FML Resort Ltd v NBF Asset Management Bank [2015] FJHC 85; HBC269.1999 (13 February 2015)

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Appearance : Mr D Sharma with Ms N Choo of R Patel and Company for the Plaintiffs
Mr A Sokimi of Jamnadas & Associates for the 1st Defendant
Ms S Daunabula with Ms L Ramoce of AG's Chambers for the 2nd & 4th Defendants
Ms R Lal for the 3rd Defendant

1. The Plaintiffs initiated this by way of Writ of Summons filed on 2 June 1999 which was amended by Writ of Summons filed on 9 August 2007. By the second amended Statement of Claim the Plaintiffs sought the following Orders:

(a) the 2nd Defendant acted in breach of its own policy in granting its approval and consent to the sale of Malawi Resorts to the 2nd Defendant;

(b) the 1st and 3rd Defendants acted contrary to Sections 6 and 7 of the Land Sales Act;

2.1 The 1st Plaintiff was a registered company and the 2nd Plaintiff was the shareholder and Managing Director of the Plaintiff Company. (Other shareholder was the wife of the 2nd Plaintiff).

2.2 The 1st Defendant is a duly incorporated Bank which took over the Plaintiff's loan portfolio from the National Bank of Fiji pursuant to the National Bank of Fiji Restructuring Act 1996.

2.3 The 2nd Defendant is in charge of the Ministry of Lands and he was responsible for the administration of consents and approvals relating to the sale of freehold lands that are more than 10 acres to foreign purchasers.

2.4 The 4th Defendant is joined pursuant to the State Proceedings Act as a nominal Defendant.

3.1 The 1st Plaintiff purchased CT Nos. 48/4780 and 48/4781 totaling 348 acres in Kadavu known as Malawi (hereinafter sometimes called and referred to as Malawi).

3.2 The 1st Plaintiff along with two other related companies namely Fiji Machinery Limited and Fiji Customs Draft Limited (referred to as FML Group) obtained loans from National Bank of Fiji (NBF) in 1991 which were restructured to National Bank of Fiji and NBF Asset Management Bank.

3.4 The 1st Plaintiff and other FML Group loan portfolio with NBF was transferred to the 1st Defendant (NBF Asset Management Bank) in 1996.

3.5 The 2nd Plaintiff had several correspondences with the 1st Defendant in relation to the interest rates charged on the FML Group Loans.

3.6 By letter dated 15 May 1996, G H Whiteside Accountants of the Plaintiffs informed the 1st Defendant that FML indebtness to the 1st Defendant was in the vicinity of $2.7 million and a proposal was submitted to the Minister for Finance requesting to transfer $1.6 million to the 1st Defendant and $1.1 million to the National Bank of Fiji to continue servicing of 1.1 million with the National Bank of Fiji.

3.7 The FML Group defaulted the repayment to the 1st Defendant and demand was served on 12 June 1997 on the FML Group.

3.8 On 26 June 1997 pursuant to Debenture dated 14 March 1983 and Debenture dated 18 May 1990 the 1st Defendant appointed Dhiraj Hemraj of Price Waterhouse as Receiver of Fiji Machinery Limited and Fiji Customs Craft Limited (FCCL) and was advertised on 27 June 1997 in the Fiji Times.

3.9 The 2nd Plaintiff who was living on Malawi with his family withdrew from Malawi when the 1st Defendant took over the possession of the property on 2 July 1997 as the Mortgagee.

3.10 On 9 August 1997 pursuant to the demand dated 12 June 1997, the 1st Defendant exercised its power of sale, advertised Malawi under Mortgage Sale. Tenders closed on 12 September 1997 and it was re-advertised and tenders were closed on 7 November 1997.

3.11 The Plaintiff's Accountant submitted loan proposal on 20 October 1997 for $650,000.00 to Fiji Development Bank (FDB) to be brought before the Board of Directors approval. Since it was in excess of $500,000.00 and the FDB Board of Directors met once a month.

3.12 On 27 November 1997 the 1st Defendant accepted the tender offer from Mr Suresh Chandra on certain terms and conditions which were subsequently accepted by Mr Suresh Chandra on 28 November 1997.

3.13 On 27 November 1997, Fiji Development Bank advised the 2nd Plaintiff the approval for the loan of $650,000.00 is deferred pending further information being provided.

3.14 On 1 December 1997, the 2nd Plaintiff advised the 1st Defendant of the progress of the FDB loan application and formal offer would be made shortly.

3.15 On 3 December 1997, 1st Defendant advised the 2nd Plaintiff that it would proceed with offers received under the Receivership.

3.16 On or about 16 December 1997, the Receiver sold the assets of FML and FCCL to Leeda Equipment Limited and not to the 2nd Plaintiff personally on various terms and conditions at a price of $330,000.00.

3.17 On 18 December 1997, Minister of Lands granted its consent to the Sale of Malawi to the 3rd Defendant and transferred on 19 December 1997.

4.1 As to whether the 1st Defendant breached its duty in relation to the 1st named Plaintiff fraudulently or by misrepresentation?

4.2 As to whether there was an offer of $650,000.00 made by the 2nd named Plaintiff to the 1st Defendant for the assets of FML Group and as to whether it was accepted by the 1st Defendant at a meeting of 16 October 1997 or thereafter as the full and final settlement of the outstanding of the FML Group's dues to the 1st Defendant?

4.3 If there was an agreement to accept $650,000.00 as the full and final settlement and as to whether the 1st Defendant breached such agreement by selling the property on 27 November 1997 for $415,000.00 without advising the Plaintiff?

4.5 As to whether the damages claimed by the 1st Plaintiff arose due to default on the Mortgage Loan or by the alleged breaches of the 1st Defendant?

4.6 As to whether the Plaintiff can claim chattels left at Malawi were sold illegally under the mortgage sale.

4.7 If the issue in the paragraph 4.6 above is answered against the 1st Plaintiff and as to whether it is liable to pay the counter claim and as to whether the counter claim is statute barred?

5.1 As to whether the 2nd Defendant breached any policy or legal requirements when it dealt with the application for consent to the sale of Malawi to 3rd Defendant which was a foreign owned company?

5.2 As to whether there was a requirement to advertise the land, Malawi for local indigenous buyers before the consent or approval was granted?

5.3 As to whether the 2nd Defendant followed such policy on the sale of Malawi Resort to the 4th Defendant if not whether the Plaintiff is entitled for damages.

5.4 As to whether there was a breach of Sections 6 and 7 of the Land Sales Act (Cap 137) by not obtaining prior consent from the 2nd Defendant for the contract to sell the Malawi Resort to the 3rd Defendant?

6.2 As to whether the 3rd Defendant there was a statutory requirement to obtain consent from the Minister of Lands pursuant to Section 6 and 7 of the Lands Sales Act for the contract to sell the land known as Malawi to the 3rd Defendant?

6.3 As to whether if such consent was not obtained the contract to sell the land to the 3rd Defendant was illegal, thus null and void? The issues against 3rd Defendant will be depended upon on the determination made on the issues against the 2nd and 4th Defendants.

7.1 Prior to dealing with this matter, it is important to consider the circumstances led to restructuring of National Bank of Fiji (NBF). The mismanagement and frauds of the Bank resulted in having $220 million bad and doubtful debts implying insolvency made a restructure and rehabilitation of the Bank imperative. Fiji's economy was severely affected, by downfall of the NBF. National Bank of Fiji Restructuring Act came into operation in August 1996 for Rehabilitation of NBF under the supervision of the Reserve Bank of Fiji; with the task of stream lining the operations of the Bank to return to financial viability. The Act divided NBF into two separate legal entities the National Bank of Fiji and the NBF Asset Management Bank, the NBF as a Commercial Bank to provide banking services for personal and non-commercial purposes. The functions of the NBF Asset Management Bank was to manage the assets and liabilities, with the objective of disposing of or satisfying all of them as soon as practicable while minimizing any loss of value [Section 25(1) (a)].

It is provided in the Section 25(b) of the Act to perform the said functions in Section 25(a) to provide Banking services principally to the persons who are or were customers of the Bank.

7.2 It is clear policy adopted by the government was to focus on bad and doubtful loans of NBF by the NBF Asset Management Bank (the 1st Defendant) and to apply appropriate speedy recovery action or to restructure the facilities.

7.3 To arrive at conclusions, consideration of the above background, it is necessary. The Plaintiff stated in his evidence that he requested, from NBF between the period of 1992 to 1995 to stop charging excessive interest. It is to be understood that the Bank will charge interest which was agreed by the customer. In case of the downfall of the business income, Bank can apply its discretion to reduce the interest rates. It is to be understood the Bank lend monies to its customers from the investments made by the public, and sometimes the government. The bank has an obligation to pay interest and/or on such deposits. In the circumstance, Bank considers interest concessions for the Debtors of the Bank on case by case basis after analyzing the Debtors grievances and they cannot claim rebates on interest as of right.

8. At the outset I state Bundles of Documents filed by all the parties were taken into consideration and specific documents are referred to in my judgment. The Plaintiff's account was transferred from NBF to the 1st Defendant since it was considered as a bad and doubtful loan. On 15 May 1996, the FML Group's Accountant, Whiteside, tendered a proposal to the Minister of Finance for repayment.

8.1 In his evidence the 2nd Plaintiff stated the 1st Plaintiff executed a Mortgage (Document 67 in Defendants Bundle) on 11 February 1992 for $200,000.00. This Mortgage was never varied. Witness stated that interest rates were in dispute since May 1992. However, I note from the Mortgage the rate of interest applied is 12.5% per annum agreed, by the Plaintiff when the Mortgage was executed.

The position taken up by the witness cannot be accepted. It is also surprising to find after 4 months from the Mortgage was signed the Plaintiff was disputing the rate of interest which was agreed in February 1992. The first letter was written to the Board on 14 January 1995 (Document 1 of the Plaintiffs' Bundle - PBD) in reply to letter dated 28 December 1994 (Document 33 of the 1st Defendant's Bundle of documents – 1DBD). The Plaintiff had not made any proposals for repayment. By the letter dated 28 December 1994, by NBF refers to a discussion the Plaintiff had with NBF. The proposals made at the meeting the following were denied by the letter dated 28/12/1994:

8.2 It was further informed the 1st Defendant was aware that the Plaintiff was negotiating for a private sale of Malawi to a company called Raine & Horne and Ragg & Associates (Fiji) Limited and time was granted by the 1st Defendant until end of January 1995.

The 2nd Plaintiff stated in his evidence at length no responses were given for his proposals (Documents No. 3 to 13 in the PBD dated 16 January 1995 to 11 January 1996). However, in the 1st Defendant's bundle of documents tendered through the witness Basilio, I find several proposals for further facilities and payments were made on its account and Bank had allowed the Plaintiff to operate the account by making payments against the Deposits in other words credit basis (Document No. 33 of 1DBD). I further find that the Plaintiff's evidence that there was no response for his proposal is not substantiated and it is not correct and the Plaintiff had lied to this court by restricting himself to forward the documents favourable to him. He is not a genuine witness. It is abundantly clear that the Documents Nos. 34 to 54 of the 1st Defendant's Bundle of Documents (1DBD) between the period of 30/12/1994 to 21 April 1995 there were responses by the 1st Defendant with regard to various requests made by the Plaintiff. I specifically state that by the (Document No. 59 of 1DBD) offer letter dated 21 April 1995 was issued to the Plaintiff under the heading "Application for Restructure of Facilities and Additional Finance". This was in reply to the letter dated 28 December 1994. However, during this period NBF Bank made several facilities available to the 1st Plaintiff. This court takes into consideration even if there was a delay in (which is not conceded) it was because of the collapse of the Bank in January 1995 and naturally the Bank was engaged in strenuous restructuring process. Apart from this as stated earlier, the Plaintiff was doing various transactions during the relevant period with NBF which was admitted in the evidence of the 2nd Plaintiff. The 1st Plaintiff's claim that the NBF was not responding and no proposal was considered was unfounded and the Plaintiff's evidence on this issue cannot believe considering the documentary evidence and does not warrant consideration by this court and I disregard the evidence of the 2nd Plaintiff on this issue.

8.3 The Plaintiff Exhibit (Document 14 of PBD) dated 2/3/1996 of its Bundle, Letter by KPMG Chartered Accountants in reply to the Plaintiff's fax dated 2 March 1996 and the said fax was not produced. However, the inference this court can draw is that the Plaintiff instructed KPMG to discuss its issues with the 1st Defendant.

8.4 By the letter dated 17 April 1996 Exhibit 15, (Document 15 of PBD), the witness drew attention of NBF that the Bank should not go for receivership and proposed to accept 1.1 million as full settlement of FML Group against the outstanding of 2.7 million. It also stated Mr McLauchlan was in a position to arrange finance from another lending institution to pay 1.1 million. The letter states:

"Mr McLauchlan believed that he may be in a position to refinance the FML Group operations with another lending institution on the basis that NBF accepts $1.1 million in full satisfaction of the amounts outstanding by the FML Group".

"This view is based on his belief that the realizable market value of the Group's assets is around 1.1 million".

The question arises if the group assets value was only 1.1 million and agreed to pay 1.1 million to NBF. It is basic banking principle that no lending institution is going to finance larger amount to a Debtor (which had a negative net worth) specifically to meet obligations to other creditors in absence of a valuable security to cover such loan. Mr McLauchlan's proposal for repayment of 1.1 million is not a genuine effort and I agree with the contents of the reply dated 19 April 1996 Exhibit 16, (Document 16 of PBD) that the 1st Plaintiff Company and other companies in FML Group were unable to meet its obligations and liquidation was the justifiable course of action. McLauchlan in his evidence stated the merits were not considered by NBF and I conclude for the reasons set out; there were no merits to consider by NBF on the proposal made by the Plaintiff.

8.5 By the letter dated 19/4/1996 Exhibit 17 (Document 17 of 1DBD) were comments by McLauchlan to Bruce Sutton of KPMG explaining the history of the account but there is no proposal or commitment for repayment. The evidence by McLauchlan was that there was a meeting with Escudier, General Manager of NBF and no decision was made.

8.6 The Exhibit 18, (Document 18 of PBD) was a letter by the Plaintiff's Accountant to the Minister of Finance with reference to the discussion and suggested $1.6 million be transferred to the bad Bank (1st Defendant) and $1.1 million be transferred to the good Bank (NBF) and submitted the advantages, the suggestions and the disadvantageous of recovery action. Further letter dated 12 June 1996 Exhibit 19, (Document 19 of PBD), McLauchlan had written to the Minister seeking his assistance. The Minister or Ministry had not responded. I state that it is normal practice such matters are referred to the relevant institution by the Minister and in this case to NBF.

8.7 By letter dated 20 June 1996, NBF had informed the Plaintiffs' accounts are transferred to the First Defendant. I don't see any collusion or any evidence to establish that Escudier had colluded with anyone to defraud the 1st Plaintiff as alleged by the 2nd Plaintiff. Although there were many requests and proposals by the Plaintiff, there was no acceptance of such proposals by the NBF Bank or the 1st Defendant. Considering all the correspondence I find there was no agreement for any repayment proposal. As such there is no need to consider anymore documents on this issue. Although 2nd Plaintiff alleged there was no response for his proposals, made in December 1994 during cross examination he agreed that until April 1996 he had correspondence and discussions with the 1st Defendant. He further agreed the accruing interest was suspended.

(a) There was no breach of its duty by the Defendant in relation to the 1st named Plaintiff fraudulently or by misrepresentation.

I cite Crossman J. V. in case of Waring v. London and Manchester Assurance Co. Ltd [1934] ALL ER 642:

"For at least three years the mortgagee has been trying to find a purchaser for the property; it has made every possible effort and the mortgagor has himself put the property up for auction and obtained no effective bid. There were negotiations throughout the whole period and, at some time at the beginning of the summer of 1934 a purchaser was found who was likely to enter into the contract, and the mortgagor was in effect warned that that purchaser would have to be accepted if nothing else could be done. Opportunities were given him to find the money in other ways, but in fact nothing was done...."

"In my judgment, it is impossible for me to accept the suggestion that there has been a lack of bona fides in the present case, and that being so, the contention that the mortgagor is entitled, on the grounds that the sale was made at a gross undervalue, to an injunction restraining the mortgagee and the purchaser from completing, also fails."

The above statement is relevant to this case and I state there was no lack of bonafides by the 1st Defendant or its employees.

(b) There was no evidence before me to establish offer of $650,000.00 made by the 2nd named Plaintiff for the assets of FML Group was accepted by the 1st Defendant. The Plaintiff refers to the meeting held on 16 October 1997and the 2nd Plaintiff referred to a file note made by Escudier addressed to Takala which was written on the Ministry of Finance letter dated 28 October 1997 Exhibit 44, (PBD No. 44) inquiring whether Fiji Development Bank was seriously considering the offer of $650,000.00 by the Plaintiff. The said note further states there was no such offer being informed to the 1st Defendant by the Fiji Development Bank. As such I conclude there is no merit in the Plaintiff's argument that there were any finances considered by the Fiji Development Bank to the Plaintiff. The Plaintiff had failed to provide any document from Fiji Development Bank or any letter of offer for $650,000.00. In such circumstance, I conclude there was no agreement to accept $650,000.00 as full settlement of the Plaintiff's outstanding by the 1st Defendant, and the offer of $650,000.00 is merely to delay the recovery action. I also have taken into consideration since May 1992 up to October 1997 the Plaintiff was delaying the process of recovery action by making several proposals. The main reason to collapse the Bank was that no timely action taken for recovery of the loans and no proper assessment was made on the loan facilities before granting.

(c) According to the 2nd Plaintiff's own evidence FML Group had overdue outstanding since 1992 and as I stated herein before interest was accruing on the outstanding facilities. The intention of the legislature of enacting National Bank of Fiji Restructuring Act 1996 was to establish the 1st Defendant to minimize the loss of the value of the assets. The evidence established that the Plaintiff was just delaying the process of recovery without coming forward with any meaningful payment plan. His intention was to borrow further monies to pay the current liabilities without proper planning for funding of existing business, which would have resulted further deterioration of his business. On the other hand, the 1st Defendant had a statutory obligation to dispose the assets minimizing the loss of value or to get the payments on the outstanding without any delay. As such there was no malafide on the part of the Bank and the actions were justified.

(d) It is important to note some details of the account in the Exhibit 46 (Document 46 of the PBD):

"Quote:		FML Resorts
		Existing Facilities
A/C Nos		Balance	Interest
02-152154-5001-0		$532,382.45	13%
02-152145-2002-9		$686,521.16	16%

Sus Int.	-	$225,766.15
Provision	-	$730,460.00
FSV	-	$325,000.00

Mortgagee Sale FML Resorts in Kadavu – CT Vol 48 Folio 4750 and CT Vol 45 Folio 4751"

Total outstanding was	$1,218,903.00	($532,382.45+686,521.16)
Less interest in suspense	$ 225,766.15
Capital	$ 993,137.46
Less Provision	$ 730,460.00
	$ 262,677.46

The Exhibit 46 was unchallenged by all the parties. As such now I deal with it. The Commercial Banks have to make provisions on the capital outstanding time to time according to age of the outstanding. FML Resorts originally had capital outstanding of $993,137.46. The 1st Defendant had to make provisions on the capital sum and accordingly they have made a provision of $730,460.00 leaving capital balance of $262,677.46. It is also important to note that interest on this account was suspended. This also has to be done according to accepted guidelines since the account was in a bad and doubtful section and the accruing interest will not serve any purpose, and Banks books will be showing inflated figure which is unrecoverable. By disposing the property for $415,000 Bank had recovered the remaining capital exposure of $262,677.46 and paid for the expenses incurred on the sale. If there was a balance amount it will reverse the provision already made. The account clearly shows the Plaintiffs have failed to service the interest or capital for years and the Plaintiffs' proposals to settle outstanding at different times at various sums are mere proposals to prolong the recovery. I conclude that this evidence before me justifies the Mortgage Sale by the 1st Defendant and the intentions of the 1st Defendant was genuine.

In addition I accept the letter dated 3 December 1997 Exhibit 50 (Document 50 in DBD) was sent to the Plaintiff informing that the Defendant had determined to proceed with the present offers. This letter was a reply to the letter of 1 December 1997 – Exhibit 49 (DBD 49) which did not give any commitment for purchase. As stated by the 2nd Plaintiff it's not a guarantee which was not substantiated by Fiji Development Bank which was correctly not considered by the 1st Defendant. It is a conditional offer, the witness agreed. Although, the 2nd Plaintiff in his evidence stated that this offer was rejected he could not substantiate with any documentary evidence.

(e) I further conclude for the reasons set out above there was no agreement in place between the Plaintiff and the 1st Defendant to settle the outstanding for $650,000.00 as such there was no breach of an agreement and further conclude that the 1st Defendant did not had any obligation to advice the Plaintiffs prior to such sale considering all the evidence placed before me.

(f) The 1st Defendant Bank was established by the National Bank of Fiji Restructuring Act to speedy realization of the assets and if not to restructure the facilities if there was any possibility of reactivation of the business. The conduct of the Plaintiff's did not warrant for restructuring of the business in absence of viable proposal. I accept the evidence of Basilio witness for the 1st Defendant that the Plaintiff did not generate income to pay the loans. The main goal of the Act was not to safeguard the interest of the Debtors. The Act was passed to safeguard the interest of the depositors and/or investors to create confidence among the public on financial institutions to avoid any economic crisis in Fiji. Accordingly, I conclude, there was no breach of the duties and obligation of the National Bank of Fiji Restructuring Act 1996 by the 1st Defendant.

(g) Having made the above conclusion, I determine there was no damages caused to the Plaintiffs by the 1st Defendant and the Plaintiffs failed to prove the breaches on balance of probabilities.

8.9 Now I turn to the issue of Sale of the Chattels left at Malawi by the 1st Defendant illegally:

(a) The Plaintiff stated in his 2nd amended Statement of Claim the 1st Defendant breached its duty by not accounting for the items listed in Exhibit 65 (Document 65 in PBD) which were sold. The Plaintiff in his evidence stated submitting (Document No. 65 of PBD) Exhibit 65 that the chattels were included in the newspaper notice which is not so. Under the improvement it states the fixtures and description of the facilities which were part of the property. There is no evidence before me that the Plaintiff had informed and given possession to the 1st Defendant of the items which were abandoned at the property. Under cross-examination, the 1st Plaintiff stated that the items were listed in the Annual Accounts of the FML Group; the 2nd Plaintiff failed to produce any document in this regard in his evidence. On the other hand the 1st Defendant's witness Basilio stated there was no value on the abandoned equipments on the alleged sale. The Plaintiff has abandoned the property in July 1997. The sale of Malawi took place on 16 December 1997. The Plaintiff had not complained about the sale of the abandoned items in the Writ of Summons filed on 2 June 1999. For the first time, the said allegation was brought in the Plaintiff's amended Statement of Claim filed on 8 August 2007.

(b) The witness of the 1st Defendant Basilio admitted he did not know the owner of the items listed in paragraph 40 of the 2nd Amended Statement of Claim. I agree that the onus of proof of the ownership of the items lies with the Plaintiff which he could not establish. As such, 1st Defendant need not to disprove the ownership which is not an issue. I further conclude no documentary evidence of any form before this court to consider the ownership as such the Plaintiffs fails.

(c) The 2nd Plaintiff in the course of cross examination admitted after abandonment of the items he never went back to Malawi and he failed to secure the items due to financial difficulties. In such a situation the Plaintiff cannot blame for his own failure to secure the items abandoned and pass on the responsibility to the 1st Defendant.

(d) The Plaintiff referring to Exhibit 46 (Document 46 of 1DBD) read the note:

"we accept the offer for Mr Chandra ($415,000.00) inclusive of furnishings as per list, the caterpillar/tractor both marked * are to be sold separately after ownership is established".

As suggested by the Plaintiff this is not a proof to establish that the 1st Defendant sold the items to the 3rd Defendant. It clearly states "after ownership is established"; and I disagree with the Plaintiff.

Having made conclusions in paragraphs (a); (b) and (c), I determine the Plaintiffs' failed to prove the claim for chattels in Malawi, failed to establish the ownership and the allegations that the 1st Defendant sold the said chattels illegally is unfounded. As such the Plaintiffs' claim fails.

(a) The 1st Defendant has made a Counter Claim against the Plaintiffs and in its submissions it made the claim as set out in paragraphs 25; 26(c ); 28; 29(b); 30(c); 31; 32 and 33 of the amended Statement of Defence filed on 10 October 2007. The 1st Defendant had failed and neglected to claim this amount for 10 years.

(b) The Mortgage was executed in February 1992 and the Plaintiff submitted pursuant to Section 8(1) and 5 of Limitation Act Cap 35 the counter claim is time barred which I agree, and the Plaintiffs succeed and I determine the cause of action of the 1st Defendant is time barred. The property was Mortgage property and was sold in 1997. I agree with the Plaintiffs' counsel and 1st Defendant fails and I hold with the Plaintiff. The unlimited guarantee bond tendered by the Defendant is not properly authenticated and the 1st Defendant's witness admitted it was completed after signing as such I conclude there is no evidential value.

8.11 The Plaintiff had made submissions at length on the issue of no demand was made under the Section 77 of the Mortgage Act and Exhibit 28(PBD 28) Notice dated 12 June 1997 cannot be considered as Notice of Demand. However, this issue was not pleaded by the Plaintiffs in their Statement of Claim or not raised as an issue at the Pre Trial Conference Minutes. As such this court is not making any conclusion or determination on this issue.

9.1 The Plaintiffs raised the issue whether the 2nd Defendant breached any policy or legal requirements when he dealt with the application for consent to the sale of Malawi to the 3rd Defendant which was a foreign owned company. Arising out of the said issue it is to be decided as to whether there was a requirement advertising the land for local indigenous buyers and if not whether the Plaintiffs are entitle for damages. It is also to be determined whether there was a breach of Sections 6 and 7 of the Land Sales Act (Cap 137) by not obtaining prior consent from the 2nd Defendant for the contract to sell the Malawi Resort to the 3rd Defendant. In fact, it is the provision in Sections 6 should be considered by this court.

9.2 As I stated earlier, the issues raised against the 3rd Defendant depend on the findings of the issues raised against the 2nd and 4th Defendants.

9.3 The Plaintiff's evidence that there was a contract made with Suresh Chandra by accepting his offer for $415,000.00 for Malawi Property by the 1st Defendant and the said acceptance of the offer created a contract between the parties. Mr Suresh Chandra was acting for the purchaser, the 3rd Defendant, admittedly a foreign company.

9.4 In the process of the cross-examination, the 2nd Plaintiff stated he was not aware of the specific policy of the government. He agreed that the Minister has the discretion with regard to consent.

9.5 The 2nd and 4th Defendants called Ms Taraivini Ratumudu who was Lands Manager handling Ministerial consent at the Ministry of Lands. She produced Annexure 6 of the 2nd and 4th Defendants Bundle of Documents (2DBD) which illustrates the procedure to be adopted. Annexure 1 was marked which is the Cabinet Memorandum and the Cabinet Decision dated 20/4/1993 was tendered as Annexure 2.

Every proposal for the purchase of freehold land as proposed in this Memorandum be submitted to the Cabinet for consideration".

"The Minister for Lands, Mineral Resources and Energy permitted to exercise his discretion to exempt dealings from the requirement to advertise as outlined in paragraph 3.2(b) of the Memorandum".

"The Minister for Lands, Mineral Resources and Energy be permitted to exercise his discretion to exempt certain dealings from such requirement as he considers appropriate. Such exemptions, generally though not exclusively, would cover transfers arising from inheritances, transfers amongst close family members on grounds of natural love and affection, transfers arising from Mortgage Sales (foreclosures) and Commercial/Industrial/Agricultural Projects approved by Fiji Trade and Investment Board".

The above policy was in existence in 1997. In my view this Mortgage Sale was to a foreign company and it's a Resort business coming under the Fiji Trade and Investment Board.

The witness further stated Fourth Document of the 3rd Defendant's Bundle of Documents dated 17/12/1997, 2nd paragraph states: (This is the letter sent by Maharaj Chandra Associates on behalf of the 3rd Defendant)

"Recently Asset Management Bank had called for tenders for sale and our client company on whose behalf we had submitted the tender, was successful in that the tender had been accepted by NBF Asset Management Bank for a consideration sum of $415,000.00 (Four Hundred and Fifteen Thousand Dollars)"

with the letter the Application for consent was annexed. The witness Ms Ratumudu stated the Application for consent for dealing (Annexure 3 of 2DBD) dated 17 December 1997 sent under cover of letter dated 17 December 1997.

The file minute Annexure 4 (Annexure 4 of 2DBD) ref. LD – 2/90/1935 was tendered which was forwarded to the Minister. The witness further stated there is no other form for consent.

9.6 The Plaintiffs' counsel referred to Section 6 of the Land Sales Act to the witness which states:

6-(1) No non-resident or any person acting as his agent shall without the prior consent in writing of the Minister responsible for land mattes make any contract purchase or to take on lease any land".

The Plaintiff counsel suggested to the witness that there was a Contract of Sale by the 1st Defendant and the Agent of the 3rd Defendant namely Suresh Chandra by accepting the tender and Ministerial consent was not obtained for the said contract. The witness stated that they would have informed the Minister all the facts and circumstances and Minister using his discretion had given the consent.

9.7 The issue is whether there was a contract made on 27 November 1997. This cannot be only decided on the evidence given by the 1st Defendant Basilio as submitted by the Plaintiffs' counsel. The Plaintiffs' Exhibit 46 (Document 46 of PBD) Manager's Diary gives details of the recommendation and approval of the offer of Suresh Chandra. The Plaintiffs alleged that the Minister had given the approval within a day on urgent basis. The inference this court can make is the Minister would have called for all information considering as an urgent matter and used his discretion. Normal case, witness stated it would take 14 days. When an urgent matter is referred the Minister would have to look into all the documents this court infers.

9.8 There were 6 tenders for the property. Suresh Chandra was the highest bidder made an offer of $415,000.00 on behalf of him or his nominee, next highest was $400,000.00 VIP, (The Plaintiffs' Exhibit 45). The offer was for Malawi Resort and Exhibit 46 specifically states the offers are called for the Malawi Resorts property giving the volume folios of the CT registration. I quote the following note of Exhibit 46:

"..................The highest tender received from Mr Suresh Chandra further advised that would his bid be successful he will pay $20,000.00 as deposit and will settle in full within 30 days when the resort was first advertised in August 1997, the highest tender received was $360,000.00. The highest offer received upon re-advertisement.

Recommendations: We accept the offer for Mr Suresh Chandra ($415,000.00)......."

The offer of $415K is good and that we ought to formalize with Mr SC. On all non-refundable basis the holding deposit of $20K and full settlement within 30 days as above (ii) further suggest that we keep it open for Shane and Sue Kennedy with tender of $400K.

This is the Recommendation approved by the Chief Manager. It is abundantly clear the making of the deposit of $20,000was not finalization of the offer it's a non refundable deposit. If Suresh Chandra fails to pay the balance amount within 30 days, his offer would have declined and the deposit would have forfeited and offered the property to the second highest bidder for $400,000.00.

In the circumstance, I conclude that there was no Contract of Sale by the 1st Defendant with Suresh Chandra on his payment of the deposit of $20,000.00 on 27 November 1997.

In the circumstance there was no obligation to request for consent (when the offer was accepted which was conditional) in pursuant to Section 6 of the Land Sales Act.

The Application for Consent on 17/12/1997 was in conformity with the said section.

(a) There was no breach of Policy or Legal requirements when the 2nd Defendant dealt with the application for sale of Malawi to the 3rd Defendant;

(b) There was no breach of Section 6 and 7 of the Land Sales Act (Cap 137) since there was no formal contract entered between Suresh Chandra, 3rd Defendant and 1st Defendant when the offer was accepted and the 1st Defendant had no restrictions to offer the property to the 2nd highest bid.

Having concluded as above, I determine that there was no breach of the provisions of Land Sales Act on the Sale of Malawi property owned by the 1st Plaintiff.

The Mortgagee Sale was advertised in the newspaper on 9 August 1997 and 11 October 1997 and I conclude there was no evidence to substantiate as per Cabinet Decision to have a special format for advertisement. The Cabinet Decision was for the offer for sale of freehold land over 10 hectares should be advertised locally before granting the consent is considered. The Exhibit No. P66 tendered by the Plaintiffs is not on a Mortgage Sale and there is no evidence before me to the effect that all advertisement should follow such a format. I determine the said 2 advertisements are sufficed for such purpose.

(c) the Plaintiffs are ordered to pay jointly/and or severally to the 2nd and 4th Defendants costs of $2,500 each summarily assessed.

High Court of Fiji

FML Resort Ltd v NBF Asset Management Bank [2015] FJHC 85; HBC269.1999 (13 February 2015)