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Kamandu v Weleilakeba [2013] FJHC 442; HBC86.2011 (2 September 2013)

IN THE HIGH COURT OF FIJI
AT SUVA
CIVIL JURISDICTION

Civil Action No: HBC 86 of 2011

BETWEEN:

Martin Gritonga Kamandu
1st PLAINTIFF

AND:

Paul Kofi Freemen
2nd PLAINTIFF

AND:

Andrew Weleilakeba
1st DEFENDANT

AND:

Border Solution (Fiji) Limited
2nd DEFENDANT

COUNSEL : Ms Nayacalevu for the Plaintiffs
Mr Muloilagi for the Defendants

Date of Judgment: 2 September 2013

JUDGMENT

1. The Plaintiff filed summons for discontinuation dated 9 February 2012 of the Writ of Summons dated 22 March 2011 subject to following conditions:
   

i] Leave be granted for the discontinuation of this matter.

ii] For the Mareva injunction order granted by Justice Calanchini in Chambers on Wednesday, 30th March 2011 to be dissolved.

iii] Leave is granted for the removal of the prohibition order issued by Justice Calanchini in Chambers on Wednesday, 30 March 2011, prohibiting the Plaintiffs from withdrawing the $35,000.00 that is in the Plaintiff's Solicitors Trust Account.

iv] Any further orders of this Court.

2. Affidavit of Martin Kamandu sworn on 30 January 2012 filed in support of the summons for discontinuance.
   
3. The 1st Defendant filed an affidavit in reply for the summons for discontinuance to the affidavit in support filed by the Plaintiff, sworn on 27 February 2012.
   
4. Both counsel for the Plaintiff and the Defendant on 26 July 2012 informed court that the hearing of this case should be confined only to the determination on which party is entitled to the $35,000 held in the trust Account of the Plaintiff's solicitors Trust Account and thereafter to discontinue the Writ of Summons dated 22 March 2011.
   
5. The Plaintiff filed submissions on 7 September 2012 and Defendant filed his submissions on 27 September 2012 and supplementary submissions on 1 October 2012. The Plaintiff thereafter filed his reply to supplementary submissions of the Defendant. The Defendant has also filed response submissions on 7 November 2012.
   
6. The matter was listed for hearing on 28 March 2013, on the issue of entitlement and both counsel submitted that they are relying on the submissions already filed and reiterated that this action be discontinued after the ruling is made on the issue of entitlement of $35,000.00 in the trust account of the Plaintiff's solicitors.
   

Facts Pertaining to this Action

7. The both Plaintiffs state that they have lent and advanced a sum of $110,000.00 to the Defendants for the purpose of purchasing riot police gear from a company in China pursuant to a tender that the Defendant had been awarded.
   
8. The both parties executed a loan agreement dated 9 December 2010, subject to terms and conditions on repayment of the money lent to the Defendants.
   
9. The 2nd Defendant after supplying goods for the tender awarded, has been paid a sum of $199,999.99 by the Fiji Police Service.
   
10. The Plaintiffs allege that the Defendants having received a money from the Fiji Police Service, failed and neglected to pay as per the terms and conditions stipulated in the loan agreement.
    
11. The Plaintiff further states that the Defendant after the receipt of the demand notice sent by the Plaintiff had paid a sum of $35,000.00 to the Plaintiff's solicitors on 11 March 2010.
    
12. The Defendant however failed to pay the balance as per the loan agreement. The Plaintiffs obtained a Mareva injunction against the 1st Defendant and the 2nd Defendants by themselves and their servants and or their agents restrained from transferring, dealing with charging mortgage, assigning or disposing off or removing from the jurisdiction any of its properties or moneys or assets which the Defendant has ownership or contract within Fiji, including the 2nd Defendant's Bank Account number 9803002303.
    
13. This court made a prohibition order on 30 March 2011 that the 35,000.00 paid in to the Plaintiff's solicitor's Trust Account not to disburse unless ordered by the court.
    
14. The Plaintiffs after receipt of the available bank balance of the 2nd Defendant and the value of the assets owned to the Defendants proceeded to file summons for discontinuation subject to inter-alia that leave be granted to remove the prohibition order issued by the court in order to enable the Plaintiff to withdraw the monies in the Trust Account.
    
15. The Defendants in their Affidavit in Response asserts that the Defendants are the party entitled to the $35,000.00 in the Trust Account.
    
16. The issue before the Court is whether the $35,000.00 held in the Plaintiff's solicitors Trust Account should be disbursed to the Plaintiffs or to the Defendants.
    
17. The Defendant's objections to the application of the Plaintiff to withdrew the money held in the Trust Account of the Plaintiff's solicitors mainly on the premise that loan agreement entered in to between the parties are in contrary to the certificate issued by the Fiji Trade and Investment Board to carry on the business of exploration and production of oil and exploration, mining and production of minerals and thereby violated the Foreign Investment Act of 1999 as amended.
    
18. The second objection of the Defendants is on the premise that the Plaintiff's are not authorized or licensed money lender in terms of Money Lenders Act and thereby the said loan agreement entered into between parties is contrary to the law and unenforceable in court of law.
    
19. The third objection of the Defendants is that the Defendant signed the contract in contrary to own volition, the defense of non est factum and fraud which violates the provisions of Fair Trading Decree and thereby the loan agreement is unenforceable.
    
20. The forth objection of the Defendants is that the contract was signed under pressure and suspicious circumstances, unconscionability and the Defendants had paid $67,000.00 to the Plaintiff in two installments $32,000.00 and $35,000.00 respectively, wrongfully.
    

The Determination

21. The issue of illegality on the premise that the loan agreement is in contrary to the provisions of Foreign Investment Act and Money Lenders Act is the main contention raised by the Defendants in their affidavits. It is observed that the other legal objections to the application of the Plaintiff have been raised for the first time in the Written Submissions of the Defendants.
    
22. The Foreign Investment (Amendment) Act number 8 of 2004 clearly sets out the definition of the Foreign Investor. Section 2(b) states:
    

"the foreign investor is a corporation, company, trust, partnership or association or body of persons whether corporate or unincorporated, and the person, as the case may be:

(a) Is one of those persons or a partner or, in the case of a private company, a member; or

(b) Is a director, secretary or trustee of the corporation, company, trust, partnership or association or body of person."

23. It is to be noted that the Foreign Investment Certification granted by the Fiji Island Trade and Investment Bureau (now known as Investment (Fiji)) is for South Pacific Natural Resource Group Ltd where the Plaintiffs are Directors. The loan agreement in issue of contention is between the Plaintiffs in their personal capacity and not as Directors of the South Pacific Natural Resource Group Ltd or in the name of the company and Defendants.
    
24. It appears from the material submitted to court that both parties entered in the loan agreement as separate individuals, distinct to the respective companies.
    
25. Furthermore, as per the affidavits tendered to this court by the defendants and the documents annexed thereto, do not reveal that there was any complaint against the Plaintiffs to the relevant statutory body or authority to inquire into the allegation of violation of the terms and conditions of the certificate issued to the Plaintiff's company and the provisions of the Foreign Investment Act.
    
26. In the absence of proper complaint to the appropriate body, in my view, this court is unable to come in to a proper conclusion whether the Plaintiff have violated the law or not by entering in to the loan agreement. The only material available to this court is the mere assertion in the affidavit supported by reference to relevant legal provisions of the Act in Written Submissions. It seems that no statutory body authorized by law to issue Foreign Investment Certificate has not decided that the investor violated the conditions or the provisions of the law. It would not be appropriate for this court to come to a conclusion solely based on the Written Submissions without a due process of the law in relation to the alleged violation.
    
27. The Defendants also submitted that alleged lending and the loan agreement between the Plaintiffs and the Defendants violates the provisions of Money Lenders Act.
    

Section 2 of the Money Lenders Act defines the Money Lender as follows:

"moneylender" includes every person whose business is that of money lending or who carried on or advertises or announces himself or holds himself out in any way as carrying on that business whether or not that person also possesses or earns property or money derived from sources other than the lending of money and whether or not that person carries on the business a principal or as an agent but does not include:

(a) anybody corporate incorporated or empowered by any written law or Imperial enactment to lend money in accordance with such law or enactment; or (Substituted by 13 of 1997, s 13).

(b) any person bona fide carrying on the business of banking or insurance or bona fide carrying on any business not having for its primary object the lending of money in the course of which and for the purposes whereof he lends money at a rate of interest not exceeding ten per cent per annum; or

(c) any pawnbroker licensed under the provisions of the Second Hand Dealers Act; or (Cap. 238).

(d) anybody corporate for the time being exempted by the Minster from the provisions of this Act; (Amended by 48 of 1940, s. 2).

Section 15 of the Act states as follows:

"No contract for the repayment of money lent after the commencement of this Act by an unlicensed money lender shall be enforceable."

28. The contention of the Defendants is that the Plaintiffs do not come within the definitions of a money lender and thereby the loan agreement entered in to between parties, as per Section 15 of the Money Lenders Act is not enforceable in court of law.
    
29. It is to be noted that a person enters into a loan agreement knowing that the lender is not an authorized under the terms of the Money Lenders Act could also be liable pursuant to Section 13 (3) of the Act.
    

Section 13(3) states as follows:

"No money lender or any person on his behalf shall employ any agent or canvasser for the purpose of inviting any person to borrow money or to

enter into any transaction involving the borrowing of money from a money lender and no person shall act as such agent or canvasser or demand or receiver, directly or indirectly; any sum or other valuable consideration by way of commission or otherwise for introducing or undertaking to introduce to a moneylender any person desiring to borrow money.

30. As I stated in my judgment, the allegation of violation of the provisions of the Money Lenders Act has not been brought to notice of the relevant court by any person as per the affidavits of the Defendants, as of the allegation of violations of Foreign Investment Act.
    
31. The procedure and the manner in which such allegation has to be inquired in to, is clearly stated in the Money Lenders Act. In the absence of a complaint to
    the relevant body to inquire in to and without a hearing by the relevant court, this court is unable to come to a conclusion on the alleged violation solely on the Written Submission of both parties. However, it is to be noted that as per the material submitted to court by both parties, it appears that the Plaintiffs do not fall within to definition of a money lender, and not subject to Money Lenders Act as both parties have entered in to a loan agreement in their personal capacity.
    
32. The Defendant alleges that they signed the loan agreement not on their own volition but due to undue influence exerted on them by the Plaintiffs.
    
33. The Defendants also relies on the defense of "Non Est factum" and fraud on the part of the Plaintiff in their other dealings.
    
34. In careful perusal of the affidavits and the Written Submissions submitted to court by the Defendants, in my view, there was no sufficient material to come to conclusion that there was duress and undue influence exerted by the Plaintiff on the Defendants.
    
35. It is to be noted that the Plaintiff after the execution of the loan agreement have performed their obligations partially. The Writ of Summons of the Plaintiff was only to recover the balance outstanding from the Defendants. The Defendants in their affidavits admitted a payment of $67,000.00 as partial performance of the loan agreement and infact agreed to pay further $8,884.93 as a full performance of contract by way of a deposit.
    
36. The affidavit of Andrew Weleilakeba sworn on 8 April 2011, deposed as follows:
    

"This amount to $75,884.93. Of this sum I have repaid the Plaintiff $67,000.00. I am therefore prepared to deposit the sum of $8,884.93 into Court pending the outcome of this action and provided that the Plaintiff provide all particulars and receipts of the said amount. I am prepared to this notwithstanding that the Plaintiff's are in breach of their FIC, and the lending being ultra vires.

37. The defense of Non Est factum also cannot be taken in to consideration in this matter for the reason is that the Defendant is a person of full age and businessman by profession engaged in business of supplying material to Government bodies.
    

"The Supreme Court of Fiji in the case of Fiji Development Bank v Raqona [1984] FJSC 10; [1984] 30 FLR 151 (1 May 1984) quoted the House of Lords decision in the case Saunders v. Anglia Building Society (1971).A.C. 1004 where it was stressed that the defense of non est factum was not lightly to be allowed where a person of full age and capacity had signed a written document embodying contractual terms. The general rule is that a party of full age and understating is normally bound by his signature to a document whether he reads or understands it or not.

38. In view of the above authorities, this court is not inclined to accept the assertion of the Defendant.
    
39. The Defendants in their allegation of fraud, have failed to submit any material acceptable to court to establish fraud. Mere allegation of fraud is not sufficient for the court to decide that the loan agreement is not enforceable. The onus of proof of fraud, in law, entirely lies on the Defendants.
    

" In Sharma v Akhil Projects Ltd [2010] FJCA 8; ABU0030.2008 (18 February 2010), the Court of Appeal stated:

[47] The onus of providing rests with the party alleging it. In Panama and South Pacific Telegraph Co. v. India Rubber, Gutta Percha, and Telegraph Works Co. [1875] UKLawRpCh 58; (1975) 10 Ch. App. 515, at p.530 Mellish, L.J.says:

"No doubt the Court is bound to see that a cause of fraud is clearly proved, but on the question at what time the persons who have been guilty of that fraud commenced it, the Court is to draw reasonable inferences from their conduct.

[48] There must be something in the nature of moral turpitude and personal dishonesty Assets Co. Ltd v. Mere Roti [1905] UKLawRpAC 11; (1905) AC 176 at p.210.

40. In view of the above authority, I am unable hold that there is fraud on the part of the Plaintiff which materially affects the loan Agreement.
    
41. It is abundantly clear from the affidavit of the 1st Defendant sworn on 8 April 2011 that the payment of $35,000.00 to the Plaintiff's Trust Account is as a partial performance of the loan agreement between parties. In my judgment, I have already concluded that the Defendants have not submitted acceptable material for the court to declare that the money held in the Trust Account should be disbursed to the Defendants and not to the Plaintiffs.
    

Orders

1. Leave is granted to for the discontinuation of this matter forthwith.
   
2. Mareva injunction order granted by this court is dissolved forthwith.
   
3. Leave is granted for the removal of the prohibition order issued on 30 March 2011, prohibiting the Plaintiff's from withdrawing the $35,000.00 held in the Plaintiffs Trust Account, forthwith.
   
4. No orders as to costs.
   

Susantha N. Balapatabendi
JUDGE