Home | Databases | WorldLII | Search | Feedback Journal of South Pacific Law

Fiji Development Bank v Raqona, Supreme Court of Fiji (Case Note) [2001] JSPL 9; (2001) 5 Journal of South Pacific Law

FIJI DEVELOPMENT BANK v NAVITALAI RAQONA

(1984) 30 FLR 151

Supreme Court, Fiji.

Kermode J

Facts:

The defendant, Mr. Navitalai Raqona executed a written guarantee on the 26th of September 1977 in favour of the plaintiff bank. The guarantee was for money owing to the plaintiff bank by one Peniasi Lewadamu. The terms of the written agreement contained a clause that the guarantee was payable on demand. Demand was made pursuant to a written notice to the defendant and the co-guarantor on the 12th of May 1981. The defendant refused to honour his contingent liability under the executed guarantee and the matter came before Kermode J in the Supreme Court of Fiji. Although there was another co-guarantor Ratu Josaia Tavaiqia, a claim against him has not been made.

Claim:

The plaintiff claims against the defendant the sum of $5.017.03 and interest thereon owing to the plaintiff (Bank) by Peniasi Lewadamu, which was guaranteed by the defendant and payable on demand.

Outcome:

The defences of the defendant failed, and the claim of the plaintiff was upheld. The defendant was ordered to pay the sum of $5,017.03 and the further sum of $134.56 for interest outstanding and any further interest at the rate of 11% per annum.

Legal Principles:

Ratio Decidendi

· A person of full age and understanding is bound by the signature and it is immaterial whether he or she read or understood the document signed.

· One of the exceptions to a signed document being binding upon the signatory is ‘non est factum’. However, the plea of ‘non est factum’ is unsuccessful when the signatory is a person of full age and understanding.

· The obligation to pay the debts of the debtor under a written guarantee is enforceable upon the guarantor when demand is made.

· Where there is more than one guarantor the creditor can elect to sue either one of them and the guarantor can afterwards claim the contributions from the fellow guarantors if the liability was joint and several.

· Where the terms of the contract are clear and have been reduced to writing, ‘parol evidence rule’ prevents the party relying on oral evidence to vary those written terms of the contract, which the parties have agreed to record as part of the contract.

· The limitation period for a civil claim of a guarantor’s liability is six years from the date the liability arises. The liability does not arise on the execution of the Guarantee, rather it is contingent, and arises when demand is made on the guarantor to pay on his guarantee.

Obiter Dicta

· A guarantor can later claim the contributions from the co-guarantor(s) when the liability is joint and several.

· The time when the defendant files a defence is fatal if the court is of the view that there is a defence to the plaintiff’s claim of a summary judgement.

Commentary:

Contractual Obligations and the Effect of Signature