IN THE HIGH COURT OF FIJI AT SUVA
CIVIL JURISDICTION

Civil Action No. HBC 267 of 2018

BETWEEN

MERCHANT FINANCE LIMITED a duly licensed financial institution having its 
registered office at Level 1, Ra Marama house, 91 Gordon Street, Suva.

PLAINTIFF

AND

PREMIUM PLASTICS LIMITED a limited liability company having its 
registered office at Lot 4 Viria Road, Vatuwaqa. P.O. Box 814, Suva.

FIRST DEFENDANT

AND

RAVIN LAL of Lot 10 Tirikula Street, 9 Miles, Company Director.

SECOND DEFENDANT

AND

OPETAIA DREKETIRAU RAVAI of 19 Ratu Dovi Road, Laucala Beach, Suva, 
Company Director.

THIRD DEFEDANT

Counsel			:	Mr. A. Pal with Ms. Naidu S. for the Plaintiff
					Mr. S. Nand for the defendants

Date of Hearing		:	21st March 2022

Date of Judgment		:	03rd May 2022	

JUDGMENT

[1]	The plaintiff filed this writ of summons claiming FJD84,540.00 with pre-judgment interest at the rate of 24% per annum from 30th August 2013 to the date of judgment and post-judgment interest at the rate of 24% per annum and legal costs on solicitor client indemnity basis, against the defendants. 
[2]	At the pre-trial conference the parties admitted the following facts:
1.	The plaintiff is a financial institution engaging inter alia in the business of providing lending facilities to its customers.
2.	At all material times, Premium Plastic Limited (“Company” and “First Defendant”) was a customer of the plaintiff.
3.	Ravin Lal (“Second Defendant”) and Opetaia Dreketirau Ravai (“Third Defendant”) are both directors of the first defendant company.
4.	On 1st June 2012, the first defendant entered into a Loan Agreement (“Agreement”) with the plaintiff for the Financing of one SDEC 100KV Diesel Generator bearing Serial No. H110036 (“Property”).
5.	The total amount financed and interest charged to the plaintiff under this agreement was FJD 102,000.00 (one hundred and two thousand dollars) (“financed amount”). 
6.	On 1st June 2012, the plaintiff took a Bill of Sale over the property as security to secure the loan facilities granted to the first defendant.
7.	As a means of further security, on 1st June 2012, the second and third defendants also provided a personal guarantee by executing the Guarantee and Indemnity document, the Borrower’s/Guarantor’s Acknowledgement and the Guarantor’s Acknowledgement.
8.	Through the Guarantee and Indemnity document, the second and third defendants agreed inter alia:
i.	Clause 2 – Guarantee 
The Guarantor (and where there is more than one, each Guarantor jointly and severally), irrevocably and unconditionally guarantees to MF the due and punctual observance and performance of all terms and conditions and covenants on the part of the borrower contained in the loan contract and similarly agrees to pay to MF on demand any and every sum or sums of money which the Borrower shall at any time become liable to pay to MF under or pursuant to the Loan Contract (Indebtedness) when required under the Loan Contract to pay it; and  
9.	By virtue of the executed guarantee and acknowledgement of the same, the first defendant’s liability extends to the second and third defendants.
10.	On 10th March 2014, the first defendant entered into a Sale and Purchase Agreement with Kalobo Plastics Ltd for the sale of the plant and machinery of the first defendant, which included the sale of property.
[3]	The defendants in their statement of defence aver that the plaintiff has failed to repossess the Generator Serial No. H110036 which remains as security for the loan. The defendants state further that plaintiff represented to the 1st defendant that the plaintiff would seize the Generator from Sigatoka Electric and had it over to Kalobo Plastic Ltd and they were at all material times were of the impression that the full debt was being paid off to the plaintiff by Kalobo Plastic Ltd. In reply the plaintiff states that the defendant failed to declare to the plaintiff that the Generator remained unpaid and the defendant owed the purchase price of the Generator to Sigatoka Electric Ltd and the defendants for all intents and purposes did not known or have legal title over the property to place as security. The plaintiff relies on the maxim nemo dat quad non habet which means “no one can give what they do not have”.
[4]	The amount claimed by the plaintiff is shown in the account sheet (P6) which is $84540.07 was not challenged by the defendants at the trial. 
[5]	The first issue to be determined is whether the plaintiff was correct in instituting these proceedings against the defendants without first making an attempt to recover the sum due by selling the generator that was given as security for the loan.
[6]	The plaintiff tendered in evidence the letter written by Gordon & Co., the Solicitors of Sigatoka Electric Limited to the plaintiff. According to the said letter Sigatoka Electric Ltd supplied the generator to the 1st defendant and due to non-payment of account it was repossessed by Sigatoka Electric Ltd and sold it to Fulton College. 
[7]	On 10th March 2014 the 1st defendant entered in to an Agreement for Sale and Purchase (of plant and machinery) with Kalabo Plastics Limited (D1) and in the schedule of the said agreement the generator (H110036) has also been included as one of the items for sale. The Bill of sale dated 01st June 2012 lodged by the plaintiff was tendered in evidence as”P5” and in paragraph 4.2 it is stated that the Mortgagor will pay MF the Indebtedness at the times, place and in the manner required under any Transaction Document. However, the 1st defendant has failed to pay for the generator and on the other hand at the time the Bill of Sale was lodged the 1st defendant did not have the ownership of the generator. 
[8]	These proceedings were instituted on 04th September 2018. From the above evidence it is clear that the generator had been sold more than four years before the institution of these proceedings. It is also important to note that from the account sheet it appears that the last two payments of $2500.00 and $250.00 had been paid on 30th December 2015 and 29th February 2016. Therefore, by the time the 1st defendant stopped payments, the generator had already been sold to Fulton College and it would not have been possible for the plaintiff to seize it.
[9]	The payout request dated 28th May 2014 (D2) was tendered in evidence by the plaintiff to show that the generator in question was not part of the deal. This document was objected to by the by the plaintiff on the ground that it was not put to the witness for the plaintiff. This is a document prepared and signed by the Manager Corporate of the plaintiff company. It was the plaintiff’s witness who could explained this document. Therefore, the court upheld the objection and disregard the document. 
[10]	The 2nd defendant testified that the plaintiff was fully aware of the sale of the business but except the bare statement of the 2nd defendant there is no evidence on record that the plaintiff was in fact informed about the sale of the generator.
[11]	Another defence taken up by the defendants is that the plaintiff failed to serve demand notice on them before filing of this action.
[12]	Clause B(3)(a) of the Loan Agreement reads as follows:
The Borrower agrees to pay to MF the total of Amount Financed and Interest Charges at the times and in the manner set out in Part “E” of the Schedule, time being of the essence.
Part “E” of the Schedule –
Repayment 
By 48 consecutive instalments of $2,125.00 each commencing 30.07.2012 up to and including 30.06.2016 
[13]	Under the agreement if the 1st defendant failed to pay the instalments as agreed it would fall into default and the plaintiff was entitled to commence proceedings against it immediately. The Loan Agreement did not require the plaintiff to demand for payment when the 1st defendant failed to pay the loan instalments.
[14]	However, Section 80 subsections (1) and (2) of the Consumer Credit Act 1999 provides:
(1)	A credit provider must not begin enforcement proceedings against a debtor in relation to a credit contract unless the debtor is in default under the credit contract and-
(a)	the credit provider has given the debtor, and any guarantor, a default notice, complying with this section, allowing the debtor a period of at least 30 days from the date of the notice to remedy the default; and
(b)	the default has not been remedied within that period.
(2)	A credit provider must not begin enforcement proceedings against a mortgagor to recover payment of money due, or take possession of, sell, appoint a receiver for or foreclose in relation to property subject to a mortgage, unless the mortgagor is in default under the mortgage and -
(a)	the credit provider has given the mortgagor a default notice, complying with this section, allowing the mortgagor a period of at least 30 days from the date of the notice to remedy the default; and
(b)	the default has not been remedied within that period.
(3)	A credit provider that contravenes subsection (1) or (2) commits an offence.
[15]	Clause 6.5 of the Bill of Sale it is provided:
(a)	MF will not exercise its rights, powers and remedies under this clause 6 unless:
(b)	MF gives the Mortgagor all relevant notices required to be given by law
(c)	The relevant notice period and any postponement period have lapsed
(d)	The default specified in the notice has not been remedied within the applicable grace period
(e)	MF complies with all requirements under the Transaction Documents, consumer credit laws (as applicable to the mortgagor) and any other law that may be in force at that time.
Clause 2 of the Guarantee and Indemnity Bond reads as follows:
Guarantor (and where there is more than one, each Guarantor jointly and severally), irrevocably and unconditionally guarantees to MF the due and punctual observance and performance of all terms and conditions and covenants on the part of the Borrower contained in the Loan Contract and similarly agrees to pay to MF on demand any and every sum or sums of money which the borrower shall at any time become liable to pay to MF under or pursuant to the Loan Contract (Indebtedness) when required under the Loan Contract to pay it. (Emphasis is mine)
[16]	NBF Asset Management Bank v Low [2000] FJHC 48; Hbc0477j.1999s (27 March 2000)
Section 80 provides that a credit provider must not begin enforcement proceedings against a debtor unless the debtor is in default and a default notice allowing the debtor 30 days to remedy the default has been given. Breach of the section gives rise to a criminal offence. 
[17]	In this case no demand notices have been served on the defendants. The plaintiff’s position is that they have written letters to the defendants. The question here is whether the letters sent by the plaintiff can be construed as demand notices. Those letters are only reminders. In those letters the plaintiff says that a particular instalment due from the 1st defendant has not been paid. The plaintiff’s noncompliance of section 80 of the Consumer Credit Act 1999 and clause 2 of the Guarantee Bond amounts to a breach of the agreement between the plaintiff and the 2nd and 3rd defendants.

ORDERS
1.	The plaintiff’s action is dismissed.
2.	There will be no order for costs.  

Lyone Seneviratne
JUDGE
03rd May 2022