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DHL Express v Lal [2016] FJHC 208; HBC98.2012 (30 March 2016)

IN THE HIGH COURT OF FIJI
AT SUVA
CIVIL JURISDICTION
Civil Action No: HBC 98 of 2012

BETWEEN:
DHL EXPRESS
Plaintiff
AND:
RONALD JEREMIAH LAL
1st Defendant
AND:
VIKLESH VIMAL NARAYAN
2nd Defendant

BEFORE : The Hon. Mr Justice David Alfred

Counsel : Mr R Prakash for the Plaintiff
Mr J Reddy for the 1st Defendant
Mr I Samad for the 2nd Defendant

Date of Hearing : 16 and 17 November, 4, 7 and 8 December
2015, 25, 26 and 27 January, 5 and 8 February 2016

Date of Judgment : 30 March 2016

JUDGMENT

According to the Statement of Claim, the 1st and 2nd Defendants were employed by the Plaintiff as a Credit Controller and a Customs Clerk respectively. During the period June 2011 to February 2012, the Defendants "fraudulently embezzled and converted into their own use the total sum of $57, 237.01 (the said sum) being monies collected by them on behalf of the Plaintiff from some of the Plaintiff's customers.

Para 6 sets out the "Particulars of Claim" as follows:

PARTICULARS OF CLAIM

It is contended that the Defendants breached their duty to act honestly and diligently and thereby deprived the Plaintiff of the use and benefit of the said sum. Alternatively they have been unjustly enriched at the expense of the Plaintiff. The Plaintiff therefore claimed the said sum, interest and costs.

The Statement of Defence generally denies the allegations in the Statement of Claim and prays that the Plaintiff's claim against the Defendants be dismissed with costs.

The Minutes of the Pre-Trial Conference dated 3 March 2014 (Minutes) include among the following:

Agreed Facts:

At all material times the 1st and 2nd Defendants were employed as Credit Controller and Customs Clerk whose duties included receiving and collecting cash from the Plaintiff's customers and processing their accounts.

Issues to be Determined:

Whether the Defendants fraudulently embezzled and converted to their use the total sum of $57, 237.01 collected from the Plaintiff's customers.

Whether the Defendants had a duty to act honestly and diligently and whether they breached that duty.

Whether the Defendants deprived the Plaintiff of the use and benefit of the said money and alternatively unjustly enriched themselves at the Plaintiff's expense.

The hearing commenced with the Plaintiff's witness (PW1) Sarvesh Gopala Devan giving his evidence. He said he is the business services manager of the Plaintiff. In 2011, he was the financial controller. He said the 1st Defendant was responsible for debt collection from credit account customers. The 2nd Defendant was responsible for clearing shipments.

PW1 then went through the various documents tendered as exhibits and which the 2nd defendant allegedly falsified.

With regard to Exhibit P15, PW1 said this is a payment voucher which Speedy Holdings (Fiji) Ltd (Speedy) said it paid the Plaintiff on behalf of the University of the South Pacific. This payment was made by a cash cheque at the "request of the 2nd Defendant to director" of Speedy. However there was no record of this payment into the Plaintiff's account.

With regard to Exhibit P16, PW1 said it was Speedy's cheque, on the reverse of which were the signatures of the 2nd Defendant and Amit Prasad, the director of Speedy. The 2nd Defendant did not have any authority to cash any cheque for the Plaintiff.

With regard to Exhibits P36A-E, PW1 said these were falsified purchase orders signed by the 2nd Defendant. The Plaintiff was not in the business of ordering vehicle spare parts.

Exhibit P37 was a tax invoice from Speedy to the Plaintiff for $16,268.15 for Honda Accord spare parts. The 2nd Defendant's signature does not appear in any of the payment vouchers.

Exhibit P39 was the deposit receipt into Speedy's account for $16, 268.15. The 2nd Defendant deposited this into Speedy's account and the money came from the Plaintiff's ANZ cheque no. 49068.

Exhibit P44 is the deposit receipt for $7,458.50 into Speedy's account.

PW1 said he enquired from Prasad and was informed that Speedy received payments from the Plaintiff in relation to the ordering of vehicle parts. Prasad mentioned that the Plaintiff paid on 2 invoices (Exhibit P37 for $16, 268.15 and Exhibit P40 for $7,458.50) which were issued by Speedy. PW1 advised Prasad that the Plaintiff had never ordered any vehicle parts and since the Plaintiff paid Speedy for vehicle parts, Prasad is to give the money back or give the Plaintiff the spare parts.

Under cross-examination by Counsel for the 1st Defendant, PW1 said with regard to Exhibit P19, the Plaintiff paid Speedy $15,333.70, but no services had been provided by Speedy. The invoices of Speedy were later discovered to be false documents. It may be correct that Speedy submitted false documents and took money from the Plaintiff. The Plaintiff does not do business with Speedy after they indentified these discrepancies.

The Plaintiff paid by 3 cheques a total sum of $21,336.90 to Speedy before discovering the invoices to be false. The Plaintiff did pursue Speedy but it did not pay the Plaintiff in relation to this. It was a purely business dealing between the Plaintiff and Speedy. The Plaintiff has to recover from Speedy.

With regard to Exhibit P42, the Secretariat of Pacific Community indicated to the Plaintiff it had not received this invoice. There was no shipment in relation to this invoice. The Plaintiff pursued Speedy and they said this invoice had not been issued by them. PW1 said Speedy should not have accepted this amount if they had not issued this invoice. The Plaintiff should have gone after Speedy and not the 1st and 2nd Defendants based on documents. The Plaintiff has no proof of payment received by the 1st Defendant. It is correct that the Plaintiff should claim against somebody else for the first 3 payments to FIRCA.

Lines 4,5 and 6 under the Particulars of Claim were paid on false documents from Speedy. The Plaintiff did not report to the police. Instead of running after Speedy, the Plaintiff is running after the 1st Defendant. The business dealing is not between the Plaintiff and the 1st Defendant. All the Plaintiff's moneys were paid to FIRCA and Speedy.

Under cross examination by Counsel for the 2nd Defendant, PW1 said of the various exhibits of invoices allegedly prepared by the 2nd Defendant, there was no evidence on any of them to show that they had been prepared by him. With regard to Exhibit P26, it was not an official receipt in the Plaintiff's system. The 2nd Defendant's signature is on the receipt but they did not have it examined by a handwriting expert. The receipt was provided by Speedy. This is not part of the Plaintiff's particulars of claim. This is Speedy's payment of a forged invoice, Exhibit P24.

PW1 said Exhibit P16 is a Speedy cheque signed by Prasad. On its reverse is his signature. The copy of the cheque was provided by Prasad. PW1 said he did not ask him why he signed a cash cheque. He did not have any idea whether Prasad cashed the cheque himself.

The Plaintiff's second witness (PW2) was Amit Kumar Prasad who said he is a director of Speedy Customs Ltd and Speedy Holdings Ltd. Speedy does the business with the Plaintiff of freight forwarding and import of goods as required by the Plaintiff.

The 2nd Defendant was their contact person in the Plaintiff. He issued a cash cheque – Exhibit P16 – for $5,185.00 in favour of the Plaintiff, at the request of the 2nd Defendant. On the reverse of the cheque was his (Prasad's) signature. He gave the cheque to the 2nd Defendant.

Exhibit P55 is the deposit slip for the $6003.20 cheque the Plaintiff paid into Speedy's account. The Plaintiff's cheque for $15,333.70 for (Exhibit P25) was paid into Speedy's account by the 2nd Defendant. Exhibit P23 is the deposit receipt. The Plaintiff was making payments into his (Speedy's) account.

In 2011, he (Prasad) ordered vehicle parts for the Plaintiff. He issued the Plaintiff with 2 invoices. Exhibit P37 is one of the invoices, and the Plaintiff paid it through a cheque for $16,268.15, which is proof of payment. He deposited the cheque into Speedy's account. The deposit slip is Exhibit P39.

Exhibit P40 is Speedy's invoice to the Plaintiff for Toyota Hiace parts. The Plaintiff paid the invoice by a cheque for $7,458.50 which was deposited into Speedy's account. The deposit receipt is Exhibit P44. All payments were cleared by the Plaintiff.

He was called in by the Plaintiff for a meeting where PW1 and the Plaintiff's Taylor wanted a full refund. The Purchase Orders were not the Plaintiff's when he showed them.

Under cross-examination by Counsel for the 1st Defendant, PW2 said that Speedy had business dealings with Drive Through Auto Spares Ltd (Drive), with which company he dealt with the 1st Defendant.

Exhibit P39 is the deposit receipt for Speedy's account and he confirmed receiving $16,268.15 from the Plaintiff. To date the parts in the invoice have not been supplied to the Plaintiff. This was a pure business dealing between Speedy and the Plaintiff. Exhibit P46 is the deposit receipt for $7,458.50 paid by the Plaintiff to Speedy. PW2 confirmed Speedy received this sum. Speedy have not supplied parts to the Plaintiff. The Plaintiff paid $23,726.65 to Speedy and the parts remain to be supplied.

These were pure business dealings between Speedy and Drive. Speedy paid a total of $19,999.92 to Drive. It was paid to the company and not to the 1st Defendant. The dealings were not between individuals. If Speedy could not supply parts they ought to refund the Plaintiff the money. Speedy have only refunded part of the money to the Plaintiff. The balance remains to be paid by Speedy to the Plaintiff. The Plaintiff should pursue Speedy for the balance sum. The Plaintiff did not have direct dealings with Drive or the 1st Defendant. Speedy have paid $6,000.00 to the Plaintiff. Speedy needs to refund to the Plaintiff. He agreed the Plaintiff should not pursue the 1st Defendant.

Under cross-examination by counsel for the 2nd Defendant, PW2 said he refunded $6,000.00 to the Plaintiff. He had taken $23,000.00 from the Plaintiff. The $6,000.00 are the profits he made from 4 transactions with the Plaintiff. The 2nd Defendant did not benefit from the cheques he (Prasad) received from the Plaintiff. The 2nd Defendant did not receive any benefit from Speedy. The transaction was between companies.

Speedy was not able to supply parts and they were liable to refund all the money to the Plaintiff. He agreed the transactions were between 2 limited liability companies and cannot concern the 2nd Defendant.

Exhibit P16 is Speedy's cash cheque to the Plaintiff which he gave to the 2nd Defendant who did not sign any acknowledgement of receipt ANZ requires the signature of the signatory on the reverse. He denied it was him who took the cash from the bank. His is the only signature on the reverse of the cheque. The Plaintiff never queried about the non-payment of the amount.

He visited the Plaintiff's office many times after this transaction and he never asked the cashiers for a receipt. He denied he never asked for a receipt because he had cashed the cheque himself.

Exhibit P25 is the cheque at the bottom (on the reverse) of which is his signature. Another signature is that of the 2nd Defendant. He disagreed he cashed the cheque. His company received the money but never supplied the spare parts.

In re examination, PW2 said he did not repay (the Plaintiff) the balance because it was reinvested in spare parts.

The final witness for the Plaintiff was Vinay Sandeep Chand (PW3) who said he paid cash to the 2nd Defendant and because of that, his rifle was cleared and released to him. With that the Plaintiff closed its case.

The 1st Defendant (DW1) now gave his evidence. In 2011, he was a Director of Drive. He received a call from Prasad of Speedy who ordered spare parts. Exhibit P59 was their tax invoice on Drive's letterhead billed to Speedy. His company was paid this money of $13,827.92 for the Honda Accord spare parts.

Exhibit P60 is on Drive's letterhead to Speedy for Toyota spare parts for $6,172.00. His company received this amount. All these were business transactions between Speedy and Drive. They were never personal dealings with Speedy or Prasad.

Referring to Exhibit P63, DW1 said he never received any money from the Plaintiff. Drive never received any money from the Plaintiff. He, personally, had no contract with the Plaintiff to supply parts to them. Drive did not have any contract with the Plaintiff to supply parts to the Plaintiff. He and Drive were not liable to the Plaintiff. The order placed by the Plaintiff to Speedy was canceled, but the order placed by Speedy to Drive was not canceled and remains open.

DW1 then went through the other exhibits tendered by the Plaintiff and stated he had nothing to do with any of them. With regard to Exhibit P45, he said there was no loss to the Plaintiff.

Both payments by the Plaintiff to Speedy were approved by Nick Taylor. If the payments were wrong, the Plaintiff should recover from Speedy as the money did not come to the 1st Defendant nor to the 2nd Defendant. Speedy should refund the money as the payment was given to it. He has not stolen any money from the Plaintiff nor committed any fraud against the Plaintiff, while employed by the Plaintiff. He had not provided any false document to any government authority. He had no contract with the Plaintiff to supply any parts to it.

Under cross examination by Counsel for the 2nd Defendant, DW1 said either the Financial Controller (PW1) or the General Manager approves payment vouchers. Without their signature, no cheque can leave the Plaintiff's office.

Under cross examination by Counsel for the Plaintiff, DW1 said the invoices were not prepared by him. He denied he altered the date on the invoice to avoid the management becoming aware it was due. Once a date is inserted on an invoice it cannot be altered.

When he was with the Plaintiff, Speedy would issue cheques in the Plaintiff's name. After his termination he became aware of Speedy trying to supply parts to the Plaintiff.

In re-examination, DW1 said the $42, 000.00 paid by DGF to the Plaintiff was not supposed to be allocated to SPC. This error was committed by somebody else. He tried to correct it and there was nothing wrong with that. There was no loss to the Plaintiff. No money moved out of the Plaintiff's account. He had corrected a wrong done by someone else. He gained nothing by correcting the error. With the conclusion of his re examination, the 1st Defendant closed his case.

The 2nd Defendant (DW2) now opened his case by giving evidence. He said he was never allowed to prepare payment vouchers. Prasad did not give him the cheque Exhibit P16 at his office. The Vicky on the reverse is not his signature. On the reverse of Exhibit 25, Speedy's cash cheque for $13,246.80, it was not his signature and not his account number. "Viklesh" was not written by him. The receipt Exhibit P26 was not issued by him to Prasad. In his career with the Plaintiff he has never issued any receipts. It was not his signature on the receipt. He had no knowledge of any dealings between Drive and Speedy. He did not embezzle or convert $57,237.01.

Under cross examinations by Counsel for the Plaintiff, DW2 said it was strict procedure that customers pay to the Plaintiff's cashiers. With regard to Exhibit P16, he denied he had collected this cheque from Prasad. He denied 8857784 is his account number. He denied Vicky was his signature. He denied he had collected a cash cheque from Speedy and denied he had cashed the cheque the same day. He denied preparing any of the invoices. He did not issue the purchase orders. He did not advise Prasad to seek parts from Drive. He did not introduce Prasad to the 1st Defendant.

After DW2 was re-examined by his own Counsel the 2nd Defendant closed his case.

I then instructed all 3 Counsel to make oral submissions on the next hearing date and prescribed the order of the speeches.

The Plaintiff's Counsel started with his submission. He said the 1st and 2nd Defendants embezzled the amount from the Plaintiff in the course of their employment over the 7 transactions in para 6. Counsel went through those transactions and said the Defendants colluded. The Plaintiff did not have any checks and balances to prevent the fraudulent changing of the ageing of bills. Prasad asked the 2nd Defendant for the receipt but when he did not receive it, he, Prasad, did not do anything.

On the reverse of the cheque Vicky is not a signature. Prasad's signature is the only signature on the reverse of the cheque. It is ANZ practice to get the signatory to sign on the front and the back of the cheque, but no one was called from ANZ to confirm this practice. There is no direct proof that the 2nd Defendant cashed the cheque but Counsel asked the Court, that because, (according to Prasad's evidence) the 2nd Defendant was the last person to handle the cheque, the Court should draw the inference that he cashed the cheque. Counsel agreed that the Bank would ask for some identification and the signature of the person who received the cheque proceeds.

With regard to the 5th transaction the Plaintiff should not have paid Speedy but it paid. Before October 2011, Speedy had been conducting business with the Plaintiff for 5 years. Exhibit P16 was the 1st time a cash cheque had been issued because Prasad trusted the 2nd Defendant. The Plaintiff concedes its system then was not fool proof.

With regard to the 7th transaction, the spare parts were falsely ordered by the 2nd Defendant. The moneys were paid to Speedy but to date not a single spare part has been received by the Plaintiff and the Plaintiff has not filed any action against Speedy.

Counsel for the 1st Defendant then submitted. He said the court has to determine whether the Plaintiff had proved that the Defendants took the moneys and converted it to their use. The claim had to be particularized which had not been done, as required by Order 18 Rule 11(1) of the Rules of the High Court.

The Plaintiff did not produce its bank statement to show the moneys did not go into its account. No evidence was adduced in respect of the writings on documents. There was no report of any handwriting expert nor was any expert called to give evidence. No evidence of any falsified documents to government authorities was produced to the court. PW1 confirmed that the Plaintiff should have recovered from Speedy. Counsel said when Speedy discovered the invoices were false, they ought to have refunded the money to the Plaintiff. This disclosed dishonesty on the part of Prasad in not returning the money which did not belong to Speedy. He suggested Speedy and the Plaintiff were working together and it was a wrong cause of action to sue the 1st and 2nd Defendants

All documents point to the dishonesty of Prasad and Speedy on the facts. The 1st Defendant saved the Plaintiff by correcting the ageing and the party to be credited with the payment of $42,000 and the Plaintiff did not suffer a loss in any event. The claim should be dismissed.

Counsel for the 2nd Defendant now submitted. The particulars of the claim are ambiguous in alleging both Defendants did the same thing against the Plaintiff. The allegations in para 3 of the Statement of Claim should have been separately alleged against each Defendant. Para 6 particularizes cheques etc but did not particularize what each Defendant did wrong. The Plaintiff's evidence does not implicate the Defendants. All cheques were signed off by the Financial Controller (FC) and approved by Devan or Taylor. DW1 and DW2 state the accounts payable section prepare the payment vouchers. DW1 said Speedy had given crossed cheques to the Plaintiff, so there was no reason for Speedy to give any cash cheques. With regard to Exhibit P25, the 2nd Defendant denied signing on the reverse and no handwriting expert was called at all. He also denied raising any of the invoices.

Counsel for the Plaintiff replied.

At the conclusion of the hearing I stated I would take time to consider my judgment. In the course of reaching my decision I have perused:

The Bundle of Pleadings.
The Plaintiff's Bundle of Documents.
The Defendants Bundle of Documents.
Authorities cited by counsel on both sides.

I now deliver my judgment. The principal issue raised in this action is the allegation contained in para 3 of the Statement of Claim that during the said period, the Defendants fraudulently embezzled and converted to their own use the total sum of $57,237.01 being monies collected by them on behalf of the Plaintiff from the Plaintiff's customers. I note that no particulars of the alleged embezzlement and conversion have been provided in para 3 nor anywhere else at all in the Statement of Claim. There is no mention of the alleged dates, amounts and names of the customers concerned.

The only Particulars of Claim provided are in para 6 where 9 cheque numbers, their dates, the cheque amounts, the invoice links and the names of the payees are clearly stated. But this is a horse of another colour because they do not bolster the Plaintiff's allegation in para 3. Indeed those particulars would show unequivocally that the payees had indeed received payments from the Plaintiff and therefore the Plaintiff could not have suffered any loss whatsoever. Further these directly and incontrovertibly contradict para 3 in that these are payments out by the Plaintiff and NOT payments from its customers diverted by the Defendants on their way to the Plaintiff.

The issue before me is in the simplest terms crystallized in the Minutes, in Issue 1 to be determined by me viz whether the Defendants embezzled and converted to their own use the total sum of $57,237.01 particularized in para 6, being monies collected by the Defendants from the Plaintiff's customers.

It is trite law that a party is bound by its pleadings. As I said earlier, para 6 contradicts para 3. Now it is even clearer that the Plaintiff has failed to show that and to prove how the Defendants took moneys from FIRCA and Speedy Holdings and failed to pay the Plaintiff, when para 6 shows as plain as a pikestaff that these monies emanated from the Plaintiff and NOT its customers.

On this alone, the Plaintiff's claim falls to the ground, and this disposes of all matters in this action. However, I will not stop here but will go on to consider the evidence led by both sides herein. I have reproduced the material salient evidences in extenso above and do not propose to engage in any tautology. Suffice it to say that once the nature and the effect of the evidences are understood, the question of liability is very simply solved.

Turning to the 2 cheques first. They are Exhibits P16 and P26, they are both made to cash and are drawn on ANZ Bank. The first is for the sum of $5,185.00 and the second for $13,246.80. Both have on their reverse the signature of Prasad, the authorized signature of Speedy. The Plaintiff through its counsel and witnesses tried to put it out that it was the practice of ANZ that cash cheques required the authorized signatory of the account holder to sign on the reverse of the cheque. But the Plaintiff did not call any witness from ANZ to confirm the Bank had indeed such a practice. In my view, such a requirement is not part of any bank's current practice. I can say of my own judicial knowledge that a bank only requires the recipient of the proceeds of a cash cheque to sign on its reverse as an acknowledgment of receipt of the money. The only inference that can be drawn is that if the Plaintiff had called a witness from ANZ, he would have very quickly disabused anyone of the misperception that ANZ required the signatory to sign on the reverse of a cash cheque. In the event, the evidence would show, as suggested by the Defendants' counsel, who collected the proceeds of both cheques. This certainly was neither of the Defendants.

The evidence of the Plaintiff also showed clearly that monies were paid to Speedy but when the parts paid for were not received, the Plaintiff inexplicably made no efforts to recover their monies. Instead they went off at a tangent and sued their former employees. The Plaintiff should have sued Speedy but for their own reasons chose not to do so.

Further, Plaintiff's counsel tried to bolster the Plaintiff's case by raising inferences from the Bar Table. In my opinion, Counsel cannot augment the weakness in his client's case by his own oral submission unless the evidentiary basis for it has first been established by the evidence of his witnesses.

Finally, I also hold that Plaintiff's Counsel cannot resile from the admissions made in court by his own witnesses that Speedy should be the proper defendants and not the 1st and 2nd Defendants.

The cases cited, with one exception, are of no relevance to the matter once I have analyzed the claim as I have done. I therefore think it would be inexpedient to discuss them. The solitary authority that is relevant is my own decision in Lallu Gopi Chand v Dharam Mati Kumar and 2 Others, where I held that an allegation of fraud in a civil claim has to be proved according to the civil standard on a balance of probabilities.

At the end of the day, the Plaintiff failed to discharge the onus which is on it to prove any of its claims against either or both defendants.

In fine, because of the able way in which the matter has been argued by Counsel on both sides, I am able to conclude that I do not entertain any doubt whatsoever that the Plaintiff's claims against both Defendants should be hereby dismissed with costs. I summarily assess the costs to be paid by the Plaintiff to the 1st Defendant in the sum of $3,000.00 and to the 2nd Defendant in the sum of $3,000.00 making a total of $6,000.00.

Delivered at Suva this 30th day of March 2016.

David Alfred
JUDGE
High Court of Fiji