Levukalailai Developmets Ltd v Estate of Tui Grace Fenton [1995] FJHC 55; Hbc0367d.94s (27 March 1995)

IN THE HIGH COURT OF FIJI
AT SUVA
CIVIL JURISDICTION

CIVIL ACTION NO. 0367 OF 1994

Between:

LEVUKALAILAI DEVELOPMENTS LIMITED
Plaintiff

- and -

1. THE ESTATE OF TUI GRACE FENTON
2. JOHN EDGAR HUGH WHITESIDE and
BRETT ALEX WHITESIDE
3. KINGFISHER INVESTMENTS LIMITED
Defendants

Mr. D. Sharma for the Plaintiff
Mr. Subhas Parshotam with Mr. Satish Parshotam for the Defendants

DECISION

In this motion the plaintiff seeks, as confirmed by Mr. Sharma at the hearing, an Order extending the time for removal of Caveat No. 388690 until the hearing and determination of this action. The caveat is in respect of the property comprised in Certificate of Title No. 14537 being Lot 3 on Deposited Plan 3427 (hereinafter referred to as the "said property").

In support of the motion an affidavit was sworn by a law clerk ROSHNI PRASAD employed by the law firm of Sherani & Company. She has deposed, inter alia, that she is making this affidavit from her own knowledge of the facts and background to this case and upon authority from the plaintiff. She says that the said property was transferred by the first defendant to the plaintiff but it was not registered because of an existing mortgage to Westpac Banking Corporation registered against the Title to the said property; that it was agreed between the parties that the mortgage was to be repaid before registering the transfer.

The said Roshni Prasad refers to a number of other transactions involving the plaintiff, Levukalailai Holdings Limited and Kingfisher Investments Limited. Paragraphs 6 and 10 are relevant in that regard and are as follows:-

"6. THAT I am informed and verily believe that the consideration for the sale of the property, being $100,000.00 was contingent upon the terms of a Joint Venture Agreement entered into between the Plaintiff and Kingfisher Investments Limited where it was agreed that in lieu of the $100,00.00 being paid for the acquisition of the Certificate of Title No. 14537 the Plaintiff was to invest a further $100,000.00 into the joint venture company, LEKUKALAILAI HOLDINGS LIMITED and such monies were to be reimbursed to Kingfisher Investments Limited upon the sale of certain subdivided lots. A copy of the Joint Venture Agreement is annexed hereto and marked "C".

10. THAT I am informed and verily believe that the Plaintiff has already made part payments under the Agreement dated 11th February 1993 and the Plaintiff has also made payments of instalments owed to Westpac Banking Corporation under its mortgage which is registered against CT 14537.
    

Any attempts to remove the Caveat protecting the Plaintiff's unregistered interest in the land would seriously prejudice the Plaintiff's rights under both the Sale and Purchase Agreement dated 11th February 1993, the Transfer dated 11th February 1993 and the Joint Venture Agreement."

On the application of the defendant the Registrar of Titles had sent a Notice (exhibit 'E' to Prasad's affidavit) to the Plaintiff to withdraw the said caveat. Hence the present application. The Plaintiff has also instituted this action No. 367/94 in the High Court claiming, inter alia, specific performance of the Sale and Purchase Agreement dated 11 February 1993.

Mr. Parshotam opposes the Motion and has filed very comprehensive affidavits in Reply to PRASAD'S affidavit but there are no further affidavits from the Plaintiff in Reply to the defendants' affidavits. The Affidavits I refer to are those of John Whiteside sworn 23 August 1994, Supplementary Affidavit of said John Whiteside sworn 5th September 1994 and one from ROBIN MERCER sworn 1 September 1994.

In short, Mr. Sharma's argument is based on the contents of PRASAD'S affidavit. This argument basically is that because of the unregistered agreement/transfer the Plaintiff's interest ought to be protected until the determination of this action. It has a caveatable interest. He said that the transfer would be subject to Lease and Mortgage as endorsed on the said Title. He says that the Joint Venture (JV) is subject to so many things and unless and until JV is completed "one party can say terminated"; and "although vendor is not a party it is relevant to the transfer"; transfer "can stand on its own - transfer speaks for itself - but if question raised as to payment then joint venture is very relevant".

Mr. Parshotam, very briefly, submits that although he has filed three affidavits in Reply, there has been no response to them from the Plaintiff. The Plaintiff has filed this Motion by getting a law clerk to swear an affidavit in support. There is no response from the "principals" of the Plaintiff company.

He said that the Plaintiff has not replied to paragraph 8 of Whiteside's affidavit and ROSHNI would not be able to respond; there he sets out the circumstances in which the transfer document (annexure 10) was executed; inter alia, he said:

8. The Instrument of Transfer CT No: 14537 (Fenton property) (Annexure "10" of this Affidavit) was executed and was to be held by Jamnadas in trust for Fenton and not in escrow nor for the benefit of Peter Marks/LDL. This Instrument of Transfer was signed for the following reasons:
   

(i) Fenton had been ill because of her old age (died at 92 years of age) and it was brought to my understanding by Jamnadas/Peter Marks that should Fenton die this property would become tied up with Probate which would cause unnecessary inconvenience and costs.

It was also understood that if this document was signed during her life time it would be an effective and registrable document even after her death. I was also told that if Peter Marks/LDL exercised the option to purchase as aforesaid the transaction could be settled immediately and would be of convenience.

(ii) As Fenton resided in Savusavu (and although I held a Power of Attorney from her in my favour) it would nevertheless inconvenience the parties as to travelling the distance to Suva every time a legal matter had to be attended to.

(iii) I was led to believe and verily believe the same to be true that this Instrument of Transfer (Fenton) was part of the Sale & Purchase Agreement (Annexure "7") having not being given prior drafts or explained the meaning and effect of the various documentation that was being signed before Jamnadas.

Parshotam has only recently brought to my notice that the said Instrument of Transfer (Fenton) was not made pursuant to the Sale & Purchase Agreement (Annexure "7"). In fact the only reference which allies the said Instrument of Transfer is the Main Agreement (Annexure "2").

Mr. Parshotam said that on an ex parte application the Plaintiff obtained an interim Order for extension of time to remove the said caveat; but there have been material non-disclosures; he refers to annexure 2 of Whiteside's affidavit - wanting to cross-examine ROSHNI PRASAD. Whiteside in paragraph 3 makes the following statements arising out of PRASAD'S affidavit. It reads:

3. I have read the Affidavit of Roshni dated 21 July 1994 filed in this Action. It was on the basis of this affidavit that this Honourable Court granted and extended Orders against the removal of Caveat N: 358690 over Certificate of Title No: 14537 (property of Fenton).
   

I make the following statements relating to the Affidavit of Roshni Prasad:

(i) I do not believe that Roshni, who is a Law Clerk employed by Sherani, is competent and knowledgeable of the entire matters to be able to make such an Affidavit covering and encompassing a multiplicity of commercial transactions between the parties herein.

(ii) By Parshotam's letter dated 18 August 1994 (on behalf of the Defendant) to Sherani the Defendants propose to cross-examine Roshni on her Affidavit as it contains material omissions and non-disclosures of material facts which ought to have been disclosed to this Honourable Court."

Paragraph 4 of Whiteside's affidavit is also relevant. It states:

4. Prior to entry into the 1st JVA (deposed as Annexure "C" by Roshni) the parties had entered into the Main Agreement.
   

A copy of this is annexed hereto and is marked "2".

A signed copy of the Main Agreement is held by Jamnadas. Peter Marks who is the principal of LDL also holds in my belief a signed copy. Roshni failed to disclose to this Honourable Court the existence of the Main Agreement.

By the terms of the Main Agreement the following principal terms were agreed:

* the Whitesides were to sell their properties CT Nos: 19829 and 19830 (annexures "3" and "4" respectively) to LDL/Peter Marks for a price of $180,000;

* Fenton who is my grandmother (now deceased at the age of 92 years) was to sell her Beachfront Property CT No: 14537 (annexure "5") to LDL/Peter Marks for a price of $100,000. However it was agreed that pending formal sale by Fenton of this property CT No: 14537 LDL/Peter Marks were to hold only an option to purchase this property.

* This option was for 2 years only - refer Clause 3 of the Main Agreement.

It was always understood the arrangements with Fenton was an option to purchase transaction as is supported by annexures "6A", "6B", "6C", "6D", "6E", "6F", "6G", "6H", "6I", "6J", "6K", "6L", "6M".

The arrangements on the option were recognised by Peter Marks/LDL as late as 1 February 1994 (annexure "6M") and in subsequent discussions throughout this year until Peter Marks left for overseas on 23 February 1994.

Peter Marks has not returned to Fiji yet.

According to Whiteside, after the documents were executed disputes and differences arose between the parties and all the joint venture arrangements were at an end and the parties understood that the "Main Agreement" would henceforth regulate the arrangements between them. At no time thereafter was it ever understood to revert to the Joint Venture arrangements (paragraph 7 of Whiteside's affidavit). The Plaintiff had accepted the cancellation as evidenced by annexures 6A to 6M and 12A to 12D.

The reason for sending Notice to remove caveat No. 385690 was as a consequence of the following default by Plaintiff:

"LDL/Peter Marks failed to purchase CT No. 14537 with the option period of 2 years which expired in July 1994 (refer Annexures "6A" to "6K" both inclusive)".

(paragraph 10 of Whiteside's affidavit).

Mr. Whiteside says that the Plaintiff's problem is "inability of finance" as evidenced by various annexures ("6A, 6E, 6H, 6I, 6K, 6L, 6M" and the handwritten notes of Peter Marks at foot of Annexure 18) (paragraph 11 of Whiteside's affidavit).

In his Supplementary affidavit, Whiteside responded to certain portions of PRASAD'S affidavit particularly regarding money payments to Westpac. He said that only one payment of $825 was made "to buy time from Westpac as Westpac had threatened to proceed with Mortgagee Sale of CT No. 14537. If this would have occurred LDL would not have been able to exercise the option and purchase of CT No. 14537". He further said that "a further sum of $3000 was given to me by Peter Marks and documented as Annexure "21D" as Westpac was pressing and Peter Marks was desperately trying to raise funds from overseas to bring further time to exercise the option to purchase" (paragraph 5 of affidavit). He deposed further that as stated in paragraph 8 of his first affidavit the "essence of this (transfer of CT. 14537) was that LDL/Peter Marks were to have no more than an option to purchase CT. No. 14537 which option was to be exercised by July 1994." The further annexures which recognise the option to purchase are annexures 21A, 21B, 21C, 21D, 21E and 20G (paragraph 7 of affidavit).

The fact that the Plaintiff is in financial straights is evidenced by its financial statement as at 31 December 1993 showing a net profit of $814.44, and as stated in Annexure "6I" which reads as follows:

"As you once said, I am a business cat and will always land on my feet - right now I am doing OK at keeping my heads out of the water. If Newport fails - we must pursue all other options immediately, whilst keeping the "dream" afloat.

One thing is for sure (as in the movie "Far and Away") ...A man does not feel good unless he owns land...at least I feel good, although I'm broke. At least one day, I will find that pot of gold!"

Also see Annexure 21C and 22 in this aspect (paragraph 8 of Supplementary Affidavit).

The Affidavit of ROBIN MERCER speaks for itself suffice it to say that Plaintiff did not have the necessary finances and capital ability to undertake the development as was intended with the JV (paragraph 5 of affidavit). The parties had therefore abandoned the JV. He said that the development talks "fizzled out" and no further talks were undertaken with him in that regards as was intended with the JV (paragraph 6 of affidavit)

The above is the background to the matter before me. In dealing with this application I have considered the contents of the various affidavits filed herein. It is unfortunate that no further affidavits have been filed by the Plaintiff in response to the very comprehensive affidavits of the defendants. It is abundantly clear that ROSHNI PRASAD as a law clerk could not possibly have deposed to matters any more than what she has done in her said affidavit for it appears to me that a lot of the relevant matters would be within the knowledge of the principal of the Plaintiff Company than PRASAD.

No doubt the caveat was lodged by the Plaintiff to protect its interest in the said property.

There is no response to the matters raised by the defendant in their affidavits. If what is stated therein is what actually transpired as stated hereabove, than I agree with Mr. Parshotam that there have been material non-disclosures in PRASAD'S affidavit. In fact it is not the sort of affidavit which would entitle the Plaintiff to an extension of the caveat.

However, it is not my intention nor is it for me in this application to decide on matters which are the subject-matter of the Writ of Summons in this action except whether on the affidavit evidence before me I ought to extend the caveat any further or not.

The Plaintiff's affidavit does not give the true history of the matter and the dealings between the parties. In the circumstances of this case and on the facts of this case it is not sufficient for the Plaintiff merely to rely on the transfer document. What response is there to the host of matters raised by the defendants in their affidavits? What happens to the joint venture agreement? What about the option to purchase allegation? These all appear to be tied up with the transfer itself. It appears that the transfer document cannot be read in isolation. If it was a straight out transfer, which it is not on the affidavit evidence before me, then one could say that the Plaintiff's interest ought be protected by a caveat.

However, all that has been disclosed to Court as stated hereabove indicates quite clearly that the transaction has collapsed. The evidence discloses that the Plaintiff's financial position is in a sorry state and it is in no position to fork out $100,000.00 to pay for the said property. It appears it never was in a position to pay the said $100,000.00 nor was it able to carry out the provisions of the Joint Venture Agreement.

In the circumstances of this case I must accept what the defendants have said in their affidavits touching on matters in question. The Plaintiff should have set out the true position of the transaction in the first place and it is itself to be blamed for being less than frank in its affidavit in the absence of a reply to the defendants' affidavits.

For the above reasons I do not grant the Plaintiff's application for an extension of caveat, and the previous order of this Court extending it shall lapse with costs against the Plaintiff to be taxed if not agreed.

D. Pathik
Judge

At Suva
27 March 1995

HBC0367D.94S