IN THE HIGH COURT OF FIJI
AT SUVA
CIVIL JURISDICTION

CIVIL ACTION NO. 486 OF 2000

Between:

NACANIELI SERU TUBUNAVERE
ATECA SIVOIDAVETA MASITABUA
ANARE MASITABUA
Plaintiffs

And

COLONIAL NATIONAL BANK OF FIJI
NBF ASSET MANAGEMENT BANK
Defendants

Mr. S.R. Valenitabua for the Plaintiffs
Ms. B. Prasad for the 1st Defendant
Mr. W. Clarke for the 2nd Defendant

DECISION

This is an application by both the defendants to strike out the plaintiffs’ Statement of Claim on the ground that it discloses no reasonable cause of action pursuant to Order 18 Rule 18(1)(a) of The High Court Rules.

The first defendant (D1) has filed an affidavit in support but not the second defendant (D2). Written submission, as ordered has been filed by D2 but not D1. The plaintiffs (P) have replied to D2's submission.

The plaintiffs’ claim

It is the plaintiffs claim that on or about 27 August 1997 the first defendant (D1) approved re-financing facilities to the second and third plaintiffs. After execution of this loan D1 had to prepare all relevant security documents by certain time. There is allegation of negligence on the part of D1 which in effect was that D1 was slow and dilatory in its preparation of security documentation thereby causing inordinate delay, prejudice and loss to the plaintiffs.

The First defendant’s contention

The first defendant’s contention is contained in the affidavit of Isikeli Taoi, the Manager of D1's branch in Samabula. He traces the history of the transaction between the D1 Bank and D2 Bank. But in the meantime the D2 sold the property and D1 was prepared to enter into a new arrangement with the plaintiffs in that they look for another property the price of which was to be within the approved sum of $42,000.00. The plaintiffs did not keep to their part of the bargain and instead brought this action. The D1 says that the plaintiffs have not shown any new circumstances nor reason as to why it had suddenly chosen to bring a claim for negligence against the D1 in respect of the same matter again after having settled and discontinued the same previously.

For these reasons D1 says that the plaintiffs’ claim against it be struck out.

The Second Defendant’s contention

It is the second defendant’s contention that it did not hold the mortgaged property in trust for the plaintiffs as alleged by them without any particulars as to how or why such a trust arose. The plaintiffs allege that D2 sold the property in question knowing that the delay was caused by the first defendant not preparing the security documents in time which means that it was the D1's negligence which caused the delay and the alleged loss. Hence it is the plaintiffs’ claim that D2 has breached its duty as trustee.

The D2 states that as mortgagee (a creditor Bank) it is not obliged to do anything and is not under a duty to exercise its power of sale over the mortgaged property at any particular time or at all and does not become a trustee of the mortgaged securities unless and until it is paid in full. It says that the duty as alleged by the plaintiffs to exist has no basis in law.

The D2 says that the action against it is misconceived and ought to be struck out.

The plaintiffs’ reply to defendants’ submissions

The plaintiffs say that D1 was negligent. The D1 has breached its fiduciary duty to the plaintiffs. The D2 sold the plaintiffs’ property despite its knowledge that a loan facility had been approved to the plaintiffs and that security documents were being prepared. The D2 broke its duty as trustee. The plaintiffs submit that D1 was in the circumstances of this case the constructive trustee of the plaintiffs’ property situate at 15 Vetaia Street in Lami (the ‘property’).

The plaintiffs submit that there is a cause of action against the defendants. If D2 disputes that a trust existed between itself and the plaintiffs and D1, then the proper forum to address that dispute is the Trial Court. They say that the action against D2 is neither vexatious nor misconceived.

Consideration of the issue 

Upon considering the whole of the affidavit evidence before me and the written legal submissions and reply thereto by the plaintiffs, I am of the view that the plaintiffs have raised certain issues which merit adducing evidence in the trial of this action to prove the case. The defendants will have the opportunity of calling evidence to refute the plaintiffs’ claims. The action should in all the circumstances of this case be allowed to proceed to trial.

In the application of Order 18 r.18(1)(a) under which this application is made "it is not the practice in the civil administration of our Courts to have a preliminary hearing, as it is in crime" (per Sellers L.J in Wenlock v Moloney [1965] 1 W.L.R. at p.1238). As stated in the Notes to Or.18 r.19 in The Supreme Court Practice 1979 Vol 1 p312, ‘it is only in plain and obvious cases that recourse should be had to the summary process under this Rule’ and that ‘it can only be adopted when it can be clearly seen that a claim or answer is on the face of it "obviously unsustainable"’ (A.G. of Duchy of Lancaster v L. & N.W.Ry. Co [1892] 3 Ch 274, C.A.). 

This is a case which involved arrangement of finance between the plaintiffs and D1 and some arrangement between D1 and D2. The plaintiffs allege that because D2 sold the property they were left in the lurch. They attach blame on both the defendants in the situation they found themselves in. As I see it, the circumstances surrounding the events point to the fact that there ought to be a trial of the action rather than dismissing it as showing no cause of action.

In addition to Order 18 r.18, the High Court has an inherent jurisdiction "to strike out pleadings and other documents which are shown to be frivolous, vexatious or scandalous, and to stay or dismiss an action or strike out a defence which is an abuse of the process of the court". (Hals. Vol 37 4th Ed. para 434 p.435. This is a case where it appears to this Court that ‘there is what has been described as a matter fit to be investigated’ and in that case the Court ‘will decline to stay or dismiss the action’. (Hals. ibid).

What constitutes a "cause of action" is stated as follows in the Notes to the Supreme Court Practice 1979 under Order 18 r.19/5 and it is apt to bear in mind:

"There is some difficulty in affixing a precise meaning to" this term. In point of law, ... every cause of action is a reasonable one (per Chitty. J., Rep. of Peru v Peruvian Guano Co., 35 Ch. D. p.495). A reasonable cause of action means a cause of action with some chance of success when only the allegations in the pleading are considered (per Lord Pearson in Drummond-Jackson v. British Medical Association [1970] 1 W.L.R. 688; [1970] 1 All E.R. 1094, C.A.). But the practice is clear. So long as the statement of claim or the particulars (Davey v. Bentinck [1893] 1 Q.B. 185) disclose some cause of action, or raise some question fit to be decided by a Judge or a jury, the mere fact that the case is weak, and not likely to succeed, is no ground for striking it out (Moore v. Lawson, 31 T.L.R. 418, C.A.; Wenlock v. Moloney [1965] 1 W.L.R. 1238; [1965] 2 All E.R. 871, C.A.); 

I will conclude with the following passage from Hals. ibid, and this I have borne in mind in considering the issue before me:

"The power to strike out, stay or dismiss under the court’s inherent jurisdiction is discretionary. It is a jurisdiction which will be exercised with great circumspection and only where it is perfectly clear that the plea cannot succeed, it ought to be exercised sparingly and only in exceptional cases. However, for this purpose the court is entitled to inquire into all the facts and circumstances of the case, and to this end affidavit evidence is admissible. In a proper case the court may exercise its jurisdiction even if the application to strike out is made at a late stage of the proceedings."

For these reasons, I am not satisfied that the defendants have made out a case to strike out the plaintiffs’ Statement of Claim and in the exercise of the Court’s discretion the applications are dismissed with costs in the cause. The defendants are ordered to file their Statement of Defence within 21 days and thereafter the action is to take its normal course.

D. Pathik
Judge

At Suva
18 September 2001