NBF Asset Management Bank v The Occupiers [2005] FJHC 120; HBC0119.2005 (26 May 2005)

IN THE HIGH COURT OF FIJI
AT SUVA
CIVIL JURISDICTION

CIVIL ACTION NO.: HBC0119 OF 2005

BETWEEN:

NBF ASSET MANAGEMENT BANK
Plaintiff

AND:

THE OCCUPIERS
Defendant

Counsel: Mr. Seeto – for Plaintiff
Mr. Lateef – for Defendant

Date of Hearing/Judgment: Thursday 26th May, 2005

JUDGMENT

Background

This is an application made under Order 113 of the High Court Rules 1988 to evict unidentified occupiers of the subject land.

The property was originally owned by one Jane Low now deceased. She died in 1986. The property was the subject of a mortgage to the NBF Asset Management Bank that was part of a wide ranging security over a number of properties belonging to the deceased. This mortgage fell chronically into arrears and I accept the advice from the bar that the applicant bank is at present owed approximately $600,000.00 under this security.

To further put the debt equity ratio into perspective the subject property is valued at $26,000.00 and under mortgagee sale tender process reached an agreed price of only $32,000.00.

After Jane Low died her estate was not administered formally. Rather her son Michael collected rent and distributed it, his lawyer says, to various family members. What is clear is that these rental payments have not been consolidated in any trust fund, properly estate managed, or accounted for. It is equally clear that no proper arrangements have been entered into with the bank concerning tenanting, collection of rents, transfer of the property or any subsequent proper management either formally or informally of the deceased’s affairs.

It is against this background that the plaintiff bank has properly advertised and undertaken mortgagee sale proceedings by tender. It has received and conditionally accepted a tender offer on the subject land but has not been able to complete settlement because the unidentified occupiers could not or would not surrender possession.

I ordered that this application be bought to the attention of the occupiers by substituted service order against Messrs Lateef & Lateef. This firm of solicitors acts for the informal administrator of the property the owner’s son Michael Low. Michael Low it is said in the affidavits has been receiving rent from the unidentified occupiers and therefore this was thought to be the best way for bringing the application to the unidentified occupiers notice.

The Application

The applicant bank’s originating summons of the 10th of March is clearly stated to be against the occupiers of Lot 128, Block 2 Milverton Road, Raiwaqa.

These occupiers were at the hearing before me and by affidavit identified as one Mrs. Eileen Elliott and/or Mr. David Daniel Elliott.

I was advised from the bar table that neither person currently lives in the property. They are temporarily in the United States. They do however pay rent regularly to Mr. Michael Low the deceased’s son.

As the application was against the occupiers I ensured that they were called three times at 10.05 am on the date of hearing. There was no appearance. I record that the hearing took some 1½ hours there was no appearance made during that time.

That is not surprising. Neither of these occupiers has filed any papers in court. Counsel appearing for Mr. Low made it very clear that he had no instructions to appear on behalf of these occupiers.

Accordingly in a preliminary way there being no opposition filed and no appearance filed by these occupiers an order should be granted together with costs. However, Mr. Michael Low, the deceased owner’s son, declared his interest in the property under Order 113(5). The relevant Order reads:

Application by occupier to be made a party

5. Without prejudice to Order 15, rules 6 and 11, any person not named as a defendant who is in occupation of the land and wishes to be heard on the question whether an order for possession should be made must apply at any stage of the proceedings to be joined as a defendant.
   

Mr. Low who has without authorization or proper letters of appointment collected rent from the deceased’s properties including this one over the last several years had by the time of the hearing before me taken out letters of administration. These had been issued a day before this hearing.

Armed with those letters of administration and fortified by his interpretation of Order 113(5) his counsel sought to convince me that Mr. Low was in occupation of the land and wished to be heard on the question of whether an order for possession should be made.

Is He An Occupier

The order and rule do not specify what the phrase “who is in occupation of the land” means.

The Oxford Dictionary of Law 2001 Edition page 339 defines occupation to be the physical possession and control of land.

Counsel for Mr. Low conceded that his client was not living in the house. Rather he claimed an interest solely because he collected rent and sought to administer his mother’s estate.

I reject that argument. I find that he is not “in occupation of the land” in terms of Order 113 Rule 5.

Equitable Considerations

Although this finding is determinative of the matter as I refuse Mr. Low’s application to be joined as a defendant in the proceedings nonetheless this has a proper and just effect as well.

As part of an investment strategy the deceased in 1992 had acquired several properties with a total asset base of approximately $96,000.00. Against those properties she took out bank mortgages totalling some $92,000.00.

She died in 1996. Her estate has since that date not been administered. However, in relation to this particular property I accept the contents of the affidavit and assurances from counsel at bar table that Mr. Low has collected rent. He has not accounted for that rent in any way to the estate or the bank but distributed it amongst various family members who might be considered as beneficiaries of her estate.

That was not a fair way of dealing with this matter.

In my view the bank was clearly entitled to receive payment of its mortgage before and after Mrs. Jane Low’s death. Her death did not affect the applicant bank’s security in any way.

Rather than accounting to the bank for rent obtained from this property Mr. Michael Low has taken it upon himself to receive and distribute those funds in an unaccounted fashion.

His counsel frankly concedes today that there is no way the estate can meet the mortgage arrears nor enter into any compromise for the sale of any remaining Jane Low estate assets to pay back the mortgage debt.

Accordingly, even if I had granted Mr. Michael Low some right to be joined as a defendant in these proceedings, any right he may have claimed to an interest in the property, would in equity, be meaningless and at law hard to pursue as neither he in his personal capacity or even in a de facto estate administration capacity sought to stop the mortgagee sale proceedings of this subject land.

The bank called up its security. The bank proceeded with mortgagee sale by tender. The bank took these actions long before the letters of administration were issued yesterday on the eve of this hearing.

Conclusion

The occupiers have been properly served by substituted service. They have taken no opposition and made no appearance in this hearing.

I have declined to join Jane Low’s lately created estate administrator into the proceedings as a defendant. There will accordingly be an order in terms of the plaintiff’s originating summons with costs summarily assessed against Mrs. Eileen Elliott and Mr. David Daniel Elliott formerly of Lot 128, Block 2 Milverton Road, Raiwaqa and the Estate of Jane Low all jointly and severally in the global sum of $1,000.00.

Gerard Winter
JUDGE

At Suva
26th May, 2005