Asset Management Bank v Suliana [2002] FJHC 207; HBC0093j.2000s (8 February 2002)

IN THE HIGH COURT OF FIJI
AT SUVA
CIVIL JURISDICTION

CIVIL ACTION NO. HBC0093 OF 2000

IN THE MATTER of Mortgage No. 5555 over Instrument of Tenancy No. 011 given by TANIELA VERE SULIANA, RACHAEL LAL, ETIKA SULIANA, FINAU WAQANIVAVALAGI AND SAVIKA ROUNDS in favour of NBF ASSET MANAGEMENT BANK

Between:

NBF ASSET MANAGEMENT BANK
Plaintiff

and

TANIELA VERE SULIANA
Defendant

Mr. T. Seeto for Plaintiff
Ms. G. T. Olsson for Defendant

JUDGMENT

By Originating Summons dated 7 March 2000 the plaintiff (hereafter called >NBF=) seeks the following main orders against the defendant (the >defendant=) on the grounds set out in the Affidavit in Support filed herein:

1. DELIVERY by the Defendant to the Plaintiff of vacant possession of ALL THAT property comprised and described in Instrument of Tenancy 011 known as Davuilevu Agriculture Sub-Division, Stage 1 Lot 2 on Deposit Plan 5922 in the Province of Rewa and having an area of 5 acres situated TOGETHER WITH all improvements thereon under Order 88 of the High Court Rules.
   
2. AN injunction restraining the Defendant, their servants or agents from interfering with the improvement on the said property in any way so as to deplete its value.
   

The defendant opposes the Summons to which the NBF has replied by an affidavit sworn 30 August 2001.

As ordered both counsel filed helpful written submissions

Consideration of the issue

This is NBF=s application under Order 88 Rule 3 of The High Court Rules 1988 being an action on the mortgaged property being Methodist Church Instrument of Tenancy 011 known as stage 1 Lot 2 on D.P. No. 5922 at Davuilevu Subdivision (hereafter called the >property=) seeking the Orders stated hereabove.

The brief facts are that the defendant (the >mortgagor=) is the registered proprietor (lessor) of the property and has mortgaged it to secure repayment to the plaintiff of all banking advances, charges, interest and other banking accommodations made by the plaintiff to the mortgagor from time to time and on terms and conditions as therein contained.

The two main grounds upon which the defendant opposes the application are firstly, the NBF by its conduct, caused and/or contributed to the alleged debt being owed by the mortgagor, and secondly, that the NBF has failed to provide all the particulars required under Or.88 r(3). He alleges that his farm income has suffered because of seizure by NBF of one of his farm vehicles. He says that NBF was in breach of the duty of care which it owed to the mortgagor. He admits that he was unable to service the loan because variation in payments were made unilaterally and alleges that in breach of Or.88 r3 NBF failed to provide the details of advance.

Mr. Seeto for NBF submitted that the >understanding= about the five year farm program is according to parole evidence rule inadmissible. The transaction was reduced to writing and hence extrinsic evidence is inadmissible to contradict, to vary, to add to or to substract from the terms of the document. The mortgagor is bound by offer letter signed by him (L=Estrange v F. Graucob [1934] 2 K.B. 394). Mr. Seeto further submits that the >delinquent behaviour= of the mortgagor can be gleaned from the manner in which the mortgagor conducted the management of his account and his running of the farm as evidenced by NBF=s letter to the mortgagor.

The learned counsel submits that on the authorities to which he made reference the mortgagor=s arguments are frivolous and without merit.

In the application under Order 88 the plaintiff has to comply with certain requirements as stated in that Order particularly Order 88 rules 2, 3(2), (3), (4), (5), (6) and (7). This I find the NBF has complied with.

The defendant is considerably in arrears of payment. The amount remaining due now under the mortgage is $222,251.00. The defendant is in possession of the property. The NBF has a purchaser for the property who is now ready to pay the balance purchase price to NBF and has requested the bank to transfer the property to them and further to give vacant possession.

The NBF had on 9 February 1999 given the defendant notice to vacate the mortgaged property but he has failed to do so.

Under the powers contained in the mortgage document the NBF is empowered to obtain possession as therein provided. The right to possession arises in this case because of the default in payment of the NBF advances made.

The defendant=s argument in effect suggests that for the reasons advanced by him the NBF be restrained from exercising its power of sale under the mortgage. If the defendant wants an injunction in this regard then he has to move the Court. On this aspect the law is very clear and I refer to the following passage in Halsbury=s Laws of England 4th Ed. Vol.32 parag 725 which supplies the answer and is apt:

AThe mortgagee will not be restrained from exercising his power of sale because the amount due is in dispute or because the mortgagor has begun a redemption action or because the mortgagor objects to the manner in which the sale is being arranged. He will be restrained however if the mortgagor pays the amount which the mortgagee claims to be due to him.@ (emphasis added)

This is not a case where the Court will interfere with the mortgagee=s rights under the mortgage for it has complied with the provisions of Order 88. The defendant as mortgagor has vested NBF with wide powers under the mortgage document. The effect of these powers have been fully set out in the following passage from the judgment in Matthie v Edwards 73 RR 776 at 779:

>Now those powers so given may undoubtedly, be often used for purposes of oppression. They are however, powers which the party having a power of the property thinks proper to confer on the individual from which he borrows the money; it is a bargain; one party parts with his money, and he has to pay himself out of the property upon which it is charged; and it is for the other party, who creates the mortgage, to consider whether he has not given too large a power to the individual with whom he is dealing. But when once it is given, the party advancing his money is perfectly entitled to execute the power which such a contract gives him.. however if the power is sought to be exercised for exorbitant purposes, without a due regard to the interest of the parties concerned, this Court will interfere under certain circumstances, and, like other pledges, if the individual comes and deposits the money, the Court will, under certain circumstances prevent a party from exercising that power arbitrarily, but not without the actual deposit of the sum which the other party is entitled to.

Now it is quite clear, that the interests of society (and more particularly financing institutions) require, and the justice of such a case requires that those powers, when they do not come within the (above) principles on which the Court has acted, should not be interfered with; it is merely a power which the individual has given.=

Further, the mortgagee has a common law right to possession and this is well established as borne out by the judgment of Goff L.J. in Western Bank Ltd v Schindler (1977) 1 Ch where it is stated:

AIt has for a very long time been established law that a mortgagee has a proprietary 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 per 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.@

Conclusion

To conclude, on the facts and circumstances of this case and on the authorities NBF is well within its rights to apply under Order 88 of The High Court Rules for the Orders sought in the Originating Summons. The argument put forward by the defendant to prevent the mortgagee from exercising its power of sale and from obtaining vacant possession are without merit and an abuse of the process of the Court. The defendant who owes a large sum of money to NBF and has been in default with no hope of paying the debt has the audacity to say to the effect that NBF is to be blamed for the failure of his farm project.

For these reasons I conclude that the defendant has not convinced me on the facts and authorities that I ought to make an Order in his favour. The plaintiff therefore succeeds in its application and I grant the Orders sought by it as stated hereabove with costs against the defendant in the sum of $300.00.

D. Pathik
Judge

At Suva
8 February 2002