Fiji Development Bank v Tuberi [2010] FJHC 220; HBC059.2010 (29 June 2010)

IN THE HIGH COURT OF FIJI ISLANDS
AT SUVA
CIVIL JURISDICTION

Civil Action No: HBC 59 of 2010

BETWEEN:

FIJI DEVELOPMENT BANK
Plaintiff

AND:

INIASI VODO TUBERI
Defendant

Counsel: Mr. N. Lajendra for the Plaintiff
Defendant in Person

Date of judgment: 29th June 2010

JUDGMENT

This is an application for possession by the plaintiff bank pursuant to Order 88 Rule 3 of the High Court Rules (1988).

By originating summons dated 3rd march 1999, the plaintiff applied for the following orders:-

1. Delivery by the defendant and/or his servants and/or agents to the plaintiff of vacant possession of all that property comprised and described in Crown lease No 168 being Lot 8, Section 30, Samabula North in the Island of Rewa and District of Suva, having an area of 32 perches situated at 68 Nayau street Samabula, together with the improvements thereon.

2. An injunction restraining the defendant, his servants or agents from interfering with the improvements on the said property in any way so as to deplete its value.

3. Costs of this action.

4. Such other or other relief as seems just and equitable to this Honourable Court.

The defendant is the registered owner of the crown lease No 16 80 being Lot 8, Sec 30 Samabula North. A certified copy of the said title marked as A is annexed to the affidavit.

The affidavit of Paula Rakai in support of the Summons depose that by mortgage made between the plaintiff and the mortgagor the property was charged to secure repayment to the plaintiff. The Mortgage No 74779 was registered on 20.01.1995.A certified copy of the mortgage marked as B has been annexed to the affidavit.

On 19.11.1996, a further loan of $3649.50 was granted to the defendant by the plaintiff bank. A copy of the said loan letter marked as ‘D’ has been annexed to the affidavit.

In consideration for the loan facility, the plaintiff bank took the following securities.

(a) Bill of sale over items to be purchased.

(b) Registered 3rd mortgage over CL 1680, lot 8, Section 30 with improvements thereon.

Since the defendant’s loan account with the plaintiff bank fell in arrears, a formal demand notice was sent to the defendant by the plaintiff on 16th Feb.2009.

Having received no response from the defendant, on 20.04.2009 the plaintiff made a formal demand under the Mortgage for payment of the full outstanding account within 30 days from receipt of the said demand.

Since the defendant had failed to respond, the plaintiff bank called for tenders for the sale of the mortgage property and the same was informed to the defendant.

Subsequently the defendant has made representation to the bank and as a result of that, the defendant was given time until 10.10.2009 to pay off the entire loan.

However, the defendant has not made any attempt to make payments. Therefore, the defendant was notified by the plaintiff to deliver the vacant possession of the mortgaged property.

A copy of the said notice marked as ‘j’ has been annexed to the affidavit.

On 12th Feb 2010, the plaintiff bank informed the defendant their intention of obtaining a court order for eviction and re advertising of the property for sale.

A copy of the said demand notice marked as ‘K’ has been annexed to the affidavit.

Regardless of that notice the defendant is still in occupation of the property and has not made any monthly payment. When the case was mentioned on 26.03.2010 the defendant was granted 21 days to file his affidavit in reply.

The plaintiff’s application was opposed by the affidavit of the defendant Iniasi Tuberi filed on 24.6.2010.

However, none of the above facts were denied by the defendant in his affidavit filed in opposition.

Furthermore, in his affidavit, the defendant has admitted that he was in arrears in his mortgage payment in respect of the property at No 68 of Samabula north Suva.

He stated that he has got resources to pay his outstanding mortgage but he needs 185 US$ to activate his overseas account which is at Northwest Bank PLC in USA.

He further stated that once he is able to raise 185 US$ and send it to the Northwest Bank, the funds would be transferred to Fiji and he would pay off the outstanding mortgage.

According to the defendant the main cause of delay is finding the required fees of 185US$ which were transferred to Benin.

Therefore the defendant requests that the court should monitor the progress of the transfer of funds without granting an order sought by the plaintiff.

When the application was taken up for hearing on 22.06.2010, the defendant informed the court that he would receive funds without delay and the payments would be settled by 26.06.2010.Therefore he sought an adjournment.

Accordingly, the case was adjourned for 25.06.2010.

However, on 25.06.2010 the defendant informed the court that he has not received funds yet and therefore is unable to settle the payment.

Thus the defendant sought an adjournment again but it was opposed by the plaintiff.

At the hearing the plaintiff’s counsel and the defendant made their respective submissions.

The Plaintiff’s counsel submitted that since the defendant has admitted his default in mortgage payment, under the Sec 6 of the Mortgage Act and Order 88 Rule 1(1)(d) of the High Court Rules 1988 the plaintiff is entitled to get the vacant possession of the mortgaged property.

In support of his submission the plaintiff’s counsel cited several authorities.

Having cited the judgment of Fiji Development Bank v Duvuloco [2002] FJHC 243 and ANZ v .Amit Kumar[2003] FJHC 326 the plaintiff’s counsel submitted that the Court can order the defendant to give immediate vacant possession of the mortgaged property with costs to plaintiff.

Opposing the plaintiff’s application, the defendant stated that he had not failed to rectify the default. The defendant further stated that he would be able to redeem the debt once he received funds from US.

However, the defendant failed to produce any reliable document to show the progress of the transfer of funds. The documents annexed to the defendant’s affidavit also do not confirm any immediate transfer of funds to the defendant.

The defendant further submitted that the order sought by the plaintiff was inhuman and drastic, the mortgaged property was a residential property and the court should consider the plight of the children and other members of the defendant’s family, and this property is the only investment of the defendant.

The mortgage is a contract between a mortgagee and mortgagor. Once the Order 88 has been complied with, the mortgagee has indisputable rights to possession. This applies to the third party mortgages as well.

In National Bank of Fiji v. Hussain [1995] FJHC29 Fatiaki J explained the mortgagee’s right to possession of the mortgaged property by referring to the following dictum of Goff L.J in Western Bank Ltd. v. Schindler(1977) 1 Ch.1

"It has for a very long time been established law that a mortgagee has a proprietary right at common law as owner of the legal estate to go into possession of the mortgaged property. This right has been unequivocally recognized in a number of modern cases: see, for example, Four Maids Ltd. v. Dudley Marshall(Properties Ltd. (1957) Ch.317...It has nothing to do with default: see Harman J in the Four Maids case where he said at p 320:

"The mortgagee may go into possession before the ink is dry on the mortgage unless there is something in the contract, express or by implication, whereby he has contracted out of that right."

The defendant is in possession of the property. The total amount due under the mortgage has been accumulating and the defendant has not made any genuine attempt to settle the outstanding balance on the account.

The plaintiff has given the defendant enough time to pay off the outstanding amount but the defendant failed to honour his obligations under the mortgage.

The defendant mainly relied on the availability of funds from overseas to redeem the mortgage. The annexure marked as ‘H’ by the plaintiff clearly shows that even in September 2009 the defendant had taken up the same position and had sought two weeks time to settle the outstanding account by informing the plaintiff that he would receive funds from overseas, but up to now it has not been materialized.

Therefore, the reasons advanced by the defendant in opposing the plaintiff’s application are far from satisfactory and I conclude that the defendant’s submission would fail for want of merits.

The plaintiff has fully complied with the provisions of the Order 88 r.3 pertaining to mortgage actions and claim for possession.

Furthermore, Clause 5 and 6 (a) of the Mortgage expressly empowers the plaintiff to enter upon and take possession of the mortgaged property when the mortgagor has defaulted on his payment obligations under the mortgage as follows:

1. That the power of sale and all other powers conferred on a mortgagee by the Property Law Act 1971 may be fully exercised by the mortgagee immediately upon or at any time after default in payment of any of the moneys hereby secured or in the performance or observance of the any of the covenants or agreements on the part of the mortgagor herein contained or implied and such default continues for the space of one calendar month after the mortgagee shall have given notice to the mortgagor to pay the money then due or owing hereunder or to perform or observe the covenants or agreements herein contained or implied.
   
2. That upon the power of sale becoming exercisable hereunder it shall be lawful for the mortgagee at any time and from time to time without giving to the mortgagor any notice to do all or any of the following:-
   
   • (a) To enter upon and take possession and/or enter into receipt of the rents and profits of all or any of the said land and to manage the same and to pull down, rebuild, alter and add to any than existing building or improvements thereon and to do all such things as the mortgagee may deem necessary to manage and efficiently carry on the said land or to obtain income thereon and for any of such purposes to employ managers workmen and others and otherwise to act in all respects as the mortgagee in its absolute discretion may think fit."
     

These contractual rights are further reinforced by the terms of Section 75 of the Property Law Act which provides:

"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 destrain upon the occupier or tenant of the said land for the rent then due."

Considering the above facts I hold that the plaintiff bank/mortgagee is entitled to have the vacant possession of the mortgaged property.

I therefore order in terms of the originating summons.

However, considering the residential nature of the mortgaged property, I stay the execution of the order for three weeks from the date of service of the order on the defendants.

Costs are to be assessed summarily.

Pradeep Hettiarachchi
JUDGE

At Suva
29th June, 2010