Kadim v Nakalavo Land Purchase Co-perative Society Ltd [2012] FJHC 1195; Civil Action 001.2010 (4 July 2012)

IN THE HIGH COURT of FIJI
AT LABASA
CIVIL JURISDICTION

Civil Action No: 1 of 2010

BETWEEN:

MOHAMMED KADIM, MANSOOR SHAH, MOHAMMED
JANIF and SHAIBAN SINGH all of Nakalavo, Labasa
PLAINTIFFS

AND:

NAKALAVO LAND PURCHASE CO-PERATIVE SOCIETY
LIMITED a limited liability company having its registered office at Nasarawaqa Postal Agency, Nasarawaqa, Bua.
1st DEFENDANT

AND:

THE REGISTRAR of CO-PERATIVES
2nd DEFENDANT

AND:

FIJI DEVELOPMENT BANK
THIRD PARTY

Before: Master H Robinson

Counsels: Mr A Kohli for the Plaintiffs
Mr. Shah in his personal capacity for the 1st Defendant
Mr. Mainavolau of AG's Chambers for the 2nd Defendant
Mr. Ram for the Third Party.

INTRODUCTION

The 1st Defendant is a co-operative society registered with the Registrar of Co-operatives whose members, among others, included the Plaintiffs. The members of the Nakalavo Land Purchase Co-operative Society formed the Society for the purpose of purchasing a portion of land comprised in Certificate of Title No. 4311 and known as Nakalavou situated in the province of Bua. The land was purchased from Nukuseva Investment Limited. The purpose of the purchase was for each member of the society to pay and thereafter own a share of the portion of the land and included in the arrangement was the payment of survey fees. Once this was paid each member of the co-operative would then be given his/her own certificate of title to the portion of the land given to them. The monies paid were to service the debt to the Fiji Development Bank (FDB) who holds a mortgage over the whole of the land. It was envisaged by all the members that each one would pay for the portion of the land apportioned to them including the survey fees so that eventually the FDB would then discharge the mortgage, the survey development plans would then be registered and each member would have a safe title to their own freehold land. Unfortunately the intentions of the members of the co-operative did not eventuate. Only some members of the co-operative paid for the costs of the portion of land allocated to them including the survey fees and others did not. The result of non payment by some members was that the mortgagee's debt remained unpaid and the FDB thereafter threatened to foreclose on the mortgage. The co-operative through its members thereafter renegotiated the payment of the debt with the FDB and redistributed the debt to all the members of the co-operative irrespective of whether they have fully paid their contribution. It is these renegotiations of the debt and its subsequent redistribution which prompted the Plaintiffs to bring this action. In their view they have paid their full contribution including the survey fees and consider it unfair that they should shoulder the debt of the other members of the co-operative and therefore demand from the co-operative a registered title to their allotted portion of the land. As far as I can gather from the information before the court the debt to the FDB still remains to be paid.

The current matter

After attempts by the Master to settle this matter amicably given the fact that the debt still remains and that the mortgagee's right to foreclose could result in the land being lost altogether none of the parties agree to a settlement.

An ex-parte application was then made by the 2nd Defendant pursuant to Order 16 rule 2 to issue a Third Party Notice on the Fiji Development Bank as mortgagee. The application was made on the basis that it was on the advice of the FDB that the 1st Defendant through its President Mr. Dildar Shar to proceed with the redistribution and reallocation of the lots to its members. That there were certain matters about this redistribution which needed to be verified and may, according to the 1st Defendant, assist in this matter reaching an amicable resolution. The application to issue third party proceedings was thereafter granted and the order sealed on 2nd November 2011. The Third Party Notice served on the FDB states that:-

that this action has been brought by the Plaintiff against the First and Second Defendants. In it the Plaintiff claims and seeks against the Defendants:

(i) For an order that the 1st Defendant provide the Plaintiff with registered titles for their respective holdings.
(ii) That the 2nd Defendant hold an enquiry into the affairs of the 1st Defendant formation until today be provided to the Plaintiffs.
(iii) Costs on indemnity basis.
(iv) Relief.

as appears from the Writ of Summons a copy thereof is served herewith together with a copy of the Statement of Claim.

The Second Defendant claims against you and the Plaintiff the following remedies.

(i) that the Plaintiff's claim be dismissed in its entirely
(ii) costs against you and the Plaintiff

on the grounds that

(a) it was through the advice of the Fiji Development Bank (FDB) that one, Mr.Dildar Singh, agent of the Second Defendant proceeded with the re-allocation and selling of the Nakalavou Lots.

(b) in the best interests of both the Plaintiff and the Defendant, FDB needs to clarify the following:

• (i) when was the re-sale of the land offered to Mr.Dildar Shah
• (ii) what was the price and the balance of the loan when the offer was made?
• (iii) who are the new list of members (of Nakalavou Land Purchase Co-operative Society Ltd)
• (iv) what is the sum being paid by the new members?
• (v) why didn't FDB consider those members who had fully paid their shares?
• (vi) how many titles have been made and given to the members?
  

The Second Defendant require that the question whether the Defendants are liable, be determined not only as between the Plaintiff and the Defendant but also as between either or both of them and yourself.

The Third Party Fiji Development Bank on being served with the third party notice then filed an application to strike out the third party notice in that it discloses no reasonable cause of action. Perhaps the application ought to have been an application to have the third party notice set aside under Order 16 rule 6. Nonetheless this application was made pursuant to Order 18 rule 18(1) of the High Court rules. It is this application which is currently before the Court for determination.

Order 18 rule 18(1) states that:-

(1) The Court may at any stage of the proceedings order to be struck out or amended any pleading or the indorsement of any writ in the action, or anything in any pleading or in the indorsement, on the ground that-

(a) it discloses no reasonable cause of action or defence, as the case may be; or

(b) it is scandalous, frivolous or vexatious; or

(c) it may prejudice, embarrass or delay the fair trial of the action; or

(d) it is otherwise an abuse of the process of the court;

and may order the action to be stayed or dismissed or judgment to be entered accordingly, as the case may be.

(2) No evidence shall be admissible on an application under paragraph (1)(a).

The third party at the hearing submits that the Third Party Notice as it stands does not show a claim against the third party and that the question asked are framed in such a way that it amounts to an interrogatory.

The 2nd Defendant on the other hand submits that the third party notice as it stands complies with Order 16 rule 1(1). That the nature of the claim requires the third party to answer the question requested of them.

Order 18 rule 18(1) applications.

The Court's power to strike out on the grounds of no reasonable cause of action is to be used sparingly and only where a cause of action is obviously unsustainable. The fact that the case might be weak or unlikely to succeed is not enough it must be shown that no cause of action exists; (A-G v Shiu Prasad Halka (1972) 18 FLR 210.; Bavadra v Attorney-General (1987) 3 FLR95. Justice Prakash in Ratumaiyale –v- NLTB & Anor quoted Justice Kirby's decision in the Australian High Court decision of London v Commonwealth [No 2] [1996] HCA 14; 70 ALJR 541 at 544 – 545 as providing the guiding principles of striking out in the following way:

1. It is a serious matter to deprive a person of access to the courts of law for it is there that the rule of law is upheld, including against Government and other powerful interests. This is why relief, whether under O 26 r 18 or in the inherent jurisdiction of the Court, is rarely and sparingly provided (General Street Industries Inc v Commissioner for Railways (NSW)(1964) HCA 69; and Dyson v Attorney-General [1910] UKLawRpKQB 203; (1911) 1 KB 410 at 418.

2. To secure such relief, the party seeking it must show that it is clear, on the face of the opponent's documents, that the opponent lacks a reasonable cause of action (Munnings v Australian Government Solicitor [1994] HCA 65; (1994) 68 ALJR 169 at 171f, per Dawson J.) or is advancing a claim that is clearly frivolous or vexatious; (Dey v. Victorian Railways Commissioners (1949) HCA 1; (1949) 78 CLR 62 at 91;

3. An opinion of the Court that a case appears weak and such that it is unlikely to succeed is not alone, sufficient to warrant summary termination. (Coe v The Commonwealth [1979] HCA 68; (1979) 53 ALJR 403; Even a weak case is entitled to the time of a court. Experience reaches that the concentration of attention, elaborated evidence and argument and extended time for reflection will sometimes turn an apparently unpromising cause into a successful judgment.

4. Summary relief of the kind provided for by O 26, r 18, for absence of a reasonable cause of action, is not a substitute for proceeding by way of demurrer. (Coe v The Commonwealth [1979] HCA 68; (1979) 53 ALJR 403 at 409). If there is a serious legal question to be determined, it should ordinarily be determined at a trial for the proof of facts may sometimes assist the judicial mind to understand and apply the law that is invoked and to do so in circumstances more conducive to deciding a real case involving actual litigants rather than one determined on imagined or assumed facts.

5. If notwithstanding the defects of pleadings, it appears that a party may have a reasonable cause of action which it has failed to put in proper form, a court will ordinarily allow that party to reframe its pleadings. (Church of Scientology v Woodward (1982) HCA 78. A question has arisen as to whether O 26 r 18 applies only part of a pleading. (Northern Land Council v The Commonwealth [1986] HCA 18; (1986) 161 CLR 1 at 8). However, it is unnecessary in this case to consider that question because the Commonwealth's attack was upon the entirety of Mr. Lindon's statement of claim; and

6. The guiding principle is, as stated in O 26, r 18(2), doing what is just. If it is clear that proceedings within the concept of the pleading under scrutiny are doomed to fail, the Court should dismiss the action to protect the defendant from being further troubled, to save the plaintiff from further costs and disappointment and to relieve the Court of the burden of further wasted time which could be devoted to the determination of claims which have legal merit.

What makes this case different is the fact that the third party notice refers to questions which are to be put to the third party and not the normal issue of indemnity per se. The 2nd Defendant is of the view that the answers to these questions will help resolve the matter. Is it necessary then to issue a third party notice for the purpose of determining the answers to questions put in this way? Order 16 rule 1(1) is quite clear on the basis upon which a third party notice can be issued. This Order states:-

Third party notice (O.16, r.1)

1.-(1) Where in any action a defendant who has given notice of intention to defend –

(a) claims against a person not already a party to the action any contribution or indemnity; or

(b) claims against such a person any relief or remedy relating to or connected with the original subject-matter of the action and substantially the same as some relief or remedy claimed by the plaintiff; or

(c) requires that any question or issue 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; (emphasis added)

then, subject to paragraph (2), the defendant may issue a notice in Form No. 9 in Appendix A, (in this Order referred to as a third party notice), containing a statement of the nature of the claim made against him and, as the case may be, either of the nature and grounds of the claim made by him or of the question or issue required to be determined.

(2) A defendant to an action may not issue a third party notice without the leave of the Court unless the action was begun by writ and he issues the notice before serving his defence on the plaintiff.

(3) Where a third party notice is served on the person against whom it is issued, he shall as from the time of service be a party to the action (in this Order referred to as a third party) with the same rights in respect of his defence against any claim made against him in the notice and otherwise as if he had been duly sued in the ordinary way by the defendant by whom the notice is issued.

Order 16 rule 1 (1) (c) clearly shows that a defendant who has obtained leave could issue a third party notice which requires that any question or issue 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" One of the third party's objection is that the question are framed in such a way that it amounts to an interrogatory and that the questions should be legal questions only. This objection in my view is unfounded in that in the first instance the question in relation to issues which may be asked may indeed be, depending on the cause of action, take the form of interrogatory. In the second instance the rule 1(1) (c) refers to any question or issue relating to or connected to the subject matter and need not be legal only in nature but also factual as to the issue in question.

I agree with the view expressed by the 2nd Defendant that Form 9 of Appendix 1 allows for the questions to be asked in the way it was put to the third party. The issue here is whether the 2nd Defendant be allowed to ask the questions in the way it did and whether this gave rise to no cause of action sufficient for it to be struck out. In my view this is allowed under the rules. This is different from the obligation of the third party to answer it, the third party may object to it for various reasons, confidentiality for example, but this will have to be weighed against the need to obtain what is just under the circumstances. This matter needs to be resolved because it can be settled and the active participation of all the parties is critical in its resolution.

CONLUSION

The application by the Third Party to strike out the third party notice is therefore denied and the matter to be adjourned before me for further directions on 9 August 2012. Costs of the application to be costs in the cause.

Dated this 4 July 2012.

................................................
Master H Robinson
High Court, LABASA