Shah v Fifita [2004] FJHC 299; HBC0392j.2003s (23 June 2004)

IN THE HIGH COURT OF FIJI
AT SUVA
CIVIL JURISDICTION

CIVIL ACTION NO. 392 OF 2003

Between:

SOFIA SHANAZ SHAH
f/n Dildar Shah

and

ALEEM SHAH
f/n Shorat Ali Shah
Plaintiffs

and

NIMILOTE M. FIFITA
Defendant

Mr. N. Shivam for the Plaintiffs
Mr. N. Nawaikula for the Defence

JUDGMENT

This is a s.169 application under the Land Transfer Act, Cap. 131 (the ‘Act’).

By summons filed 18 September 2003 the plaintiffs seek an order for immediate vacant possession of the property situated at 25 Kabatia Place, Namadi Heights, Suva comprised in Certificate of Title No. 27242 and described as Lot 8 on Deposited Plan No. 4585 known as “Tamavua” situated in the District of Suva on the Island of Vitilevu (hereafter referred to as the “property”).

Background history

On 17 October 2003 the defendant appeared before Scott J (now Judge of Appeal) and asked for 7 days to file an affidavit in reply to the plaintiff’s affidavit. This was granted but he failed to do so by the adjourned date of 24 October 2003. No one appeared on his behalf either. So I made the order sought.

Then on 31 October 2003 the defendant through his counsel Mr. Nawaikula applied to set aside the said order and by consent on 2 March 2004 it was set aside.

The defendant has opposed the summons which I heard on 31 March 2004.

I have before me the following affidavits for my consideration:

Affidavit of plaintiff in support of the summons for Ejectment

Affidavit in reply of the defendant

Further two affidavits of the defendant

Affidavit in Reply of Dildar Shah the previous owner of the property

Affidavit of the plaintiffs.

On 31 March 2004 I had for my consideration the oral submission of Mr. Shivam and the written and oral submissions of Mr. Nawaikula.

Plaintiffs’ case

The plaintiffs say that they are the registered proprietors of the property (vide C.T. No. 27242). They require the property for their own use so they caused a Notice to Quit to be served on the defendant but he has not vacated.

Dildar Shah in his affidavit stated that the defendant failed to exercise his option to purchase the property as he could not afford to do so. Mr. Shah could not keep the property as the mortgagee proceeded to exercise its powers of sale. The defendant has not paid rent for two years. On 29 January 2001 the defendant admitted that he owed rent in the sum of $5400.00 (vide letter from defendant being annexure ‘A’ to Shah’s affidavit).

The second plaintiff in his affidavit stated that he purchased the property when it was advertised for sale by the Mortgagee. He paid $170,000.00 for it financed by Westpac Banking Corporation Limited. He says that he and his niece are ‘bona fide purchasers for value’ of the property and to meet repayments they want to put the property on rent.

The plaintiffs say that they are not aware of any arrangements between the previous owner Dildar Shah and the defendant.

Defendant’s contention

In his affidavit in response the defendant outlined in great detail how he became interested in purchasing the property from the previous owner Dildar Shah (the father and brother respectively of the plaintiffs).

The defendant entered into a written agreement (Annexure ‘A’ to defendant’s affidavit sworn 20 October 2003). That agreement stated, inter alia, that ‘this agreement can be terminated at one month’s notice on either side’and that ‘if the landlord decides to terminate this Agreement earlier he shall refund the balance of the rent’.

Under the Agreement the defendant became the tenant of the property at a rental of $800 per month but had agreed to pay $6000 as “advance rental”. He also had the option to buy the property at an agreed price.

The defendant’s counsel submits that the “Plaintiffs have committed fraud against the defendant, the defendant has exercised his option to purchase and the plaintiffs have taken the property subject to that because they have full and complete knowledge of that fact, the defendant has raised issues against the plaintiffs which were pending in Civil Action No. 245/2003, that the defendant has a pending tenancy agreement and that the seller of the property has colluded with the plaintiffs and deny the defendant’s right.”

The defendant alleges that the transfer of the property by Dildar Shah took place while C.A. 245/2003 was pending. That action was ‘abruptly withdrawn for the reason only to entitle Mr. Dildar Shah to transfer the property to the plaintiffs’, the defendant says that the transfer is therefore ‘unlawful, or at least because he is a tenant with an option to buy. The plaintiff hereby takes the property subject to that obligation.’

The defendant’s counsel submits that the ‘Plaintiffs and their father and brother have committed intentional fraud and deceptive tactics. The Defendant wants to take out an action against them on his right under the agreement with the transferor and by virtue of his tenancy agreement to buy this property’.

The defendant’s counsel also submits that in his further affidavit the defendant has added ‘more allegations’. He says that the defendant has ‘tendered evidence that he has paid the deposit towards the purchase of the same property and the defendant has put the court on notice that he has filed another action No. 69/2004 in which extensive allegations of fraud are contained against both defendants and their father and bother Mr. Dildar Shah who sold the property to them.’

Determination of the issue

The undisputed fact is that the plaintiffs are the registered proprietors of the property.

The procedure under s.169 is governed by sections 171 and 172 of the Act which provide respectively as follows:-

“s.171. On the day appointed for the hearing of the Summons, if the person summoned does not appear, then upon proof to the satisfaction of the Judge of the due service of such summons and upon proof of the title by the proprietor or lessor and, if any consent is necessary, by the production and proof of such consent, the judge may order immediate possession to be given to the plaintiff, which order shall have the effect of and may be enforced as a judgment in ejectment.”

s.172. If the person summoned appears he may show cause why he refuses to give possession of such land and, if he proves to the satisfaction of the judge a right to the possession of the land, the judge shall dismiss the summons with costs against the proprietor, mortgagee or lessor or he may make any order and impose any terms he may think fit.”

It is for the defendant to ‘show cause’. For the reasons hereinafter appearing I find that the defendant has not done so.

The defendant has stated that there is a pending action No. 69/2004 against the plaintiffs and Dildar Shah (the previous owner of the property) alleging fraud against them. Because of the pendency of that action he wants that this action be not heard.

The defendant should realize that the pendency of an action is no bar to the hearing of the summons for possession and this proposition has the support in the Fiji Court of Appeal case of Dinesh Jamnadas Lalji and Anor v Honson Limited F.C.A. Civ. App. 22/85 where Mishra J.A. said:

“At the hearing, the appellants’ main submission was that, as proceedings relating to the same matter were already before the Supreme Court, the application should be dismissed. The learned Judge, quite correctly in our view, held that existence of such proceedings was, by itself, not a cause sufficient to resist an application under section 169 of the Land Transfer Act.” (emphasis added).

Also in Muthusami s/o Ram Swamy v Nausori Town Council (Civ. App. No. 23/86 F.C.A.) Mishra J.A. expressed the same view as above in the following words:

“.....that mere institution of proceedings by Writ did not by itself shut out a claim under section 169 of the Land Transfer Act in a proper case. It was for the appellant to show, on affidavit evidence, some right to remain in possession which would make the granting of an order under section 169 procedure improper.”

Although the defendant has alleged fraud, and which is also the subject matter of the said action instituted by the defendant, there are no complicated questions of fact to be investigated. The procedure under s169 is most appropriate here. On this aspect in Ram Narayan s/o Durga Prasad v Moti Ram s/o Ram Charan (Civ. App. No. 16/83 FCA) Gould J.P. said:

“... 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.”

On the requirements of section 172 the Supreme Court in Morris Hedstrom Limited v. Liaquat Ali (Action No. 153/87 at p2) said as follows and it is pertinent:

“Under Section 172 the person summoned may show cause why he refused to give possession of the land and if he proves to the satisfaction of the judge a right to possession or can establish an arguable defence the application will be dismissed with costs in his favour. The Defendants must show on affidavit evidence some right to possession which would preclude the granting of an order for possession under Section 169 procedure. That is not to say that final or incontrovertible proof of a right to remain in possession must be adduced. What is required is that some tangible evidence establishing a right or supporting an arguable case for such a right, must be adduced.”

The requirements of section 172 have been further elaborated by the Fiji Court of Appeal in Ajmat Ali s/o Akbar Ali and Mohammed Jalil s/o Mohammed Hanif (Action No. 44 of 1981 – judgment 2.4.82) where it is stated:

“It is not enough to show a possible future right to possession. That is an acceptable statement as far as it goes, but the section continues that if the person summoned does show cause the judge shall dismiss the summons; but then are added the very wide words “or he may make any order and impose any terms he may think fit”. These words must apply, though the person appearing has failed to satisfy the judge, and indeed are often applied when the judge decides that an open court hearing is required. We read the section as empowering the judge to make any order that justice and the circumstances require. There is accordingly nothing in section 172 which requires an automatic order for possession unless “cause” is immediately shown. (emphasis mined)

I have borne the above passage in mind in determining this action.

Indefeasibility of title

The principle of indefeasibility of title comes into operation in this action. On this aspect the following sections 38, 39 and 40 of the Act are relevant to this case and are to be borne in mind in considering the issue before the Court.

Section 38 provides: (registered instrument to be conclusive evidence of title).

“No instrument of title registered under the provisions of this Act shall be impeached or defeasible by reason of or on account of any informality or in any application or document or in any proceedings previous to the registration of the instrument of title”.

Section 39 provides: (estate of registered proprietor paramount, and his title guaranteed):

Section 39(1)

“Notwithstanding the existence in any other person of any estate or interest, whether derived by grant from the Crown or otherwise, which but for this Act might be held to be paramount or to have priority, the registered proprietor of any land subject to the provisions of this Act, or of any estate or interest therein, shall except in case of fraud, hold the same subject to such encumbrances as may be notified on the folium of the register constituted by the instrument of title, thereto, but absolutely free from all other encumbrances whatsoever except:-

the estate or interest of a proprietor claiming the same land, estate or interest under a prior instrument of title registered under the provisions of this Act; and so far as regards any portion of land that may be by wrong description or parcels or of boundaries be erroneously included in the instrument of title of the registered proprietor not being a purchaser or mortgagee for value or deriving title from a purchaser or mortgagee for value; and any reservations, exceptions conditions and powers contained in the original grant.

39(2) Subject to the provisions of Part XIII no estate or interest in any land subject to the provisions of this Act shall be acquired by possession or user adversely to or in derogation of the title of any person registered as the proprietor of any estate or interest in such land under the provisions of this Act.” (emphasis added)

Section 40 states: (purchaser not affected by notice):

Except in the case of fraud, no person contracting or dealing with or taking or proposing to take a transfer from the proprietor of any estate or interest in land subject to the provisions of this Act shall be required or in any manner concerned to inquire or ascertain the circumstances in or the consideration for which such proprietor or in any previous proprietor of such estate or interest is or was registered, or to see to the application of the purchase money or any part thereof, or shall be affected by notice, direct or constructive, of any trust or unregistered interest, any rule of law or equity to the contrary notwithstanding, and the knowledge that any such trust or unregistered interest is in existence shall not of itself be imputed as fraud (emphasis mine)

In the said sections of the Act there is reference to ‘indefeasibility of title’ and ‘fraud’. The defendant alleges ‘fraud’ on the part of the plaintiffs.

It is clear from the affidavit evidence before me that, as required by law, no particulars of alleged ‘fraud’ have been given. They are just wild and general allegations. As against these allegations, the Court has before it the plaintiffs as the registered proprietors of the property. Even in the said civil action 69/2004 wherein there is allegation of fraud, the issue has not been decided. In any case as I see it this s169 application can be dealt with independently of the other case without having to await the outcome of the decision in that case. The defendant cannot rely on the purported agreement wherein he said he had an option to purchase.

The issue of fraud has been raised by the defendant in this action as well as in the said pending civil action.

The defendant said that he had challenged ‘vacant possession’ in the said civil action 245/03 as well but that action was later withdrawn.

Fraud is alleged on the part of the ‘plaintiffs and their father and uncle who is the transferor’.

The defendant alleges that the transfer of the property to the plaintiffs on 12 August 2003 was made when the defendant’s challenge for vacant possession was still pending in 245/03. He said that under the said agreement he had the option to purchase the property. In these circumstances he says that the transfer to the plaintiffs is ‘unlawful or at least because he is a tenant with an option to buy. The plaintiffs have taken the property subject to that obligation’.

The defendant further says that ‘he got involved in this property through the fraudulent intention of Dildar Shah (1st plaintiff’s father) and his brother and both plaintiffs are aware of his dealings’. He said that the ‘transfer to members of the same family was a way around the law as they try to free themselves from the legal obligations that they have’.

These allegations of fraud have to be looked at in the light of the said agreement between the defendant and Dildar Shah.

I have already stated hereabove what the agreement contained and what was done by the defendant and Dildar Shah under it.

It is abundantly clear from the affidavit evidence before me that in terms of the agreement a month’s notice to terminate the agreement was given. All other terms of the agreement were complied with by Dildar Shah. The defendant was considerably in arrears of rent. There is no evidence that the defendant exercised his option to purchase the property at any time. The mortgagee was exercising its power to sell the property and Dildar Shah tried to protect his property. The plaintiffs became the bona fide purchasers for value.

On fraud, the mere knowledge, if the plaintiffs had any, about the dealing between Dildar Shah and defendant ‘shall not of itself be imputed as fraud’ (section 40 of the Land Transfer Act Cap. 131). If the defendant has any claim it would be against Dildar Shah and not against the title of the plaintiffs who are the registered proprietors of the property and entitled to bring this action for vacant possession under s169 of the Act which they are doing.

In considering the ‘fraud’ aspect in this application I have borne in mind the ‘test of fraud’ as stated by Salmon J in the following passage in the New Zealand Court of Appeal case of Waimiha Sawmilling Co Ltd v Waione Timber Co Ltd [1923] NZGazLawRp 32; [1923] N.Z.L.R. 1137 at p.1175:

“The true test of fraud is not whether the purchaser actually knew for a certainty the existence of the adverse right, but whether he knew enough to make it his duty as an honest man to hold his hand, and either to make further enquiries before purchasing, or to abstain from the purchase, or to purchase subject to the claimant’s rights rather than in defiance of them. If, knowing, as much as this, he proceeds without further inquiry or delay to purchase an unencumbered title with intent to disregard the claimant’s rights, if they exist, he is guilty of that wilful blindness or voluntary ignorance which, according to the authorities, is equivalent to actual knowledge, and therefore amounts to fraud ...” (emphasis mine)

On the facts and circumstances of this case fraud has not been established against the plaintiffs to throw doubt on their registered proprietorship.

In this case the defendant alleges that the plaintiffs had notice of the agreement. Although the abovementioned statutory provisions provide that a registered proprietor’s title is defeasible for fraud but they also make it clear that fraud is not to be equated with ‘mere’ notice.

“Fraud” in the context of the Torrens system was interpreted by the Privy Council in Assets Company, Limited v Mere Roihi & Others [1905] UKLawRpAC 11; [1905] A.C. 176 at 210. Lord Lindley delivering the judgment of their Lordships said as follows and this is apt in considering the allegation of fraud in the present case:

“by fraud in these Acts is meant actual fraud, i.e. dishonesty of some sort, not what is called constructive or equitable fraud – an unfortunate expression and one very apt to mislead but often used, for want of a better term, to denote transaction having consequences in equity similar to those which flow from fraud. Further, it appears to their Lordships that the fraud which must be proved in order to invalidate the title of a registered purchaser for value, whether he buys from a prior registered owner or from a person claiming under a title certified under the Native Land Acts, must be brought home to the person whose registered title it impeached or to his agents. Fraud by persons from whom he claims does not affect him unless knowledge of it is brought home to him or his agents. The mere fact that he might have found out fraud if he had been more vigilant, and had made further inquiries which he omitted to make, does not of itself prove fraud on his part. But if it be shewn that his suspicions were aroused, and that he abstained from making inquiries for fear of learning the truth, the case is very different, and fraud may be properly ascribed to him. A person who presents for registration a document which is forged has been fraudulently or improperly obtained it not guilty of fraud if he honestly believes it to be a genuine document which can be properly acted upon.

Interestingly the same principles as stated in Assets Co (supra) are found in the Fiji case of Caldwell v Mongston (Action No. 2 of 1908, 2 FLR p1). There it was held that it was “not competent for the Court to go behind Certificate of Title unless obtained by fraud: or a title has been obtained by adverse possession.” There C. Major, C.J. found that there was no fraud, but he said:

“.....it has been contended for the defendant that the plaintiff was not an innocent purchaser for value he well knowing what has been called the defendant’s outstanding interest acquired by statute at the time that he purchased Solo. The contention could not be successfully maintained in that form even if the plaintiff had that knowledge for it would have to be classed as fraud on the plaintiff’s part. But it would not have been that fraud which the Lords of the Privy Council laid down is necessary to establish before a man’s Certificate of Title can be done away”.

The same principles apply in the Acts of Fiji relating to registration of title referred to hereabove.

The following passage from the judgment of Lindley L.J. in Asset Co’s case is pertinent in the context of this case showing the strength of the plaintiffs as having a better title than that of the vendor:

“In dealing with actions between private individuals, their Lordships are unable to draw any distinction between the first registered owner and any other. A registered bona fide purchaser from a registered owner (and that is the case here) whose title might be impeached for fraud has a better title than his vendor, even if the title of the latter could be impeached by the Crown.

In addition to what I have said hereabove on the subject of fraud for the purposes of the present action, I would like to quote the following extract from an article by Peter Butt on ‘Conveyancing and the Rights of Persons in Occupation’ in Volume 55 ALJ (1981) 119 at 122:

“This narrow meaning of the term “fraud” in the Real Property Act has been evident in pronouncements of the High Court also. For example, in Butler v Fairclough [1917] HCA 9; (1917, 23 CLR 78 at 97), Issacs J. said that what was contemplated by “fraud” was “actual fraud, moral turpitude (ibid at 90)”, and Griffith C.J. said that it imported “personal dishonesty or moral turpitude”. A few years later, in Wicks v. Bennett [1921] HCA 57; (1921, 30 CLR 80 at 91) Knox C.J. and Rich J. said that “fraud”, as that term was used in s.43 of the Real Property Act 1900 (N.S.W.) meant “something more than mere disregard of rights of which the person sought to be affected had notice”. In Stuart v. Kingston [1923] HCA 17; (1923, 32 CLR 309 at 359) Starke J. said: “Fraud will no longer be imputed to a proprietor registered under the Act unless some consciously dishonest act can be brought home to him. The imputation of fraud based upon the reinforcements of the doctrine of notice has gone.” And the Privy Council, in a later case, expressed the view: “If the designed object of a transfer be to cheat a man of a known existing right, that is fraudulent, and so also fraud may be established by a deliberate and dishonest trick causing an interest not to be registered and thus fraudulently keeping the register clear..... The act must be dishonest, and dishonesty must not be assumed solely by reason of knowledge of an unregistered interest (Waimiha, supra).”

Conclusion

To sum up, s.169 provides a summary and expeditious method of obtaining possession. This is applicable to cases where there are no complicated questions of fact and legal inferences. This is a straightforward case of the plaintiffs as registered proprietors who are entitled to apply for vacant possession.

Despite the imputation of fraud against the plaintiffs I find on the evidence before me and on the authorities the allegation does not hold any water in so far as the present action is concerned so as to affect the plaintiffs’ title in question. If the defendant has any claim it is against Dildar Shah with whom he had the said agreement and he can have the issue determined in the pending civil action.

The defendant imputes in the plaintiffs knowledge of the agreement with Dildar Shah and this he says gives rise to ‘fraud’ in them.

On this aspect the Court of Appeal in Hardeo Prasad f/n Badal v Abdul Hamid f/n Ahmed Ali (Civil Appeal No. ABU0059 of 2003 – Judgment 19.3.04), said:

“In the words of Salmond J the question is whether he knew for certainty of the existence of an adverse right but did he know enough to make it his duty to hold his hand and either to make further enquiry before taking the lease. Was he guilty of the wilful blindness to which Salmond J refers?”

As the Appeal Court has said in that case “there was no evidence before the Judge” that the plaintiff “knew for a certainty of the existence of an adverse right”.

The situation is the same here and I express the same view which means that what the defendant alleges is insufficient to establish fraud in the plaintiffs for the purpose of this action.

For these reasons I find that the defendant has not ‘shown cause’ to my satisfaction why he should not give vacant possession of the property as required under s172 of the Act.

In the outcome, the plaintiffs, who are the last registered proprietors of the property, for the reasons given hereabove and on the authorities, are entitled to immediate vacant possession of same irrespective of the pendency of the said civil action against the plaintiffs and Dildar Shah as defendants.

It is therefore ordered that the defendant give immediate vacant possession of the property to the plaintiffs under the provisions of the Act with costs to be paid by the defendant to the plaintiffs’ solicitor in the sum of $400.00 within 14 days.

D. Pathik
Judge

At Suva
23 June 2004