Brown v Attorney-General of Fiji [2000] FJHC 77; Hbc0141j.2000s (20 June 2000)

Fiji Islands - Brown v The Attorney-General of Fiji - Pacific Law Materials

IN THE HIGH COURT OF FIJI

AT SUVA

CIVIL JURISDICTION

CIVIL ACTION NO. HBC 141 OF 2000

BETWEEN:

TOGA BROWN

Plaintiff

AND:

THE ATTORNEY-GENERAL OF FIJI

Defendant

Counsel: Mr S. Parshotam for Plaintiff

Mr S. Kumar for Defendant

Hearing: 26th May 2000

Judgment: 20th June 2000

JUDGMENT

This action commenced by originating summons, issued on 29th March 2000. The Plaintiff is registered as lessee of Native Land No. 23398 in Naqelebulu, Nadi, which is a residential lease and was issued in 1982 for 99 years. The land contains a house occupied by the Plaintiff.

On 4th March 1999, the Plaintiff mortgaged the property to the Bank of Hawaii. The mortgage was registered with the Registrar of Titles as Dealing No. 460872 on 3rd May 1999. Prior to registration, the mortgage was stamped by the Commissioner of Stamp Duties on 25th March 1999 under the provisions of the Stamp Duties Act. Conditional exemption from stamp duty was given by the Commissioner under the Stamp Duties (Amendment) Act 1982 to cover the initial debt of $42,250.00. The conditions were as set out in section 3 of the Stamp Duties (Amendment) Act 1982.

The Plaintiff then obtained further facilities from the Bank of Hawaii, of $11,750.00, to enable her to pay for the rebuilding of her house. She applied to the Commissioner for exemption from stamp duty for the additional debt. She submitted to the Commissioner:

1. The Duplicate Mortgage;

2. Application for conditional exemption from stamp duty;

3. Statutory Declaration declared on 10/2/00;

4. Requisition dated 14/2/00.

The Commissioner did not approve the application. Instead she asked that the Plaintiff provide her with a “Variation of Mortgage” document. This request is set out in the requisition form, in a handwritten note dated 8/3/00 as follows:

“Return, pls. provide variation document in this transaction.”

The Plaintiff’s solicitors responded in a letter dated 14 March 2000 saying inter alia:

“We do not believe it is the role of the Commissioner of Stamp Duties to tell parties what documents are required to be lodged. Your office has been presented with certain documents for stamping - and your role is to stamp them under the provisions of the Stamp Duties Act. If you require further information before you stamp them, that is a right you have.

In order, therefore, for us to advance the matter, please let us know the legal basis on which you have asked for a ‘Variation’ document, we certainly are not aware of any such basis.

Otherwise, we ask that you stamp the documents as presented. If you do not do so, our client has asked us to put your office on notice that it will commence legal proceedings against your office for declaratory orders, and in the event is successful, it will seek costs on an indemnity basis.”

The Commissioner did not reply to this letter.

The Plaintiff now seeks the following declarations:

1. A Declaration that the Commissioner of Stamp Duties had acted incorrectly in refusing to grant exemption from stamp duties on a “Mortgage” (as is more specifically set out in the Schedule hereto) lodged for stamping by the Plaintiff at her office.

2. A Declaration that the Plaintiff is entitled to conditional exemption from stamp duties on the said ‘Mortgage’ lodged by him with the Commissioner of Stamp Duties for stamping.

3. Costs.

The Commissioner for Stamp Duties, in an affidavit sworn on 26th April 2000 confirmed that she had requested the Plaintiff to provide a variation of mortgage documents “instead of upstamping the original documents”. She said that this was the practice whenever there was an increase or reduction in the amount secured by a mortgage. She said that this practice was in line with section 66 of the Land Transfer Act and the Consumer Credit Act 1999.

The matter was heard on 26th May 2000. Counsel made both oral and written submissions. Mr Parshotam for the Plaintiff submitted that the Plaintiff was clearly entitled to exemption from stamp duty because the debt was to be used on residential property, and that the Commissioner had no right to demand any other document in the exercise of her statutory discretion.

Mr Kumar for the Defendant submitted that all title documents were public records, and that the Commissioner of Stamp Duties had a public duty to ensure that the amount for which land was mortgaged was accurately recorded on documents. He said that the stamp duty process should be a transparent one so that the public was accurately informed about the status of titles of leases.

Section 3 of the Stamp Duties Act, as amended by section 2 of the Stamp Duties provides as follows:

“Subject to the exemptions and provisions as to the conditional exemptions contained in the Schedule, there shall be raised, levied collected and paid unto Her Majesty for the public uses of Fiji upon and in respect of the several instruments specified in the column of Part 1 of the Schedule headed “Nature of Instrument” the several duties specified in the column of that Part of the Schedule headed “Amount of Duty”.”

Under the Schedule as amended by the 1982 Act, a mortgage which is the only or primary security for the payment or repayment of moneys, is conditionally exempt from stamp duty, if it is executed after 1st January 1982, and if the application for exemption is accompanied by a declaration stating the appropriate conditions of entitlement.

Paragraph 2 of the Schedule provides:

“The conditions of entitlement to the conditional exemption from stamp duty under Paragraph 1 of this Part of this Schedule of the instruments described in sub-paragraph (1) of that paragraph shall be as follows: that is to say -

(b) in the case of a mortgage is exclusively for the purpose of enabling the applicant, alone or jointly with any other person -

(i) to meet all or some of the cost of building a dwelling which the applicant intends to occupy in whole or in part, or to meet all or some of the cost of rebuilding a residential property as a dwelling which he intends to occupy in whole or in part.”

Under the provisions of the Act a mortgage is therefore exempt (including further advances on existing mortgages) if the advances are used for rebuilding of residential property. Under the Act, the applicant must make an application and provide a declaration within 6 months of the execution of documents. Once he/she has satisfactorily complied with these requirement, Paragraph 1(1) of the amendment Act 1982 applies. That paragraph provides that the mortgage instrument (including further advances) shall be granted conditional exemption.

Section 43 of the Stamp Duties Act provides:

“Where an instrument is brought to the head office for assessment the Commissioner shall state whether it is liable for duty and if he is of the opinion that-

(a) it is not so liable, he shall impress thereon the Commissioner’s seal and the particular stamp denoting that it is not so liable; or

(b) it is liable to duty or fine he shall assess the duty or fine with which it is in his opinion chargeable and on payment of the payment so assessed, shall stamp the instrument, with the Commissioner’s seal and a particular stamp denoting the amount of duty or fine so paid.”

In this case the Plaintiff submitted the Mortgage document and asked for further exemption on further sums secured.

The Commissioner asked for a variation of mortgage document, not to allow her to decide whether or not, the document was exempt from duty, but because she wanted the records in the Titles Office to accurately reflect the status of titles including total sums secured against mortgages.

It is clear from the provisions of section 66 of the Land Transfer Act, that variation of mortgages need not be registered. That section provides:

“In the case of every mortgage under this Act -

(a) the mortgage may be varied as follows:

(i) the amount secured by the mortgage may be increased or reduced;

(ii) the rate of interest may be increased or reduced;

(iii) the term or currency of the mortgage may be shortened, extended or renewed;

(iv) the covenants, conditions and powers contained or implied in the mortgage may be varied, negatived or added to; and

(v) unmortgaged land which becomes included in the same certificate of title as land the subject of the mortgage may be included in and made subject to the mortgage by a memorandum in the prescribed form:

Provided that it shall not be necessary for a mortgagor to execute a memorandum of reduction, or for a mortgagee to execute a memorandum of reduction, or for a mortgagee to execute a memorandum of increase, of the mortgage debt or of the rate of interest payable under a mortgage;

(b) the memorandum may include all or any of the matters mentioned in paragraph (a), and in that case the form shall be modified accordingly;

(c) the memorandum may be registered in like manner as the original mortgage;

(d) a memorandum varying a mortgage so as to include unmortgaged land shall be presented for registration at the same time as the application for the new certificate of title combining the unmortgaged land with the land already the subject of the mortgage is presented for registration;”

Any increase in the amount secured by a mortgage is therefore a variation of a mortgage. However it is not necessary to execute a memorandum for variation in such a case, nor is it necessary to register such memorandum. In comparison, a variation to include unmortgaged land must be registered under section 66(d) of the Land Transfer Act.

The effect of requiring a memorandum of variation for increases in secured amounts before stamp duty is considered for exemption, is to make variation of mortgages which are entitled to exemption, mandatory. This is clearly not the intention of the legislation either under the Land Transfer Act or under the Stamp Duties Act. Indeed, it may well be the duty of the Registrar of Titles to keep accurate records of all titles. However, it is not the duty of the Commissioner of Stamp duties

to ensure accuracy of titles in the Titles Office, nor was it the intention of the Land Transfer Act to make the registration of variation (by increased advances) of mortgages mandatory.

The purpose of the Stamp Duties Act is to provide a system for tax on certain documents in land transactions. The duty of the Commissioner is to decide whether or not stamp duty is payable, and to fix amounts payable as prescribed by law. When she is in doubt as to whether stamp duty is payable, or as to the amount she may request the High Court for guidance. It is not her statutory duty to ensure that variation of mortgages are properly registered in memorandum form.

It is clear from the affidavits filed that the Plaintiff submitted all documents required by law, to allow the Commissioner to make a decision under section 43 of the Stamp Duties Act.

It is also clear that the Plaintiff is entitled to exemption from stamp duty on the increased advances made under the mortgage.

I see no relevance of the Consumer Credit Act to the facts of this case. That Act deals with conditions in the supply of credit. The Stamp Duties Act has a completely different purpose.

For these reasons I find for the Plaintiff in terms of the summons dated 29th March 2000.

However, I am of the view that the Commissioner erred in the way that she did because of a genuine misunderstanding as to the nature of her duties under the Stamp Duties Act. For this reason I decline to award indemnity costs. The Defendant is to pay the Plaintiff’s costs which I set at $300.

Nazhat Shameem

JUDGE

At Suva

20th June 2000

Hbc0141j.00s