JUDGMENT
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This is an application for summary judgment pursuant to Order 14 of the High Court Rules 1988.
In 1992, the Plaintiff made advances to “Malolo Estate Ltd.” The Defendants signed guarante respect of those advances. By May 1995,
the Malolo Estate tate Ltd. owed the Plaintiff $394,969.75. In 1993, the Plaintiff served demand notices on all the defendants, all
of whom reside out of the jurisdiction. A writ of summons in this matter was filed and served out of jurisdiction, in July 1995.
The claim against the 2nd and 3rd Defendants is for $38,000 each plus interest in respect of the guarantees alleged to have been made.
A Defence in this case was filed for the second, third and fifth defendants on 8th October 1996. The defencthat the defendants had
nevd never accepted the guarantee documents dated 5 January 1992, and that there was therefore no binding contract between them and
the Plaintiff. The Defence is further, that the Plaintiff had sold the mortgaged property secured for a price lower than the market
value, and had therefore failed to mitigate its losses.
On 18th May 1999, the Plaintiff made this application for summary judgment in respect of the second, third and fifth defts respectively.
The summonummons is supported by the affidavit of Christopher Robin Griffiths of the Plaintiff Bank.
The second and third defendants filed affidavits in reply on 5th July 1999. The plaintiff the affidavit of Narendra Kumar on 23rd
February 2000.
ass=MsoNormal stal style="margin-top: 1; margin-bottom: 1"> The matter was heard on 28th April 2000. Counsel for the Defendants had withdrawn as counsel for the 5th Defendant, and the application
proceeded against the second and third defendants alone.
Counsel for the Plaintiff submitted that the defendants had signed the guarantees prepared by the bank, but had altered the amount
in them. He said that even if there was no consensus between the parties in respect of the original amount of money on the guarantees
(of $68,000) the Bank’s present claim is for the amount agreed to by the Defendants which was $38,000. He further submitted that
the issue of whether or not a good price had been obtained for the securities was irrelevant and that the Defendants had failed to
make a counter-claim to this effect.
Counsel for the Defendants said that the Defence was not a sham, the guarantees were not binding, that the application was made well
after the defence had had been filed with no explanation for the delay and that it should be dismissed.
As Parker LJ in Home and Overseas Co. Ltd. -v- Mentor Insurance Co. (UK) Ltd. (In Liquidation) (1990) 1 WLR 153, 158, the purpose of Order 14 is to allow the Plaintiff to obtain a quick judgment where there is no defence to the claim. If the
defence is on a question of law, which is plainly misconceived, the plaintiff may be given judgment. In Jones -v- Stone [1894] UKLawRpAC 2; (1894) AC 122, the court said that the power to give summary judgment under Order 14 was “intended only to apply to cases where there is no reasonable
doubt that a plaintiff is entitled to judgment, and where therefore it is inexpedient to allow a defendant to defend for the mere
purposes of delay.”
In Maganlal Brothers Ltd. -v- LB Narayan & Co.Dhiraj Lal Hemraj and Samuel Henderson -v- Vin- Vinod Kumar Ramanlal Patel Civil Appeal No. 19 of 1993,) O’Regan JA summed up the principles governing Order 14 applications and said that where the Plaintiff’s
application is in proper form and order, the burden shifts to the defendant and it is for him to satisfy the court that there is
a triable issue. The defendant may show cause by affidavit, he must “condescend upon particulars” and must show that there is a genuine
defence.
The crux of the Defence in this case is that there was nally enforceable guarantee. The Plaintiff says in the affidavit of Christopher
Robin Griffiriffiths that “there is no Defence to this action; the Statement of Defence filed herein by the said Defendants does
not reveal any good defence and is merely a sham defence designed to delay judgment being entered against them.”
p class=MsoNormal stal style="margin-top: 1; margin-bottom: 1"> The Guarantees (Annexures “B” and “C” to the Griffiths affidavit) are signed by the second and third defendants respectively. However
the evidence is that the Defendants altered the amount covered by the guarantees to read $38,000.00 from the original $65,000. The
Plaintiffs say that these guarantees are enforceable because both parties accepted the reduced amount.
p class=MsoNormal stal style="margin-top: 1; margin-bottom: 1"> However the Plaintiff’s solicitors wrote to the Defendants on 9th September 1992 in the following terms:p class=MsoNormal style="mae="margin-top: 1; margin-bottom: 1">
“We refer to your letter of 11th October 1991 together with thlosures and enclose herewith five new Guarantee forms to beto be completed
by Messrs Kerry Powell, Christopher Joseph Zambucka, Fraser McDonald, Mark Steward and Miles Pope. The previous Guarantees were not
accepted by the ANZ Bank as there were several discrepancies in the Guarantees.”
The solicitors asked the Defendants to sign uarantees and to send them back to Fiji. These new guarantees were never signed. The only
rnly real difference between them is that the original amount of $65,000 was re-inserted.
This letter (annexed as “D” to the affidavit of Christopher Zambucka) raises an issue which in my view ought to be tried. If the Plaintiff
did not accept the guarantees which are the basis of this claim, then it is clear that the defence is not a sham defence.
On this issue alone, I am of the view that the Defendants should be given leave to defend.
The other defence raised is in relation to the Plaintiff’s exercise of mortgagee sale of thered property.
Counsel for the Plaintiff submitted that the Plaintiff owed ny of care to the guarantors to sell the mortgaged property at a particular
time. He referreferred to the Privy Council decision in China and South Sea Bank -v- Tan [1989] UKPC 38; (1990) 2 WLR 56.
In that case the Privy Council said in relation to a creditor who had executed guarantees in relation to a debt, in addition to a
mortgage over securities:
“The creditor had three sources of repaymThe creditor could sue the debtor, sell the mortgage securities or sue the surety. All thes
these remedies could be exercised at any time or times simultaneously or contemporaneously or successively or not at all. If the
creditor chose to sue the surety and not pursue any other remedy, the creditor on being paid in full was bound to assign the mortgaged
securities to the surety. If the creditor chose to exercise his power of sale over the mortgaged security he must sell for the current
market value, but the creditor must decide in his own interest if and when he should sell.”
The Defence in this case alleges that the Malolo property was sold for $290,000 which was well below the market value. In his affidavhristopher
Zambucka says thys that if the Plaintiff had advertised and sold the property in 1990, instead of waiting until 1995, it might have
got a better price. He also challenges the mode of advertisement, and the sale of other chattels.
Counsel for the Defendants argued that the circumstances of the sale of the property also raiseable issues, and referred to Standard Chartered Bank Bank Ltd. -v- Walker 1 WLR 1410. In that case the English Court of Appeal held that a receiver realising assets under a debenture owed a duty to the borrower
and a guarantor of the debt to take reasonable care to obtain the best price that the circumstances permitted and to choose a suitable
time for the sale.
If the only ground for challenging the circumstances of the sale of the securities hen the time chosen to sell, then I would have
been minded tded to find that leave should not be granted to defend this portion of the defence.
However, I am satisfied that the Defendant has raised other mattelevant to the mortgagee sale such as the mode of advertising on the
open market, and the sahe sale of chattels, which ought to be tried.
As Lord Denning said in relation to a receiver in Standard Chart/u> Bank supra) at p.1415:
“He owes a duty to take reasonable care to obtain the best possible price which the circumstances of the case permit. He owes this
duty not only to the company, of which he is the agent, to clear off as much of its indebtedness to the bank as possible, but he
also owes a duty to the guarantor, because the guarantor is liable only to the same extent as the company. The more overdraft is
reduced, the better for the guarantor.”
In all the circumstances therefore I dismiss the Plaintiff’s application for summary judgment. The action may proceed on the basis
of the Statement of Defence already filed.
The Plaintiff must pay the Defendants costs of this application which Iat $300.
Nazhat Shameem
<JUDGE
