Estate Management Services Ltd v Lakshman [2010] FJHC 457; HBC301.2007 (14 October 2010)

IN THE HIGH COURT OF FIJI AT SUVA
CIVIL JURISDICTION

Civil Action No. HBC 301 of 2007

BETWEEN:

ESTATE MANAGEMENT SERVICES LIMITED
Plaintiff

AND:

PRINCE VYAS MUNI LAKSHMAN f/n Braham Dass Lakshman
Defendant

Before: Master Anare Tuilevuka

Counsels: Cromptons for the Plaintiff
Messrs Sherani & Company & A.G. Chambers for the Defendant

Date of Ruling: 14th October 2010

RULING

INTRODUCTION

In this case, an issue has arisen as to whether or not the plaintiff''s claim against the defendants falls within the realm of public law and if so – whether or not therefore, it should have filed judicial review proceedings under Order 53 of the High Court Rules 1988 rather than in its current writ-statement of claim form.

Both defendants are of the view that the plaintiff's claim raises public law issues and therefore, the current action in writ-statement of claim form should be struck out under Order 18 Rule 18(1) of the High Court Rules 1988 as:

[i] disclosing no reasonable cause of action.

[ii] being scandalous, frivolous or vexatious.

[iii] being an abuse of the Court process.

The plaintiff argues that its claim is mainly and primarily against the 1st defendant and is a:

"claim in contract against the First Defendant in that the First Defendant breached terms and conditions which it covenanted to when taking transfer of CT 35021 from the Plaintiff"

and, as against the 2nd and other defendants, the plaintiff submits that its claim:

" is secondary and dependant upon their statutory obligations in that the claim against the Second and the other Defendants flow from the breach of the covenants by the First Defendant"

BACKGROUND

The plaintiff is a property developer. It is the predecessor in title of all that freehold property being Lot 5 on DP 3954 comprised in Certificate of Title 35021. CT 35021 was derived from Certificate of Title 14135. This land is situated at Pacific Harbour in Deuba.

For some time, the plaintiff had been developing CT 14135 based on a particular concept and scheme.

I am to understand that the plaintiff had carved out huge blocks of land off CT 14135 and sold them off to buyers.

One such buyer was the 1st defendant who acquired CT 35021 by sale from the plaintiff in 2003. CT 35021 was originally zoned "private open space and future reserve in the initial scheme in Development Plan No. 3954". However, the zoning was changed in 2003 when the plaintiff sold CT 35021 to the 1st defendant. The plaintiff alleges that the sale and transfer of CT 35021 was made on the 1st defendant's covenant that the land would continue to be used and zoned public open space future reserve. I gather that the covenant was insisted upon by the plaintiff – and given by the defendant - to preserve the open space character and theme in line with the plaintiff's development scheme in the area. The plaintiff further alleges that the agreed purchase price was arrived at with the covenant in mind.

The covenant allegedly was in the nature of a restrictive covenant. According to the plaintiff, the covenant constituted a promise by the 1st defendant that he would not put CT 3501 to commercial use when he acquires the property but would keep it open as a reserve for public use and to benefit adjoining landowners in line with the plaintiff's development scheme.

I note that these covenants were actually registered on CT 35021 for some time. That this was so is confirmed by the very first memorial on CT 35021 which records a covenant being registered but only to be revoked later.

The plaintiff alleges that once the 1st defendant acquired CT 35021, he then recanted and changed the zoning. In paragraph 17 of the statement of claim, the plaintiff alleges:

"Upon the transfer of CT 35021 to him, the First Defendant, in breach of the terms and conditions of transfer to which he had covenanted with the Plaintiff, and without seeking and obtaining the consent of the Plaintiff, had the zoning/usage of CT 35021 changed from Civic (Education) to Comprehensive Development Area, thus breaching the contract of sale between him and the Plaintiff"

RELIEF SOUGHT

The remedies sought by the plaintiff are as follows:

[i]. An order extending the plaintiff's caveat until final determination of the within proceedings.

[ii]. An order that the 1st defendant is bound by the terms and conditions as contained at paragraph 9 of the statement of claim, which terms and conditions the 1st defendant covenanted upon with the plaintiff when taking transfer of CT 35021.

[iii]. An order that any approval granted by the Second Defendant permitting CT 35021 to be used other than for civic (education) purposes be revoked.

[iv]. An injunction restraining the First defendant from using the said land other than for Civic Education purposes until the final determination of this Action.

[v]. An order that there be endorsed by the Third Defendant on CT 35021 a provision that the said land be only used for Civic (Education) Purposes.

[vi]. An Order that the First Defendant be not permitted to use the land situated at Pacific Harbour being Lot 5 on DP 3954 as comprised in CT 35021 for any use of purpose other than for Civic (Education) Purposes.

[vii]. Alternatively, an Order that a restrictive covenant be registered over CT 35021 to give effect to the terms and conditions covenanted to by the First Defendant (as contained at paragraph 9 of the Statement of Claim) when taking transfer of CT 35021 from the Plaintiff.

ANALYSIS

The plaintiff alleges in its statement of claim that it had been prepared to consent to a rezoning but on certain conditions. Paragraph 19 of the statement of claim pleads that the plaintiff had notified both the DTCP and the 1st defendant of its conditions. However, the rezoning went ahead without compliance with the plaintiff's conditions.

The statement of claim then alleges that the Director of Town and Country Planning approved the rezoning without the plaintiffs consent and without proper procedure as laid down in the Town Planning Act (Cap 139).

I am convinced by the submissions filed by counsels for the 1st defendant that essentially, what the plaintiff is purporting to do is:

"..challenge the decision of the Director of Town and Country Planning in approving the rezoning of the CT 35021"

The nature of the relief sought certainly bear this out. And furthermore, the decision of the Director of Town and Country Planning to change the zoning would have been made in exercise of a public and statutory function under the Town Planning Act (Cap 139). Any application seeking to challenge or undermine that decision must be made under Order 53 of the High Court Rules and come by way of Judicial Review. Such application raising public law issues cannot be sustained in a writ-action which essentially, is a private law originating process.

Counsels for the 1st Defendant have cited various authorities emphasizing the need to maintain the distinction between private law and public law originating processes (see also following article for a more detailed discussion on the attitude of Fiji Courts on this topic - The Public Law-Private Law Divide in Fiji Courts: A Review of Recent Authorities Udit & Sharma – Legal Lali –Volume IV No.1 June 2001).

Without going into detail as to the reasons why, suffice it to say that in public law cases, the Courts are required to consider the wider public interest and which interests are more appropriately addressed in the judicial review forum. In fact, even under Order 53, it is still open to the Plaintiff to claim damages if the damages sought arises out of or relates to or is connected with the public law issues raised (see Order 53 Rule 2).

I reiterate here the sentiments of Pathik J in Ram Prasad v A-G – Civil Appeal No. ABU 0058 of 1997, 27 August 1999 that a public law challenge disguised as a private law action is an abuse of process (as per Pathik J in) and ought to be struck out (see also O'Reilly v Mackman [1982] 2 ALL ER).

I agree with the submissions of the Office of the Attorney-General that the nature of the challenge against the 2nd and 3rd defendants strike at the heart of the manner of their exercise of their statutory and public functions.

I presume that immediately upon the plaintiff becoming aware of the 1st defendant's intention to rezone the land, it lodged a caveat on the title. The title records that the plaintiff's caveat was actually registered on the 04th of April 2007 – which would have been some three years after the registration of the transfer to the plaintiff.

Having said that, while I am convinced that the submissions filed by the counsels for the 1st defendant are sufficient to strike out the plaintiff's claim against the 2nd, 3rd and 4th defendants – I am reluctant to use the same ground to justify striking out the claim against the 1st defendant. My reasons follow.

Firstly, the plaintiff's claim against the 1st defendant is premised on a cause of action based on an alleged right as covenantee to enforce the 1st defendant's covenant. True, the covenant cannot now be enforced given that enforcing it would entail reversing the rezoning which the Director of Town and Country Planning had approved, and would entail a public law matter outside the purview of the current writ process. However, it is my view that the plaintiff may still recover damages against the 1st defendant, if it succeeds in its claim.

Secondly, and flowing from the first, the issues raised in the Plaintiff's claim involve triable issues.

The allegation against the first defendant is that he breached his covenant and changed the zoning to multi unit residential development without reference to the plaintiff. The plaintiff also pleads that "the value of the land has thereby increased significantly" – which suggests that the 1st defendant has benefitted tremendously out of his act of breaching the covenant.

I do note though that the remedies sought all seek to achieve a reversion of the zoning of the land to its original form before the current zoning. In that regard, the oft cited comments of the learned Mr. Justice Lord Diplock in O'Reilly v Mackman [1982] 2 ALL ER at page 1134 is worth noting:

"In the instant case where the only relief sought is a declaration of nullity of the decisions of a statutory tribunal, the Board of Visitors of Hull Prison, as in any other case in which a similar declaration of nullity in public law is the only relief claimed, I have no hesitation, in agreement with the Court of Appeal, in holding that to allow the actions to proceed would be an abuse of the process of the court. They are blatant attempts to avoid the protections for the respondents for which Ord 53 provides"

The rezoning was essentially approved by the Director of Town and Country Planning. Also, presumably, as is often the case, the process which led to the decision to approve rezoning would have been triggered by an application by the 1st Defendant. On that alone, any consideration of whether the 1st Defendant's act of applying for a rezoning constituted a breach of covenant and therefore a private law matter – or - whether it falls within the purview of public law – would have to tread on a very fine line.

I must say that while I personally have misgivings about the chances of success of the plaintiff's claim in its current form against the 1st defendant, I am mindful that the jurisdiction to strike out pleadings under Order 18 Rule 18(1) (a) is exercised only where the case is so clearly untenable that it cannot possibly succeed (Takaro Properties Ltd –v- Rowling [1978] 2 NZLR 314 at 317).

I am of the view that it is best to leave the issues arising out of the allegations of breach of covenant against the 1st defendant to trial. This necessarily means that the plaintiff must be allowed a chance to amend and better its pleadings against the 1st defendant and in particular the remedies it seeks.

CONCLUSION

Having said that, it must be pointed out that since a rezoning (a public law issue) is out of the question, and since the remedies now available to the plaintiff against the 1st defendant must necessarily then be restricted to damages for breach of covenant, the caveat that the plaintiff has placed on the title is now without any sound basis. But that is best left for another day if the 1st defendant so applies to remove it.

As for now, the claim against the 2nd, 3rd and 4th defendants is struck out. The claim against the 1st defendant is to take its normal course. The Registry is to issue NOAH to the parties for a mention date before Master Amratunga.

Anare Tuilevuka
Master

At Suva
Dated this 14th day of October 2010.