Fiji Development Bank v Apostles Gospel Outreach Fellowship International [2013] FJHC 721; HBC277.2011 (18 October 2013)

IN THE HIGH COURT OF FIJI
AT SUVA
CIVIL JURISDICTION

CIVIL NO. HBC 277 of 2011

BETWEEN:

Fiji Development Bank
PLAINTIFF

AND:

Apostles Gospel Outreach Fellowship International
FIRST DEFENDANT

AND:

Poate Mata Uculoa, Taito Waqavakatoka and Jokatama
Bola
SECOND DEFENDANT

COUNSEL : Mr. Sharma D for the Plaintiff
Mr. Tuifagalele for the Defendants

Date of Judgment: 18 October 2013

JUDGMENT

Introduction

1. This is an application by the Fiji Development Bank to evict the Defendants from the property which had been mortgaged to the Bank and in respect of which the Bank has exercised its power of Sale.
   
2. The Plaintiff commenced this proceeding against the Defendants by originating summons seeking possession under order 88 of the High Court Rules of the properties contained in crown leases 15054 and 15055, respectively.
   
3. The Plaintiff's application was supported by an affidavit deposed by Salote Taranavesi, on 8 September 2011 which was responded to by the Defendant vide the affidavit of Jokatama Bola dated 22 November 2011.
   
4. The Plaintiff subsequently filed an affidavit in reply to the Defendant's affidavit in opposition, sworn on 23 December 2011 deposed by Salote Taranavesi.
   
5. By originating summons dated 8 September 2011 the Plaintiff applied for following orders:
   
   1. Delivery by the Defendants of vacant possession of all that properties comprised and described in Crown Lease 15054 being Lot 2 on Plan No. SO 4968 situated on State Tiri Land Laucala Beach Estate and Crown Lease 15055 being Lot 1 on Plan No. SO 4968 situated on State Tiri Land Laucala Beach Estate with all improvements thereon under Order 88 of the High Court Rules.
      

ii. An injunction restraining the Defendants, their servants or agents from interfering or removing the improvements on the said properties in any way so as to deplete its value.

iii. Such further or other relief seems just and equitable to this Honourable Court.

iv. Costs of this action.

6. On perusal and examination of the affidavits filed by both the Plaintiff and the Defendants, the following facts are not in dispute:
   
   1. The Plaintiff holds a valid mortgage over crown leases 15054 and 15055 and the debt under the said mortgage is not disputed.
      
   2. The Defendant has admitted the default under their mortgage loan repayment and has no hope of redeeming the mortgage.
      
   3. The Plaintiff has given several opportunities to rectify the defaults which the Defendants have failed to do so.
      
   4. The Plaintiff called for tenders for the sale of the mortgaged properties and received tenders which it has accepted.
      
7. The Plaintiff as deposed in the supporting affidavit claimed that the Defendants have defaulted in repaying the loan and hence now entitled to exercise its mortgage rights under the mortgage contract no 565886 and 565888 to possess the said mortgaged securities.
   
8. The Defendants in their affidavits deposed that the Plaintiff has not permitted for the Defendants to complete the construction of the building hence put the building to rentable state and failed to accept the Defendants alternative proposal to settle its debts considering its dire financial constraint situation.
   

Law and Analysis

9. The Plaintiff has filed this application under order 88 of the High Court Rules of 1988.

Order 88 rule 1(d) provides:

"(1) This Order applies to any action (whether begun by writ or originating summon) by a mortgagee or by any other person having the right to foreclose or redeem any mortgage, being an action in which there is a claim for any of the following relief's namely:

(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."

Order 88 rule 3 and 4 deals with the requirements for an application for delivery of possession.
Rule 3 provides:

"3.(1) The affidavit in support of the originating summons by which an action to which this rule applies is begun must comply with the following provisions of this rule.

This rule applies to a mortgage action begun by originating summons in which the Plaintiff is the mortgagee and claims delivery of possession or payment of moneys secured by the mortgage or both.

(2) The affidavit must exhibit a true copy of the mortgage and the original mortgage or, in the case of a registered charge, the charge certificate must be produced at the hearing of the summons.

(3) Where the Plaintiff claims delivery of possession the affidavit must show the circumstances under which the right to possession arises and, except where the Court in any case or class otherwise directs, the state of the account between the mortgagor and mortgagee with particulars of.

Rule 4 provides:

"Where the Plaintiff claims delivery of possession, the affidavit must give particulars of every person who to the best of the Plaintiff's knowledge is in possession of the mortgaged property."

10. It is clear from the affidavits and the above provisions of law, the application order 88 which allows a mortgagor having the right to foreclose to seek an order for delivery of the possession by any person in a possession of the properties. The affidavit in support deposed that the properties were mortgaged to the Bank. The mortgage had fallen in to arrears and the Bank's solicitor made a demand on the registered proprietor for payment of the arrears. The Bank after the tender, has now signed up a purchaser but is waiting vacant possession. The bank has given notice to the Defendants who is current occupier of the property to give vacation possession but the Defendants have refused. This affidavit also provided the particulars of the amount owed under the mortgages.
    
11. I find that the originating summons and affidavit in support comply with the requirements of order 88 rules 1 and 3 of the High Court Rules.
    
12. The Defendant in its submissions relies on the Equity doctrine of the clean hands. In support of the above, assertion, the Defendant states in its submissions as follows:
    
    1. "Representation by the Defendants made to the Plaintiff for both consideration of its alternative proposals and its request to complete the building was not accepted hence in that regard the Plaintiff soiled its hand.
       

ii. The Defendants therefore submit that the Plaintiff was wrong by failing to accept the Defendants attempt(s) to settle its debts. And cannot be allowed to take advantage of its wrong to be awarded the relief of possession it now seeks.

iii. The Defendants further submit that it is a church organization and it merely relies on the offering and donations willfully given by its members to support its religious cause."

13. The Defendant's main contention is that the failure on the part of the Plaintiff to accept its proposal for repayment is tantamount to and falls within the equity doctrine of clean hands.
    
14. On perusal of the case record, it reveals that this court has adjourned this matter with the consent of the counsel for the Plaintiff on several occasions for the Defendants to submit an acceptable proposal for the repayment of loans advanced to the Defendants, which Defendant failed to do so and fixed this matter for hearing thereafter. Hence, this court is unable to accept the fact that the Plaintiff has failed to accept the alternative proposal submitted by the Defendant prior to the institution of the application.
    
15. In consideration of the facts and circumstances of this case, and the relevant provision of the law, I am of the opinion, that this is not a proper case of the court to apply the equity doctrine of "clean hands".
    

In National Bank of Fiji v. Hussain [1995] FJHC29 Fatiaki J explained the mortgagee's right to possession of the mortgaged property by referring to the following dictum of Goff L..J in Western Bank Ltd. V. Schindler (1977) 1 Ch. 1

"It has for a very long time been established law that a mortgagee has a proprietary 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, Four Maids Ltd. V. Dudley Marshall (Properties Ltd. (1957) Ch. 317.... It has nothing to do with default: see 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."

16. In the case of West Pac Banking Corporation vs Adi Mahesh Prasad (1999) 45 FLR 1 failure of payment into Court of the whole sum under a Mortgage, the Court will not restrain Mortgagee from exercising its powers under the mortgage.
    
17. It is to be noted that the Defendant in the instant case failed to submit any ground acceptable to court to restrain the delivery of possession to the Plaintiff.
    

Orders

1. I therefore grant the order for vacant possession of the properties described in crown leases 15054 and 15055 but stay execution thereof for six weeks from today considering the nature of the properties.
   
2. The Defendants must pay the Plaintiff costs which I summarily assess at $1,500.00.
   

Susantha N. Balapatabendi
JUDGE