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Pran v The National Trust for Fiji [2004] FJHC 293; HBC0234.1997 (23 July 2004)

IN THE HIGH COURT OF FIJI
AT SUVA
CIVIL JURISDICTION

CIVIL ACTION NO.: HBC0234 OF 1997

BETWEEN:

MUNEEM PRAN f/n James Pran and
LALITA PRAN
Plaintiffs

-v-

THE NATIONAL TRUST FOR FIJI
Defendants

Mr. S. Matawalu for Plaintiff
Ms S. Saumatua for Defendant

JUDGMENT

This case raises the issue of some general importance regarding the powers of a bailiff distraining for rent. The process of distress for rent consists of entry into premises, seizure of goods, securing or impounding the goods, taking an inventory and sale. The Distress for Rent Act Cap 36 is woefully inadequate so in Fiji we have to rely principally on common law to find what the applicable law is. The Act provides only for certified bailiffs to levy distress, goods which may not be distrained, the time for making distress and issue of appraisement. All other issues are left to common law.

FACTS:

The defendant was the owner of certain premises in Levuka, Ovalau. The plaintiffs were its tenant under a written tenancy agreement dated 7th November 1994.

The plaintiffs operated a hardware and grocery shop known as Levuka Timber and Hardware Merchants from the rented premises. The plaintiffs in their statement of claim which is remarkable in its repetition of same facts firstly base their claim on trespass in that they say that on 29th July 1996 the defendant illegally broke into the shop premises without any valid reason and disposed off all the contents. The premises at the time were locked. The plaintiffs alleged the seized goods included both perishable goods and personal goods and were illegally sold. Secondly, the plaintiffs’ claim is based on an alleged illegal seizure under alleged distress of rent. They claim that $128,000.00 worth of goods were seized when rent if any owing was only $6,500.00. The sale of goods subsequently on 1st August 1998 was an unlawful sale they say. Thirdly they base their claim on negligence in that the defendant acted negligently by failing to obtain proper price for seized items in that it sold items below marked price and that it did not take proper inventory. As a result the plaintiffs’ business has come to a halt. The claim is for unspecified unparticularized special damages which is quite unusual and which confounds the very basic rules of pleadings and general damages.

The defendant in its defence denies that the plaintiffs were its tenants at the material time and denies that the plaintiffs paid rent in time. It denies its entry onto the premises was illegal.

At the pre-trial conference the counsels agreed to certain facts. In light of what various witnesses claimed in their testimony and which contradicted agreed facts, I shall set out the various agreed facts:

(a) There existed a tenancy agreement dated 7th day of November 1994 between the parties.

(b) The monthly rental was $650.00.

(c) The defendant levied distress and seized all the goods.

(d) The chattels were sold by auction on 1st August 1997 (which I believe is a slip and should be 1996).

(e) Arrears of rental as at 31st August 1997 (again a slip) was $7,150.00.

PW1 MUNEEM PRAN is one of the plaintiffs and is one of the owners of Levuka Timber and Hardware. He said he has been in business since 1989 and as his business expanded he moved into the Old Morris Hedstrom’s building in 1994. On 7th November 1994 he entered into a tenancy agreement with the defendant. The rental was $650.00 per month. He was never in arrears. A distress for rent was levied against him by the defendant. He was advised on phone that he was in arrears by the Director of National Trust one Birendra Singh.

He said that when he took over the tenancy, he was told to do repairs to the interior but not to interfere with walls or the roof as the building was a historic building. In April or May 1995 there was a heavy downpour resulting in leakage through the roof causing damage to computers, cash registers, fax machines, microwaves, carpets and stock. The next day he rang the defendant and advised him of damages. He was advised by the defendant to repair the roof. He told the court that he repaired the roof by putting new roofing iron.

Later the Director of National Trust came from Suva and inspected the damaged items and saw repairs he had carried out. The two of them agreed that value of damaged items and repairs to roof was worth $15,000.00. The Director advised him he would go back to Suva and see the Board how could he be reimbursed. He wrote a letter with a view to the defendant reimbursing him. He was told to keep paying rent which he did for April, May, June and July. Later, the Director came to Levuka and advised him that he could set off rent against the $15,000.00.

In June 1996 he said he was in Koro Island where he had another branch of his shop. His wife had gone to Suva to attend to her sick father. She was to return the next day but their truck got stolen in Suva.

He says he was informed by a friend of his that his shop had been broken into by the defendant. He rang the Director of Trust but he would not come on the phone. He learnt from Levuka Police that a distress notice was pasted on the shop. He went with his accountant to his solicitor but the solicitor could not do anything.

He said he went back to Levuka after three or four months but later changed this to few weeks. When he returned to Levuka he could not gain entry to his shop. He added he owed no rent to the defendant but in fact the defendant owed him over $7,000.00 in June 1996.

In cross-examination he said he wrote in March 1995 saying building needed repairs. He agreed the letter made no mention of agreement by defendant to reimburse him $15,000.00. He agreed there was nothing in writing about payment of $15,000.00. He agreed the defendant had replaced roofing iron after he wrote letter in March. It repaired the entire roof. He denied that he had vacated the property in early June 1996 but said by time of distress the shop had been closed for ten to twelve days.

PW2 SAVENACA BALENASINU is a bailiff who lived in Levuka. He was instructed by solicitors for the defendant to levy distress. He was sent the necessary documents. The arrears of rent was $7,150.00. He pasted a copy of distress notice on the door of the shop. After five days, he broke the lock on the back door to gain access to the premises as the occupants were not there. He conducted a stock-take that is took an inventory. He gave the original to the plaintiff and kept a photocopy. He estimated the value of goods inside the shop exceeded $7,000.00. In cross-examination he said frozen goods and junk food were not sold. He could not say how much goods were in the shop. He alleged he had not been fully paid for his services by the defendant. Out of $888.55 he was paid only $361.00.

The plaintiff came to him and he gave the plaintiff all records. He discussed the case with the plaintiff. He knew Graham Eden and Associates were engaged to conduct the sale. They conducted stock sale not an auction sale.

In re-examination he said he was not favouring Muneem Pran. The shop was closed when Muneem Pran was in Suva. It was closed for a long time.

PW3 JAMES CHAND at the material time operated a taxi and mini bus service between Levuka and Levuka airport. He said he knew Birendra Singh as he at times hired his taxi. He said that on 24th June 1996 his father bought a few tools and a deep freezer worth $3,000.00 for $1,200.00. He also said Birendra Singh gave him a rip saw in lieu of taxi fare of $60.00. However I note he produced no receipts nor was he an expert in knowing the value of such items.

PW4 KISHORE NAND said in 1996 he was Manager of Levuka Timber and Hardware. As a Manager he knew of prices of items as he did the costing. He said the company was flourishing in 1996 and he was paid well. He added that Mrs Pran had to go to Suva so the shop was closed. In Suva, their truck was stolen so she did not return. He received a call from Birendra Singh who told the witness he was hiring him for a day. He did not ring the Prans as he considered it was unnecessary to get involved in what Birendra Singh was doing.

He went to the shop in the morning of auction. The witness was on main counter and Birendra Singh at the till. He assisted Birendra in pricing in case of unmarked items. It was not an auction but an ordinary supermarket type of sale. The sale lasted from 8.00 a.m. to 8.30 p.m. Birendra Singh according to him was a bit disappointed as not all items had been sold so Birendra Singh contacted one Anil Kishore who dealt in general hardware and grocery. Anil Kishore came to the shop and the two negotiated a price of $8,000.00 for items which the witness thought would be worth $35,000.00. Anil paid by cheque.

Birendra Singh asked the witness to stay on. He had stacks of money on him in a brief case. He assisted in counting. It was almost $45,000.00 apart from the $8,000.00 cheque. He said items were sold at reduced price up to fifty to sixty percent on some items.

In cross-examination he said he could not recall what day Mrs Pran went to Suva as it was a long time ago but it was June. He could not tell for how long the shop had been closed. He said even though he was the Manager of the shop he did not know whether rent was in arrears. He said Birendra Singh hired him to conduct the auction but he was not told why Birendra Singh was conducting the auction.

He later changed his version and said he contacted Pran. Birendra Singh came all of a sudden. He said hardware items would be worth $60,000.00. He could recall figures even though matter was eight years old. Lots of people came to the shop mainly to buy grocery items. He assessed left over items at $35,000.00 and he added he discussed the figures with Anil. He has no evidence to support his figures.

PW5 STEVEN DISTON is a hotelier. He was an accountant until 1984 when he retired in England and came to Fiji. He had been hired by the plaintiffs to prepare a cash flow budget for National Bank of Fiji to restructure plaintiffs’ account. He was there for two months in April and May 1996. He said had had sale figures from January and based on those figures weekly sales would average $20,000.00. He projected a turnover of about one million dollars for 1996. He said for retail items one had to keep a ten-week supply.

He learnt of closure of shop and rang Pran in Koro and also tried to unsuccessfully contact Mrs Pran. He assisted Pran to find a lawyer.

In cross-examination he said his figures are based on professional advice and not on fact. He would not know how much stock had been sold.

The defendant called one witness Elizabeth Erasito. She is the current Director of National Trust. The previous director Birendra Singh migrated to New Zealand after he tendered his resignation. She testified on basis of records in the file. She said there was nothing in the records which showed that the Trust owed any money to the plaintiffs. According to the records of the defendant, when the plaintiffs were in arrears of rent, Q.B. Bale solicitors were instructed to issue distress. The total proceeds of sale after distress was $11,329.00 after Graham Eden & Associates had deducted their expenses to conduct sale.

In cross-examination she said the trust received a cheque from Graham Eden & Associates not from Q.B. Bale & Associates.

ISSUE 1 – Was the distress without cause and unlawful?

Central to the plaintiff’s case is the assertion that the defendant had agreed to reimburse them $15,000.00 for alleged repairs to roof and damages to items caused by a downpour. That downpour occurred according to PW1 in April or May. In support of the alleged oral agreement he tendered Exhibit 2. That exhibit is dated 20th March when the downpour referred to by the plaintiff had not occurred so neither the alleged repairs nor any damage to items could have occurred by leaking roof. The letter in fact refers to $15,000.00 spent on repairing the interior. It also mentions leaks during rain and requests for repair and which were done in May by the defendant. It does not state any damage to items. I am of the view the plaintiff tried to deliberately mislead the court but the date on contents of the letter do not bear him out. I do not believe the plaintiff that the Director Birendra Singh agreed to reimburse him $15,000.00 after talking to the Board. If he had he certainly would not have levied distress. Nor is this agreement, so important to plaintiffs’ case, pleaded in the statement of claim. The plaintiff is a business person and it is unlikely that he would not have sought something in writing from the defendant in respect of the $15,000.00 which is a substantial sum of money equivalent to close to two years rent. The plaintiffs’ story becomes more implausible when one reads the agreed facts by the parties which says the plaintiff owed $7,150.00 to the defendant as at 31st August 1996. How could the plaintiffs’ solicitors have agreed to this if there was arrangement in place to set off rent against $15,000.00?

I therefore find that at the time of levy of distress a sum of $7,150.00 rent was in arrears.

A landlord has statutory powers to levy distress if rent is in arrears by virtue of Section 91(b) of the Property Law Act which reads:

(a) “In every lease of land there shall be implied the following powers in the lessor, his personal representatives and transferees;

(b) that whenever the rent reserved is in arrears he or they may levy the same by distress.”

Clause 4(g) of the January Agreement entered into between the parties are expressly adopts this power. Clause 4(g) reads:

“The covenants powers rights and restrictions and forms of words deemed to be implied or contained in or to affect leases under and by virtue of Sections 90 and 91 of the Property Law Act Cap 130 shall be deemed to be implied or contained herein or to affect these presents (unless hereby negative or modified) as if the same had been fully set out herein and as if these presents were a lease made under the said Act.”

Hence in face of this clause the defendant had the right to levy distress if rent was in arrears. The tenancy was a subsisting tenancy at the time of distress there being no evidence that the landlord had re-entered and determined the tenancy for non-payment of rent prior to levying the distress. The tenant too had not indicated in any way that the tenancy had been terminated.

TRESPASS – BREAKING OF LOCK TO GAIN ENTRY:

The plaintiff alleges that the defendant illegally broke into the premises without serving any demand or without approval from the plaintiff. In his evidence the plaintiff said in May 1996 he was told by the Director of National Trust by phone that rent was in arrears. According to the bailiff Savenaca Balenasinu he broke the backdoor lock to gain entry. Before doing that he had pasted a copy of the distress notice on the front door of the shop. That notice remained there for five days. The bailiff is a local and he had known that the shop had been closed for a long time. Muneem Pran in his evidence in chief said he went to Koro and returned to Levuka after three or four months. When his counsel expressed surprise he changed it to a few weeks. In cross-examination he said his wife had left Levuka on 11th June 2004.

Woodfall on Landlord and Tenants volume 1 paragraph 9.126 states:

“The law of distress gives the landlord to whom rent is due, the right to do things, which if done by any other person would be trespass; provided he does not break the outer door of the building”.

The initial entry by the bailiff must be placeable and with the consent of the tenant – Khazanchi v. Fairchem Investments Limited [1998] EWCA Civ 471; [1998] 2 ALL ER 901. That was a case where the initial entry by the bailiff was by consent of the tenants and a walking possession agreement had been entered entitling the bailiff to re-enter at any time while the distress was in force. Payment of rent not having been made and distress remained in force, the bailiff broke into the locked premises and removed goods in the absence of the tenants. The English Court of Appeal concluded that in limited circumstances of forcible ejection or deliberate exclusion which would justify use of force, there was no right of forcible entry. What amounts to deliberate exclusion depends on the circumstances of each case. While the concept of deliberate exclusion was discussed in above case where initial entry was lawful there is no reason why the same concept cannot be applied where the circumstances at first step of distress give rise to such a conclusion being reasonably drawn.

While the above case is a persuasive authority and deserves to be treated with great respect, it is strictly not binding on our courts. At the heart of the reasoning in the case lies social and economic changes in England. In the present day and age the court reasoned it was not unusual for people to lock their doors and the whole family being out to work so mere existence of a locked door did not point to an intention to exclude entry. The case puts a huge onus on a bailiff – how is a bailiff to know whether he is being deliberately excluded or whether the tenant is out for a day or two.

In the present case, the bailiff knew the tenants were out and the shop had been closed for quite some time. If Muneem Pran is to be believed, the shop had been left closed for at least eleven days between the day his wife left and the day the notice was pasted on the front door. He had knowledge of this. He had learnt of it from Levuka Police Station. They took no action. Muneem Pran continued to remain away from Levuka. He said he saw a solicitor but there is not even a letter from the solicitor to National Trust complaining about the distress. This action was filed on 17th June 1997 some ten months after the incident, an unusually long time for a person to remain dormant while his interests are so violently violated. I do not believe Muneem Pran that he tried to contact the Director Birendra Singh.

In the circumstances of the case with the shop being left closed for so many days and five more days without any reaction from the plaintiffs, the plaintiff could reasonably have concluded that it was being deliberately excluded or that the process of distress was being deliberately stifled. The plaintiff had been forewarned in May of the rent arrears. The defendant had no choice except to break the lock and put a new lock. I hold that plaintiffs’ actions did not amount to trespass. The rent being in arrears, the defendant had the right to distress including seizing and selling the goods.

EXCESSIVE DISTRESS:

The matter does not rest here as the plaintiff is also alleging that the defendant failed to obtain the best price and sold items at an undervalue [price] and for levying excessive distress. The landlord can still be liable even if the initial entry is proper, his subsequent acts are irregular or distress excessive. The plaintiff in his statement of claim (paragraph 6) said “a full list of goods and chattels shall be produced at the trial of this action”. Having pleaded that, one would expect to plaintiff to have the list. I was waiting for the list and in fact asked the plaintiff when the last stock take was done hoping it would spur plaintiff into remedying the oversight and bringing in the list. The most crucial piece of evidence which the plaintiff has not produced is the inventory taken by the bailiff. The inventory would have shown what exactly was seized by the bailiff from the shop. The bailiff was plaintiffs’ witness. He testified that he took inventory in an exercise book and made a photocopy. He also stated he gave copy of record of stocktaking to Muneem Pran. The plaintiff had the records but has elected not to disclose these to the court. These records would be of immense significance in assisting the court to reach conclusion as to certain matters as they would have shown what items were seized, the quantity seized and may even have given the court a rough idea of their worth. Without these records the court is hardly in a position to decide whether the distress levied was excessive.

An excessive distress is really an irregular distress. Any distress may not be excessive. A distress must be clearly proportionate to the arrears of rent and costs of distress, taking into account the conditions under which a forced sale of goods must take place – Field v. Mitchell 170 ER 133. To avoid excess all the distrainor has to do is exercise reasonable care in estimating what the goods would fetch at a sale by auction without calculating what the tenant could have realized for them.

The bailiff could not assist the court. All he said was I guess goods inside shop were worth over $7,000.00. He said frozen goods and junk food were not sold. PW3 James Chand said his father bought goods worth $3,000.00 for $1,200.00, suggesting that proper prices were not obtained. But he is not an expert in pricing items. He neither gave his qualification nor experienced in such matters. PW4 Kishore Nand said he said he helped in pricing items and said that he saw Birendra Singh count close to $45,000.00 apart from a cheque for $8,000.00. I find this particular witness clearly incredible. I base it firstly on his demeanour in him having to be restrained by court for putting questions back at the counsel during cross-examination. His actions also appeared inexplicable. He says he was surprised when approached by Birendra Singh to assist him but made no attempt to contact his employer whose shop was going to be closed and even future employment of the witness put in peril. When cornered, he said he did contact the plaintiff. He said he did not want to unnecessarily get involved in what Birendra Singh was doing but then lent him a helping hand in pricing and selling items. He says he was the Manager of the shop but yet he assisted in acting against his boss’s interests even though Birendra Singh did not tell him why he was selling items. His acts are quite inexplicable. He said despite being the Manager he did not know if rent was in arrears. Would a manager of a shop stand by and left someone else run riot as the witness suggested for no reason. I have no doubt that this witness came to assist the plaintiff and truth to him mattered little. I do not believe that he assisted the Director count money or that $35,000.00 worth of goods were sold for $8,000.00. I doubt very much if goods worth $35,000.00 were in the shop. I do not put any weight to figures he gave me or about the contents in the shop.

PW5 Steven Diston’s evidence is strictly irrelevant to the present inquiry. He was employed to do a projection based on figures for purposes of a loan. He was not an auditor but an advisor. He produced no ledgers or cash books. He produced no figures for stock purchased during 1996 or close to the time of distress by the plaintiffs or any evidence by invoices of purchases made. The issue in this case is what was actually in the shop and what was seized not some vague possibilities of what would be value of items in the shop if it had been operating on basis of some historical figures.

Excess is a matter of fact. To determine what is considered to be excess, the court must know –

(a) value or amount of goods of the plaintiff at the time of distress;

(b) the arrears and costs involved in the distress;

(c) the value or amount of goods detained to recover the rent arrears.

In the present case, I have no credible figures as to the value or amount of goods of the plaintiffs in the shop at the time of distress. All I have are speculative figures. I do not know what the goods were. I am unable to rely on any figures. The plaintiff has also, even though he had access to records, did not provide evidence on amount of goods seized. The evidence before the court is that Grahame Eden & Associates who conducted the sale paid $11,329.00 to the defendant after deducting their costs. The rent arrears was $7,150.00 leaving a balance therefore of $4,179.99. The defendant said the surplus was $3,679.00 as according to audit report arrears of rent was $7,650.00.

I am aware that the place detained was a shop in Levuka. Numerous small items would probably be included among the seized items. There was a need to sell to recover rent. One could hardly expect the defendant to stop the sale, close the shop every now and then and count up the total. Prospective buyers would lose patience in such circumstances and leave. The defendant would not have been able to recover the arrears. The distress was not greatly disproportionate I hold.

In any event a claim for excessive distress is a form of irregular distress. At common law a claim for irregular distress cannot be maintained without proof of special damages. Without proving special damages, the plaintiff is not even entitled to nominal damages – Rodgers v. Parker – [1856] EngR 511; 139 ER 1308; Lucas v. Tarleton – [1858] EngR 409; 157 ER 409. Special damages not having been proved, claim under this head fails.

GOODS SOLD UNDER REAL VALUE:

The plaintiff alleges that goods were sold at less than the real value. Kishore Nand testified that goods were sold at below prices up to fifty to sixty percent reduction on some items. I have already said I have serious doubts about his credibility. In any event, this was not a sale between a willing buyer and a willing seller but a forced sale. The mere fact that goods were sold at an undervalue does not prove the distress was an excessive distress – Thompson v. Wood – 1843 QB 493 (Halsbury – 4th edition Volume 13, para 372). It would have been impossible for the defendant to have calculated with accuracy the price of each and every item sold and insist on selling at par value.

The plaintiff also submitted that unauthorized persons had levied distress. The bailiff was authorized to levy distress. He had the certificate to levy distress. The Director of the defendant assisted him by supervising. The Director represented the landlord. A landlord under Section 3 can levy distress. The scale of the distress and the nature of the distress being that of a shop warranted that bailiff be assisted. In fact bailiff asked for further assistance to take stock. Licensed auctioneers were engaged to conduct the sale. The completion of entire process of distress was beyond the scope of one person so involvement of others does not render it illegal, so the allegation of illegal distress fails.

REFUND OF SURPLUS:

From defendant’s own evidence, it is clear that it is holding onto a sum of $3,679.00 being surplus funds collected under distress. My calculations show it should be $4,179.00. This sum as a matter of equity should be refunded to the plaintiffs. Further, the plaintiffs have been kept out of these moneys since 1st August 1996 so interest ought to be paid on it. I order that the defendants refund this sum with interest at ten percent from 1st August 1996.

CONCLUSION:

I hold therefore that the plaintiff did owe the defendant rent and the initial levy of distress was lawful. In the circumstances of this case with shop being left unattended for so long, it was reasonable for a person to conclude that either the bailiff was being deliberately kept out or that the premises were abandoned. The plaintiffs had not informed the defendant where they were so the only alternative for the bailiff was to paste the notice on the front door and he broke the backdoor lock after lapse of reasonable period of five days. I conclude that there was no trespass. Without the aid of inventory or stock-take done by the bailiff, it is impossible for this court to conclude that the distress was irregular or excessive.

I would have been much more impressed with the assertions of catastrophic damages if the plaintiff’s actions had matched his words. If such immediate and serious damage was inflicted as to cause him to close his business, I would have expected the plaintiff to act far more vigorously and expeditiously both in the commencement and continuation of these proceedings. In my view the delay is inconsistent with serious and immediate damage.

ORDERS:

Accordingly I dismiss the plaintiffs’ claim. I order the defendant to refund the sum of $4,179.00 together with interest on this sum at the rate of ten percent per annum from 1st August 1996. I do not order costs to the defendant as it failed to disclose the existence of the surplus funds in its defence or even at the pre-trial conference stage. As it could have resulted in settlement before trial.

[ Jiten Singh ]
JUDGE

At Suva
23rd July 2004