Singh v Housing Authority [2005] FJHC 35; HBC0033.2005 (24 February 2005)

IN THE HIGH COURT OF FIJI
AT SUVA
CIVIL JURISDICTION

CIVIL ACTION NO.: HBC0033 OF 2005

BETWEEN:

MOHAN DUTT SINGH & SANIL DUTT SINGH
Plaintiff

AND:

HOUSING AUTHORITY
Defendant

Counsel: Mr. Raman Singh – for Plaintiff
Mr. Vijay Maharaj – for Defendant

Date of Hearing: 17th February, 2005
Date of Judgment: 24th February, 2005

JUDGMENT

Background

The plaintiffs are of the registered proprietors of land described in Certificate of Title No. 31292 known as “Davulevu” and “Na Calia” on Lot 008 DP 7877 having an area of 421 some square meters. The property is owned between them as tenants in common. The purchase was financed by the brothers taking a loan from the defendant Housing Authority secured by mortgage No. 495175. The loan advance was approximately $12,000.00. The monthly repayments were $130.00. For various reasons these instalments could not be made and the mortgage account fell into arrears.

The first demand notice was made to the plaintiffs on the 24th of October 2001. In response the mortgage was restructured with loan arrangements being rescheduled for payments at the sum of $40.00 per week for a period of 109 months.

The plaintiffs struggled on with these repayments but defaulted again. They were sent a final warning letter on the 4th of December 2002 as a result of which they re-negotiated the loan again and increased payments to $60.00 per month.

Regrettably they fell into default again and a further notice was sent to them on the 18th of September 2003. This document marked as Exhibit 8 in the agreement bundle of documents demands repayment of the entire loan then outstanding at $12,315.61 noting that there were arrears of $2,396.31.

Again the plaintiffs visited the defendant Housing Authority in an attempt to stave off a mortgagee sale. They were requested to pay the sum of $1,360.00 being half of the arrears then owning and the balance at $55.00 per week. The plaintiffs were unable to honour this agreement. The defendant decided to proceed with its mortgagee sale; sold the property and served the plaintiffs a notice to quit the residence. That notice was dated the 18th of November 2004. After taking legal advice these proceedings were commenced.

The Statement of Claim

The claim details the general background to this matter and then pleads, indirectly, that as the plaintiffs had continued with their payments under a negotiation to forestall the mortgagee sale that the original notices to quit were invalid and illegal and contrary to the Consumer Credit Act 1999. It was submitted that the defendant hadn’t been given an opportunity by the plaintiff to pay the amount due in its notice to quit dated the 18th of November 2004 (document 12 in the agreed bundle of documents). The defendant largely concedes the factual background to the matter but pleads that the plaintiff were always aware of the consequences of non-payment of outstanding amounts under the mortgage loan, denies any breach of the Consumer Credit Act 1999 as pleaded and says that the mortgagee sale was valid.

This trial progressed under my case management system with evidence being tendered in written brief, simple supplementary questions being asked and witnesses then being tendered for cross-examination and re-examination if necessary.

In his brief (by inference) and certainly under cross-examination the plaintiff was led to the position of conceding that for a large part of the loan history the mortgage repayments to the defendant were in default.

The plaintiffs conceded that at all material times they had not kept to any arrangements made for re-payment. Mr. Singh further conceded that he was aware that if he didn’t keep to the arrangements then the property could be sold.

He accepted that he received documents 3,4,6,8 and 9. When told of their contents he was able to identify them. He agreed concerning the stated arrears in each of those documents.

Although he can’t read he did understand the contents of the documents as his wife, a woman educated in high school to Form 5, could read and she would tell him what the notices contained.

The plaintiffs' case rested after only calling Mohan Dutt Singh.

Defence

The defence elected to call an officer of the defendant Authority. She confirmed the loan background, history of demands and mortgagee sale of the property.

Decision

The loan history is accepted as detailed. The demand history set out in documents 3,4,6,8 and 9 with the accompanying re-arrangements for re-payment and defaults is accepted.

I find as a fact that this is a loan that limped on from inception with the plaintiff borrower frequently falling behind in repayments to the defendant Housing Authority, making re-arrangements and then lapsing into default again.

I find as a matter of fact that the notices specified in 3,4,6,8,9 and finally 12 were all received and understood by the plaintiffs. The demand notices (3,4,8) all follow the same format and of importance read as follows:

”Your account has been in arrears for some time. You are now required to pay the amount shown below (“Payment Required”), plus $10.00 costs, within 30 days of the service of this notice.

If payment in full is not received, the Housing Authority will take action to terminate your Interest over the property without further notice to you. (Partial payments will be received without prejudice). In the event you will be required to quit the property and give vacant possession. If necessary the Authority will enforce its rights of re-entry or forfeiture by legal action.”

The notices are unequivocal. They make it quite clear that partial payments are to be received without prejudice. They make it clear that if payment is not received then the defendant will take action to terminate the mortgagor’s interest in the property, force the mortgagor to quit and deliver vacant possession.

Plaintiff’s counsel skilfully argued that the provisions of Section 80 of the Consumer Credit Act 1999 provide that a mortgagee cannot take action under its nominated mortgage unless it has given the defaulting mortgagor 30 days notice to remedy any default. The words of the section are that the mortgagee cannot “begin” enforcement proceedings unless that notice is given.

Counsel submitted that all of these notices were invalidated by the subsequent arrangements made by the defendant Housing Authority to compromise their position and accept partial payment of the moneys owed. I disagree with that submission for 3 reasons:

1. The demand notices themselves make it clear that receipt of partial payments after delivery of the notice are received by the mortgagee without prejudice to its rights to take terminating or enforcement action. That is logical as the lender will often want to monitor a defaulting mortgagor’s promises to remedy any default. In the meantime it would naturally seek to preserve its position on forced sale to clear the debt.
   
2. The provisions of Section 80 of the Consumer Credit Act 1999 must be read subject to the provisions of Section 81(2).
   

That section makes it clear that having received a default notice if re-arrangements for repayment of the loan are not honoured then the mortgagee is nonetheless entitled to take enforcement proceedings.

3. Finally, the words of Section 80 require only one notice in my view before the mortgagee is entitled to “begin” enforcement proceedings.
   

Applying these findings of fact and law I have decided that each of the notices given to these plaintiffs were without prejudice to any subsequent receipt of partial payment. Receipt of any payment did not affect the mortgagee’s rights of enforcement by its powers of mortgagee sale.

I find that section 80 of the Consumer Credit Act 1999 only requires that one notice be served providing the defaulting mortgagor with 30 days within which to remedy his default by the repayment of outstanding arrears. At the expiration of that period the mortgagee may ‘begin’ enforcement proceedings. A mortgagee is not required to serve subsequent notices if the mortgagor defaults in any compromise arrangement for repayment made after the notice and at the ‘beginning’ of the enforcement process.

This is fortified by the provisions of Section 81(2) of the Consumer Credit Act 1999. This section makes it clear that if there is default by the mortgagor in any compromise made to stave off enforcement the mortgagee can without further notice proceed to take advantage of all its available remedies.

The plaintiff mortgagors could not manage the loan repayments. They were properly warned of their default in notices. The notice period expired without remedy of the default. Compromise arrangements were never honoured. The defendant Authority was always entitled to collect its loan by mortgagee sale without any further notice to the plaintiffs. The final notice to quit (document 12) was not required to provide a further redemption period.

Conclusion

For these reasons I find for the defendant in the proceedings. I order costs against the plaintiffs in the sum of $1,000.00. I order the plaintiffs to vacate the subject property described in Certificate of Title No. 31292 no later than the 18th day of March 2005. I discharge the defendant from its undertaking not to proceed with mortgagee sale or enforce an eviction of the plaintiff.

Gerard Winter
JUDGE

At Suva
24th February, 2005