NBF Asset Management Bank v Low [2000] FJHC 48; Hbc0477j.1999s (27 March 2000)

Fiji Islands - NBF Asset Management Bank v Low - Pacific Law Materials

IN THE HIGH COURT OF FIJI

AT SUVA

CIVIL JURISDICTION

CIVIL ACTION NO: HBC 477 OF 1999

BETWEEN:

NBF ASSET MANAGEMENT BANK

Plaintiff

AND:

ass=MsoNormal alal align=center style="text-align: center; margin-top: 1; margin-bottom: 1"> JOHN THOMAS LOW

1st Defendant

AND:

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VASITI NAIKELEKELEVESI LOW

ass=MsoNormal align=center style="text-align: center; margimargin-top: 1; margin-bottom: 1"> 2nd Defendant

Counsel: Mr T. Seeto for Plaintiff

Mr A. Tikaram for Defendanendants

Hearing: 16th March 2000

Judgment: 27th March 2000

ass=MsoNormal alal align=center style="text-align: center; margin-top: 1; margin-bottom: 1"> JUDGMENT

This is an application under Order 88 of the High Court Rules 1988, in respect of mortgaged property CT 7966.

It is not in dispute that the application, made by originating summons dated 13th Oc 1999, and the affidavit of Laisenia Takala, Senior Officerficer of the Plaintiff Bank, satisfies the requirements of Order 88 Rule 1. What is in dispute is whether the Plaintiff was in breach of the Consumer Credit Act 1999, whether the Defendants owe the Plaintiff the amount claimed, whether the Defendants have been permitted to exercise their equitable rights to redeem the debt and whether as Third Party Mortgagors, the consent of the Defendant should have been obtained to make further advances to Unique Marketing South Pacific Limited.

The facts of the case are that the Defendants egistered proprietors of CT 14689. On 12th December 1988, a mortgage was executed between teen the Plaintiff and the Defendants in respect of a loan made to Unique Marketing South Pacific Ltd. The security for the mortgage was, inter alia, CT 14689. The loan was for the sum of $64,000. Clause 12 of the Mortgage (Annexure B to the affidavit of Laisenia Takala) states:

“THAT the Bank upon default in payment of any money hereby secured or any thereof or any interest may -

(a)  p; &nsp; enter into possessiothe mohe mortgaged land by receiving the rents and profits thereof; or

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(b) &nnbsp;; dsptraistrain upon upon the occupier or tenant nant of the said land for the rent then due; or

(c) &nnbsp;;&nbssp; bsp; bring ring an action of ejectment to recover the said land either beforeefore or after entering into the receipt o rent profits thereof or making any distress as aforesaid and either before or after ater any sany sale of such land effected under the power of sale given or implied in this Mortgage .....”

The Plaintiff says that the amount advanced is $266,5095.77. The amount was and is payable at $6,100.00 per month. The total amount due was $383,575.63 on the 13th of October 1999 (the date of the originating summons).

The Defendants continue to reside on the property, which is situated in the Vatuwaqa Industrial Sub-Division.

On 19th September 1999 and 25th day of March 1999, the Plaintiff issued Demand under the Mortgage. The Bank tdvertised the property for for sale. A tender was accepted and the Bank made this application to ensure vacant possession.

A supplementary affidavit of Laisenia Takala sworn on 20th January 2000, was filed oh January. This affidavit states that in addition to the $6he $64,000 advance, the following further loans were made:

1.  p; &nsp;&nnbsp; &nnbsp;;&nspp;&nsp; &nsp; nbsp; acck modation tion ($33,000) on 8th May 1989;

2.&n;">  p;&nbbsp;&nsp; &nsp;  p; &nnsp;&&nsp; &nbp; Aoditifial ce of $4of $40,000 on 30th May 1999;

3.3.&t;"> &nbbsp;&&nsp;;&nsp; &nsp; &nnbp;& &nAdditioditional baal banking facility of $207,000 on 22nd July 1992;

4.&nbs> &nbp; &nsp; &&nbs;; &nbbsp;&nsp; &nbp;  p; &&nsp;; Opan>Overdraerdraft facility of $20,000 on 23rd June 1995.

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The Defendanve filed an affidavit in reply. The mortgage is admitted but the 1st Defendant says that that the Plaintiff should have complied with the provisions of the Consumer Credit Act 1999. The amount owed is denied although the receipt of one Demand Notice is admitted. Finally the 1st Defendant says that he has tried to redeem the mortgage, the debt is in fact to Unique Market South Pacific Limited and the consent of the mortgagor was not obtained before further advances were made.

The Plaintiff filed a final affidavit in reply, the contents of which I shall refer to later in this judgment.

The Consumer Credit Act 1999

The Consumer Credit Act 1999 came into force, by Legal Notice No. 42 of 1999, on 7th May 1999. By virtue of section 8 e Act, the protection afforafforded apply to mortgages if “the mortgage secures obligations under a credit contract.” Section 80 provides that a credit provider must not begin enforcement proceedings against a debtor unless the debtor is in default and a default notice allowing the debtor 30 days to remedy the default has been given. Breach of the section gives rise to a criminal offence. Section 80(7) provides that the obligations under section 80, are in addition to any other law relating to real property mortgages “and does not prevent the issue of notices to defaulting mortgagors under other legislation.”

The mortgage in this case was executed i9, well before the passing of the Consumer Credit Act. The The demand notices are dated 25th March 1998 and 19th September 1994. The sale process, however, appears to have been processed after May 1999, and an offer of $120,000 accepted by July 1999.

A presumption against retrospectivity exists in respect of statutes, but it does notssarily operate because some relevant facts took place befo before the statute was passed. In R v. Secretary of State for the Home Department ex parte Mundowa (1992) 3 ALL ER 607 Staughton LJ said at page 612:

“..... the presumption does not necessarily apply merely because some of the facts on whichstatute operates will have have occurred before it was passed. It is easy to think of examples. Suppose that a statute enacted that all persons reaching the age of 21 should be liable to two years military service. Could an unwilling conscript argue that it applied only to persons born - or more plausibly conceived - after the passing of the Act? ..... It would be absurd if the presumption against retrospectivity applied in every case where any single fact relevant to the operation of the statute occurred before it was passed.”

In re a Solicitor’s Clerk (1957) 3 ALL ER 61e Court of Appeal considered whether legislation empowering the Law Society to make orders ders against the employment of a clerk who had been convicted of an offence before the passing of the legislation had retrospective effect. At page 6191, Lord Goddard CJ said:

“In my opinion, however, this Act is not in trutrospective .... It would be retrospective if the Act provided that anything done before thee the Act came into force or before the order was made should be void or voidable or if a penalty were inflicted for having acted in this or any other capacity before the Act came into force or before the order was made.”

The breach of the Act complained of by the Defendants, is the failure to give a 30 day default notice, thus allowing the Defendants to remedy the breach. The demand notices (only one of which the Defendants admit receiving) were dated well before the passing of the Act. The Act cannot therefore have any bearing on the way the demand notices were made and executed.

In any event, after the notices were served, considerably longer than 30 days were available to the Defendants to remedydefault. Notice to Quit wast was not served on the Defendants until July 1999. This was done after the Plaintiff had accepted an offer from a purchaser to buy the property.

Even if the Act had applied to the demand notices sent, it is clear from the facts of this case that the Defendants had ample opportunity to remedy the default.

The ground of objection to this application, on the basis of the Consumer Credit A therefore unsuccessful.

The Equity of Redemption

The Plaintiff says that the equity of redemption was extinguished on completion of an agreeto sale to a third party. The Defendants claim that they shey should have been given an opportunity to redeem the mortgage and that the sale price of $120,000 was far exceeded by the offer of $180,000 made by the Defendants.

I note that a number of documents relating to thder, sale and counter-offer of the property are attached toed to the legal submissions of the Plaintiff. They are not properly tendered as part of an affidavit and I therefore disregard them.

However in the affidavit of the 1st Defendant, it is claimed that the Defendants tried to obtain the details of the successful tender “so I could better it in order to redeem the debt over our matrimonial home.” In reply, in his affidavit sworn on 9th March 2000, Laisenia Takala says that “the Defendants have not made a concerted effort to redeem the mortgage having regard to their conduct throughout this matter.”

Section 79 of the Property Law Act Cap 130 provides:

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“(1) If default in payment of the mortgage money .... continues for onth after service of the notice referred to in section 77,n 77, the mortgagee may sell or concur with any person in selling the mortgaged property ....”

Section 77 requires a notice of default to be served o mortgagor, if default is made in payment of the mortgage money. The exercise of the power ower of sale vested in the mortgagee, extinguishes the equity of redemption. (Duke v. Robson (1973) 1 ALL ER 481.

The evidence on the affidavit material before me, is that between 25th March 1998 when the Notice of Demand was served July 1999 when the Noticeotice to Quit was served, the Defendants made no attempt to remedy the default or redeem the mortgage. No evidence of attempts to redeem before a sale was made by the bank has been put before me in affidavit form.

In the circumstances I see no reason why I should find that the Plaintiff has frustrated the Dents’ rights to redeem. The Defendants do not say that they they tendered for the property, nor have they shown that the Plaintiff acted fraudulently in the exercise of its power of sale.

This ground, argued by the Defendants, is therefore unsuccessful.

Dispute over Accounts

p class=MsoNormal stal style="margin-top: 1; margin-bottom: 1"> The Defendants say that they owe $64,000.00 and that they did not consent to anther advances. An Order 88 application is not the appropriaopriate forum to resolve a dispute on the amount advanced under the mortgage.

The mortgagee has a right, both under contract and statute to regain poion of the mortgaged premises, and to sell the property.

The Defendants do not dispute that they are in default of payments. They only dispute the total owed.

I see no reason why the mortgagee should be restrained from entering and selling the premises. I note that the Defendants hade no offer to pay the disp disputed amount into court.

The Defendants have filed a writ of summons against the Plaintiff in Action No. 66/99. That hearing is the most appropriate forum to decide on the amount owed, whether or not the Defendants consented to further advances and whether or not their signatures appear on the loan approval letters.

Orders:

I therefore order in terms of the Plaintiff’s originating summons dated 13th October 1999. The Defendare to pay the Plaintiff’s ff’s costs which I set at $300.00

ass=MsoNormal alal align=center style="text-align: center; margin-top: 1; margin-bottom: 1"> Nazhat Shameem

JUDGE

At Suva

27th March 2000

Hbc0477j.99s