IN THE HIGH COURT OF FIJI
At Suva
Civil Jurisdiction

CIVIL ACTION NO. 0549 OF 1991

Between:

VITI INVESTORS LIMITED
(trading as Banabhai & Co.)
Plaintiff

- and -

1. CARPENTERS FIJI LIMITED
Defendant
2. LONGBEACH HOLDINGS LIMITED
Third Party

Mr. H.M. Patel for Plaintiff
Mr. J. Howard for Defendant
Mr. R. Smith for Third Party

JUDGMENT

In this interlocutory summons the Third Party seeks an order pursuant to Order 18 r.18(1) of the High Court Rules striking out the defendants Statement of Claim on the ground that 'it discloses no reasonable cause of action'.

The brief background to the application may be summarised as follows:

(1)	On 25th November 1991 the plaintiff issued a Writ of Summons against the defendant claiming damages for alleged breaches of a contract of affreightment entered into between the plaintiff and the defendant; 

(2)	On 11th March 1993 the defendant issued a Third Party notice against the Third Party claiming "to be indemnified (by the third party) against the plaintiff's claim and the costs of this action on the grounds that the claim against the defendant arises directly from your failure to properly endorse the bank release document; from your unauthorised collection of the said goods; and from your failure to pay for the said goods or part thereof".;

(3)	On 5th May 1993 the Third Party filed through its solicitors an acknowledgement of service of the notice and indicated its intention to defend the proceedings;

(4)	On 17th May 1993 the Third Party issued a summons seeking the striking out of the Third Party Notice on the ground that the Third Party was beyond the Court's jurisdiction and the circumstances of the defendant's claim against the Third Party did not fall within the ambit of Order 11 r.1 of the High Court Rules which deals inter alia with the Court's jurisdiction to grant leave to serve a Writ out of jurisdiction. This application was withdrawn on 6th February 1996 after full argument by counsels;

(5)	On 18th April 1994 the defendant issued a summons seeking an order that the plaintiff's action be permanently stayed on the ground of 'forum non convenience';

(6)	On 19th August 1994 this Court refused the defendant's application in (5) above. In the course of the judgment rejecting the defendant's application this Court observed (of the nature of the claim against the defendant) at p.4:

"In the present action the plaintiff company which is a manufacturer and exporter of garment claims damages against the defendant company which handled the carriage of the plaintiff's goods under various enumerated invoices and Air Way Bills between January and March 1990 and which goods were ultimately destined for Long Beach in Christchurch, New Zealand."

(7)	On 11th April 1995 the Defendant filed its Statement of Claim against the Third Party; and

(8)	On 23rd April 1996 the Third Party filed the present application which after several adjournments, was argued before me in Chambers on 1st August 1996.

The application being one under Order 18 r.18(1)(a) learned counsel for the Third Party properly confined his submissions to an examination of the Defendant's Statement of Claim in an effort to demonstrate that the defendant had no 'cause of action' against the Third Party.

In particular counsel submitted after an examination of the defendant's Statement of Claim that paragraphs 9 to 15 represents a series of vain attempts by the defendant to make out a claim on matters which even if accepted, do not support any 'cause of action' against the Third Party which was not a party to the 'contract of affreightment' between the plaintiff and the defendant and could not therefore be liable either in contract or tort for any alleged breaches thereof.

In summary counsel submits that at most the defendant's Statement of Claim discloses a fear on its part that it may be held liable for breaches of the 'contract of affreightment' but such fears do not give rise to a 'cause of action'.

Learned counsel for the defendant on the other hand forcefully submits that '... the primary protagonists in this matter are Viti (the plaintiff) and Longbeach (the Third Party)' and '... Carpenters (the defendant) has been caught in the middle of (their) contractual dispute ...' and '... in the event that judgment is entered against Carpenters in favour of Viti, Carpenters will, in effect, be compelled by law to satisfy Longbeach's obligation's to Viti'. This result counsel adds is '... inequitable' and 'remediable in law'.

If I may say so the submission appears to echo the words of Lord Wright when he said in Fibrosa Spolka Akcyjna v. Fairbairn Lawson Combe Barbour Ltd. (1943) A.C. 32 at p.61:

"... any civilised system of law is bound to provide remedies for cases of what has been called unjust enrichment or unjust benefit, that is to prevent a man from retaining the money or of some benefit derived from another which it is against conscience that he should keep."

Be that as it may, from the foregoing counsel submits that the defendant has three (3) 'causes of action' against the Third Party namely:

"-	recovery of money paid to the use of a third party;
 -	subrogation; and
 -	unjust enrichment."

It is convenient at this stage to set out the defendant's pleadings which it is submitted discloses the above "causes of action". These are contained primarily in paras. 9 to 15 of the defendant's Statement of Claim which reads:

9.	To the extent of any amount the Defendant is obliged to pay pursuant to any judgment entered against it in favour of the Plaintiff in this proceeding, the Defendant will have been compelled to discharge the third party's liability to the Plaintiff for the contract amount, in that the Plaintiff will no longer be entitled to claim this amount from the third party.

10.	The Defendant is entitled to be reimbursed by the third party for any amount the Defendant may pay to the Plaintiff in discharge of the third party's liability to the Plaintiff for the contract amount.

11.	Further and or in the alternative the Plaintiff has a right to claim the contract amount from the third party.

12.	To the extent that the Defendant may pay the Plaintiff any amount pursuant to a judgment entered against it in this proceedings, it is just and equitable that the Defendant should be entitled to enforce, and be subrogated to, the rights of the Plaintiff against the third party arising from the contract.

13.	Further and or in the alternative to the extent of any amount the Defendant may pay pursuant to any judgment entered against it in favour of the Plaintiff in this proceedings, the Defendant will have discharged the third party's liability to the Plaintiff for the contract amount, and the third party will benefit by this amount at the Defendant's expense.

14.	It is unconscionable in the circumstances for the third party to benefit at the Defendant's expense.

15.	The third party is liable to pay to the Defendant any amount the Defendant may pay pursuant to any judgment entered against the Defendant in favour of the Plaintiff in this proceeding.

It is immediately apparent from a reading of the above paragraphs that there is no claim whatsoever for an 'indemnity' nor is the word even mentioned in the entire Statement of Claim, yet, that was the sole ground upon which the defendant framed its Third Party Notice (see (2) above).

In this latter regard Lord Wrenburg said in delivering the judgment of the Privy Council in Eastern Shipping Co. v. Quah Beng Kee (1924) A.C. 177 at p.182:

"The right to indemnity generally arises from contract express or implied, but it is not confined to cases of contract. A right to indemnity exists where the relation between the parties is such that either in law or in equity there is an obligation upon the one party to indemnify the other. There are, for instance, cases in which the state of circumstances is such that the law attaches a legal or equitable duty to indemnify arising from an assumed promise by a person to do that which, under the circumstances, he ought to do. The right to indemnity need not arise by contract, ... it may arise upon the notion of a request made under circumstances from which the law implies that the common intention is that the party requested shall be indemnified by the party requesting him; it may arise in cases in which the Court will 'independent of contract raise upon his conscience an obligation to indemnify ..."

Furthermore the defendant's Statement of Claim is littered with unhelpful expressions about future possibilities and conditional matters which appear to be predicated upon a yet-to-be established liability on the part of the defendant or an assumed liability on the part of the Third Party to pay for the goods the subject-matter of the 'contract of affreightment'.

In this regard, I refer in particular to expressions such as: "the defendant will have been compelled to discharge the third party's liability to the plaintiff for the contract amount" (para.9); "the defendant is entitled to be reimbursed by the third party for any amount the defendant may pay to the plaintiff in discharge of the third party's liability to the plaintiff" (para.10); and "To the extent that the defendant may pay the plaintiff ... it is just and equitable that the defendant should be entitled to enforce and be subrogated to, the rights of the Plaintiff ..." (para.12).

This 'uncertainty' is further amplified in counsel's written submissions where the following expressions may be found under each 'cause of action' as follows, as to Money Paid for Use of Third Party counsel writes: "if judgment is entered against Carpenters, Carpenters will be compelled by law to satisfy Longbeach's obligation to Viti to pay for the goods ..." (p.4); as to Subrogation the above paragraph is again repeated; and finally, as to the claims of Unjust Enrichment: "In the event that judgment is entered against Carpenters, Carpenters will have discharged Longbeach's liability to Viti" (p.5). So much then for the defendant's pleadings and submissions in this case.

The principles that guide the exercise of the court's discretion in an application under Order 18 r.18 of the High Court Rules are too well-known to require extensive citation of authority. Suffice it to refer to the judgment of the Fiji Court of Appeal in A.G. v. Shiu Prasad Halka (1972) 18 F.L.R. 210 where it said:

"The power to strike out a Statement of Claim given under Order 18 r.19 is one which is to be sparingly used and is not appropriate to cases involving difficult and complicated questions of law."

I turn next to consider in more detail the particular 'causes of action' which counsel for the defendant claims the defendant has against the Third Party (not I might add against the plaintiff) and which are most often dealt with in major reference works under the subject-headings of: 'Quasi-contract' and 'Restitution'.

As to Recovery of Money Paid to the Use of a Third Party the learned author of Cheshire and Fifoot's 'Law of Contract' (9th edn.) states at p.637:

"If the plaintiff has been compelled to pay money for which the defendant is liable, he may sue the defendant for the amount so paid."

Then in Vol. 9 of Halsbury's 'Laws of England' (4th edn.) the learned editors state at para. 642:

"The requirements for the application of the rule are as follows: (1) the plaintiff must have made an actual or virtual payment of money; neither the incurring of a liability nor the loss of goods can be treated as money paid; (2) the plaintiff must have been compelled to pay this money to a third party or have been requested by the defendant to pay it; (3) the defendant must have been legally liable to pay the third party, though the reason for that liability need not be the same as the one which induced the plaintiff to pay the third party."

In my considered view, reading the defendant's Statement of Claim in as favourable a light as possible, the matters pleaded cannot possibly raise or support the above 'cause of action' not the least because none of the above 'requirements' are fulfilled in the defendant's case. It has neither made any actual payment of money or incurred any liability nor has it been compelled to pay anything to the plaintiff.

Turning next to 'subrogation', the authors of Halsbury's 'Laws of England' (4th edn.) describes the doctrine in Vol. 16 at para. 1438 in the following terms:

"Where one person has a claim against another, in certain circumstances a third person is allowed to have the benefit of the claim and the remedy for enforcing it, even though it has not been assigned to him, and he is then said to be subrogated to the rights of the first person. This is so ... in those (cases) in which, without any contract of suretyship, there is a primary and a secondary liability of two persons for one and the same debt, the debt being, as between the two, that of one of those persons only, ... so that the other, if he should be compelled to pay it, would be entitled to reimbursement from the person by whom, as between the two, it ought to have been paid."

The plainest and most frequent application of the doctrine occurs in insurance cases of indemnity, where an insurer or underwriter upon paying the insured the loss, is entitled to the benefit of all remedies of the insured against any person liable for the loss, whether in contract or in tort, and is entitled to sue in the name of the insured.

In the present case not only is there no established 'primary or secondary liability' by any of the parties to the action 'for one and the same debt' as clearly exists in the case of say a guarantee or a suretyship, but more importantly, a condition precedent to any 'right of subrogation' which the defendant may assert has not been fulfilled viz: the payment of the plaintiff's claim or debt. [Cf: Section 80(1) of the Marine Insurance Act (Cap. 218)]

In his classic judgment in Castellain v. Preston (1883) 11 Q.B.D. 380 Lord Justice Brett in discussing the nature of the 'doctrine of subrogation' emphasised this fundamental pre-condition when he said of an insurer's right to be subrogated at p.389:

"But he cannot be subrogated into a right of action until he has paid the sum insured and made good the loss."

I am further fortified by the decision in a Canadian Case, Pacific Coyle Navigation Co. Ltd. v. Ruby General Insurance Co. Ltd. (1954) 12 W.W.R. (N.S.) 715 noted in Vol. 29 of The Digest (1982 reissue) at p.369, where the facts were that the plaintiff was the owner of a barge which was lost at sea and the plaintiff made a claim against the defendant insurance company under an insurance policy. The insurer contended that in certain eventualities it would be entitled to subrogation of the rights of the plaintiff as against the third parties against whom the plaintiff might have a claim in negligence. The plaintiff's claim against the insurer had not been paid but the insurer applied to have the third party joined so as to have all the issues that might arise between the parties decided at the one time and so avoid the possibility of inconsistent or contradictory judgments. The Court held: (in rejecting the insurers application to join the third party) that 'since the right to subrogation had not yet accrued the insurer was not entitled to have the third party joined now'.

Quite plainly no 'cause of action' can be said to have arisen in this case on the basis of subrogation as pleaded by the defendant in its Statement of Claim and even the joinder of the Third Party at this stage would appear to be doubtful.

I come lastly to the third and final 'cause of action' claimed by the defendant under the head of 'Unjust Enrichment' which it is claimed 'has been recognised by the House of Lords as being part of the common law Lipman Gorman v. Karpnale Ltd. (1991) 2 A.C. 548'.

When so eminent a jurist as Lord Diplock has categorically stated in Orakpo v. Manson Investments Ltd. (1977) 3 W.L.R. 229 at p.234:

"... there is no general doctrine of unjust enrichment recognised in English law. What it does is to provide specific remedies in particular cases of what might be classified as unjust enrichment in a legal system that is based upon the civil law."

It is truly a bold counsel who would submit the contrary.

Be that as it may having carefully considered the various judgments of their lordships in Lipman's case, I entertain grave doubts about counsel's assertion in regard to the doctrine of 'unjust enrichment' being a recognised 'cause of action' at common law.

The claim in Lipman's case was in the form of 'a claim for money had and received' in which the plaintiff sought the recovery of stolen monies utilised at the gaming tables of a licensed casino. In the words of Lord Goff (at p. 578 op.cit).

"... the solicitors claim... is founded upon the unjust enrichment of the club, and can only succeed if, in accordance with the principles of the law of restitution, the club was indeed unjustly enriched at the expense of the solicitor's. The claim for money had and received is not ... founded upon any wrong committed by the club against the solicitors ... The recovery of money in restitution is, not, as a general rule, a matter of discretion of the Court. A claim to recover money at common law is a matter of right; and even though the underlying principle of recovery is the principle of unjust enrichment, nevertheless, where recovery is denied, it is denied on the basis of legal principle."

Lord Goff then went on to specifically recognise (as summarised in the Headnote):

"... that the defence of change of position in good faith is available against restitution claims, based on the unjust enrichment of the defendant ..."

In my view Lipman's case is not an example of a claim based on a general doctrine of unjust enrichment rather it is a claim under a long-recognised head of quasi-contract seeking 'restitution' founded upon 'unjust enrichment'. The difference is neither semantic nor pedantic (See: for instance the illuminating judgment of Mahon J. in Avondale Printers v. Haggie (1979) 2 N.Z.L.R. 124 at pp.144 to 155 in which his Honour (like Lord Diplock) concluded "... that a general doctrine of unjust enrichment is not part of the law of New Zealand".)

There is no claim however in the defendant's Statement of Claim for 'restitution' which in any event, by definition, assumes that something (in this case money) has been taken or paid over to another and the paying party seeks reparation so as to be reinstated or restored to his original position.

In other words in order for a claim for 'restitution' to succeed the claimant must establish that money has been paid to the defendant which has unjustly enriched him. Viewed in that light it is difficult to see how any award of damages paid to the plaintiff by the defendant for the latter's breach of the 'contract of affreightment' could amount to an unjust enrichment of either the plaintiff, or for that matter, the Third Party.

For the foregoing reasons I have reached the irresistible conclusion that the defendant's Statement of Claim (as drafted) discloses no reasonable 'cause of action' against the Third Party and is accordingly struck out.

The Third Party having succeeded in this application is granted the costs of the application to be taxed if not agreed.

By way of further directions the defendant is ordered to file and serve a fresh Statement of Claim upon the solicitors of the Third Party within 21 days from the date hereof and failing which the Third Party Notice is ordered to be set aside with costs to be taxed if not agreed.

(D.V. Fatiaki)
JUDGE

At Suva,
28th November, 1996.
HBC0549J.91S