ACTION NO. HBC 0568 OF 1998
BETWEEN:
:
MYONG CHUNG KIM
trading as MEAD ROAD SERVICE STATION
of Mead Road, Suva
Plaintiff
AND:
FIJI NATIONAL PROVIDENT FUND BOARD
of Provident Plaza, Suva
Defendant
Ma for the Plaintiffntiff
G.P. Lala for the Defendant
Date of Hearing: 4th December 1998
Date of Judgment (Oral Reasons): 4th December 1998
Date of Written Reasons: 14th Decem998
NTER>JUDGMENT
On the 4th of December 1998 I dissolved an Injunction which I had granted the Plaintiff against the Defendant on the 19th of October
1998 restraining the Defendant from selling, transferring or registering the property known as CT 27534, Lot 3 on DP3861 situated
at Mead Road, Suva and all other properties under Mortgage No. 354381 until the Plaintiff's action is determined.
To date no Statement of Claim has been delivered, there merely being an Indorsement of Claim which, if drawn by a barrister and solicitor
of this Court, leaves much to be desired in the way of grammar and spelling. It is signed by the solicitors for the Plaintiff and
so presumably was drawn by them.
On the 16th of October 1998 the Plaintiff issued an Ex- parte Summons for an Interim Injunction which I granted but gave liberty to
apply on 72 hours' notice.
The Summons was supported by an affidavit of the Plaintiff sworn on the 16th of October 1998 in which he deposes to various facts
many of which are not disputed by the Defendant.
The Plaintiff says on or about 27th July 1993 he entered into a loan agreement with the Defendant to finance the purchase of the Service
Station at Mead Road, Tamavua, Suva known as Mead Road Service Station.
The Plaintiff provided security to the Defendant by a mortgage entered on the Certificate of Title on the 24th of May 1994.
In April 1998, he fell into arrears of instalments of his loan which, by 1st August 1998 amounted to $58,747.16. The outstanding balance
of the loan was $304,409.16.
On or about 30th March 1998 the Defendant demanded full payment of this balance.
The Plaintiff alleges, and this is clearly false, that on the 12th of April 1998 he negotiated with the Fiji National Provident Fund
to refinance the loan. He annexes a copy of what he claims to be the Letter of Approval from the Fiji National Provident Fund dated
12th April 1998 when in fact the only letter from the Fund increasing the amount of the loan by $35,000.0 is dated 12th April 1994.
I regard this as a deliberate attempt to mislead the Court but how it could be expected to succeed short of my suffering blurred
vision or inability to understand English is beyond me.
The Plaintiff complains that while he and the Defendant were still in the process of negotiating the refinancing the Defendant advertised
the security for Mortgagee Sale. Again this is patently false which I would have thought would have been obvious to the Plaintiff
and his solicitors.
The Plaintiff says that on or about 16th May 1998 he sought refinance of the loan from Habib Bank Limited which on the 29th of September
1998 approved refinancing for the sum of $400,000.00.
On the 8th of October the Plaintiff's solicitors informed the Defendant's solicitors office by letter alleging also that the property
was worth well in excess of $600,000.00 and claiming that the Plaintiff was able to pay the debt owing to the Defendant and asking
it to re-consider its decision to proceed with the sale of the property.
On the 8th of October 1998 the Defendant's solicitors faxed a letter to the Plaintiff's solicitors stating that transfer documents
had been signed, stamp duty paid and documents stamped. They also said that the Defendant had accepted a deposit so that as far as
the Defendant was concerned the transaction was completed.
It was on the strength of this affidavit that I granted the Interim Injunction although I realise now in hind sight that if I had
then noticed the difference in dates of the letter of the Defendant to the Plaintiff of 12th April 1994 I doubt very much whether
I would have granted the Injunction. The Plaintiff had a duty to inform me of this but failed to do so. Clearly it was an attempt
to gain my sympathy.
Following this on the 29th of October 1998 the Defendant issued the present Motion which is before me seeking an order that I dissolve
the Interlocutory Injunction.
This Motion was supported by an affidavit of Jai Prasad the Investments Manager of the Defendant who alleges in substance that the
Plaintiff has defaulted in monthly repayments of the loan from July 1997.
He advised the Defendant of his intention to pay off the loan and discharge the mortgage by letters dated 13th November 1997 and 29th
December 1997.
Nothing eventuated regarding repayment of the loan which prompted the Defendant to advise the Plaintiff by letter of 11th February
1998 requesting him to regularise his account by 28th February 1998.
The Plaintiff did not respond so that the Defendant served him with a Demand Notice dated 20th April 1998.
After a grace period was allowed to the Plaintiff to clear the debt with no positive response from the Plaintiff, the Defendant instructed
its solicitors to serve another Demand Notice on the Plaintiff dated the 2nd of June 1998 claiming the sum of $304,409.16 and interest
of $108.41 per day until payment from the 31st of March 1998.
On the 7th of September 1998 the only tender received was from Mahendra R. Patel & Co. Ltd. in the sum of $350,000.00. That company
deposited a 5% deposit in the sum of $17,500.00 in the Trust Account of the Defendant's solicitors.
On the 15th of September 1998 the Defendant's solicitors informed Messrs Mahendra R. Patel & Co. Ltd. of the acceptance of its
tender.
Transfer documents were prepared and forwarded to the Defendant for attestation. A stamped transfer was signed on behalf of the Defendant
on the 17th of September 1998.
As to the offer of a loan of $400,000.00 from the Habib Bank Mr. Prasad states that that amount is inadequate to cover the Plaintiff's
debt with the Defendant. He further says, and I agree, that despite the Defendant showing patience, indulgence and co-operation with
the Plaintiff there seems no realistic prospect of the Plaintiff clearing its debt and I also agree that every opportunity was given
to the Plaintiff to pay the debt owing under the mortgage.
The fact of what I regard as material non-disclosure of a relevant fact by the Plaintiff would be sufficient for me to dissolve the
Injunction and I now do so first on that ground. However because none of the submissions of the parties refer to this non-disclosure
but instead make other submissions on the law I feel obliged to give other additional reasons for dissolving the Injunction.
It is submitted by the Plaintiff that the Defendant is in breach of its duty of trust towards the Plaintiff for accepting the offer
of $350,000.00. The Defendant knew the value of the property was in excess of $600,000.00. It is said that a search of the register
of titles showed that as at 27th November 1998 no registration of any sale has been lodged in the Titles Office and that there is
no actual sale in the meaning of Section 72(1) of the Property Law Act Cap. 130.
It is further submitted that the Defendant is a statutory body and by law could not sell any property without a proper consideration
and security. This is because it is said the Defendant is a statutory body using public funds and as a mortgagee it therefore could
not enter into a dealing in the form of the transfer mentioned by Mr. Prasad in his affidavit.
In my judgment this submission flies in the face of what I regard as well settled law on this question but before dealing with the
question when a property is deemed to be sold under Section 72(1) of the Property Law Act I will dispose of the allegation by the Plaintiff of the duty of the Defendant to enter into a Contract of Sale only after obtaining
security for payment of the money.
The powers and duties of the Fiji National Provident Fund are set out in the Act constituting it, Cap. 219. Section 4 of the Act establishes
the Fiji National Provident Fund Board as a body corporate having perpetual succession and a common seal. It may sue and be sued
in its corporate name and may enter into contracts. There is nothing in the Act which requires the Board to first obtain security
for payment due under any Contract of Sale into which it enters although doubtless this would be expected of it if the occasion warranted
it. In my view the only requirement of the Board, like that of any other body corporate in such matters, is to act and to be seen
as acting in good faith. There is nothing in the evidence in this case to persuade me that the Defendant has acted in bad faith in
its dealing with the Plaintiff.
The evidence for this is the fact that the Mortgagee Sale was advertised on three occasions and the only tender received was from
Mahendra Patel & Co. Ltd.
I am satisfied that the price obtained was the best price available for the property which can be inferred even from the efforts made
by the Plaintiff to obtain loans from other sources. The only loan he obtained was from Habib Bank for $300,000.00 with an overdraft
facility of $100,000.00. This is consistent in my view with the tender of Mahendra Patel & Co. Ltd. for $350,000.00. In all these
matters the Courts must use their common sense.
It is unreal to say that a property is worth a certain amount if nobody is prepared to offer this amount. All valuations in the end
become an estimate of the current market opinion about the value of a particular property.
In Laisenia Uluinayau and Merewai Uluinayau v. National Bank of Fiji No. HBC0175 of 1994 in my unreported judgment delivered on the 26th of August 1994 at pp. 7 and 8 I said this:
"I now turn to Mr. Lateef's argument that no Contract of Sale has been entered into by the Defendant which would extinguish the
Equity of Redemption held by the Plaintiffs. I can reject this submission immediately. In Vol. 4 of Halsbury's Laws of England 4th Edition paragraph 1132 the Author states, "The unconditional acceptance of a tender gives rise to a contract", and he then cites three cases in support."
In that case I dissolved the Injunction I had previously granted the Plaintiff.
Also in this regard Scott J. said on p.3 of his decision in HBC0475 of 1997S Islam Ali v. Westpac Banking Corporation, "In answer Mr. Howard....... as an aid to interpreting Section 72 pointed to Section 81 (1) of the New Zealand Property Law
Act 1952 and cited Hawson v. Little (1948) NZLR 1073. He suggested that once a binding sale and purchase agreement had been entered into the property had been "sold" within
the meaning of Section 72. I agree." Unreported Decision of 10 November 1997.
He later said in words which are equally relevant here:
"As to the allegation of undervalue, while I accept that a mortgagee owes a mortgagor a duty of care when exercising its powers
of sale, first, there is no Action pending before this Court alleging a breach of such duty and secondly, it is perfectly clear that
a Court will only interfere to restrain completion of a conveyance in such circumstances (a) if the moneys due under the mortgage
are tendered by the mortgagor and (b) if the Court is satisfied that the mortgagee has not acted in good faith (see Property and Bloodstock Ltd v. Emerton (1968) Ch. 94)."
In my opinion the Plaintiff has been given more than enough time to pay his loan. He has not done so and in my opinion based on his
record has little likelihood of being able to do so in the near future. Actions speak louder than words. The Plaintiff has used many
words in his attempt to postpone the evil day; to allow him to use any more would in my judgment be a denial of justice to the Defendant.
The application to dissolve the Injunction is granted. Costs will be in the cause.
JOHN E. BYRNE
JUDGE
The following legislation and cases referred to in Judgment:
Property Law Act Cap. 130.
Fiji National Provident Fund Act Cap. 129.
HBC0475 of 1997S Islam Ali v. Westpac Banking Corporation - unreported Decision of Scott J. of 10 November 1997.
Laisenia Uluinayau and Another v. National Bank of Fiji No. HBC0175 of 1994 - unreported judgment of Byrne J. of 26th August 1994.
The following additional cases were referred to in submissions:
Cukmere Brick Co. Ltd. v. Mutual Finance Ltd. [1971] EWCA Civ 9; (1971) 2 ALL E.R. 633.
Bishop v. Bonham (1988) 1 WLR 742.
Waring (Lord) v. London and Manchester Assurance Co. Limited (1935) 1 Ch. 310.
Hervey v. Inglis (1868) 5 WW & A'B (E) 125.
Warner v. Jacob [1882] UKLawRpCh 61; 20 Ch. D. 220, 224.
Property and Bloodstock Ltd. v. Emerton (1968) Ch. 94.
Hbc0568j.98s
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