NBF Asset Management Bank v Rigamoto [2012] FJHC 1416; Civil Action 454.2001 (15 November 2012)

IN THE HIGH COURT OF FIJI AT SUVA
CIVIL JURISDICTION

Civil Action No. HBC 454 of 2001

IN THE MATTER of
Mortgage No. 334184 Certificate of Title No. 15207
given by IANE RIGAMOTO and LAVENIA RIGAMOTO
in favour of NBF ASSET MANAGEMENT

BETWEEN:

NBF ASSET MANAGEMENT BANK
a body corporate duly constituted under the
National Bank of Fiji Restructuring Act, 1996
and having its registered office at Suva.
Plaintiff

AND :

IANE RIGAMOTO
of 26 Sawani Street, Suva.
First Defendant

LAVENIA RIGAMOTO
of 26 Sawani Streeet, Suva.
Second Defendant

Date of Judgment: 15th November, 2012
Appearances: T. W. Seeto for the Plaintiff
Teree. T for the Defendants

Judgment

History

1. This matter was pending before the Court since 2001. On 10th July 2003, Hon. Justice Jitoko had fixed this matter for Decision on Notice which was not delivered.
   

Background

2. Originating summons filed on 13th November, 2001 and sought the following Orders:
   
   • (i) DELIVERY by the Defendants to the Plaintiff of vacant possession of ALL THAT property comprised and described Certificate of Title 15207 being Grant Nos. S468 and S610 in the island of Viti Levu and having an area of one rood situated TOGETHER WITH all improvements thereon under Order 88 of the High Court rules;
     
   • (ii) AN injunction restraining the Defendants, their servants, or agents from interfering with the improvements on the said property in any way so as to deplete its value.
     
3. The originating summons was supported by the Affidavit sworn by Sara Bulavakanua dated 12th November 2001.
   
4. The Defendant's filed their Affidavit, sworn by the 2nd Defendant Ms Lavenia Rigamoto dated 7th March 2002. As stated, the basis of opposing to the application of the Plaintiff was that by claiming Defendant's rights under "equity of redemption". This was the main issue among other issues raised by the Defendants in this case.
   
5. When this case came up before me, on 22nd November 2011 (after 8 years from the last date of hearing) I granted time for the Plaintiff and Defendants to file their supplementary affidavits and written submissions on specified dates. The Plaintiff filed its supplementary submissions and supplementary affidavit on 29th November 2011 which was served on the Defendants on 1st December 2011.
   
6. By the supplementary affidavit dated 29th November 2011, it was submitted that one Waisiki Gonemaitabu has continuing interest in purchasing the property comprised and described in the Certificate of Title No. 15207. A letter dated 3/11/2011 sent to NBF Asset Management Bank (The Plaintiff) by the said purchaser was annexed to the said affidavit.
   
7. The Plaintiff had filed its supplementary submissions and supplementary affidavit as directed by Courts on 29th November 2011 and affidavit of service was filed on 15th of December 2011 stating that the said supplementary written submissions and supplementary affidavit was served on the Defendant's solicitors on 1st of December 2011.
   
8. On 29th of November 2011, Court directed the Defendant to file the supplementary submissions in response and the supplementary affidavit in response before 3rd January 2012 and Plaintiff failed and neglected to file same in contravention of the direction of this court.
   
9. When the matter was taken up on 18th January 2012, no appearance was made by the Defendants personally or by their counsel/solicitors. At the request of the Plaintiff's counsel the matter was refixed for 2nd April 2012 for mentioning and the Registry was directed to inform the date to the Defendants.
   
10. When the matter was mentioned on 2nd April 2012, the Defendants or their counsel/solicitor failed to appear before the courts; and unless order was made by the court to the effect that if the Defendants or their counsel/solicitor fails to appear on the next date that Order will be granted in favour of the Plaintiff and was fixed for 19th June 2012.
    
11. When the matter was taken up before me on 19th June 2011, the Defendant's counsel made an application to file the supplementary submissions and supplementary affidavit in response to the supplementary submissions and supplementary affidavit filed by the Plaintiff. The Defendants had not taken any interest and disobeyed the court direction made on 29th November 2011 and no reason was adduced by the Defendant to justify the delay and/or failure. Accordingly, the Defendant's application was refused and the case was fixed for Order.
    

Analysis and Findings

12. The Plaintiff filed originating summons on 13th November 2001 which was supported by the affidavit of Mr Sara Bulavakarua the Manager Rehabilitation of the Plaintiff inter-alia stated in the affidavit that the Plaintiff's sought to exercise its powers under Clause 12 of the Mortgage registered on 23rd February 1993:
    

"12. 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; or

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

(c) Bring an action of ejectment to recover the said land either before or after entering into the receipt of the rents and profits thereof or making any distress as aforesaid and either before or after any sale of such land affected under the power of sale given or implied in this Mortgage in the same manner in which the Bank might have made such entry or distress or brought such action if the principal sum were secured to the Bank by a conveyance of the legal estate in the mortgaged land;

(d) Lease the said land or any part thereof for such time and upon such terms as the Bank shall deem reasonable either taking or not taking any fine or premium and either with or without the option to the Lessee at any time during the currency of any such lease or at the determination thereof of renewing such lease and either for the purpose whatever and also may accept surrenders of and determine any tenancy now existing or which may hereafter be created and compromise with and make concessions to tenants upon such terms and conditions as the Bank may think fit"

I concede, the Defendants being ex-employees of the Bank, were well aware of this Clause.

13. The 2nd Defendant filed an affidavit in reply dated 7/3/2002 and the Defendants sought the protection of the equity of redemption doctrine.
    
14. Further, it was stated in the Affidavit of the Second Defendant in (e) ii and (e) iii:
    

e) (ii) The periodical payments as stated in the said affidavit was subsequently reduced by the Bank (although we are unable to provide the written evidence to that effect) hence the reduced repayment to the sum of $98.00 per month and $102.00 per month between my husband and I and later at $700.00 per month for about two(2) years and the lump sum transfer of about $25,000.00 from FNPF in or about 1993. None of these payments that my husband and I have made to the Bank has been reflected in the Bank statement that was made available to my wife and me;

(iii) Also of greater concern for us the off system cheque advance of $27,872.84 (Dollars Twenty Seven Thousand Eight Hundred and Seventy Two Only) that was debited to our loan account on 24th January 1998 and our efforts to obtain an explanation from the Bank was/is to no avail.

That we have no record of signing any cheque for that amount at that time or at any other time.

15. It was further stated in the affidavit of the Second Defendant:
    
    • (a) Bank had not proved that the monies are due and payable and had not attached the statements;
      
    • (b) That the Plaintiff had failed to take into account the lump sum transfer of $25,000 as a part payment.
      
16. By the affidavit file on 19th December 2002, the Plaintiff had clarified the issues raised by the Defendants' of ($27,872.84). It was stated in the said affidavit:
    

"5. THAT refer to paragraph 4 of the Affidavit and comment as follows:

(a) I reaffirm paragraph 1, 2 & 3 of my Supplementary Affidavit sworn on the 12th of August 2002;

(b) I say that the composition of the debt of $27,872.84 is comprised of as follows:

Account Name	Account Number	Transfer of loan Account styled 02-301575-5501-5
i). Iane & Lavenia Rigamoto	02-301575-5002-4	$25,745.82
ii). Iane Kafoa Rigamoto	02-301585-6—1-5	$ 234.12
iii). Lavenia Jione	02-862284-5501-5	$ 341.36
iv). Lavenia Jione	02-862284-5502-3	$ 1,551.54
	Total	$27,872.84 DR

Furthermore, this is stated at page 38 of Account No. 02-301575-5501-5 annexed as Annexure "A" to my Affidavit sworn on the 22nd day of April, 2002.

(c) At amalgamation the total debt was $65,641.35. This is verified at page 57 of Account No. 02-301575-5501-5. The total of $65,300.00 given earlier was only the approximate amount. A copy of the Account Statement 02-301575-5501-5 is annexed as Annexure "A";

(d) I am instructed that the firm view maintained by the Bank is correct. The law is quite clear that the award of a tender amounts to a contract and extinguishes the equity of redemption;

(e) I say that it is the Defendants responsibility to provide documentary evidence to support their request to pay off the loan and the Bank cannot held responsible for the lack of documentation by the Defendants. Furthermore, I say that the Defendants are in default demand having been served. Copies of correspondence confirming the Defendants history of default are annexed as Annexure "B1-B4".

(f) This is contained at page 24 of Account No. 02-301575-5002-4 which is annexed as Annexure "C";

(g) This is stated at paragraph (f) above;

(h) I repeat what I have said in paragraph (d) of this Affidavit".

17. I concede with the above stated facts by the Plaintiff in its affidavit, which had given clarifications on the matters raised with regard to the correctness of the outstanding figures and how the monies being applied to recover the part of outstanding due to the Bank from the Defendants.
    
18. As I stated earlier, the two Defendants were employees of the Plaintiff and they were aware of the responsibility of the Plaintiff and the Defendants obligations towards the Bank, as employees.
    
19. As I stated in para 4 of this Judgment, the Defendants application was to adopt "equity of redemption". As correctly pointed out by the counsel for the Plaintiff in Fiji, when a mortgage is created unless the Mortgagor pays the sum due on the Mortgage to the Courts Mortgagee will not restrained from exercising its powers of sale, to dispose the property to recover the dues on the Mortgagee.
    
20. The Defendant's in this case were enjoying the possession of the property for last 8 years, without making any payment to the Bank. As a result, Plaintiff as a Financial Institution suffered loss. The Plaintiff functions as a Financial Institution and advance its moneys to borrowers, which was collected as deposits and equity capital from the public. The Financial Institutions are responsible for its Depositors and equity partners. So it's vital for a Financial Institution to recover the monies advanced to its Debtors (borrowers) with substantial interest to meet its obligations to the Depositors and shareholders.
21. The assets to the borrowers mortgage is taken as an insurance for the monies lent and advanced and in a default situation, financial institution should be able to exercise its rights over the Assets Mortgaged expeditiously to recover the dues. If the Debtor had any grievance, his grievance could be brought before the court and claim damages. If the Financial Institution fails to recover its monies lent and advanced on time, there would be increase of its non performing loan portfolio and will have serious repercussions on depositors funds and at large will have serious effect on the economy of the country.
    
22. As stated above the only matter to consider in this case is whether "Mortgagor's equity of redemption" should be considered and/or applicable in this case.
    
23. The decision made by the High Court in case no. 454 of 2001 which was reaffirmed by the Court of Appeal Case Civil Appeal No. ABU 0069 of 2005 (Naipote Vere and Esita Takayawa V NBF Bank) is relevant to make a decision in this case. The principles applicable in Fiji with regard to Mortgagors equity of redemption was dealt by the Learned Judge of the Court of Appeal of Fiji.
    
24. Ironically the present case was filed before the said decision and the principles in the said case could be adopted now, in this case.
    
25. I quote the following paragraph from the said judgment:
    

"It is clear that the Appellants were in default under the Mortgage and they admitted that to be the case during, the Trial. They did not, at any time, pay the monies required to redeem their equity into Court; nor did they place themselves in a position to pay out the Mortgage even though they were aware, at all material times of the Respondent's intention to exercise its Power of Sale under the Mortgage. (emphasis mine)"

In the present case, the facts are identical and the Defendants have not made any attempt to pay the dues on Mortgage to redeem and I conclude although the case was not taken up for trial, the Plaintiff had established the amounts due from the Defendants under the Mortgage.

26. Under Section 72(1) of the Property Law Act (CAP 130) provides:
    

"A Mortgagor is entitled to redeem the Mortgaged Property at any time before the same has been actually sold by the Mortgagee under his power of sale, on payment of all monies due and owing under the Mortgage at the time of Payment".

The Defendants have failed to exercise this option neither application was made to the Court on same.

27. It is noted that it was held in Property and Bloodstock Limited v Emerton (1968) 1Ch94 that the entry into a contract for sale, by a Mortgagee exercising a power of sale, whether conditional or unconditional, extinguishes the Mortgagors right of redemption so long as the contract was still subsisting. By the supplementary affidavit filed by the Plaintiff on 15th December 2011 it was established that the contract of sale was in force, as such I conclude the Defendants had extinguished their right of Redemption as the Mortgagors.
    
28. I also note Section 75 of the Property Law Act (CAP 130) clearly set out that if there is a default in payment of monies due under a Mortgage, Mortgagee is entitled to enter into the possession of the Mortgaged land. It was expressly agreed by the Mortgagors (the Defendants) under Clause 12 of the Mortgage Bond.
    
29. I further conclude that the Annexure marked "D" to the affidavit filed on 13th November 2003 was a proper demand under Section 78 of the Property Law Act and the Defendants did not comply with the said demand, or failed to tender of the Mortgage monies to the court and as such Plaintiff is entitled for the reliefs sought in the originating summons filed on 13th November 2003.
    
30. In the case of West Pac Banking Corporation vs Adi Mahesh Prasad (1999) 45 FLR 1 failing payment into Court of the whole sum under a Mortgage, the Court will not restrain Mortgagee from exercising its powers under the mortgage.
    
31. I also wish to state that the principle of "unconditional acceptance of a tender gives rise to a contract" is noted in Haulsbury's Laws of England (Vol 4 – 4th Edition) which cites the cases of Wimshurst vs. Deeley (1845) 2CB 253 Thorn vs. Public Work Commissioners (1863) 32 Bear 490 and Taruced, Arrel & Co. vs. Steel Co. of Scotland (1890) 15 App Case 125.
    
32. The said principle was followed by the High Court Fiji in the cases of Laisenia Uluinayau & Another vs. National Bank of Fiji HBC No. 0175 of 1995 and Jiten Singh vs. Fiji National Provident Fund Civil Action No. HBC 0073D and 2002B. In the present case the unconditional acceptance of the offer was established and further hold the Plaintiff had met all requirements under Order 88(3) of the High Court Rules.
    
33. Accordingly, I hold that the Plaintiff is entitled for the reliefs claimed in its originating summons dated 13th November, 2001; and I make the following orders:
    
    • (a) Defendants are ORDERED to deliver the vacant possession of ALL that property comprised and described in the Certificate of Title number 15207 being grant nos. S468 and S610 in the island of Viti Levu and having area of one rood situated together with all improvements thereon to the Plaintiff in pursuant to Order 88 (3) of the High Court Rules;
      
    • (b) An injunction is issued restraining the Defendants, their servants or agents from interfering with the improvements on the said property in anyway so as to deplete its value;
      
    • (c) I ORDER First and Second Defendants to pay summarily assessed costs of FJ$1500 each (totaling to FJ$3000) to the Plaintiff.
      

Delivered at Suva this 15th Day of November, 2012

..............................
[C. Kotigalage]
JUDGE