Sol Belize Ltd v Beez Imports Ltd and Zeeb Exports Ltd

• Jurisdiction: Belize
• Judge: Joseph-Olivetti, J.
• Judgment Date: 11 December 2013
• Date: 11 December 2013
• Docket Number: 222 of 2012
• Court: Supreme Court (Belize)

Sol Belize Limited

and

Beez Imports Limited and Zeeb Exports Limited

Joseph-Olivetti, J.

222 of 2012

Supreme Court

Contract - Claim for money due and owing — Whether claimant established debts — Whether claimant could rely on promissory notes — Whether contract enforceable.

Appearances:

Mrs. Deshawn Arzu Torres of Youngs Law Firm of counsel for the claimant.

Mr. Philip Zuniga S.C. of counsel for the defendants.

Joseph-Olivetti, J.

1 — Maybe after all there is some truth in the old adage- never put all your eggs in one basket. Sol Belize Limited (“Sol”) is a major importer and seller of fuel in Belize, Central America. They allege here that the defendants, BEEZ Imports Limited (“BEEZ”) and ZEEB Exports Limited (“ZEEB”) are indebted to them in the amounts of $612,185.00 and $907,484.14 respectively for fuel and that their principal signed two promissory notes acknowledging the debts. Both BEEZ and ZEEB deny that they are so indebted and say further that the two promissory notes relied on were obtained by duress and cannot be relied on as admissions / proof of the debts. They also counterclaim for damages as a result of Sol's breach of contract in disclosing information on price to their customers and the customers ceasing to trade with them and for accounts.

2 The main issues arising, having regard to the pleadings, the joint pre-trial memorandum, the evidence and the written submissions can be summarized as follows: –

• i. Whether Sol obtained the execution of the promissory notes through duress and if so whether the notes are enforceable;

• ii. Whether Sol is entitled to payment of the sums claimed.

3 First, however, a preliminary issue as directed by the court shall be considered. This is whether stamp duty is payable on the promissory notes.

4 Learned counsel for Sol, Mrs. Arzu Torres contends that section 60 of the Stamp Duties Act, Cap 64 (“the SDA”)only speaks to the stamping of a notarial act and that there is no requirement at law for a promissory note itself to be notarized or stamped. Additionally, that section 62 of the Act deals with stamp duties on receipts (which included promissory notes) but was repealed by the General Sales Tax Act Cap. 45 s.100 and so is not applicable.

5 Learned senior counsel for the defendants, Mr. Philip Zuniga argues first that the promissory notes are not before the court as neither the originals nor copies were put into evidence or even identified by Sol's witnesses. And, the fact that Mrs. Arzu Torres handed in the originals to the court in relation to the court's queries on stamp duties does not remedy this. In any event, that both notes were notarized and these notarial acts attract stamp duty by virtue of s.60 of the SDA. As the duties were not paid the instruments cannot be relied on nor can evidence of them be received. He cited Halsbury's Law of England Vol. 17 4th edn para 227.

6 First, the notes were not put in evidence by any of Sol's witnesses. Mr. Cortes spoke of the notes but he did not identify them or ask that they be admitted into evidence. In my judgment, the mere fact that a document has been disclosed pre-trial as part of required standard disclosure does not mean that it automatically becomes evidence at the trial. The Supreme Court (Civil Procedure) Rules 2005(“CPR2005”) r. 28 contains no provision to that effect. Rule 28speaks to pre- trial disclosure of relevant documents not to their automatic admission in evidence at trial. And further, CPR 2005 r. 29. 2 (a) makes it abundantly clear that the general rule is that any fact which needs to be proved at trial must be proved by the oral evidence of witnesses given in public. The short answer follows that the promissory notes were not adduced into evidence and that no more need be said of them. However, I will consider the other challenges posed to the notes in the event that I am mistaken in this.

7 Section 60(1) (a) of the SDA (s. 60.-(l) There shall be paid- (a) on every notarial act, not being a protest of a bill of exchange or promissory note, a duty of …….. $1.50 (b) on every protest of a bill of exchange, or promissory note, the same duty as on the bill or note: Provided that the maximum duty payable on such protest shall be ……… $1.50 (2) A notary who does or executes any notarial act or protest which is liable to duty but is not duly stamped shall incur a fine of fifty dollars.ept as between the banker and the payer;) provides for the stamping of every notarial act. Mrs. Arzu Torres is correct that the SDA does not require that a promissory note itself be notarized or stamped. However, the notes appear to have been executed before a notary public (as it turns out, on the face of the notes, Mrs. Arzu Torres herself) but the notarial acts were not stamped as required by s. 60 of the SDA. This to my mind affects the validity of the notarial acts themselves, not the notes. Had the notes been required to be notarized or stamped then by virtue of s. 30 of the SDA they could not be relied on for any purpose unless this were done. As it is, had Sol put the notes into evidence, Sol could have relied on them, subject to my ruling on the duress and other issue raised about their validity. Now to the main issues.

COURT'S FINDINGS AND ANALYSIS

8 First, the main facts. Sol is a wholesale supplier of fuel in Belize, Central America. It buys fuel in bulk from Puma Energy (formerly ESSO Petroleum) from Puma's fuel terminal at Loyola, Belize City and then they on sell to customers directly from that terminal. BEEZ and ZEEB are both limited liability companies incorporated in Belize owned by Mr and Mrs Jose Alberto Aldana who are both directors. At all times Mr. Aldana conducted the business of both companies. They had no other employees.

9 Sol commenced doing business with BEEZ pursuant to a written supply agreement dated 1 October 2010. (This is contrary to Sol's pleading at para. 2 of their statement of case (‘S/C’) that they had an oral agreement with BEEZ made in October 2010for the purchase of fuel on a credit basis).

10 However, Sol through their then general manager, Mr. Jose Habet and BEEZ, through Mr. Aldana, varied the agreement to provide for payment of all fuel bought, 30 days after delivery. The agreement had no provision that BEEZ provide a bond but it must have been orally agreed to subsequently as BEEZ provided to Sol a surety bond on 14 January 2011. However, scarcely a month thereafter BEEZ's insurers, Home Protector Insurance Company Limited, cancelled the bond on 31 January 2011 and returned the premium of $6,040.48 to BEEZ. (See letter from Home Protector exhibited as JA 2 to Mr. Aldana's witness statement.) Thus, Sol has not established their allegation in para.4 of their S/C that the policy was cancelled for non- payment of premium.

11 Notwithstanding the cancellation of the bond it appears that the arrangement to sell on credit continued although BEEZ did not provide another bond and there is no evidence that they were required to do so. However, sometime in November 2011, Mr. Habet at the request of Mr. Aldana agreed to continue the business through Mr. Aldana's new company, ZEEB. This appears to be because of BEEZ's financial difficulties as they also agreed that any debt owed by BEEZ would be transferred to ZEEB. However, it does not appear that they generated any paperwork to record this, to document the amount owed by BEEZ then or that Sol made any demands for payment at that time.

12 I accept Mr. Aldana's testimony that the arrangements or payment plan Sol, through Mr Habet, had with BEEZ was that BEEZ would pay to So1,00.20 cents more for each gallon purchased or pay a monthly minimum of $25,000.00 and that except for one month, more than the monthly payment was made. He was not cross-examined about that arrangement. He said that this was working well that is why Sol agreed to transfer any debt to ZEEB.I also accept Mr. Aldana's testimony that Sol through Mr Habet had agreed that Sol would not disclose to his company's customers the price at which they purchased the fuel from Sol.

13 Now, to Sol's certain knowledge, the defendants' business was to sell the fuel they bought from Sol to their customers in Guatemala so the sales were tax free. See Mr. Cortes at para. 6. Mr. Aldana explained and this is not in issue that the fuel was put directly into their customers' trucks from the Loyola terminal. To facilitate this Mr. Aldana had obtained Sol's permission to leave the trucks overnight at Sol's facility. After the fuel trucks were loaded Mr. Aldana accompanied them to the border and payment was made to him in cash at the border in Guatemalan currency (Quetzals) which he converted to Belize currency at the border and then paid Sol. However, prior to going to the border, as the sales were tax exempt, Sol issued delivery notes of the fuel purchased to Mr. Aldana and he used those notes that same time to make up the necessary customs declarations to enable the fuel to be exported. He said and I accept that he did not keep copies of those delivery notes as he gave them to the Customs Department and so the defendants did not keep a record of the amount of fuel bought from Sol. All records of sales were kept by Sol. A copy of the type of documentation he prepared for Customs was tendered in evidence by Mr. Lin, Sol's current general manager and no issue was taken on them.

14 Mr. Aldana testified that sometimes he made large cash payments to Mr. Habet in his office, not to the cashier, and that such payments were sometimes $ 200,000.00, $300,000.00, $ 400,000.00 or $500,000.00 a week. The fact that large payments were made to the manager and not to the cashier is credible having regard to how payments were made by the defendants' customers and too, the court can take judicial notice of the well-known commercial reality that in business dealings where large cash transactions are concerned that ordinarily...