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Property Experts (Fiji) Ltd v Ruwailevu Taxis Ltd [2019] FJHC 142; HBA7.2018 (1 March 2019)

IN THE HIGH COURT OF FIJI
(WESTERN DIVISION) AT LAUTOKA
APPELLATE JURISDICTION


HBA NO. 7 OF 2018

(On Appeal from the Decision of Magistrates Court Nadi delivered on 30th November, 2017 in Civil Action No. 91 of 2015)


PROPERTY EXPERTS (FIJI) LIMITED, a duly incorporated Limited Liability Company having its registered office at Nadi.


APPELLANT

[Original Defendant]


V


RUWAILEVU TAXIS LIMITED, a duly incorporated Limited Liability Company having its registered office at Nadi.


RESPONDENT
[Original Plaintiff]


Before : A.M. Mohamed Mackie- J.
Counsel : Mr. J. Sharma – For the Defendant- Appellant.
Plaintiff- Respondent absent and unrepresented.
Date of Hearing : 20th February 2019.
Date of Judgment : 01st March 2019.


J U D G M E N T


  1. INTRODUCTION:
    1. This is an appeal arising out of the judgment dated 29th November 2017 and delivered on 30th November 2017 at the Magistrate Court of Nadi, wherein the learned Magistrate ordered against the Defendant – Appellant (the Appellant) and in favour of the Plaintiff- Respondent (the Respondent) as follows;

  1. “THAT Defendant to pay $10,000.00 to the plaintiff;

  1. THAT 3% interest on the said sum of $10,000.00 from the date of filing this action till the date of this judgment.
  1. $1000.00 Costs”.
  1. Being dissatisfied of the impugned judgment, the Appellant, having filed the timely Notice of Intention to Appeal on 6th December 2017, filed the Notice and Grounds of Appeal on 19th December 2017, which too fell within the prescribed time period.
  1. BACKGROUND:
    1. The Plaintiff - Respondent Company (the Respondent) as the Purchaser and one Gremay (Pacific) Ltd as the Vendor had entered into a sale and purchase Agreement (the Agreement) in respect of all that piece of Land comprised in the Crown Lease No.12978 lot 13 SO 462 situated in Nadi, having an area of 1003 m together with the improvements therein, of which the said Gremay (Pacific) Ltd was the registered lessee.
    2. That at all material times, the Appellant had been carrying on its business of a Real Estate Agent under the provisions of the relevant Act and during the time material had acted as the Real Estate Agent for the said Vendor, Gremay (Pacific) Ltd.
    3. Notably, it was the Appellant Company, who had prepared the Agreement for the Respondent (Purchaser) and the Vendor thereto sign and accordingly same was signed on 28th day of February 2014 for the sale and purchase of the said land for a sum of $5, 20.000.00, however subject to, inter- alia, the following conditions.
      1. “That the Respondent would make a deposit of Ten Thousand Fijian Dollars ($10,000.00) with the Defendant upon the execution of the Agreement.
      2. That the said sale was subject to bank finance and the Plaintiff was to furnish the Vendor with a signed offer letter from the plaintiff’s bank on or before 13th day of May 2014.
      1. That the deposit of $10,000.00 would be refunded to the Plaintiff if the sale did not proceed.
      1. That the sale was subject to the consent of the Director of Lands”.
    4. Accordingly, on the Agreement being signed, the Respondent paid the said deposit of $10,000.00 into the Trust Account of the Appellant Company as per the terms of the Agreement.
    5. Subsequently, an initial dispute arose between the parties with regard to the composition of the subject matter (Land) followed by another dispute relating to the deadline given for the furnishing of the Approved or unapproved letter by the Respondent from its financing bank for the purchase.
    6. The Respondent’s position was that the dead line for furnishing of the said letter as per the Agreement was 13th May 2014. But the Vendor held the position that the dead line was 20th April 2014. It is observed that both the above disputes are in respect of the “further terms and conditions” found in the clause 28 of the Agreement, which the Respondent alleges that the Appellant had unilaterally altered forging the Respondent’s signature.

  1. As the transfer of the land did not materialize due to the above disputes, the Respondent demanded the deposit of $10,000.00 from the Appellant. At the same time the Vendor also demanded the said deposit from the Appellant threatening with possible winding up proceedings. Both the parties accused each other for the violation of the Agreement.
  2. Finally, in order to avoid the winding up proceedings by the Vendor Company, the Appellant deposited the advance Money with the Solicitors for the Vendor on the undertaking that the Money will be retained by them (Lateef & Lateef) in their Trust Account pending the outcome of the litigation between the Appellant and the Respondent.
  3. It is as a result of the litigation initiated by the Respondent against the Appellant, the impugned judgment was delivered by the learned Magistrate and the Appellant is before this Court challenging the propriety of it on the following Grounds of Appeal.
  1. NOTICE AND GROUNDS OF APPEAL
    1. The Appellant relies on the following 6 Grounds to appeal against the judgment, which are as follows:
      1. The Learned Trial Magistrate erred in law and in fact in finding in
        favour of the Plaintiff, whilst accepting at paragraph 22 that the Defendant Company had transferred the $10,000.00 to the Vendors Solicitors and that the Vendors Solicitors released it to the Vendor.
      2. The Learned Trial Magistrate erred in law and in fact in failing to consider the Defendants Exhibits 2, 3, 4, 5, 6, 7, 8, and 9 in its ruling.
      3. The Learned Trial Magistrate erred in law and in fact failing to take into consideration the Vendors Solicitors undertaking not to release the money until determination by the court.
      4. The Learned Trial Magistrate erred in law and in fact in holding the Defendant to refund the deposit to the Plaintiff, which is justly holding by the Defendant.
      5. The Learned Trial Magistrate erred in law and in fact in failing to consider the Defendants pleading and evidence that the Plaintiff’s claim should have been against the Vendor (Gremay (Pacific) Limited) and not the Defendant.
      6. The Learned Trial Magistrate erred in Law and in fact in awarding the Plaintiff costs in the sum of $1,000.00.
    2. The Appellant has reserved the right to adduce further grounds of appeal.
  1. HEARING OF APPEAL:
    1. The Respondent did not appear in this court either through its directors or by legal representation, despite notice being issued and same being reportedly served on it. Hence, the court proceeded to hear the matter in the absence of the Respondent.
    2. Learned counsel for the Appellant has orally addressed the court, drawing my attention to few reported judgments, particularly, on the Principal and Agency relationship and its legal implications. I thank the learned counsel for the short, but convincing submissions made.
  2. DISCUSSION:-
    1. I have carefully gone through the impugned judgment and ascertained the ground on which the learned Magistrate has arrived at the decision ordering the Appellant to pay unto the Respondent a sum of $10,000.00, interest on it and costs.
    2. I don’t think that a deep scrutiny is warranted in order to decide the propriety of the impugned judgment, in view of the issues that were raised for determination and the issue the learned Magistrate has considered to finally decide the matter.
    3. Parties had recorded 6 agreed facts, which, inter- alia, included the facts that the ownership of the land in question was held by the aforesaid vendor Gremay (Pacific) Ltd, the Appellant was the Real Estate Agent of the Vendor and the execution of the Agreement. However, certain contents in clause 28 thereof were disputed, alleging that it was altered by the Appellant.
    4. Parties also had raised 19 issues to be tried at the trial and answered by the learned Magistrate, which I shall not reproduce.
    5. In order to arrive at the final decision, though it was not a mandatory requirement to address and answer all the issues so framed, the learned Magistrate in this case has wittingly or unwittingly failed to address any issue out of those 19 issues or at least the most pivotal issue/s thereof, answering of which would, probably, have disposed the matter fully and finally.
    6. Instead, the learned Magistrate from paragraph 15 of the impugned judgment has proceeded to examine the propriety of the Agreement and decided on the basis that since the consent of the Director of Lands had not been obtained, as per clause 27 of the Agreement, it was illegal and null and void, while the parties had not called upon the learned Magistrate to decide on the question of consent of the DOL, by framing an issue on it.
    7. Even if the parties had framed an issue on the question of consent from DOL, it need not have necessarily attracted an answer in favour of the party who seeks refuge under Section 13 of the State Land Act, as the absent of consent could not have been a bar for entering into an Agreement between the parties. The reason being that the consent of the DOL becomes sine qua non only when the actual dealing with the State Lands takes place within the meaning of the Section 13 of the State Land Act.
    8. Even if the act of entering into the sale and purchase Agreement in this case had fallen within the meaning of Section 13 of the State Land Act, by reason of actually dealing with the Land on the execution of the Agreement, it could not have affected the Appellant in this case, in view of the most probable affirmative answer the issue number 14 in this case would have attracted, had it been properly addressed and answered by the learned Magistrate. The issue number 14 reads as follows.

“14. Whether the Plaintiff’s cause of action is against the Vendor- Gremay (pacific) limited?” (Emphasis mine).

  1. As per the Agreement, the duty of obtaining the consent of the DOL was squarely on the Vendor, who was a party to the Agreement with the Respondent, and the Appellant had no role to play in that regard. Notably, the Vendor was not a party to the case. The Appellant cannot be found fault with for any failure on the part of the Vendor, unless the Respondent proves that there was a valid Principal – Agent relationship between the Appellant and the Vendor. Admittedly the Appellant was not a party to the Agreement and the same is between the Respondent and the Vendor. The Law on the Principal-Agent relationship will be discussed later in this judgment.
  2. The contents of the pleadings averred by the Appellant in paragraphs 6 and 10 of its statement of defense, that of the Appellant’s Exhibits 2, 3, 4, 5, 6, 7, 8, and 9 and the evidence led at the trial, which would have amply guided the learned Magistrate before or at the trial to issue notice on the Vendor Gremay (pacific ) Limited, in order to make it as a proper or a necessary party, seem to have escaped the attention of the learned Magistrate.
  3. The rule 5 under Order viii of the Magistrate’s Court Rules Cap. 14 Rev. 1985 read as follows:

Non joinder

5.-(1) If it shall appear to the court, at or before the hearing of a suit, that all the persons who may be entitled to, or who claim some share or interest in, the subject-matter of the suit, or who may be likely to be affected by the result, have not been made parties, the court may adjourn the hearing of the suit to a future day, to be fixed by the court, and direct that such persons shall be made either plaintiffs or defendants in the suit, as the case may be. In such case, the court shall issue a notice to such persons, which shall be served in the manner provided by the rules for the service of a writ of summons or in such manner as the court thinks fit to direct; and, on proof of the due service of such notice, the person so served, whether he shall have appeared or not, shall be bound by all proceedings in the cause:

Provided that a person so served, and failing to appear within the time limited by the notice for his appearance, may, at any time before judgment in the suit, apply to the court for leave to appear, and such leave may be given upon such terms (if any) as the court shall think fit.

Misjoinder

(2) The court may, at any stage of the proceedings, and on such terms as appear to the court to be just, order that the name or names of any party or parties, whether as plaintiffs or as defendants, improperly joined, be struck out.


  1. The learned Magistrate, who failed to act under the above Rule 5 under Order viii, before arriving at the impugned final decision, could have paid some attention to the most pivotal issue number 14, answer to which would, undoubtedly, have been an affirmative one, in view of the pleadings and the ample evidence placed before the learned Magistrate. This affirmative answer, in my view, would, undoubtedly, have exonerated the Appellant from this case.
  2. Since there was allegation against the Appellant that the alterations in the Agreement were made by it, the learned Magistrate could have tried the Appellant with the participation of the Vendor as a proper party to the action.
  3. Unfortunately, the learned Magistrate failed to follow the said rules and/or to address the said issue number 14. Instead opted to try an issue with regard to the consent of the DOL, on which the parties were not at variance.

Principal and Agent Relationship


LAW:


  1. The general rule as rightly submitted by learned counsel for the Appellant is that "where a person contracts as an Agents for a Principal , the contract is the contract of the principal and not that of the agent ; and prima facie, at common law the only person who may sue is the Principal and only person who can be sued is the principal ." Montgomerie v. U.K. Mutual S.S. Assn Ltd [1891] 1QB 370 at 371. (emphasis mine)

In Phonogram Ltd v. Lane [1981] 3 ALLER 182 Lord Justice Shaw at page 187 stated as follows:-


"The general principle is, of course, that a person who makes a contract ostensibly as an agent cannot afterwards sue or be sued on it..."


  1. The general rule as stated above is subject to certain exceptions.

"Where a contract purports to be made by a company, or by a person as
agent for a company, at a time when the company has not been formed,
the subject to any agreement to the contrary the contract shall have effect
as a contract entered into by the person purporting to act for the
company or as agent for it, and he shall be personally liable on the
contract accordingly."


31.4. The common law position was stated by his Lordship Justice Donaldson in Teheran - Europe Co. Ltd v. S. T. Belton (Tractors) Ltd [1968] 2 Q.B. 53 at page 60 as follows:-

"An Agent can conclude a contract on behalf of his principal in one of
three ways:


(a) By creating privity of contract between the third party and his principal without himself becoming a party to the contract. The
principal need not be named but the contract must show clearly that
the agent was acting as such. Familiar examples are contracts made
by X as agents and signed by X, the signature being claused "as
agents only." The consequence of such an arrangement is that the
third party can only sue, and be sued by, the principal.

(b) By creating privity of contract between the third party and his
principal, whilst also himself becoming a party to the contract. The
consequence of this arrangement is that the third party has an
option whether to sue the agent or the principal, although this
is of little practical value if he does not know of the principal’s
existence. Equally the third party is liable to be sued either by the
agent or by the principal. Where both agent and principal are
privy to the contract, questions of election can arise (see Clarkson
Booker Ltd. v. Andjel [1964] 2Q.B. 775; [1964]) but no such
question arises in this case.


(c) By creating privity of contract between himself and the third Party, but no such privity between the third party and his
principal. In other words, in relation to the third party he is a
principal, but in relation to his principal he is an agent. The
consequence of this arrangement is that the only person who can
sue the third party or be sued by him is the agent.”


31.5. The above principle was adopted with approval in Australian Trade
Commission v. Goodman Fielder Industries Ltd [1992] FCA 307; (1992) 36 FCR 517.

31.6. Agent can also be liable if he/she enters into a contract on behalf of undisclosed principal with the third party. Montgomerie (Supra) page 372.

31.7. The test to be applied in determining whether Agent is personally liable is objective test. Montgomerie (Supra)
  1. The Respondent in this case opted to file this action against the Appellant on the basis that the Appellant had acted as the Estate Agent for the Vendor Gremay (pacific) limited and drafted the Agreement. Admittedly, the advance of $10,000.00 had also been paid into the Appellant’s Trust Account.
  2. Besides considering to notice the Vendor under the above rule to make it as a party, the learned Magistrate, by scrutinizing the evidence against the Appellant could also have considered whether the Respondent had a valid cause of action to have filed and proceeded with this action against the Appellant on the alleged Principal – Agency relationship between the Appellant and the Vendor, just because the Appellant had drafted the Agreement, accepted the advance deposit of $10,000.00 and acted as the Estate Agent of the Vendor Gremay (Pacific) Ltd, who in fact had signed the Agreement as a party with the Respondent.
  3. The allegation that the alterations in the Agreement were fraudulently and unilaterally effected by the Appellant has not been visited by the learned Magistrate by considering whether any evidence in that regard was available. There is no any finding against the Appellant on the said allegation. However, on careful scrutiny, I find no acceptable evidence of any sort against the Appellant on the above allegation has come forth.
  4. The Respondent has signed the Agreement in this case only with the Vendor, who is not a party to the action, and not with the Appellant. For instance, had the Appellant signed the Agreement in its capacity as a recognized Agent of the Vendor, the necessity to formulate the issue number 14 and the requirement to bring the Vendor as a party would not have arisen. In that event, the Respondent could very well have proceeded against the Appellant, provided, it had evidence to incriminate the Appellant.
  5. I find that most of the issues raised are revolving around the matters that are part and parcel of the Agreement signed between the Respondent and the Vendor. The role played by the Appellant as the Estate Agent of the Vendor or in preparation of the Agreement or by accepting the advance deposit on behalf of the Vendor cannot be the valid grounds to file the action against the Appellant, unless the Respondent proves that there was a valid Principal – Agent relationship between the Appellant and the Vendor. I do not find any evidence to that effect.
  6. The Appellant has been tried for the return of the advance of $10,000.00 which was not, admittedly, with the Appellant. This money had already been remitted to the Vendor’s Solicitors Trust Account with notice to the Respondent. In addition to this, the Respondent was duly notified by the solicitors for the Vendors, M/s. Lateef & Lateef, by their letter dated 18th September 2014 that if it fails to commence legal proceedings within a week, they will release the deposit to the Vendor. The plaintiff disregarded all these notices and filed the action against the wrong party.
  7. Being the signatory to the Agreement with the Respondent, it is none other than the Vendor, who should have been tried for the alleged violation and subsequent alteration therein. I don’t think it was prudent for the Respondent to have gone behind the Appellant in this case, when the things had been made abundantly clear to the Respondent by several pre-litigation correspondences. In my view, the Respondent was on a mission of “wild goose chase”.
  8. Calling someone from the Vendor Company as a witness to the Respondent’s case would not have served the purpose of the rule 5 under order viii of the Magistrate Court’s Rule. Most of the issues raised are found to be issues that should have been tried between the proper parties to the action and the learned Magistrate should have addressed those issues and given the most suitable answers thereto, after making appropriate orders for the addition of the Vendor Company as a proper party to the case.

  1. Instead, what the learned Magistrate has conveniently done is to disregard all the issues raised in the case and found an issue on her own in relation to the consent of the DOL to answer it in favor of the Plaintiff, which was not the duty the learned Magistrate was called upon to perform by the parties. Even if it was an issue before the learned Magistrate, it could not have attracted an affirmative answer for the reasons stated in one of the foregoing paragraphs.
  2. I, find that all 6 grounds of appeal are with merits, particularly ground number 5, and warrant the consideration in favor of the Appellant. The ancillary orders made by the learned Magistrate for the payment of interest and the costs of $1000.00 also cannot stand as valid orders.
  3. Since the Appellant was called upon to defend a frivolous action for over a

period of nearly 4 years, an order for the payment of a reasonable sum as summarily assessed costs by the Respondent unto the Appellant would do justice.


  1. FINAL ORDERS:
    1. For the reasons stated above, I decide to allow the appeal and grant the reliefs as follows.
      1. The Appeal preferred by the Appellant is allowed.
      2. The impugned judgment dated 29th November 2017 and pronounced on 30th November 2017 is hereby set aside.
      1. The action against the Appellant is dismissed.
      1. The Respondent shall pay unto the Appellant a sum of 4,500.00, being the summarily assessed costs.
      2. Copy of this judgment shall be served on the Respondent.
      3. The original record shall be dispatched to the Magistrate’s Court of Nadi, forthwith along with a copy of this judgment.

A.M. Mohammed Mackie
Judge


At Lautoka

1st March, 2019




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