Total (Fiji) Ltd v Khan [2010] FJHC 206; HBC023.2008 (11 June 2010)

IN THE HIGH COURT OF FIJI
AT LAUTOKA
CIVIL JURISDICTION

Civil Action No. HBC 23 of 2008

IN THE MATTER
of an application under section 169 of Part XXIV
of the Land Transfer Act Cap. 131 for the Order of Vacant Possession.

BETWEEN:

TOTAL (FIJI) LIMITED
a duly incorporated company having its registered office in Suva
Plaintiff

AND:

AGHA KHAN
(father’s name Akram Khan) of Varoka, Ba, Businessman,
trading as SHELL BA BRIDGE SERVICE STATION
First Defendant

AND:

De VITI INVESTMENTS CORPORATION LIMITED
a limited liability company having its registered office
at Main Street, Kings Road, Varoka, Ba
Second Defendant

Before: Master Anare Tuilevuka

Counsels: Messrs Sherani & Co for the Plaintiff
Messrs Sahu Khan & Sahu Khan for the Defendant

Date of Hearing: 23rd March 2010
Date of Ruling: 11th June 2010

RULING

INTRODUCTION

[1]. The plaintiff, TOTAL, is the registered proprietor of Lot 3, DP 2818, in Ba comprised in Certificate of Title No. 11447 ("Lot 3"). On 1st October 1999, TOTAL’s predecessor, Shell Fiji Limited, signed an agreement giving the defendants a lease to occupy and run a service station on Lot 3 with rights to use Shell’s/TOTAL’s trademarks, service marks, business names, colour schemes, signs – and so on. At some point in 2006 after TOTAL acquired Shell’s operations in Fiji, TOTAL reviewed the agreement and discovered that the defendants had breached an insurance clause and had misrepresented that it was so covered. TOTAL then determined that it would terminate the lease agreement based that breach. Accordingly, TOTAL served a notice of termination of lease to the defendants. The defendants however remained in occupation of Lot 3 after TOTAL served them the Notice.

[2]. TOTAL then instituted a legal action in the Magistrates Court in Ba[1]. On 30th November, 2006, the Magistrates Court entered judgement in TOTAL’s favour. The learned presiding Magistrate found that TOTAL was entitled to terminate the agreement for breach of either the insurance clause or misrepresentation and that the notice to terminate was effective. He also found that the agreement had been effectively terminated on 27th September, 2003 and awarded nominal damages and costs in TOTAL’s favour. On 14th December 2006, TOTAL sealed the judgment orders and served them on Messrs Sahu Khan & Sahu Khan.

[3]. Doctor Sahu Khan appealed the Magistrates Court decision to the High Court where, in due course, it was to be dismissed by Madam Justice Phillips. Doctor Sahu Khan then appealed Phillips J’s decision to the Fiji Court of Appeal[2]. That appeal was heard on 13th November 2009 and Judgment was delivered on 27th January 2010 which dismissed the appeal and awarded costs in the sums of $4,000 against the Appellants (defendants in this case).

THE CURRENT CASE

[4]. The chronology will show that shortly after the defendants lodged their appeal to the High Court, TOTAL instructed Messrs Sherani & Co to issue a fresh Notice to Quit on the defendants. It did this on the 31st January 2007. For one reason or another, TOTAL did not pursue that Notice.

[5]. The chronology will also show that TOTAL again instructed Sherani & Co to issue another Notice to Quit around the time the defendants lodged their appeal to the Fiji Court of Appeal. This Notice to Quit ("Notice") dated 21st of August 2008 was served on the defendants on the same day.

[6]. What is before me now is TOTAL’s section 169[3] application dated 13th January 2009 based on the above Notice seeking an order that the defendants do give vacant possession of Lot 3. As stated, this application was filed around the time the defendants lodged their appeal to the Fiji Court of Appeal.

[7]. Hence, this section 169 application before me has been afoot simultaneously with the Fiji Court of Appeal matter.

[8]. And so, whereas the Fiji Court of Appeal matter concerned the legality or otherwise of TOTAL’s termination of the lease in 2006 based on the alleged breach of the insurance clause and/or misrepresentation on the part of the defendants, the section 169 application before me is premised on the Notice to Quit that TOTAL caused to be served on the defendants in 2008.

AFFIDAVITS

[9]. The affidavit of Ronald Leung sworn on 9th January 2009 is filed in support of the application. Leung is TOTAL’s Retail Area Manager. He is duly authorized by TOTAL to swear this affidavit on its behalf. Other Affidavits of Debashish Sanyal (TOTAL’s Vice President- Finance & Corporate Affairs) and Shakila Bano (TOTAL’s Card Officer) are filed in support of the application. The defendants have filed various affidavits of Agha Khan opposing the application.

[10]. For the record, Dr. Sahu Khan had raised a preliminary objection to the affidavits filed for the plaintiff. He submits that there was no proper authority by TOTAL to its officers authorizing them to swear an affidavit on behalf of the company. He argues that only directors and secretaries can swear such an affidavit on behalf of a company. Any other officer must be properly authorized as required under section 40 of the Companies Act (Cap 247).

[11]. Section 40 says a document or proceeding requiring authentication by a company may be signed by a director, secretary or other authorized officer of the company and need not be under its common seal.

[12]. Both Leung and Sanyal depose that they are duly authorized to swear their respective affidavits on TOTAL’s behalf. These gentlemen both hold positions of high authority in TOTAL (see paragraph 9 above). It is hard not to believe that they are duly authorized by TOTAL in this case. Their affidavits obviously are crucial to TOTAL’s case. As an artificial legal entity, TOTAL obviously must of necessity, give evidence through the medium of its human officers or agents in this case. In this case, it is clear that TOTAL has been trying for quite some time to get vacant possession of Lot 3. That, and the fact that Leung and Sanyal both hold relatively very senior management positions in TOTAL, which are yet undisputed, lead me to the conclusion that both are duly authorized to swear their respective affidavits on behalf of TOTAL.

[13]. I see no reason either to disbelieve that Bano’s affidavit was sworn with the authority of TOTAL and accordingly, I accept it in evidence. In her case, support is to be found by the mere reference to it in Sanyals’ affidavit.

WHY THE DEFENDANTS HAVE REMAINED IN OCCUPATION?

[14]. At the time of the hearing of this section 169 application before me, the Fiji Court of Appeal had long delivered its judgement. The defendants however have remained in occupation of Lot 3.

[15]. While the Fiji Court of Appeal’s decision had affirmed that TOTAL’s termination of the agreement in 2006 was a valid action, the defendants have since continued to pay rent in advance on Lot 3 on a monthly basis directly into various TOTAL bank accounts. This has continued even after the 2008 Notice. Ms Neelta does not dispute this.

[16]. Hence, the defendants’ base their continuous occupation of Lot 3 on the argument that, by their continuous payment of rent and by the on-going acceptance of it by TOTAL, a new tenancy is thereby created irrespective of the Fiji Court of Appeal’s Judgement.

ISSUE

[17]. Essentially, the issue between the parties is whether TOTAL had accepted the rental payments and if so, whether that acceptance constituted a waiver of its right to enforce the Notice to Quit and the creation of a new tenancy.

THE LAW

Statutory Law

[18]. The starting point is section 100(2) of the Property Law Act which states as follows:

"After the giving of a notice to quit, acceptance of rent expressed to be without prejudice to the notice shall not operate as a waiver of the right to enforce the notice or create or revive a tenancy." (my emphasis)

Common Law

[19]. In Kumar v Prasad [2004] FJHC 219; HBC0061.2004 (30th June 2004), Mr. Justice Jiten Singh took the following approach:

"The receipt for rent not having been produced, I am left to decide this matter on basis of common law"

[20]. In the above case, Singh J quoted the following passage from Clarke v Grant (1950) 1 KB 104 at 105 where Lord Goddard laid down the common law position as follows:

"If a landlord seeks to recover possession of property on the ground that breach of covenant has entitled him to a forfeiture, it has always been held that acceptance of rent waives the forfeiture, the reason being that in the case of a forfeiture, the landlord has the option of saying whether or not he will treat the breach of covenant as a forfeiture. The lease is voidable, not void, and if the landlord accepts rent after notice of a forfeiture it has always been held that he thereby recognises that the lease is continuing. With regard to the payment of rent after a notice to quit, however, that result has never followed. If a proper notice to quit has been given in respect of a periodic tenancy, such as a yearly tenancy, the effect of the notice is to bring the tenancy to an end just as effectually as if there has been a term which has expired. Therefore, the tenancy having been brought to an end by a notice to quit, a payment of rent after the termination of the tenancy would only operate in favour of the tenant if it could be shown that the parties intended that there should be a new tenancy.

That has been the law ever since it was laid down by the Court of King’s Bench in Doe d. Cheny v. Batten (1) where LORD MANSFIELD said (1 Cowp. 245):

‘The question therefore is, quo animo the rent was received, and what the real intention of both parties was?’

It is impossible to say that the parties in this case intended that there should be a new tenancy. The landlord always desired to get possession of the premises. That is why he gave his notice to quit. The mere mistake of his agent in accepting the money as rent which had accrued is no evidence that the landlord was agreeing to a anew tenancy."

................................................................................................

"Therefore when a landlord has brought a tenancy to an end by means of a notice to quit, a payment of rent after that date will only operate in favour of the tenant if it can be shown that the parties intended that there should be a tenancy .... the question therefore is, qui animo the rent was received, and what the real intention of both parties was."

That intention would be the intention at the time of the receipt of rent not at time of filing of this application. The Court would need to know what was said before and after rent was tendered and accepted to get at the real intention of parties. (my emphasis)

[21]. The Fiji Court of Appeal case of Maganlal Ramabhai Patel v. Native Land Trust Board –ABU 40 of 1976[4] cited with authority the following passage from Central Estates (Belgravia) Ltd. v. Woolgar No. 2 [1972] EWCA Civ 4; (1972) 3 ALL ER 610:

"If the landlord by word or deed manifests to the tenant by an unequivocal act a concluded decision to elect in a particular manner, he will be bound by such an election. If he chooses to do something such as demanding or receiving rent which can only be done consistently with the existence of a certain state of affairs, namely, the continuance of the lease or tenancy in operation, he cannot thereafter be heard to say that that state of affairs did not then exist. If at the time of the act he had a right to elect whether to forfeit the lease or tenancy or to affirm it, his act will unequivocally demonstrate that he has decided to affirm it. He cannot contradict this by saying that his act was without prejudice to his right of election continuing or anything to that effect. In this respect his act speaks louder than his words, because the act is unequivocal; it can only be explained on the basis that he has exercised his right to elect. The motive or intention of the landlord, on the one hand, and the understanding of the tenant, on the other, are equally irrelevant to the quality of the act." (my emphasis)

[22]. Woodfall’s Law of Landlord and Tenant - 25th Edition by Lionel A. Blundell pronounces the common law in the following words:

"By acceptance of rent. Acceptance by the landlord of rent due after the expiration of a notice may be evidence upon which the court will infer the creation of a new tenancy. However, in each case the question is, quo animo the rent is received, and what is the real intention of the parties (p). No such inference can be drawn if the rent fell due before the expiration of the notice (q).

Even after the expiration of the notice, where rent is usually paid at a bankers’, if the banker, without any special authority, receive rent accruing after such expiration, the notice is not thereby waived (r): so if the money be not paid or received as rent, but as a satisfaction for the injury done by the tenant in continuing on the premises as a trespasser, it will not have such an operation (s). A demand of rent accruing subsequently to the expiration of a notice to quit is not necessarily a waiver of the notice, but is a question of intention which ought to be left to the jury (t); but a demand and acceptance of one day’s more rent than was due has been treated as a waiver in law (u). Where, after the termination of a service occupancy under which the servant had been paying 15s., a week for the premises he occupied, the employer accepted two more such payments of 15s., but there was no evidence of any real intention to create a new tenancy, it was held that no tenancy was created (x). So also where the rent was received by the agent who mistakenly thought that it was payable in arrear and not in advance (y)." (my emphasis)

[23]. In Halsbury's Laws of England 3rd Edition p.671 para. 1396 the learned authors say:

"A landlord does not waive the forfeiture by merely standing by and seeing it incurred ... there must be some positive act of waiver."

ANALYSIS

[24]. Section 100(2) of the Property Law Act, in my view, is well complemented by the position at common law. Clearly, according to section 100 (2) (see paragraph 18 above), a landlord who accepts rent after giving a Notice to Quit does not waive her right to enforce that Notice if her acceptance is expressed to be without prejudice to her right to enforce the Notice. That must mean that an acceptance of rent per se will waive a Notice to Quit. It must also mean that the onus rests on the landlord to establish that her acceptance of rent was without prejudice to her right to enforce the Notice.

[25]. Hence, it is on the landlord to adduce evidence that (to use the Latin phrase oft cited in common law cases) the quo animo[5] of acceptance was without prejudice to her right to enforce the Notice.

[26]. According to Woodfall (see paragraph 24 above), "where rent is usually paid at a bankers’, if the banker, without any special authority, receives rent accruing after such expiration, the notice is not thereby waived".

[27]. In this case, rent was paid directly to TOTAL’s banker’s. I gather also from the affidavit of Debashish Sanyal sworn on 8th February 2010 that the account to which the payments were made was a general account. It was not a special account created specifically for the payment of the defendants’ rent.

"the Plaintiff is a large corporation an routinely receives payment by deposits from its several customers for sale of fuel products and the Defendants were aware of this and that is why they made payments of varying

[28]. The Bank was neither given special authority to receive rent payment after the expiration of the Notice, nor was it specifically instructed not to receive any rent payment after the expiration of the Notice.

[29]. The points of contention between the parties are: (i) whether TOTAL knew about the payments (ii) whether the quo animo of TOTAL, by its conduct, was to waive its Notice to Quit and enter into a new tenancy with the defendants.

DID TOTAL KNOW ABOUT THE PAYMENTS?

[30]. The defendants’ case is that TOTAL knew about the payments and in fact authorized them. Therefore, TOTAL was well aware of the payments and had thereby accepted the rent. That acceptance amounted to a waiver.

[31]. The above submission is premised on a deposition by Khan that he was instructed by Bano to pay the rent into TOTAL’s bank account. It is also premised on another deposition by Khan that, shortly after every payment was made, he would fax over the relevant details to TOTAL. These details included the deposit slips and the hand written advice (annexure "A" to "Q" in Khan’s affidavit sworn on 13th November 2009).

[32]. The submissions is also premised on an argument that TOTAL has never objected about the payments nor has it tried to refund any of the money paid and that any valid objection could only be made right after the service on the defendants of the Notice to Quit. Hence, given that position, Doctor Sahu Khan submits that a new tenancy is to be presumed in accordance with section 89[6] of the Property Law Act.

[33]. Bano denies she ever gave any instruction to the defendants to pay the rent into any of TOTAL’s account. She says her position in TOTAL is not one that vests in her the power to give the authorization she is alleged to have given. Sanyal’s affidavit sworn on 8th February 2010 confirms what Bano says. He describes Bano’s position in TOTAL and deposes that Bano’s duties therein has nothing to do with collecting rent let alone anything about the defendants service station on Lot 3. According to Sanyal, the defendants have deviously and without TOTAL’s authority or knowledge, deposited the payments in order to neutralize and undermine the effect of the Notices to Quit. To show this, he points to the fact that different amounts were paid at irregular intervals purportedly for the rent and into various TOTAL accounts. The payments therefore were unilateral deposits by the defendants which cannot amount to acceptance of rental by TOTAL.

[34]. The deposit slips indeed show that the amounts were irregular. However – Khan’s affidavits attempts to show that the reason for the irregularity in the amount paid was because the defendants were offsetting various payments they made such as repair costs on the service station against the rent.

[35]. Sanyal highlights that a good part of the payments were made in August and September 2009 at a time when the Court was trying to fix a hearing date. This is confirmed from the documentation filed. This fact, Sanyal argues, fortifies his submission that the payments were meant to derail the section 169 proceedings.

WHETHER THE QUO ANIMO OF TOTAL, BY ITS CONDUCT, WAS TO WAIVE ITS NOTICE TO QUIT AND ENTER INTO A NEW TENANCY WITH THE DEFENDANTS.

[36]. As stated above, the onus is on TOTAL to establish that its acceptance of rent was not a waiver of its Notice to Quit. The legal position advanced by TOTAL is canvassed in the foregoing paragraphs. I will not repeat them here.

[37]. Doctor Sahu Khan submits that whilst the original notice may have been valid in light of the Fiji Court of Appeal’s decision, TOTAL has since accepted that the defendants are monthly tenants by accepting monthly rental.

Dr. Sahu Khan relies on the case – Suva City Council –v- Suresh Sushil Charan And Anuradha Charan – Civil Action No. 125 of 1985:

"On that date the defendants were holding over on the basis that they were entitled to a renewal of the tenancy which had expired on the 30th November, 1984. It can therefore be said that they have established that they had some right to possession. Proceedings under section 169 were designed, as Stuart J. said; ‘ to provide a quick and relatively inexpensive summary method of finding out whether a person who is in possession of land had any legal right to be there’. (Vivek Prasad –v- Ram Sundar & Another) Action Lautoka 188/76 unreported). The dismissal of the summons shall not prejudice the right of the plaintiff to take any other proceedings against the defendants to which it may otherwise be entitled. It follows from this that the requirements of section 172 are met, if the occupier of the land proves to the satisfaction of the judge at least a prima facie right to the possession of the land.

That appears to me to be the case here. Not only has the plaintiff failed to show that on the 12th February, 1985 a lawful notice to quit had been served or that the term of the tenancy had expired, but, the defendants have proved that on the material date they had some right to remain in possession."

[38]. Doctor Sahu Khan also cites section 89 of the Property Law Act (see paragraph 32 above).

FINDINGS

[39]. It is clear from the affidavits and submissions filed that TOTAL did not ask for the rent to be paid. Khan’s deposition that Bano authorized the payment is not supported by any concrete evidence such as a letter, an e-mail or any communication. All that Khan deposes is as follows:

"The payments were made as instructed by the Plaintiff through their staff Shakila and in this regard the following procedure was adopted: -"

[40]. He does not state a date or at least put a period or a time frame to the alleged instruction. There is nothing before me to indicate that the defendants had always dealt with Bano on the issue of rent. Nor is there any explanation to say why they dealt with Bano rather than some other officer. Bano deposes simply that the allegations are an "utter lie" and that she gave no such instructions as "such payments do not fall under my portfolio". I believe Bano’s and Sanyal’s word on this – that is, that Bano gave no such authority as she simply did not possess it to give.

[41]. Following from the above finding, the payments by the defendants were made without any authority from TOTAL.

[42]. The law is clear in that it is the acceptance of rent that raises a presumption of waiver. The payment per se of rent does not raise that presumption.

[43]. I get the impression from paragraph 8 (i) to (iv) of the Affidavit of Sanyal sworn on 13th November 2009 that he was embarrassed by annexure "A" to "Q" in Khan’s Affidavit filed on 11th November 2009 (see paragraph 31 above).

"the Plaintiff will verify and ascertain these unlawful deposits and refund the same as the Plaintiff has not accepted them as rental payments. The payments claimed to be paid by the Defendants appear to have been made over Westpac Bank counter and the Plaintiffs does not have any control over it"

[44]. That does not necessarily jeopardize TOTAL’s position in my view. Sanyal’s reaction seems candid and honest and to be expected from one who truly had no knowledge that the payments were being made.

[45]. I note that there is scribbling on some deposit slips (part of annexure "A" to "Q") to the effect that deposit slips were indeed faxed either to Bano or to "Accounts". As I have said above, I believe Bano’s word that payments do not fall under her portfolio.

[46]. Sanyal does not deny that TOTAL has received this. I observe though that he makes this confession with the benefit of hindsight. I say that because he still denies that TOTAL ever gave instructions for these payments or that TOTAL was aware of these deposits at the time they were made.

[47]. In my view, even if some accounts clerks were aware of the payments and had even acknowledged them, that awareness of acknowledgement do/does not necessarily equate to an "acceptance" by TOTAL, particularly in the peculiar circumstances of this case.

[48]. For the record, I include in the "peculiar circumstances" of this case the situation that existed between the parties at the time the Notice was served and the history preceding the Notice which clearly shows that TOTAL had been trying for so many years to obtain vacant possession of Lot 3. The history shows that TOTAL’s efforts were being hampered by the various appeals lodged by the defendants which have all turned out unsuccessful.

CONCLUSION

[49]. After taking all into account, I cannot find any evidence that TOTAL had accepted the rents paid. Accordingly, I find in favour of the plaintiffs and order that the defendants do give vacant possession of Lot 3 within 14 days of the date of this Ruling.

[50]. In addition, I award costs in favour of the plaintiffs in the sum of $800-00 (eight hundred dollars) to be paid in 14 days.

Anare Tuilevuka
Master

At Lautoka
11th of June 2010.

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^[1] Civil Action No. 104 of 2003.
^[2] by Civil Appeal No. ABU 0048 of 2008.

^[3] of the Land Transfer Act (Cap 131).
^[4] cited by Singh J in Kumar v Prasad.

^[5] i.e “the mind with which a thing has been done” – see The Lectric Law Library’s Lexicon – http://www.lectlaw.com.

^[6] Section 89 of the Property Law Act says as follows:

89.-(1) No tenancy from year to year is implied by payment of rent.
(2) In the absence of express agreement between the parties, a tenancy of no fixed duration in respect of which the rent is payable weekly, monthly, yearly or for any other recurring period may be terminated by either party giving to the other written notice as follows:-

(a) where the rent is payable yearly or for any recurring period exceeding one year, at least six months' notice expiring at the end of any year of the tenancy; or

(b) where the rent is payable for any recurring period of less than one year, notice for at least a period equal to one rent period under the tenancy and expiring at any time, whether at the end of a rent period or not.