Barclays Bank (Seychelles) Ltd v Gopal and another ( CS 126 of 2010) [2011] SCSC 66 (22 September 2011);

 

THE REPUBLIC OF SEYCHELLES

 

IN THE SUPREME COURT OF SEYCHELLES HOLDEN AT VICTORIA

 

Civil Side No. 126 of 2010

 

Barclays Bank (Seychelles) Ltd===========================Plaintiff

 

Versus

 

Christopher Gopal===============================Defendant No. 1

Palani Batcha===================================Defendant No. 2

 

 

Teresa Micock for the plaintiff

 

Rajasundaram for the defendant no. 1

 

Basil Hoareau for the defendant no. 2

 

 

 

JUDGMENT

 

 

Egonda-Ntende, CJ

 

  1. The plaintiff brings this action against the defendants to enforce a guarantee agreement between the plaintiff and defendants dated 4th August 2006 under which the defendants jointly and severally guaranteed the payment of the sum of US$ 140,000.00 and interest to the plaintiff in event of default by the principal debtor, Indian Ocean Printing Services (Pty) Ltd, on the repayment of credit facilities advanced by the plaintiff to the principal debtor.

 

  1. Two US Dollar loans were advanced to the principal of debtor of US$ 143,000.00 and $400,000.00 as well as an overdraft in Seychelles Rupees of R 500,000.00. The principal debtor paid off the USD loan of $143,000.00 and the plaintiff recovered SR 492,460.25 in respect of the overdraft. The principal debtor made no repayments to the US$400,000.00 loan. With effect from November 2007 the principal debtor ceased making any re-payments towards the said loans and is in breach of the loan agreement. As of 29th January 2010 a total sum of US$ 484,071.00 was outstanding on the US Dollar loans and SR 201,468.95 was outstanding on the Seychelles Rupees overdraft.

 

  1. The plaintiff contends the guarantee agreement is now activated by the principal debtor’s breach of the loan agreements and the defendants are now liable to pay to the plaintiff the guaranteed sum of US$140,000.00 with interest standing at SR 865,687.3 and the costs of this suit.

 

  1. The defendants filed a joint written statement defence in which they deny that they are indebted to the plaintiffs in anyway. The defendants deny that they guaranteed the specific sum of US$140,000.00 or that they signed the agreement on 4th August 2006. The defendants state that the principal debtor obtained 2 US dollar loans from the plaintiff for which the defendants signed a blank guarantee form. The defendants contend that the plaintiff filled the relevant clauses of loan and interest amount without their knowledge, authority and consent. The said guarantee agreement is therefore not enforceable.

 

  1. The defendants further contend that there was no existing loan as of 4 August 2006 as the facility letter was dated 18th September 2007. In any case the defendants further contend that the alleged guarantee agreement was valid for only 3 months and by the time the loans were issued in September 2007 the guarantee agreement had expired. The plaintiff’s claim is therefore time barred.

 

  1. The defendants admit that the loans of US$143,000.00 and US$ 400,000.00 advanced to the Principal debtor but deny that the two loans have any link with the alleged guarantee agreement. The defendants further assert that no interest can be claimable under a guarantee agreement as a guarantee is only additional or supplemental security to a loan. The plaintiff was put to strict proof with regard to the non-payment of the loans by the principal debtor.

 

  1. I shall set out the last head of defence in full.

The defendants specifically deny that the plaintiff suffered “damage” in the sum claimed in paragraph 12 of the plaint. There is no Cause of Action in this plaint for any damage arising out of the alleged guarantee agreement. The plaint is simply not maintainable for a sum allegedly guaranteed in isolation of proving the liability of the main loans for which the guarantee was allegedly given. No two different currencies, namely US$ and SR as averred in the Plaint is maintainable in respect of any claim.’

 

  1. The defendants prayed that this suit be dismissed with costs.

 

  1. So far as I can gather from the evidence of both parties there are facts that are not in dispute. I will set those out first. The defendants were directors of the principal debtor. The principal debtor sought several facilities from the plaintiff and these were initially granted by the facility letter dated 1st August 2006, tendered in evidence as exhibit P2. It set out the terms upon which loans and an overdraft would be made available by the plaintiff to the principal debtor. With regard to security it stated,

1. Director’s Guarantee supported by: 2. Fixed and floating charge over company’s assets; 3. A 2-year renewable contract between IOT and IOPS to incorporate an undertaking from IOT to assign all payments through Barclays Bank; 4. Barclays As agent, note as Loss Payee under all risks insurance policy; 5. A first line mortgage over property parcel number S4563 with insurance and the Bank’s interest noted in the policy. All indebtedness and liabilities, actual or contingent, now or at any time owing or due by the Client to the Bank will be secured by the above security in favour of the Bank.’

 

  1. The last paragraph of exhibit P2 states,

Please confirm your acceptance of this Agreement by executing and dating this Facility Letter and the enclose duplicate. The duplicate should then be returned to the Bank. The date of this agreement shall be the date signed below. This agreement will remain available to be accepted for a period of 30 days from the date of this Facility Letter, after which it will lapse.’

 

  1. The facility letter was signed for and on behalf of the principal debtor by the defendants and dated 4th August 2006. The defendants also signed a Guarantee form, exhibit P1. Exhibit P1, the guarantee form was prepared by PW1, Egbert Laurence, a Relationship Manager with the Plaintiff. He filled in the name of the Principal Debtor at the beginning of the document, the names of the defendants, and the phrase ‘GOOD FOR THE SUM OF USD ONE HUNDRED AND FORTY THOUSAND ($140,000)’ at the foot of the document before the defendants signed the document.

 

  1. The proviso to clause 2 was filled in by Philip Pierre, the Relationship Manager, that managed the principal debtor’s accounts relationship with the plaintiff. PW1 does not recall whether this was after or before the defendants signed the document. The defendants in their testimony claim that this was filled in without their knowledge and or consent after they had signed the document. They only signed a blank form with clause 2 unfilled in. The document did not also bear any date. These are the 2 aspects of exhibit P1 challenged on the pleadings, and as a result in issue.

 

  1. The defence revolves around the fact that the defendants claim they did not consent to the contents of the proviso to clause 2 that were inserted by Pierre. Given the endorsement at the foot of the document next to the defendants’ signatures which states, ‘GOOD FOR THE SUM OF USD ONE HUNDRED FORTY THOUSAND ($140,000), existed on the document prior to the defendants’ signatures; having been so endorsed by PW1, the defendants cannot conceivably deny knowledge that the guarantee was at least good for the sum of US$140,000.00. The defendants acknowledge signing the guarantee form and this information was clearly available on the form at the time of their signing the document next to where they appended their signatures.

 

  1. On the evidence before me I am satisfied that the defendants freely consented to guarantee the principal debtor in the sum not exceeding US$140,000.00 which is a sum not in excess of obligations due from the principal debtor to the plaintiffs. There is uncontroverted evidence tendered by PW2 that of the loans guaranteed there are outstanding amounts on all of them. With regard to the loan of US$400,000.00 the outstanding amount is US$501,493.56 as at 27 December 2010; with regard to US$143,000 loan, US$10,950.29 being interest is outstanding as at 24th March 2010; and on the overdraft account SR201,468.95 was outstanding.

 

  1. During final addresses to this court learned counsel for the Defendant No.1, Mr Basil Hoareau submitted that the plaintiffs had failed to prove that on default by the principal debtor, the plaintiffs had demanded of the the defendants as guarantors to make good payment on the guarantee and that therefore this action was premature and misconceived and established no cause of action. Mr Basil Hoareau submitted that this defence was specifically pleaded in paragraph 12 of the plaint. Secondly that the much as the plaintiff had pleaded that it had made a demand the defence put it to strict proof in paragraph 13.

 

  1. Section 75 of the Seychelles Code of Civil Procedure , hereinafter referred to as the SCCP, states,

 

The statement of defence must contain a clear and distinct statement of material facts on which the defendant relies to meet the claim. A mere denial of the plaintiff’s claim is not sufficient. Material facts alleged in the plaint must be distinctly denied or they be taken to be admitted.’

 

  1. My view is that the defendants did not distinctly plead in their defence, as required by section 75 of SCCP that the plaintiff had not made demand from the defendants in their capacity as guarantors on default of the principal debtor. It would have been necessary for the defendants to do so if this was being set up as a defence to the action. To require the other party to strictly prove a fact is not necessarily to plead that such alleged fact did not in fact occur or take place. I do not accept the submission put forward by Mr Hoareau.

 

  1. However if the defendants contended that had they been notified of the breach they would have paid what was due on the guarantee agreement without the necessity of an action being filed this may well be sufficient ground to deny a plaintiff costs of the action as the action would be unjustified. But this is not the position taken by the defendants. They have resisted the claim as they were entitled to with every available means at their disposal.

 

  1. In the result I am satisfied that this action should succeed but only to the extent of US$140,000.00 for which the guarantee was endorsed prior to the signature of the defendants. The nature of the endorsement in my mind, set apart from the main body of the provisions, put a cap on the amount that would be recovered from the guarantors not to exceed US$140,000. I will therefore not allow the claim for interest.

 

  1. Judgment is entered for the plaintiffs in the sum of US$140,000.00 with costs.

 

 

Signed, dated and delivered at Victoria this 23rd of September 2011

 

 

 

 

 

FMS Egonda-Ntende

Chief Justice