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Robson v Goiset [2007] VUMC 5; Civil Case 79 of 2005 (14 December 2007)

IN THE MAGISTRATE'S COURT
OF THE REPUBLIC OF VANUATU
(Civil Jurisdiction)

Civil Case No.79 of 2005

BETWEEN:

EDWARD ROBSON
Claimant

TI TAM GOISET
Defendant

George Boar for the Claimant
Jack Kilu for the Defendant

JUDGEMENT

This is a reserve judgment of the Court. The counsels have been ordered to file submissions. The claimant's counsel has filed closing submissions but the defence Counsel has failed to do so.

INTRODUCTION

On the 9^th of May 2005 the claimant filed a claim for 872000 vatu, plus 10% interest and damages for frustration and termination of the Rental agreement of a bus against the defendant.

FACTS

The claimant has entered into a verbal agreement with the Defendant on February 2004 for rental of a bus which is intended to be purchased by the defendant at the end of the term and when the sale price has been paid in full.

On the 24^th of February 2004, the claimant then deposited an amount of 840'000 vatu as instructed by the defendant with the understanding that the said sum covers insurance, road tax and 1^st month rental of the bus. He also paid filing fees at 15000 vatu.

The defendant promise to deliver the bus to the claimant shortly thereafter. The defendant did not give the claimant any bus until the month of July 2004 when the claimant had to go to the defendant's brother (Dinh Van Tan and ask him for a bus because the defendant has failed for almost five months to give effect to their agreement to which monies had already been paid.

This agreement was formalized and signed on the 22^nd of July 2004.

The claimant then took possession of the bus and operated a public transport business. From July 23^rd to the time the defendant confiscated the bus the claimant has made five payments in installment to the defendant.

The bus was confiscated on the 26^th of October as the defendant alleged that the claimant has not paid insurance for the bus for July, August, September and October 2004.

The bus was then sold to another person on November 2004.

ISSUES

There are four issues to before the Court.

1. Whether or non payment of insurance is a condition for termination and or frustration of the rental agreement?

2. By whom was the contract terminated?

3. Is the contract enforceable after the bus was repossessed?

4. Whether or not the claimant is entitle to recover the deposit of 840000 vatu paid to the defendant?

EVIDENCE

Claimant's evidence

The claimant's evidence is that:

(i) He entered into a contract with the defendant on February 2004 to purchase a bus which is worth VT 2'800'000. He deposited the sum of VT 840'000.

(ii) The total sum includes 70'000 vatu deposit, 15000 vatu application fee, 75000 half of yearly insurance payment

(iii) 50,000 vatu 1^st month instalment payment:

(vi) He took possession of the bus on July 2004 after much pressure and discontent.

(vii) The terms of the agreement is for the claimant to pay VT 44800 monthly rentals and bus would cost him 2'800'000 vatu.

(viii) The contract is for 4 years.

(ix) The claimant would take possession of the bus and pay monthly rentals to the defendant.

(x) He went to pay insurance at Vatu 17000 before driving the bus.

(xi) He paid to the defendant Vatu 69000 on August 2004, VT 69000 on September 2004 and 50'000 on October 2004.

(xii) Towards the end of October the defendant instructed Inspector Tarimas to detain the bus and after several attempts to have the bus release the defendant continues to refuse.

(xiii) By December 2004, the defendant sold the bus to another person.

On cross examination the claimant maintained he initially deposited 840'000 vatu in which he was told by the defendant that the deposit covers road tax and insurance. When questioned as how much money he paid after the initial deposit the amount stated that he had paid 15000 vatu filing fees, 17000 vatu insurance for the month of July 2004. He stated he also paid 69000 vatu on August, 69000 vatu on September, and 50,000 vatu on October. Receipts of all these transactions have been annexed. He stated he was told by the defendant initially that the purchase price of the bus would be 2'800'000 vatu but then the defendant later told him it is 2'900'000 vatu.

The claimant also admitted taking monies from the defendant from July 2004 to March 2005 which totals to 127'500 vatu.

He stated he could not make payments to the defendant after the bus has been confiscated because when he operated it as a service bus it brought income for rentals and other expenses. Therefore he cannot make payments as he relied on the bus to make money.

The claimant stated he understood if he does not make payments to the defendant for 3 months she would remove the bus. He was told by the defendant that the bus was confiscated because he did not pay insurance and that if he pays, he would take the bus back. He also understood the agreement ends in 2008.

When questioned about the insurance not being paid from August to October 2008, he stated that has not paid yet when the bus was taken away from him.

Defendant's Evidence

That defendant gave evidence that:

(i) She entered an agreement with the claimant on the 22^nd of July 2004 to rent out its Hyundai bus registration # 5387 to the claimant:

(ii) It is an essential condition to the contract that the lessee pay rent before or by end of each month. If he fails then an interest of 4% must be charged to the principal amount.

(iii) The agreement signed is on a rental basis for a period of 30/7/04 to 22/6/08.

(iv) On or about the 25^th of February 2004 the claimant paid an initial sum of 840'000 vatu which does not include a deposit, fling fees, insurance or first monthly rental. He also paid 15000 vatu for services rendered to him to get a vehicle for rent.

(v) She or TPM has never terminated the contracted but it was frustrated by the claimant when he failed to perform his duties under the agreement, such as failing to pay his rent and driving without proper insurance.

(vi) The claimant only made four (4) payments. On the 23^rd of August 2004 he paid 69000vatu (receipt #324). On 27^th of September 2004 he paid 44'900 vatu, 14800 vatu on the 1^st of October 2004, and 9300 vatu on the 4^th of October 2004 for the September period.

(vii) The defendant's company Third Party Management (TPM) has made advances in the sum of 127'500 vatu to the claimant.

(viii) The claimant has failed to make rental payments for September 2004, he failed to meet the requirement to pay initial deposit of 3 months rent, he failed to keep the vehicle insured, he cancelled the agreement without giving notice to TPM and he failed to pay money due to TPM at The time of cancellation in compliance with the agreement.

(ix) Under the agreement in the event TPM cancels the agreement as a result of the claimant's breach, it may claim from the claimant for such breach.

(x) She claims for unpaid rent for October 2004, unpaid interest and unpaid rents and interest up to 22^nd June 2008 at 4,927'921 vatu.

(xi) The total interest and rentals to be paid by the claimant calculated as of 22/11/04 is 3'460'421 vatu.

In cross examination the defendant was asked whether the initial 840'000 vatu includes road tax and insurance, her answer was "It includes insurance but it is the customer's duty to pay insurance".

She also agreed that 700'000 vatu from the initial sum is the deposit and 75000 vatu Insurance.

She denies quotation laying out the details of the sums of money amounting to the initial sum deposited, stating it not on TPM's letter head and states that it could have come from the secretary but the colour of the bus is red and not green.

She also stated she purchased bus and it was sitting in their show room for six (6) months waiting for the claimant to pay insurance and take possession of the bus. The defendant stated she will claim interest beginning 22/11/04 instead of March 2004.
She stated she did not sell the bus to anyone its still in the company's name and that he never paid 75000 vatu Insurance if he had he should have paid to AFA.

Issues

There is no issue on whether or not there was a valid contract between the parties. There was an offer and acceptance. The consideration of 840'000 vatu was made as initial deposit towards the purchase price of the bus which is 2'900'000 vatu.

The agreement between the parties was formalized and signed on the 22^nd of July 2004.There are general conditions to the agreement which includes the duration of the contract, payments of rent, registration insurance, termination of contract, damages, cancellation of the contract and value of the vehicle when the lessee returns the vehicle.

Whether or non payment of insurance is a condition for termination and or frustration of the rental agreement?

It is important to point out, that I do not find in the agreement the set amount that must be paid by the claimant as monthly rentals to the defendant. The claimant's evidence in his sworn statement is that he is obliged to pay 44'800 monthly rental.

The defendant's evidence did not indicate at all to the Court what amount is due as rental per month. Thus I would rely on the information that is before the Court.

The copies of the receipts annexed shows that on the 23/8/4 he paid 69000 vatu for the month of August 2004, on 27/9/04 he paid 44'900 as part payment for September rentals. He made other two payments on October of 14'300 and 9300 in addition to 44900 paid on 27/9/07 which amounts to 69000 vatu for September rentals.

On the 26^th of October 2004 the bus was confiscated. Note that the monthly rentals are due on or before the end of each month as stated by the defendant.

He paid to the defendant's company 50'000 vatu as partial payment for 3 months deposit. If the defendant had failed to pay first three (3) months rent then the question that arises is, "what is the initial 840'000 vatu for which in the contract shows that it is for FESFALA RENT"and what is the 50'000 (above) for?

I find the evidence of the defendant contradictory as in paragraph 5 of her sworn statement dated 19^th July 2007 she stated that: the initial sum does not include a deposit, filing fees, insurance or first monthly rental while in paragraph 5 of her additional sworn statement she stated that "in performing his duty under the contract, Edward Robson (claimant) only paid the following:

(a) an initial deposit of 840'000 vatu" and other payments made.

There are a lot of inconsistencies in the defendant's evidence in regard to this issue.

Under the agreement, payment of Insurance is the duty of the claimant. In this case it is obvious that the claimant has paid part of the insurance for that year. The claimant has paid made partial payment for insurance in the sum of 17'057 vatu on the 22^nd of July 2004 which covers the vehicle up to the 22^nd of August.

He still did not pay insurance for the month of August and September. However in cross examination the defendant agreed that 75000 vatu out of the initial sum deposited was for insurance.

The evidence of the defendant in regard to this issue is very inconsistent as well.

Thus I find the defence of failure to pay insurance as a ground to confiscate the bus from the claimant is unreasonable. Monthly rentals for August and September have been paid on time and above the minimum amount that should be paid if the monthly rental is 44'800 vatu. Deposits have been made and an additional sum of 50'000 vatu towards the deposit.

Further more the terms of the contract in regard to monthly rentals and deposit for three months up front are unclear. I cannot find in the contract this condition. The evidence given in regard to the initial deposit is also unclear.

Given these analysis I am not convince that the defendant has a genuine defence. I cannot believe the evidence of the defendant as there are a lot of inconsistencies and contradictory evidence.

I find that the contract has not been frustrated by the claimant therefore cannot be use by the defendant as the basis for repossessing the said bus.

The second issue is by whom is the contract terminated.

The claimant wrote to the defendant to express his disappointment of how the bus has been detained on the 26^th of October 2007 and that it is now rented/sold to another buyer Mr. Sandy. This letter was written to the defendant 4 months after the defendant has reposed the bus and rent/sold it to another person.

Given the Court's findings to issue # 1, the action to reposes the bus in itself has terminated the contract.

In my view the defendant's letter did not cancel the contract as it has been already been terminated when the bus was confiscated on October 2004 and rented out to another buyer in December 2004.The claimant does not need to seek consent of the defendant to terminate the contract because the defendant has in fact already terminated the contract by taking possession of the bus and renting it out to another person. It can be implied from the actions of the defendant that this brings an end to the contract. The contract in my view has been frustrated by the defendant

The third issue is whether the contract enforceable after the bus was repossessed?

Given the Courts findings in issue # 2, the defendant cannot enforce the contract. Neither the defendant nor her company is not entitled to monthly rentals and interest for the rest of the contract period.

The defendant has failed to deliver the bus as she had promised. The claimant had to wait for at least 5 months before he could get the bus to start a small public transport business only to find out that the defendant has frustrated the agreement after three months. He has suffered loss for this period.

Further more Insurance money (75000 vatu) collected by the defendant from the claimant has not been paid, and was used as a reason in the end to reposes the vehicle. Thus the defendant in my view has dirty hands.

It is also not possible to order the defendant to specific performance as she has already rented or sold the vehicle.

Therefore the counter-claim of the defendant must fail.

The fourth issue is Whether or not the claimant is entitled to recover the deposit of 840000 vatu paid to the defendant?

Having explained the Court's reasoning in issue # 1,2 and 3,1 find that the claimant is entitle to recover his deposit from the defendant minus the sum of l27'500 vatu owing to defendant. It would be unjust to keep the claimant's deposit given the evidence adduced by the court.

ORDER

Having made all these findings, I find the defendant liable and I so order that Judgment is entered for the claimant in the sum of 776'000 vatu. The Court further orders that:

1. The defendant shall pay to the claimant t 63000 vatu excess rentals:

2. The claimant is entitle to damages at 150'000 vatu

3. The defendant shall also pay interest at 5% per annum beginning from 30^th October 2004.

4. The defendant shall also meet the entire cost of these proceedings.

5. That the defendant shall pay the total sum of 989'000 plus interests and costs within 30 days from the date of this order.

DATED AT PORT VILA THIS 14^TH DAY OF DECEMBER 2007

BY THE COURT

LINNES M-TARI
MAGISTRATE