Maravu Plantation Resort Ltd v Swiss (Fiji) Divers Ltd [2003] FJHC 278; HBC0364.2001 (31 March 2003)

IN THE HIGH COURT OF FIJI
AT SUVA
CIVIL JURISDICTION

ACTION NO. HBC0364 OF 2001

BETWEEN:

MARAVU PLANTATION RESORT LIMITED
Plaintiff

and

SWISS (FIJI) DIVERS LIMITED
Defendant

Mr. R. Smith for the Plaintiff
Mr. W. Clarke for the Defendant

JUDGMENT

By originating summons Maravu Plantation Resort Limited (the ‘plaintiff’) seeks an order for possession of the property which Swiss (Fiji) Divers Limited (the ‘defendant’) is occupying being part of land comprised in Certificate of Title No. 13789 Lot 3 on DP 3504 (hereinafter referred to as ‘the property’) situated in Taveuni. The summons requires the defendant to show cause why it should not give up possession.

The application is made by the plaintiff under section 169 of the Land Transfer Act Cap. 131 (the ‘Act’) supported by an affidavit. The defendant has filed an affidavit in reply opposing the application followed by an affidavit in reply thereto by the plaintiff.

Plaintiff’s case

The plaintiff company is the registered proprietor of the property.

On 29 January 1999 the parties entered into a Lease Agreement (the “agreement”) whereby the plaintiff agreed to lease to the defendant part of the said property for a period of 10 years from 15 December 1998.

On 14 December 2000 the plaintiff in accordance with clause 10 of the agreement served on the defendant a Notice terminating the agreement. The said clause 10 provides: ‘The lease may be terminated by either party at any time during the term of the Agreement provided four months written notice is given to the other party.” The agreement was determined on 30^th April 2001 by Notice dated 13 December 2000.

The plaintiff says that the defendant failed to deliver up possession of the said land on 30 April 2001 and improperly remains in possession of it till today.

The plaintiff argues that the arbitration clause in the agreement does not in any way restrict either party’s right to terminate on 4 months’ notice and if that was so it would have meant that there was no right to terminate.

Defendant’s case

The defendant’s contention is that the

‘whole basis of the defendant in taking a lease from the plaintiff was to provide diving and ancillary services for the plaintiff’s guests and for other paying customers. The plaintiff’s business, which is a resort business, required the services of a dive operator.’

It says that the defendant was expected to invest substantial funds into the venture through matters such as construction, creation of infrastructure, co-operation and the buildings themselves.

Determination of the issue

This is a s.169 application by the plaintiff under the Land Transfer Act Cap. 131 (the ‘Act’) seeking vacant possession of a portion of the property of which it is the registered proprietor.

The undisputed facts are that there is a Lease Agreement (the ‘agreement’) between the parties for a period of 10 years. In the agreement in clause 10 there is provision for termination of the lease. There is also a provision in clause 7(b) which states that:

“At the expiration or sooner determination of this agreement, the Lessor will buy from the Lessee the Dive Centre at the original cost of construction of the same depreciated at a rate of 5% taking into consideration any renovations or improvements on any building.”

At the same time in clause 8 there is provision for arbitration in case of dispute arising between the parties. The said clause reads:

“All disputes, differences and questions which may at any time arise between the parties hereto or their respective representatives or assigns touching or concerning or arising out of or in respect of this lease or the subject matter thereof shall be referred to a single arbitrator in accordance with the Arbitration Act or any statutory modification or re-enactment thereof for the time being in force.”

In the application, as provided under s.172 of the Act, the defendant is summoned that it may show cause why it refuses to give possession of the property and if it proves to the satisfaction of the Court a right to take possession or can establish an arguable defence the Court shall dismiss the Summons with costs against the proprietor or the ‘Court may make any order and impose any terms it may think fit’.

The defendant opposes the plaintiff’s claim for possession. The nature of s.169 procedure has been stated by Gould V.P. in Ram Narayan s/o Durga Prasad v Moti Ram s/o Ram Charan (Civil App. No. 15/83 FCA) thus:

“............the summary procedure has been provided in the Land Transfer Act and, where the issues involved are straightforward, and particularly where there are no complicated issues of fact, a litigant is entitled to have his application decided in that way.”

I have read the affidavit of the plaintiff in support of the summons and the affidavit in opposition in reply of the defendant and a reply thereto by the plaintiff. Upon a careful consideration of the affidavit evidence before me, I find that the defendant has shown cause why it should not give vacant possession of the property.

The plaintiff relies solely on it being the registered proprietor to obtain vacant possession. It says that the Agreement provides for the giving of Notice to terminate and that is what it has done and says that the said Arbitration clause does not prevent it from instituting the present proceedings for possession. It is not looking beyond all this despite the fact that it has furnished a large number of correspondence as to what should happen under the said clause 7(b) of the agreement.

Now that the plaintiff has terminated ‘the agreement’, it is incumbent on it to comply with the requirements of clause 7(b). This the plaintiff has not done despite the fact that the defendant has furnished all invoices and receipts in respect of the cost of construction of the Dive Centre. This states how much money is owing by the plaintiff to the defendant. It say that the plaintiff must pay this amount before it will vacate the premises. It appears that the plaintiff has not accepted the figure and hence the defendant says that there is also a dispute and therefore the arbitration clause should be invoked rather than the plaintiff coming to Court and asking for vacant possession.

I shall consider the effect of arbitration clause a little later in this judgment.

Pursuant to the agreement the defendant has spent large sums of money in constructing the Dive Centre. It was a long lease because there was need to recoup the investment. I agree with the defendant that it was the intention of the parties that unless the defendant could be compensated for the cost of investment the defendant is entitled to remain in the property until such time that it could be compensated. The said clause 7(b) is quite clear in this regard. The defendant says that it has invested approximately $167,991.85 in this venture.

Under the agreement the defendant is quite justified in asking that it must be repaid before it is ordered to vacate the property and the lease properly terminated.

In view of what I have stated hereabove, for the reasons given the plaintiff cannot succeed in its claim for possession. The defendant has shown cause to my satisfaction.

Arbitration clause – effect of

I have dealt with section 169 procedure and its applicability to the present case. I am making a two-pronged attack on the issue for my determination. The first has already been dealt with hereabove. The other is the effect of arbitration clause in the agreement. It is that which I wish to deal with now.

It is clause 8 of the agreement which contains the arbitration clause. According to the defendant’s affidavit there have been disputes between the parties but they have never been resolved. Instead of resolving the disputes through arbitration, termination notice was given culminating in the present proceedings.

In this agreement there is not only the termination clause but also, inter alia, an arbitration clause to which I have already made reference and commented upon.

By instituting s.169 proceedings the plaintiff has picked on just one portion of the agreement to the exclusion of all the other relevant clauses. To determine all matters of dispute between the parties the whole contract has to be considered. One might say that the contract is not happily worded. It is not that, except that because of the nature of the transaction between the parties the intention of the parties could have been made clearer vis a vis the termination and compensation. However, the principles on which this type of agreement should be construed is not doubtful as stated by Lord Watson in Chamber Colliery Co. Limited v Twyerould, H.L. 1893 (unreported):

“that the deed must be read as a whole in order to ascertain the true meaning of its several clauses, and that the words of each clause should be so interpreted as to bring them into harmony with the other provisions of the deed if that interpretation does no violence to the meaning of which they are naturally susceptible, or (as was said by Lord Selborne) you may disregard the literal meaning of the words and give them another meaning if the words are sufficiently flexible to bear that interpretation: Caledonian Ry. Co. v North British Ry. Co. (1).”

I was required to deal with s.169 application and I have done so, but because the arbitration clause has been introduced in the defendant’s argument herein and because the plaintiff is silent on this aspect of the agreement, I ought to say something on its effect on the contract.

This contract is as absolute a contract as the law permits the parties to make inter se. It does not give one party or the other an option which the other may dissent from particularly as far as the arbitration clause and clause 7(b) are concerned.

The parties have agreed that disputes shall be referred to arbitration in situations stated in the said clause. What that means is as stated by The Lord Chancellor (Selborne) in Willesford v Watson [1861-73] All E.R. Rep. Ext. (1873) C.A.: 1086 at 1091:

“If parties choose to determine for themselves that they will have a domestic forum instead of the ordinary courts, under that Act of Parliament, and since that Act was passed, a prima facie duty is cast upon the courts to act upon such an agreement, the parties have made such an agreement here; they probably knew what were the reasons in favour of determining these questions by arbitration, and what were the reasons against so doing, and they have made it part of their mutual contract that these questions should be so determined. They cannot, therefore, be heard to complain if that part of their contract is carried into effect.”

By incorporating clause 8, I do not find there is any ambiguity. The parties knew and understood the language they were using, and that in executing the agreement containing that clause they were truly expressing their intentions and are bound by the writing they have signed. The agreement as to arbitration is clear and definite and the parties ought to invoke that provision in the agreement in settling their dispute.

Conclusion

In the outcome for the reasons given hereabove the plaintiff fails in its application under s.169 for vacant possession. However, as under s.172 the Court is empowered to make any order or impose any terms it may think fit, in all the circumstances of this case it is ordered that the parties either go to arbitration pursuant to clause 8 of the Agreement or invoke the provisions of clause 7(b) and settle that aspect of the matter between themselves and until settlement the defendant to be in possession of the property. I award costs against the plaintiff which is to be taxed unless agreed.

[ D. Pathik ]
JUDGE

At Suva
31 March 2003