Hollows v Scofield [2004] FJHC 514; HBC0191.2004L (8 December 2004)

IN THE HIGH COURT OF FIJI
AT LAUTOKA
CIVIL JURISDICTION

CIVIL ACTION NO. HBC0191 OF 2004L

BETWEEN:

REX BASIL HOLLOWS
of Nasoso, Nadi, Fiji, Company Director and Developer
Plaintiff

AND:

JERALD EDWARD SCOFIELD
of Seattle, United States of America, Businessman
Defendant

Counsel:
Mr. V. Mishra for the plaintiff
Mr. W. Clarke for the defendant

Hearing: 3 November 2004
Judgment: 8 December 2004

JUDGMENT

The plaintiff seeks by way of Notice of Motion an extension of caveats registered against the Certificates of Titles, the subject of an agreement for sale between the defendant as vendor and the plaintiff as purchaser. The plaintiff also seeks by way of Summons orders for specific performance of the agreement and various ancillary orders including damages and by further Summons an order for judgment in default of defence.

The plaintiff relies on the affidavits of the plaintiff sworn on the 29^th June 2004 and 18^th October 2004 and the defendant relies on the affidavit of the defendant sworn on 6^th August 2004 and the affidavit of Siteri Cevalawa sworn on 28^th October 2004.

Counsel for both parties have filed and relied on written submissions.

The Issue

The fundamental issue for the determination of the court is whether or not the defendant has validly terminated the agreement for sale and purchase of the subject land.

The Facts

There is a history of dealings between the parties where the plaintiff has sought unsuccessfully to purchase the land described as 96 acres 1 rood 1.7 perches more or less, being Lots 5, 6 and 7 DP 1492 and Lot 59 DP 4386 and being all the land in Certificates of Titles 7136, 7138, 7140 and 20489 [“the land”].

On 2^nd June 2003, the vendor executed an Agreement for Sale and Purchase and on the 6^th June 2003 the document was executed by the purchaser. The agreement provided inter alia for:

1. A purchase price of F$5m.

2. A deposit of F$100,000.00. Payable within 7 days of signing the agreement.
   
3. Payment of the balance of purchase moneys, F$4.9m “not later than two calendar months after the date borne by the notice of his consent to this contract by the Minister for Lands”.
   
4. “14(i) – This agreement is conditional upon there being secured to the Commissioner of Inland Revenue by Charge 149861 at settlement day no more than F$700,000.00 to the discharge of which, the vendor shall pay F$350,000.00 and the purchase or any balance but no more than F$350,000.00, but if there is more than F$700,000.00 secured by such charge at such date and the purchaser chooses not to pay such amount beyond F$700,000.00 as is so secured the vendor may declare this Agreement void and of no effect and if so shall refund the deposit to the purchaser the parties otherwise having neither rights nor duties hereunder”.
   
5. “14(j) – This agreement is subject to the condition precedent that it shall not be a contract either to purchase or for the disposition of any land and shall be of no effect in either respect unless and until the Minister of Lands has consented to it and in the event that he has not consented by September 30, 2003 either party may at his option declare the Agreement void and of no effect and if so the vendor shall refund the deposit to the purchaser the parties otherwise having neither rights nor duties hereunder”.
   

By Notice dated 3 October 2003, from the vendor’s solicitors to the purchasers then solicitors, Muaror & Co the vendor declared the agreement void and of no effect in accordance with Clause 14(j) of the agreement as the Minister’s consent had not been obtained prior to 30^th September 2003.

It appears that it subsequently became apparent that the purchaser did not require Minister’s consent to the agreement as he could be properly accepted as a resident of Fiji.

The contract was “restored” or a further agreement entered into on or about 19^th November 2003 on the original terms with the following changes:

“We confirm that if the further payment of US$100,000.00 is made to the same account and recorded as a credit in that account by 1700 hrs (Seattle time) on November 28, 2003 the agreement is restored but varied as follows:

(i) It will be then unconditional with the purchaser being bound to pay on Settlement Day the balance of the purchase price and half of any tax secured to the Commissioner by Charge 149861 with a maximum liability in respect of the latter of F$350,000.00.

(ii) Settlement Day will be February 1, 2004.

(iii) The US$150,000.00 then having been paid will comprise a deposit forfeitable by the Vendor in the event of default by the Purchaser but will in the event of settlement being completed when due comprise part-payment of the purchase price to the extent of the sum in Fiji dollars that US$150,000.00 would buy in Suva at the rate first published by Westpac on Settlement Day.”

The additional deposit “of US$100,000.00 was paid on 26^th January 2004 and the purchaser’s solicitor submitted a transfer for execution by the vendor on 27^th January 2004.”

The purchaser made no appointment to settle.

On 27^th February 2004, 26 days after settlement day, the vendor’s solicitors served notice making time of the essence and requiring settlement on or before Friday, March 5 2004.

The notice specified that if the purchaser failed to settle on the stated date, 5 March 2004, and continued that default for 7 days, the vendor would rescind the agreement and forfeit as deposit the moneys already paid.

Settlement did not take place and by notice dated 15^th March 2004 the vendor rescinded the agreement.

The plaintiff contends that Minister’s consent is still required to the transfer of the land and that he requires 2 months to organize his finance.

The Notice making time of the essence and the Notice of Rescission were both served by the vendor’s solicitor on the purchaser’s solicitor by facsimile transmission. The contract provides for service by facsimile transmission but the address for service on the plaintiff is stated in the contract as:

“...an address to be advised.”

Considerable correspondence appears to have passed between the solicitors for the vendor and the ultimate solicitors for the purchaser prior to the notice being served. There is no evidence that the notices were not received.

The Contract

The contract entered into in June 2003 having been declared void and of no effect by Notice dated 3 October 2003 leaves the agreement entered on or about 19^th November 2003 as the agreement for the consideration of the court.

The terms of that agreement are the terms of the June 2003 agreement as varied by the memo of 19^th November 2003 from the solicitor for the vendor to the solicitor for the purchaser, the details of which appear above.

Payment of the additional deposit required by these amendments was made by the purchaser.

Time of the Essence

Clause 11 of the agreement provides:

“11 – Save for the effect of the provisions of clauses 9 and 10 of this agreement time shall be of the essence of this agreement.”

Clause 9 of the agreement provides:

“9 – If the Purchaser shall make default in payment of any moneys when due or in the performance or observance of any other stipulation or agreement on the Purchaser’s part herein contained and if such default shall continue for the space of seven (7) days from the due date then and in any such case the Vendor without prejudice to any other remedies available to the Vendor may at the Vendor’s option exercise all or any of the following remedies namely: -

(a) enforce this present agreement in which case the whole of the purchase money then unpaid shall become due and at once payable; or

(b) rescind this agreement for sale and thereupon all moneys theretofore paid or under the terms of sale applied in reduction of the purchase money shall be forfeited to the Vendor as liquidated damages; or

(c) sue for specific performance of this agreement; or

(d) sue for special and general damages.”

Clause 10 relates to default by the vendor.

The vendor’s notice of 27^th February 2004 required settlement on or before Friday March 5, 2004 and made time of the essence. In accordance with Clause 9 it also provided that if the default continued for 7 days after March 5, the vendor would rescind the contract.

There was therefore a period of 12 days allowed for settlement prior to the right to rescind being available.

“The determination of what is a reasonable time for completion of a contract for the sale of land, judged in the light of the circumstances of the particular case, is very much a matter of impression” – Sindel v Georgiou 154 CLR 661 at 670.

The date for settlement under the contract was 1^st February 2004. There is no evidence before the court that the plaintiff made any attempt to settle. The vendor on the 28^th February 2004 served notice making time of the essence and appointing 5^th March 2004 for settlement and then in accordance with Clause 9 provided a 7 day default period before rescission.

As the Notice of Rescission was not served until 15^th March 2004, 14 clear days was allowed prior to rescission.

There are 3 basic requirements of a notice making time of the essence. The notice must:

1. Inform the recipient of the obligation which is to be performed – Laurinda Proprietary Limited v Capalaba Park Shopping Centre Proprietary Limited [1989] HCA 23; 166 CLR 623.
   
2. Fix a period of time which is, in the circumstances, a reasonable time for performance; Stickney v Keeble [1915] AC 386, Sindel v Georgiou 154 CLR 661.
   
3. Clearly indicate, either that it makes time essential, or that failure to comply with the notice will give rise to a right to terminate – Laurinda Proprietary Limited v Capalaba Park Shopping Centre Proprietary Limited [1989] HCA 23; 166 CLR 623.
   

The Notice informs the purchaser that settlement is required. The time for settlement under the agreement having passed.

A period of time is fixed for compliance, which considering the history of dealings between the vendor and purchaser and the terms of the agreement is reasonable. The notice indicates that it makes time of the essence and that it gives a right to terminate.

The notice is therefore effective to enable rescission to take place if the purchaser does not comply with its terms, i.e. make an appointment to settle.

Miscellaneous Issues

The plaintiff has raised a number of issues which do not bear on the real issue to be determined.

The agreement on which the plaintiff relies is an agreement entered into in November 2003. There is no other agreement, the immediate prior agreement was declared void due to the failure to obtain Minister’s consent to the transaction within the time prescribed by the contract. This was effected in accordance with the contract. That contract was then at an end. It could not then be varied.

The agreement of November 2003 relied on the terms of the prior agreement and some additional or substituted terms, all of which became the terms of the November 2003 agreement. The terms were all in writing.

The vendor’s obligations under the contract were to give a good title to the purchaser on settlement. There is no evidence before the court that the vendor could not give a good title to the purchaser on settlement.

The arguments that some items appeared to the plaintiff to be outstanding is irrelevant. The plaintiff should have made an appointment to settle and if the vendor was then unable to settle, these issues would have been relevant.

The issue of the debt to the Fiji Inland Revenue & Customs Authority is again a matter for settlement. The actions of the plaintiff did no more then reduce the amount that the plaintiff had to pay on settlement.

Service of the notices on the solicitors for the plaintiff, it is argued is not good service as the agreement required the plaintiff to advise an address for service or it is argued service should be personal.

The vendor’s solicitors had been corresponding with the plaintiff’s solicitors for the entire period of the relevant agreement and prior thereto. It is not suggested that the plaintiff did not receive or become aware of the notices. The whole purpose of service of documents is to ensure that the other party is aware of the contents of the document. As it is not alleged that the plaintiff was not made aware of the contents of the notices in a timely manner, I see no merit in this argument.

The defendant has not filed a defence to the Writ of Summons and the plaintiff seeks judgment. Whilst no defence is filed, the interlocutory applications have all been addressed by the defendant who has filed relevant affidavits. In the circumstances there is no prejudice to the plaintiff and accordingly no merit in this application.

Caveatable Interest

In Lee v Waikalou Development Ltd [2002] FJHC 17; HBC0294D.95S, Scott J said:

“A caveat is a warning operating “as a notice to all the world that the registered proprietor’s title is subject to the equitable interest alleged in the caveat (Butler v Fairclough [1917] HCA 9; (1917) 23 CLR 78).”

In Chand v Visama Rice Mill Ltd [2002] FJHC 22; HBC0331D.2000S, Scott J said:

“Our own Act is similar to the provisions of the New Zealand Land Transfer Act 1952. In Catchpole v Burke [1974] 1 NZLR 266 Mc Carthy P. explained that:

When it is plain to the court that the caveator cannot possibly succeed in establishing his claim against the registered proprietor it is proper to refuse to extend the caveat (Re Jones [1908] NZGazLawRp 114; (1908) 11 GLR 30). But where there are doubts surrounding the rights of the caveator....the proper course is to extend the caveat until the conflicting claims of the different parties are determined in actions brought for that purpose.”

Conclusion

The notice making time of the essence is a good notice properly served.

The notice of rescission is similarly a good notice properly served.

It follows therefore that the agreement of November 2003 between the parties has been validly rescinded and the plaintiff therefore has no caveatable interest in the subject land.

Orders

1. The plaintiff’s Notice of Motion and Summonses are dismissed.

2. The plaintiff is to pay the defendant’s costs of these applications.

JOHN CONNORS
JUDGE

At Lautoka
8 December 2004