|
|
Home
| Databases
| WorldLII
| Search
| Feedback
High Court of Fiji |
IN THE HIGH COURT OF FIJI
AT SUVA
CIVIL JURISDICTION
CIVIL ACTION HBC NO. 283 OF 2006
BETWEEN:
HOUSING AUTHORITY
PLAINTIFF
AND:
PENI BULUCAMA DELANA
DEFENDANT
AND:
FIJI DEVELOPMENT BANK
THIRD PARTY
Ms S Narayan for the Plaintiff
Mr A Vakaloloma for the Defendant
Mr M Nand for the Third Party
JUDGMENT
These proceedings were commenced by Originating Summons dated 28 June 2006. The substantive orders sought by the Plaintiff are:
"a. That the Defendant deliver to the Plaintiff vacant possession of all that piece or parcel of land situated in the District of Suva ... comprised and described in lease No. 168309 being lot 42 on DP 3720 located Nairai Road Raiwai together with all improvements thereon as charged by the Defendant to the Plaintiff by Mortgage No. 272970 dated 27 day of April 1989 to secure the money therein mentioned.
b. That the Defendant their servants, agents or employees be restrained from interfering with the improvements on the said property in any way so as to deplete its value."
The affidavit in support sworn by Jagdish Prasad on 28 June 2006 indicates that the Plaintiff as mortgagee is seeking an order for vacant possession of land mortgaged to it as a result of default by the Defendant in making payments due under a mortgage agreement.
The Defendant is the registered proprietor of the property described in Lease No. 168309 situated in Nairai Road Raiwai (the property). Erected on the property is a concrete dwelling in which the Defendant is apparently presently residing.
By mortgage number 272970 made between the Plaintiff and the Defendant on 27 April 1989 the property was charged to secure repayment to the Plaintiff of all advances, charges, interest and other lending accommodation made by the Plaintiff to the Defendant from time to time on terms and conditions stated in the mortgage.
As at 31 May 2006 the amount owing to the Plaintiff, deposed to by Jagdish Prasad, was $17061.43 and is increasing on a daily basis.
The Defendant has not paid the amount due and the Plaintiff has effected a mortgagee sale. The Plaintiff is required to give vacant possession of the property. The Plaintiff served on the Defendant a Notice to Quit dated 14 December 2005.
The Plaintiff’s application is brought under Order 88 of the High Court Rules. These Rules set out the circumstances in which a mortgagor may be required to deliver possession of his mortgaged property to a mortgagee when he has defaulted in payments due under the Mortgage.
In this case I am satisfied that the Plaintiff has complied with Order 88 and in doing so I accept the Plaintiff’s written submissions dated 22 December 2008 and the oral submissions made before me at the hearing of the application.
It follows that the Plaintiff is entitled to obtain possession of the mortgaged property from the Defendant. The position is clearly stated in paragraph 725 Halsbury’s Laws of England (4th Edition Volume 32):
"The mortgagee will not be restrained from exercising his power of sale because the amount due is in dispute, or because the mortgagor has begun a redemption action or because the mortgagor objects to the manner in which the sale is being arranged. He will be restrained, however, if the mortgagor pays the amount claimed into court .... The mortgagee will also be restrained if, upon a subsequent encumbrancer offering to pay off the first mortgage, the mortgagee denies his title to redeem."
The contractual right to bring an action for possession and the power of sale are both set out in clause 14 of the Mortgage. That clause states:
"14 That the power of sale and all other power conferred on a mortgagee by the Property Law Act may be exercised by the mortgagee immediately upon or at any time after default of any of the moneys hereby secured ....."
This Court has long held the view that failing payment into Court of the amount sworn by the Mortgagee as due and owing under the Mortgage, no restraint should be placed on the exercise of the Mortgagee’s powers of sale under the mortgage (see Westpac Banking Corporation Ltd –v- Adi Mahesh Prasad (1999) 45 FLR 1; NBF Asset Management Bank –v- Kolinio Bulivakanua and Selina Mau Bulibakarua Civil Action No. 97 of 1999 unreported decision of Byrne J (as he then was) delivered on 30 November 1999; NBF Asset Management Bank –v- Donald Thomas Pickering and Eileen Pickering Civil Action No. 170 of 1999 unreported decision of Byrne J (as he then was) delivered on 19 May 2000 and NBF Asset Management Bank –v- Naipote Vere and Another Civil Action No. 323 of 2001 delivered 10 November 2003 unreported per Scott J).
At the hearing before me Counsel for the Defendant indicated that the facts upon which the Plaintiff relied were not disputed. This would appear to explain why there was no answering affidavit filed by the Defendant in response to the Plaintiff’s affidavit.
At this stage of the proceedings the Plaintiff would ordinarily be entitled to the relief claimed in its Originating Summons.
However the Defendant subsequently filed and served a Third Party Notice. It is necessary now to make some comments about the manner in which the third party proceedings were commenced.
It would appear from a perusal of the Court file that Counsel for the Defendant made an oral application to the Judge in Chambers on 16 July 2008 that the Fiji Development Bank be added as a party. There being no objection by Counsel for the Plaintiff, the Judge granted leave to the Defendant to issue a Third Party Notice. The Third Party Notice was filed on 1 August 2008 and subsequently served on 4 August 2008.
Order 16 Rule 1 (2) of the High Court Rules states:
"A defendant to an action may not issue a third party notice without the leave of the Court unless his action was begun by writ and he issues the notice before serving his defence on the Plaintiff".
The proceedings in the present case were begun by Originating Summons. As a result the Defendant was required to obtain the leave of the Court. The procedure for obtaining the leave of the Court to issue a third party notice is set out in Order 16 Rule 2 which states:
"(1) Application for leave to issue a third party notice may be made ex parte but the Court may direct a summons for leave to be issued.
(2) An application for leave to issue a third party notice must be supported by an affidavit stating:
(a) the nature of the claim made by the Plaintiff in the action;
(b) the stage which proceedings in the action have reached;
(c) the nature of the claim made by the applicant or particulars of the question or issue required to be determined, as the case may be, and the facts on which the proposed third party notice is based; and
(d) the name and address of the person against whom the third party notice is to be issued".
It is no doubt appropriate for the Court to proceed by way of summons inter partes where the basis of the Defendant’s application is Order 16 Rule 1 (1) (c) namely where the Defendant:
"requires that any question or issues relating to or connected with the original subject-matter of the action should be determined not only as between the Plaintiff and the Defendant but also as between either or both of them and a person not already a party to the action".
In view of these provisions it is unfortunate that the order was made in the manner that I have described. It is clear that there should have been a formal application, initially ex parte, supported by an affidavit setting out the matters specified in the Rule. The application should then have proceeded inter partes. In this case there appears to have been only an oral application unsupported by any affidavit material.
As a result, at the time when the third party notice was filed and served, no affidavit material of any description had been filed by the Defendant.
The Court has a discretion under Order 16 Rule 2 in all cases whether or not to allow the Defendant to issue a third party notice. Usually, if a prima facie case is established which would bring the matter within any paragraph of Rule 1 (1) leave will be granted to issue the notice and the Court will not in granting leave consider the merits of the claim (see The Supreme Court Practice 1991 Volume 1 paragraph 16/2/3).
Without the benefit of an affidavit filed by the Defendant in support of its application it is difficult to conclude that there has been a proper exercise of the Court’s discretion under Order 16 Rule 2.
There is a further problem in relation to these Third Party proceedings. In The Supreme Court Practice 1991 (supra at paragraph 16/2/2) it is stated that the application (for leave) cannot be made by a Defendant until after notice of intention to defend has been given. By way of obiter, Pain J dealt with the consequences of this requirement in Osea –v- Tuqovu (1996) 42 FLR 259 when he noted:
"In terms of the rule (O16R1) a third party notice can only be issued by a defendant who has given notice of intention to defend. A notice of intention to defend is a specific pleading defined in Order 1 Rule 2 as containing an acknowledgment of service and statement that the defendant intends to contest the proceedings. In terms of Order 12 (Rule 8) it is required to be given in an action begun by ... originating summons. It has a prescribed form to be found in form 2 of Appendix 1 to the Rules."
In the present case there is no notice of intention to defend (acknowledgment of service) on the court file and I can only assume that no such document was ever filed or served on the Plaintiff by the Defendant. Therefore the oral application itself should not have been entertained for that reason alone.
In addition, there has been a failure to comply with the requirements of Order 16 Rule 4 that the Defendant issue a summons seeking the Court’s direction as to the future conduct of the proceedings to be followed by the Third Party.
Regrettably none of the parties appears at any stage of the proceedings to have raised any of these issues of non-compliance with the Court Rules with the Judge.
To add to the somewhat unusual nature of the proceedings, the Third Party’s Business Manager Choice Home Loans, Jone Niumataiwalu, swore an affidavit on 4 September 2008 purporting to respond to the matters pleaded by the Defendant in his Third Party Notice. Since there was no affidavit at that time filed by the Defendant putting forward evidence upon which he might be said to be relying and considering the provisions of Order 16 Rule 3, the filing of such an affidavit by the Third Party was both unnecessary and inappropriate. Having filed an Acknowledgement of Service on 18 August 2008, the appropriate course of action was for the Third Party to file and serve its Defence. To date that has not been done.
The above narrative represents either an inability and/or an unwillingness on the part of the legal practitioners involved in these proceedings to understand and/or apply the Rules of the Court. In such circumstances it is invariably the parties who are disadvantaged by either unnecessary delay, increased costs or a denial of a fair hearing before the Court.
In respect of the third party proceedings further affidavits were filed and then the parties filed written submissions. On 1 April 2009 the parties appeared before the Judge for mention. Despite all these irregularities the matter was listed for argument on 22 May 2009. However that date was vacated and the matter came before me initially for mention and then for oral submissions on 9 February 2010. It became necessary for the parties to file further affidavit material and the matter was relisted for further submissions on 25 March 2010. I also allowed the matter to proceed.
The Third Party Notice filed by the Defendant states:
"Take Notice that this action has been brought by the Plaintiff against the Defendant. In it the Plaintiff claims against the Defendant the sum of $21,381.04 as amount owed to the Plaintiff.
The Defendant claims against you to be indemnified against the Plaintiff’s claim and the cost of this action or contribution to the action to the extent as the court may determine of the Plaintiff’s claim on the ground that:
1. That the Respondent had sought assistance with the Fiji Development through its Home Loan Program, seeking Bank loan to refinance his housing loan after being notified and claim by the Plaintiff for the payment of arrears.
2. That the Respondent was notified by the Bank of the approval of his loan letter dated 22 February 2007 in which they (the Bank) have approved $21,000.00 to refinance Home Loan Debt with Housing Authority.
3. That the Respondent in the process of his application paid $70.00 application fees paid vide Receipt No. 1044933 on 20 February 2007.
4. That in regards to the contract of the Agreement the Defendant expected and trusted that the Fiji Development Bank should have settled the Housing Authority Debt.
Whereof the Defendant claims against you the following relief:
(a) settlement of arrears claimed by the Plaintiff;
(b) To be indemnified against any interest accumulated over time due to the delay of agreed settlement including costs;
(c) Costs".
The Notice is inaccurate and lacks particulars. The Plaintiff is not claiming $21,381.04 against the Defendant. The Plaintiff claims possession of the property to enable the mortgagee’s sale to be effected. The only way in which the claim for possession may be defeated is by a payment into court of the whole amount claimed to be owing under the mortgage as at the date stated in the affidavit in support. The amount owing under the mortgage was $17,061.43 as at 31 May 2006 according to the affidavit filed in support of the Originating Summons. There was no other affidavit material filed as at the date of the Third Party Notice and it is not clear how the Defendant asserts that the Plaintiff was claiming $21,381.04. In any event there has been no payment into court.
There are no particulars provided in paragraph 1 and there are insufficient particulars provided in paragraphs 2 and 3. There are no particulars provided in paragraph 4 as to the bases of the expectation and trust of the Defendant.
The Defendant is claiming to be indemnified by the Third Party in respect of the financial loss incurred by the Defendant as a result of the alleged failure by the Third Party to perform its obligations under a loan agreement made between the Defendant and the Third Party. The financial loss that the Defendant claims against the Third Party is the amount of the arrears that the Plaintiff claimed were owing by the Defendant under the mortgage together with what is termed interest accumulated over time due to the delay of agreed settlement.
The amount of the loan was $21,000 and was to be disbursed by way of a payment of $18,000.00 to refinance the debt with the Plaintiff, $2000.00 for contingency and $1,000.00 for what was termed as "other interest and legal fees".
The relevant terms of the loan as set out in the Third Party’s offer letter dated 10 February 2006 may be summarised briefly. First, the Home loan was approved subject to the special conditions set out in paragraph 7 which included the term that any overrun in cost was to be borne by the applicant.
Secondly, all formalities associated with the proposed loan were to be completed before funds could be disbursed.
Thirdly, all out of pocket expenses incurred by the Bank together with the Bank’s usual fees in connection with any of its services were to be debited to the borrower’s account and were payable by the borrower irrespective of whether or not the loan was disbursed.
Fourthly, security was to be by way of a first mortgage over the property together with assignment of sufficient of the Defendant’s salary to meet stipulated repayments.
Fifthly an establishment fee of $500 was to be debited to the account or payable upon acceptance by the Defendant of the loan offer.
Finally, a commitment fee was payable under specified circumstances at a specified rate.
It should be noted at the outset that the Third Party has not disbursed up to the present time any funds to the Plaintiff on behalf of the Defendant pursuant to the agreement which was signed by the Defendant on 16 February 2006.
It should also be noted that whatever may be the reasons for this, neither the Defendant nor the Third Party have sought to attach any fault to the Plaintiff.
Before proceeding to consider the issues in the Third Party proceedings, there is one matter that should be dealt with at this stage. That issue is whether the mortgagee (the Plaintiff) has entered into a contract of sale pursuant to its power of sale. If so, what effect did that have on any attempt by the Defendant to exercise his right of redemption which was the purpose of the loan from the Third Party.
It is therefore necessary to consider the effect of paragraphs 14 and 15 of the Plaintiff’s affidavit in support sworn by Jagdish Prasad that states:
"14. That meanwhile prior to the commencement of these court proceedings the Plaintiff has received numerous tenders pursuant to the above mortgagee sale and the said property has now been sold to a successful tenderer namely Vilisita Daurewa also known as Vilisila Tesinoko Waqaliti.
15. That the Plaintiff will be required by the successful tenderer to give vacant possession of the said property."
Reference to this sale was made in paragraph 6 of an affidavit sworn by Eapi Nabou the Plaintiff’s Acting General Manager Lending on 21 October 2008. That paragraph stated:
"That in response to paragraph 6(f) of the said affidavit, I admit that the Plaintiff received the letter dated 27 February 2006 however we cannot produce settlement figure because property was already offered to a successful buyer as stated in the Affidavit in Support filed by the Plaintiff’s Solicitors. I reiterate paragraph 14 of the Affidavit in Support of Jagdish Prasad filed on 4 July 2006."
It is clear from this material that the Plaintiff is asserting that as at 21 October 2008 the contract for the sale of the mortgaged property that had been entered into some time prior to 26 June 2006 by the Plaintiff still subsisted. Furthermore in her oral submission before me Counsel for the Plaintiff stated that the sale still subsists.
Although the particulars of the sale have not been disclosed nor any relevant terms of the contract, the material in the affidavits has not been challenged and is the only evidence before me on this point.
On the authority of Property and Bloodstock Ltd v. Emerton [1968] 1 Ch 94 ordinarily the entry by the Plaintiff as mortgagee into a contract for the sale of the mortgaged property, whether conditional or unconditional, pursuant to section 79 of the Property Law Act Cap 130, would bar the Defendant’s (as Mortgagor) right of redemption so long as the contract subsists.
Under those circumstances the Defendant could not claim that he was entitled to be indemnified by the Third Party for its alleged failure to perform because redemption by the Third Party on behalf of the Defendant would not have been possible. Redemption would be barred as a result of the subsisting contract for the sale of the mortgaged property entered into pursuant to the statutory and contractual right to sell.
However, the conduct of the Plaintiff in its dealings with the Third Party raises a question concerning the willingness of the Plaintiff to accept payment from the Third Party on behalf of the Defendant thereby allowing the Defendant to exercise a right of redemption.
In a letter dated 28 November 2006 addressed to the Third Party, the Plaintiff stated, so far as is relevant, that:
"We refer to your letter dated 17 November 2006 and wish to advise that the amount required for full settlement is $27,311.03 ... and the same to be settled by bank cheque.
....
The above figure is valid till 23 February 2007. A fresh figure is to be obtained if settlement is not affected by the aforesaid date.
......."
And again in a letter dated 28 June 2007 the Plaintiff wrote to the Third Party saying:
"We refer to your clients’ application dated 21 February 2007 and are pleased to inform you of our consent to the mortgage over the above property to Fiji Development Bank and Fiji National Provident Fund for a consideration sum not exceeding $21,000.00 and $6,377.00 as first and second mortgage respectively as applied for subject to the following conditions:
a. That the sum of $28,431.04 ($21,381.04 – H/A Balance and $7,040.00 – FNPF Balance) being the full amount owing on the account concerned up to 19 September 2007 be paid to us in full not later than the expiry date as stipulated above.
b. That this transaction is registered with the Registrar of Titles or Registrar of Deeds within a period of three calendar months hereof, that is to say not later than 28 September 2007 failing which the consent as hereby given shall be deemed null, void and of no effect.
We forward herewith the Charge and Mortgage documents duly endorsed with our consent".
Two further letters from the Plaintiff indicated an on-going willingness to allow the Defendant through the Third Party to settle his account. The first is a letter dated 5 March 2008 addressed to its solicitors and copied to the Third Party. The relevant paragraphs of that letter stated:
"Please be informed that the above named defendant has taken considerable time to settle his account. The defendant’s financier (FDB) had, on 20 February 2008, requested to settle in the sum of $21,381.04 which had expired on 29 September 2008.
Kindly be advised that we are not accepting their proposal and request the Defendant to settle the sum of $32,627.74 which will expire on 14 May 2008."
In the second letter which was undated and addressed to its Solicitors with a copy to the Third Party’s Solicitors, the Plaintiff stated:
"Please be advised that further to our letter of the even date, we have reconsidered our decision to settle the above matter as per your clause 3 of your letter dated 3 November 2008 in the sum of $23,140.97 being full and final payment for the defendant’s debt with the Authority."
It is apparent that the Plaintiff has been willing to allow the Defendant to exercise his right of redemption even though at the same time it has entered into a contract for the sale of the mortgaged land which contract, it would appear, subsists up to the present time.
That being the case the questions to be determined are whether the Third Party has breached its loan agreement with the Defendant? If so, whether such breach entitles the Defendant to be indemnified by the Third Party for any financial loss suffered by him as a result of the said failure to pay on his behalf the amount claimed by the Plaintiff.
The affidavit material indicates that the Third Party has at all times been willing to disburse the sum of $21,000.00 to the Plaintiff as part of a settlement with the Plaintiff. The Plaintiff it would appear was prepared to accept a sum less than the amount owing under the mortgage to settle the matter. Apart from the additional sum of $381.00 that had been paid by the Defendant to the Third Party at its request on 30 August 2007, the proposed settlement also required the Defendant to consent to the amount standing to his credit in his account with the Third Party in the sum of $1756.93 to be included in the settlement amount to be paid to the Plaintiff. That amount of $1756.93 is in part made up of monthly payments of $17.84 in respect of commitment fees paid by the Defendant to the Third Party.
In his affidavit sworn on 29 March 2010 the Defendant explained in paragraph 18 why he did not consent to the sum of $1756.93 forming part of the settlement amount of $23,140.97. The reason was:
"... I did not agree to the Third Party proposal because of the amount that had been accumulated with Housing Authority and I believe that Third Party should be responsible to pay Housing Authority for the amount that had been accumulated due to their failure to settle as promised."
The Defendant’s stance needs to be considered and weighed against other facts. It should not be forgotten that the Plaintiff was prepared to accept a lesser amount (about $4000) than the accumulated total amount due under the mortgage in settlement.
It should also be remembered that the Third Party’s contractual liability was to provide a loan of $21,000.00. After reading the material in the affidavit it would appear that the Third Party has been willing to do this at all material times.
Considering that the Defendant has not paid any moneys under the mortgage since 2004 it does seem to have been an unreasonable decision on his part not to make an additional payment of $1756.93 in order to enable the matter to be settled whereby the right of redemption would be exercised and a fresh first mortgage executed in favour of the Third Party. Under the loan agreement the Defendant was, by implication, liable for any additional moneys owing to the mortgagee.
Finally I am not satisfied on the material before me that the Third Party has acted with unreasonable delay in this matter. It twice wrote to the Plaintiff requesting information about a settlement amount. The first letter was dated 21 February 2006 and the second letter was dated 17 November 2006. It did not get a reply from the Plaintiff until 28 November 2006 and from the Fiji National Provident Fund until 3 May 2007. Initially settlement was to take place by mid June 2007. The Plaintiff then advised the Third Party that settlement was required in the sum of $21,381.04. The Defendant paid the additional sum of $381.04 on 30 August 2007. Then there was further delay caused by the existence of a caveat on the title that had been lodged by the Suva City Council. That was a matter that quite properly the Defendant was required to clear before settlement could be effected.
That was done and the Third Party informed the Plaintiff by letter dated 20 February 2008 that it was ready to settle as the caveat had been lifted.
Then by letter dated 5 March 2008 the Plaintiff informed the Third Party that the settlement amount was no longer $21,381.04. The amount had increased to $32,627.74 although this included the amount required to be paid by FNPF. After negotiations between the Plaintiff and the Third Party, it was agreed that the amount to be paid by the Third Party together with the Defendant’s contribution to settle the debt would be $23,140.97.
There has certainly been tardiness on the part of the Plaintiff and the Fiji National Provident Fund in answering correspondence from the Third Party. Perhaps the Third Party could have been more pro-active in pursuing replies but there is no certainty that follow-up correspondence would have changed anything.
There were unforeseen issues that needed to be attended to. Requesting a further small contribution ($381) from the Defendant and the need for the caveat to be removed by the Defendant both added to the delay.
As a result of the aforegoing I have concluded that as between the Plaintiff and the Defendant the Plaintiff is entitled to vacant possession of the property that is described in paragraph (a) of the Originating Summons and is entitled to the injunction sought in paragraph (b). Although the Plaintiff has entered into a contract for the sale of the mortgaged property which still subsists, it has at all times been willing to accept payment in settlement of the mortgage debt.
As between the Defendant and the Third Party I have concluded that the Third Party has at all times remained willing to honour its agreement to provide a home loan in the sum of $21,000.00. The reason why the agreement has not been performed was the unreasonable refusal of the Defendant to contribute a further sum of $1756.93 to the settlement amount in satisfaction of the reduced mortgage debt. There was no unreasonable delay that could be attributed to the Third Party.
I therefore make the following orders:
That
W D Calanchini
JUDGE
30 April 2010
At Suva
PacLII:
Copyright Policy
|
Disclaimers
|
Privacy Policy
|
Feedback
URL: http://www.paclii.org/fj/cases/FJHC/2010/277.html