NBF Asset Management Bank v Sharma [1999] FJHC 159; HBC0132J.1999 (2 September 1999)

IN THE HIGH COURT OF FIJI
AT SUVA
CIVIL JURISDICTION

CIVIL ACTION NO. HBC 0132 OF 1999

BETWEEN:

NBF ASSET MANAGEMENT BANK
Plaintiff

AND:

CHAND KUAR SHARMA
1st Defendant

RAM HARAK SHARMA
2nd Defendant

KINI JIOJI
3rd Defendant

Counsel: Mr T. Seeto for the Plaintiff
Mr P. Howard for the 1st, 2nd & 3rd Defendants

Hearing: 13th August 1999
Decision: 2nd September 1999

JUDGMENT

This is an application for possession by the plaintiff/mortgagee pursuant to Order 88 Rule 3 of the High Court Rules (1988). I have been advised by counsel that the 3rd Defendant, a tenant of the 1st & 2nd Defendants, has now vacated the premises.

By originating summons dated 3rd March 1999, the Plaintiff applied for the following orders;

1. Delivery by the Defendants of Vacant Possession of property on Housing Authority Sub-Lease No. 135261 in Lot 33 DP No.3866.
   
2. An Injunction restraining the Defendants from interfering with the said property.
   
3. Such further or other relief deemed just and equitable.
   
4. Costs.
   

The affidavits of Laisenia Takala in support of the Summons depose that the 1st Defendant is the registered proprietor of the property and that by Mortgage made between the Plaintiff and the mortgagor the property was charged to secure repayment to the Plaintiff. The affidavit deposes at paragraph 5, that there was default in payment to the Bank. The total amount due under the Mortgage as at 3rd March 1999 was $372,314.04. The Defendants were in possession of the property. On 29th October 1997 the Bank issued Demand Notice to the 1st Defendant, and on 29th January 1999, the Bank gave the Defendants Notice to Quit.

Annexed to the affidavit is the Mortgage, registered on 29th May 1999, between the Bank and the 1st Defendant, a copy of the Housing Authority Sub-Lease to the 1st Defendant, letters from the Bank to the Directors of Nakasi Builders Ltd. (one of whom is the 1st Defendant) approving overdraft facilities, Notice of Demand to the 1st Defendant, and Notices to Quit to the 1st, 2nd and 3rd Defendants.

The application was opposed by affidavit of Ram Harak Sharma filed on 17th March 1999. This affidavit deposes that the 1st and 2nd Defendants (being husband and wife) were unable to keep up with the mortgage repayments, that the Plaintiff had failed to supply proper accounts when requested, that they are an old and infirm couple, that the interest charged and other bank charges were disputed, that they had a possible buyer who could offer $60,000.00 for the property and that the Plaintiff had not told the Defendants of the tenders received.

In response the Plaintiff filed a further affidavit of Laisenia Takala dated 10th June 1999. In this affidavit the Bank states that all accounts were furnished on request that all bank charges repayments and interest were agreed to by the Defendants in the offer letters leading to the Mortgage, that the 2nd Defendant was informed orally of the sale price to the successful tenderer, that the Housing Authority had revoked consent to the Defendants’ prospective buyer, and that another bidder had been accepted by the Bank.

Both counsel then made written submissions to the Court. Mr T. Seeto for the Plaintiff submitted that Order 88 Rule 3 had been strictly complied with and that the Court should uphold the Mortgagee’s right to vacant possession. He submitted that the Defendant’s opposition on the ground of defects in the Mortgage and defects in the tenders, did not prevent an order for vacant possession. He added that the Defendants are bound by the documents they sign, and assumed to understand them.

Mr P. Howard opposes the application on a number of grounds. He submits that the Plaintiff has no locus standi since the mortgage was with the National Bank of Fiji, whereas the Plaintiff is the NBF Asset Management Bank. He further submits that there was no proper notice served on the 1st Defendant by the Mortgagee requesting payment of the Nakasi Builders debt, that the property was on leasehold land and there was no evidence of the consent of the Housing Authority and the Director of Lands, to the mortgage being taken over by the Plaintiff, that there was no proper service on the Defendants of the demand notice, that proper accounts were not detailed in the application, that the outstanding debt to the Bank is not clear, that the mortgage itself is defective because the advances are actually made to Nakasi Builders Ltd, that it is “a matter of consumer knowledge that an Indian house wife of the age of the 1st Defendant (63 years of age at the time of executing the mortgage) has a limited knowledge of English particularly as in a mortgage document . . . . and in business matters obediently follow the directions of her husband. . . .” and that the law should operate to protect the vulnerable parties in a relationship.

Order 88 Rule 3 of the High Court Rules (1988) provides that the affidavit in support of the originating summons must

“(2) . . . exhibit a true copy of the mortgage . . .

(3) where the Plaintiff claims delivery of possession the affidavit must show the circumstances under which the right to possession arises and, except where the court in any case or class otherwise directs, the state of the account between the mortgagor and mortgagee with particulars of -

(7) (a) the amount of the advance,

(b) the amount of periodic payments required to be made,

(c) the amount of any interest or instalments in arrears at the date of issue of the originating summons and at the date of the affidavit, and

(d) the amount remaining due under the mortgage.”

Provided Order 88 has been complied with, the mortgagee has unquestionable rights to possession. This is also so in third party mortgages where the mortgagor has no direct dealings with the bank’s actual customer. In National Bank of Fiji -v- Abdul Kadeer Kuddus Hussein Civil Action No. 0331 of 1994 Fatiaki J referred to the following dictum of Goff L J in Western Ltd. -v- Schindler (1977) 1 Ch 1:-

“It has for a very long time been established law that a mortgagee has a proprietory, right at common law as owner of the legal estate to go into possession of the mortgaged property. This right has been unequivocally recognised in a number of modern cases see, for example, Four Maids Ltd. -v- Dudley Marshall (Properties Ltd. (1957) Ch 317). It has nothing to do with default: See Harman J in the Four Maids case where he said, at p 320:

`The Mortgagee may go into possession before the ink is dry on the mortgage unless there is something in the contract, express or by implication, whereby he has contracted out of that right’.”

In this case the affidavits of Laisenia Takala satisfy the requirements of Order 88 Rule 3. A true copy of the Mortgage is annexed as Annexure B of the affidavit filed on 14th March 1999. That Mortgage, between the National Bank of Fiji and the 1st Defendant, provides for the advance of the sum of $65,000 to Nakasi Builders Limited. Clause 6 of the Mortgage provides:

“That the mortgagee upon default in payment of any money hereby secured or any part thereof or any interest or in the observance or performance of any covenants hereby contained may:-

(a) enter into possession of the mortgaged land by receiving the rents and profits thereof; or

(c) bring an action of ejectment to recover the said land . . . .”

The right to possession is referred to at paragraph 5 of Laisenia Takala’s affidavit when he states that “the right to possession arises because of the default in payment of advances made to the Bank”. Paragraph 6 of the same affidavit details the advances made with the total due under the Mortgage of $372,314.04. There is of course dispute between the Defendants and the Plaintiff about the amount due. However the mortgage itself provides that “the Mortgager will on demand in writing pay to the Mortgagee all moneys (including interest) which it is herein before recited should be included in and secured by this Mortgage such interest to be chargeable at such rate as may from time to time be agreed on between the Mortgagee and the Customer or other parties primarily liable therefore or in so far as not agreed on at the ordinary rate for the time being charged by the Mortgage for interest on overdrafts and to continue to be chargeable until all moneys hereby secured are fully paid . . . .”.

Correspondence from the Bank to the Directors of Nakasi Builders shows that interest would initially be charged at 13% per annum daily chargeable monthly and that the rate was subject to change without notice. Furthermore by letter of 25th April 1991, the Bank told the Directors of Nakasi Builders Ltd. that the facilities were also subject to banking fees and changes when applicable (Annexure C of Affidavit of Laisenia Takala). The Defendants have not provided any evidence that they did not accept these terms, or that they did not receive and accept the letters of 3rd April 1991, 28th June 1991, 25th July 1991 and 9th January 1992.

Indeed in his affidavit filed on 17th March 1998, the 2nd Defendant states that he was a Building Contractor, that the company faced difficulties due to lack of management at the Housing Authority, and that the Defendants were unable to maintain repayments. Indeed, it seems clear that the 2nd Defendant accepted that payments were being made by the Defendants who were running a “construction venture”. The 2nd Defendant’s complaint is that accounts were not furnished by the Bank on request. He does not deny receiving and accepting the terms of the letters annexed to the affidavit of Laisenia Takala.

It is also clear that the alleged discrepancy in the amounts due between the date of the affidavit of Laisenia Takala, and the date of the demand notice of March 1998, is due simply to the time lapse, and to the fact the interest continues to accrue because final payment has not been made.

Paragraphs 6, 8, 9 and 10 of the affidavit of Laisenia Takala satisfy the remaining requirements of Order 88 Rule 3. In the circumstances, I am satisfied that Order 88 has been complied with by the Plaintiff.

I am also satisfied that under provisions of the National Bank of Fiji Restructuring Act 1996, the Plaintiff is entitled to bring this action. In particular Section 2 of Schedule 1 of the Act provides that:-

“ . . . . every contract, agreement, conveyance, deed, lease, licence . . . . entered into by, made with, given to or by, or addressed to the Bank . . . . before the vesting time

. . . shall to the extent that it was previously binding on and enforceable by . . . . the Bank, be binding on . . . . AMB as fully and effectually in every respect as if instead of the Bank, AM B had been the person by whom it was entered into . . . .”

AMB is a reference to the Asset B - Management Bank.
I am also satisfied that the Defendants have failed to show that the 1st Defendant did not understand what she was signing when she signed the Mortgage. Firstly the 1st Defendant has not sworn any affidavit to this effect. Secondly the fact that she is fluent in Hindustani rather than in English does not permit the court to draw an inference that she therefore did not understand the Hindustani translation either. Thirdly the court must decline to draw any inferences that Indian women are automatically subservient to their husbands in business matters. Such a submission by counsel rests substantially on a race/gender stereotype for which there is neither statistical nor evidential basis. Indeed the Mortgage describes the 1st Defendant as a “Director”. A person signing a document is bound by its conditions (L Estrange -v- Graucob (1934) 3KB 394).

Finally there is no evidence of fraud or collusion by the Plaintiff in the tender process.

In all the circumstances I am satisfied that Order 88 Rule 3 has been complied with and the Plaintiff Bank has a right to vacant possession. I therefore order in terms of the originating summons but stay execution of the order for four weeks from the date of service of the order on the Defendants.

Costs of this action are to be paid by the Defendants, to be taxed if not agreed.

[Nazhat Shameem] Ms
JUDGE

At Suva
23rd August 1999