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Kamanalagi v Fiji Development Bank [1995] FJHC 57; Hbc0032j.93s (27 March 1995)

IN THE HIGH COURT OF FIJI
AT SUVA
CIVIL JURISDICTION

CIVIL ACTION NO. 32 OF 1993

Between:

JOSAIA KAMANALAGI and
NAVITALAI TAVURA
t/a "Naivakumu Fishing Group"
Plaintiffs

- and -

FIJI DEVELOPMENT BANK
Defendant

Mr. H. M. Patel for the Plaintiffs
Mr. P. Sharma for the Defendant

JUDGMENT

In this action the Plaintiffs seek to recover from the defendant Bank (hereafter referred to as the "Bank") (a) the sum of $20,000 as damages being the value of the vessel "ADI NAIVAKUMU" (the subject-matter of the action) (hereafter referred to as the "vessel" and its transportation costs, (b) general damages, (c) refund of amounts paid under the Bill of Sale and (d) costs.

In opening the Plaintiff's case Mr. Patel said that NAVITALAI TAVURA (the second Plaintiff) is dead and that the only witness to be called is one TIMOCI LAVE who was the guarantor in the loan application by the Plaintiffs.

At the commencement of the hearing the following documents were put in by consent as exhibits: Approval of loan letter dated 17 January 1986 (exhibit I), Bill of Sale dated 4 February 1986 (exhibit 2), Guarantee signed by TIMOCI LAVE and another dated 4 February 1986 (exhibit 3) and Fiji Insurance Company Limited Hull Insurance Proposal dated 23 January 1986 (exhibit 4).

For the Plaintiffs, the said TIMOCI LAVE, the only witness, testified that he is Attorney for the Plaintiffs under a Power of Attorney (exhibit A). He is also a brother of the first Plaintiff and is the one who started the fishing project for them. The vessel was bought for $17400. The Bank had approved a loan of $4148.27 for the purpose shown in exhibit I. The security document the Bill of Sale was executed by the Plaintiffs with the witness executing a guarantee (exhibit 3).

According to paragraph 3 item (c) of exhibit I, the defendant wanted Marine and Hull Insurance Cover "over the vessel for at least $10,000 with the Bank's interest noted thereon". The Bill of Sale and the Guarantee documents were prepared by the Bank. The witness testified that insurance was to be "obtained" by the Bank. The witness says that he does not recall if insurance was obtained or not. The repayments were to be $200 per month "covering principal and interest and insurance" (exhibit I). He said payments were made (vide exhibit D) by the Bank to insurance company.

The witness said that the vessel was damaged in July 1986. The broken part was dismantled and the vessel brought to Suva at the request of Rudra Singh (DW2) an employee of the Bank. It had to be dry-docked after it was brought to Suva. It is still at the jetty without repairs being carried out to it.

The vessel was seized in September 1987. He was told that it will be sold but it was not. The witness said that payments were made to the Bank in the sum of $1000 on 9 February 1987 and $500 in 1989.

In cross-examination he said that the variation of loan condition about insurance was not in writing and that the bank staff said that bank will arrange for insurance. He said that the engine and hull were damaged. He said that it was the said SINGH for the Bank who said to bring the boat to Suva; and it was in November 1986 that Singh told him that there was no insurance cover for the vessel. The witness said that the Plaintiffs were "inside and we were outside when he signed Proposal Form" (exhibit 4) but he did not see them sign "Letter of Authority" (exhibit 6) empowering the bank to insure and debit. He said that the Plaintiffs were in no position to pay the insurance premium.

The defendant Bank in its Statement of Defence states, inter alia, that (a) the vessel was only required to be insured up to the value of the loan and the Plaintiffs' value of the vessel is grossly exaggerated but it admits that Marine Hull Insurance cover was to be taken out for at least $10,000 and for the Bank's interest to be noted thereon; (b) the defendant was requested by the Plaintiffs to arrange for the insurance premium to be paid; (c) the accident to the vessel occurred as a result of the Plaintiffs' negligence; (d) it admits that the vessel was required to be brought to Suva from Kadavu and that the Plaintiffs' were advised that the insurance cover had not been taken out; (e) the vessel was seized under the Bill of Sale on 7 September 1987 but it was not sold because it was in a derelict condition; (f) the Plaintiffs' account was in arrears and any monies that were paid were used as part payment of the loan.

The defendant through its insurance officer VEERENDRA CHAND (DW1) stated that a Proposal form has to be signed by the clients together with a Letter of Authority to pay insurance premiums and the client pays the Bank the premium. He said that they will not pay premium without the client's authority and unless the authority is signed, the Bank will not send the Proposal Form to the insurance company. In this case CHAND said that the Bank required insurance because "other securities were not strong enough". The authority (exhibit 6) was not signed or sent to the insurance company by the Plaintiffs. Although the Bank tried to assist the Plaintiffs after the accident was reported in December 1986, the insurance company will not accept the inclusion of the vessel at that stage.

The witness said that neither he nor his department (insurance) authorised the vessel to be towed to Suva. He said that he would not do so knowing that the damage was only to the engine and which was later fixed by the Plaintiffs.

There was no report of the accident to Fisheries Officer; there was no police report and the Plaintiffs did not complete claim form.

This witness is not aware that the vessel was seized under Bill of Sale.

The loans officer RUDRA SINGH (DW2) testified that he is familiar with this case from 1986 to September 1989. The insurance proposal was given to the first plaintiff together with an Authority form to complete. The funds were released but they were advised that "if some mishaps or incidents happen the vessel was not covered". The Plaintiffs did not return the Authority form. Except one payment of $200 in April 1986, the Bank had to chase for payment. The Bank came to know of accident on 9 December 1986 when PWI (Lave) gave him (DW2) the letter. He said that he did not authorize the vessel to be brought to Suva. The vessel was not seized but demand and seizure notice was served. It was never sold and he does not know where the vessel is at present. The PWI was advised in December 1986 that the vessel was not insured. The Plaintiffs agreed to repair the engine from their own funds. The said Lave was fully aware in December 1986 that the vessel was not insured. In early 1987 after pressure from the Bank $1000 was paid towards the loan arrears.

Now I shall consider the issues that are before me for determination. The Minutes of Pre-trial Conference stated that "there was no possibility of settlement and both counsel agreed that the facts and issues in the action are in dispute".

Certain facts are not in dispute and I find the following facts to be established. It is agreed that there was a loan to the Plaintiffs the sum of $4148.27 for the various items listed in Exhibit I. The monthly payment was to be $200 "covering principal and interest and insurance"; that a Bill of Sale (exhibit 2) was executed in respect of the items in the schedule thereto; the said loan was guaranteed (exhibit 3) by the said LAVE and another.

Upon a careful consideration of the evidence adduced in this case I have come to certain findings of fact on a balance of probability as hereunder.

As far as the monthly payments under the security documents are concerned it was most unsatisfactory. Apart from a few payments stated hereabove nothing else was paid. The Plaintiffs were considerably in arrears by the time the vessel was damaged in July 1986 at Kadavu. The difficulties which the Plaintiffs faced are set out in a letter which LAVE wrote to the Bank on 9 December 1986 (exhibit 5). These difficulties arose because of an accident which occurred as the vessel was about to anchor. The said letter says that "the engine struck an unseen object and the universal joint broke down. So the boat had to be pulled to shore to anchor at its moore".

As far as the said accident is concerned this was not reported to the Bank until the said letter was brought to the Bank and given to Singh (DW2). That was the first time the Bank came to know of the accident.

In regard to the actual alleged damage to the vessel, the said letter makes no mention that the hull was damaged. All it talks about is that: "Ratu Josaia Kamanalagi, the captain Engineer of the boat, took the broken parts off the engine and brought them to Suva. Ratu Kamanalagi then went to see Bank Insurance Department and was told the boat had to be towed to Suva for Survey by the insurance surveyor before any repairs can be done. A quotation from the company Wing Lee was received on November 5, 1986 regarding the engine. The boat finally arrived in Suva and we had paid $300 for towing charges and a further $3.00 per day for docking charges. However, the bank is still awaiting the survey to be done by the insurance surveyor to the engine." It is pertinent to note that there is no evidence as to who told the first plaintiff to bring the boat to Suva and whether it was said in the presence of LAVE.

In the last paragraph LAVE talks about his hope that the Bank will assist "with the repairing of the engine"; he does not say anything about damage to the hull.

On the evidence I find as a fact that the Bank's dealings at the time of the loan were with the Plaintiffs (the second Plaintiff having died afterwards) and the said LAVE was not aware of all that took place at the Bank for some of the conversation was with the Plaintiffs with LAVE waiting outside as he himself admitted. One such conversation was in relation to insurance and LAVE admitted in his evidence that he was waiting outside at this time and he does not know what took place inside the office. It is pertinent to note that the first Plaintiff (although he lives in Fiji) has not come forward to testify in regard to the matters pertaining to this case. I am sure he would have been the right person to throw light on the arrangement about the hull insurance, namely who was to do it and how it was going to be done. Without his evidence the Court is left with the DW1 & DW2's evidence in this regard and the evidence of LAVE for the Plaintiffs.

The Bank has quite clearly stated that according to the Bank's procedure the "Letter of Authority" form (exhibit 6) was to have been duly completed by the Plaintiffs and returned to the Bank so that hull insurance could be affected. I find as a fact that this was not done by the Plaintiffs and hence no hull insurance was taken out by the Bank. It is not the Bank's fault for not doing so. The Plaintiffs were lax in this regard.

The Plaintiffs made an issue out of the alleged failure on the part of the Bank to take out hull insurance. But it is clear from the evidence that the fault lay entirely on the shoulders of the Plaintiffs. Although the Bank wanted its interest noted by taking out the insurance, it did not actually affect them because they had ample security as one of the witnesses had said. The Bill of Sale was there as a security. The Loan was only for a small sum of $4148.27.

In this situation although the Plaintiff had made the "hull insurance" an issue, it was not such in the opinion of the Bank because they had adequate security and they were satisfied with it. There is no evidence to indicate that they were in any way concerned about it. As was pointed out to the Plaintiff that unless the Authority was returned they will not be covered and therefore it was more in their own interest that they should have returned it to the Bank. It was not a condition of the loan that no loan will be given without the hull insurance; in fact full amount of the loan was paid out to the Plaintiffs. They insisted in getting the money in their hands without complying with the request for "hull insurance". Therefore, if the Plaintiffs have suffered any loss as a result of not having hull insurance, it is entirely through their own negligence.

The Bank's witnesses testified that they did not authorize the vessel to be brought to Suva. I prefer to accept the testimony of DWI and DW2 in this regard to that of LAVE whose evidence is hearsay in this connection.

There was no need to have the vessel in Suva as there was no damage to the hull. Exhibit 6 does not say that there was any damage to the hull. Only the broken part of the engine was brought to Suva for repairs and the Plaintiffs got it fixed themselves through Wing Lee who were the agents for the engine.

It is expecting too much of the Bank to do anything for them when the alleged accident happened in July 1986 and the first time they notified the Bank was in December 1986 when LAVE brought exhibit 6 to the Bank. The accident was not even reported to the authorities concerned as they should have done. The Plaintiffs, it is clear, let the vessel lie idle to deteriorate; then they decide to bring it to Suva and dump it at the jetty without any proper arrangement for its maintenance and care. When asked in cross-examination as to what happened to the things in the vessel, LAVE replied "except 3 fridges - one in Kadavu one in Nadi and one at Kinoya - other items on vessel". These fridges were part of the Bill of Sale but for some reason they were left scattered at three different places. There is no clear evidence as to where the rest of the items were kept.

Apart from the seizure notice that was given the Bank did not actually seize the vessel.

The Plaintiffs' main complaint is that the vessel was delivered to the Bank and it had deteriorated without the Bank taking any steps to sell it.

On the evidence, in view of what I have stated hereabove, the Bank did not authorize the vessel to be brought to Suva and it did not seize it under the Bill of Sale. The Bank was not obliged to do anything with it. The only thing was that there was damage to the engine and that was fixed up by the Plaintiffs themselves. Therefore, the Bank was under no responsibility to take care of the vessel and if it did deteriorate it was due to the Plaintiffs' own negligence and no blame whatsoever attaches to the Bank.

For the reasons given hereabove I find that there is no merit in the Plaintiffs' claims. The question of general damages does not arise.

Since the Plaintiffs owed the Bank monies under the Bill of Sale any amounts that they have paid under the said security document, the Bank is entitled to utilize it towards the reduction of the debt. I do not see anything improper about that.

The Plaintiffs have not proved their claim against the defendant.

In the outcome, I disallow the Plaintiffs' claims and they are dismissed with costs against them to be taxed if not agreed.

D. Pathik
Judge

At Suva
27 March 1995

HBC0032J.93S