Prasad v NBF Asset Management Bank [2012] FJHC 867; HBC301.2009 (14 February 2012)

IN THE HIGH COURT OF FIJI
AT SUVA
CIVIL JURISDICTION

CASE NUMBER: HBC 301 OF 2009

BETWEEN:

NAWENDRA PRASAD and NIRMALA PRASAD
PLAINTIFFS

AND:

NBF ASSET MANAGEMENT BANK
DEFENDANT

Coram: The Hon. Justice Anjala Wati.

Appearances: Mr. D. Prasad for the Plaintiffs.
Ms. R. Lal and Ms. M. Rakai for the defendant.
Date / Place of Judgment: Tuesday, 14th February, 2012 at Suva.

JUDGMENT

CATCHWORDS:
Injunction –Application to restrain mortgagee sale- ground raised that the mortgagee had waived right to conduct mortgagee sale by allowing mortgagors to redeem the debt by private sale- private sale permitted by mortgagee but that was not sufficient and equivalent to constitute a waiver of the rights to exercise the powers under the mortgage injunction refused.

The Cause

1. The plaintiffs are seeking an order to restrain the defendant bank from exercising its powers of mortgagee sale of the mortgaged property. The property is known as HA Sub Lease Number 329377 being "Na Qawa" (Part of) Lot 26 on DP No. 6924 situated at Nadawa, Fiji.
   

The Grounds/Submissions in Support

2. The plaintiffs' counsel supported his application with the following arguments:-
   
   • On the 20th day of June, 2006, the plaintiffs consented to a judgment against them for a sum of $125,000 under the mortgage. Consent judgment was entered by the High Court with an additional order that execution of the mortgage be stayed for a period of 3 months.
     
   • After that, the defendant, indisputably, worked closely with the plaintiffs. There was a verbal agreement between the parties which allowed the plaintiffs to enter into sale with a third party and pay off the debt. The defendant thus waited until August 2009 to advertise and enforce its rights under the mortgage.
     
   • On the 8th day of May, 2009, the plaintiffs entered into a sale and purchase agreement to sell the said property to Tui Pai Vunibaka and Camari Naibeli Vunibaka. Upon conducting a search of the title, it was found that the property had a charge placed on it by the Commissioner of Inland Revenue and a mortgage on the same property by National Bank of Fiji. These encumbrances had to be discharged before a transfer was effected.
     
   • On or about the 6th day of May 2009, the plaintiffs' solicitors wrote to Fiji Islands Revenue and Customs Authority ("FIRCA") advising it of the plaintiffs' intention to dispose the property and asked it to withdraw all claim against the land and to discharge its charge number 704097. The solicitors also wrote to National Bank of Fiji on 7th May 2009 and asked for its mortgage number 357616 to be discharged.
     
   • On 13th May, 2009 the defendant bank forwarded to the plaintiff the settlement figure.
     
   • On 14th May 2009, the plaintiffs were advised that FIRCA was not going to remove the charge.
     
   • The basis of FIRCA's charge was that the plaintiffs owed to FIRCA a sum of $45,770.96 in taxes. The plaintiffs denied owing the sum of $45,770.96 to FIRCA.
     
   • On the 22nd day of May 2009, the defendant bank advised the plaintiffs that it was ready for settlement.
     
   • On or about the 5th day of June 2009, the plaintiffs' solicitors wrote to FIRCA and informed it that the plaintiffs did not owe any outstanding taxes and that the amount of $45,770.96 was miscalculation by FIRCA in refunding a sum to the plaintiffs. FIRCA was again advised by the solicitors to withdraw the charge.
     
   • On or about the 16th day of June 2009, the plaintiffs' solicitors again wrote to FIRCA as there was no response.
     
   • On or about the 19th day of June 2009, FIRCA wrote back stating that they will not withdraw the charge as the sum was being owed to it by the plaintiffs' previous company namely "Building Contractors of Fiji Limited." The previous company namely "Building Contractors of Fiji Limited" had been wound up and the Official Receiver had been appointed a liquidator. The right course of action for FIRCA was to file a Proof of Debt with the Official Receiver. The delay by FIRCA in withdrawing its charge and resolving the matter caused the defendant to proceed with mortgagee sale.
     
   • The plaintiffs' should be allowed to sell the property and pay the defendant on what is owed. The plaintiffs were aware that there were arrears on the mortgage payment but they were not given a proper notice that the property will be put up for mortgagee sale nor any warning letter whatsoever.
     
   • The plaintiffs were under the impression that the parties would be negotiating the sale of the property as far as the arrears are concerned and that the defendant would be paid its dues upon the sale of the said property. Reasonable time had not been given as the mortgagee sale was closed the very next day, that is, the tender closed on 4th September 2009.
     
   • The defendant should be stopped in exercising its rights under the mortgage.
     
   • The defendant is not entirely correct when it says that it will be prejudiced if it is not allowed to exercise its rights under the mortgage. The only prejudice will be suffered by the plaintiffs as the defendant will get paid on the sale.
     
   • The plaintiffs have a right to redeem the property before it is actually sold and the bank has a duty to ensure that the property is sold at its market value.
     
   • Damages would not be an adequate remedy for the plaintiffs but on the other hand if the plaintiffs do not succeed at the substantive hearing, damages would be an adequate remedy for the defendant which the plaintiffs are in a position to pay.
     
   • The plaintiffs can sell the property themselves at a higher price. The defendant will still get paid. It is only a matter of allowing the plaintiff to arrange the sale. The plaintiff will not be able to be adequately compensated due to that very reason as it has paid a huge amount to the bank anyway. Its balance will be lost as well. Therefore more prejudice will be suffered by the plaintiff and not the defendant.
     

The Grounds/Submissions in Opposition

3. The bank's counsel stated that:-
   
   • The defendant is the first mortgagee of the subject property. The sum due by the plaintiffs under this mortgage is agreed to be $125,000.00.
     
   • The defendant is unaware of the precise details of the sale suffice to say that it was aware that the plaintiffs had entered into a sale and purchase to sell the property. The defendant worked closely with the plaintiffs to have the sale concluded and its debt paid. However, despite being co-operative with the plaintiffs', no settlement has taken place.
     
   • The proposed sale and purchase agreement does not have a deposit paid under it and nor is it executed by the purchasers and no stamp duty is paid under it. Furthermore it appears on the face of it that the sale and purchase agreement has lapsed.
     
   • There is a charge on the subject property, the details of which the defendant is unaware, except that the defendant's mortgage number 357616 holds priority to the charge.
     
   • The defendant proceeded to mortgagee sale because the plaintiffs failed to pay the debt which they admit. The defendant is not denying the plaintiffs their rights as registered proprietors but exercising its power of sale pursuant to its mortgage, the right arose 3 years ago. In fact the defendant has been more than reasonable with the plaintiffs in the circumstances.
     
   • The defendant did notify the plaintiffs of its intentions to proceed to recovery.
     
   • Reasonable time was given for the receipt of tenders, which was advertised 5 times Tenders closed on 4th September, 2009.
     

The Law and Analysis

4. On 20th June, 2006 the Court granted consent judgment against the plaintiffs in the sum of $125,000 under the mortgage. The Court had further ordered that any execution under the mortgage be stayed for 3 months from 20th June, 2006.
   
5. The bank cooperated with the plaintiffs so that they could arrange a private sale and pay the bank the amount of monies due. Instead of giving the plaintiffs 3 months from 20th June 2006, it gave the plaintiffs much more than the deserved time to redeem the debt. The plaintiffs failed.
   
6. When the plaintiffs could not redeem the debt for whatever reasons, the defendant advised the plaintiffs that it will proceed with recovery of the debt.
   
7. The defendant had never waived their rights to enforce the debt. Their act of co-operating with the plaintiffs was allowing them an opportunity to redeem the debt.
   
8. The right to redeem the debt extinguished 3 months after the date of the consent judgment. However the plaintiffs were given further time by a verbal arrangement. The mortgagee's act of granting the plaintiffs' further time to redeem the debt cannot be equated as waiver of right to enforce its rights under the mortgage. The act of obtaining a judgment was clear indication that the bank always wanted to recover the debt and had never waived its rights of recovery. The judgment by consent was without prejudice to its other rights to exercise other powers under the mortgage. Exercising of other rights was however suspended for 3 months from the date of the consent judgment, the suspension period having expired, the defendant is at liberty to proceed in the manner it wishes to recover its debt.
   
9. The plaintiffs did enter into a sale and purchase agreement on 8th May 2009 but that was after the bank had announced its intention to withdraw the offer to the plaintiffs to proceed with private sale and to redeem the debt. The letter of 29th May 2008 by the bank is important. It is by this letter that the bank announced its intention to proceed to recovery. It is after a year that the plaintiffs entered into the sale and purchase agreement and this was to avoid the bank from selling the property. It seems that before 8th May, 2009, the plaintiffs have been idle and not taken any serious step to honour the debt. This eleventh hour running around is just to buy more time which cannot be allowed.
   
10. The plaintiffs' complaint that the bank did not give it enough notice to sell the property or to pay the debt is frivolous. The letter of 29th May, 2008 was sufficient notice.
    
11. The plaintiffs seem to have problems with FIRCA and its charge which is blocking the sale. That problem cannot stop the defendant bank from exercising its rights under the mortgage.
    
12. The plaintiffs have safely sat on the debt without paying any interest on the same. It was not a clever exercise by the bank to obtain a judgment of $125,000 because post judgment interest is only 4% whilst the mortgage interest on housing loan is far greater than that. Be that as it may, the issue is not for me to judge, however, to restrain the bank from exercising its rights under the mortgage, in the circumstances of the case, cannot be founded on any factual or legal basis.
    

Final Orders

13. The application for an injunction is refused.
    
14. The plaintiffs must pay the bank cost which I summarily assess at $2,000.
    
15. Orders accordingly.
    

Anjala Wati
Judge

14.02.2012

To:

1. Mr. D. Prasad, counsel for the plaintiffs.
2. Ms. R. Lal and Ms. M. Rakai, counsel for the defendant.
3. File: HBC 301 of 2009.