Australia & New Zealand Banking Group Ltd v Interior Plus Ltd [2011] FJHC 114; HBC305.2010 (7 February 2011)

IN THE HIGH COURT OF FIJI
AT SUVA
CIVIL JURISDICTION

Civil Action No. HBC 305 of 2010

IN THE MATTER of Mortgage Number 700207 given by INTERIOR PLUS LIMITED in favour of Australian and New Zealand Banking Group Limited over property being Certificate of Title Number 14903, Lot 31 on DP No. 3936 known as "Tamavua" (part of).

BETWEEN:

AUSTRALIAN & NEW ZEALAND BANKING GROUP LTD a duly constituted Banking Corporation having its registered office in Melbourne, Australia and carrying on business in Suva and having branches throughout Fiji.
PLAINTIFF

AND:

INTERIOR PLUS LIMITED a limited liability company having its registered office at 54-56 Carnarvon Street, Suva in the Republic of Fiji Island.
1ST DEFENDANT

AND:

PRAVIN SINGH (f/n Unknown) of Lot 31 Tuisowaqa Road off Vunakece Road, Namadi Heights, Suva in the Republic of Fiji Islands.
2ND DEFENDANT

BEFORE: Master Deepthi Amaratunga

COUNSELS: Lateef & Lateef for the Plaintiff
Tevita Fa & Associates for the Defendant

Date of Hearing: 17th January, 2011
Date of Ruling: 7th February, 2011

RULING

1. INTRODUCTION
   

1. This is an application filed by the Plaintiff in terms of Order 88 of the High Court Rules to obtain possession of the mortgaged property.
   

2. FACTS
   

2. The property was mortgaged to the Plaintiff by the 1st Defendant.
   
3. 2nd Defendant was the previous owner who transferred his rights to the 1st Defendant.
   
4. 2nd Defendant's position is that since the full amount was not paid he remained in possession of the property.
   

100. LAW AND ANALYSIS
     

6. Order 88 of the High Court Rules deals with the mortgage actions. Order 88 rule 1(1)(d) states as follows:

(d) delivery of possession (whether before or after foreclosure or without foreclosure) to the mortgagee by the mortgagor or by any other person who is or is alleged to be in possession of the property. (emphasis is added)

7. So Order 88 rule 1(1)(d) can be resorted by the mortgagee, to obtain the possession of the property that was mortgaged irrespective of the person in possession is the mortgagor or another.

8. In the case of ANZ Bank vs Kelemedi Rakuve Bulewa, High Court of Suva Civil Action 233 of 2002 it was sited Halsbury's Laws of England 4th Ed. Vol 32 at para 725 which states as follows:

"The mortgagee will not be restrained from exercising his power of sale because the amount due is in dispute or because of the mortgagor has begun 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 which the mortgagee claims to be due to him."

9. In that case it was also sited the case of Matthie v Edwards 73 ER 776 at 779:

"Now the powers so given may undoubtedly, be often used for purposes of oppression. They are however, powers which the party having a power of the property thinks proper to confer on the individual from which the borrows the money, it is a bargain one party with his money and he has to pay himself out if the property upon which it is charged and it is for the other party who creates the mortgaged to consider whether he has not given too large a power to the individual whit whom he is dealing. But when once it is given, the party advancing his money is perfectly entitled to execute the power which such contract gives him. However if the power is sought to be exercised for exorbitant purposes, without a due regard to the interest of the parties concerned, this court will interfere under certain circumstances, and like other pledges, if the individual comes and deposits the money, the court will under certain circumstances, and like other pledges, prevents a party from exercising that power arbitrarily but without the actual deposit of the sum which the other party is entitled to."

10. In the above case Justice Pathik also sited the judgment of Goff L. J in Western Bank Ltd v Schindler (1977)1 Ch where it is stated:

"It has for a very long time been established law that a mortgagee has a property 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, For Maids Ltd v Dudley Marshall Properties Ltd (1957) Ch 317 .. It has nothing to do with default: see per 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."(emphasis is mine)

11. It is clear that the rights of the mortgagee is paramount and only in exceptional instances that a court has interfered with those rights. It may be because; it encourages business and gives notice to mortgagors or the people in possession of the mortgaged property that they are at mercy to the mortgagee, in case of a default. This is clearly to encourage financial market to grant loans, but at the same time to have an easy method of recovering the debt in case of a default. This is a deterrent to default, too.

12. In this case the2nd Defendant is not the mortgagor of the property. He was the previous owner who has sold it to the 1st Defendant, the mortgagor of this property to the plaintiff.

13. 1st Defendant has not objected to this proceedings and it is an already wound up company and Plaintiff did not pursue the matter against 1st Defendant.

14. 2nd Defendant's position is that he did not receive the full amount of the sale price from the 1st Defendant and he was in possession of the property till the last payment was paid.

15. The transaction between 1st and 2nd Defendant, cannot be raised as a defence in this proceedings. The Plaintiff's rights are clearly laid down in the contract of mortgage and clause 12 of the said agreement states as follows:

"That the Bank upon default in payment of any money hereby secured or any part thereof or any interest may:

(a) enter into possession of the mortgaged land by receiving the rents and profits thereof..."

(b) distrain upon the occupier or tenant of the said land for the rent then due; or

(c) bring and action of ejectment to recover the said land......"

16. It is clear that 2nd Defendant was not a party to this mortgage contract and what ever the dispute he has with the payments of his money cannot be a subject matter of this case. 2nd Defendant has transferred the property to the 1st Defendant and the Plaintiff was not a party to that transaction.

D. CONCLUSION

17. In the light of the legal position and factual circumstances of this case 2nd Defendant is ordered as per paragraph A and B of the originating summons filed on 19th October, 2010 to vacate the premises and hand over the possession to Plaintiff forthwith.

18. Plaintiff is also entitled to $500 costs from the 2nd Defendant, assessed summarily.

Dated at Suva this 8th day of February, 2011

Mr. Deepthi Amaratunga
Acting Master of the High Court

Suva