Kelton Investments Ltd v Lami Investments Ltd [2005] FJHC 192; HBC0078.2005 (21 July 2005)

IN THE HIGH COURT OF FIJI
AT SUVA
CIVIL JURISDICTION

CIVIL ACTION NO.: HBC0078 OF 2005

BETWEEN:

KELTON INVESTMENTS LIMITED
PLAINTIFF

AND:

LAMI INVESTMENTS LIMITED t/a
FOOD FOR LESS SUPERMARKET
DEFENDANT

Ms B. Narayan for the Plaintiff
Mr. H. Nagin for the Defendant

Date of Hearing: 9th June 2005
Date of Judgment: 21st July 2005

JUDGMENT

By summons filed on 22nd February 2005 the plaintiff is seeking vacant possession of property comprised in Certificates of Titles number Volume 51 Folio 5044, 5969 and 6247. There is a supermarket known as Food For Less Supermarket situated on these properties. The property is close to the Suva market. The application is made pursuant to Section 169 of the Land Transfer Act.

I have before me following affidavits for consideration:

(a) James Ah Koy sworn on 18th February 2005
(b) Rudra Nand sworn on 17th March 2005
(c) James Ah Koy in reply sworn on 7th April 2005.

The defendant had filed a further affidavit sworn on 27th May 2005 without the leave of the court in contravention of Order 28 Rule 2(6) so it was excluded from all consideration.

The plaintiff is the registered proprietor of the three titles. As such he is entitled to present the summons. The plaintiff says that it had granted a tenancy to the defendant for a period of five years effective from 17th December 1998 with three five yearly options to renew. It adds that the defendant breached fundamental terms of the agreement and accordingly the plaintiff refused to grant a renewal.

The defendant filed an affidavit in reply to show cause why it refuses to give possession as required by Section 172 of the Land Transfer Act. It says that the purpose of these proceedings is to put pressure on the defendant to increase the rent unlawfully.

The defendant had gone into possession of the property pursuant to a written tenancy agreement dated 9th December 1998. The lease was to run for a period of five years commencing 17th December 1998 – annexure B to plaintiff’s affidavit. Under Clause 3(a) of the agreement the defendant was entitled to three renewals each of a five-year term. The renewals were subject to firstly, the defendant having paid all the reserved rent, secondly, the defendant having observed and performed other conditions and thirdly exercising his right of renewal at least three calendar monthly before the expiry of the agreement. The relevant part of Clause 3(a) of the agreement reads:

“If the lessee shall during the said term pay the rent hereby reserved and observe and perform the conditions on the part of the lessee herein contained and implied up to the expiration of the said term and shall have given notice in writing to the lessor at least three calendar months before the expiration of this Agreement then the lessor will grant 3 options to the lessee for a renewal tenancy of the said premises for periods of five (5) years each on the same terms and conditions except rental which is to be calculated as stated in Clause 3 of this lease and failing agreement to be determined by an arbitrator appointed by the parties in the manner determined in Clause 3(c) of this lease. This option is exercisable for 3 (three) renewals only the rent for which shall be determined as stated hereunder.”

It is agreed between the parties that the defendant gave notice dated 22nd August 2003 indicating it wished to renew lease for further period of five years. The reaction of the plaintiff is contained in annexure D of the affidavit of Rudra Prasad. This relevant portion of letter reads:

“November 18, 2003

Mr. Rudra Prasad

Managing Director

Food for Less Supermarket

Rodwell Road

SUVA

Fax: [phone]

Mr. Rudra Prasad,

Re: Illegal Building and Construction

It has come to my notice that you have built a series of mezzanine floors and fixtures in our building without:

(1) The Landlord’s consent and approval

(2) Proper plans and specifications

(3) The Suva City Council’s approval of your plans and specifications

(4) And weakening the structure of the building by cutting the Apex wall to fit through your mezzanine floor joists, thus weakening our structure at the Apex.

(5) Painting the exterior, facing Rodwell Road, to correct the mutilation of our walls with a wrong colour.

(6) Defacing our exterior walls with all your posters and advertising.

These are all breaches of our lease with you.

In our telephone discussion with you yesterday, you indicated your intention to cut through al wall to connect you to the adjoining property which you hope to lease from Yatulau. We were amazed at your suggested intention without running it past us for approval.

All these acts of yours so far are in flagrant breach of the second schedule of the lease totally and of your lease proper.

Yours sincerely,

{Sgd:}

James M. Ah Koy

Founder & Group Executive Chairman

c.c.: Kafoa Muaror – Muaror & Company Fax [phone]”

Then on 2nd October 2003, the plaintiff’s solicitors wrote to defendant’s solicitors informing them since the defendant had failed to observe certain requirements in the tenancy the plaintiff is not inclined to consider an extension of the tenancy. Further it went on to say that if the lease is to be renewed, the rental has to be higher – see annexure D to Rudra Prasad’s affidavit.

Ms Narayan submitted that paragraph 2 of the letter the plaintiff has refused to renew the lease on the grounds that the defendant failed to observe the terms of the agreement. She said that the defendant breached clause 4(k) of the agreement which prohibited the defendant from making any additions or alterations to the premises without the prior written consent of the plaintiff. The defendants she submits erected a mezzanine floor on the premises without obtaining the plaintiff’s prior consent. Further the defendant also failed to obtain the prior approval of Suva City Council in carrying out the construction of mezzanine floor.

Mr. Nagin submitted that the plaintiff was motivated by greed and was finding an excuse to determine the tenancy due to greed. He submitted that plaintiff raised no issue of breach until the defendant exercised its option for renewal. He submitted that the plaintiff just wanted $25,000.00 in rent and the rest would be forgotten. The rental for option periods is already fixed. He says the plaintiff is still holding onto the deposit. This is not a proper case for vacant possession under Section 169 he submitted.

IS THIS A PROPER CASE FOR SECTION 169 PROCEDURE:

Where the basic relevant facts are not in dispute, then the summary procedure under Section 169 is appropriate – Shyam Lal v. Schultz – [1972] 18 FLR 152. Complicated questions of facts or law especially where allegations of fraud are involved are not appropriate for the summary procedure but need more thorough investigation. Simply because a large number of documents have been filed does not render it a complicated case as long as the basic material facts are not in dispute.

The plaintiff says that the defendant has built a mezzanine floor without its consent. The defendant admits constructing the mezzanine floor not long after it entered into possession on 17th December 1998. The defendant says the plaintiff was aware of the construction of mezzanine floor and it was built with the knowledge and consent of the plaintiff. It says the plaintiff is estopped from raising the issue now. It also says the floor is removable.

The option of renewal of the lease on expiry of the first term was not as of right but subject to three conditions.

(a) All rent must have been paid
(b) Lessee must have performed and observed all conditions
(c) At least three months notice in writing before expiry must be given.

The lease agreement determines the rights of the parties. The function or approach which a court ought to adopt when construing a written contract is helpfully set out by Henry J.A. in H.P. Kasabia Brothers Ltd. v. Reddy Construction Ltd. – [1977] 23 FLR 235 at page 255 A-B as follows:

“the express words of the contract must first be construed in the surrounding circumstances but not on the basis of what the parties may have said was their intention at the time. Nor can any prior or subsequent conduct determine the meaning of their written contract unless there is more than one way in which the contract can be construed, that is, unless there is an ambiguity in the way in which the terms are recorded in that event subsequent conduct may be looked at. The paramount task of a court is to consider the express words used, considering them, of course, in the context of the whole of the provisions in the writing and the relevant background. It is beside the point that the parties may consider their obligations to be different from the express terms of the recording instrument. That can only be a matter of rectification or perhaps estoppel. If the written words are capable of being given a meaning then that is the intention and obligation in accordance with the writing.”

Clause 4(k) requires “prior written consent” before additions and alterations are carried out. The addition here was substantial. The parties have called it “mezzanine floor”. Both parties also considered that the addition was large enough to warrant approval of Suva City Council. The defendant alleges that the plaintiff knew about the additions but did not complain so there was acquiescence. This knowledge is denied by the plaintiff. In face of such denial, the defendant’s allegations are mere assertions.

This is a commercial contract and one would expect parties to abide by its letter. While other claims by the plaintiff about rubbish, keeping of flammable materials etc are insignificant, the complaint about mezzanine floor is important. Even till now the defendant has not offered to rectify the breach nor has it obtained approval from the Suva City Council. The plaintiff is met with a stubborn resistance.

The defendant says the plaintiff’s real motives are to extract more rent. The defendant could easily have avoided all that by complying with the agreement.

Amidst all the allegations the following material facts stand out abundantly clear –

(1) the plaintiff is the registered proprietor.
(2) the lease agreement required prior written consent to additions or alterations.
(3) The defendant carried out substantial addition in the form of a mezzanine floor.
(4) No consent of the plaintiff in writing was obtained.
(5) The option for renewal required observance of terms and conditions as a pre-requisite to renewal.

The covenant to renew so long as lessee’s obligations were duly performed is strictly interpreted against the lessee: West Country Cleaners (Falmouth) Ltd. v. Saly – 1966 3 ALL ER 210 where the landlord lived next door to the premises and frequently visited the premises. The tenant failed to paint the ceiling and did no painting in the last year of the term. Even though the breaches were trivial, it did not “prevent them from rendering the option unenforceable” – the headnote.

Accordingly I am of the view that this is a proper case for summary possession under Section 169 of the Land Transfer Act. I am not satisfied that the defendant has shown sufficient reason to remain in continued possession. Accordingly I order the defendant to deliver vacant possession of Certificates of Title Numbers Volume 31 Folios 5044, 5969 and 6247.

In view of the nature of the business of the defendant, vacant possession is to be delivered within thirty (30) days from today. I also order costs summarily fixed in the sum of $800.00.

[ Jiten Singh ]
JUDGE

At Suva
21st July 2005