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Fiji Development Bank v Niulevu [2011] FJHC 586; HBA16.2010 (15 September 2011)

IN THE HIGH COURT OF FIJI ISLANDS
AT SUVA
CIVIL JURISDICTION

Magistrate's Court No: 107/2009
Civil Appeal No: HBA 16/2010

BETWEEN:

FIJI DEVELOPMENT BANK
[Appellant]

AND:

MALAKAI NIULEVU & EREMASI NIULEVU
[Respondents]

Counsel: Mr. V. Kapadia for the Appellant
No appearance for the Respondents

Date of Judgment: 15th September, 2011

JUDGMENT

1. This is an appeal by the appellant against the judgment of the Magistrate's Court in Suva delivered on 10.8.2010.
   
2. The learned Magistrate dismissed the appellant's Statement of Claim with costs fixed at $500.00
   
3. The appellant's grounds of appeal are as follows:
   
   1. The learned Magistrate erred in law and in fact in paragraph 25 of the judgment that the appellant had written-off the said debt due and owing by the 1st defendant to the appellant.
      
   2. That the learned Magistrate erred in law and in fact in dismissing the appellant's claim.
      

4. The appellant is a body corporate duly constituted under the Fiji Development Bank Act. Pursuant to a loan letter, dated 1.7.2004 and 18.2.2005 the appellant had agreed to lend and advance the defendants a sum of $17000.00 upon the execution of a Loan Agreement secured over the Bill of Sale Nos. 2780 and 1021 dated 11th August, 2004 and 11th March, 2005. The defendant undertook to pay the loaned money within 4 years from the date of execution of the said agreement.

5. The defendants defaulted repayment of the loan despite the several demands made by the appellant.
   
6. The appellant, thereafter filed an action in the Magistrates' Court, which was concluded by way of formal proof.
   
7. In her Order the learned Magistrate concluded that the 1st defendant was liable to repay the loan. However, she concluded that since the bank had written-off the debt on 01.03.2006, the plaintiff bank could not bring this action against the defendant. On that ground alone the learned Magistrate had dismissed the plaintiffs' claim on 10.8.2010.
   
8. The only issue that this court has to now determine is whether the writing-off the loan would preclude the plaintiff appellant initiating action against the defendant an obtaining order as it wrote off the debt in the bank accounts. In other words whether the contact between the appellant bank and the defendants is negated by the write-off of the debt.
   
9. The Document No. 5 of the plaintiffs' bundle of documents tendered in the Magistrates' Court is the loan agreement. According to that document borrowers were the defendants.
   
10. In my mind, the writing-off of the debt was an internal administrative affair of the bank. Writing-off could be done for so many reasons and such matters falls strictly within the bank's preview of internal record keeping. The contract between the defendant and the plaintiff was independent of any internal arrangements made by the bank for their administrative purposes.
    
11. At the time of entering into the agreement with the bank, the defendant undertook to repay the loan. Hence, it is the duty of the defendant to repay the loan in terms of the agreement, because the plaintiff's internal administrative actions will not absolve the defendant's liability towards the bank.
    
12. In Bristow (H.M. Inspector of taxes) v. William Dickinson & Company, Ltd. [1946] K.B. 321, it was held that merely because a debt is declared as a bad debt, for that reason alone it does not become unrecoverable. It was also held that, bad debts if received subsequently ought to be treated as trade profits for purpose of taxation to income tax.
    
13. Therefore, it is my view that the right to recover the loan survives despite the bank's writing-off the loan. I therefore conclude that write-off will not be an impediment for the plaintiff to sue the defendant in order to recover its debt.
14. I therefore conclude that the learned Magistrate had erred in law in dismissing the plaintiff's action. Therefore, I allow the appeal.
    
15. The Learned Magistrate has already decided that the defendant is liable to pay the debt. Therefore, I do not see any reason to send the record back to the Magistrate to assess the debt. I accordingly order that a sum of $15,838.13 be paid to the plaintiff by the defendant within 21 days hereof. I also order that the defendant pay interest at the rate of 6% and costs to the plaintiff which I summarily assess as $ 500.00.
    
16. ORDERS
    
    1. Appeal allowed.
    2. Defendant to pay the plaintiff a sum of $ $ 15838.13 together with interest at the rate of 6% per annum from 31st of January, 2009 till the date of judgment.
    3. The defendant to pay $ 500.00 as costs to the plaintiff.
    4. All payments stated herein to be paid within 21 days hereof.
       

Pradeep Hettiarachchi

JUDGE

15.9.11