Credit Corporation (Fiji) Ltd v Buksh [2010] FJHC 137; HBC003.2010 (23 April 2010)

IN THE HIGH COURT OF FIJI AT SUVA
CIVIL JURISDICTION

CIVIL ACTION NUMBER: HBC 03 OF 2010.

BETWEEN:

CREDIT CORPORATION (FIJI) LIMITED
PLAINTIFF

AND:

MOHAMMED SHIKANDAR BUKSH AND NASREEN BUKSH
DEFENDANTS

Appearances: Mr. Ritesh Naidu for the Plaintiff.
Mr. Gavin O’ Driscoll for the Defendants.

Date/Place of Hearing: Tuesday, 06th April, 2010 at Suva.
Date/Place of Judgment: Friday, 23rd April, 2010 at Suva.

Judgment of: The Hon. Acting Justice Anjala Wati.

JUDGMENT

MORTGAGE ACTION- entire debt under mortgage called up-mortgagors defaulted in payment of the debt-mortgagee sold the property, had transfer signed and stamped-settlement awaited as mortgagee needs to give buyer vacant possession-application for vacant possession made with which an order restraining the mortgagors from interfering with the improvements on the property was sought –once property is sold, a mortgagors right to redeem the debt is extinguished and thus they have no right to remain in occupation of the property-they must grant vacant possession and not interfere with the property as they have agreed not to do so as one of the terms of the mortgage-application for vacant possession and injunction granted with costs to mortgagee.

Legislation:
High Court Rules, 1988.
Property Law Act, Cap. 130.

Cases referred to:
Naipote Vere and Esita Takayawa Vere and NBF Asset Management Bank Civil Appeal No. ABU0069 of 2003S.
Property and Bloodstock Limited v. Emerton [1968] 1 Ch. 94.

The Application

1. The plaintiff has by an originating summons filed on the 5th day of January, 2010 brought a mortgage action against the defendants. The orders sought in the summons are:-

- Delivery of vacant possession of all that property comprised and described in Certificate of Title No. 9269, Lot 15 on Deposited Plan No. 2208 together with the improvements thereon, situated at 25 Amputch Street, Tamavua, Suva;

- An injunction restraining the defendants, their servants and/or their agents from interfering with the improvements on the said property in any way so as to deplete its value; and

- Costs of the action.

2. The application is supported by an affidavit filed on the same day as the originating summons.

3. An acknowledgement of service of the originating summons was filed by the defendants counsel Mr G. O’ Driscoll on the 22nd day of January, 2010.

4. The defendants did not file any affidavit in opposition.

Plaintiffs Affidavit in Support

5. The following contentions were made through the affidavit in support:-

a. The defendants are the registered proprietors of all that property comprised and described in Certificate of Title No. 9269, Lot 15 on Deposited Plan No. 2208 together with all improvements thereon and situated at 25 Amputch Street, Tamavua, Suva. A copy of the certificate of title was attached to the affidavit.

b. Erected on the said property is a dwelling house which is presently occupied by the defendants and their family.

c. By mortgage registration number 591466 entered into between the parties, the property was charged to secure repayment to Credit Corporation (Fiji) Limited hereinafter referred to as "CCFL" of all the loans, advances, charges, interest and other financial accommodation made by CCFL to the defendants from time to time and on conditions contained in the mortgage between the parties. A copy of the mortgage was attached to the affidavit.

d. The details of the loan advanced to the defendants under mortgage registration number 591466 are:

- $226, 500.00 advanced to the defendants on or about 04th July 2006 plus 1% establishment fee of $2,265.00 together with interest at the rate of 14% per annum amounting to $128,115.00 making a total sum of $356.880.00.

- The monthly instalment payment was $7,435.00 per month over a term of 48 months.

e. On the 24th day of November, 2008, the defendants applied to the plaintiff seeking an additional loan. The plaintiff refinanced the defendants on or about the 28th day of November, 2009 and in exchange took a new mortgage over Certificate of Title No. 9269. The defendants executed the mortgage on 28th November, 2008.

f. On 13th January, 2009, the plaintiff attempted to register this mortgage at the Registrar of Titles office when it discovered that Fiji Meat Industry Board had registered a judgment over Certificate of Title No. 9269. In view of this, the plaintiff did not register the new mortgage and as a result it did not discharge mortgage number 591466. A copy of the mortgage executed on the 28th day of November, 2008 was attached to the affidavit.

g. The details of the loan advanced to the defendants around 28th November, 2008 are as follows:-

- $237, 350.00 advanced to the defendants on or about 28th November, 2008 together with interest at the rate of $9.75% per annum amounting to $115, 750.00 making a total of $353,100.00.

- The monthly instalment payment was $5,885.00 per month over a term of 60 months.

h. The repayment arrears and the amount remaining due under the mortgage registration number 591466 as at 23rd June, 2009 was $344,871.63.

i. The defendants defaulted in their mortgage repayments. On 23rd June, 2009, CCFL issued a demand notice under mortgage registration number 591466 against the defendants. A copy of the demand notice was attached to the affidavit.

j. Due to the defendants default in the payment of the advances, CCFL proceeded to exercise its powers under mortgage registration number 591466 and called for tenders of the sale of the property. The tender advertisement was attached to the affidavit.

k. On 20th August, 2009, the 1st named defendant issued court proceedings against the plaintiff in the High Court of Suva wherein an order was sough that the plaintiff be restrained from selling the subject property. The application by the defendant was declined by the court. A copy of the judgment was attached to the affidavit.

l. The mortgage registration number 591466 contains the following material provisions:-

"7. That the covenants powers conditions and provisions implied in Mortgages by virtue of the Property Law Act 1971 and any amendment thereof shall for the purposes hereof be negative or varied so far only as the same are varied by or shall be inconsistent with the terms and provisions hereof and subject to any negotiation or variation the Mortgagee shall be entitled to all rights powers and remedies conferred on mortgagees by the said Act and any amendment thereof.

10. that the Mortgagee upon entering into possession of the said land or any part thereof by receiving the rents and profits thereof under any power conferred by the said Act or any amendment thereof shall be entitled and hereby empowered to grant tenancies or leases of the said land or any part thereof for any period not exceeding three years at such rental and on such conditions and terms and with such covenants as the Mortgagee shall decide."

m. CCFL has accepted a tender for the said property from One Muni Ratnam and has entered into a contract of sale. CCFL is required to give vacant possession of the said property to the purchaser on the date of settlement.

n. The defendants’ occupation of the said property is interfering and prejudicing the mortgagee’s rights. It is believed that the defendants may remove and/or damage valuable attachments which form part of the improvements of the property.

Plaintiffs Submission

6. Mr. Naidu basically relied on his affidavit but further stated that there was a development in terms of the sale in that the transfer of the property has been signed and stamped. Once vacant possession is granted then settlement would take place with the new buyer. The plaintiff has entered into a valid contract of sale and as such the defendants’ right to redeem the debt is extinguished. The case of Naipote Vere and Esita Takayawa Vere v. NBF Asset Management Bank Civil Appeal No. ABU 0069 of 2003S was cited in support.

7. It was further stated that no affidavit in opposition has been filed and the basis on which the application is challenged are not known.

8. Mr. Naidu further submitted that the arrears continue to accumulate. The sale should be allowed to be finalised. If the defendants think that they have any claim at all now against the mortgagee, then their right lies in a claim for damages.

Defendant’s Submission

9. Mr O’ Driscoll submitted that the interest on the account has been calculated for the entire term. If the mortgage was cancelled then interest rebate should be granted to the defendants.

10. The defendant Mr. Mohammed Shikandar Buksh also submitted that he did not get proper statements from the plaintiff. If he received the statements then he would have filed his response. He then made a request for full statement. He also stated that if he was given the full statement, then he would have paid the monies. He has more than $100,000 in his account.

Plaintiffs Submission in Reply

11. Mr. Naidu submitted that he had on the date of hearing at about 12.25pm received a letter requesting for the statement. He spoke to his client and they obliged and so the statement was given to Mr. O’Driscoll. Statements otherwise were provided to the defendants. It shows what interest was waived and what other charges are levied. This same issue was raised in Civil Action HBC 264 of 2009. The defendants at that time were provided with the statement as well.

12. Mr. Naidu further said that there is absolutely no substance in the contention that the defendants had money to pay the plaintiff and that they would have paid if they were provided the statement. The defendants knew the status of the account and they knew that the account fell in arrears. If they had money, they should have paid up the debt.

The Law

13. The application is brought under Order 88 of the High Court Rules, 1988.

14. By virtue of order 88 Rule 1 (1) (d), an application for delivery of possession (whether before or after foreclosure or without foreclosure) to the mortgagee by the mortgagor or by any other person who is alleged to be in possession of the property can be made.

15. Order 88 Rule 3 mandates that an affidavit in support of an originating summons seeking an action for possession must comply with certain rules. The rules that the plaintiffs affidavit in support must comply in this case are:-

a. The affidavit must exhibit a true copy of the mortgage: Order 88 Rule 3(2).

b. The original mortgage or, in the case of a registered charge, the charge certificate must be produced at the hearing of the summons: Order 88 Rule 3 (2).

c. 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 account between the mortgagor and mortgagee with particulars of the amount of the advance, the amount of periodic payments required to be made, the amount of any interest or instalments in arrears at the date of the issue of the originating summons and at the date of the affidavit, and the amount remaining due under the mortgage: Order 88 Rule 3 (3).

d. The affidavit must give particulars of every person who to the best of the plaintiffs knowledge is in possession of the mortgaged property: Order 88 Rule 3 (4).

16. The rules in Paragraph 15 above are mandatory and must be complied with.

The Determination

17. All the mandatory requirements of Order 88 Rule 3 has been met except that the original mortgage was not produced at the hearing as the court had already been shown the original mortgages when Civil Action Number HBC 264 of 2009 between the same parties was heard. It was not necessary for the plaintiff to produce the mortgage again.

18. By a demand notice dated the 23rd day of June, 2009, the plaintiff demanded from the defendants’ payment of all the monies due under the mortgage. The plaintiff was entitled under clause 12 of the mortgage to issue the demand notice requiring payment of all the monies due and owing. Clause 12 of the mortgage reads as follows:-

"That upon default by the Mortgagor in the payment when due of any part of the principal interest or other moneys hereby secured or in the observance or performance of any covenants condition or agreement herein expressed or implied the whole of the principal interest and other moneys then remaining hereby secured shall (at the option of the Mortgagee) become immediately due and payable.

19. When the defendants failed to pay the monies under the demand notice, the plaintiff entered into a sale with a buyer. There is unchallenged evidence that a contract of sale has been entered into. There is also no challenge to the information provided by Mr. Naidu that the transfer has been signed and stamped awaiting vacant possession for settlement to take place with the new buyer.

20. Since the plaintiff has sold the property, the defendants’ right to redeem the mortgaged property has been extinguished and as such they have absolutely no right to remain on the property.

21. Section 72(1) of the Property Law Act Cap. 130 states that " a mortgagor is entitled to redeem the mortgaged property at any time before the same has been actually sold by the mortgagee under his power of sale, on payment of all moneys due and owing under the mortgage at the time of the payment"

22. The case of Property and Bloodstock Limited v. Emerton [1968] 1 Ch. 94 also recognises that a mortgagee’s right to redeem is extinguished once a contract of sale has been entered into by the mortgagee. As the property is sold there is nothing left to redeem.

23. The plaintiff has exercised its powers of sale under the mortgage. It now needs to realise the proceeds of the same and to do that it must give vacant possession to the buyer. They are entitled to an order for ejectment. It was said in the case of Naipote Vere and Esita Takayawa Vere and NBF Asset Management Bank Civil Appeal No. ABU0069 of 2003S:-

"...The Respondent was not bound to accept offers to reduce the arrears, or to accept a sum of money which may have partially reduced the balance of the debt after it was called up. It was entitled to require payment of the full amount which was due and secured by the mortgage, and failing that, to sell the property and to commence proceedings in ejectment..."

(underlining is mine for emphasis)

24. The defendant Mr. Buksh’s main contention is that if the statement was provided to him, he would have paid the arrears due and owing under the mortgage. It should be noted that it is not only the arrears that the plaintiff was claiming but the whole amount under the mortgage. The defendants have at no point offered that they would pay the amount due and owing notwithstanding that his right to redeem has extinguished.

250. In my judgment in Civil Action No. HBC 246 of 2009 where Mr. Buksh was the plaintiff and CCFL was the defendant, I had commented as follows:-

"...the plaintiffs second argument is that his account statements were not provided to him. The defendant says that they provided all information pertaining to his accounts and if they did not, the plaintiff should have written to them.

I agree with the defendant’s counsel that the plaintiff should have written for his statements if the oral requests were not complied with. After all, the plaintiff has been writing to the defendant for the time for payment of the debt. He could have written for his statements failing which he could have come to the court to seek an order for the defendant to furnish the statements to him..."

26. In my judgment I had also stated that pursuant to s. 35 (1) of the Consumer Credit Act, an application could have been made to the court for the statements.

27. The defendant is again raising the same issue of statements despite clear directions in my judgments indicating the options available to him. If the statements were so essential, then why did the defendants allow the omission in supply of the statements to continue? Why did not they act as suggested in my earlier judgment? This application is a serious issue for them as they could be asked to leave their home and yet no action was taken by the defendants.

28. Now, it is very late for the defendants to make and for the court to consider any offer for payment of the monies so Mr. Buksh’s assertion that he would have paid the money is of no help to him as the mortgagee has now sold the property.

29. At this juncture I must state that although there is no basis on which the defendants can continue in occupation of the property, they must be given some time to vacate as it is not an easy task to relocate. I must also balance the interest of the plaintiff who is awaiting settlement and is at a loss because the interest on the property is accruing since the monies by the purchaser has not yet been credited to the mortgagors account. The mortgagors will also suffer from the delay as well if the mortgagee exercises its rights to recover the shortfall after the proceeds of the sale are credited to the account. The purchase price is now fixed and no one will benefit if the execution of the orders are stayed. However in view of the need for relocation, I am minded to grant some time before the orders for vacant possession are executed.

30. The plaintiff is also seeking an order that the defendants be restrained from interfering with the improvements on the property.

31. The mortgagors have by executing the mortgage document agreed not to interfere with the improvements on the property. I see no impediment to the rights of the defendants if an order is granted to secure the improvements on the property as it was agreed to by the parties pursuant to Clause 4 of the mortgage that:-

"the mortgagor will not during the continuance of the security without the consent in writing of the mortgagee first had and obtained remove from the said land any buildings or other structural improvements now or hereafter on or about the said land."

32. The mortgage continues as a security as it has not been discharged as yet and as such the parties are bound by the terms of the mortgage. Clause 14 of the mortgage states that:-

"That these presents shall be a continuing security notwithstanding any settlement of account intervening payment or other matter or thing and shall remain in full force and extend to cover all or any sums of money which may hereafter become owing by the Mortgagor to the mortgagee until a discharge hereof shall have been given by the Mortgagee to the Mortgagor."

33. Finally, on the issue of costs, I must say that the defendants should have known that his defence was doomed to fail in any event. Similar arguments were rejected earlier. There should be costs to the plaintiff. I think that summary assessment of the costs will be justified.

Final Orders

34. For the above reasons, I order as follows:-

a. That there shall be delivery by the defendants to the plaintiff vacant possession of all that property comprised and described in Certificate of Title No. 9269, Lot 15 on DP No. 2208 together with the improvements thereon, situated at 25 Amputch Street, Tamavua, Suva within 28days from today.

b. That the defendants, their servants and/or their agents be restrained from interfering with the improvements on the subject property in any way so as to deplete its value.

c. Costs to the plaintiff in the sum of $1,000.

35. Orders Accordingly.

ANJALA WATI
Acting Judge
23.04.2010