Coral Surf Resort Ltd v Yam [2010] FJHC 25; HBC066.2008 (2 February 2010)

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CORAL SURF RESORT LIMITED
trading as Warwick Fiji Resort & Spa, a private company with its
registered office at Queens Road, Korolevu, Sigatoka.
Plaintiff

GREENWAYS LIMITED
a duly incorporated body under the Companies Act Cap 247
having its registered office at 23 Helsen Street, Samabula, Suva.
3rd Defendant

Counsel: Munro Leys, Solicitors for the Plaintiff
Messrs Jamnadas & Associates for the 2nd Defendant
No Appearance for 1st Defendant
No Appearance for 3rd Defendant

1. The plaintiff ("CSRL") is the owner and operator of the Warwick Fiji Resort & Spa in Fiji. The first defendant ("Chirk") was employed by Coral Surf as its Financial Controller from 17th August 2005 to 28th March 2007. The second defendant ("Jane") was the wife of Chirk at all material times. The third defendant ("Greenways") is a company duly incorporated in Fiji of which Chirk and Jane are directors.

2. This is CSRL’s application for Summary Judgement against all three defendants under Order 14 of the High Court Rules 1988. CSRL seeks the following Orders:-

(a)	judgement in the sum of $1,375,784.16 against Chirk.
(b)	judgement in the sum of $214,718.73 against Jane.
(c)	Judgement in the sum of $619,305.01 against Greenways.
(d)	interest on the judgement sum pursuant to the Law Reform (Miscellaneous Provisions) (Death and Interest) Act Cap 27 of 8% per annum from 1st April 2007 to the date of final judgement.
(e)	post judgement interest of 4% per annum from the date of final judgement to the date of final satisfaction of the judgement sums.
(f)	Costs

3. CSRL relies on the Affidavit of Tammie Tam sworn on 15th July 2009 in support of its application. Out of the three Defendants, only Jane has filed an Affidavit sworn on 6th October 2009 and filed herein.

4. Tam is the Executive Director of CSRL. She says Chirk was Financial Controller of CSRL. He was responsible for controlling the revenue income stream, establishing daily and monthly revenue income reports, controlling daily and monthly revenue income reports, controlling invoices and charges received from vendors, government agencies, tour and travel agencies, controlling, directing and preparing payments to local and overseas entities, establishing cheques and bank transfer orders, controlling and establishing monthly financial reporting statements addressed to the management of the Warwick Fiji Resort & Spa and to the Plaintiff.

5. Chirk, by virtue of his position as Financial Controller, was also one of two authorised signatories on CSRL’s Bank Account.

6. Around March 2007, during the annual auditing of CSRL’s accounts, certain financial irregularities were discovered. As a result, a further investigation was carried out. And in due course, a scheme of fraud by Chirk was unearthed. This alleged scheme of fraud is set out in detail in paragraph 12 of Tam’s Affidavit. And all documentary proof of it all are exhibited in Volumes I, II and III of the List of Exhibits filed by Tam.

7. The scheme of fraud that Chirk is alleged to have committed is set out in Tam’s Affidavit as follows:

(i) he established in his own name and made payable to himself some $25,150.49 in petty cash disbursement forms. These payments to himself were not authorised by Coral Surf nor were they justified¹.

(ii) on fifty different occasions, he transferred various sums of money belonging to Coral Surf into his own Westpac Account No. 9801118515. The transfers totalled $516,609.93 altogether².

(iii) on thirty six different occasions, Chirk transferred monies out of Coral Surfs Account into Jane’s Westpac Account No. 9801117046 totalling $214, 718.73. These transactions were not authorised³.

(iv) on 55 different occasions, Chirk transferred monies belonging to Coral Surf into Greenways Westpac Bank Account No. 9801321374 totalling $619, 305.01⁴.

8. Tam exhibits in her Affidavit and List of Exhibits copies of documentary evidence of all these transactions.

9. These are set out in paragraphs 15 (a) to (d) (i) – (iii). By virtue of his position⁵ as Financial Controller, Chirk was placed centrally in CSRL’s financial management system. He was involved in processing payments to CSRL’s suppliers.

10. It is alleged that Chirk executed the unlawful transfers by deluding and manipulating the payment control system. He is alleged to have done that in the following manner. Firstly, he would raise documents to make it appear as if he was processing payment for some overseas supplier either vide a direct debit, telegraphic transfer or bank draft instruction. He would then raise a cheque bearing the name of that supplier and an amount which corresponds with documentation. He would then sign the documentation and the cheque. And he would then present these for countersigning by CSRL’s second authorised signatory.

11. Once the documents and the cheque are countersigned, Chirk would then take the cheque and alter on it the name of the payee and the payee’s account number. And of course, the alterations would favour either of the defendants.

12. Chirk allegedly was equally crafty in what he did to avoid being caught. Whenever he received a Westpac Statement of CSRL’s account, he would photocopy it and then make alterations on the copy to conceal any trace of the unlawful transfers. He would then again photocopy the altered-copy-statement and then file the copy amongst CSRL’s Reconciliation/Bank Statement records. The original statement and first copy, he would destroy.

13. Again, Tam has gone to great lengths to exhibit in the three volumes of the List of Exhibits a copy of every relevant original unaltered Westpac Bank Statement and of the altered copy⁶.

14. Tam’s Affidavit⁷ goes to great length to set out the full particulars of each allegation against Chirk.

15. In paragraph 12, she tabulates each of the ten occasions on which Chirk is alleged to have helped himself to CSRL’s petty cash funds - setting out each particular date and the corresponding petty-cash amount involved. The total amount that Chirk is alleged to have paid himself out of petty cash funds is $25,150.49. Proof that Chirk was paid $25,150.49 is to be found in the List of Exhibits which Tam has filed. The List exhibits a copy of every petty cash disbursement form that Chirk had filled for each payment.

16. There is a second table in paragraph 12 which sets the fifty occasions between 05th September 2005 to 01st March 2007 when Chirk allegedly deposited monies belonging to CSRL into his Westpac Bank Account No. 9801118515. A grand total of $516,609.93 was allegedly involved. Tam actually sets out the cheque date, the date credited to Account No. 9801118515, the branch presented and the Account Name.

17. On the allegation that Chirk unlawfully transferred a total of $214,718.73 of CSRL funds into Jane’s Westpac Account No. 9801117046, Tam tabulates in paragraph 13 of her Affidavit thirty six individual transactions setting out the cheque date, date credited, cheque number, amount, branch presented, account number and Account Name of Memrie-Anne Jane Yam..

18. On the allegation that Chirk unlawfully transferred a total of $619,305.01 of CSRL funds into Greenway’s Westpac Account No. 9801321374, Tam tabulates in paragraph 14 of her Affidavit 55 individual transactions setting out the cheque date, date credited, cheque number, amount, branch presented, account number and Account Name of Greenways.

19. Tam also exhibits a copy of every document showing all the above bank transfers (in paragraphs 17, 18 and 19 above) in her List of Exhibits.

20. The great length to which Tam goes to detail every payment Chirk made to himself and every deposit Chirk made to the various defendants’ accounts is a striking contrast to the rather dull and bland defence and/or affidavit filed individually by the respective defendants.

21. The question is whether CSIR has proved its claim. Or whether Chirk, Anne or Greenway is able to set up a bona fide defence or raise an issue against CSIR’s claim which ought to be tried.

1.-(1) Where in an action to which this rule applies a statement of claim has been served on a defendant and that defendant has given notice of intention to defend the action, the plaintiff may, on the ground that the defendant has no defence to a claim included in the writ, or to a particular part of such a claim, or has no defence to such a claim or part except as to the amount of any damages claimed, apply to the Court for judgement against that defendant.

23. The Order 14 summary judgment procedure is available to any Plaintiff who desires a quick judgment on his or her claim where there is no defence to a claim, or, if a defence is raised, it either fails to set up a bona fide defence or discloses no triable issues and will merely have the effect of delaying a judgement in favour of the Plaintiff. The Court’s task is to determine whether there ought to be a trial.

24. In Carpenters Fiji Ltd –v- Joes Farm Produce Ltd Civil Appeal Number ABU 0019/2006, the Court of Appeal at pages 9 and 10 of the judgment stated the summary judgement principles as follows:-

"Here it is timely to state some of the well established principles relating to the entry of summary judgment:

(a) The purpose of 0.14 is to enable a plaintiff to obtain summary judgment without trial if he can prove his claim clearly and if the defendant is unable to set up, a bona fide defence or raise an issue against the claim which ought to be tried.

(b) The defendant may show cause against a plaintiffs claim on the merits e.g. that he has a good defence to the claim on the merits or there is a dispute as to the facts which ought to be tried or there is a difficult point of law involved.

(c) It is generally incumbent on a defendant resisting summary judgment, to file an affidavit which deals specifically with the plaintiffs claim and affidavit and states clearly and precisely what the defence is and what facts are relied on to support it.

(d) Set off, which is a monetary cross claim for a debt due from plaintiff, is a defence. A defendant is entitled to unconditional leave to defend up to the amount of the set of claimed. If there is a set off at all, each claim goes against the other and either extinguishes or reduces it Hanak v. Green (1958) 2 QB 9 at page 29 per Sellers LJ.

(e) Like wise where a defendant sets up a bona fide counterclaim arising out of the same subject matter of the action, and connect with the grounds of defence, the order should not be for judgment on the claim subject to a stay of execution pending the trial of the counter claim but should be fore unconditional leave to defend, even if the defendant admits whole or part of the claim; Morgan and Son Ltd v. S. Martin Johnson Co (1949) 1 KB 107(CA).

25. The Plaintiff must prove each claim clearly and to satisfy the Court that the Defendant has no defence which has any realistic prospect of success.

26. Once a claim is established, the evidential and persuasive burden shifts to the Defendant (see Thomas J in Hibiscus Shopping Town Pty Ltd -v- Woolworths Ltd [1993] FLR 106 at 109) who must adduce affidavit evidence dealing specifically with the plaintiffs claim and affidavit and also state clearly and precisely what the defence is and what facts he relies on to resist the entry of summary judgment: Magan Lal Brothers Ltd. –v- L. B. Masters & Company Civil Appeal No: 31/84.

27. If the Defendant has not filed an affidavit but a defence, the Court must then direct its mind on the issues raised in the defence to see whether it has merits and is not just a sham defence to delay judgment or avoid the necessity of showing cause by Affidavit (see the Fiji Court of Appeal in Magan Lal Brothers Ltd –v- L.B. Masters (supra); see also Halsbury’s Laws of England (4th Edition) volume 37 para 413 – 415, notes 4).

28. All three defendants have filed their Notice of Intention to Defend. Ms Rakai argues though that the Summary Procedure under Order 14 is not available to CSRL as its claim is based on allegations of fraud.

"Subject to paragraph (3), this rule applies to every action begun by writ other than ..... an action which includes a claim by the plaintiff based on an allegation of fraud"

30. Allegations of fraud indeed appear in CSRL’s claim on three different occasions. Firstly, in paragraph 8 where the sum of $1,350,633.67 is said to have been fraudulently transferred by Chirk to his, Jane’s and Greenways accounts. Secondly, in paragraph 10 where the sum of $516,609.93 is alleged to have been fraudulently transferred by Chirk into his own bank account. Thirdly, in paragraph 11 where the sum of $214,718.73 is said to have been fraudulently transferred by Chirk to Jane’s account.

31. Mr. Tuitoga relies on the following passage from Fatiaki J’s judgement in ANZ Banking Group Ltd v Qing Li [2000] FJHC 34; HBC0614J.98S (1 March 2000):

"...I am satisfied that Order 14 Rule 1(2)(b) is not necessarily enlivened by the mere mention of the word "fraud" in the pleadings ....nor dies it necessarily mean that the claim is "based on an allegation of fraud.

In the not dissimilar case of Barclays Bank Ltd v Cole (1967) 2 Q.B. 738 where there was a bank robbery and the robber had paid in part of the stolen proceeds into another branch of the same bank and the bank sued the robber to recover the stolen monies after the robber had been convicted of robbery and the robber had claimed that the bank’s claim was one based on an allegation of fraud, the court in rejecting the robber’s claim held: that "fraud" (in the rule) is used in its ordinary and primary sense of deceit i.e. where the plaintiff alleges that the defendant has made a false representation, and not as referring generally to dishonesty.

Furthermore in Everett v. Islington Guardians (1923) 1 K.B 44 it was held: that where al allegation of fraud does not involve the court in having to decide whether fraud has taken place before the rights of the parties can be determined, that allegation will not suffice to prevent the plaintiff from applying for judgement under Order 14"

32. Mr. Tuitoga submits that fraud is not an element to be proved in his client’s case against Chirk and therefore, Order 14 Rule 1(2)(b) does not apply. I agree and I rule that Order 14 Rule1 (2)(b) has no application against CSRL’s claim.

33. The application was duly served on Chirk’s lawyers. However, no affidavit in opposition has been filed on his behalf. Chirk however had a defence filed on 14th May 2008. That defence is a general denial of every allegation in CSRL’s Claim. His non-attendance in these proceedings leaves much to be desired. Jane, his wife, with whom he still lives under the same roof as told to me by Ms. Rakai, has instructed her lawyers to appear today. The Court has no idea why Chirk has chosen not to participate in these proceedings, although I am aware that he regularly turns up at the Lautoka High Court Criminal Division for his pending related criminal charge.

"By way of further and alternative defence, in the unlikely event that the First Defendant is found to be liable for any part of the monies claimed by the Plaintiff then the First Defendant seeks a right of offset in the sum of $1,500,000-00 being the amount the First Defendant saved the Plaintiff when remitting a dividend sum of $5,000,000-00 to the Plaintiffs shareholders overseas"

35. Mr. Tuitoga submits that the set-off "is not bona fide". He submits that CSRL has never remitted dividends overseas as Chirk alleges and there is no evidence before the Court to support the setoff.

36. In Powszechny Bank Zwiazkowy W polsce v Paros (1932) 2 K.B. 353⁸ Greer LJ said as follows:

"All the defendant need say is that he requires the plaintiff to prove his case, and the law puts upon the plaintiff the onus of proving it. When the defendant says he does not admit the claim he need not carry the case any further than to say: 'There is a triable issue and I want to have it tried'."

37. The Fiji Court of Appeal in Carpenters Fiji Ltd –v- Joes Farm (supra paragraph 24) has said the following:

38. One may read the pleaded-set-off as hinting at certain things. I need not say any more as it would merely involve speculating beyond the scope what I have to consider on the application before me.

39. Nevertheless, in essence, what Chirk appears to be asserting through the setoff is an entitlement to some $1.5 million that he saved for CSRL, his employer. The basis of that alleged entitlement is not at all pleaded properly. Is it not the case that money saved for CSRL is still CSRL’s saving anyway? Is it not incidental to Chirk’s duties as Financial Controller to save money for his CSRL anyway? The bareness of the pleaded setoff, coupled with the absence of any affidavit in opposition, and Chirk’s non-attendance - all lead to the conclusion that the setoff is but a feeble plot at delaying judgement to the CSRL. I am not at all convinced.

40. Jane’s affidavit opposing summary judgement deposes that she was not aware that Chirk occupied the position of Financial Controller of CSRL. She was also not aware that he was one of two authorised signatories on CSRL’s bank account. Nor was she aware of the internal audit that was carried out which revealed the irregularities in CSRL’s account.

"...has explanations as to why she denies each and every allegation contained in the Plaintiffs Statement of Claim. [Jane] whilst the legal wife of [Chirk] has not been charged with any criminal matter relating to this case. [Jane] will also challenge the authenticity and the manner in which the bank exhibits are brought before this Court"

42. Ms. Rakai then points out that in paragraphs 1 and 2 of Jane’s defence, she denies any knowledge of the monies being deposited into her account.

"She always thought that it was her husband’s, the 1st Defendant wages and/or profit from the Company, 3rd Defendant"

43. Mr. Tuitoga however highlights that in paragraph 6 of Jane’s affidavit, she has admitted that the deposits were made into hers and Greenway’s account. All she denies is any personal knowledge or involvement in the deposit of the funds in her account.

44. Against that, it is hard to see how any challenge by Jane of the authenticity of any bank documents will advance her defence. She has, after all, earlier admitted that the monies were paid into her account by Chirk.

45. Whilst it may be conceded that the bank documents ideally should have been tendered through an Affidavit sworn by an officer of the Bank – or at least be duly certified when attached to any other affidavit – in my view, such an objection should more appropriately be raised by Chirk.

46. I say the above because the bank documents speak of allegations against Chirk, not Jane. If Jane were to challenge the documents, would she not then be embroiling herself in issues which she deposes she knows nothing of? The short point is, to reiterate, it is Chirk who should be challenging these documents – if he questions with any seriousness their probative value. He simply has not bothered to file any affidavit in opposition. He has simply not bothered to turn up in Court.

47. Incidentally, I have read again the Affidavit of Lemeki Sevutia, Law Clerk of Messrs R. Patel Lawyers, former Solicitors of Chirk and Greenways, sworn on 17th August 2009. The Affidavit deposes at paragraph 4 that the List of Exhibits Volumes 1, 2 and 3 were duly served on R. Patel & Lawyers on 24th July 2009 when they were still acting for Chirk and Greenway.

48. Are these enough to mount a triable defence for Jane in the circumstances of her case? Again, I turn to the authority of the Fiji Court of Appeal in Carpenters Fiji Ltd –v- Joes Farm (supra paragraph 24):

"It is generally incumbent on a defendant resisting summary judgment, to file an affidavit which deals specifically with the plaintiffs claim and states clearly and precisely what the defence is and what facts are relied on to support it".

49. Having "explanations" is not sufficient if they do not "deal specifically with the plaintiffs claim". Jane’s affidavit says all she can possibly say. She believed the money belonged to Chirk. I believe her. But there is hardly any triable issue raised by her.

50. After all, the relief sought against Jane (as it is with Chirk and Greenways) is restitution based on unjust enrichment or alternatively, damages for wrongful conversion of money. The case for unjust enrichment and restitution is strong. Whether or not Jane knew anything about the origin of the money kept in her account in irrelevant. Her case hinges on the relative strength of Chirk’s which, as i have highlighted, is wanting in that respect.

51. Greenways’s too has not filed an opposing affidavit. However, it too has filed a defence. Like Chirk’s, Greenways defence is a bare denial of every allegation in CSRL’s claim. One can only reiterate here the same conclusion in Jane’s and Chirk’s defence. There are no bona fide triable issues raised.

52. Both counsels agree that the onus is on the plaintiff to prove each claim clearly and to satisfy the Court that the defendants have no defence with any realistic prospect of success. Once that is established, the "persuasive" or "evidential" burden then shifts to the defendants who must convince the Court that judgement should not be given.

53. In my view, CSRL has clearly proven its claim. If I may say so yet again, Tam has gone to great detail in her Affidavit as she has in the List of Exhibits to explain what Chirk did and to exhibit every documentary proof.

54. The main issue which I see arises in this case is: to what standard should Chirk, Jane and Greenway be assessed now that the burden has shifted to them?

55. In dealing with the above, I have considered on the one hand the authority of Greer LJ in Powszechny Bank Zwiazkowy (supra) and on the other, the Fiji Court of Appeal case of Carpenters Fiji Ltd –v- Joes Farm (supra). Is the general denial on the part of the defendants sufficient to revert the onus back to the plaintiff or, must the defendants now show cause on the merits or at least show that there is a dispute as to the facts which ought to be tried or that there is a difficult point of law involved?

56. Ms Rakai cites Lord Cairns in the House of Lords decision in Bank fur Gemeinwirtscaft v City of London Garages Ltd and Others [1971] 1 All ER 541 as authority that under the English Order 14 Rule 3(1) (equivalent to Fiji’s Order 14 Rule 3(1)), leave to defend may be given if the claim were of a highly technical nature which could only be properly understood if oral evidence were given, although no defence was shown. She submits that this is such a claim, and the Court must grant leave even if it were to find that there was no dispute to be tried.

57. I accept that as good authority but one which should be applied in this case. The volume of documentation may be enormous but the issues are quite straightforward in my view.

58. Ms Rakai alleges that the application was not made in a timely manner. She cites McLardy v Slateum [1890] UKLawRpKQB 34; (1890) 24 QBD 504 CA as authority that a plaintiff who applies for summary judgement after the defendant has served his defence must justify the delay. She then points out that the summary judgement application was made two months after the defence was filed.

59. But there is nothing in the rules precluding an application at a later stage in the proceedings (as per Jacobs J in Brinks Ltd v Abu-Saleh and Others (No.1) [1995] 4 ALL ER 65 at para g page 68). The headnote of this case states: "delay in making an application for judgement under RSC Ord 14 was not of itself a relevant matter in determining the application in circumstances where there was no defence to the claim, or the defendant was unable to show that there was an issue or question in dispute which ought to be tried or that there ought for some other reason to be a trial of the claim"

60. Again, I reiterate the words of the Fiji Court of Appeal in Carpenters Fiji Ltd –v- Joes Farm that a defendant resisting summary judgment must file an affidavit which deals specifically with the plaintiffs claim and state clearly and precisely what the defence is and what facts relied on are.

61. Finally, I am aware that there is a related pending criminal matter against Chirk at the Lautoka High Court Criminal Division.

Again, as the Plaintiffs case does not rely on proof of fraud, I see no reason why the pendency of that criminal matter should delay judgement for CSRL in this civil matter.

(a)	Judgement in the sum of $1,375,784.16 against Chirk.
(b)	Judgement in the sum of $214,718.73 against Jane.
(c)	Judgement in the sum of $619,305.01 against Greenways.
(d)	Interest on the judgement sum pursuant to the Law Reform (Miscellaneous Provisions) (Death and Interest) Act Cap 27 of 8% per annum from 1st April 2007 to the date of final judgement.
(e)	Post judgement interest of 4% per annum from the date of final judgement to the date of final satisfaction of the judgement sums.
(f)	Costs on an indemnity basis.

63. For the sake of clarity, I am not granting the order for damages for conversion as sought in paragraph 18(i).

1. See further paragraph 15 below.
2. See further paragraph 16 below.
3. See further paragraph 17 below.
4. See further paragraph 18 below.
5. See paragraph 4 above.
6. As per annexure TTD, TTE,TTF, TTG, TTH, TTI, TTJ, TTK and TTL of Volumes 1 to 3 of the List of Exhibits.
7. see paragraphs 11, 12, 13 and 14.
8. Cited with authority by Pathik J in Westpac Banking Corporation v Bullock [1997] FJHC 115; HBC 0181d.96S (22 August 1997)

High Court of Fiji

Coral Surf Resort Ltd v Yam [2010] FJHC 25; HBC066.2008 (2 February 2010)