Fiji Development Bank v Biutanaseva [2012] FJHC 1186; HBC362.2011 (29 June 2012)

IN THE HIGH COURT OF FIJI AT SUVA
CIVIL JURISDICTION

Civil Action No. 362 of 2011

IN THE MATTER of Mortgage No: 572506 given by
VULI BIU aka VAKATOTO VULIVAKARUA and SEREANA BIU
both of 24 Kaunitoni Street, Vatuwaqa, Suva, Administration Manager and Domestic Duties respectively and
PAULA TUVURA QICANIWAQA aka PAULA TUVURA BIUTANASEVA aka PAULA BIU
of LTA Quarters, Cuvu, Nadroga, Sigatoka, Bank Officer over residential property comprised in Certificate of Title No: 11414.

BETWEEN:

FIJI DEVELOPMENT BANK
of 360 Victoria Parade, Suva.
PLAINTIFF

AND :

JONE BIUTANASEVA, Clerical Officer,
PAULA TUVURA QICANIWASA aka PAULA BIUTANASEVA
aka PAULA BIU, Bank Officer,
KESAIA BIUTANASEVA,
Clerical Officer and SEREANA BIU
Domestic Duties all of 24 Kaunitoni Street, Vatuwaqa, Suva.
DEFENDANTS

BEFORE : Master Deepthi Amaratunga
COUNSEL : Mr. Mukesh Nand for the Plaintiff
Mr. Akuila Naco for the Defendant

Date of Hearing : 14TH June, 2012
Date of Ruling : 29TH June, 2012

Decision

1. INTRODUCTION
   

1. The originating summons seeking delivery of vacant possession of the property described was filed by the Plaintiff in terms of the Order 88 of the High Court Rules of 1988. The property is mortgaged to the Plaintiff by the Defendants and accordingly a loan was granted. The 2nd named Defendant was an employee of the Plaintiff and the contract of employment was terminated and on 29th January, 2011 a three month moratorium was sought as regards to the payments for which the Plaintiff laid down certain conditions before granting 3 month deferment of payments, and the said conditions were not satisfied. The 2nd named Defendant is alleging that his FNPF contributions that were accrued were sufficient to cover the default amounts of the loan and the Plaintiff has unreasonably refused to sign and or to process the relevant documents, but there is no evidence of such request or refusal by the Plaintiff. There is evidence contrary to that indicating that even 3 month deferment of loan installments was allowed by the Plaintiff subject to certain conditions. The said 2nd named Defendant is only one of the debtors and the loan was granted to all the Defendants including the 2nd named Defendant and the Plaintiff's application for vacant possession should be granted.
   

2. FACTS
   

2. The Plaintiff has filed a application under Order 88 of the High Court Rules seeking for an order against the Defendants for delivery of Vacant possession of all that property comprised and described in Certificate of Title No: 11414 being Lot 8, on D.P. No: 2317 having an area of 38.4 perches together with all the improvements thereon situated in the District/ Tikina of Suva and Province/ Island of Vitilevu.
   
3. The affidavit in opposition filed on 13th June 28, 2012 and sworn on 16th April, 2012 at paragraph 4 admits the proprietorship of the Premises in issue and at the moment the premises is occupied by tenants and the mortgagors have rented the premises.
   
4. By Mortgage No: 572506 dated 9th June 2005 made between the Plaintiff (FDB) and the Defendants, the said property was charged to secure repayment to Bank of all loans, advances, charges, interest and other banking accommodation made by Banks to the Defendants from time to times on terms and conditions as therein contained.
   
5. On or about 23rd November 2010 the Plaintiff had issued and served Demand Notice under the Mortgage demanding payment of the mortgaged money in the sum of $110,865.00 outstanding as at 31st October 2010. Copies of the said Demand Notice are annexed as annexure "D" of the Plaintiffs affidavit sworn on 18th November 2011.
   
6. The Defendants defaulted in paying the mortgage monies the Plaintiff, Bank as Mortgagee pursuant to the powers contained in the mortgage document as well as the statutory powers under the Property Law Act and its powers under Common law called for tenders for the sale of the property.
   
7. On or about 11th August 2011 the Bank entered into a Sale and Purchase Agreement with the successful tenderer and completed all relevant documents in readiness for settlement to be effected and a sale and purchase agreement was entered between the Plaintiff and the prospective buyer.
   
8. On or about 16th September 2011 the Bank issued and served a Notice to the Defendant requiring them to deliver Vacant possession of the property.
   
9. The Defendants failed to give Vacant possession of the said property and the Bank brought an action for ejectment to take vacant possession of the property by filing this originating Summons.
   
10. On 7th February, 2012 the counsel for the Defendant sought time to respond and the time was granted and the matter was fixed for hearing on 20th March, 2012, but again the Defendant failed to file an affidavit in opposition, and subject to a cost the hearing was adjourned to 30th May, 2012, but even on that day there was no affidavit in opposition that was filed on record and the reason for the delay as stated by the Defendants' counsel Mr. Naco was the severe flooding in the area where the Defendants are residing, and on that ground the hearing was adjourned finally to 14th June, 2012, and another 7 days was granted to file the affidavit in opposition.
    
11. The Defendants filed an affidavit dated 16th April 2012 on 13th June, 2012 just a day before the hearing in violation of 7 day time period granted by the court on 30th May, 2012.
    
12. At this moment I can only state that the affidavit in opposition that was filed in this application was sworn on 16th April, 2012 long after the severe flooding in late March and early April and this affidavit should have been filed long before the hearing on 30th May, 2012 where the adjournment was sought on the basis of severe flooding! When I pointed this out to the counsel for the Defendants at the hearing, he could not give a satisfactory answer.
    
13. Under the circumstances the affidavit in reply by the Plaintiff was filed on the date of the hearing on 14th June, 2012 and I proceeded to hearing without adjourning the hearing as the intensions of the Defendants are clear from their behaviour and actions in this case and any further delay would seriously prejudice the Plaintiff and the prospective buyer of the property.
    

100. LAW AND ANALYSIS
     

14. The Plaintiff has filed this application under Order 88 of the High Court Rules of 1988.
    

Order 88 Rule 3 of the High Court Rules expressly provides that the affidavit in support of the originating Summons; must;

(2) .............exhibit a true copy of the mortgage and the original mortgage

(3) Show the circumstances under which the right to possession arises and ........... the state of the account between the mortgagor and the mortgagee with particulars of –

(a) the amount of the advance,

(b) the amount of the periodic payment required to be made

(c) the amount of any interest or installments in arrears at the date of the issue of the Originating Summons and at the date of Affidavit and

(d) the amount remaining due under the mortgage.

15. Apart from exhibiting the Original Mortgage the Affidavit complies with all the requirements as stated in Order 88 Rule 3. The Original Mortgage was produced for perusal at the hearing and no objection for that was raised as this had always been the practice and no prejudice to the Defendants due to this as the mortgage is an admitted fact.
    
16. In the case: National Bank of Fiji – v – Abdul Kadeer Kuddus Hussein (1995) FJHC 29; HBC 0331 of 1994, Fatiaki J (as he than was) found various shortcomings in the Affidavit but proceeded to deal with the merits of the Order 88 application citing the case of Australia and New Zealand Banking Group Ltd – v – Shanti Lal Civil action 265 of 1990 where Jayaratne J. acted on a similar affidavit in granting an order for possession under Order 88.
    
17. The procedure under Order 88 was further stated in this same case of National Bank of Fiji – v – Abdul Kadeer Hussain (supra) where Fatiaki J (as he was then) said of the procedure under Order 88 as follows:
    

"Order 88 of the High Court rules only deal with action relating to Mortgage. It gives Mortgagees the right to claim possession without being registered proprietor with or without foreclosure. To that extent Order 88 is available to him nothing can inhibit him from utilizing Order 88.

18. Section 75 of the property Law Act Cap 130 of Fiji deals with the statutory rights of the Plaintiff as the mortgagee and state as follows;
    

"A Mortgage 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 of may distrain upon the occupier or tenant of the said lands for the rent then due."

19. Section 79 of the Property Law Act gives the Mortgagee the right to sell the Mortgaged property where there is default in payment of the mortgaged money or in the performance of any covenant in the mortgage and where such default continues for one month after a service of Notice under Section 77 of the said Act.
    
20. There is no dispute that the Plaintiff has informed the default of the loan payments and the Defendants have failed to rectify and regularize the payments. It is also admitted that at the moment the property is given on rent and the rent is being collected by the Plaintiff, and the Plaintiff is in constructive possession of the property in issue.
    
21. The main contention of the Defendant is that Plaintiff has wrongfully and or unreasonably refused to sign the documents relating to the FNPF contributions but there is no evidence of such documents being annexed to the affidavit in opposition.
    
22. The Third Party Mortgage No: 572506 contains inter alia the following provisions
    

Clause 6 (a) of he said Third Party Mortgage provides:

"That upon the power of sale becoming exercisable hereunder it shall be lawful for the Mortgagee at any time and form time to time without giving the Mortgagor any notice to do all or any of the following:

1. To enter 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 top pull down rebuild alter and add to any than existing building or improvements thereon and to all such things the Mortgagee may deem necessary to manage and efficiently carry on the said land or to obtain income there from and for any such purpose to employ managers workmen and others and otherwise to act in all respects as the Mortgagee in its absolute discretion may think fit.
   

Section 79 (1) of the Property Law Act, Cap 130 provides that:

If default in payment of the mortgage money or in the performance or observance of any covenant continues for one month after the service of the notice referred to in section 77, the mortgagee may sell or concur with any other person in selling the mortgaged property, or any part thereof, either subject to prior leases, mortgages and encumbrances or otherwise, and either together or in lots, by public auction or by private contract, or partly by the one and partly by the other of those methods of payment of the purchase money or otherwise as the mortgagee thinks fit, with power to vary any contract for sale and to buy in at any auction or to vary or rescind any contract for sale and to resell without being answerable for any loss occasioned thereby, with power to make such roads, street and passages and grant such easements of right of way or drainage over the same as the circumstances of the case require and the mortgagee thinks fit, and may make and sign such transfers and do such acts and things as are necessary for effectuating any such sale.

23. In the case: Western Bank Ltd – v – Schindler (1997) 1 Ch1; which said case was also referred to in the case; National Bank of Fiji – v – Hussein (1995) FJHC 29, Buckley, L.J.Goff said;
    

"A legal mortgagee's right to possession is a Common law right is an incident to his estate in the land. It should not be lightly treated ad abrogated or restricted. Although it is perhaps most commonly exercised as a preliminary step to an exercise of the Mortgagee's power of sale, so that the sale may be made with Vacant possession, this is not its only value to the Mortgagee. The Mortgagee may wish to protect his security ...................he might wish to take possession for the purpose of carrying out repairs or to prevent waste".

24. In this regard the Plaintiff has deposed in the Affidavit filed in Support of the Summons that the Defendants have defaulted under the Mortgage and the Defendants refusal to give vacant possession of the property is interfering and prejudicing the Bank's rights as mortgagee. Furthermore in its Affidavit in Support the Plaintiff deposed that it accepted an offer to purchase the mortgaged property and have entered into a Sale and Purchase Agreement and has signed the Transfer documents but the settlement is pending as the Bank could not give vacant possession to the prospective buyer.
    

In accordance to Section 77 of the Property Law Act Cap 130 provides:

"If default is made in payment of the mortgage money or any part thereof, or in the performance or observance of any covenant expressed in any mortgage or in this Act declared to be implied in any mortgage, and such default is continued for one month or for such other period of time as is in such mortgage for that purpose expressly fixed, the mortgagee may serve on the mortgagor notice writing to pay the mortgage money or to perform and observe the covenants therein expressed or implied, as the case may be".

25. The second issue raised is that the Plaintiff failed to give the Defendants enough opportunity to redeem the mortgage debt, by utilizing the FNPF contributions. I do not have any evidence to support this contention. The only communication that is before me is a letter dated 29th January, 2011 addressed to the CEO of the Plaintiff under the heading 'Housing Loan A/C No 1132733' where Paula Biutanaseva stated as follows
    

'Firstly, I would like to apologize for my actions claimed to have been the reason for my dismissal.....

It is therefore my humble request if your Bank could give me three (3) months grace period to organize for settlement of the same .Whilst waiting for employment I've taken all alternative steps to normalize our repayment with the Bank.

I am currently working with Public Trustee for inclusion of my bother and wife's name to the title to qualify them for housing assistance with FNPF with would mean a total of 20k transferred towards the account and further total direct monthly salary deduction of $1,040.00. Inclusion of their names will give them confidence and some sort of security towards their commitment.'

26. The Plaintiff replied to this letter on 'without prejudice' basis and indicated that three month deferment of installments is possible subject to conditions in the said letter. It is to be noted that for the first time the Plaintiff has requested the FNPF eligibility letter from the 2nd named Defendant in the said letter, but there is no evidence of such letter being produced to the Plaintiff within the stipulated time period or any time after that. The said letter clearly laid down the conditions for the 3 months grace period, which was sought by the letter dated 29th January, 2011.
    
27. This letter of 8th February, 2011, by the Plaintiff has shown a genuine effort by the mortgagee to facilitate the Defendant a three month grace period, while safeguarding its interest as a prudent financier. Any mala fide on the part of the Plaintiff, due to the dismissal of one Defendant has to be excluded taking into consideration of the facts before me in the proper analysis.
    
28. The Defendants were granted an opportunity to redeem the mortgaged property however the Defendants failed to do so and now rely on an issue where I do not have evidence before me. The letter dated 29th January 2011 is silent on FNPF of the 2nd Defendant, which he alleged was not processed by the Plaintiff. The said letter is clear indication that what was stated there is not the 2nd Defendant's FNPF, but the brother and his wife's FNPF where the Plaintiff cannot play a role, as they were not employees of the Plaintiff. So, the issue of FNPF of the 2nd named Defendant is an afterthought and clearly dragged to this case in order to buy time or create a confusion in the mind. This also supports their previous behavior which I have commented earlier where the affidavit sworn on 16th April, 2012 was only filed day before the hearing on 13th June, 2012.
    
29. The Defendants have served the Plaintiff a copy of their Affidavit in Opposition have raised objections to the Plaintiff's claim. The 2nd Defendant under paragraph 9 of his Affidavit is stating that he was eligible to access and withdraw from his FNPF funds the sum of $20,000.00 to go towards the home loan with the Plaintiff.
    
30. The 2nd Defendant further states under paragraph 10 of his Affidavit that in order to access the FNPF funds the Plaintiff was required to formally process the request and send it across to FNPF to allow funds to be paid into the Plaintiff's bank account but no eligibility letter from FNPF was produced by the Defendants and that the Plaintiff had given the Defendants 3 months period to make the arrange via letter dated 8th February 2011 in response to the letter from the Defendant dated 29th January 2011 which is silent on the FNPF of the 2nd named Defendant, where it specifically mentions the FNPF of the brother and the wife.
    
31. Section 38 of the Fiji National Provident Fund Act Cap 219 (this is now repealed by FNPF Decree 2011 Decree No 52, but the relevant provision material for this action was 38 of the FNPF Act which was in operation) provides that for application of housing finance assistance it is the member who should make the application and upon receipt of the same then the Board would make a decision about eligibility.
    

38. –(1) Subject to this section and to section 41, the Board may, following receipt from a member of an application for housing finance assistance made in accordance with section 39, at it discretion either –

(a) transfer to an approved lender money in the Fund sanding to the credit of the member;

(b) lend to the member money in the Fund standing to the credit of the member; or

(c) provide to the member money in the Fund standing to the credit of the member.

32. There is no evidence of any such application to the FNPF by the 2nd named Defendant. There is no evidence of any request by the same person for any application under the said provision for process of an application. The letter of the 2nd named Defendant which sought a moratorium of payments for 3 months is silent on his FNPF or any such application and or request. In the proper analysis of the evidence before me there is no evidence to support the contension of the affidavit in opposition.
    
33. The Defendants state that they have not been served personally with this application. There is an affidavit of service to all the Defendants and there is acknowledgment of service filed on behalf of all the Defendants by the solicitor for the Defendants. The objection to service was not raised in terms of High Court Rules of 1988.
    

Order 2 rule 2 of the High Court Rules deals with the applications to set aside on irregularity and stated as follows:

2(1) An application to set aside for irregularity any proceedings, any step taken in any proceedings or any documents, judgment or order therein shall not be allowed unless it is made within a reasonable time and before the a party applying has taken any fresh step after becoming aware of the irregularity.

(2) An application under this rule may be made by summons or mouthing and he grounds of objection must be stated in the summons or notice of motion.

34. The Defendants have not only waited till the hearing of this summons to object to the alleged irregularity of the Plaintiff's summons, but also the Defendant's oral application on the date of the hearing of Plaintiff's summons is irregular in terms of the Order 2 rule 2 (2). The said objection has to be rejected in limine for not complying with the said provisions of the law.
    

4. CONCLUSION
   

35. The Defendants have not shown any acceptable reason for refusal of this application. The Plaintiff as the mortgagor has the right to possess the property. At the moment the property is on rent and the proceeds are also collected by the Plaintiff, by virtue of that the Plaintiff is in constructive possession. The property was tendered in mortgagee sale and the Defendants did not stall that process and a successful tender has been accepted. The Plaintiff should be granted the orders sought in the originating summons. I assess the cost of this application summarily at $1000.
    

5. FINAL ORDERS
   

1. The Plaintiff is granted the vacant possession as prayed in the originating summons.
2. The Plaintiff is also granted a cost of $1000 assessed summarily.
   

Dated at Suva this 29th day of June, 2012.

Master Deepthi Amaratunga
High Court, Suva