Sidiq v Akhtar [2010] FJHC 21; HBC180.2009L (29 January 2010)

IN THE HIGH COURT OF FIJI
AT LAUTOKA
CIVIL JURISDICTION

Civil Action No: HBC 180 of 2009L

BETWEEN:

FAIYAZ SIDIQ KOYA SIDIQ
(f/n Siddiq Moidin Koya), Barrister and Solicitor and
FAIZAL RIYAD KOYA
(f/n Siddiq Moidin Koya) Barrister and Solicitor of
Nadi, Fiji Islands
Plaintiffs

AND:

MOHAMMED AKHTAR
(f/n Yaar Mohammed) the Executor and Trustee of the
Estate of Yaar Mohammed (f/n Noor Mohammed)
of Malomalo, Sigatoka, Cultivator
1st Defendant

AND:

RAM NARAYAN
(f/n Sonda) of Ba, Fiji, Cultivator and Moneylender
2nd Defendant

INTERLOCUTORY JUDGMENT

Of: Inoke J.

Counsel Appearing: Mr. R. P. Singh with Ms T. Draunidalo for the Plaintiffs
Dr. Sahu Khan for the Defendants

Solicitors: Messrs Patel & Sharma for the Plaintiffs
Messrs Sahu Khan & Sahu Khan for the Defendants

Date of Hearing: 25 January 2010
Date of Judgment: 29 January 2010

INTRODUCTION

[1] This is the Plaintiffs application for stay of proceedings and injunctions against the Defendants.

[2] The Plaintiffs are the sons of the late Mr Siddiq Koya and Mrs Amina Koya. The First Defendant is the executor and trustee of the late Mr Yaar Mohammed. By Deed, the First Defendant assigned all his rights in respect of the subject matter in this action to the Second Defendant. I was puzzled as to why the First Defendant is a party to this action but that is a matter that is to be decided at another time in another application should the issue arise.

THE BACKGROUND

[3] On 25 September 1985, Yaar Mohammed (“Yaar”), the father of the First Defendant, entered into a contract for the sale part of his land to one Ignazio Gonzalez (“Gonzalez”), an American citizen. Both parties are now deceased; Gonzalez died in 1992 and Yaar in 1996. Unfortunately for them, but I think more so for Gonzalez than for Yaar, they did not seek and the Director of Lands did not give consent to their contract pursuant to s 6(1) of the Land Sales Act. The parties had a falling out which eventually led to the Supreme Court decision in Gonzalez v Akhtar [2004] FJSC 2; CBV00011.2002S (21 May 2004). The Court held that the 1985 contract was illegal and unenforceable.

[4] To fully understand and appreciate the nature of this application it is necessary to understand the rather bizarre and unfortunate history of this case. I say unfortunate because but for sound legal advice, none of the events, the anxiety and the antagonism that followed would have taken place. The case history is fully set out in the Supreme Court judgment but for present purposes I need only quote these passages:

Under (the 1985) agreement, Mr Mohammed agro sell, and Mr&d Mr Gonzalez agro purchase, a 1, a 12-acre block of land located in the district of Nadroga for the sum of $90,000. The land in question was part of a larger block consistf jusr 101 acres.cres.

The purchase pric price was to be paid in instalments every six months, over a period of five years. The full amount, together with interest calculated at 13.5% per annum, was to be paid on or before 16 September 1990. ontract wast was subject to several conditions. Mr Mohammed was bdivide the lahe land at his own expense, construct a well it, and also arrange for road access to be provided. Mr Gonzalez was tain the vare vare various statutory approvals for subdivisand he was to allow Mr&#160 Mohammed rvest any cane thee then standing on the land. Mr Gonzalez was te possession sion uponution of the contract.<

Mr DS Naidu, a solicitor ban Nadi Nadi, drew up the contract. He acted on the instructof both parties. The primary judge found that neither partyparty consulted closely with Mr Naidu, preng to go about cout complethe contract on their own, awn, and only calling upon professional help when required.

Mr Gonzalez and Mr&#160mmed seen set about attending to the various conditions of s of the contract. Not surprisingly, in a case of this type, certain diffies were encountered. One problem was Mr Mohammed’s inabili rato raise the funds unds necessary to perform his part of the bargain in arranging for the access road to be built. To overcome this difficulty, Mr Gonzalez meveral payments onts out ofown pocket.

Sometime in 1988, Mr Mohammed decto seek the sere services of his own solicitor. He retained160;Amjal Khan, of Khan & Associates, a firm also basedbased in Nadi. Like Mr Naidu, Mr Khand that the parties wenu wenut matters on their own, onn, only consulting their solicitors when they thought it necessary.

By early 1990, rela betwr Gonzalez and Mr Mohammed appeahato have brve brve broken down. Progress on completing the contract had stalled. Both men consulted Mr Amjal Khan who, after diingssing the matter with them, and with Mr Naidu, "struck" a furagreemgreement. That agreement provided that Mr Gonzalez would mo further pher payments to Mr Mod until the access road hoad had been completed. Mr&#1nzalez, in turn, would pay into the trust account of Khan &han & Associates any monies to be used for paying the road builders. Such m were ultimately to be dedu deducted from the purchase price. The agreement provided that payment of the purchase monies would commence once the road was complete, and Mr Gonzalez had taken poion ofon of the land.

On or about 5 April 199is further agreemereement was refined, and reduced to writing by Mr Amjal Khan. Both parties signed it. It was express be "er to the agreemereement of 25 Septem985". Both the primarrimary judge and the Court ourt of Appeal regarded it as a variation o 1985 agreement, and part thereof.

The 5The 5 Apri0 agreement provided thed that Mr Mohammed would arrange for the access road to be built as soon as possible. It also obliged Mr Mohammed to comply with all of the approval conditions necessar the subdivision, and requirequired Mr Gonzalez immediately to psu a sum of $15,000 into the trust account of Khan & Associates. That sum was to be retained for payment to the builder of the access road, with any balance remaining being set off againstpurchase price. Once the rohe road had been completed, and the relevant approvals obtained from the authorities, the total purchase price owing, together with interest as provided for in the 1985 agreement, would be paid into that trust account. The entire amount would be paid to Mr Mohaonce title to the subjesubject land had been transferred to Mr Gonzalez.

It should be noted that, at this point, the contract between the parties consisted of the 1985 agreement, as varied by the 5 April 1990 agreement.

On 13 August 1990, the subdivision was approved, subject to compliance with conditions imposed by the local authority.

At about this time, the parties first learned of the existence of s 6(1) of the Lanes Act. Beca Because Mr Gonzaleznot a resident of F of Fiji, he could not enter into a contract to purchase more than one af land without the prior consent, in writing, of the Minister of Lands.

p>On 16 July 1990, the parties sought to rectify that problem by writing to the Minister and requesting his consent. The application to the Minister was, in one sense,essful. On 16 October 1990, he gd consentnsent. However, in accordance with s 6(20;6(2), which pes that that the Minister may impose conditions upon the grant of any consent, the Minister said that he approved the transaction subject to the following condi

"The vendor to obtain clearance from thom the Commissioner of Inland Revenue, who will ensure that necessary clearance is also received from the Governor of the Reserve Bank."

Regrettably, further difficulties were encountered. The problem that ultimately gave rise to this proceeding was that the condition imposed by the Minister was never met. The Commissioner of Inland Revenue did not provide the relevant clearance. Nor did the Governor of the Reserve Bank.

On 13 December 1990, M0;Gonzalez alez and Mr Mohammed ed into a third agrd agreement. That agreement was in writing and provided that Mr Gonzalez woulthin 14 d160;days, deposit in thst rust account of Khan & Associates an amount sufnt to satisfy the debt owin owing to the Bank. Mr Mohammed would have the yorveyor register the final survey plan, and obtain the rel clearance from the Commissmmissioner of Inland Revenue, as stipulated by the Minister when he granted his consent. After some furtheficulties the sum of $120,1120,174.32 was paid into the trust account of Khan & Associates on 13 February 1991.

Finally, the parties entered into a fourth agreement on 16 March 1991. Importantly, that agreement provided that Mr&Mohammed would arrange for the clearance to be obtained from the Commissioner of Inland Revd Revenue within two weeks. An amount of $as set aside for that purpose. As indicated earlier, howeveowever, Mr Mohammed did not obtain the relevant clearance. As a result, the condition remained unfulfilled, and the Minister’s consent was never actually given.

On 24 1991,160;Amjal Khan, actingcting with Mr Mohammed̵’s authority, transferred his file to another firm, Koya & Co. Ho transferred the monies that had been paid into his firm’s trust account by Mr #160;Gonzalez, authorised csed costs and dsements. The amount in ques question came to $114,811.54.

Mr Koya died in 1993. Inmber ober of that year, Mr&Mohammed engaged another firm of solicitors, Sahu Khan &amp & Sahu Khan, to act for him.

[5] After Mr Koya’th, his wife, Mrs Amina Koya, who is also now deceased, bec, became the executrix and trustee of his estate. In 1994, Yaar Mohammed through his new solicitors sued Mrs Koya in this Court in Civil Action HBC 94 of 1994L for the $114,811.54 that was paid into her husband’s trust account (the "Deposit") as moneys had and received together with interest thereon at 13.5% up to 31 March 1994 of $38,748.89 making a total claim of $153,560.43. No Defence having been filed by the late Mrs Koya, Yaar’s solicitors entered default judgment on 24 May 1994 for $153,560.43 together with further interest at 13.5% on the Deposit from 1 April 1994 to the date of judgment and costs (the "Default Judgment").

[6] On obtaining the Default Judgment, Yaar Mohammed registered a Judgment caveat against the Koya’s family home at Lautoka on 6 July 1994. By consent the caveat was ordered to remain registered on the property until further order of the Court. The Plaintiffs were studying law overseas at the time.

[7] The Koya brothers needed funds to complete their studies but in order to get those funds their mother had to offer the family home as security. According to the Second Defendant, negotiations followed which eventually led to the Plaintiffs’ Attorney executing a Deed of Guarantee on 20 April 1995 for the payment of the Default Judgment debt in exchange for Yaar removing his caveat. Yaar died in 1996 and his son, the First Defendant, became the executor and trustee of his father’s estate.

[8] By December 2002, the judgment debt had accumulated interest and increased to $218,823.61 so the solicitors for Yaar’s estate sent on 13 December 2002 a demand for payment of at least $60,000 from the Plaintiffs within 7 days otherwise proceedings would be issued in this Court. True to their word those proceedings came to be issued on 31 December 2002 in HBC 413 of 2002 in which the First Defendant sued the Koya brothers pursuant to the Deed of Guarantee for the sum of $223,858.73 and interest of 5% pa from 24 December 2002 until payment. The Plaintiffs filed their Defence on 21 January 2003. By consent, it was struck out on 14 October 2004 and judgment entered for the First Defendant for $223,858.73.

[9] In October 2005, the First Defendant took out bankruptcy proceedings against the Plaintiffs in the Nadi Magistrates Court in Bankruptcy Action No 36 of 2005.

[10] By September 2006, the Plaintiffs had paid $47,000 so the balance of the debt was $176,858.70. On 19 September 2006, the Second Defendant took sympathy to the First Defendant and his family and on payment of $72,000 by him took an assignment of the balance of the judgment debt.

[11] On 12 December 2006, in the Bankruptcy proceedings, by consent, the court ordered that the Plaintiffs pay the judgment debt plus 10%pa interest by monthly installments of $5,000. The debt then was $184,735.59. The Plaintiffs struggled with their payments which led to the Defendants moving the Nadi Magistrates Court for Fifa and an action by Originating Summons in this Court in Civil Action HBC 235 of 2008 for this Court to sanction the advertisement and sale of the Plaintiffs family home. These latter proceedings are yet to be heard by this Court.

[12] Finally, the Plaintiffs took independent legal advice and as a result filed these proceedings against the First and Second Defendants on 29 September 2009. The Plaintiffs have paid a total of $92,000 so far. They now seek from the Defendants repayment of those monies as payment under a mistake of fact or law. They allege that the Defendants knowingly pursued them for payment of a debt due to someone else under an unlawful contract. They now claim consequential punitive and general damages and want the Defendants restrained from demanding further payments.

OBJECTIONS TO THE SECOND DEFENDANT’S AFFIDVIT

[13] Before I move on to consider the application currently before the Court, I need to deal with objections which Mr Singh made to certain parts of the Second Defendant’s affidavit filed on 20 November 2009. Counsel was very mindful of my comments in Whittaker v Colonial Bank regarding objections to affidavits but I think the objections now raised are not technical. Counsel listed the paragraphs objected to in his submissions: 19(iv); 20(ii), (iv), (vi), (vii); 21(a), (f); 22; 23(iii), (iv). In the course of argument, further paragraphs were pointed to: 10(ii), (vi).

[14] Paragraphs 10(ii), (vi); 19(iv); 20(ii), (vi), (vii); 21(a), (f) allege misappropriation, fraud and conversion of the Deposit by the Plaintiffs late father and mother and severely attacked their character. I think it is totally unnecessary, let alone relevant.

[15] Order 41 r 5(1) of the High Court Rules require affidavits, subject to certain exceptions, to contain "only such facts as the deponent is able of his own knowledge to prove". The exceptions are in respect of summary judgment applications¹ and interlocutory applications where the affidavit is allowed to contain "statements of information or belief with the sources and grounds thereof"²

[16] The deponent of the affidavit objected to is the assignee of the judgment debt from First Defendant. He describes himself in an affidavit filed in action HBC 36 of 2005 and annexed to his affidavit in this action as a "substantial farmer" and moneylender for over 50 years. He has no personal knowledge of the transactions that took place before he became an assignee. When asked what were the sources of the allegations in the affidavit, Counsel for the Defendants said that his client relied on the Statement of Claim in action HBC 94 of 1994L in which the same matters were alleged. No Defence having been filed, he argued that the allegations in the Statement of Claim stood as proven under the Rules. With respect, I cannot agree. Order 45 rule 5(2) clearly require the source of the information or the belief to be disclosed. The deeming provisions in the Rules cannot have that effect. The above paragraphs do not comply with the rule.

[17] I agree with Mr Singh that the above paragraphs of the affidavit are scandalous. The Osborne’s Concise Law Dictionary defines "scandalous" as "anything unbecoming the dignity of the court to hear, or contrary to good manners or which unnecessarily charges some person with crime or immorality". The contents of paragraphs 10(ii), (vi); 19(iv); 20(ii), (vi), (vii); 21(a), (f) fall within all of the above categories of what is scandalous. I therefore order that they be expunged from the affidavit of the Second Defendant filed on 20 November 2009 and the record. Also, Defence Counsel’s submissions repeat those paragraphs and they too are to be expunged. The remainder of the paragraphs objected are of the kind that I "can shut my mind to it". They need not be struck out. It will be clear from the reasons that I give below for my Judgment on this application that the Defendants allegations are quite unfair and that the same allegations may well be leveled at them.

[18] Its all too often that deponents use their affidavits for personal attacks on other litigants. It gives little comfort in my view to the victim that the offending material is later removed from the Court file. The damage may have already been done. I have in the past and again now suggest that the rules be changed to require that all affidavits be settled by a legal practitioner, unless the litigants represent themselves, and that the name of the legal practitioner that settles the affidavit is noted in the affidavit. I know that quite often affidavits are drafted by clerks and in some if not most law firms this is necessary. There is nothing wrong with that. What is wrong, however, is for the solicitor or counsel who appears in Court not to have cast his eye over the affidavit before it is filed or used in Court and having cast his or her eye over it allows material that is obviously scandalous or vexatious to stand.

THE APPLICATION

[19] The Motion for stay of proceedings was filed on 29 September 2009. The orders sought are for stay of action HBC 235 of 2008 and to restrain the Defendants from "taking and form of payment or benefit" from the Plaintiffs under the 1985 contract, until further order.

[20] Both Counsels filed extensive submissions supplemented by oral submissions.

CONSIDERATION OF THE APPLICATION

[21] Generally, the principles in an application for stay and an application for interim injunction are the same: Fijian Teachers Association v President of the Republic of Fiji Islands [2008] FJHC 59; CA595.2007 (31 March 2008); The Professionals Limited v Professionals West Realty (Fiji) Limited [2008] HBC 90l.

[22] The threshold question is therefore: is there a serious issue to be tried? Counsel for the Plaintiffs relied on the Supreme Court decision in Gonzalez. He argued that the 1985 contract was declared to be illegal and unenforceable. Therefore the Deposit and other moneys paid under that contract must be left as they were. This is the serious issue to be tried.

[23] There is a balance of $22,000 from the initial Deposit unaccounted for and Counsel for the Plaintiffs said that his clients are willing to pay such an amount into Court if so ordered.

[24] On the other hand, Counsel for the Defendants argued that the Defendants are not claiming payment under the 1985 contract. Instead they are claiming under the Default Judgment and the Deed of Guarantee. The 1985 contract has nothing to do with this action. There is no serious issue to be tried.

[25] I would have thought that the first question that should be asked is: who owns the Deposit? It is an inevitable conclusion from the Gonzalez decision that the Deposit belongs to Gonzalez. It does not belong to the late Mr Koya nor does it belong to the late Mr Yaar Mohammed or anyone who claims title through him.

[26] Counsel for the Defendants disagrees that this was the critical question. He argued that the Deposit belonged to Yaar Mohammed because the money was deposited into Amjal Khan’s trust account on the instructions of Yaar, which money was subsequently transferred to the late Mr Koya’s trust account. The Deposit belonged to his client because as between a client and his lawyer moneys deposited in a trust account belonged to the client regardless of who owns it. The late Mr Koya had nothing to do with the 1985 contract he said. The money was deposited on his client’s instructions so it belonged to his client.

[27] I asked if he had any case authority for his proposition and he said he knew of an English authority and would send it to the Court when he finds it. In fact Counsel for the Plaintiffs also asked for leave to bring to the attention of the Court any such authorities. At the time of writing this Judgment, neither Counsel had submitted any such case authority. And I doubt very much that such an authority exists because the point can be decided by pure and simple logic.

[28] It is trite law that moneys deposited in a solicitor’s trust account by or for a client belongs to the client. Dr Sahu Khan says it is the client’s money irrespective of the source. That would be true if no one else can claim ownership of it. However, I do not think that Dr Sahu Khan’s proposition is correct if the money was stolen. I think he has to concede that the Police can stop the money being paid out until they find the true owner. For the same reason therefore, in my view, if the money does not belong to either the solicitor or the client this Court can intervene and order that the money be paid into Court. Or as in this case, where it is clear that the Deposit belongs to Gonzalez and to neither the Plaintiffs nor the Defendants, this Court can intervene and ask the balance to be paid into Court until further order. To not intervene would be, in my view, to allow the money to be taken or claimed by someone who does not own it. That cannot be right when the true owner is known as a direct result of a decision of the highest court in the land. In any event, I only need be satisfied that there is a serious issue to be tried which I consider that the issues that I have just discussed are such.

[29] The balance of convenience clearly lies in favour of maintaining the status quo until final determination of this action. It would be quite unfair if the final decision of this Court were to be that the Defendants were not entitled to lay any claim to the Deposit but the Plaintiffs’ property has already been sold. All other proceedings should be stayed.

[30] The Plaintiffs undertaking to damages has been criticised by Dr Sahu Khan but I think this is a case where an undertaking is not necessary for the grant of the stay.

[31] Finally, I think it should now be clearer to the legal representatives involved how this matter is to be resolved and the way forward to lay to rest the ghosts of Gonzalez v Akhtar, Episode 1.

COSTS

[32] The Plaintiffs having won this application are entitled to their costs. The hearing took nearly three hours mainly due to Defence Counsel’s lengthy oral submissions. Substantial affidavits and submissions have been filed. I think costs of $2,400 are justified.

ORDERS

[33] The orders are as follows:

1. All proceedings in Civil Action HBC 235 of 2008 in this Court are stayed until further order.

2. The Defendants, their servants and agents are restrained from making any demand or claim against the Plaintiffs in respect of moneys paid under or pursuant to the contract between Yaar Mohammed and Ignazio Gonzalez entered into on 25 September 1985 and any agreements, guarantees, Court orders and judgments relating thereto until further order.

3. The sum of $22,000 shall be paid into Court by the Plaintiffs within 6 weeks.

4. The Defendants shall pay the Plaintiffs costs of $2,400 within 21 days.

5. Paragraphs 10(ii), (vi); 19(iv); 20(ii), (vi), (vii); 21(a), (f) of the Second Defendant’s affidavit filed on 20 November 2009 and any references thereto in the Defendants’ Submissions are to be expunged from the record.

Sosefo Inoke
Judge

_________________

Endnote

1. under Orders 14 and 86, respectively.
2. O 41 r5(2).