Buksh v Bibi [1991] FJHC 65; Hbc0519j.91s (18 December 1991)

IN THE HIGH COURT OF FIJI
(AT SUVA)
CIVIL JURISDICTION

ACTION NO. 519 OF 1991

BETWEEN:

KARIM BUKSH
(f/n Madar Buksh) of
68 Suva Street, Suva, Company Director
Plaintiff

AND

HAZRA BIBI
(f/n Mohammed Ismail Khan)
and KARIM BUKSH
(f/n Madar Buksh) both
of 68 Suva Street, Suva as trustees of
the Estate of Madar Buksh, Domestic
Duties and Company Director respectively
1st Defendants

AND

NATIONAL BANK OF FIJI
a body corporate duly constituted under the
National Bank of Fiji Act, 1973
2nd Defendant

Mr. M. Khan: For the Plaintiff
Mr. H.K. Nagin: For the Defendants

Date of Hearing: 16th December 1991
Date of Judgment: 18th December 1991

JUDGMENT

The Plaintiff applies for continuation until further order of an Interim Injunction which I granted him on the 1st of November 1991; the application is opposed and I heard argument on it on the 16th of December. At the conclusion of the argument Mr. Nagin for the Defendants invited me to give my decision immediately without necessarily giving reasons which could be published at a later date because of the urgency of the matter. However I considered that the better course would be to stand back for some 48 hours to enable me to review the considerable amount of evidence before the Court and counsels' submissions to avoid the possibility of coming to a hasty decision although at the end of argument I had formed certain tentative conclusions. As a result of my giving as full a consideration as possible to the matter I find myself confirmed in the tentative views I had formed. I shall now state my conclusions but before doing so must refer to the facts.

The relevant part of the order which I made on the 1st of November reads as follows:

"IT IS ORDERED that Interim Injunction is hereby granted restraining the 2nd Defendant by itself and or its servants, agents, officers, solicitors or by any other person or persons acting under or with authority from it from advertising for mortgagee sale or considering any tenders of the mortgagee sale or entering into any negotiation for sale or entering into any contract for sale or otherwise howsoever from dealing or attempting to deal, disposing or otherwise doing any act matter or thing or dealing or signing, sealing, executing or otherwise signifying any sale or transfer of the property described as CT. 8336 Lot 2 on DP. 1981 pursuant to the provisions of mortgage registration No. 298202 or of the property Law Act or of the Land Transfer Act or any other rule of Law whatsoever, until the 16th day of November, 1991."

As a result of various preliminary listings of the matter the injunction was continued until the 19th of December.

The Facts

The facts which are not in dispute are that the Plaintiff has commenced these proceedings in his personal capacity but he is also one of the Trustees of the Estate of Madar Buksh together with his mother Hazra Bibi who is also named with the Plaintiff as First Defendants in this action as Trustees of the Estate of Madar Buksh. The Plaintiff is also a Company Director. He and Hazra Bibi are registered Proprietors as Trustees of the Estate of the late Madar Buksh of the freehold property described as CT. 8336 being Lot 2 on DP. 1981 on which a substantial commercial building is erected of 15,000 square feet of floor area (hereinafter called "the said property").

The Plaintiff alleges that on or about the 16th of July 1984 the Second Defendant agreed to grant a loan facility of $140,000.00 to the Plaintiff to purchase the said property which the Plaintiff had agreed to purchase from the First Defendants for a total consideration of $400,000.00. A formal Memorandum of Agreement to purchase the property was entered into between the Plaintiff and the First Defendants on the 20th day of September 1984.

The purchase price of $400,000.00 was agreed to be paid as follows:

(a) A sum of $200,000.00 in consideration of the Plaintiff foregoing his shares and interest as a beneficiary of the Estate of Madar Buksh.

(b) A sum of $65,000.00 had already been paid in advance to the Estate of Madar Buksh by the Plaintiff.

(c) The Plaintiff to take over the debt of $70,000.00 due under Mortgage No. 188681 to the Second Defendant by H.P. Kasabia Brothers Limited.

(d) Transfer of the said property to the Plaintiff to be made on payment of the balance of purchase price in the sum of $65,000.00.

In June/July 1991 the Second Defendant advertised the sale of the properties registered under the names of the First Defendants as Trustees of the Estate of Madar Buksh and contained in Certificates of Title Nos. 17125 and 8336 respectively. The Second Defendant is currently demanding a sum of $913,254.43 with interest and costs as moneys allegedly owing to the Second Defendant and purportedly secured by Mortgage No. 298202.

The above is a summary of the facts before this Court when I granted the Plaintiff the Interim Injunction on the 1st of November 1991. Since then the Second Defendant with the consent of Hazra Bibi has entered into a contract to sell the land comprised in both Certificates of Title for $805,000.00 and I shall refer again to this contract later.

The Plaintiff alleges that the Second Defendant by advertising the sale of the two properties is in breach of an agreement and undertaking with the Plaintiff not to register mortgage No. 298202 and that upon payment of the balance of the purchase price of the said property the Second Defendant would discharge the said mortgage and hand-over Certificate of Title No. CT8336 to enable the Plaintiff to register the transfer of the property pursuant to the agreement of 20th of September 1984. The Second Defendant denies these allegations. It also denies that the Plaintiff paid the balance of purchase price of the property in CT 8336 to the Estate of Madar Buksh's account with the Second Defendant. The Second Defendant also denies that it registered the said mortgage on the 12th of March 1991 some three years after the Plaintiff paid the balance of purchase price in full in breach of "its undertaking, understanding and agreement" with the Plaintiff.

The Plaintiff claims, and this is not denied by the Second Defendant, that the subject matter of the mortgage is a valuable property. However the Plaintiff also claims and the Second Defendant denies that any sale of that property will cause irreparable damage to the Plaintiff. The Plaintiff also alleges that damages will not be an adequate remedy in the circumstances of this case. The Plaintiff denies a claim by the Second Defendant that the estate of the late Madar Buksh is insolvent and is unable to pay any moneys at all.

The Second Defendant disputes the Plaintiff's allegations that it agreed not to register the mortgage on CT. 8336. It further says as follows:

(i) The Plaintiff has no claim against the Second Defendant as the Second Defendant is not seeking to enforce any securities personally given by the Plaintiff.

(ii) Any claim that the Plaintiff may have against the First Defendants is a matter between him and the First Defendants.

(iii) The Plaintiff's claim if based on the Memorandum of Agreement dated 20th of September 1984 is in any event statute barred.

(iv) The Plaintiff's claim against the Second Defendant is a repetition of the claims the Plaintiff and Hazra Bibi as Trustees of the Estate of Madar Buksh made in the High Court Civil Action No. 353 of 1991 which is still pending in this Court.

The Second Defendant says that the Plaintiff has commenced the proceedings before me because he was unsuccessful before Scott J. in obtaining an Interlocutory Injunction against the National Bank of Fiji to stop the Mortgagee Sale of the Estate of properties comprised in Certificates of Title Nos. 8336 and 17125.

(v) The Second Defendant alleges that the Plaintiff has no locus standi against the Second Defendant and is merely abusing the process of this Court.

The Second Defendant further states that tenders for the sale of the properties closed on the 26th of July 1991 and the Second Defendant received tenders ranging from $150,000.00 to $751,112.41. The Second Defendant then reached an agreement with H.P. Kasabia Brothers Limited who had made the highest tender that they would increase their offer for the properties to $805,000.00. A Sale and Purchase Agreement has been entered into by the purchasers who have paid the Second Defendant's solicitors a deposit of $100,000.00. The Second Defendant says that the Agreement was about to be signed by the Second Defendant when the Second Defendant received the Interim Injunction order.

The Plaintiff has filed two further affidavits in response to the affidavit filed on behalf of the Second Defendant. The last affidavit was filed without leave on the day of the hearing of the present application but I agreed to accept it because I considered that it threw further light on the issues. During the course of his submission counsel for the Second Defendant made certain comments on this latest affidavit and I shall refer to some of these shortly.

Submissions of Counsel

The Plaintiff's first submission is that although the estate was the owner of the property comprised in CT. 8336 and the Bank was the mortgagee of the land there was an agreement or undertaking by all the parties to the Plaintiff that the Plaintiff was to obtain a clear title and the Bank was to take the first registered mortgage over the land for $150,000.00 and that thereafter the Second Defendant would discharge all existing mortgages on the land and thereby enable the Plaintiff to have the title free of all encumbrances.

The Plaintiff alleges that the bank debited the Plaintiff's account periodically towards repayment of the $150,000.00 and the Plaintiff now says that this amount and all interest owing on it has now been paid by the Plaintiff and that this constitutes all the money owing by the Plaintiff in his personal capacity. Alternatively the Plaintiff submits that even if the bank has not discharged this mortgage the mortgage secured as the sum of $176,000.00 represents the value of stamp duties paid on mortgage No. 298202 and a collateral mortgage No. 196070. Mortgage No. 298202 was executed on the 2nd of October 1985 and the Plaintiff submits that when the Second Defendant registered the mortgage in March 1991, by virtue of its previous agreement and undertakings to the Plaintiff it was estopped from registering the mortgage. Consequently it is submitted the Court should continue the injunction with a view eventually to having the Certificate of Title No. 8336 transferred into the name of the Plaintiff.

When I granted the original injunction counsel for the Plaintiff mentioned that on the 13th of September 1991 my brother Scott J. had refused an application by Hazra Bibi and the present Plaintiff for an injunction preventing the Second Defendant from exercising its powers to sell under Mortgages Nos. 188681 and 298202 and at my suggestion the Plaintiff swore a short supplementary affidavit exhibiting a copy of Mr. Justice Scott's judgment.

Counsel for the Second Defendant places considerable reliance on this judgment in that His Lordship held that there are no exceptional circumstances which justified him restraining the bank as mortgagee from exercising its power of sale under the mortgages. Counsel for the Second Defendant argues that the evidence before me also discloses no exceptional circumstances which would warrant me not following Scott J. During the hearing before Mr. Justice Scott there was before the Court an affidavit sworn on the 6th of August 1991 on behalf of the Bank by Mosese Waqavonovono. Counsel referred at some length to various passages from this affidavit which he submitted I should accept as refuting the claims made by the Plaintiff to support his application for continuation of the injunction. In the present proceedings the affidavit of Mr. Waqavonovono is itself exhibited to the Affidavit in Reply on behalf of the Second Defendant sworn by Rajnish Lal on the 14th of November 1991.

Mr. Nagin submits that Mr. Justice Scott's judgment is of even greater importance now to the present application for two reasons. First, the Plaintiffs before Mr. Justice Scott were the mortgagors and therefore there was privity of contract between Hazra Bibi and the present Plaintiff and the bank. Mr. Nagin said that Hazra Bibi and the Plaintiff were the only persons who thus had any right to challenge the actions of the bank in the present matter and that the Plaintiff has no rights against the Defendant in his personal capacity. This is because the Certificate of Title No. 8336 shows that no mortgage has been registered on it to the Plaintiff in his personal capacity. I comment that this submission is supported by reference to the two mortgages concerned, Nos. 188681 and 298202 both of which name as mortgagors H. Bibi and Karim Buksh as Trustees of the Estate of the late Madar Buksh.

Secondly Mr. Nagin refers to the subsequent contract for the sale of the properties for $805,000.00 and says that because of this the mortgagors have lost their equity of redemption and now have no rights under the mortgage. Thus, Mr. Nagin says, this proves that the Plaintiff in his personal capacity has no locus standi before the Court.

Mr. Nagin as he did before Scott J. then subjected the various affidavits filed on behalf of the Plaintiff to a detailed analysis. In doing so he referred me to various parts of the affidavit of Mosese Waqavonovono. It is submitted that the Plaintiff's claim that the mortgage on CT No. 8336 was never to be registered is answered by Mr. Waqavonovono. Annexed to his affidavit is a letter dated the 9th of May 1985 from the Second Defendant to the Plaintiff who was then employed in the Ministry of Finance in Suva. This letter confirmed the bank's agreement to re-arrange the then current borrowings of the Plaintiff and the Estate of Madar Buksh. The letter stated that the re-arrangement was to be subject inter alia to "second registered mortgage over CT. 8336 (75 Suva Street) in support of debt in the name of the Estate".

Counsel submits that the Plaintiff has failed to disclose this letter. He also refers me to exhibit "B" of Mosese Waqavonovono's affidavit which is a letter dated the 5th of June 1985 from the bank to its solicitors at the time, Munro Leys & Co. This letter enclosed CT. No. 8336 and asked Messrs Munro Leys & Co. to prepare a second registered mortgage stamped collateral to mortgage No. 196070. Counsel submits that these two letters show that the bank never contemplated giving the Plaintiff an unregistered second mortgage. Again in a letter of the 22nd of July 1985 to the Bank, annexure "C" to Mr. Waqavonovono's affidavit, Messrs Munro Leys & Co. said that they had by then prepared the necessary mortgage documents and would inform the bank as soon as the mortgage had been signed, stamped and registered.

According to Mr. Waqavonvono the mortgage No. 298202 could not be lodged for registration in 1985 because of caveats on Certificate of Title No. 8336 by Suva City Council and one Abdul Kadir Buksh. To protect its interest the bank lodged a caveat itself on the 22nd of July 1986. The Second Defendant contends that the Plaintiff was well aware of these caveats because a letter dated the 6th of April 1988 from Messrs Munro Leys & Co. to the bank is annexed to the last affidavit filed by the Plaintiff on the day of the hearing of this application. Part of the second paragraph of this letter reads:

"Please note that unless the caveat registered by Suva City Council is removed or unless Suva City Council consents in writing to the registration of your bank's mortgage we cannot attend to registration of your bank's mortgage dated the 2nd of October 1985."

This, submits counsel, proves two things:

(a) That the Plaintiff and Hazra Bibi were insolvent at the time and even now in that they cannot pay the Suva City Council rates; and

(b) That there was no doubt in the mind of the bank at the time that the mortgage was to be registered.

According to the Second Defendant on the 12th of March 1991 the Defendant through its present solicitors paid the Suva City Council a sum of $22,587.67 on account of arrears of rates and that it was only after this payment that the Council withdrew its caveat and allowed the Defendant's mortgage No. 298202 to be registered. This matter has never been disclosed to the Court by the Plaintiff. Likewise this was not disclosed to Scott J.

Counsel then refers to the Sale and Purchase Agreement mentioned by the Plaintiff. He says that the Plaintiff has never made any claim until now that he wished to purchase the property and that if he were genuine he should have done so. Annexure "C" to the affidavit of Mosese Waqavonovono is a copy letter dated the 28th of September 1989 from the First Defendants to the bank's solicitors. The letter refers to a meeting held between the Plaintiff and his mother, a representative of the bank and Mr. Nagin on the 6th of September 1989 in which Hazra Bibi and the Plaintiff stated that they intended to take various actions relevant to the re-payment of moneys owing to the bank.

Counsel for the bank comments that nothing is said in this letter about the Plaintiff taking over the property nor does the letter dispute the amount owing to the bank. On the 5th of October 1989 the bank made a formal demand on the Second Defendant for $746,407.95 as money owing to the bank on the land on Certificate of Title 17125. This was followed by a letter dated the 13th of October 1989 to the bank's solicitors signed by the Plaintiff on behalf of the Estate suggesting possible terms for reductions to the mortgage debt. Counsel draws my attention to the fact that although the Plaintiff could then have done so he did not make any claim about being entitled to become registered as the proprietor of the land under his name only.

This letter was followed by a letter dated the 29th of November 1989 from the Estate's then solicitors, Messrs Lateef & Lateef to the bank querying the rate of interest charged by the bank on the mortgage but not, as counsel points out, making any complaint or allegation that the present Plaintiff was entitled to become registered proprietor of the land.

Similarly on the 5th of December 1989 the Plaintiff and his mother wrote to the bank making certain proposals for settlement of the amount owing to the bank. Again, counsel points out, there is no reference in this letter to any claim by the Plaintiff to become registered proprietor of the title which might be expected if the Plaintiff's claim was genuine.

Again, but more recently, the Plaintiff wrote to the bank's solicitors on the 25th of May 1991 in a letter a copy of which is also exhibited to Mosese Waqavonovono's affidavit. The letter states that the Trustees wished to pay $150,000.00 to the bank in full payment on debt due on CT. 8336. There is no reference in this letter to any undertaking by the bank to give the Plaintiff a discharged title to the land.

On the 10th of June 1991 the Second Defendant made its demand on the Estate for the amount of $913,254.43 and further interest of $325.26 per day. This demand drew a response from the Estate dated the 21st of June in which the Estate requested the amalgamation of all the actions in the names of the Trustees into the name of the Estate of Madar Buksh.

Mr. Nagin points out that again there is no reference in this letter to any personal claim by the Plaintiff. He says that if the Trustees were disputing the debt and, particularly, if the Plaintiff was asserting the rights which he now claims, he should have mentioned his claim and the alleged undertaking in this letter but he failed to do so.

In reply to the defence submissions Mr. Khan for the Plaintiff submits that the mortgagors still have the equity of redemption in the property because the agreement for sale is incomplete - it has been stayed by the order of this Court.

I cannot accept this submission. In the 12th Edition of Cheshire's Modern Law of Real Property by E.H. Burns at page 670 the author states:

"If a mortgagee realizes his security by exercising the statutory power of sale, the effect is to extinguish the mortgagor's equity of redemption. It is, however, the contract to sell and not the subsequent conveyance that represents the effective exercise of the mortgagee's power; and, providing that there is no impropriety in the sale, the mortgagor's equity is extinguished as soon as the contract of sale is made."

In my view this passage is sufficient authority for me to reject Mr. Khan's submissions on this point. When I asked Mr. Khan why the Plaintiff made no reference to his alleged rights under CT. 8336 until these proceedings he said that this was unnecessary because of previous correspondence with the bank. I cannot understand this remark in the light of the correspondence exhibited to the affidavits by the bank and the Plaintiff. It is clear to me from that correspondence that the bank has always believed the mortgage was to be registered and in my view it is too late in the day now for the Plaintiff to claim otherwise.

A similar comment can be made in my judgment about the letter from the Trustees to the bank on the 21st of June 1991. I accept that the accounts of the Estate and the Plaintiff should be treated as separate but I cannot understand why, when the bank was by that date clearly determined to foreclose on the mortgage over CT. 8336, the Plaintiff did not then allege that it could not legally do so because of the Plaintiff's personal rights in the matter. I find these failures by the Plaintiff inexplicable if he wishes the Court to believe the claims he is now making.

Lastly I will quote briefly from the judgment of Barwick CJ in Inglis and Another v. Commonwealth Trading Bank of Australia 126 CLR 161 at 168:

I have not heard anything, nor been referred to any authority, which causes me in the least to doubt the correctness of the refusal of Walsh J. to grant the interlocutory injunction sought by the appellant or the reasons which he gave for that refusal. I find no need to discuss the arguments offered, and the authorities referred to, by the appellant. Such of them as were relevant are sufficiently answered in his Honour's reasons.

The case falls fairly, in my opinion, within the general rule applicable when it is sought to restrain the exercise by a mortgagee of his rights under the mortgage instrument. Failing payment into court of the amount sworn by the mortgagee as due and owing under the mortgage, no restraint should be placed by order upon the exercise of the respondent mortgagee's rights under the mortgage."

Applying His Honour's remarks to the present case I can see no exceptional circumstances to justify me continuing the present injunction. In my view if the Plaintiff has suffered any loss I have no doubt the bank is sufficiently solvent to be able to pay him any damages which the Court may later award him. In my judgment if he has any remedy at all it is against the bank and his mother in damages. I therefore dissolve the Interim Injunction of the 1st of November 1991. The Plaintiff is to pay the Defendants' costs to be taxed if not agreed.

John E. Byrne
J U D G E

HBC0519J.91S