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Credit Corporation (Fiji) Ltd v Bulileka Transport Ltd [2016] FJHC 965; Civil Action 14.2013 (25 October 2016)

IN THE HIGH COURT OF FIJI
AT LABASA
CIVIL JURISDICTION
Civil Action No. 14 of 2013


BETWEEN


CREDIT CORPORATION (FIJI) LIMITED
PLAINTIFF


AND


BULILEKA TRANSPORT LIMITED
DEFENDANT


AND


NORTHERN BUSES LIMITED
THIRD PARTY


CONSOLIDATED WITH CIVIL ACTION NO 44 OF 2012


BETWEEN


NORTHERN BUSES LIMITED
1ST PLAINTIFF


RAJENDRA DEO PRASAD
2ND PLAINTIFF


AND


BULILEKA TRANSPORT LIMITED
1ST DEFENDANT


RAVINDRA DEO LATCHMAN
2ND DEFENDANT


SALESHNI DEVI alias SALESHNI DEVI PRASAD
3RD DEFENDANT


Coram : The Hon. Mr Justice David Alfred
Counsel : Mr A Kohli for the Plaintiff in Civil Action No. 14 of 2013.
Mr A Ram for the Defendant in Civil Action No. 14 of 2013
and the Plaintiffs in Civil Action No. 44 of 2012.
Mr A Pal for the Third Party in Civil Action No 14 of 2013
and for the Plaintiffs in Civil Action No. 44 of 2012.


Dates of Hearing : 12 and 13 August 2015, 24, 25, 26 and 27 November 2015,
11, 12 and 13 July 2016


Date of Judgment : 25 October 2016


JUDGMENT

  1. These 2 actions have been consolidated by an order of the Court. In the First Action the Plaintiff avers in its Statement of Claim that the Defendant took loans from it secured by an Asset Purchase Agreement and a Bill of Sale. The Defendant defaulted in its monthly installment payments resulting in the Plaintiff repossessing and selling certain vehicles thereunder.
  2. In its Defence, the Defendant essentially contends that the amounts claimed by the Plaintiff are in error or unnecessary or excessive.
  3. Further the Defendant avers it contracted with Northern Buses Limited (later, the Third Party herein) for the sale of certain encumbered buses, that the latter gave an undertaking

to the Plaintiff to take over the Defendant’s bus account loan and that it later reneged on its undertaking.


  1. In its Counter-Claim the Defendant alleges the Plaintiff falsely and maliciously advertised and published in the newspaper that it intended to Wind Up the Defendant as it was unable to pay its just debts. The Defendant therefore Counter-Claims against the Plaintiff damages as well as other sums with regard to the loans and the vehicles.
  2. The Defendant in its Third Party Notice claims against the Third Party an indemnity in respect of every judgment given against the Defendant under the Plaintiff’s claim in this action.
  3. The Third Party in its Defence to the above Notice states that it was not obliged to meet its obligations under the agreement including its conditional commitment to pay the Plaintiff because the Land Transport Authority did not approve and transfer the Road Route Licence from the Defendant to the Third Party.
  4. The Minutes of the Pre-Trial Conference between the Plaintiff and the Defendant dated the 2nd June 2015 state, inter-alia, the following:
    1. Among the Agreed Facts
      1. The Defendant had obtained certain advances from the Plaintiff as specified.
      2. The Third Party had with the consent of the Plaintiff purchased the Defendant’s bus business and undertook by letter to pay “the loan for the bus account” owing by the Defendant to the Plaintiff.
      3. The Plaintiff withdrew from the repossession of the 2 buses and left them in the Third Party’s possession.
      4. The Third Party declined to pay the said loan account by letter dated 28 November 2011 saying it was not in a position to pay the same.
    2. Among the Issues
      1. Were unnecessary charges debited by the Plaintiff.
      2. Were needless costs incurred.
      3. Why was the Third Party not pursued for payment when it had with the agreement of the Plaintiff undertaken to meet the debt properly owing on the buses.
      4. Are the debt amounts claimed by the Plaintiff inflated.
      5. Is the Plaintiff estopped from claiming the debt from the Defendant.
      6. Was the advertisement to wind up the Defendant defamatory.
  5. The Minutes of the Pre-Trial Conference between the Defendant and the Third Party held on 8 June 2015 record, inter alia, the following:
    1. Among the Agreed Facts
      1. The Third Party and the Defendant merged their bus operations and

thereafter the Third Party took over the operation of all services under the RSLs.

  1. The Defendant held 3 Road Service licences (RSL) issued to it by the

Land Transport Authority (LTA).

  1. By a Sale Agreement dated 11 October 2011 the Defendant sold its bus

business and goodwill to the Third Party.

  1. The LTA cancelled the Defendant’s 3 RSLs and refused to grant new

route licences to the Third Party.

  1. The Third Party has performed the Sale Agreement.

B Among the Issues
1. Did the Third Party enter into the first Agreement with full knowledge of the
problems the Defendant faced with the LTA, and thereafter operate the 2 bus


businesses pursuant to a merger.


2. Did the directors of the Defendants personally make any representations to the Third Party or its directors to induce them to enter into the Sale Agreement.


  1. Was the Sale Agreement conditional to the transfer of the RSL and did the Third Party waive the condition.
  2. In the Second Action, the 1st and 2nd Plaintiffs aver that by an agreement in writing dated 11 October 2011 between the 1st Plaintiff and the 1st Defendant it was agreed:
  3. The Plaintiffs further contend that at the time and for the purposes of the said sale, the 2nd

and 3rd Defendants as directors of the 1st Defendant orally and falsely represented to the Plaintiffs that there were no problems with the 3 road route licences (RRLs) and they failed to disclose that legal proceedings were pending against the 1st Defendant to establish why the 3 RRLs should not be varied, suspended or cancelled.


  1. The Plaintiffs say that by such false and/or fraudulent representation and non-disclosure, the 2nd and 3rd Defendants induced the Plaintiffs to purchase the 3 RRLs, the goodwill attached and the buses.
  2. The 1st Plaintiff on 11 October 2011 paid the 1st Defendant $257,000.00. The 2nd Plaintiff on 25 November 2011 paid to Merchant $110,176.81. Both payments were pursuant to the agreement.
  3. By reason of the aforesaid matters, the Plaintiffs allege they incurred the following expenses (special damages).

Particulars

(a) Repairs to buses $100,000.00. (estimated)
(b) Interest on loans obtained to pay the monies set out above.
(c) Solicitors costs for the loan documents $5,999.35.
(d) Stamp duty on loan documents $2,562.06.
  1. The 2nd Plaintiff on 12 October 2011 first discovered that legal proceedings were pending against the 1st Defendant and the LTA had refused to transfer the 3 RRLs to the Plaintiffs. On 19 October 2011, the LTA cancelled the 3 RRLs, as a result of which the buses were now valueless.

15. Consequently the Plaintiffs claim:
(1) Rescission of the Agreement.
(2) Return of $367,176.81.
(3) In the alternative damages for fraud and misrepresentation.
(4) Special damages.
(5) General Damages
(6) Exemplary/Punitive Damages.


  1. The 1st, 2nd and 3rd Defendants in their Defence contend as follows:

(1) The Plaintiffs have no cause of action against the 2nd and 3rd Defendants.

(2) The sale was of the 18 buses and the goodwill and not the 3 Road Service Licences (RSLs).

(3) The Defendants deny the agreement was subject to the transfer of the 3 RSLs.

(4) They say no representations were made to the Plaintiffs by the 2nd and 3rd Defendants.

(5) It was within the Plaintiffs’ knowledge that the 1st Defendant’s bus operations were in “financial and operational difficulties,” this being the Defendant’s reason to sell.


17. In the 1st Defendant’s Counter-Claim, it alleges:
(1) The 1st Plaintiff did not pay the 1st Defendant’s debt to Credit
Corporation (Fiji) Limited (Credit) in breach of the Agreement and its
undertaking.
(2) By reason of the above the debt has risen to $120,857.35 as at 6
September 2012 with interest thereon continuing.
(3) As a result the buses were seized by Credit.
(4) As a consequence the 1st Defendant counter-claims for:
(a) The sum of $120,857.35, as at 6 September 2012.
(b) Interest.
(c) Special Damages.
(d) General Damages.
(e) Costs.


18. In their Reply and Defence, the Plaintiffs aver the agreement was subject to the LTA
transferring the 3 RRLs, the LTA refused so, the 1st Plaintiff did not pay Credit.


19. The Minutes of the Pre-Trial conference between the Plaintiffs and the
Defendants held on 8 June 2015 record, inter-alia, the following:
Among the Agreed Facts

  1. The 1st Plaintiff and the 1st Defendant were bus operators in Labasa.
  2. The 1st Plaintiff paid a sum of $257,000.00, took possession of assets sold and paid Merchant $117,176.81, and undertook to pay Credit the debt of the 1st Defendant.
  3. The LTA cancelled the 1st Defendant’s 3 RSLs and refused to grant new Route Licences to the 1st Plaintiff.
  4. The 1st Plaintiff declined to pay Credit when it sought payment under the undertaking.
  5. The 1st Plaintiff has performed the Sale Agreement and transferred to itself all the buses purchased, has possession of them and has been using them in its business.

Among the Issues

  1. Did the 1st Plaintiff enter into the agreement with full knowledge of the 1st Defendant’s problems with the LTA.
  2. Did the 1st Plaintiff purchase the 3 RSLs pursuant to the Agreement or at all.
  3. Did the 2nd and 3rd Defendants make any representations to the 1st and 2nd Plaintiffs to induce them to enter into the Agreement.
  4. Was the Agreement conditional on the transfer of the RSL routes and did the 1st Plaintiff waive the condition.
  5. Did the 1st Plaintiff affirm the Agreement after waiver of the conditions.
  6. When the consolidated actions came up for hearing before me on the first day. Counsel for the Plaintiff and for the Defendant in the First Action informed that they had come to an agreement regarding the claims. Both Mr Kohli and Mr Ram confirmed the total amount the Plaintiff is claiming is $118,684.22.
  7. The hearing then commenced with the Plaintiff’s general manger giving evidence. He is Navind Kumar (PW1). He said the Defendant entered into an Asset Purchase Agreement and also obtained a loan to purchase 2 buses. The loan was secured by a Bill of Sale. There was also a deed of collaterisation. The Plaintiff was empowered to combine both accounts which became overdue on 15 September 2009.
  8. An agreement was entered into between the Defendant and the Third Party for the sale of 2 charged buses to the Third Party. On 18 November 2011 the Third Party wrote the Plaintiff undertaking to take over the loan of the Defendant. The Plaintiff sold the 2 buses for $6,900.00. The van was sold for $40,000.00.
  9. PW1 said he had requested for a letter of undertaking to be assured that their debt would be paid off. They were not a party to the arrangement which was between the Defendant and the Third Party. They never informed the Defendant that it did not need to pay and they did not inform the Defendant that the debt would be paid by the Third Party.
  10. The Plaintiff had to advertise because payment had not been made by the Defendant. They were never given a copy of the agreement by the Defendant to sell the buses to the Third Party. At a meeting, the Third Party (T.P) informed they would be buying the buses as per their agreement with the Defendant, and gave PW1 an undertaking letter that they (T.P) would settle the debt as per their agreement.
  11. Based on the undertaking the Plaintiff allowed the Defendant to continue with their sale. At the end of the day, they wanted payment by the Defendant. They did not give any relief to the Defendant. The relief only comes when they give a discharge and a discharge only comes after payment of the debt. After repossession, the buses remained where they were which was in the Third Party’s yard in Labasa where they were already parked by the Defendant. There were no offers to buy the buses at the price advertised.
  12. They notified the Defendant when they got an offer of $6,000.00. Ultimately they sold the 2 buses at the new price offered of $6,900.00. The 25% interest on overdue amount was agreed to in the Agreement and the Defendant never raised any query of high interest rate. If there were no arrears the overdue fees were not charged. The 25% was only charged, if the client defaults, as per the Agreement. The Plaintiff advertised the winding up of the Defendant after the Plaintiff had no option when the Defendant defaulted. The Plaintiff is claiming $118,684.22.
  13. Under cross-examination by Counsel for the Defendant, PW1 said the Reserve Bank of Fiji (RBF) wants them to charge the same rate of interest on overdue amounts as on loan amounts. The RBF found 25% was too high. The conduct of the Defendant’s account was unsatisfactory and that could imply the Defendant was undergoing financial difficulty.
  14. PW1 said the Plaintiff would discharge an asset if they received sufficient payment for that asset. PW1 agreed there was a substantial reduction in the value of the buses whey they were sold. The price was determined by a willing buyer and there was no willing buyer higher than $6,900.00. The Defendant is having custody and looked after the buses and it is the Defendant’s responsibility to take care of them. If the Third Party wants to take over the loan it must first make a loan application. The Deed of Collaterisation binds the security of the 1st account with the security of the 2nd account.
  15. PW1 said the Defendant’s account was unsatisfactory and the payments were not coming. They gave the Defendant an opportunity to sell the buses and pay the debt. The Defendant is their client and they could not pursue the Third Party.
  16. When cross-examined by Counsel for the Third Party, PW1 said under the Asset Purchase Agreement, the Defendant could not assign its rights to the Third Party. It means the obligation for payment of the account cannot be transferred to a third party. The Defendant cannot ask anyone else to take over the 2 accounts.
  17. The Defendant did not keep the buses in running order and the condition of the buses led to the Plaintiff not been able to get a buyer. The Defendant never made any offers to the Plaintiff to buy these buses. The Plaintiff was not relying on the undertaking as a security document.
  18. When re-examined by his own Counsel, PW1 said they never released the Defendant from their obligation to pay. The figure now is less than what the Plaintiff was demanding.
  19. With that the Plaintiff closed its case and the Defendant began its case.
  20. The Defendant’s first witness was Ravindra Deo Latchman (DW1). He said the Defendant joined Northern Buses Limited as the Third Party because the Defendant’s business had been sold to the Third Party in October 2011. When they sold the business, the Third Party was supposed to take over the debts of the Defendant, i.e Credit and Merchant who both had security over the Defendant’s buses. All their buses had been sold to the Third Party who have possession of all 18 buses and are using them. None of the buses were returned to the Defendant. Both debts were supposed to be paid by the Third Party.
  21. Merchant’s debt has already been cleared by the Third Party but the Third Party did not clear Credit’s.
  22. The Agreement was willingly signed by both the Defendant and the Third Party. The 18 buses were sold for $450,000.00. The routes were not sold as these were owned by the LTA. The Agreement did not sell the service routes.
  23. DW1 said it was not his responsibility that the licences were to be given to the Third Party. He said the Third Party did not advise him that the deal was off. They did not ask for the refund of the money to them. They did not say they would return all the buses. They did not write a letter to this effect. They did not make any attempt to cancel the sale.
  24. DW1 said he was operating as the managing director of the Defendant while his wife was a director but took no part in the proceedings. The Third Party purchased his (Defendant) business on an as is where is basis. None of the 18 vehicles were returned to the Defendant. They are operated by the Third Party. He thought the Third Party would pay into Merchant’s and Credit’s accounts.
  25. He wrote to the LTA consenting to the transfer of the buses. The Third Party never advised them that the deal was off and that they wanted to return the buses. DW1 said he did everything the Third Party requested. He signed all transfer forms and the Third Party are still using all the buses to date for the past 4 years. There was no oral request from the Third Party to terminate the Agreement.
  26. DW1 said the Third Party to date did not pay the account of Credit. There was an advertisement in the newspaper of the winding up petition against the Defendant. It was done by the Plaintiff because their account was not paid. Because the Defendant was facing financial problem that was the reason why he sold the bus company and to pay everybody he owed money so that his name and the company name are not damaged because the Defendant is the oldest bus company in Vanua Levu. After the advertisement appeared, the banks did not give any loans to him, and the Defendant’s name went down.
  27. DW1 said they were claiming against the Third Party the total amount due to the Plaintiff as they are the rightful people to pay the debt and the interest thereon. He said the Plaintiff’s penalty interest is very high and should be 10%. He said both Merchant and the Plaintiff want to repossess vehicles because of their regular defaults in repayments. He did not issue any demand to the Third Party (T.P) to pay off the Plaintiff. He did not file any proceedings against the T.P. He did not ask for the buses to be returned. He was aware that the T.P had withdrawn its undertaking to Credit.
  28. DW1 said he used the $257,000.00 to pay his creditors. He did not have money to pay Credit. He has no evidence that he applied for loans. He agreed there were a few dishonoured cheques and interest was charged on overdue accounts. He would consider a company with dishonoured cheques as not having a good credit standing. DW1 said it was the vendor’s responsibility to enable the transfer of the RRLs from the LTA.
  29. When cross examined by Counsel for the Plaintiff, DW1 said he was having financial trouble. He was making payments but falling into arrears. He was looking for a buyer for his business. He wanted to pay all debts and retire. The Bank would not give a loan for secondhand vehicles. The Plaintiff was taking a greater risk and nobody forced him to take a loan from the Plaintiff. No bank would give a loan, looking at his 3 years bank statements. He agreed his financial situation was not very good.
  30. As far as the Plaintiff is concerned they owe but say it should be paid by the T.P. Inspite of 2 entries in the Data Bureau, the Plaintiff still in January 2009 gave him a loan. He knew the Plaintiff was not obliged to discharge the van. The Plaintiff was not charging penalty interest which they were entitled to charge. The Plaintiff was fair to him.
  31. When re-examined, DW1 said it was his understanding that the account would be paid by the T.P. The Defendant was owing its creditors and he paid them off with the $257,000 he received. The Plaintiff is supposed to be paid by the T.P but it has not paid the Plaintiff to date. After he received the money, he paid all his creditors except the Plaintiff.
  32. The next witness was Seleshni Devi (DW2), the 3rd Defendant, but her evidence adds nothing as she said she was not involved in the business.
  33. With that the Defendant closed its case and the Third Party opened its case.
  34. The Third Party’s first witness was Rajendra Deo Prasad (TW1), the 2nd Plaintiff in the second action. He said he is a director of Northern Buses Limited (Northern). He became sole owner of Northern in 2000. A proposal came orally from the Defendant in September 2011, and they entered into an agreement, paid cash and agreed to take over the Defendant’s loan. He paid $257,000 on 11 October 2011 and had to pay the Plaintiff and Merchant. The LTA refused to accept the application because of a show cause letter. He was aware of the problem but did not enforce any of his rights under the Agreement. He filed an appeal to the LTA Tribunal at the Defendant’s request, but the Defendant withdrew the appeal without discussion with them. With the withdrawal of the appeal there was no chance of getting the permit back.
  35. He was trying to tell the Plaintiff that they would pay them after the transfer of the RRL, but the RRL were not transferred to him. The Plaintiff never issued a demand notice to settle the Defendant’s account. The Plaintiff never instituted any legal proceedings against Northern Buses for the Defendant’s account.
  36. TW1 said the Defendant never started any litigation before this date to compel Northern to pay the Defendant’s debt. He was not aware of the show cause issue prior to the agreement. If he were aware he would not have entered into the agreement, and would have waited for the permits to be activated before making the payments. No one informed him there was an issue. According to the Agreement Northern would only pay the Plaintiff if the permits were transferred to them.
  37. When cross-examined by Counsel for the Defendant, TWI said to date the LTA had not transferred the permit to Northern. The merger was done to save the Defendant who were facing financial and operational difficulties. He said when he found out he could have called the deal off but he proceeded with the transaction to have all the buses transferred to Rajendra. The transfer depends on the LTA and not the Defendant. It was

only their responsibility to make the necessary application for the RRL He could have used clause 10(d) but he chose to affirm the agreement and proceed with the transaction.


  1. TW1 said he issued the writ in August 2012. He has kept on using the buses till today. If the LTA does not transfer the RRL, the deal is off. He kept on using the buses as long as the Defendant kept on using his money. The buses were never stripped.
  2. TW1 said it was not too late for both sides to go back to their original position. He agreed there was an agreement to pay Credit and he was in breach of it because Credit was not paid. He agreed the agreement did not say he could pay Credit when he was in receipt of the permit. The routes were not part of the sale. He was still willing to pay today if the permit was given to him.
  3. When re-examined by his Counsel, TW1 said the owner of the bus should be the permit holder. If you do not have the RRL, the LTA will not register you as the owner of the bus. Bus operators are aware of this rule. At that time Northern did not own any RRL. The LTA would not accept the transfer to Northern. He said he wanted to save the Defendant because it was the family business. Credit never acted on their undertaking.
  4. With that Counsel for Third Party closed its case in Action No. 14 of 2013 and the 1st and 2nd Plaintiffs’ case in Action No. 44 of 2012.
  5. The oral submissions now began with Counsel for Credit Corp submitting in Action No. 14 of 2013. He said Credit’s advances to the Defendant (BTL) were secured by a Bill of Sale and an Asset Purchase Agreement. The security was 1 car and 2 buses. BTL started making repayments. BTL had a deed of collaterization which ties both sets of securities. BTL was in arrears. Credit wanted an undertaking from someone of substance. Rajendra said he would undertake. Credit repossessed the vehicles and advertised for their sale. The van was sold, Credit credited the proceeds of $40,000 and gave a rebate to BTL. Credit advertised the buses for sale and the highest tender was $6,000.00. Credit sold it to a higher bidder for $6,900.00 Credit’s claim is $118,684.22 (which Counsel for BTL agrees is due to Credit from BTL). Credit never discharged BTL. There was no consideration for the Letter of Undertaking. BTL is bound to pay the penalty interest as it signed in full knowledge. Counsel concluded by saying Credit looks to BTL only for payment of the claim.
  6. Counsel for Northern then submitted in Action No. 44 of 2012. He said the root of the matter was the agreement of 11 October 2011. In return for its payment, Northern gets the bus operation. Northern now wants, inter alia, a rescission of the agreement, reimbursement of all monies paid (i.e. $367,176.81) to BTL and Merchant and relief from paying Credit the debt of BTL. Counsel said BTL’s present solicitors did not consider sending any notice of rescission pursuant to Clause 5. Northern decided to continue and did not resort to clause 5. Northern paid Merchant, and is not claiming for fraudulent misrepresentation. Northern knew one day after the agreement that it would not go through.
  7. Counsel then submitted on BTL’s Counter Claim. The letter of undertaking is not effective because (1) there was no contractual relationship between Northern and Credit (2) there was no acceptance by Credit. Credit did not accept the letter of undertaking and Credit did not commence any action against Northern but their action was against BTL. Northern is relying entirely on para 18 of its defence to the Counter Claim.
  8. Counsel then submitted on the claim against the Third Party (Northern) in Action No. 14 of 2013. He said after the RRL was cancelled, Northern is not obliged any further to BTL under clause 2(c) nor to Credit.
  9. Counsel for the 1st, 2nd and 3rd Defendants in Action No 44 of 2012 now submitted. He said there was no claim and no cause of action against the 2nd and 3rd Defendants as they are directors and shareholders and they need to be discharged.
  10. Everything was done by BTL except the ultimate transfer. The 2nd Plaintiff has no privity of contract with BTL and has no claim at all. The 2nd and 3rd Defendants have no privity of contract with either Plaintiff. Clause 10(d) of the Agreement was the escape clause for the Purchaser and also the Vendor. All buses were transferred to the 2nd Plaintiff and only the debts to Merchant and Credit and the transfer of the licence remained.
  11. Counsel said the particulars of misrepresentation, fraud etc were not pleaded. The Plaintiff was aware of the problem but affirmed the agreement and waived clause 10(d). The Plaintiffs did not invoke clause 10(d) and acted as if it did not matter. The Plaintiffs affirmed the Agreement and intimated to Merchant and Credit that the Plaintiffs were proceeding with the transaction and gave an undertaking to Credit. There was no reversal, only positive proceeding.
  12. The undertaking was given for consideration viz (1) it averted the repossession (2) Northern got to keep the buses (At this juncture, Mr Kohli confirmed his witness said they did not repossess because of the letter of undertaking).
  13. Counsel continued that Exhibit D4 was proof that Credit was looking to the Plaintiffs to make full payment of BTL’s debts. Even after Exhibit T1, the Plaintiffs did not rescind the agreement but filed an appeal. The Plaintiffs were proceeding ahead rather than cancelling the agreement. On 25 November 2011, the 2nd Plaintiff paid Merchant fully. BTL did all that was necessary regarding the RRLs. By August 2012, the parties have altered their position. There will be substantial prejudice if the position is reversed for both parties. The rescission avenue is not available any longer because of the significant

delay in making the application. There are laches and acquiescence in the state of affairs. The Plaintiff relied on things that proceeded towards completing the contract. There was no question but the Plaintiff had to pay Credit on the undertaking. The winding up petition led to a loss of business reputation. In 2013 BTL’s business was o.k. and it thus suffered damage. The Plaintiffs never took the rescission avenue.


  1. Counsel then submitted on Action No. 14 of 2013. The debt to Credit is disputed by BTL. He asked for general damages for the Defendant’s name being in the Data Bureau list as a result of which its applications for loans were refused. Counsel also contended that the penalty interest at 25% is too high. The court should revise this to 10%. The van was sold at an undervalue and there was a loss of $6,000.00. The undertaking was given at the request of Credit, there was a direct relationship between Northern and Credit, and now Northern is directly liable as there was consideration because the repossession was not done. BTL relied on the the agreement and the undertaking that Northern would pay Credit.
  2. Counsel for Northern now submitted. He said Credit did not accept the undertaking and did not act on it. There was no evidence from any lender that it refused credit to BTL. There were no documents to support the allegation. There was no proof of any loss of reputation. Other creditors’ names were also in the Data Bureau list.
  3. Counsel for Credit then submitted. He said there was no correspondence from BTL disputing the amounts. There was no discharge of BTL by Credit. It was a fantasy to say Credit was relying on the undertaking. It could not sue Northern on the undertaking. Counsel conceded interest at 25% seemed exorbitant but BTL never challenged or questioned the rate of interest. He asked for costs of $5000.00 per suit.
  4. At the conclusion of the hearing I said I would take time for consideration. Having done so, I now proceed to deliver my judgment. I heard these 2 consolidated actions in immediate succession, in order that I may give judgment upon them together, again in immediate succession. The judgment is based on all the evidence provided in the course of the hearing by all witnesses for all parties. I have reproduced them in extenso above to obviate the need to repeat them in my reasoning.
  5. The main question raised in the first action although from a different angle by each party may, I think, be stated succinctly as follows: BTL admits a debt to Credit but contends it should be paid by Northern, because of the agreement between Northern and BTL and Northern’s undertaking to Credit.
  6. The first document that I have to consider is the agreement between BTL and Northern made the 11th October 2011 (Exhibit D8). Its salient terms provide:

(i) BTL will sell and Northern will purchase the specified 3 Road Route Licences (RRLs) together with 18 specified buses, both together referred to as the “Transfer Property”:


(ii) The purchase price of $450,000.00 was to be paid in 2 tranches, $250,000.00 as deposit on the execution of the agreement and the balance on the settlement date (60 days after execution of the agreement) or to settle with Merchant and Credit to discharge any encumbrance to facilitate the transfer of the Transfer Property.


(iii) Time is of the essence.


(iv) Conditions Precedent inter alia:

(a) BTL is a service provider on the said routes, which routes are not being sold.
(b) The Agreement is subject to the LTA transferring the route licences to Northern.
  1. I next turn to Northern’s letter to Credit dated 18 November 2011 (Exhibit P14). The relevant words are as follows: “We hereby give an undertaking to take over the loan for bus account only by Bulileka Transport Limited as per our agreement.”

72. The relevant authority for me to consider at this juncture is the decision of the

High Court at Lautoka in Civil Action No. HBC 161 of 2009L: Adish Narayan .... Plaintiff AND Public Employees Union .... Defendant. Inoke J held at para [20] that because the undertaking was accepted by the Plaintiff, a binding contract for repayment arose out of it.


73. So here I have to consider whether Northern’s undertaking had been accepted by

Credit. I find and I so hold that no cogent evidence was provided to the court during the entire trial either orally or by document that Credit had accepted the undertaking. On the contrary, the evidence led pointed in the opposite direction. The evidence of its manager PW1 showed unequivocally that Credit continued to consider BTL as the sole debtor and CCL did not in any way act upon the undertaking. Finally to show with blinding clarity that it did not consider that Northern had taken over BTL’s debt, Credit never issued any letter of demand nor commenced any legal proceedings against Northern. It was as plain as a pikestaff, that Credit considered the supposed undertaking as irrelevant and never wavered in its determination to seek recovery from BTL alone of BTL’s debt to Credit.


  1. Even if I am wrong in my above finding, looking at the undertaking itself, it is clear that Northern is standing on a platform consisting of planks, all of which have collapsed. No particulars of what exactly Northern was going to do were supplied. No details of the loan it was ostensibly taking over were stated. No conditions of the agreement under which Northern was providing the undertaking were made visible. In fact it was clearly a nudum pactum which Osborn’s Concise Law Dictionary defines as an agreement made without consideration and upon which no action will lie. BTL failed to satisfy me that some consideration moved from Credit to Northern to entitle the former to enforce the undertaking against the latter.
  2. I do not think that BTL has succeeded in showing that the consideration moving from Credit was its releasing the 2 buses, because if that were the case, BTL could have compelled Credit to proceed further against Northern, but BTL did not.
  3. I therefore find and so hold that BTL fails in its attempt to get itself off the hook by getting Northern to pay Credit in its stead. I therefore enter judgment for the Plaintiff against the Defendant and dismiss the Defendant’s claim against the Third Party.
  4. I turn now to the Defendant’s Counter Claim against the Plaintiff.
  5. In Dunlop Pneumatic Tyre Co Ltd v Selfridge & Co. Ltd [1915] UKHL 1; [1915] AC 847; Dunlop sold tyres to Dew & Co who undertook not to sell the tyres below Dunlop’s list price. Dew sold tyres to Selfridge and received a similar undertaking, which Selfridge breached. Dunlop brought an action against Selfridge for breach of the undertaking. It was held by the House of Lords that Dunlop could not succeed in its undertaking because it had not provided any consideration for Selfridge’s promise. In fact, Dunlop was not even a party to the contract which was between Dew & Co and Selfridge & Co.
  6. To my mind this is exactly the situation here. Credit never gave any consideration to Northern and Credit was not a party to the agreement between BTL and Northern. It follows that Credit could not have compelled Northern to pay BTL’s debt and when and because Northern refused to pay BTL’s debt to Credit, this meant that BTL remains liable to pay its debt to Credit, the amount of which is not disputed. Thus the undertaking is invalid and ineffective.
  7. I turn now to the issue of defamation. The Defendant has the burden of proving that the advertisement was defamatory of it. It was a fact that the Defendant owed money to Credit. It was a fact that it failed or was unable to repay the loan. It was a fact that Credit was entitled in law to present a winding up petition and as required to advertise it in a newspaper. The debt to the date of this hearing has not been paid and still remains unpaid. In these circumstances it would stretch credulity to breaking point for the Defendant to claim Credit had defamed it. Similarly I find and so hold the Defendant cannot complain of its name being inserted in the Date Bureau list. It is a fact that 2 other creditors had entered their claims against the Defendant in that list.
  8. And it is also a fact that these entries did not prevent the Defendant from receiving a loan from Credit in 2009 as its director testified.
  9. At the end of the day these are my findings in:
  1. Civil Action No. 14 of 2013
  2. Civil Action No. 44 of 2012
  1. In fine my judgments are as follows:

interest thereon at the rate of 8% per annum from the date of judgment to the date of payment together with costs which I summarily assess at $3,500.00.


(2) I dismiss the Defendant’s Counter-Claim and order the Defendant to pay the Plaintiff costs which I summarily assess at $1,500.00.

(3) I dismiss the Defendant’s claim against the Third Party with costs which I summarily assess at $1,500.00 to be paid by the Defendant to the Third Party.

(B) Civil Action No. 44 of 2012

Delivered at Suva this 25th day of October 2016.


......................................

David Alfred

JUDGE

High Court of Fiji


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