Tradeplus (Fiji) Ltd v Chand [2004] FJHC 220; HBC0065.2004 (5 July 2004)

IN THE HIGH COURT OF FIJI
AT SUVA
CIVIL JURISDICTION

CIVIL ACTION NO.: HBC0065 OF 2004

BETWEEN:

TRADEPLUS (FIJI) LIMITED
PLAINTIFF

AND:

MOTI CHAND
DEFENDANT

Mr. M. Arjun for Plaintiff
Mr. G. O’Driscoll for Defendant

JUDGMENT

BACKGROUND:

This was an application for summary judgment for specific performance pursuant to Order 86 Rule 1 of the High Court Rules. This order permits the court to order specific performance of a sale and purchase agreement unless the defendant satisfies the court that there is an issue or question in dispute or there ought for some other reasons be a trial.

FACTS:

By a written agreement dated 29th August 2003 the defendant agreed to sell to the plaintiff his vacant land comprised in Crown Lease 13420 being Lot 14 on SO 3699 having an area of 1707 square meters for the sum of $90,000.00.

The date of settlement was on or before 6th day of October 2003 or “such other date as may be mutually agreed in writing between the parties”. In short, by agreement in writing the parties could postpone the date of settlement. The agreement also went on in Clause 11.1 to provide that “Time shall be of the essence of this agreement”. The land in question is Crown Land so the consent of the Director of Lands had to be obtained before the agreement could be implemented -–Section 13 of State Lands Act Cap 132.

The vendor signed the application for consent to transfer on 6th October 2003. The consent was granted on 16th October 2003 subject to payment of rental arrears. On 30th October 2003, the plaintiff paid $1,800.00 being stamp duty into the trust account of Sherani & Company who were solicitors engaged by both parties to finalize the transaction. On 18th November 2003, solicitors for plaintiff wrote to Sherani & Company requesting for settlement date. On 20th November 2003 Sherani & Company wrote back to say that the defendant “does not wish to proceed with the sale and has instructed us to refund the deposit with interest if necessary”.

SUBMISSIONS:

The defendant submits that the plaintiff was not ready for settlement by 20th October 2003 so he verbally cancelled the deal. He submits that 20th October 2003 was the last day for settlement. He only became aware that the plaintiff was ready for settlement when he received its letter of 8th November 2003. He submits by 17th October 2003, he had obtained the necessary consent and was ready for settlement. He is not at fault, he says. The plaintiff on the other hand has said that it was always able and willing to complete the sale. Any extension for settlement date was to be done in writing. It says it only became aware on receipt of letter of 20th November 2003 that the defendant was not proceeding with the sale.

TIME OF ESSENCE CLAUSE:

The agreement contains time is of the essence clause. In Union Eagle Ltd. v. Golden Achievement Ltd. - [1997] UKPC 5; 1997 2 ALL ER 215 a deposit of Hong Kong $420,000.00 was forfeited because the purchaser was ten minutes late for settlement. The Privy Council concluded that requirements of certainty in commercial transactions dictated that in the absence of a waiver or estoppel courts would hold parties to their bargains.

Similar views were expressed by Sir R. Malins V.C. in Webb v. Hughes [1850] EngR 321; LR 10 Eq. 281 at 287 as follows:

“But if time be made the essence of the contract, that may be waived by the conduct of the purchaser; and if the time is once allowed to pass, and the parties go on negotiating for completion of the purchase, then time is no longer of the essence of the contract.”

Marlin J. went on to add that the parties need not wait indefinitely and if it becomes apparent that they have to wait indefinitely, a party can give a reasonable notice and fix a time for completion.

WAS THERE ELECTION TO EXTEND TIME FOR COMPLETION:

In the present case time for completion was fixed for on or before 6th October 2003. However, I note that the vendor signed the application for consent on 6th October 2003. The application was sent to the Ministry of Lands on 7th October. The Ministry responded on 16th October 2003 stating that consent will be endorsed on payment of rent arrears. The consent was endorsed on the transfer on 17th October 2004 – annexure I to affidavit of Arveen Anand sworn on 25th March 2004. The defendant must have paid the rent arrears for the consent to be endorsed on the transfer. This is the first act by him which shows he was prepared to waive the completion date. Additionally there is a letter written by Sherani & Company on 10th November 2003 to the defendant seeking certain information for purposes of Land Sales Tax. The usual conveyancing practice is that the Inland Revenue Department impounds transfer documents and they are released only upon Land Sales Tax being exempted or arrangements made for payment. Sherani & Company acted for both parties in the transaction.

The defendant alleges he verbally cancelled the contract on 20th October 2003. Documentary evidence and subsequent conduct of parties makes it highly unlikely that that verbal notice was given. First, in Clause 15.1 it is expressly stipulated that notice to be given under this agreement shall be in writing and delivered. Even the fax number for service are given. It takes no great effort to send a fax. Secondly if the agreement had been terminated verbally, his solicitors would have been informed and they would not have accepted stamp duty from the plaintiff on 30th October 2003 nor would the solicitors have written to the defendant to obtain information for purposes of Land Sales Tax. Thirdly in a letter dated 20th November 2003 (annexure F affidavit of Arveen Anand sworn on 11th March 2004) and which letter informs the plaintiff that defendant does not want to proceed further with the agreement, there is no mention of the defendant having verbally informed the plaintiff on 20th October 2003 that agreement was cancelled. Surely if there had been verbal termination earlier some reference to it would have been made. A significant factor of such importance would not be omitted or overlooked. The letter says the defendant “has instructed us to refund the deposit with interest if necessary”. One would surmise why would the defendant offer to pay interest if he acted in accordance with the agreement.

CONCLUSION:

The acts outlined above indicate quite clearly that the defendant had waived the time for completion to beyond 6th October 2003. If he wanted to make time of essence again he could have done that by subsequent service of notice specifying reasonable period within which completion was to take place and only upon passage of that time he could lawfully have terminated the agreement. However that was not done which means the transaction is still in place.

There was some suggestion that the plaintiff was not ready with finance. The agreement itself is not subject to availability of finance. Finance would be a matter entirely for the plaintiff and it could not have provided non-availability of finance as an excuse to terminate the agreement. The plaintiff says it was ready and willing to complete the contract. To that end it has annexed a copy of mortgage entered between it and Westpac Banking Corporation to support its contention that it was able and willing to complete the deal.

I am satisfied that the defendant has no defence and no fairly arguable point on any issue. This in my view is a proper case for entry of summary judgment.

I accordingly order specific performance of agreement dated 29th August 2003. I order that upon the plaintiff at 11.00 a.m. on 29th July 2004 at the Registrar of Titles Office, Suva paying the defendant the sum of $90,000.00 by Bank cheque, the defendant simultaneously shall hand-over the following documents to the plaintiff or his solicitors:

(a) Original Sale and Purchase Agreement.

(b) Stamped Transfer in duplicate.
(c) Land Sales Declaration.
(d) Crown Lease 13420 free of all encumbrances except for any caveat that may have been lodged by the plaintiff.

I further order that the defendant pay plaintiff’s costs which I fix at $400.00.

[ Jiten Singh ]
JUDGE

At Suva
5th July 2004