Home Finance Company Ltd v Ravunikau [2005] FJHC 240; HBC0047j.2005s (24 August 2005)

IN THE HIGH COURT OF FIJI
AT SUVA
CIVIL JURISDICTION

CIVIL ACTION NO. HBC0047 OF 2005

Between:

HOME FINANCE COMPANY LIMITED
Plaintiff

and

SULIASI RAVUNIKAU and
ALISI RAVUNIKAU
Defendants

Ms. Y. Fatiaki for the Plaintiff
Mr. S. Chandra for the Defendant

Date of Judgment: 24 August 2005

JUDGMENT

By motion dated 18 May 2005 the defendants sought an order ‘to stay and or set aside the orders’ made by this Court on 29 April 2005. The application was supported by an affidavit of Suliasi Ravunikau (the 1st defendant) sworn 17 May 2005.

There being no appearance by the defendants on the hearing of the Originating Summons the order that was made by the Court was that the defendants deliver vacant possession to the plaintiff of all that property comprised and described in Lease No. 160741 being Lot 4 on DP 3493 situated at 2 Duivosavosa Lane, Raiwaqa, Suva together with improvements thereon. Further, it was ordered that the defendants, their servants and/or agents are restrained from interfering with the improvements on the said property in any way so as to deplete its value.

The main reason given for the defendants not appearing in Court on 29 April when the Orders were made was that their solicitor could not attend the Court. The defendants say that they are advised that there is merit in their case.

The Motion to set aside was heard by me when both counsel argued the matter.

A number of affidavits were filed by both sides and submissions were made.

During the submission in Chambers and in the written submissions the facts and merits of the case were discussed as if it was the hearing of the Originating Summons on which the said Order was made.

Although the reason advanced for non-appearance of the defendants’ counsel is not acceptable to Court, nevertheless after hearing both counsel on the issues, I find, subject to what I say hereafter, that there is no merit in their application to set aside or even stay.

There is no doubt that they defaulted in payments under the mortgage and the mortgagee could call up the mortgage debt upon demand.

Despite time being given the defendants did not clear up the debt. The defendants did not redeem the debt within 21 days allowed them whereupon the plaintiff accepted the offer to sell the property for $65,000.00 and at that stage the plaintiff says that the defendants lost their equity of redemption.

In their affidavits the defendants raised a number of issues such as: the mortgage payments were up to date; the plaintiff failed to properly exercise its powers of sale by accepting an offer from an employee employed by the plaintiff (which the plaintiff denies); the defendants are aggrieved that the plaintiff did not accept the FNPF contribution of $9,000.00; the plaintiff did not disclose to the defendants the offer made by the purchaser; the purchaser has not disclosed where she obtained her loan; the Instrument was only executed on 19 April 2005 and consent obtained on 23 May 2005; that not enough time was given to the defendants to refinance and that there is no binding agreement between the purchaser and the plaintiff in the absence of a sale and purchase agreement.

The plaintiff’s affidavit sworn by Vinod Shankar on 11 July 2005 states that Vulawalu (the purchaser) ‘has arranged loan finance for the purchase of the said property and is now ready to complete the sale’; and ‘the settlement is held up as Vulawalu requires vacant possession’.

The defendants allege, inter alia, that the plaintiff has even accepted payment from them under the mortgage after purportedly exercising its power of sale. Counsel could not explain to Court when asked why that was done.

When asked further by the Court, Ms. Fatiaki stated that the transfer document although executed has not been registered as the plaintiff is ‘not ready to complete the sale’.

This is the plaintiff’s application under Order 88 of The High Court Rules 1988 in respect of the said property.

The plaintiff has complied with the provisions of Order 88.

A number of issues have been raised by the defendants as stated hereabove, and as stated by Mr. Chandra, they are triable issues.

The authorities are quite clear as to when a Bank or mortgagee can be restrained from exercising its power of sale under the mortgage. The following passage in Halsbury’s Laws of England 4th Ed. Vol 32 para. 725 is apt:

“The mortgagee will not be restrained from exercising his power of sale because the amount due is in dispute or because the mortgagor has begun a redemption action or because the mortgagor objects to the manner in which the sale is being arranged. He will be restrained however if the mortgagor pays the amount which the mortgagee claims to be due to him” (emphasis added).

Again, as can be seen from the following passage from the judgment in Matthie v Edwards 73 ER 776 at 779 that the defendants as mortgagors have vested the plaintiff with wide powers under the mortgage document, however the Court will under certain circumstances interfere upon deposit of what is owing into Court:

‘Now those powers so given may undoubtedly, be often used for purposes of oppression. They are however, powers which the party having a power of the property thinks proper to confer on the individual from which he borrows the money; it is a bargain; one party parts with his money, and he has to pay himself out of the property upon which it is charged; and it is for the other party, who creates the mortgage, to consider whether he has not given too large a power to the individual with whom he is dealing. But when once it is given, the party advancing his money is perfectly entitled to execute the power which such a contract gives him. However if the power is sought to be exercised for exorbitant purposes, without a due regard to the interest of the parties concerned, this Court will interfere under certain circumstances, and like other pledges, if the individual comes and deposits the money, the Court will, under certain circumstances prevent a party from exercising that power arbitrarily, but not without the actual deposit of the sum which the other party is entitled to.

Now it is quite clear, that the interest of society (and more particularly financing institutions) require, and the justice of such a case requires that those powers, when they do not come within the (above) principles on which the Court has acted, should not be interfered with; it is merely a power which the individual has given.’ (emphasis mine).

I have considered the law as to the mortgagee’s right to possession but at the same time the defendants’ arguments cannot be ignored.

In the case before me although the transfer document has been executed by the purchaser before even the alleged loan has been arranged it has not been registered because the purchaser was not in a position to settle. Even the consent to sell was not obtained until some time after the execution of the document.

But for some of the alleged triable issues raised by the defendants the Court will not interfere with the mortgagee’s rights to possession unless the mortgagors pay the amount due into Court (Barwick CJ in Inglis & Another v Commonwealth Trading Bank of Australia 126 C.L.R. 161 at 168; vide also Joe Colati v Fiji Development Bank (HBC0060.1998 – Scott J) and Daulat v J. Santaram (Stores) Limited (HBC0455.1997), Votualailai Ltd v FNPF (unreported) HBC0272.1998 – Sadal J). On this aspect I should refer to the statement of Byrne J in NBF Asset Management Bank v Donald Pickering and Ellen Pickering (HBC0170.1999) at page 2 where he said:

“In Action No. HBC0097 of NBF Assets Management Bank v Bulivakarua in my unreported judgment of the 30th November 1999 I stated at page 2 that it was surprising that actions by Mortgagees against defaulting Mortgagors were frequently before the Courts in Fiji because of the fact that the law governing them is well settled. That law put simply is that failing payment into the Court of the amount sworn by the Mortgagee, no restraint should be placed on the exercise of the Mortgagee’s powers of sale under the Mortgage.”

I conclude with the remarks of Barwick C.J. in his judgment in Inglis (supra) at 169 when he said:

“The case falls fairly, in my opinion within the general rule applicable when it is sought to restrain the exercise by a mortgagee of his rights under the mortgage instrument. Failing payment into court of the amount sworn by the mortgagee as due and owing under the mortgage, no restraint should be placed by order upon the exercise of the respondent mortgagee’s right under the mortgage”.

Order

In the outcome bearing in mind the law as to mortgagee’s right to possession and the provisions of Order 88 of The High Court Rules and also taking into consideration the various issues raised by the defendants pertaining to the alleged sale of the property, the said order of 29 April 2005 for vacant possession of the property described in item I of the Originating Summons is ordered to be set aside subject to the deposit of the full amount due under the security document in question into Court within 28 days for failure to do so will mean that the order for vacant possession will stand It is further ordered that the defendants, their servants, agents or employees be restrained from in any way damaging removing or interfering with the improvement in the said property so as to diminish its value. I award costs against the defendants in the sum of $400.00 to be paid to the plaintiff within 28 days. Liberty is reserved to parties to apply generally.

D. Pathik
Judge

At Suva
24 August 2005