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High Court of Fiji |
IN THE HIGH COURT OF FIJI
AT SUVA
CIVIL JURISDICTION
Civil Action No. 310 of 2008
IN THE MATTER of Mortgage No. 231708 given by BODH MATI (Deceased) of 14 Ambler Place, Howell Road, Suva, in favour of
BHAGAT RAM (Deceased) over the property being Certificate of Title No. 10483
BETWEEN:
CHANDRA WATI (f/n Shiu Pal), of Senic Drive Apartment 139 Modesto, CA, USA, Nurse, as Executrix and Trustee of the Estate of Bhagat Ram
PLAINTIFF
AND:
JAMES PILLAY (f/n Kotlingam Pillay) of Howell Road, Suva (occupation unknown to the Plaintiff)
DEFENDANT
Appearances:
Mr M. Nand for Plaintiff
Mr D. Prasad for Defendant
Date of Hearing: 31 March 2009
Date of Judgment: 7 April 2009
JUDGMENT
Order 88, High Court Rules 1988; Dispute as to loan secured by Mortgage; Mortgagor & Mortgagee deceased; Plaintiff is Executrix and Trustee of the Estate of Mortgagee; Plaintiff registers as Mortgagee by Transmission by Death; Plaintiff issues Notice of Demand for repayment, to Administrator of Mortgagor’s Estate; Loan remains outstanding; Defendant in Occupation of land subject of Mortgage; Defendant not Mortgagor; Defendant not Administrator of Mortgagor’s Estate; Plaintiff issues Notice for Vacant Possession to Defendant; Defendant remains in possession; Plaintiff issues action under Order 88; Requirements of Order 88; Action against non-Mortgagor under Order 88; Misprint re Order 88, r. 2(6) & (7), and Order 88, r. 3; Consumer Credit Act 1999 and Order 88; Consumer Credit Act 1999 not retrospective; Prudent credit providers will comply retrospectively with Consumer Credit Act 1999 provisions; Law reform – need for modification of Order 88?
Asset Management Bank v. Suliana [2002] FJHC 207; HBC0093j.2000s (8 February 2002)
Australian and New Zealand Banking Group Ltd v. Kumar [2003] FJHC 326; HBC0307.2002 (1 January 2003)
Colonial Mutual Life Assurance Society Ltd v. Kumar [1998] FJHC 2; Hbc0072j.1997s (16 January 1998)
Fiji Development Bank v. Duvuloco [2002] FJHC 243; HBC04509j.2001s (8 February 2002)
Fiji Development Bank v. Endeavour Youth Investment Cooperative Society Ltd [2000] FJHC 63; HBC0337J.99S (5 May 2000)
Home Finance Company Ltd v. Sahib [2005] FJHC 604; HBC0233.2002 (18 August 2005)
Hussein v. National Bank of Fiji [2001] FJCA 21; ABU0066.98 (22 November 2001)
NBF Asset Management Bank v. Low [2000] FJHC 48; Hbc0477j.1999s (27 March 2000)
NBF Asset Management Bank v. Niumataiwalu [2000] FJHC 205; HBC0427J.98S (24 January 2000)
NBF Asset Management Bank v. Radike [2004] FJHC 531; HBC039J.2001S (11 March 2004)
NBF Asset Management Bank v. Sharma [1999] FJHC 159; HBC0132J.1999 (2 September 1999)
Nagaiya v. Australian and New Zealand Banking Group Ltd [2001] FJCA 4; Abu0058d.2000s (4 May 2001)
National Bank of Fiji v. Hussein [1995] FJHC 29; Hbc0331j.94s (9 February 1995)
National Bank of Fiji v. Hussein [1998] FJHC 193; Hbc0331.94s (13 July 1998)
Singh v. Housing Authority [2005] FJHC 739; HBC0645.1998 (17 May 2005)
Turnbull v. Foreman [1885] 13 QBDF 234 was cited:
1. Background & Dispute
This is one of a number of actions between the same or associated parties, relating to the Estates of Bhagat Ram and Bodh Mati: Action No. 243 of 2007 (Hari Pal v. Vijay Chand – struck out); Action No. 310 of 2007 (Chandra Wati v. James Pillay – the present action); Action No. 548 of 2007 (Chandra Wati v. James Pillay with an order for joinder of Hari Pal).
1.1 The Plaintiff, Chandra Wati is sister to Mr Hari Pal. James Pillay, the Defendant, occupies the property the subject of the dispute, and the residence of Bodh Mati and Bhagat Ram in the past. It seems the various legal actions have been instituted because as beneficiaries Mr Pal and Ms Wati appear unable to agree. Both Ms Wati and Mr Pal are resident in the State of California, in the United States (US). Their proximity in that country has not, apparently, enabled resolution, whilst appearing in itself perhaps to have created some delays in communication with their legal representatives in Fiji.
1.2 It is as well at this early stage to set out the names of those involved in the various disputes (whether in person or through their estates):
1.3 In the instant matter, Ms Wati says that prior to their deaths, Bhagat Ram (Mr Ram) – understood to be a medical practitioner and Ms Wati’s (then) husband - lent the sum of $8,000.00 to Bodh Mati (Ms Mati). That sum is said to have been secured by mortgage executed on 11 December 1985 over the property described in Certificate of Title No. 10483, Lot 26 on DP No. 2577, Suva, Vitilevu, having an area of 32.4 perches. The Certificate of Title shows a Mortgage registered on 23 December 1985, No. 231708, to Bhagat Ram: Annexure ‘V2’, Affidavit in Support by Vijay Chand, filed 12 September 2008 (Affidavit in Support)
1.5 Ms Wati says that that sum was not repaid and hence the amount due is $8,000.00. As Administrator of Mr Bhagat Ram’s Estate, she claims that sum as Mortgagee. On 14 September 2007, she registered ‘Transmission by Death’ on the Mortgage.
1.6 It appears that two ‘Demand Notices’ were issued. One appears as an Annexure to the Affidavit in Support, whilst the other appears as an Annexure to the Affidavit in Response, filed 19 February 2009 (Affidavit in Response), as follows:
First Demand Notice
On 6 July 2007, a ‘Demand Notice’ was issued for and on behalf of Ms Wati ‘as Mortgagee’, to Mr Pal as the appointed Administrator and Executor of the Estate of Bodh Mati: Annexure ‘B’ to the Affidavit in Response It stated that Mr Pal was thereby ‘required to pay forthwith to [Ms Wati’s Solicitors] for [Ms Wati] the Executrix and Trustee of the Estate of Bhagat Ram ... the Mortgagee, the principal sum due and owing by late Bodh Mati (f/n Sahadeo) late of 14 Ambler Place, Howell Road, Suva Domestic Duties by virtue of the ... Mortgage executed on the 11th December, 1985,
Amount Due $8,000.00
That Notice of Demand (first Demand Notice) further provided a period of 30 days in which the monies should be paid, in default of which ‘the power of sale and all other rights, powers and remedies conferred on the mortgagee in such case and by law will thereupon be exercisable without further notice to you’. Any monies paid in partial payment would be received ‘without prejudice to this notice and the receipt of any such money shall not be construed as a withdrawal or waiver thereof’.
Second Demand Notice
On 31 July 2008, a ‘Demand Notice’ was issued for and on behalf of Ms Wati as Mortgagee, to Mr Pal as the appointed Administrator and Executor of Bodh Mati’s Estate: Annexure ‘V4’, Affidavit in Support It stated that Mr Pal was thereby required to pay ‘forthwith’ to Ms Wati’s Solicitors ‘the principal sum due and owing by late Bodh Mati (f/n Sahadeo) late of 14 Ambler Place, Howell Road, Suva Domestic Duties by virtue of the ... Mortgage executed on the 11th December 1985’,
Amount Due $8,000 .00
That Notice of Demand (second Demand Notice) further provided a period of 7 days in which the monies should be paid, in default of which ‘the power of sale and all other rights, powers and remedies conferred on the Mortgagee in such case and pursuant to the provisions in the said mortgage and by law will thereupon be exercisable without further notice to you’. Any monies paid in partial payment would be received ‘without prejudice to this notice and the receipt of any such money shall not be construed as a withdrawal or waiver thereof’.
1.7 Neither the first Demand Notice (on its face) nor the second Demand Notice (similarly on its face) indicates it was further addressed or a copy sent or provided to Mr Pillay. Mr Pillay states that he ‘was never served with a demand notice of the sum of $8,000.00 regarding the mortgage of the property, which Chandra Wati Ram is claiming from Hari Pal’: Affidavit in Response, at para 10 Mr Pillay then provides ‘a copy of the demand notice’ being the first Demand Notice. That Demand Notice shows, at the bottom in handwriting the words ‘Sign’ followed by a signature and (again in handwriting) ‘9/7/07’ and immediately below ‘Sign’ the word ‘Name’ and next to it in hand-printing ‘James Pillay’: Annexure ‘B’, Affidavit in Response
1.8 As to the second Demand Notice, it bears an endorsement in initials with the date ’04.08.08’.
1.9 For Ms Wati it is said that a copy of the Demand Notice (the second Demand Notice) was provided to Mr Pillay, with reference to Annexure ‘V5’, Affidavit in Support, para 4 Further, Mr Pillay is said to have received it. In this regard, the second Notice appears as the Annexure with both front and back reproduced, as bearing on it the endorsed initials dated 4 August 2008.
1.10 By Affidavit in Reply, filed 25 February 2009 (Affidavit in Reply), the Deponent Mr Chand says in this regard:
... I say that a Demand Notice dated 31st July 2008 was served on the property by a registered Bailiff and [Mr Pillay] acknowledged receipt ...
1.11 Annexure ‘V13’ to the Affidavit in Reply is a further copy of the second Demand Notice, front and back, with the endorsed initials and date 4 August 2008. Together with it a copy document headed Affidavit of Service sworn by on Muni Prasad on 15 August 2008, which notes the attached Demand Notice and states:
Mr Prasad served Mr Pillay personally with ‘a true copy of the Demand Notice dated 31st July, 2008’ at 14 Ambler Place, Howell Road, Suva;
Mr Pillay ‘accepted the ... document and Acknowledged receipt of [it]’ at the time of service.
1.12 Ms Wati says that the Demand Notice did not result in payment of the $8,000.00 sum nor any part thereof. Hence, she says, the Administrator of Bodh Mati’s Estate being in default, powers and remedies under the Mortgage can now be exercised by her as Mortgagee.
1.13 On 14 August 2008, Ms Wati’s Solicitors issued a Notice to Mr Pillay requiring him to ‘deliver vacant possession’ of the property, amongst other matters providing him and his family ‘and any other persons residing on the property’ seven (7) days to vacate: Annexure ‘V5’, Affidavit in Support.
1.14 Mr Pillay has not done so.
1.15 Ms Wati now seeks by the present action to remove Mr Pillay from the property.
2. Order 88 High Court Rules 1988
The present action was commenced by Originating Summons filed on 12 September 2008, under Order 88 of the High Court Rules 1988. Order 88, r. 3 (Affidavit in Support) is required to be complied with strictly: Hussein v. National Bank of Fiji [2001] FJCA 21; ABU0066.98 (22 November 2001).[1]
2.1 Because it has created some problems in the past: National Bank of Fiji v. Hussein [1998] FJHC 193; Hbc0331.94s (13 July 1998), at 1, per Scott, J. it is as well to set Rule 3 out in full:[2]
Action for possession or payment (O. 88, r. 3)
3.- (1) The affidavit in support of the originating summons by which an action to which this rule applies is begun must comply with the following provisions of this rule.
This rule applies to a mortgage action begun by originating summons in which the plaintiff is the mortgagee and claims delivery of possession or payment of moneys secured by the mortgage or both.
(2) The affidavit must exhibit a true copy of the mortgage and the original mortgage or, in the case of a registered charge, the charge certificate must be produced at the hearing of the summons.
(3) Where the plaintiff claims delivery of possession the affidavit must show the circumstances under which the right to possession arises and except where the Court in any case or class otherwise directs, the state of the account between the mortgagor and mortgagee with particulars of –
- (a) the amount of the advance,
- (b) the amount of the period payments required to be made,
- (c) the amount of any interest or instalments in arrear at the date of issue of the originating summons and at the date of the affidavit, and
- (d) the amount remaining due under the mortgage.[3]
(4) Where the plaintiff claims delivery of possession, the affidavit must give particulars of every person who to the best of the plaintiff’s knowledge is in possession of the mortgaged property.
(5) If the mortgage creates a tenancy other than a tenancy at will between the mortgagor and mortgagee, the affidavit must show how and when the tenancy was determined and if by service of notice when the notice was duly served.
(6) Where the plaintiff claims payment of moneys accrued by the mortgage, the affidavit must prove that the money is due and payable and give the particulars mentioned in paragraph (3).
(7) Where the plaintiff’s claim includes the claim for interest to judgment, the affidavit must state the amount of a day’s interest.
3. Matters in Issue
The matters in dispute between the parties are, it appears:
3. Order 88, Rules 2, 3 & Generally
Counsel for the parties provided comprehensive Written Submissions, together with oral submissions at the hearing. These have been of not inconsiderable assistance, as was the cooperation of Counsel in responding to questions arising from the submissions and various aspects of the matter.
3.1 (a) Order 88 – General: If the requirements of Order 88 have been followed, then unless there is some other impediment to Ms Wati’s obtaining possession, she is entitled so to do. This means Mr Pillay is required to vacate, together with this family or families – that is, any persons in occupation by reason of his being the occupier of the property:
Provided Order 88 has been complied with, the mortgagee has unquestionable rights to possession. This is also so in third party mortgages where the mortgagor has no direct dealings with the bank’s actual customer: NBF Asset Management Bank v. Sharma [1999] FJHC 159; HBC0132.J.1999 (2 September 1999), at 3, per Shameem, J., citing National Bank of Fiji v. Hussein [1995] FJHC 29; Hbc0331j.94s (9 February 1995); and see also, for example, Asset Management Bank v. Suliana [2002] FJHC 207; HBC0093j.2000s (8 February 2002, at 2, 4, per Pathik, J.; Colonial Mutual Life Assurance Society Ltd v. Kumar [1998] FJHC 2; Hbc0072j.1997s (16 January 1998), at 3, 4-5, per Pathik, J.; NBF Asset Management Bank v. Radike [2004] FJHC 531; HBC039J.2001S (11 March 2004), per Jitoko, J.; National Bank of Fiji v. Hussein [1998] FJHC 193; Hbc0331.94s (13 July 1998), at 3-4, per Scott, J.; Nagaiya v. Australia and New Zealand Banking Group Ltd [2001] FJCA 4; Abu0058d.200s (4 May 2001), per Shameem, J.
3.2 As was said by His Lordship Justice Pathik in Australia and New Zealand Banking Group Ltd v. Bulewa [2004] FJHC 280; HBC0233j.2002s (10 March 2004), in an application under Order 88 a Plaintiff must ‘comply with certain requirements as stated in that Order particular Or 88 rules 2, 3(2), 3, 4, 5, 6 & 7’:[4] at 3 (Emphasis in original)
3.3 (b) Order 88, Rule 2 – Service of Originating Summons, etc: The Originating Summons was served on Mr Pillay and Mr Pillay signed the Acknowledgement of Service, signed and dated 30 September 2008. The Acknowledgement of Service appears on the Court File.
3.4 An Affidavit of Service appears on the Court File attesting that the party serving Mr Pillay did so on 4 November 2008 at 14 Ambler Place, Howell Road, Suva and the Notice of Appointment to Hear Originating Summons was so served and accepted by Mr Pillay. At that time, the date fixed for hearing was Wednesday 19 November 2008. Hence, Rule 3(2) was complied with as to the requirement for notice ‘not less than 4 clear days before the date fixed for hearing’.
3.5 On 19 November 2008, the parties appeared by Counsel and certain Orders were made including the matters’ being set for hearing on 4 February 2009. On each occasion thereafter the parties were represented by Counsel up to and including the hearing date of 31 March 2009. Further, in compliance with the Rule the Affidavit in Reply to the Affidavit in Response of the Defendant was filed and served upon Mr Pillay’s Solicitors, in accordance with Orders of the Court. It was filed on 25 February 2009 hence complying with the Rule’s requirement of ‘no less than 2 clear days before the day fixed for hearing’.
3.6 (c) Order 88, Rule 3(2) – Copy of Mortgage: The Affidavit in Support must exhibit a true copy of the Mortgage and at the hearing the original mortgage or, in the case of a registered charge, the charge certificate must be produced. As to the first aspect of this requirement, the Affidavit in Support carries as Annexure ‘V2’ a copy of the Certificate of Title of the property with appearing there on ‘Mortgage’ – No. 231708 registered on 23 December 1985, the Mortgagee being Bhagat Ram, and secondly as Annexure ‘V3’ a copy of a Mortgage over the property made between Bodh Mati as Mortgagor and Bhagat Ram as Mortgagee, in respect of a loan of $8,000.00 – that Mortgage is stamped ‘Provisional’ and carries the stamp of the Registrar of Titles, Fiji in respect of Mortgage No. 231708 registered on 23 December 1985.
3.7 As to the second – production of the original Mortgage at trial - the ‘original Mortgage’ being held by the Registrar of Land Titles (as will be so in all Order 88 applications) there is an obvious difficulty in so doing. In Australia and New Zealand Banking Group Ltd v. Kumar [2003] FJHC 326; HBC0307.2002 (1 January 2003) His Lordship Justice Singh addressed the ‘original Mortgage’ question:
The first preliminary issue raised by [Counsel for the Defendants] was that the original mortgage was not produced to the court. The usual practice in Order 88 applications is to annex a true copy of the mortgage and to produce the duplicate of the registered mortgage on hearing. The original is always kept at the titles Office and if [Counsel]’s submission were correct the Registrar of Titles would need to be subpoenaed on each occasion to produce the mortgage. [Counsel]’s query is answered by Cross on Evidence, 2nd New Zealand edition at page 571, where it states –
There are certain private documents which must be filed in a Court or other public office and when they are thus filed, the copy issued by the Court or other office may be treated as the original. Thus the second executed copy of a Memorandum of Mortgage registered under the Land Transfer Act 1952 is an original.
The mortgage produced in court was the second executed copy of the registered mortgage: at 1-2
3.8 In the present case, at the hearing Counsel handed up a copy of the Mortgage with the original stamp ‘Provisional’ appearing on it. It appears to me that this must be taken as satisfying Order 88, Rule 3(2). The Mortgage having been entered into in 1985, and both parties being deceased, it appears that the original copy of the Mortgage is unable to be located. Hence, Ms Wati has done what she can to fulfill the requirements of Rule 3(2).
3.9 In passing, clarification of the wording of this paragraph may assist together with its being written to encompass the reality that the ‘original Mortgage’ will not be able to be produced – viz Singh, J. in Australia and New Zealand Banking Group Ltd v. Kumar [2003] FJHC 326; HBC0307.2002 (1 January 2003). The paragraph could acknowledge this by requiring production of the second executed copy of the Mortgage rather than ‘the original’. Further, the wording would better convey what is meant if, rather than:
(2) The affidavit must exhibit a true copy of the mortgage and the original mortgage or, in the case of a registered charge, the charge certificate must be produced at the hearing of the summons –
it were to read:
(2) The affidavit must exhibit a true copy of the mortgage and at the hearing of the summons the second executed copy of the mortgage or, in the case of a registered charge, the charge certificate, must be produced.
3.10 (d) Order 88, Rule 3(3) – Right to Possession & State of Account: Ms Wati is required to show ‘the circumstances under which the right to possession arises’ together with ‘the state of the account’, including stipulated particulars.
3.11 This the Affidavit in Support does through stating:
3.12 Further, as to the particulars of account, these appear as:
THE AMOUNT OF ADVANCE
(a) $8,000.00 advanced to [Bohd Mati] on or about 11th December 1985.
(b) The monthly installment payment was $300.00.
(c) The repayment arrears and the amount remaining due under the said Mortgage as at 30th June 2008 was $8,000.00: Affidavit in Support, para 7
3.13 (e) Order 88, Rule 3(4) – Persons in Possession: As to ‘particulars of every person who to the best of the plaintiff’s knowledge is in possession of the mortgaged property’, the Affidavit in Support states that Mr Pillay is in occupation and refusing to give vacant possession. The Affidavit in Support further commences with the statement that the matters deposited to are within the Deponent’s ‘own personal knowledge save and except where stated to be on information and belief and wherein stated’ the Deponent ‘verily believe[s] the same to be true’: Affidavit in Support, paras 2, 3, 4, 16
3.14 The Originating Summons seeks delivery by Mr Pillay ‘and or his families’ to Ms Wati of vacant possession. The Affidavit in support does not provide any particulars of ‘his families’. However, Mr Pillay does not challenge Ms Wati as to this aspect and, as noted, the requirement is as to particulars ‘to the best of the plaintiff’s knowledge’. It appears to me that this is met by what is said in the Affidavit in Support.
3.15 (f) Order 88, Rule 3(5) – Tenancy other than Tenancy at Will: This provision appears to have no application and no issue is raised in respect of it by Mr Pillay.
3.16 (g) Order 88, Rule 3(6) – Claim of Payment of Moneys: This requirement is satisfied by the Affidavit in Support’s recitation of the sum lent, sum of installment payment, and that the full sum of $8,000.00 remains owing: Affidavit in Support, para 7
3.17 (h) Order 88, Rule 3(7) – Claim for Interest: There is no claim for interest. The Mortgage is amended to exclude interest by, for example, scoring through references to interest in the paragraph headed ‘SECONDLY’ (p. 2) and scoring through the entire paragraph headed, originally, ‘FOURTHLY’, as well as scoring through ‘interest’ in the paragraph immediately preceding the signatories, p. 3: Affidavit in Support, Annexure ‘V3’, pp. 2, 3
4. Order 88 – Ms Wati’s Standing & Accounting for Rents
Mr Pillay says Ms Wati has no locus standii and also refers to payment of rents as discharging the Mortgage debt of $8,000.00 or at least part thereof. He calls for an accounting by Ms Wati of rents received in answer to the contention that the Mortgage is in default.
4.1 (a) Ms Wati’s Standing: Order 88, Rule 1 says the Order applies to any action:
... by a mortgagee or mortgagor or by any person having the right to foreclose ... any mortgage ... (Emphasis added)
4.2 This applies to actions by writ or originating summons, where there is a claim for relief including:
(d) delivery of possession (whether before or after foreclosure or without foreclosure) to the mortgagee by the mortgagor or by any other person who is or is alleged to be in possession of the property ... (Emphasis added)
4.3 At the date of the first Demand Notice – 6 July 2007 - Bhagat Ram was alive. The Affidavit in Support indicates that he died on 10 July 2007: para 8 Hence, at the issue of the first Demand Notice Ms Wati had no standing to bring an action under Order 88:
4.4 On the date of the second Demand Notice – 31 July 2008 – Ms Wati was Executrix and Trustee of the Estate of Bhagat Ram. As at that date, no Transmission by Death had been registered on the Mortgage. Transmission by Death was 14 September 2007. The action under Order 88 was instituted on 12 September 2008.
4.5 Further, the Mortgage provides that Bhagat Ram ‘together with his executors administrators and assigns except where the context requires a different construction is hereinafter more particularly referred to as and included in the term ‘the mortgagee’: Affidavit in Support, Annexure ‘V3’, p. 1
4.6 By reason of all the foregoing, Ms Wati has standing in the present action.
4.7 (b) Accounting for Rents: As to this aspect, the authorities are clear. Order 88 applies without any requirement for Ms Wati to make accounting for rents. She has complied with Order 88 Rule 3(3) as to the particulars required, her position being that the whole of the $8,000.00 remains outstanding and that none of the $300.00 periodic payments was made. The Mortgage states clearly as to the amount of monies lent and the repayment method:
IN CONSIDERATION of the sum of $8,000.00 (EIGHT THOUSAND DOLLARS) this day lent and advanced to the Mortgagor by BHAGAT RAM ... (the receipt of which the Mortgagor doth hereby acknowledge) ... DOTH HEREBY COVENANT
FIRSTLY – That the Mortgagor will repay to the Mortgagee at Suva clear of all deductions the principal sum of $8,000.00 (EIGHT THOUSAND DOLLARS) UPON DEMAND and until demand by equal monthly instalments of $300.00 (THREE HUNDRED DOLLARS) each such installment shall be paid on the last day of each and every month during the term hereof the first such installment being due and payable on the last business day of January, 1986: Affidavit in Support, Annexure ‘V3’, p. 1
4.8 Further, the Mortgage ends with the words:
AND for the better securing to the Mortgagee the repayment in the manner aforesaid of the principal sum the Mortgagor do hereby MORTGAGE to the Mortgagee the land hereinbefore described: Affidavit in Support, Annexure ‘V3’, p. 3
4.9 Authority affirms that a dispute about the amount owing on a Mortgage will not interfere with the operation of Order 88, at least (though it appears not invariably) so long as there is default. In Fiji Development Bank v. Endeavour Youth Investment Cooperative Society Ltd [2000] FJHC 63; HBC0337J.99S (5 May 2000), for example, the Fiji Development Bank (FDB) said Endeavour Youth Investment Cooperative Society Ltd (Endeavour Youth) had ‘defaulted in its payments and [FDB] issued a Demand Notice [later] advertising the property for sale]’. However, Endeavour Youth said:
... they have paid the full amount due to [FDB], that the Demand Notices were wrongly issued, that they disagree with the accounts of the loan account provided by the bank, that the Minister for Cooperatives had not consented to the 11% interest rate charged by the Bank, and that [FDB] should provide full and detailed accounts to the court: at 3, per Shameem, J.
4.10 In an Affidavit from one of the Second Defendants, Iliesa Duvuloco and Kelera Duvuloco, who as associated of Endeavour Youth had moved in to occupy the property, it was said that he ‘disputes the accounts and ... made a payment of $80,000.00 that was not shown in the accounts’: at 2
4.11 Order 88 proceedings were held to be appropriate and the disputes raised by Endeavour Youth and the Duvulocos did not impede its operation. Counsel for FDB said:
... a dispute on the total due was not relevant in an Order 88 application for vacant possession, unless the power of sale and re-entry was not exercisable because there was no default at all. Counsel for [Endeavour Youth] said [they] were not in default at all, that the accounts were inaccurate and that there should be an open court hearing and evidence heard: at 2
4.12 Having pursued all the material before the Court, Her Ladyship Justice Shameem said she was satisfied that Endeavour Youth was in default whatever the rate of interest and whether the $80,000 was taken into account. In any event, Endeavour Youth had not taken steps to challenge the interest charged, nor to ‘provide evidence of lack of default, or to provide any accounts of their own’: at 3
4.13 This differs from the present case in that Mr Pillay has referred extensively in his Affidavit in Response to the rents paid on the property and their receipt by Ms Wati, as well as attaching ‘a copy of receipts of rental payment to [Ms Wati] since 1988-1990’: Affidavit in Response, Annexure ‘A’ However, as earlier noted there is nothing in the Mortgage referring to payment of rents as being payment of or in discharge of the $8,000 loan. The Mortgage speaks for itself and monthly payments of $300.00 are required to discharge the monies lent. There is no evidence before the Court of this.
4.14 In Asset Management Bank v. Sharma [1999] FJHC 159; HBC0132J.1999 (2 September 1999) the right to possession was said by Asset Management Bank to arise ‘because of the default in payment of advances made to the Bank’. The Court went on to observe:
There is of course dispute between the [Sharmas] and the [Asset Management Bank] about the amount due. However, the mortgage itself provides that ‘the Mortgagor will on demand in writing pay to the Mortgagee all moneys (including interest) which it is herein before recited should be included in and secured by this Mortgage such interest to be chargeable at such rate as may from time to time be agreed on between the Mortgagee and the Customer or other parties primarily liable therefore ...: at 4, per Shameem, J.
4.15 The Court held that there was default, that Order 88 had been complied with and Asset Management Bank had a right to vacant possession. That is, the terms of the Mortgage were the focus of the Court’s enquiry as to whether or not there was default.
4.16 In Colonial Mutual Life Assurance Society Ltd v. Kumar [1998] FJHC 2; Hbc0072j.1997s (16 January 1998) the dispute revolved around a contention by the Kumars that payment under the Mortgage was not due as building on the property was incomplete. This was ‘refuted in no uncertain terms’ by Colonial Mutual Life Assurance Society Ltd (CML). The Court held there was no agreement that there would be no repayments until completion of construction work and commencement of receipt of rent by the Kumars:
This was a straight out loan transaction in the amount which CMLA advanced. In fact the [Kumars] made some repayment under it and sought further time to pay but ... were unable to pay. The [Kumars] even commenced living on the property despite the assertion that it was incomplete.
In all the circumstances of this case I consider this to be a proper case for the application of provisions of Or 88 ...: at 5, per Pathik, J.
4.17 Again, the dispute there differs in somewise from that here. However, the nub is the same – the contention that monies have been paid in respect of the monies lent. Further, in Colonial Mutual Life the Court referred to authorities which affirm the nature of a Mortgage and the powers of the Mortgagee (albeit common law is modified by statute),[5] namely Halsbury, vol 32, 4th end, para 672:
Where a legal mortgage has been created and no provision is made for the retention of possession by the mortgagor, the mortgagee is entitled to immediate possession or receipt of the rents and the profits at any time after the execution of the mortgage, and equity does not interfere, notwithstanding that there has been no default on the mortgagor’s part, or that a bill of exchange has been given for the debt, or that considerable time has elapsed, provided that an action for possession is not statute-barred.
4.18 Further in Halsbury, para 675:
Where the right of entry is to arise only on default in payment of the mortgage debt on demand, reasonable time should be allowed for compliance with the demand before the mortgagee enters: Toms v. Wilson [1827] EngR 279; (1863) 4 B&S 455, Ex Ch
4.19 And para 676:
When the mortgagee has a right of entry and allows the mortgagor to remain in possession, he is not bound to give any notice to the mortgagor before entering; and similarly he can bring an action or demand of possession.
4.20 Similarly in Asset Management Bank v. Suliana [2002] FJHC 207; HBC0093j.2000s (8 February 2002) and NBF Asset Management Bank v. Radike [2004] FJHC 531; HBC0391.2001S (11 March 2004) the powers of Mortgagees were referred to in the context of actions under Order 88. In NBF Asset Management Bank v. Radike, for example, His Lordship Justice Jitoko said:
The general principle of law is that a legal mortgagee is the owner of the legal fee simple in the mortgaged property, subject only to the mortgagor’s right to redeem. This means that the mortgagee is entitled to possession quite independent of the default of the mortgagor upon the execution of the mortgage deed, unless provisions are made to the contrary (see Four-Maids Ltd v. Dudley Marshal (Properties) Ltd (1957) Ch 317; Western Bank Ltd v. Schindler (1977) Ch 1; and Williams and Glyn’s Bank Ltd v. Roland [1980] UKHL 4; (1981) AC 487). In a situation where a mortgage is intended to sure a principal sum, and repayments are by installments, the deed usually provides that the mortgagee will not be entitled to possession until default.
The mortgagee’s right to possession as recognised in case law was also fully explored by Fatiaki, J (as he then was) in National Bank of Fiji v. Abdul Kadeer Kuddus Hussein (CA No. 331 of 1994). In addition, section 75 of our own Property Law Act (Cap 130) provides:
75. A mortgagee upon default in payment of the mortgage money or any part thereof, may enter into possession of the mortgaged land by receiving the rents and profits thereof or may distrain upon the occupier or tenant of the said land for the rent then due: at 2
4.21 The Mortgage in the present case provides for default action where payment is not made in accordance with its terms:
SECONDLY, it is hereby agreed and declared that if default shall be made in payment of the said principal ... or any part thereof respectively at the times and in manner herein mentioned or to the observance or performance of any of the covenants herein contained or imposed then the principal sum or so much thereof as shall be unpaid ... and all other moneys payable under or by virtue of this Mortgage shall become due and payable forthwith PROVIDED that all moneys which shall be owing by the Mortgagor to the Mortgagee on whatsoever account and at whatsoever time during the currency of this mortgage shall be deemed to be secured by this mortgage: Affidavit in Support, Annexure ‘V3’, p. 2 (Emphasis added)
4.22 There is no requirement for Ms Wati to make an accounting for rents. Mr Pillay does not assert any payments under the Mortgage having been made of the installment amounts of $300.00 per month. Upon the terms of the Mortgage, it would be necessary to show that the $8,000 had been paid in accordance with those terms. An assertion that the sum was to be paid out of rents, contrary to the terms of the Mortgage, cannot interfere with the application or operation of Order 88.
5. Service of Notice of Demand
The evidence before the Court affirms that Mr Pillay received the Notice of Demand – both the first Notice of Demand: Affidavit in Response, Annexure ‘B’, and the second Notice of Demand: Affidavit in Support, Annexure V4; Affidavit in Reply, Annexure ‘V13’ – Affidavit of Service & Demand Notice
5.1 Mr Pillay also contends, as it is understood, that service upon him as holding Power of Attorney for Mr Hari Pal (Administrator of the Estate of Bohd Mati) is not sufficient, and (as it is understood it is put) that Mr Pal should have been served personally. There is nothing before the Court indicating that Mr Pal was not in fact served. The Demand Notice is addressed to him. Further, the Letter of 14 August 2008 advising Mr Pillay of the failure of payment being made under the Mortgage and giving him ‘Notice Vacate Property’ states:
TAKE NOTICE that the mortgage amount of $8000.00 has not been paid to our client [Ms Wati] despite a Demand Notice being served on the Administrator, HARI PAL and a copy of which was also served on you as the Power of Attorney holder.
5.2 This, then, answers the question as to service. If it were considered not to do so (albeit that does not follow) Mr Pillay does not in any event contest that he holds Power of Attorney for Mr Pal. Hence, service upon him should suffice. Further, the evidence (as noted) shows that the Demand Notice was served on the property.
5.3 In NBF Asset Management Bank v. Radike [2004] FJHC 531; HBC039J.2001S (11 March 2004) His Lordship Justice Jitoko dealt with a contention on the part of the Defendant that there was defective or non-service of the Notice of Demand. The Court noted:
As to defective and/or non service of the Demand Notice [NBF Asset Management Bank] claimed to the contrary it was first sent to the post office box number that had been given by [Mr Radike]. In addition and annexed to its affidavit ... is a copy of the Demand Notice ... served on the property and received and acknowledge by [Mr Radike’s] wife. Counsel referred to sections 128 and 129 of the Property Law Act which allows services of any notice under it, including a Demand Notice, to be effected through registered letter or by leaving the same on the land the subject of the mortgage: at 3
5.4 The Court ordered vacant possession under Order 88.
5.5 There it was an issue of the Plaintiff’s having sold the property and the Court held that ‘failure to give notice prior to the sale by the mortgagee will not result in the setting aside of the sale on the ground of failure to give notice. The remedy for the aggrieved party lies in damages against the mortgagee which he would have to prove’: at 5, per Jitoko, J. citing Prichard v. Wilson 141 ER 740; National Bank of Fiji v. Hussein [1995] FJHC 29; Hbc0331j.94s (9 February 995)
5.6 Sale of the property does not arise in the present case. However, sections 128 and 129 of the Property Law Act (Cap 130) are relevant:
PART XV - SERVICE OF NOTICES
Service of notices in case of registered land
128. Subject to the provisions of the Land Transfer Act, any notice required or authorised by the provisions of this Act to be served on the proprietor of any estate or interest in land
registered under the provisions of that Act may be served on him -
(Cap. 131.)
(a) by delivering the same to him personally;
(b) by posting the same to him by registered letter addressed to him at his address as appearing in the register in which case such notice shall be deemed to have been served at the time when the registered letter would be delivered in the ordinary course of post; or
(c) in the case of a notice to be served on a lessee or mortgagor if there be no such address by leaving the same on the land the subject of such lease or mortgage.
Service of notices in other cases
129.-(1) In cases other than those to which the provisions of section 128 applies any notice required or authorized by this Act to be served on any person may be served on him by delivering the same to him personally or by posting it by registered letter addressed to that person –
(a) in the case of a company incorporated or registered under the provisions of the Companies Act in the manner in which notices are required to be served on companies under the provisions of that Act; or (Cap. 247.)
(b) in any other case at his last known place of abode or business in Fiji, and a notice so posted shall be deemed to have been served at the time when the registered letter would be delivered in the ordinary course of post.
(2) If the person is absent from Fiji, the notice may be delivered as aforesaid to his agent in Fiji. If he is deceased, the notice may be delivered as aforesaid to his personal representative.
(3) If the person is not known, or is absent from Fiji and has no known agent in Fiji, or is deceased and has no personal representative, the notice shall be delivered in such manner as may be directed by an order of the court.
(4) Notwithstanding anything in the foregoing provisions of this section, the court may in any case make an order directing the manner in which any notice may be served, or dispensing with the service thereof.
(5) This section shall apply only if and so far as a contrary intention is not expressed in any instrument, and shall have effect subject to the provisions of any instrument.
6. Application of Consumer Credit Act 1999?
The Mortgage was entered into between Bhagat Ram and Bohd Mati in 1985. The Consumer Credit Act 1999 became law after the Mortgage was entered into. Several cases have addressed this question, including Australia and New Zealand Banking Group Ltd v. Bulewa [2004] FJHC 280; HBC0233j.2002s (10 March 2004); Australia and New Zealand Banking Group Ltd v. Kumar [2003] FJHC 326; HBC0307.2002 (1 January 2003) (ANZ v. Amir & Sandhya Laxmi (HBC0307.2002)); NBF Asset Management Bank v. Low [2000] FJHC 48; Hbc0477j.1999s (27 March 2000).
6.1 (a) The Authorities: In Australia and New Zealand Banking Group Ltd v. Bulewa, the Court held the Consumer Credit Act would not apply to securities given to the ANZ Bank by Mr Bulewa:
... I agree with counsel that there is no provision in the [Consumer Credit Act] specifically stipulating that the Act is retrospective. Therefore s. 5(1) of the [Consumer Credit Act] would apply and make the Act operational from the date the Act was gazetted, namely, 7 May 1999: at 5, per Pathik, J.
6.2 The Court cited Australia and New Zealand Banking Group Ltd v. Kumar (as ANZ v. Amir & Sandhya Laxmi (HBC0307.2002)). where the Court addressed the contention that ‘even though the mortgage was executed before the Consumer Credit Act came into force, nevertheless, its provisions relating to enforcement of mortgages applied to these mortgages’.
6.3 Starting at section 14 Interpretation Act (Cap 7), in Australia and New Zealand Banking Group Ltd v. Kumar His Lordship Justice Singh recited:
Where any written law, or part thereof, came or comes into operation on a particular day, it shall be deemed to have come or shall come into operation immediately on the expiration of the day next preceding such day.
Subsidiary legislation operates retrospectively so long as it is not beyond the commencement day of the main Act: s. 22 Interpretation Act
6.4 Turnbull v. Foreman [1885] 13 QBDF 234 was cited:
Unless the language used is clear to the contrary, an enactment affecting rights must be construed prospectively only and not retrospectively so as to affect rights accrued before the Act passed: at 236
Where the legislature meant to take away or lessen rights acquired previously to the passing of an enactment, it is reasonable to suppose that they would use clear language for the purpose of doing so, or, to put the same thing in a somewhat different form, if the words are not unequivocally clear to the contrary, a provision must be construed as not intended to take away or lessen existing rights ...: at 238, per Bowen, LJ
6.5 The Court then went on to observe that a mortgage:
... creates certain rights and obligations not least of which in this case is the mortgagee’s right to re-enter after default. The mortgage in clause 13 refers to section 77 of the property Law Act and the period of one month is reduced to one day. If [the submission on the Consumer Credit Act] is correct, then that is asking me to rewrite clause 13 of the mortgage. That would be a gross violation f the rights of the mortgagee to give an early default notice.
A mortgage is a contract between a mortgagee and mortgagor. The terms of mortgages vary infinitely depending on what the parties agree to. There is nothing in the Consumer Credit Act to show that the legislature intended to streamline enforcement procedures to mortgages which already existed. Accordingly I conclude this submission fails ...: at 3, per Singh, J. (Emphasis added)
6.6 In the present case, the Mortgage reduced the 30 day period to seven (7) days: Affidavit in Support, Annexure ‘V3’, p. 2 Were the Credit Act to apply, then the Mortgage terms would have to be read consistent with it. As was pointed out in NBF Asset Management Bank v. Low [2000] FJHC 48; Hbc0477j.199s (27 March 2000):
Section 80 provides that a credit provider must not begin enforcement proceedings against a debtor unless the debtor is in default and a default notice allowing the debtor 30 days to remedy the default has been given. Breach of the section gives rise to a criminal offence. Section 80(7) provides that the obligations under section 80 are in addition to any other law relating to real property mortgages ‘and does not prevent the issue of notices to defaulting mortgagors under other legislation’: at 3, per Shameem, J.
6.7 In NBF Asset Management Bank v. Low the Court went on to discuss retrospectively of legislation generally and in relation to the Consumer Credit Act. It was noted that the Mortgage in NBF Asset Management v. Low was executed prior to the coming into effect of the Consumer Credit Act, as were the Demand Notices That differs from the present case in that albeit the Mortgage was executed prior to 7 May 1999 (the operative date of the Consumer Credit Act per Legal Notice No. 42 of 1999), both Demand Notices were issued after that date: 2007 and 2008.
6.8 Further in NBF Asset Management v. Low Her Ladyship Justice Shameem noted that albeit a presumption against retrospectivity exists in respect of statutes:
... it does not necessarily operate because some relevant facts took place before the statute was passed. In R. v. Secretary of State for the Home Department; Ex parte Mundowa (1992) 3 All ER 607 Staughton, LJ said:
... the presumption does not necessarily apply merely because some of the facts on which the statute operates will have occurred before it was passed. It is easy to think of examples. Suppose that a statute enacted that all persons reaching the age of 21 should be liable to two years military service. Could an unwilling conscript argue it applied only to persons born – or more plausibly conceived – after the passing of the Act? ... It would be absurd if the presumption against retrospectivity applied in every case where any single fact relevant to the operation of the statute occurred before it was passed: at 612
6.9 Shameem, J. referred also to Re a Solicitor’s Clerk (1957) 3 All ER 617. There, a clerk was convicted of an offence prior to the passing of legislation that empowered the Law Society to make orders against employment of such an officer. The English Court of Appeal had to address the question whether the legislation had retrospective effect:
... this Act is not in truth retrospective ... It would be retrospective if the Act provided that anything done before the Act came into force or before the order was made should be void or voidable or if a penalty were inflicted for having acted in this or any other capacity before the Act came into force or before the order was made: at 691, per Lord Goddard, CJ, cited at 4, by Shameem, J.
6.10 Shameem, J. then went on to say:
The breach of the Act complained of by the Defendants [the Lows], is the failure to give a 30 day default notice, thus allowing the [Lows] to remedy the breach. The demand notices (only one of which the [Lows] admit receiving) were dated well before the passing of the Act. The Act cannot therefore have any bearing on the way the demand notices were made and executed.
In any event, after the notices were served, considerably longer than 30 days were available to the [Lows] to remedy the default. Notice to Quit was not served on the[Lows] until July 1999. This was done after the [NBF Asset Management Bank] had accepted an offer from a purchaser to buy the property.
Even if the Act had applied to the demand notices sent, it is clear from the facts of this case that the [Lows] had ample opportunity to remedy the default.
The ground of objection to this application on the basis of the Consumer Credit Act is therefore unsuccessful: at 4, per Shameem, J.
6.11 (b) Application to the Present Case: As noted, the Mortgage predates the Consumer Credit Act; the Demand Notices do not. The first Demand Notice gave 30 days notice. The second Demand Notice, consistent with the terms of the Mortgage, gave seven (7) days notice. Since the second Demand Notice (which is the operative Demand Notice in my opinion and is put forward by Ms Wati as such) was compiled and served after the operative date of the Consumer Credit Act, does this mean that Order 88 cannot operate in the present case?
6.12 The second Demand Notice is dated 31 July 2008. The ‘Notice to Vacate Property’ is dated 14 August 2008: Affidavit in Support, Annexure ‘V5’
6.13 This means that the length of time between the Demand Notice and Notice to Vacate was not 30 days. The Originating Summons instituting this action was filed on 12 September 2008 and Acknowledgement of Service is dated 30 September 2008.
6.14 This does not mean, however, that were the Consumer Credit Act to apply, its terms would be met. That Act is strict in its requirements, so as to ensure that consumers’ rights are not breached. Hence, the documentation must strictly comply with its provisions.
6.15 In the present case, however, this Court must in my opinion necessarily find against the proposition that the Consumer Credit Act applies. Not insignificantly, NBF Asset Management Bank v. Low [2000] FJHC 48; Hbc0477j.199s (27 March 2000) noted, section 80 of the Consumer Credit Act imposes a criminal penalty upon persons who breach it: that is, a credit provider beginning enforcement proceedings against a debtor:
6.16 That this provision and its obligations rest alongside any other law relating to real property mortgages ‘and does not prevent the issue of notices to defaulting mortgagors under other legislation’: s. 80(7) does not ameliorate the strict operation of this provision.
6.17 The Consumer Credit Act is beneficial legislation. However, its penal provisions cannot in my view be interpreted so as to have retrospective operation. This would be to open a party to criminal prosecution when that party is operating in accordance with the terms of a mortgage entered into at a time prior to the coming into effect of the Consumer Credit Act.
6.18 Having said this, however, it also seems to me that the prudent credit provider would ensure that their notices comply with Consumer Credit Act provisions even where the financial transaction, whether by mortgage or otherwise, predates its coming into operation. This will extend protection to consumers and ensure that credit providers do not have to counter contentions that they have acted outside the Consumer Credit Act’s provisions.
7. Order 88 & Section 169 Land Transfer Act (Cap 131)
Mr Pillay is a tenant in occupation of the property. Order 88 provides for action by a mortgagee, mortgagor or any person having the right to foreclose or redeem any mortgage where there is a claim for, amongst others:
(d) delivery of possession ... to the mortgagee by the mortgagor or by any other person who is or is alleged to be in possession of the property ... (Emphasis added)
7.1 Mr Pillay is in possession of the property. There is no impediment to the operation of Order 88.
7/2 Cases where action has been taken under Order 88 in respect of persons in occupation who are not mortgagors include, for example:
For your information I have personally moved into the property yesterday and we will never vacate the premises until we are assured of an offer above $450,000 so that we may recover a fraction of our total investment.
In that letter, ... expressed in intemperate terms, the second Defendant does not say that he has become a tenant or that he has any legal right to occupy the property ...
I have not found any evidence that the second Defendant shave any right to occupy the property in question. Order 88 Rule 1(1)(d) allows the court to order delivery of possession of the property by any person who is in possession: at 3-4, per Shameem, J.
7.3 Order 88 is properly employed in the present circumstances for Ms Wati to gain possession of the property as against Mr Pillay.
8. Conclusion
Having determined in favour of the Plaintiff in respect of all the above matters and generally under Order 88, the following Orders are made.
ORDERS
Jocelynne A. Scutt
Judge
Suva
7 April 2008
[1] The Court of Appeal observed that an earlier appeal in the same matter had been ‘set aside and the case ... remitted to the
High Court to be freshly heard by that court. No written reasons for that decision were delivered ... but it appears to have been
because the requirements of Order 88 had not been satisfied’: at 2, per Shepherd, Tompkins and Smellie, JJA See also National Bank of Fiji v. Hussein [1998] FJHC 193; Hbc0331.94s (13 July 1998), at 1, 2, per Scott, J.; National Bank of Fiji v. Hussein [1995] FJHC 29; Hbc0331j.94s (9 February 1995), at 1-2, per Fatiaki, J.
[2] The original volume of the High Court Rules 1988 carries the printing error. Practitioners and others having recourse to Rule 88 need to ensure they have the corrected copy or
note upon their own copy the correct placement of the paragraphs in Rule 2 (6) & (7), thereby correcting automatically Rule 3.
[3] It is at paragraph 3, immediately before subparagraphs (a)-(d) that the printing error occurs by the interposition of paragraphs
(6) and (7) of Rule 4. Those paragraphs simply need to be noted as relating to Rule 2, not Rule 3.
[4] In the incorrectly printed Order 88, Rule 3 in the High Court Rules 1988 bound volume, there are two sets of paragraphs (6) and (7). The correct paragraphs (6) and (7) appear after paragraphs (4) and (5) of Rule 3 and are part of Order 88 Rule 3. Those appearing in the middle of Rule 3(3) relate not to Rule 3(3),
but to Rule 2. A perusal of Rule 2 and insertion of paragraphs (6) and (7) (appearing disjunctionally in Rule 3) indicates that this
is where they ‘fit’.
[5] See NBF Asset Management Bank v. Radike [2004] FJHC 531; HBC039J.2001S (11 March 2004), per Jitoko, J. – see later.
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