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Yang v Fiji Development Bank [2021] FJHC 366; HBC407.2000L (10 December 2021)

IN THE HIGH COURT OF FIJI

AT LAUTOKA

CIVIL JURISDICTION

HBC 407 of 2000L

BETWEEN :

ROBERT YANG and ALRED YANG both of Lautoka.

FIRST PLAINTIFFS

A N D :

CROWN CORK (FIJI) LTD a limited liability company incorporated in Fiji with

its registered office at 7 Nagaga Street, Lautoka.

SECOND PLAINTIFF

A N D :

FIJI DEVELOPMENT BANK incorporated under the Fiji Development Bank Act with its Head Office

at Suva, Fiji.

FIRST DEFENDANT

A N D :

HASMUKH BHAI PATEL f/n Punam Bhai Patel of Sigatoka, Director and HD’s GARMENT

WORKSHOP LIMITED a limited liability company having its registered office at Sigatoka.

SECOND DEFENDANTS

Appearances: R. Patel Lawyers for the Plaintiffs
Nacolawa & Company for the Defendants
Date of Hearing: Ruling on Paper
Date of Ruling: 10.12.2021

R U L I N G

BACKGROUND

1. An excellent background to this case is set out in the Ruling of Mr. Justice Inoke in Yang v Fiji Development Bank [2010] FJHC 447; HBC407.2000L (30 September 2010) and also in the decision of Ms. Justice D. Wickramasinghe in Fiji Development Bank v Crown Cork (Fiji) Ltd and Others [2011] FJHC 5; HBC96.2001L (24 January 2011).
   
2. The Fiji Development Bank (“FDB”) gave a housing loan to Robert and Alfred Yang in 1983. As security, the Yangs gave a mortgage over the land and improvements. This was duly registered.
   
3. At all material times, the Yangs were the directors and shareholders of the Crown Cork (Fiji) Limited, (“Crown Cork”).
   
4. The FDB also gave an industrial loan to Crown Cork secured by a second mortgage over Yangs’ land and a debenture over Crown Cork’s assets and undertaking.
   
5. The Yangs leased their land and building to Hasmukh Bhai Patel. Rental income was assigned to FDB in repayment of the loans.
6. The Yangs allege that the two loans were merged by FDB at some point. The Yangs assert that this happened without their knowledge. As it happened, Crown Cork defaulted on the loans and FDB exercised its rights as debenture holder and appointed a receiver who sold the company’s assets and undertaking including the Yangs’ land to Hasmukh Bhai Patel.
   
7. The Plaintiffs alleged that such sale was negligent, fraudulent and at gross undervalue. They sue the Defendants for certain declarations, accounts and damages.
   

WHAT HAPPENED IN HBC 096 of 2001?

8. HBC 096 of 2001 was a related action. In that case, the FDB had sued Crown Cork on the same securities in this case, HBC 407 of 2000 - seeking inlia judgment ment in the sum257 $257,663.56. FDB was also seeking a judgment against the Yangs in the sum of $150,000.00 as outstanding payments on monnt ton Cork.
   
9. HBC 096 of 2001 had been set for trial before Wickramasinghe J in 2009. Notably, the Yangs and Crown Cork’s solicitor was in court on the day when that trial date was fixed in Court. However, neither of them appeared in Court on the date of trial.
   
10. As Wickramasinghe J said in her judgment:
    

[6] When the matter was taken up for trial before me, the Plaintiff was represented by counsel; but, the Defendant was absent and unrepresented. When the case was mentioned on 7th December 2009 to fix date of trial, Mr. Nacolawa had obtained the date of trial on behalf of the Defendant. I therefore did not see any justification to postpone this action which had been initiated in 2001. Subsequent to recording the reasons in the case record, I ordered the Plaintiff to continue with the trial, in the absence of the defendants or their counsel. Needless to state that even in the absence of the Defendants or their counsel, the Plaintiff must prove its case on a balance of probability.

11. Wickramasinghe J proceeded to trial, given that the matter was then already long pending.
    

FINDINGS OF WICKRAMASINGHE J

12. In her judgment, the Learned Wickramasinghe J recorded the following:
    

13. Wickramasinghe J noted that the Yangs had tried earlier to have HBC 096 of 2001 adjourned indefinitely until HBC 407 of 2000 (which is this matter now before me) was determined. However, their application had been dismissed by another Judge.
    
14. At the trial of HBC 96 of 2001, Mustahib Hafiz Ali, the Senior Business Manager of FDB produced two bundles of Documents as Volumes 1 and 2 and tendered documentary evidence which were marked as exhibits 1 to 7.
    
15. After considering the evidence, Wickramasinghe J found as follows:
    
    • (i) Crown Cork had defaulted in its loan account for some time
      • (ii) because of that, FDB appointed a Gardiner Whiteside on 08 September 1997 as Receiver to manage Crown Cork.
      • (iii) by letter of 17 March 1997, Crown Cork advised FDB that the plant and machinery of its company was badly damaged due to cyclone, wind and water and that as a result, heavy corrosion had set in.
      • (iv) subsequently, the Receivers advertised and then sold the plant and machinery for $18,000.
      • (v) the sale proceeds were then credited to Crown Cork's loan account.
      • (vi) after obtaining a valuation report and several attempts to advertise for sale, the leased property that was mortgaged to FDB was also sold for $332,500.
        
16. Wickramasinghe J also noted as follows:
    

[11] From the sale proceeds of $332,500 of the leased land, the Plaintiff had settled in full the First Mortgage (the personal loan of second Defendant) which on 2nd October 2000 stood at $132,650.35 [Exhibit 7]. The balance sum of $199,977.86 of the sale proceeds have been credited to the First Defendant's loan account. Accordingly, as at 30th November 2000, the Defendants owed the Plaintiff a sum of $257,530.56 [Exhibit 4] as claimed in this case.

[12] At the trial, counsel for the Plaintiff informed court that he would limit its claim to $257,530.56 although the Writ of Summons specifies a figure of $257,663.56.

[13] I have considered the evidence before this court and am satisfied that the Plaintiff had loaned a sum of $150,000 on 10th May 1979, to the First Defendant's Company on the securities of the Second and Third Defendants as stated above. The Plaintiff has also served demands on the Defendants as required by the guarantees. The Demand Notices were produced before this court marked as (ABOD) Docu 184,185,237, 238, 238, 239 & 240 of Volume 2.

[14] I am also satisfied that the account balance of the Fiefendant as at 31/03/1999 stood at $448,235.24 and after apportioning the sale proceeds of s of Plant & Machinery, leased land and the insurance recoveries, the debt as at 31st December 2000 stood at $257,663.56.

17. After considering the above, Wickramasinghe J then turned to consider the defence which the Yangs had raised, even though they had chosen not to attend Court:
    

[15] Let me now consider the defences raised by the Defendants in the Statement of Defence. The main defenses are that:

• (i) the guarantees have not been signed by the Defendants;
• (ii) the demand notices were not served on the Defendants; and
• (iii) the property, plant and machinery were sold at undervalued prices;

[16] A consideration of the pre-trial minutes reveals that the Second and Third Defendants had admitted at the pre-trial conference that they had signed the Guarantees. Copies of the Guarantees were produced in evidence. The defence that no demand notices had been served was also refuted by the Plaintiff in its evidence. Documents (ABOD) Documents 18,237, 238, 238, 239 & 240 of Volume 2 were produced by taintiaintiff to prove demand was made. Letter h December sent by t by the 1st Defendant clearly admitted the debt. [ABOD, Document 89 Vo11]. The Submis tha properties, plan plant and machinery were sold at undervalued prices was also refuted by d by evidence, in that the Defendants had selves admitted that the plant and machinery had been rusterusted and damaged due to floods. The plant and machinery had been duly advertised and then sold for $18,000.00. I am also unable to accept that the property that was sold for $332,500 is grossly undervalued. Mr. Ali in his evidence said that a Valuation of the property was obtained from Rolle [ABOD, Document olume 2] wb>] who valued the property at $365,000. However, the Plaintiff then accepted an offer to sell the mortgaged propfor $332,500.00 [ABOD, ]. Mr. Ali in hiin his evidence informed court that the sale was carried out with much difficulty after advertising on several occasions at great expense to the Plaintiff, and the property needed substantial repairs and had many problems. He also informed that the Defendants did not take any action to prevent the sale of the land although it was advertised several times.

[17] I accept Mr. Ali's evidence that the Defendants could have sought legal remedy before the sale, had they in fact, truly believed that the properties were sold far below the market value. I therefore hold that the defences stated in the statement of Defence have no basis.

ISSUE ESTOPPEL

18. After Wickramasinghe J’s judgment in HBC 096 of 2001, FDB would file the following Notice of Motion on 11 April 2011 in HBC 407 of 2000 (this case) seeking the following orders:
    
    • (i) an Order that the plaintiffs’ statement of claim be struck out for being an abuse of the process of the Court which is likely to cause embarrassment to the parties and by virtue of issue estoppels
    • (ii) an order that Judgment be entered for the 1^st defendant pursuant to its statement of defence and for damages to be assessed
    • (iii) such further or other orders as this Court in the circumstances considers appropriate.
      
19. The Learned Master Udit in Ledua v Colonial Life Fiji Ltd [2008] FJHC 363; HBC288.2004 (18 August 2008) defined issue estoppel as follows:
    

[9] Issue estoppel differs from other forms of estoppel in that it is limited to one or more particular issue(s) in an action. Lord Denning MR, in Fidelitas Shipping Co Ltd -v- V/O Exportchleb [1965] 2 ALLER 4 at 8 summed up this principle as follows: -

“...within one cause of action, there may be several issues raised which are necessary for the determination of the whole case. The rule then is that, once an issue has been raised and distinctively determined between the parties, then as a general rule neither party can be allowed to fight that issue all over again”.

20. Issue estoppel occurs when a particular matter is taken to have been decided in earlier proceedings. In deciding what issues were decided, the court may consider any material. Pleadings are relevant in the inquiry, but not decisive. Any material that identifies the issues is admissible (see Scutt J in Naigulevu v National Bank of Fiji (No 2) [2009] FJHC 65; Civil Action 598.2007 (10 March 2009).
    
21. In Johnson v. Gore Wood & Co.[2000] UKHL 65 (2001) 1 All ER 481, Lord Bingham in the House of Lords reviewed the authorities as follows:
    

It may very well be .... that what is now taken to be the rule in Henderson v. Henderson has diverged from .... res judicata. But Henderson v Henderson abuse of process... although separate and distinct from cause of action estoppel and issue estoppel , has much in common with them. The underlying public interest is the same: that there should be finality in litigation and that a party should not be twice vexed in the same matter. This public interest is reinforced by the current emphasis on efficiency and economy in the conduct of litigation, in the interests of the parties and the public as a whole. The bringing of a claim or the raising of a defence in later proceedings may, without more, amount to abuse if the court is satisfied (the onus being on the party alleging abuse) that the claim or defence should have been raised in the earlier proceedings if it was to be raised at all. I would not accept that it is necessary, before abuse may be found, to identify any additional element such as a collateral attack on a previous decision or some dishonesty, but where those elements are present the later proceedings will be much more obviously abusive, and there will rarely be a finding of abuse unless the later proceeding, involves what the court regards as unjust harassment of a party. It is, however, wrong to hold that because a matter could have been raised in early proceedings it should have been, so as to render the raising of it in later proceedings necessarily abusive. That is to adopt too dogmatic an approach to what should in my opinion be a broad, merits-based judgment which takes account of the public and private interests involved and also takes account of all the facts of the case, focusing attention on the crucial question whether, in all the circumstances, a party is misusing or abusing the process of the court by seeking to raise before it the issue which could have been raised before. As one cannot comprehensively list all possible forms of abuse so one cannot formulate any hard and fast rule to determine whether, on given facts, abuse is to be found or not. Thus while I would accept that lack of funds would not ordinarily excuse a failure to raise in earlier proceedings an issue which could and should have been raised then, I would not regard it as necessarily irrelevant, particularly if it appears that the lack of funds has been caused by the party against whom it is sought to claim. While the result may often be the same, it is in my view preferable to ask whether in all the circumstances a party’s conduct is an abuse than to ask whether the conduct is an abuse and then, if it is, to ask whether the abuse is excused or justified by special circumstances. Properly applied, and whatever the legitimacy of its descent, the rule has in my view a valuable part to play in protecting the interests of justice.

(my emphasis)

22. In Reserve Bank of Fiji v Gallagher [2006] FJCA 37; ABU0030, ABU0031, ABU0032U.2005S (14 July 2006), the Fiji Court of Appeal expressed favour over the above approach:
    

[70] Counsel referred us to many manifestations of applications of the Hend&#/b> rule. We find nhelpful to r to review them all since we are attracted by the non-dogmatic approach in v. Good Goods and the reasonableness approach in&#16n Anshun