Dube v Goundar [2010] FJHC 343; HBC061.2005 (10 August 2010)

IN THE HIGH COURT OF FIJI
AT LAUTOKA
CIVIL JURISDICTION

Civil Action No: HBC 061 of 2005.

BETWEEN:

MILTON ROSS DUBE, JOHN DEDABANOUW DUBE AND NINA KATHLEEN DUBE
normally of Nauru but presently of Martinitar, Nadi, Businesspersons.
Plaintiffs

AND:

KRISTAMMA GOUNDAR
daughter of Marappa Gounder normally of Martinatar, Nadi,
Retired but presently of Sydney, Australia as the Executrix and
Trustee of the Estate of Muttamma father's name Suddaiya Pillay (deceased).
First Defendant

AND:

HARI KRISHNA GOUNDAR
son of Karpana Gounder formerly of Lautoka but now of New Zealand, Journalist
Second Defendant

AND:

THE REGISTRAR OF TITLES, SUVA
Third Defendant

AND:

CHANDAR SEN
(father's name Balram) of Tavua, Fiji, Landlord and Farmer.
Fourth Defendant

To:

KRISTAMMA GOUNDAR
daughter of Marappa Gounder normally of Martinatar, Nadi,
Retired but presently of Sydney, Australia as the Executrix and
Trustee of the Estate of Muttamma father's name Suddaiya Pillay (deceased).
First Defendant/First Garnishee

To:

HARI KRISHNA GOUNDAR
son of Karpana Gounder formerly of Lautoka but now of New Zealand, Journalist
Second Defendant/Second Garnishee

To:

MOHAMMED SAMSUDEAN SAHU KHAN
(father's name A.H Sahu Khan) trading as SAHU KHAN & SAHU KHAN
Legal Practitioner, practicing in Ba, Fiji.
Third Garnishee

To:

NILESH LAGENDRA
(father's name not known to the Fourth Defendant) trading as LAJENDRA LAW
Legal Practitioner, practicing in Suva, Fiji.
Fourth Garnishee.

Counsel appearing:
For the 4th Defendant Judgment Creditor Applicant: Mr. Mishra Prakash
Of MISHRA PRAKASH & ASSOCIATES

For the 1st, 2nd Defendant Garnishees and 3rd Garnishees: Mr. H.A. Shah
Dr.Sahu Khan
Of SAHU KHAN & SAHU KHAN

Date of Hearing: 11TH June 2010
Date of Garnishee Judgment: 10th August 2010.

JUDGMENT IN GARNISHEE PROCEEDINGS

A court has a duty to facilitate the execution and enforcement of its judgments according to Law. Garnishee is one such provision. To obstruct the execution and enforcement of its judgments, is to be in contempt of court.

The 4th Defendant obtained judgment against the Plaintiffs on the 9th of April 2010 for the sum of $277,400/= together with interest at 10% per annum thereon from 11th November 2008 till payment in full. Due to an injunction obtained wrongfully by the plaintiffs the 4th defendant suffered damages, in having to pay a higher sum of $650,000/= to purchase the particular mortgaged property.

The Plaintiffs were the Mortgagors. In essence by executing the said judgment the 4th defendant is recovering the monies in excess of the purchase price he had to pay due to the wrongfully obtained injunction. In other words ironically he is recovering part of the money he had to pay in excess, which is part of his own money so to speak. If these moneys or any part of it are in the hands of any other persons and not yet transmitted to the Plaintiffs, then irrespective of garnishee proceedings such moneys are liable to be seized in execution of the judgment, in the hands of such persons. A Solicitors trust account is no exception.

Preliminary Objection of the 1st defendant and 2nd defendant Garnishees that they are not "persons within the jurisdiction" (Order 49 Rule 1);

The plaintiffs are said to be, according to the caption of their Writ of Summons, "normally of Nauru but presently of Martintar, Nadi". There has been no change of this description up to date. The plaintiffs having instituted this action in Fiji have submitted to the jurisdiction of this court, and as such subject to the enforceable jurisdiction of this court. When ever the plaintiffs or their assets are located within the territorial or enforceable jurisdiction of this court, they are subject to the process of this court.

The enforceable jurisdiction of a court can exceed the territorial jurisdiction of a court, and one such instance is when process is served overseas and it is acknowledged, another is when the orders of court are executed within the precincts of overseas embassies or through the judicial authorities of that country were a Civil Procedure Convention subsists, so on and so forth.

The 1st defendant is described as "normally of Martintar Nadi, Retired but presently of Sydney Australia..." in the caption to this action.

The 2nd defendant is described as "formerly of Lautoka but now of New Zealand, Journalist". This caption has not been changed up to date.

However they too have submitted to the jurisdiction of this court and participated in the proceedings before this court and may have benefited by its orders. The 1st defendant being "normally of Martintar Nadi" and so accepted by the 1st defendant in these proceedings is definitely within the jurisdiction of this court, though may be "presently" meaning temporarily in Sydney Australia.

They have in their Solicitors, their agents before this court.

The affidavits filed on 8th June, 11th June and 2nd July 2010 of Prem Chand a clerk in the employment of Messrs Sahu Khan and Sahu Khan Solicitors for the 1st and 2nd defendants Garnishees states at paragraph 1 that he has been duly authorized to make the said affidavits, by the 1st and 2nd defendant Garnishees, by their Agent Natarajan Pillay, and states further that he is also authorized by their Solicitors the 3rd Garnishee.

Prem Chand does not say in his affidavits that the 1st or 2nd defendants on whose behalf he swears those affidavits, that they are out side the jurisdiction of this court.

Those who are parties to an action and are participating in its proceedings as such are "within the jurisdiction of this court".

Therefore the 1st especially, and the 2nd defendant Garnishees fall within the category of "any other person within the jurisdiction" as envisaged in Order 49 Rule 1(1).

Non compliance if any with Order 49 Rule 2(c), I consider as an irregularity under Order 2 Rule1 (1), and as such not sufficient to nullify these proceedings.

Ruling on the preliminary objection;

Therefore in particular to this case and under the said circumstances, I hold against the preliminary objection taken by the 1st and 2nd defendant Garnishees in their written submissions, and hold that the 1st and 2nd defendants are within the jurisdiction of this court and amenable to Garnishee under Order 49 Rule 1 and 2.

On affidavits and written Submissions filed to show cause by the Garnishees;

The 3rd Garnishee was served as the trustee of the Solicitors trust account to which the funds were paid. The 4th defendant (judgment creditor) Chandar Sen in his affidavit in support of his application for garnishee order, annexed copies of two cheques for $150,000/= and $450,000/= (total of $600,000/=) made out to the 3rd Garnishee.

According to the affidavit of Ashni L Prasad filed on 10th June 2010, and the letter of Chandra Singh & Associates dated 11th December 2008 annexed thereto only $31,513.89, was paid to the 3rd Garnishee out of the balance $50,000/=.

The affidavit of Prem Chand filed on 8th June 2010,for the 1st and 2nd defendant Garnishees and the 3rd Garnishee, at paragraph 12 gives the payments made out of the money deposited in the trust account of the 1st and 2nd defendant Garnishees with their Solicitor the 3rd Garnishee.

It is the Solicitor and not his clerk who is the trustee and answerable in respect of that trust account. It is with some reservations that the affidavit of Prem Chand is received on behalf of the 3rd Garnishee.

He (Prem Chand, and the court reminds itself that he is not the Solicitor trustee nor an officer of this court) states that $600,000/- was paid in to the trust account and sets out 5 payments made out between October and December 2008 totaling to $650,000/-.

The break down is given at the said paragraph 12 of his said affidavit, as follows;

(a) October 6th 2008 –paid to the nominee/creditor of the first Garnishee- $50,000.00

(b) November 27th 2008- Paid to the first Garnishee $500,000.00

(c) December 10th 2008–paid to the nominee/creditor of the first Garnishee- $46,000.00

(d) December 10th 2008–paid to the nominee/creditor of the first Garnishee- $17,000.00

(e) December 10th 2008–paid to the nominee/creditor of the first Garnishee- $37,000.00

The total = $650,000.00

The 4th defendant judgment creditor has already withdrawn the Garnishee proceedings against the 4th Garnishee, the Solicitor for the Plaintiffs (on the 11th June 2010 at 12.50 in the afternoon.).

As such it is the Garnishee order nisi against the 1st and 2nd defendant Garnishees and 3rd Garnishee that the court will consider now.

1st defendant 1st Garnishee and 2nd defendant 2nd Garnishee;

Section 81 of the Property Law Act (Cap.130 Fiji Laws) states;

81. The purchase money arising from the sale by the mortgagee of any mortgaged property shall be applied as follows;

(a) first, in payment of the expense of and incidental to the sale and consequent on the default;

(b) secondly, in payment of the moneys which are due or owing under the mortgage;

(c) thirdly, in payment of subsequent mortgages or encumbrances, if any, in the order of their respective priorities; and

(d) fourthly, the surplus, if any, shall be paid to the mortgagor.

At page 16 to 17 of the submissions in reply on behalf of the 1st and 2nd defendant Garnishees and the 3rd Garnishee,( filed on 23rd July 2010) the 2nd defendant Garnishee is referred to as a mortgagee. Therefore admittedly the 2nd defendant Garnishee as a mortgagee too owes a statutory debt to the Plaintiffs as a mortgagee along with the 1st defendant Garnishee, under section 81 of the Property Law Act as above, though the 2nd defendant Garnishee may not have received any moneys from the mortgagee sale as yet.

Under section 81 of the Property Law Act, in applying the proceeds of the sale of the mortgaged property by the mortgagee ( in this case the 1st and the 2nd defendant Garnishees) the surplus after the payments set out in section 81(a), (b) and (c) are paid out, are stated as "shall be paid to the mortgagor" in section 81(e). The mortgagors in this case are the Plaintiffs. Therefore in the event of a surplus there is a statutory debt due from the 1st and 2nd defendant Garnishees to the Plaintiffs.

Whether there is such a surplus or not depends on the amount due to the Mortgagees (the 1st and 2nd defendant Garnishees ) from the Mortgagor the Plaintiffs, and on the amount of the payments paid out as per section 81(a), (b) and (c) of the Property Law Act.

Therefore the issues to be determined are;

1. what was the amount of the purchase money arising from the sale by the mortgagees (the 1st and 2nd defendant Garnishees) of the property which is the subject matter of this action?,
   
2. what payments were made by the Mortgagees under section 81(a),(b) and (c) of the Property Law Act?,
   
3. what is the surplus if any left under section 81(d) of the Property Law Act to be paid to the mortgagors?,
   
4. if there was a surplus as above was that paid to the mortgagors by the mortgagees? and if so when?,
   

If there is such a surplus unpaid or if it had been paid after notice of the Garnishee order nisi, then to that amount Garnishee order nisi should be made absolute and judgment entered against the 1st and 2nd defendants Garnishees jointly and /severally for the said surplus in favor of the 4th defendant judgment creditor. If there is no such surplus the Garnishee order nisi against the 1st and 2nd defendant Garnishees should stand dismissed.

On issue 1;

What was the amount of the purchase money arising from the sale by the mortgagees (the 1st and 2nd defendant Garnishees) of the property which is the subject matter of this action?,

According to the affidavit of Prem Chand filed on 2nd July 2010, at paragraph 4(vi) the purchase money arising from the sale by the mortgagee, after deduction of " Town Rates owing on the land" is $631,513/=.

On issue 2;

What payments were made by the Mortgagees under section 81(a),(b) and (c) of the Property Law Act?,

(a) Section 81 (a); first, in payment of the expenses of and incidental to the sale and consequent on the default;

The Prem Chand affidavit sets out that "Town Rates owing on the land" had been paid. The amount of $631,513/= is arrived at after that payment.

Paragraph 4 (viii), (ix), (x), and (xi) of the aforesaid Prem Chand affidavit under reference states that a sum of $250,000/= had been paid to Natarajan Pillay to facilitate the mortgagee sale to the 4th Defendant. However there is no proof of such payment by the 1st defendant Garnishee though a sum of $500,000/= is said by the said Prem Chand to have been paid out to the 1st defendant 1st Garnishee.

In the previous affidavits of Prem Chand he does not mention of the payment to Natarajan Pillay. However annexure D attached to the 4th Defendants affidavit of 14th April 2010, and referred to in the Affidavit of Prem Chan filed on 2nd July 2010 at paragraph 4(ix) as well, state that only $650,000/= needs to be paid to both the 1st defendant Garnishee as well as the said Natarajan Pillay for the mortgaged property to be sold by mortgagee sale to the 4th defendant.

There is no mention of any other amount of $250,000/- to be paid by the 1st defendant Garnishee to the said Natarajan Pillay and as such no such term can be read in to the terms of settlement entered in the action no.46 of 2008 marked as D above.

No other expenses are referred to in his affidavits as could be considered under "incidental to the sale and consequent on the default". As such the amount after application of section 81(a) is $631,513/=.

(b) Section 81(b); secondly, in payment of the moneys which are due or owing under the mortgage;

Paragraph 13, 14 and 15 of the 4th Defendant Judgment creditor's (Chandar Sen's)affidavit of 14th April 2010 calculates the moneys due under the Mortgage to the 1st and 2nd defendant Mortgagees to be $428,652.45. After deduction of this amount from $631,513/= the 4th defendant applicant seeks Garnishee order made absolute for the balance sum said to be of $202,861.44.

(c ) Section 81(c); thirdly, in payment of subsequent mortgages or encumbrances, if any, in the order of their respective priorities;

The only encumbrance set out is the Town Rates owing on the land which has been deducted already as above.

On issue 3;

"What is the surplus if any left under section 81(d) of the Property Law Act to be paid to the mortgagors?";

After the deductions as above under section 81(a),(b) and(c), the surplus is $202,861.44.

Section 81 (d) states; fourthly, the surplus, if any, shall be paid to the mortgagor.

Therefore there is a statutory debt of $202,861.44,due to the plaintiffs from the 1st defendant 1st Garnishee and the 2nd defendant 2nd Garnishee.

On issue 4;

"If there was a surplus as above was that paid to the mortgagors by the mortgagees? and if so when?"

There is no evidence of the $202,861.44, (surplus) having been paid to the Mortgagors, the plaintiffs. In fact the position of the 1st and 2nd defendant (mortgagee) Garnishees as well as the 3rd Garnishee is that there is no surplus and as such no payment made to the plaintiff mortgagors.

Therefore the answer to that issue is that the surplus of $202,861.44, under section 81 of the Property Law Act has not been paid by the mortgagee 1st and 2nd defendant Garnishees to the mortgagor plaintiffs.

Therefore Garnishee orders nisi against the1st and 2nd Garnishee are made absolute and judgment is entered against the 1st and 2nd defendants Garnishees jointly and /severally for the said surplus of $202,861.44, in favor of the 4th defendant judgment creditor.

3rd Garnishee;

The 4th defendant in his written submissions dated 10th of June 2010 at the last paragraph moves for the order absolute to be made against the First and second Garnishees. I note it does not move to make order nisi absolute against the 3rd Garnishee.

At times a court has to rise above the submissions of both counsels, in its duty to ascertain the truth and achieve justice.

Prem Chand states that the 3rd Garnishee does not have any moneys of the Plaintiffs in its trust account, and that all monies paid on the sale of the property by the 4th defendant judgment creditor has been distributed to the 1st defendant Garnishee or her nominees as far back as 2008. (refer to paragraph 12 of the Prem Chand affidavit of 8th June 2010, and above).

The net proceeds of the sale of the property after payment of Town Rates is alleged to be $631,513/-, by the said Prem Chand. However he sets out payments out, totaling to $650,000/=! The $50,000/= payment alleged is said to have been made in October 2008 before the mortgagee sale proceeds were even paid by the purchaser the 4th defendant.

The subsequent payment of $31,513.89 of the balance sale proceeds had been paid to the trust account on 11th December 2008. Therefore EVEN AFTER THE LAST PAYMENT OUT OF $37,000/= ON 10TH DECEMBER 2008 STILL THERE SHOULD BE A BALANCE OF $31,513.89 (RECEIVED THEREAFTER)REMAINING IN THE TRUST ACCOUNT! How could Prem Chand swear that there is no money in the trust account, when he himself has not shown a payment out of $31,513.89 or any payment out after 11th December 2008? Prem Chand does not even show the payment of the $31,513.89 in to the trust account though he admits the sale proceeds of $631,513/= in to the trust account!

Prem Chand swears the affidavit on behalf of the Solicitor-trustee (3rd Garnishee) as well as the beneficiary (1st defendant 1st Garnishee). Could this court accept the affidavit of a trustee who swears payment to a beneficiary and in the same affidavit swears on behalf of that beneficiary the receipt of it? Could the court accept such an affidavit from the employee or agent of that trustee? One does not need case law or statutory provisions, to answer that question in the negative. Common sense and the obvious are sufficient.

The 3rd Garnishee submitted section 6(1) of the Trust Accounts Act. However there is no evidence of the management of the relevant funds in the Solicitors trust account according to the several mandatory provisions of the subsections of section 6, as there is no affidavit of the 3rd Garnishee, the custodian of that account, before this court.

The reference to that section also brings to attention the fact that there is no reference to "payments to the trustee for professional costs" as envisaged in section 6(1) (c), of the Trust Accounts Act, in the break down given by Prem Chand in his affidavit as aforesaid, which is again unusual. Did not the 3rd Garnishee charge any professional costs or fee?

Such a statutory responsibility and accountability as placed by the Trust Accounts Act has to be explained by the trustee himself, not his clerk. The 3rd Garnishee has a burden to show cause on the garnishee order nisi, as to the $202,861.44 that is statutorily due to be paid to the plaintiffs, from the proceeds of $631,513/= admittedly received in to the Solicitors trust account as admitted by his clerk Prem Chand.

Where, pray, are the acknowledgements by the 1st defendant Garnishee and her nominees? At least for the $500,000/= alleged to have been paid to her? One is compelled to wonder whether only Prem Chand alone is aware of the whereabouts of the proceeds received in to the trust account.

Prem Chand has filed 3 affidavits and failed to annex even a single acknowledgement of payments out he alleges, to have been made.

There is a clear conflict of interest as well when Prem Chand swears the affidavit on behalf of the 1st and 2nd defendant Garnishees as well as the 3rd Garnishee. Prem Chand may be swearing the truth – which is difficult to believe in view of the contradiction in respect of the $31,513.89. He may even be the most honest person in the world. But this court cannot ignore a multi- personality affidavit with conflicting interest. There were not one, but three such affidavits of Prem Chand.

All that was required of the 3rd Garnishee was to submit proof of payment out of the sale proceeds of the $600,000/= received in November 2008 and $31,513.89 received on or after 11th December 2008.

The 4th defendant was able to submit proof of payment to the 3rd Garnishee, by submitting the copies of the cheques as well as the letter of Chandra Singh Associates, all in November and December 2008, which was very much less than two years ago. Why could not Prem Chand or the 3rd Garnishee submit similar proof of payments alleged to be made thereafter, out of a Solicitors trust account?

Therefore the 3rd Garnishee has failed to shift the burden on himself to prove that the said surplus of $202,861.44, did not remain in the trust account of the mortgagees with him at the time of the service of the Garnishee order nisi against him, as it is a fact within his exclusive knowledge.

It must be said in fairness to the 3rd Garnishee that Mr. Haroon Ali Shah appeared for the 3rd Garnishee on the 11th June 2010 and informed court that the 3rd Garnishee is out of the Island and in South Africa for the World Cup Soccer games and will return on 17th July 2010, and as such this court gave the 3rd Garnishee time till 26th July 2010 to file written submissions. It may well be that his busy schedule prevented him from looking in to this matter personally, and left it to his clerk Prem Chand.

This court is mindful of the fact that there is no debt personally due from the 3rd Garnishee to the plaintiffs; however there is a statutory debt that arose in the Solicitors trust account in his custody, in favour of the plaintiffs, and there lies a burden not discharged as to the absence or whereabouts of the surplus of $202,861.44 which was last in his Solicitors trust account under his control.

Orders on Judgment;

1. As such this court is compelled to conclude that the 3rd Garnishee has not shown cause to set aside the Garnishee order nisi against him and he is liable for the surplus of $202,861.44, jointly and severally with the 1st defendant 1st Garnishee and the 2nd defendant 2nd Garnishee.

2.Therefore the garnishee orders nisi against the 1st defendant 1st Garnishee, the 2nd defendant 2nd Garnishees as well as the 3rd Garnishee are made absolute, and the sum of $202,861.44, is attached and executable on the said Garnishees.

3. The 4th defendant judgment creditor is awarded taxed costs or $3000/= which ever is higher against the 1st defendant 1st Garnishee, the 2nd defendant 2nd Garnishees as well as the 3rd Garnishee jointly and severally.

Y I FERNANDO
JUDGE

At Lautoka
10th AUGUST 2010.