Nand v Prasad [2005] FJHC 483; HBC0133R.2005S (14 September 2005)

IN THE HIGH COURT OF FIJI
AT SUVA
CIVIL JURISDICTION

CIVIL ACTION NO. HBC0133 OF 2005

Between:

VIJAY NAND & ANJULA NAND
Plaintiffs

- and -

CHANDRIKA PRASAD
Defendant

Counsel: Mr. V. Kapadia for the Plaintiffs
Mr. N. Shivam for the Defendants

Date of Hearing: 14th September, 2005
Date of Ruling: 14th September, 2005

RULING

This case illustrates the difficulties and dangers that may arise when one firm of solicitors acts for the vendors and the purchasers in the sale of land.

On 1st of April 2005 Justice Pathik made an order that “Caveat No. 556183 lodged by the plaintiffs on Lot 15 on Section 7 Samabula contained in Crown Lease No. 848 be extended until further order of this Honourable Court”. That order was made ex-parte upon the application of the plaintiffs and the matter was adjourned to the 29th of April for mention in Chambers. Today the defendants make application to rescind the order extending the caveat.

The sale and purchase agreement is dated 28th September 2004. By paragraph 3.1 date of settlement was to be within 30 days of the execution of the agreement and time was made of the essence by paragraph 12. Paragraph 13 set out the conditions concerning “Purchasers’ Default“.

The purchasers required a loan to buy this land. Lands Department consent was endorsed on 7th October 2004 for the transfer of the property.

The plaintiffs say that the defendants knew that an engineer’s report on the property was required for the purposes of application to the Colonial Bank for a loan. They contend that as a result of the defendant’s action the engineer, despite many visits, was unable to gain access to the property until the 8th of November.

After receiving the engineer’s report and a valuation report the Colonial Bank approved the loan and on 7th December instructions were given for the mortgage and other security documents for the bank to be prepared.

On the very same day, 7th December, the joint solicitors wrote to the plaintiffs saying that the agreement had expired, settlement could not take place and the agreement was cancelled. No fourteen day notice of default as required by Clause 13 of the Agreement was given.

The plaintiffs say that on the 9th of December they executed a caveat in respect of the property and that was lodged for registration on the 16th of December. Another three months passed, namely to the 7th of March, before the defendant served notice for the removal of the caveat.

The plaintiffs therefore say that the caveat should remain until the conclusion of the proceedings. It was the defendant’s fault that the agreement could not be completed in time, no notice of intention to cancel was given to them and the firm of solicitors should not have suddenly and unilaterally started acting for one party in these matters. Further, they should have given notice to the plaintiffs advising them to find other solicitors and given a reasonable time for that and any consultation and further action.

The plaintiffs say that the reality of the situation is that the defendants had received a better offer for the premises and were seeking to avoid their binding agreement with the plaintiffs.

The defendant seeks removal of the caveat. He says it was entirely upto the plaintiffs to make their arrangements for a loan within the time scales provided by the agreement. The plaintiffs were aware of the fact the defendant would be leaving the country and did not arrange for their engineer’s survey to be completed within that time. He says there is no specific notice requirement in paragraph 13 of the agreement. He further relies on the fact that notice cancelling the agreement came more than a month after the deadline set in the agreement. The defendant further points to paragraph 9 of the plaintiffs’ affidavit filed on the 30th of March 2005 in which it is stated the defendant told the plaintiff in late November that he was not interested in selling the property and had found someone who was interested in purchasing it at a higher price. This assertion, however, was denied in paragraph 7 of their defence.

This was an interim injunction made ex-parte and it is for the plaintiffs to show that it should be continued. I must also look to the principles laid down in American Cyanamid v. Ethicon Limited [1975] UKHL 1; [1975] 1 ALL E.R. 504.

I will order that the caveat remains in place until further order of this Court. There is a dispute as to whether the delay in obtaining the engineer’s report was as a result of the defendant’s actions or the plaintiffs’ actions. The plaintiffs have a good arguable case in this regard. If they do then they certainly have an interest which can be protected by caveat, namely the specific performance of this contract. Further, they have a good arguable case as far as the circumstances in which the sale and purchase agreement was purportedly cancelled. In particular, in relation to Clause 13 of the agreement, there is the argument as to whether a notice should have been served first and whether the law firm acting purportedly on behalf of both parties could then act on behalf of the defendant to the detriment of the plaintiffs. It is also pertinent to note that the defendant waited over a month before taking action to attempt to annul the agreement and was slow in seeking to have the caveat removed.

When the sale and purchase of land goes without problem then it is easier and less expensive for one firm of solicitors to act for vendor and purchaser. However, if problems arise then each party will be looking to the same lawyer to look after their interests. This is an impossible circumstance. The solicitor cannot act for both and may well not be able to act for either. The least that is required is that notice of ceasing to act be served, strong advice to obtain another solicitor is given and time is allowed for this to be done.

In this case it would appear the joint solicitor without any warning suddenly started acting for the defendant. This raises issues between the plaintiffs and the solicitors. It does not, in itself, affect the Ruling I make on this application.

I must also look to the balance of convenience. For the defendant the difference between success and loss in this action would appear to be the greater purchase price which they might well have obtained from another purchaser.

As far as the plaintiffs are concerned they will have lost the house they sought to purchase and the reality is that to get another similar one then a higher price will have to be paid. I am told also that they are particularly interested in this house.

I find the balance of convenience lies in favour of the plaintiffs. The plaintiffs seek this particular property, the defendants concern is measurable in cash.

Accordingly I make the following orders:

1. The Order of Mr. Justice Pathik of the 1st of April 2005 is to continue until further Order of this court.
   

2. Discovery is to be completed by 3.00 p.m. on the 28th of September.

3. Minutes of the pre-trial conference and an agreed trial bundle of documents are to be filed by 3.00 p.m. on the 30th of October.
   

4. The hearing will take place on the 24th November at 10.00 a.m.

5. Costs are reserved.

6. Parties are at liberty to raise any unresolved matter by letter to the court, copy to the other party, for early mention date.
   

Dated 14th day of September, 2005.

(R.J. Coventry)
JUDGE