| Fiji Islands - HP Kasabia Brothers Ltd v Fiji Development Bank - Pacific Law Materials |
IN THE HIGH COURT OF FIJI
AT SUVA
APPELLATE JURISDICTION
CIVIL APPEAL NO: HBA 26 OF 1999
BETWEEN:
H P KASABIA BROTHERS LTD.
APPELLANT
AND:
FIJI DEVELOPMENT BANK
RESPONDENT
Counsel: Mr N. Shivam for Appellant
Mr D. Sharma for Respondent
Hearing:11th February 2000
Judgment:25th February 2000
JUDGMENT
This is an appeal against the decision of the Suva Magistrates Court dismissing the Plaintiff/Appellant’s claim that the Defendant/Respondent
must indemnify it in the sum of $7000 in unpaid rents in respect of premises belonging to the Plaintiff/Appellant.
The facts of this case as disclosed by the court record are that the Appellant owned Shops 6 and 7 Kasabia Arcade and that the premises
were rented to Uraia Tarai and Simione Daveta. By January 1992 the tenants owed the Appellant $7000 in rent. The Respondent Bank
were applied to by Tarai and Daveta for a loan. On 15th January 1992 the Respondent wrote to the Appellant informing the Company
that the Bank was in the process of disbursing loan funds, part of which would be directed towards meeting the rental arrears. The
Respondent wrote:
“The Bank, however requests that on the condition of the loan disbursement, Tenancy Agreement be drawn up of no more than $700.00
per month per shop premises at no less than 3 years.”
The Appellant said that it acted upon this undertaking and entered into a tenancy agreement. However the Respondent did not pay the
Appellant $7000 in rental arrears. The Appellant says that it did not take any steps to enforce payment of the $7000, in the belief
that the Respondent was obliged in law, to pay this amount.
The matter then went to trial. The learned Magistrate found as a matter of fact, that no binding undertaking had been made between
the parties, that there was no legally enforceable contract between the parties, that the Respondent did not give an unconditional
undertaking to indemnify the Appellant, and that the Respondent’s conduct did not prevent the Appellant from pursuing recovery by
distress proceedings.
The Appellant’s grounds of appeal are as follows:
1) THAT the learned trial magistrate was wrong in not holding that the letter dated 15th January 1992 complied with the circumstances of
the case, that the Respondent’s promise constituted an undertaking to pay $7000 and/or the appellant was entitled to be indemnified
in law because the Appellant established on a balance of probabilities that it acted on the Respondent’s promise;
2) THAT the learned Magistrate failed to correctly direct on the standard and burden of proof;
3) THAT the learned Magistrate failed to properly evaluate the decision.
Grounds 1 and 3 are essentially ground of fact. Ground 2 is a ground of appeal on law.
Submissions were heard from counsel on 11th February 2000.
Mr N. Shivam for the Appellant tendered written submissions. Those submissions were that the letter of 15th January 1992 constituted
a clear undertaking which was clearly binding on the Respondent Bank. The submissions referred to the evidence of Marika Luveniyali
saying that any later conditions imposed by the Respondent had not been communicated to the Appellant, and were therefore incapable
of altering the undertaking.
Mr D. Sharma made both oral and written submissions. He referred to a letter in the Plaintiff’s bundle of admitted documents dated
15th January 1992, which showed that the Plaintiff had not accepted the Bank’s term.
Furthermore, he submitted that the evidence showed that there was no accepted undertaking between the parties. On the question of
whether an indemnity existed, he submitted that there was no compelling evidence of the Appellant proceeding with distress, and that
therefore there was insufficient evidence of an indemnity.
In response, counsel for the Appellant submitted that the appeal centred around the construction of the letter of the Bank of 15th
January 1992 which was a matter of law. That letter indicated that only one condition remained and that was the perfecting of a tenancy
agreement. This was complied with. Furthermore, the Appellant says that the letter written by Mr G.P. Lala of 15th January 1992,
was written after a contractual agreement was already in place, by virtue of the Respondent’s letter of 15th January.
It is clear, on a perusal of the court record, that on 7th January 1992, Mr G.P. Lala sent a letter to the Respondent requesting an
undertaking that $7000 would be paid to the Appellants on completion of security documentation. The letter states:
“It is our instructions that if the said undertaking is not received by 9th of January 1991, our client will exercise its right under
the law to recover the arrears.”
No undertaking was given or received by 9th January. On 15th January the Respondent wrote in the following terms:
“Uraia Tarai and Simone Daveta.
We refer to the above and advise that the Bank has completed its security formalities and is in the process of disbursing the funds.
Part of the funds will be directed towards meeting the rental arrears of $7000.00
The Bank however requests that on the condition of the disbursement, Tenancy Agreement be drawn up ....”
Mr G.P. Lala replied to that letter on the same day. It is noted that although this letter was exhibited in the lower court, it was
never put to Mr Lala, nor did the learned Magistrate refer to it in her judgment. It seems that this letter was overlooked by all
parties and that a later motion seeking to admit the letter and re-call Mr Lala to have the letter put to him, was filed on the basis
that the letter had not been disclosed by the Appellant. The letter was in fact disclosed and the Appellant does not deny that it
was written by Mr Lala. This letter states:
“We refer to your letter dated 15th of January 1992. The above tenant was considerably in arrears, and our client has incurred substantial
costs in issuing distress. Our client is not prepared to accept your present undertaking of part of the disbursements of $7000. The
$7000 that we require from the Bank will cover the costs of various distress of rent and rent up to December.
On receiving your undertaking that $7000 will be paid to us, our clients will prepare the lease for 3 years as requested. Please also
note that unless our clients give your client the lease, you have no valid security, and if you disburse funds you will not be protected.
We have had enough correspondence, if your client had informed us that he has given you authority to pay our client $7000. It is
our intention to proceed to recover if we do not receive your undertaking for $7000 by tomorrow.”
There was no reply to this letter. The Appellant did not proceed to recover the next day. However, in his evidence Marika Luveniyali
(DW1) said that the Respondent had approved a loan to Uraia Tarai and Simione Daveta on 3rd December 1992. At page 186 of the record,
the witness said:
“What bank does is give portion of money, and once necessary evidence of expenditure then we go to next stage of disbursements especially
for this type of loan. If terms and conditions are not complied with, we retract the loan .... We entered into contract with Uraia
Tarai and Simione Daveta. In this case conditions not met. We released funds to purchase the fixed assets but they bought other stuff.
We stopped payment. They never came back to the Bank.”
Mr Luveniyali’s evidence, which the learned Magistrate accepted was that the Bank had an agreement with Messrs. Tarai and Daveta and
not with the Appellant. He said that any payment to the Appellant would have been on their clients’ instructions. He said he gave
no undertaking to Messrs. G.P. Lala & Associates to pay $7000 on condition that the Distress action be withdrawn against the
tenants.
In respect of the question of whether or not an undertaking was made, the learned Magistrate quite correctly asked herself whether
“the defendant’s letter of 15/1/92 constitutes a promise assurance and/or undertaking that the plaintiff is entitled to enforce against
the defendant.” The record shows no evidence of the details of the principal debt, nor did the Appellant disclose evidence of distress.
It is trite law that a contract is complete upon offer, acceptance of offer and the existence of consideration. When was the offer
made? Was it when G.P. Lala & Associates wrote to the Bank on 15/1/92 asking the Bank “to confirm that the sum of $7000 will
be paid to our client as soon as lease is granted”? Was it when G.P. Lala & Associates wrote to the Bank on 7/1/92 asking for
an “undertaking that $7000.00 will be paid to our clients on completion of security documentation”? Was it when the Bank wrote to
G.P. Lala & Associates on 15/1/92 saying that “part of the funds will be directed towards meeting the rent arrears of $7000"?
Furthermore, if there was acceptance of an offer made by G.P. Lala & Associates, was it complete on the signing of the tenancy
agreement, or was it complete on 4/2/92 when G.P. Lala & Associates wrote to the Bank saying that Mr Tarai is refusing to sign
the lease and that “your undertaking to pay $7000 is subject to signing of the lease.”?
It is not clear from the evidence what the offer was, and when acceptance was effected. The burden was on the Plaintiff to prove that
an offer had been made which was accepted by the Defendant. This question cannot be answered simply on a construction of the Bank’s
letter of 15th January 1992. What is evident is that in January and February 1992 there was an exchange of letters which showed that
there was no common intention between the parties to effect a contract at all. The letter of 15th January 1992 written by G.P. Lala
& Associates, which was never put to Mr Lala, is evidence of the lack of any agreement. Furthermore, each offer by the Bank or
by Mr Lala, appears to have been followed up by a counter-offer with different conditions by the other party.
In the circumstances I find that the learned Magistrate did not err when she found that the Appellant had failed to prove that there
was in existence a legally enforceable undertaking binding the parties.
Where there is no clear offer and acceptance, an agreement can be inferred from the conduct of the parties. The test of an inferred
agreement is an objective one (Upton-on-Severn RDC v. Powell (1942) 1 ALL ER 220).
Using the objective test, on the evidence no such agreement can be inferred. Furthermore, there is no apparent coincidence of the
terms discussed by the Appellant and the Respondent, even if it were assumed that there was an intention to enter into a legally
enforceable agreement. What the evidence shows if anything, is a series of counter-offers which amounts to the rejection of any offer
made (Anson’s Law of Contract p.35). The setting of deadlines for the compliance of the Bank’s payment to the Appellant, the threat of distress “if the Bank did
not pay”, the concern expressed over the lack of co-operation of the tenants, the exchange of letters (some on the same day) suggest
that any agreement was incomplete because of lack of agreement on material terms.
In the circumstances I find that both as a matter of law and as a matter of fact, there was no agreement between the parties that
on the Respondent’s undertaking of payment of $7000 in rental arrears, the Appellant would not proceed with distress.
The alternative ground is that the Appellant was entitled to be indemnified in law because it relied on the Respondent’s promise to
pay $7000, and discontinued distress.
No evidence of distress other than PW1's oral testimony was produced at the trial. It is not known what the liability of the debtors
Messrs. Tarai and Daveta, was. The learned Magistrate found that the evidence fell short of establishing the Appellant’s claim to
indemnity. She said that neither liability or particulars of the principal debtors debt and default had been established.
This was clearly a finding of fact that the learned Magistrate was entitled to come to on an assessment of the evidence. It is a finding
that an appellate court would be loathe to interfere with unless the Magistrate had misdirected himself or herself on a principle
of law.
There has been no misdirection. Nor have the Appellants shown this court that the learned Magistrate erred when she said that the
burden of proving both undertaking and indemnity lay on the Plaintiff.
In all the circumstances Grounds 1, 2 and 3 are dismissed. The Appellant must pay the Respondent’s costs which I set at $200.
Nazhat Shameem
JUDGE
At Suva
25th February 2000
Hba0026j.99s
PacLII:
Copyright Policy
|
Disclaimers
|
Privacy Policy
|
Feedback
URL: http://www.paclii.org/fj/cases/FJHC/2000/29.html
