Lal v Sami [1995] FJHC 54; Hbc0495j.93s (27 March 1995)

IN THE HIGH COURT OF FIJI
AT SUVA
CIVIL JURISDICTION

CIVIL ACTION NO:00495 of 1993

Between:

SURUJ LAL
s/o Ram Sewak
Plaintiff

- and -

CHIN SAMI
s/o Mahadeo
Defendant

Mr. H.M. Patel for the Plaintiff
Mr. P. Sharma for the Defendant

JUDGMENT

By the Writ of Summons dated 15 September 1993 the Plaintiff is, inter alia, seeking specific performance of a Transfer dated 20 April 1993 of all that piece of freehold property comprised in Certificate of Title No. 9337 being Lot 54 on D.P. NO. 2274 together with all improvements erected thereon (hereafter referred to as the "said property") of which the defendant is the registered proprietor.

The Statement of Claim which is as follows sets out sufficiently the facts surrounding this case from the Plaintiff's point of view as well as the prayers sought by the Plaintiff:

"1. THE Plaintiff agreed to buy and the Defendant agreed to sell all that piece of freehold property known as Certificate to Title No. 9337, Lot 54 on D.P. No. 2274 comprising an area of 39.8 perches with all improvements erected thereon and situated at 90 Milverton Road in Suva for a consideration sum of $65,000:00 (SIXTY FIVE THOUSAND DOLLARS).

2. ON the 29th day of April 1993 the Defendant executed a Transfer Document whereby the Defendant agreed to Transfer the above mentioned property to the Plaintiff together with all his rights, titles and interests in the said property.

3. THE Defendant was always willing and able to pay the sale price of $65,000:00 to the Plaintiff and in fact by a letter dated the 4th of February 1993 the National Bank of Fiji agreed to lend the sum of $40,000 (FORTY THOUSAND DOLLARS) at the rate of 12.5% per annum, calculated daily chargeable monthly and upon full repayment of the loan and the balance price of $25,000 was held in his personal Bank Account.

4. ACCORDINGLY the Plaintiff had also executed a first registered mortgage made with the National Bank of Fiji to secure a loan of $40,000 which was advanced to the Plaintiff to enable him to buy the said land.

5. FURTHER after the Transfer and Mortgage Documents were duly executed by the Plaintiff and the Defendant as required. M.V. Bhai the Solicitor who was acting for both the parties obtained exemption of all stamp duties from the Commissioner of Stamp Duties and had the documents released.

6. HOWEVER, the Transfer and Mortgage Document now cannot be registered at the Registrar of Titles office by the said Solicitor because the Defendant had refused or neglected to produce the Original Certificate of Title No. 9337 even though request was made in writing by M.V.Bhai according to a letter dated the 25th of August 1993 to deliver the said Certificate of Title within 7 days.

7. THE Plaintiff believes that the Defendant is estopped by his son to complete the above deal and whereby the Plaintiff is now incurring financial loss.

WHEREFOR the Plaintiff claims:

(1) Specific Performance of the Sale and/or Transfer dated the 20th of April 1993 to enable it to be registered forthwith.

(2) Specific Performance of the Mortgage be allowed to be registered as a valid security in favour of the Bank as mentioned above.

(3) Further and alternatively damages and/or compensation for loss suffered by the Plaintiff for breach of contract.

(4) Interest at the rate 12.5 per cent annum to be calculated from 4th February 1993.

(5) Costs".

The defendant's Defence and Counter-claim are as stated in his Statement of Defence which are as follows:-

"1. THAT in response to paragraph 1 of the Plaintiff's Statement of Claim the agreed price was $80,000:00.

2. THAT in response to paragraph 2 of the Plaintiff's Statement of Claim, the Transfer document was misleading and incorrect as it did not reflect the true price of the contract.

3. THAT in response to paragraph 3 of the Plaintiff's Statement of Claim the Defendant never undertook to pay the Plaintiff any money.

4. THAT in response to paragraph 5 of the Plaintiff's Statement of Claim the Defendant executed the Transfer document in New Zealand after being led to believe that the Transfer document only reflects a portion of the contract price and M.V.Bhai is not the Defendant's Solicitor.

5. THAT in response to paragraph 6 of the Statement of Claim the Defendant only refused to complete his part of the transaction.

6. THAT it response to paragraph 7 of the Statement of Claim, that Plaintiff entered into the transaction without even sighting any authority from the Defendant, and as the Defendant's son has no lawful authority there is no issue of estoppel.

COUNTERCLAIM

7. THAT the Defendant repeats paragraphs 1 to 6 of the Statement of Defence.

8. THAT the Defendant agreed to sell the title to the Plaintiff after clear assurances had been given to the Defendant by the Plaintiff and by the Defendant's son, Raman that the contract price was $80,000:00 (EIGHTY THOUSAND DOLLARS) to be payable as follows :-

(a) $5,000:00 (FIVE THOUSAND DOLLARS) as deposit upon signing of the Transfer;

(b) $65,000:00 (SIXTY FIVE THOUSAND DOLLARS) upon settlement; and

(c) $10,000:00 (TEN THOUSAND DOLLARS) to be paid after settlement as a family loan.

9. THAT the Plaintiff has chosen to reneg on the contractual arrangement.

10. THAT Plaintiff is seeking unjust enrichment in this case.

11. THAT the Plaintiff is guilty of fraudulent misrepresentation;

PARTICULARS OF FRAUD

(a) The Plaintiff with intent to defraud made false representation to the Defendant in order for him to execute the Transfer for $65,000:00;

(b) The Plaintiff knew he would not honour his undertakings;

(c) The Defendant acted in reliance of the Plaintiff's undertakings;

(d) The Defendant was deceived by the Plaintiff's conduct in executing the Transfer;

(e) The Defendant is now being forced to sell the property for $65,000:00 when he knew the full purchase price was $80,000:00;

12. THAT the Plaintiff has not honoured his rental payment on the property and in fact has fraudulently started collecting rental from other tenant on the property.

WHEREFORE THE DEFENDANT CLAIMS :-

(a) That the Plaintiff's action be dismissed;

(b) That the Plaintiff be ordered to pay the full price of $80,000:00 (EIGHT THOUSAND DOLLARS) together with interest.

(c) That the Plaintiff be ordered to pay all rental arrears to the Defendant.

(d) Damages;

(e) Costs

(f) Such further relief as to this Honourable court deem just."

The issue to be decided by the court, as agreed by both counsel, is "whether there was a legal and binding contract ever reached between the parties for the sale of CT. No. 9337, Lot 54 on DP No.2274 and for how much? Damages and costs if any".

Apart from the Plaintiff SURUJ LAL (PW1) who himself gave evidence, evidence for the Plaintiff was given by MAGAN LAL VITHAL BHAI (PW2), barrister and solicitor.

For the defendant evidence was given by GUS JOHNSON (DW1), Bank Officer, CHIN SAMI (DW2) (defendant) farmer and his son RAMAN (DW3) building contractor.

Briefly, the Plaintiff's (P's) evidence is as hereunder.

The defendant (D) is plaintiff's (P's) father-in-law's father. The Plaintiff says that before April 1993 D verbally agreed to sell the said property for $65000 after a discussion P had with him at his home at Kuku, Nausori. Thereafter P approached the National Bank of Fiji (NBF) for a loan of $40,000 and at their request he gave them a letter from D confirming that he is selling the property; he also obtained a valuation Report (exhibit 2).

The NBF approved the loan (exhibit 3). Then P got Mr. Bhai, a solicitor (PW2) to prepare the document of transfer (exhibit 5); this was prepared and sent together with a covering letter (exhibit 4) by Mr. Bhai to D who was in New Zealand at the time to execute the transfer. A mortgage document (exhibit 6B) was also prepared. The transfer was returned after execution. The time for settlement came and the only thing left was the production of the Certificate of Title in respect of the said property. Mr. Bhai wrote (exhibit B) to D on 23 August 1993 giving him 7 days' time to produce the Title. The defendant did not produce so P commenced this action.

The Plaintiff denied that the consideration for the sale of the said property was $80,000.

Mr. Bhai (PW2) testified inter alia as follows: that he prepared the transfer document upon instructions from P and sent it with a covering letter to New Zealand for execution by D before a Notary Public. D sent it back from New Zealand duly executed with a covering letter (P7). The consideration shown is $65000 which is for the transfer of the said property. He also prepared a mortgage document and that was signed by P. He said that because D had failed to produce the Title, the transfer and mortgage documents could not be lodged for registration. Mr. Bhai said that he told P that a Sale and Purchase Agreement is normally prepared. It was not done in this case as there were no instructions to do that as P wanted a "straightout transfer to save costs". He said that at first he acted for P and then later for "both".

Further in cross-examination he said that it was P who gave the price of $65,000 to him. The transfer document (exhibit P5B) together with a covering letter dated 6 April 1993 (exhibit p4) was sent to D who was in New Zealand at that time. Mr. Bhai said that the first time that he met D was on 25 May 1993 when he came to his Office "with some people". Mr. Bhai said that he had no moneys in his Trust Account for P. He said that P was short of funds. On 2 March 1993 only P came to his Office and told him to proceed to transfer.

On 10 August 1993 the parties met in Mr. Bhai's Office. He said that only $65,000 was mentioned. He said that the "defendant objected to the transaction - the parties would not agree - conference held with a view to settlement - financial problem". Mr. Bhai when asked by Court said that he had a conference with the parties for an hour to work out settlement. Funds was the problem and no settlement was reached. He said that there was "no discussion of family loan". He said that the parties were at "loggerheads" and they left his Office.

The DW1 a Bank Officer with NBF explained the Bank's policy on lending. He said that he is familiar with the Plaintiff's file. In cross-examination he agreed he wrote (exhibit 11) to Mr. Patel inquiring about the progress in the documentation about the loan which the Bank approved on 25 February 1993 (exhibit 10).

In short, the defendant's (CHIN SAMI'S - DW2's) evidence is as hereunder.

He said that he agreed to sell the said property for $80,000 when the Plaintiff came to his home in 1992 in the presence of his son Raman (DW3). He said that $75,000 was to be the loan and $5000 his own.

Then when he was in New Zealand he received the Transfer document for execution prepared upon the Plaintiff's instructions. He said that one of his sons who is in New Zealand left him with an "European man" who was a Notary Public. The defendant said that this "European man" did not tell him what the amount was on the transfer but he knew that he was signing a transfer document.

After this he returned from New Zealand in May 1993 when P & D both went to Mr. Bhai's Office. D refused to produce the title. He said that the second time he went to Mr. Bhai's Office was two or three months after the first visit in May. He said that before going to New Zealand in December 1992 after this discussion he did not allow P to occupy his house. He said that he did not instruct Mr. Bhai to prepare any document nor did he mention anything about $65,000. He said that the person before whom he signed did not tell him that the purchase price is $65,000 as the "European man" did not know the Hindustani language to interpret to him. He said that before he left for New Zealand he left the negotiation with DW3 (Raman) and the selling price was $80000. When he returned from New Zealand in May 1993 the parties met but P did not have the money; P said that he will receive $65000 as loan and he will pay $5000 from his own pocket and the balance of $10,000 he will sell the car and pay in 6 months. He said that Mr. Bhai was aware of all this discussion. In re-examination he said that after he left for New Zealand after negotiating the sale for $80,000 the said Raman came in the picture and D was agreeable to the arrangement as in clause 5 of his (D's) affidavit sworn 23 September 1993. When asked why he signed for $65,000 on 20 April 1993 he said that P phoned him in New Zealand and said that "he is getting $65,000 and left over $15,000 he will pay $5000 on execution of transfer and $10,000 within 6 months". He believed him and trusted him because his son Raman also said that it is "O.K".

The defendant's son RAMAN (DW3) testified along the same lines as D; he said that D agreed to sell the said property to P for $80,000; the dealing took place at his (DW3's) home in May 1992. But later P came to him and said that he could borrow up to $65,000 "including his own". DW3 informed D about P's difficulties and he suggested as already indicated earlier on by D and D agreed to this. P went to arrange for loan and D left for New Zealand.

The DW3 said that sale and purchase agreement was prepared for the purchase price of $80,000 and it was given to P to sign. P did not sign nor did he return the document to DW3 as he said that he could not obtain loan of $80,000.

DW3 said that he was not involved in any dealings with Mr. Bhai and he did not go to his Office. He did not see the document that was sent to his father in New Zealand. He said that P was to send Sale and Purchase agreement to D but he did not nor did he give $5000 which he was supposed to give. DW3 told his father that a document was coming and for him to execute it if P sends to him. Problem arose when D returned from New Zealand and when P refused to pay the $5000. P told DW3 that "don't worry he already signed transfer". DW3 said that there was "no backing out from $80000".

P told DW3 that he will only pay $65000 and that he cannot "press" him because the owner has already signed for $65000 and that is what the transfer states. He said that he has achieved what he wanted.

What I have stated hereabove is the sum total of the evidence before the Court. It is upon that evidence that I am asked to determine whether there was a contract between the parties.

Upon considering all the evidence that has been adduced in this case, on a balance of probabilities I find as fact as hereunder.

That it was early 1992 that negotiations took place between the plaintiff and the defendant with Raman (DW3) present for the sale of the said property for $80,000. Mr. Bhai said that when the Plaintiff and defendant were in his Office after Defendant returned to Fiji in May 1993, P disputed the contract price; and it was only then that Mr. Bhai met the defendant and not previously as the Plaintiff alleged. That although a Sale and Purchase agreement was prepared by Senator Sharda Nand at the request of DW3, it was not sent by P to Defendant who was in New Zealand but instead a transfer document was sent to him by P to execute before a Notary Public. The DW3 thought that the Plaintiff will send the said agreement. It was DW3 who was instrumental in getting the Plaintiff to purchase the said property; he even went to the extent of guaranteeing the payment of $10,000 in case the Plaintiff did not pay. This also indicated that DW3 was not interested in purchasing the said property himself as alleged by the Plaintiff.

As far as the bank loan is concerned there was, according to Mr. Bhai, no communication with the Bank and that the National Bank of Fiji had withdrawn; that there was no evidence adduced by the Plaintiff that he had incurred any bank charges.

That as far as the Plaintiff's ability to complete the sale is concerned, in August 1993 he was not in a position to do so; even no moneys were deposited in Mr. Bhai's trust account according to Mr. Bhai; in cross-examination P said that he was going to sell his car to pay the balance of the purchase price which indicates that he was struggling to raise finance.

I accept the testimony of both D and DW3 in regard to the material particulars, namely that P had agreed to sell the said property for the price of $80,000 payable as follows: $65,000 as a lump sum, $5000 upon execution of the transfer and $10,000 within 6 months. This arrangement was vouched for by DW3 who had direct knowledge of the transaction and was the force behind the sale of the said property.

To summarize, the facts as I find them to be in regard to the actual dealings between the parties are that:

(a) Before leaving for New Zealand in 1992 D agreed to sell and the P agreed to purchase the said property for $80,000.

(b) P could not raise sufficient loan to enable him to purchase the said property for $80,000.

(c) P approached DW3 and told him of his difficulties and it was agreed between P and DW3 that a Sale and Purchase Agreement be prepared stating how much loan was to be obtained and how the purchase price was to be paid.

(d) DW3 got a Sale and Purchase agreement prepared and gave it to P who neither executed it nor sent it to New Zealand for D to execute but instead got Mr. Bhai to act for him and have the transfer document sent to D to execute much to the surprise of DW3. This agreement was not produced to Court.

(e) DW3 all the time thought that the sale and purchase agreement would be sent for execution and he spoke to his father telling him to execute a document which will be sent by P.

(f) It was under this arrangement that D executed the transfer document and without, as it appears from the jurat to the transfer after the word 'Hindustani' was crossed out, being fully explained its contents by the Notary Public as he did not speak the Hindustani language. The jurat is not clear in what manner the contents were explained, if at all, to D.

(g) When D returned from New Zealand later he went to Mr. Bhai's Office and there also there was disagreement as to purchase price. That was the end of all negotiation for the sale of the said property.

It is abundantly clear from the evidence before the Court and I believe the defendant and DW3 that there was an agreement reached as to the purchase price between the parties. The defendant had expected P to stick to the mode of payment of the purchase price of $80,000 along the lines communicated to D and acting on that he executed the document of transfer. But on his return to Fiji he found out that P was not prepared to pay as arranged and it was then that D showed his utter disappointment with P's attitude towards the transaction.

In a transaction of this nature involving a developed property it is preferable to have a Sale and Purchase Agreement drawn up so that the terms and conditions of the sale are clearly set out therein. Here although one was prepared by the said Sharda Nand it was not produced to Court and this is not denied by P and it was not sent to D to sign. Also, Mr. Bhai who prepared the transfer document said that he did not prepare one because the Plaintiff wanted "a straightout transfer to save costs". The sale involved transfer of a developed property from which rental income is derived. It was absolutely necessary to have a Sale and Purchase agreement executed. Whether Mr. Bhai could have required the purchaser to have one drawn up or not is difficult to say; also whether Mr. Bhai advised the purchaser in this regard is also not clear.

Be that as it may, I find as fact that Mr. Bhai acted for the purchaser (P) only; it was on P's instructions that he prepared the necessary documents and had the transfer document despatched to New Zealand for execution. I find that although D came to Mr. Bhai's Office as stated earlier he did not instruct him to act as his solicitor as well. I am not convinced that Mr. Bhai acted for both parties.

It is on these facts and circumstances of the case that the Plaintiff is seeking specific performance of the transfer executed on 20 April 1993.

In considering whether specific performance is applicable one of the rules is that there must have been a valid contract.

Here it is clear from the evidence and my findings of fact that there was a valid contract, although oral, between the parties for the purchase of the said property for $80,000 when they first met in 1992. This agreement was concluded in the presence of DW3. Subsequently the manner of payment was agreed upon as stated hereabove. But much to his astonishment after he had executed the transfer and when D returned from New Zealand he discovered that P was not playing the ball for he was retracting from the initial arrangement and even disputing the purchase price saying that it was $65,000 and not $80,000. It was then that he realized that through misrepresentation on the part of the P he was led to execute the transfer. The Plaintiff knew that the purchase price was $80,000 and he acted fraudulently in getting D to execute the transfer for $65,000. He had no intention of paying D the balance of the agreed purchase price. The fact that there was this dissatisfaction over the purchase price came out in the open in Mr. Bhai's Office after D's return from New Zealand leading to heated exchange of words between the parties in the presence of Mr. Bhai culminating in them leaving Mr. Bhai's office without reaching any agreement. That incident closed the door to any further negotiation when this action commenced.

The remedy of specific performance is discretionary. "Equity will only grant specific performance if, under all the circumstances, it is just and equitable to do so". (STICKNEY v KEEBLE (1915) AC 386, 419). The discretion is, however, "not an arbitrary ... discretion, but one to be governed as far as possible by fixed rules and principles." (LAMARE v DIXON [1873] UKLawRpHL 20; (1873) L.R. 6 H.L. 414, 423). A number of factors are taken into account which I shall discuss hereafter.

In this case although a contract was entered into for the sale of the said property, I find the Plaintiff had through unfair means obtained the execution of the transfer for less than the agreed purchase price. As arranged with DW3 a Sale and Purchase Agreement was to be forwarded to D but instead P sends D a transfer document. This was contrary to all arrangements between the parties and DW3. In WALTERS v MORGAN (1861) 3 D.F. & J 718 specific performance was refused because the defendant was "surprised and induced to sign the agreement in ignorance of the value of his property". Quoting from THE LAW OF CONTRACT by TREITEL 5th Ed p.757:

"The plaintiff must have taken unfair advantage of his superior knowledge: in WALTERS & MORGAN the court relied on the fact that the plaintiff had produced a draft lease during the negotiations, and had hurried the defendant into signing it before he could discover the true value of the property....."

Similarly, in this case the Plaintiff held back the Sale and Purchase Agreement lest it be found out by D what the real terms and conditions of the sale are. Instead he got D to execute a direct transfer pursuant to assurance which he himself gave D and D acted on that only to find out subsequently upon his return to Fiji that he had been deceived through misrepresentation into signing the transfer.

Another factor to which regard must be had is the conduct of the Plaintiff who is applying for relief (LAMARE v DIXON supra). Here the Plaintiff failed to perform a promise which induced the defendant to contract; D has signed the transfer claiming that the consideration is different from what is stated in the transfer which gives right to an examination of the conduct of the party which is seeking to enforce the contract. I have said enough about the Plaintiff's conduct in this case which is questionable. Inducing D into executing the transfer by misrepresentation and deceit is sufficient to dismiss the Plaintiff's action for specific performance. Knowing full well that the contract price was $80,000 he put $65,000 and got D to execute the transfer by backing out on the assurances given by him to D and acting contrary to the terms of the agreement entered into between them, namely, that he will pay $15,000 in a family arrangement.

In this case although the transfer was executed in the circumstances hereabove stated, parol evidence could be admitted "to show the true consideration and the legal agreement between the parties" and it was so held in AMMAR v DEOKI (15 FLR 29 FCA).

In his judgment SPRING J.A. in AMMAR (supra) at p.33 said that the general rule that extrinsic evidence is generally inadmissible when it would, if accepted, have the effect of varying or contradicting the term of a deed or a document constituting a valid and effective contract or transaction, 'is of course subject to exceptions as the learned authors in Halsbury's Laws of England 3rd Ed. Vol. II at p.402 state:

"Parol evidence is also admissible to show that the transaction is affected by fraud, immorality, illegality, duress or mistake; to show the true consideration or the existence of consideration or of consideration in addition to that stated; to show the nature of the transaction or the true relationship of the parties".'

How apt this is to the present case where the agreement between the parties was as to the mode of payment of the purchase price and which agreement is collateral with the transfer document and not inconsistent with it. The evidence here shows what the "nature of the transaction" was and of the "true relationship of the parties". But by his conduct and action Plaintiff has concealed the true contract price particularly by not sending the undisclosed sale and purchase agreement which would definitely have revealed what the terms and conditions were which governed the sale. He has now reneged on the agreement.

Here we have D who is a retired old man of 71 years old who does not understand the English language and who has been persuaded to execute a transfer of his land in the presence of an "European" Notary Public who himself does not speak the Hindustani language to be able to explain the contents of the document to him. He was supposed to have been explained the contents of the document; the word "Hindustani" is crossed out in the jurat and hence it is not clear whether the document was explained or not to D. There was no one else present at the time of execution. Whatever D did, there is no doubt bearing in mind what DW3 told him about the payment of $15,000 and also what P also told him, D still believed he was to be paid $80,000 and not $65,000 as argued by the Plaintiff.

On the evidence I am satisfied that at no time D allowed P to collect rent from the tenants of the said property and I accept D's testimony in this regard. I also accept D's evidence that he did not allow P to occupy his house.

On the whole of the evidence I have come to the conclusion that the plaintiff has failed to show that this Court should exercise its discretion in his favour and grant him the remedy of specific performance. This decision may appear to operate harshly against the Plaintiff who has been in occupation of the said property for a while now but, in view of his own conduct and his misrepresentation, he cannot expect the Court's assistance.

The Plaintiff's claim for specific performance is disallowed so is his claim for damages. He will give to the defendant vacant possession of the portion of the said property which he is occupying himself.

The Plaintiff's claim is therefore dismissed. The Plaintiff is ordered to give vacant possession of the portion of the said property which he is occupying himself.

On the Defendant's counterclaim the defendant succeeds partially; the Plaintiff is ordered to account for all rents received by him from the tenants of the said property and pay them to the Defendant after taking into account all legitimate and proper expenses in the upkeep and maintenance of the said property from the time he took possession of it. The Plaintiff is also ordered to pay to the defendant the amount due by the Plaintiff in respect of his use and occupation of a portion of the said property. Although there is no proper evidence as to what would be a proper amount for the Plaintiff to pay for that portion of the property occupied by him this will have to be ascertained by the Chief Registrar by reference to rents of similar premises in the locality for the period of his occupation.

The parties are at liberty to apply for any further order or direction and indeed liberty to apply generally.

The Plaintiff will pay the costs of this action to be taxed if not agreed.

D. Pathik
Judge

At Suva
27 March 1995

HBC0495J.93S