Rama v Australia and New Zealand Banking Group Ltd [1994] FJHC 109; Hbc0315d.92l (24 August 1994)

IN THE HIGH COURT OF FIJI
(AT LAUTOKA)

CIVIL ACTION NO. 315 OF 1992

BETWEEN:

RAMA a.k.a. RAMAN
(f/n Kuppal a.k.a. Kuppusami)
of Tagitagi, Cuvu, Nadroga, Farmer
Plaintiff

AND

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED
having its head office at Suva
Defendant

T. Fa for the Plaintiff
C.B. Young for the Defendant

Dates of hearing: 17th January, 21st July 1994
Date of Interlocutory Judgment: 24th August 1994

INTERLOCUTORY JUDGMENT

This action properly belongs to the Lautoka Registry of the Court but because I granted an Interim Injunction against the Defendant on the 23rd of September 1992 my brother Sadal J. on the 11th of June 1993 correctly declined to hear an application by the Defendant to dissolve the Injunction and referred the matter to this Court.

When the Defendant's application came before me on the 21st of July 1994 I heard brief oral submissions from Mr. Young on behalf of the Defendant in which he relied on the written submission which he had filed on behalf of the Defendant in the Lautoka Registry on the 17th of January 1994 and emphasised three particular contentions which I shall mention shortly.

After hearing Mr. Young I gave counsel for the Plaintiff until the 4th of August to file any written reply to Mr. Young's submissions but, as none was forthcoming by that date, on the 24th of August I gave a brief oral judgment in which I dissolved the Injunction of the 23rd September 1992 and stated that I would publish my reasons later. I now do so.

The relevant history of the matter before the Court began on the 8th of September 1992 when the Plaintiff issued a Writ containing a Statement of Claim parts of which I shall now summarise.

(1) The Plaintiff is the registered proprietor of the piece of Native Land known as Lot 16 Tagitagi Subdivision situated in the district of Cuvu and Province of Nadroga/Navosa and comprised in NL Approval Notice Reference No. 4/11/5046 having an area of 21 acres 3 roods 28 perches together with all the improvements thereon.

(2) The Plaintiff was financed by the Defendant to purchase the property and the loan is secured by a mortgage No. 3123 over the property with collateral Crop Lien No. 3467/89 over sugarcane farm No. 6383 Cuvu Sector.

(3) The Plaintiff alleges that the contents of the security documents were not properly explained to him at the time he executed the mortgage.

(4) The Plaintiff alleges that it was agreed and an implied term with the Defendant that the Plaintiff's loan would be paid from the sugarcane proceeds received under the Crop Lien.

(5) In the year 1990 the Plaintiff harvested approximately 220 tonnes of sugarcane and in 1991 approximately 129 tonnes. The estimate for 1992 by the Fiji Sugar Corporation was 300 tonnes.

(6) In February 1992 the Defendant gave the Plaintiff a Notice of Demand requiring him to pay the full amount owing to the Bank failing which the Bank would exercise its powers of sale under the mortgage and Crop Lien.

(7) On or about the 22nd of August 1992 the Defendant through its agents Messrs Young & Associates advertised in The Fiji Times a Mortgagee Sale of the Plaintiff's property and gave the closing date for tenders as 8th September 1992.

The Plaintiff alleges that the Crop Lien under which the payments are guaranteed to the Bank does not give any power of sale under the Crop Liens Act Cap. 226.

The Plaintiff claims he is married with a wife and two children and also supports his two brothers who are married with children and who have been living on and cultivating the land with him.

If the property is sold by the Bank by mortgagee sale the Plaintiff and his family will have no place to stay. The Plaintiff then claimed an Injunction restraining the Bank from proceeding with the sale of the property.

The matter came before me on an ex-parte motion by the Plaintiff on the 9th of September 1992 when I ordered that the application be made inter partes and listed it for hearing on the 23rd of September. On that date the Court had before it an Affidavit of Service of my order of the 9th of September and all relevant papers concerning it. Mr. Fa appeared for the Plaintiff and informed me that he had spoken to Mr. Parshotam and who told him that he had no instructions to appear. I therefore granted an Interim Injunction restraining the Defendant from selling the Plaintiff's land until further order and directed that a copy of my order be served on the Defendant by the 26th of September 1992.

On the 21st of October 1992 the Defendant issued a Summons seeking orders either that the action be transferred to the High Court at Lautoka or that the Interim Injunction of the 23rd of September 1992 be dissolved.

In support of the Summons the Defendant filed an affidavit by Hari Krishna the Manager of the Defendant Bank at its Branch Office at Sigatoka.

Mr. Krishna deposed that after being furnished by the Plaintiff with production records of tonnes of cane harvested in previous seasons from 1985 to 1988 and with an estimate for 1989 of 350 tonnes and an outline from the Plaintiff of his farm programme in 1990 which included four acres of new plant and eight acres of fourth year ratoon, the Defendant granted the Plaintiff a loan.

On or about 30th November 1989, the Plaintiff executed a mortgage over all the land described in the Native Land Approval Notice Reference No. 4/11/5046 and a collateral Crop Lien over his farm in consideration of loans, advances, credits and banking accommodation extended by the Bank. Subsequent to the execution of these securities the Defendant confirmed previous seasons' production reports with Fiji Sugar Corporation and obtained an estimate of 225 tonnes for the 1989 harvest.

In late 1990 the Defendant conducted an annual review of the Plaintiff's account. The Plaintiff's original loan arrangement was for $18,000.00 with an interest rate of 11 percent with amortisation anticipated over approximately five years with estimated tonnage of 350 tonnes to 1989. The annual review revealed that the loan had increased to $27,000.00 with an interest rate of 12.5 percent and yet the actual tonnage for 1989 was only 225 tonnes. The Bank estimated that with repayments of 50 percent of cane proceeds the loan would take almost twenty years to be paid in full.

Early in 1991 the Defendant requested the Plaintiff to discuss with it repayment arrangements.

On or about 23rd of April 1991 Mr. Krishna inspected the Plaintiff's farm with the Bank's Advances Clerk. He stated that the farm work appeared to have been delayed due to late harvesting. The Plaintiff explained to them that although the 1989 season's estimate was 350 tonnes only 225 tonnes had been harvested allegedly because part of the cane had been harvested by a neighbouring farmer due to undefined boundary. Further, in 1990 only 200 tonnes had been harvested with a further 200 tonnes left out due to the closure of the mill and bad weather.

It was at this time agreed by the Plaintiff that repayment be increased to 75 percent of all cane proceeds until the debt was reduced to approximately $10,000.00 at which time repayment would be reduced to 50 percent of all cane proceeds.

On or about the 5th of July 1991 upon further review of the Plaintiff's account, the Defendant became aware that the account appeared to be stagnant. The Plaintiff had earlier advised the Defendant that he had approached the Fiji Development Bank with a request that that Bank take over the entire debt currently held by the Defendant Bank.

Mr. Krishna states that the Defendant telephoned the Fiji Development Bank the same day and was advised that they had declined the Plaintiff's application.

Shortly afterwards the Plaintiff informed the Defendant that the Fiji Development Bank had decided to give further consideration to the Plaintiff's application.

On or about 11th July 1991 the Defendant was informed by the Fiji Development Bank Manager that after inspecting the Plaintiff's farm he had recommended the application for refinancing to the Fiji Development Bank Head Office for approval.

Nothing further was heard by the Bank until on or about 5th November 1991 when the Plaintiff called to advise the Defendant that part of his cane had been accidentally burnt as a result of fire starting on a neighbouring farm. The Plaintiff stated that 130 tonnes of cane had been burnt and that he had hired a truck to cart the cane to the Lautoka Mill the Plaintiff requested a further advance of $300.00 to meet the balance of harvesting expenses. The Defendant declined the Plaintiff's request as the Plaintiff had not made any progress in reducing his debt but had in fact increased it.

On or about 14th February 1992 the Plaintiff's account was further reviewed. By then the account had increased from the original of $18,000.00 to $28,153.00 and a decision to serve a formal demand on the Plaintiff was made.

A Formal Notice of Demand dated 25th February 1992 was served on the Plaintiff on the 3rd of March 1992 giving the Plaintiff 14 days notice of its intention to exercise the powers given to the Bank under the Crop Lien unless payment of all moneys due and interest was made.

Thereafter the Plaintiff requested further time from the Defendant and stated that he was endeavouring to obtain refinancing.

On or about 26th of May 1992 the Plaintiff advised the Defendant that the National Bank of Fiji had declined his application for refinancing. He requested two seasons to prove himself capable of repaying his loan but as by then the Plaintiff's debt had increased to nearly $30,000.00 the Defendant was dubious and informed the Plaintiff that it seemed a Mortgagee Sale was inevitable.

On or about 10th June 1992 the Plaintiff's solicitor wrote to the Bank requesting it to give the Plaintiff another chance. The Bank declined to do this on the ground that it considered the Plaintiff lacked total commitment to his farm which was reflected by the low cane production of recent years which was not sufficient to service the debt satisfactorily.

Matters culminated on or about 22nd August 1992 when the Defendant advertised in The Fiji Times the Mortgagee Sale previously mentioned.

The Plaintiff swore an Affidavit in Reply to that of Hari Krishna in which among other things he admitted that in 1989 only 225 tonnes of cane were harvested because he said 100 tonnes had been harvested forcibly by a neighbour due to a boundary dispute.

The Plaintiff also stated that during the 1990 season 200 tones of cane was harvested and that he had attempted to obtain a loan from the Fiji Development Bank. He claimed that the Defendant should have given him other possible assistance to harvest and transport his cane but refused to do so. He denied any lack of commitment to his farm.

There can be no question that the Defendant has the right of sale of the Plaintiff's land under Clause 12 of the Mortgage Agreement. The Plaintiff appears to try to avoid this by claiming in his Statement of Claim that the Bank has no right of sale under the Crop Liens Act Cap. 226 but that does not assist the Plaintiff when it is clear the Bank is exercising its right under the mortgage.

Before the Court can consider whether or not to grant an injunction it must be satisfied that there is a serious question to be tried.

The Plaintiff contends that the security documents relating to mortgage No. 3122 and Crop Lien 3467/89 were not properly explained to him at the time of execution of the same.

I reject this contention. The mortgage document contained a certificate under the hand of a solicitor that the contents of the mortgage were read over and explained to the Plaintiff in the Hindustani language and he appeared fully to understand the meaning and effect thereof. The Plaintiff however does not challenge the legality of the security documents.

He claims that he will suffer hardship on any sale but this is inevitable if it is not possible to satisfy his debt to the Defendant.

Obviously the Plaintiff has not shown himself a substantial man and he makes no suggestions about paying off the mortgage debt apart from what I consider to be a wildly optimistic request to be given further time.

In Macleod v. Jones (1883) 24 Ch. 289 at p.299 Lord Justice Cotton said:

"This is an application to restrain a mortgagee from exercising its power of sale. Under ordinary circumstances the Court never interferes unless there is something very strong, it does not interfere on any suggested case without requiring the plaintiff applying to pay into court not what a judge or the court on hearing evidence is satisfied would probably be the amount but what the mortgagee, the accounts not have been yet taken, swears is due to him on his securities. And that is perfectly right, because we are not to prevent mortgagees from exercising the powers given to them by their security without seeing that they are perfectly safe."

This view has been endorsed in numerous subsequent cases since Macleod and in my view the Plaintiff should not be granted any further relief by this Court unless and until he pays the moneys owing into Court.

It is practically certain in my judgment that he has no hope of doing so and for these reasons I uphold the Defendant's first submission that the Plaintiff has not shown there is a serious question to be tried.

That finding is sufficient to dispose of the matter but for the sake of completeness I mention two further reasons advanced by the Defendant why I should dissolve the Injunction, first that the Plaintiff has failed to disclose certain material facts and secondly that in any event damages are an adequate remedy for the Plaintiff. It is now trite law that any party seeking an Injunction must disclose to the Court all material facts relating to his right to claim an Injunction. This has been stated many times and it suffices here to mention only one case which has been often mentioned, Dalglish v. Jarvie [1850] EngR 688; (1850) 2 Mac & G 231 in which it was held that:

"It is the duty of a party asking for an injunction to bring under the notice of the court all facts material to the determination of his right to that injunction; and it is no excuse for him to say that he was not aware of the importance of any facts which he has omitted to bring forward."

The material placed before the Court by the Plaintiff on his Ex-parte Application did not disclose:

(i) A letter written by the Plaintiff's solicitor on or about the 10th of June 1992 requesting the Defendant to give the Plaintiff another chance for the rest of year to see how his cane production would go. The Plaintiff's solicitor also stated in that letter that the Plaintiff had been trying other Commercial Banks to raise the amount owing to the Defendant but that to date he had been unsuccessful. This letter is Annexure `F' the affidavit of Hari Krishna sworn on 16th October 1992.

(ii) A letter written by the Defendant on or about 19th June 1992 to the Plaintiff's solicitor advising that the Bank was not in a position to grant the Plaintiff further time until the end of the year and stating also that the Bank considered the Plaintiff lacked total commitment to his farm, reflected in low cane production in recent years.

Each of these documents revealed that at no time did the Plaintiff deny owing the Defendant the sum requested in the Notice of Demand. The Plaintiff merely requested further time to pay his debt.

Even if this non-disclosure of material facts were innocent or inadvertent it is sufficient to dissolve the Injunction.

For these reasons I granted the Defendant's Motion to dissolve the Injunction of 23rd September 1993 and ordered that costs be in cause.

I now direct the Registry to return this file to Lautoka where the matter may now proceed if necessary.

JOHN E. BYRNE
J U D G E

Cases referred to in judgment:

(1) Dalglish v. Jarvie [1850] EngR 688; (1850) 2 Mac & G 231
(2) Macleod v. Jones (1883) 24 Ch. 289

Additional cases referred to in argument:

(1) American Cyanamid Company v. Ethicon Limited [1975] UKHL 1; (1975) 1 All E.R. 504.
(2) Cayne v. Global Natural Resources (1984) 1 All E.R. 225.
(3) Civil Appeal No. 50 of 1986 - Bank of Baroda v. Akhil Chand Chaudary.
(4) Thomas A. Edison Limited v. Bullock [1912] HCA 72; (1912) 15 CLR 679.
(5) Inglish and Anor v. Commonwealth Trading Company of Australia 126 CLR 161.
(6) Rex v. Kensington Income Tax Commissioners Ex parte Princess Edmond de Polignac (1917) 1 KB 468.

HBC0315D.92L