Court orders finance firm to pay $1.4m after unlawful seizure

Merchant Finance Limited has been ordered to pay K-Naidu Investment $1,422,430 after seizing 13 of its vehicles and then auctioning them.

The order was given by High Court Judge Justice Vishwa Sharma earlier this month at the High Court in Suva.

K-Naidu Investment, the plaintiff, filed a civil suit against Merchant Finance, claiming it was not given reasonable time to settle the loan and that the seizure was premature, unreasonable, and unlawful.

The plaintiff had applied for a loan with Merchant Finance on May 30, 2007, where a sum of $744,416.54 was secured on a security of a Bill of Sale. The machines were destroyed following a heavy flash flood in Labasa in March 2008.

Merchant Finance restructured the plaintiff ’s account signing a new loan contract in the same month; however, he defaulted on his first payment of $21,416.39 which was due by April 2008. The plaintiff argued that his account was only two days in arrear when the Loan Company seized 13 machines from his property.

They argued the Letter of Authorisation was only in respect of five vehicles/ machines; however, bailiff seized eight more. Both parties discussed it and agreed to have another loan account restructured; however, Merchant Finance broke the agreement and demanded $1,036,365 which was not paid.

All 13 vehicles were sold by auction for a total price of $268,570. During the trial, the plaintiff called three witnesses while the defendants called only two witnesses. According to a prosecution witness, former chief executive officer of Fijian Holding Group, Nouzab Fareed, the normal process to issues arrears notice to customers should follow a timeframe of seven, 14 and 21 days.

He disagreed with the authorisation of the Bailiff Notice issued by the loan company’s manager, Lalin Chand, then as it did not follow the timeline. The defendants did not present any evidence regarding issuing and serving Demands Notices seeking payment. The defendants argued in court that the plaintiff had declared recovery of payments would proceed if conditions of insurance were not met by February 20, 2009.

They argued that these were written in black and white, thus this shouldn’t have come as a surprise to the plaintiff.

After careful consideration, the court said that since the matter had been pending for at least 16 years in the civil court, thus: the seizure was indeed premature, unreasonable and unlawful, the plaintiff was entitled to a reasonable time notice to pay the loan plaintiff was awarded:

• $322,430 for general damages;
• $150,000 for general damages under Fair Trading;
• $190,000 general damage for breach of contract;
• $50,000 for wrongful seizure;
• $60,000 for humiliation, embarrassment and inconvenience;
• $600,000 damages of loss of future incomes;
• $50,000 indemnity basis; and
• $50,000 summary assessed costs.
  The court dismissed the defendant’s counterclaim in its entirety.