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Credit Corporation (Fiji) Ltd v Sen [1995] FJHC 111; Hba0004j.95s (30 June 1995)

IN THE HIGH COURT OF FIJI
(AT SUVA)
APPELLATE JURISDICTION

CIVIL APPEAL NO. HBA 0004 OF 1995

BETWEEN:

CREDIT CORPORATION (FIJI) LIMITED
Appellant

AND

SHIU SEN
f/n Shiu Ram
Respondent

-----------------------------------------

IN THE HIGH COURT OF FIJI
(AT SUVA)
APPELLATE JURISDICTION

CIVIL APPEAL NO. HBA 0005 OF 1995

BETWEEN:

CREDIT CORPORATION (FIJI) LIMITED
Appellant

AND

KISHORE KUMAR
f/n Gau Karan
Respondent

H. Lateef for the Appellant
R. Chand for the Respondents

Date of Hearing: 21st June 1995
Date of Judgment: 30th June 1995

JUDGMENT

The facts in these two appeals from the First Class Magistrate's Court at Nausori are similar except in one respect which I shall mention later. They both raise a similar point of law namely whether an Agreement entitled Lease Agreement dated 11th of December 1992 between the Appellant and a company known as Furniture World Limited was a Lease Agreement or rather as found by the Learned Magistrate a Hire-purchase Agreement and a Bill of Sale. If either of those findings is correct the Learned Magistrate was entitled to set aside the two Lease Agreements in question both made on the 11th of December 1992.

It is convenient to deal only with Appeal No. HBA 0004 of 1995. The only respect in which the facts in that case differ from those in Civil Appeal No. HBA 0005 of 1995 is that in Appeal No. HBA 0004 the motor vehicle the subject of the appeal registered number CC141 was purportedly owned by one Jaswanti Kumar whereas in Appeal No. HBA 0005 the motor vehicle registered number BD145 was purportedly owned by one Narendra Kumar.

The facts were not in issue in the court below and are set out in the affidavits of Shiu Sen sworn on the 3rd of February 1994 with an accompanying exhibit, namely details of a motor vehicle search supplied by the Department of Road Transport to the Respondents' solicitors on or about the same date, a receipt for $5,800.00 purporting to be by Narendra Kumar on behalf of Jaswanti Kumar dated 6th August 1993, an affidavit by one Arveen Anand the Credit Manager of the Appellant sworn on the 23rd of February 1994 with two exhibits to that affidavit namely a copy invoice dated 11th December 1992 between the Appellant and Furniture World Limited for the sum of $44,000.00 and the Lease Agreement to which I have previously referred.

The Learned Magistrate was called on only to find whether the Lease Agreement was in fact that or a Bill of Sale. The relevant facts are that on the 11th of December 1992 Furniture World Limited (hereinafter called "Furniture World") sold five motor vehicles to the Appellant. These are described in the invoice of 11th of December 1992. The first vehicle was a Mazda 626 registered number BD145 whose owner was stated to be Narendra Kumar. The second vehicle was a Daihatsu registered number CC141 and allegedly owned by Jaswanti Kumar. The third, fourth and fifth vehicles comprised two Mazdas and one Suzuki the owners of which were stated to be Furniture World Limited.

By the Lease Agreement dated 11th December 1992 Credit Corporation (Fiji) Limited purported to lease to Furniture World Limited the five motor vehicles described for a term of 36 months by monthly instalments of $1,650.00 for a total rental and instalments of $59,400.00. The residual value was stated to be $4,400.00.

Clause 10 of the Lease Agreement provided that the equipment, namely the motor vehicles, should at all times remain the sole exclusive property of the Appellant and that Furniture World should have no right, title or interest therein except as bailee.

Clause 28 provided that the Lessee was given no option to purchase under the Agreement.

A common seal of Furniture World Limited was affixed to the Lease Agreement in the presence of Narendra Kumar named as Director and Jaswanti Kumar, his wife, described as Secretary.

In addition the Lease Agreement contained a Guarantee and Indemnity by which Narendra Kumar and Jaswanti Kumar guaranteed punctual payment of all moneys due under the Agreement to the Appellant.

On the 6th of August 1993 Narendra Kumar signed a formal receipt on behalf of Jaswanti Kumar acknowledging receipt of the sum of $5,800.00 from Shiu Sen, the Respondent "as full and final settlement upon sale of one only Daihatsu Charade registered number CC141 and that no other financial obligations remains outstanding pertaining to this deal".

On behalf of the Appellant Arveen Anand swore an affidavit stating that the motor vehicle registered number CC141 was to the knowledge of Credit Corporation Limited owned by one Jaswanti Kumar and that together with other vehicles it had been sold to the Appellant on or about 11th December 1992 for a price including VAT of $44,000.00.

The matter came before the Nausori Court because on or about the 6th of January 1994, as deposed by Shiu Sen the Respondent, Credit Corporation seized the vehicle which the Respondent had bought. Mr. Sen alleged that the seizure was unlawful.

In a judgment delivered on 25th August 1994 the Nausori Court found for Mr. Sen holding that the Lease Agreement was in fact a Hire-purchase Agreement and a Bill of Sale within Section 7 of the Bills of Sale Act Cap. 225; that as such it required to be registered and as it was not registered the Court held that it was void and that consequently the Respondent was a bona fide purchaser without notice and legally entitled to ownership of the vehicle.

Three grounds of appeal were argued before me:

(1) That the Learned Trial Magistrate erred in fact when he stated that Appellant's counsel agreed that the Lease Agreement was a Hire-purchase Agreement.

(2) That the Learned Magistrate erred in law when he concluded that the Agreement between the Appellant and Furniture World was a Hire-purchase Agreement.

(3) That the Learned Magistrate erred in law when he further concluded that the Agreement was in fact a Bill of Sale.

I can dispose of the first ground immediately and shortly. It is quite clear from the record that counsel for the Appellant never made any submissions that the Lease Agreement was in fact a Hire-purchase Agreement. This is not disputed by counsel for the Respondent, the Plaintiff in the Court below. It would seem that the Learned Magistrate became confused by a submission by counsel for the Appellant on Sections 2 and 19(8) of the Traffic Act Cap. 176. I interpolate here that both counsel in the Magistrate's Court made comprehensive written submissions.

Answering a submission by counsel for the Respondent that a search at the Department of Road Transport revealed that the previous owners of vehicle No. CC141 were Jaswanti Kumar and Shiu Sen, counsel for the Appellant said this:

"We must appreciate that the Traffic Act register is not title register because we find on turning to Section 2 of the Act that if a vehicle is under HIRE PURCHASE, "owner" includes the person in possession under the Hire Purchase Agreement. The fact that the Act specifically contemplates an `owner' who in reality is a hire purchaser makes it obvious that the Act, although deeming the person on the register as `owner' for the purpose of the Act, does not vest any title in him. It is of no interest to the authorities as to who the property in a vehicle is vested.

What they are interested in is who is in physical control of it. The Act does not need to concern itself with the property in a vehicle and does not do so. Even if it did, it still amounts to no more than the prima facie situation in S.19(8) of the Traffic Act, and in this particular case there is no more than ample evidence displacing same (i.e.) there is sufficient evidence before this Court that at the time of purported sale to the Plaintiff, JASWANTI KUMAR, was not the owner of the vehicle."

In my judgment it is clear that Mr. Lateef who appeared also below was not making any allegation that the Lease Agreement was in fact a Hire-purchase Agreement - to do so would surely have cut the ground from under the feet of his argument that the Lease Agreement was what it purported to be.

Rather I take counsel to be submitting in accordance with the judgment of Fatiaki J. in Civil Action No. 231 of 1992 Australia and New Zealand Banking Group Limited v. George Frank Koi, Mark L. Mutch and Merchant Bank of Fiji (unreported judgment of 10th January 1994) that the Traffic Act defined owner of a motor vehicle in Section 2 as a person in possession of a motor vehicle under a Hiring Agreement, or a Hire-Purchase Agreement, or a Bill of Sale.

Section 19(8) provides that the person in whose name a motor vehicle is registered shall, unless the contrary be proved, be deemed to be the owner of such motor vehicle.

At page 10 of the judgment His Lordship said this:

"Nor can I accept that the provisions of the Traffic Act which seeks to regulate and control the use of motor vehicles on public roads was ever intended or meant to effect such a radical and fundamental change in the law pertaining to contracts generally and hire purchase in particular."

Thus I take counsel to be saying that the fact that a person is registered under the Traffic Act as the owner of the vehicle does not necessarily mean that he holds title to that vehicle.

Rather I take him to be giving as an example of this a person in possession of a vehicle under a Hire-purchase Agreement who is deemed to be the owner of that vehicle for the purposes of the Traffic Act.

The Learned Magistrate appears to have based his findings that the Lease Agreement was a Hire-purchase Agreement on the English Hire-purchase Act of which there is no counter-part in Fiji which as yet has no legislation dealing with Hire-purchase Agreements.

The Court of Appeal in a judgment of the 24th of November 1994 dismissing an appeal from the judgment of Fatiaki J. referred to this on page 19 of its unreported judgment in Civil Appeal No. ABU0011 of 1994 Australia and New Zealand Banking Group Ltd. v. Merchant Bank of Fiji.

One of the principal features of a Hire-purchase Agreement under the English legislation is that it is an agreement for the bailment of goods in which the bailee may buy the goods or under which the property or the goods will or may pass to the bailee - see Hire-purchase Act 1938, Section 21(1) referred to in the judgment of Jones J. in R. v. R.W.Proffitt Ltd. (1954) 2 ALL E.R. 798 at page 800. This was one of the cases relied on by the Learned Magistrate although no submissions had been made to him by either party on this case.

When one looks at the Lease Agreement one finds that it contains no such right of purchase by the Lessee of the vehicles leased.

Clause 28 is at pains to state this as by implication is Clause 10.

I therefore uphold the first ground of appeal. The second and third grounds can be taken together.

The Learned Magistrate then went on to find that the Lease Agreement was in fact a Bill of Sale and appears to have reached this conclusion by referring to the well known rule of law that a Court is entitled to go behind the mere terms of a document to ascertain what it really is in law. The Learned Magistrate referred to several cases on this and I accept that they are authority for that proposition namely Polsky v. S. And A. Services (1951) 1 ALL E.R. 185, Madell v. Thomas & Co. [1890] UKLawRpKQB 187; (1891) 1 Q.B. 230, Re Watson - Ex parte Official Receiver in Bankruptcy [1890] UKLawRpKQB 84; (1890) 25 Q.B.D. 27.

Before me Mr. Lateef for the Appellant submitted with considerable force that if the argument for the Respondents were to be accepted namely that Jaswanti Kumar never parted with the property in the motor vehicle either to Furniture World or the Appellant, how could she take a lease back of her own vehicle or acquiesce for a lease back of that vehicle to Furniture World of her own vehicle?

Mr. Lateef submitted that there is evidence that Jaswanti Kumar sold the vehicle to the Appellant and that is the reason why she took the lease back. If she had not sold the vehicle then there was no reason why she would want to take the lease back of it because she would be entitled to say that the vehicle belonged to her.

Although there are unsatisfactory features of this case particularly the absence of any transfer documents referring to the vehicle from Jaswanti Kumar to Furniture World, nevertheless on the balance of probabilities I consider that there was sufficient evidence for the Learned Magistrate to find that at the relevant time vehicle Nos. CC141 and BD145 were in fact owned by Furniture World Limited despite the invoice of the 11th of December 1992 giving ownership to Narendra Kumar and Jawanti Kumar.

One can sympathise with the Respondents but in my judgment the Learned Magistrate erred in holding as he did that the Lease Agreement was either a Hire-purchase Agreement or a Bill of Sale. In my judgment he should have accepted it at its face value rather than going behind its terms as he did.

The result is that the appeal will be upheld but I make no order for costs.

JOHN E. BYRNE
JUDGE

Authorities referred to in judgment:

Bills of Sale Act Cap. 225.

Traffic Act Cap. 176.

Civil Action No. 231 of 1992 Australia and New Zealand Banking Group Limited v. George Frank Koi, Mark L. Mutch and Merchant Bank of Fiji (unreported judgment of Fatiaki J. of 10th January 1994).

Civil Appeal No. ABU0011 of 1994 Australia and New Zealand Banking Group Ltd. v. Merchant Bank of Fiji (unreported judgment of Fiji Court of Appeal of 24th November 1994).

Polsky v. S. And A. Services (1951) 1 ALL E.R. 185.

Madell v. Thomas & Co. [1890] UKLawRpKQB 187; (1891) 1 Q.B. 230.

Re Watson - Ex parte Official Receiver in Bankruptcy [1890] UKLawRpKQB 84; (1890) 25 Q.B.D. 27.

R. v. R.W. Proffitt Ltd. (1954) 2 ALL E.R. 798.

HBA0004J.95S & HBA0005J.95S