Quality Properties (Fiji) Ltd v Prasad [2016] FJHC 122; HBC136.2014 (29 February 2016)

IN THE HIGH COURT OF FIJI
AT SUVA
CIVIL JURISDICTION
Civil Action No. HBC 136 of 2014

BETWEEN:

QUALITY PROPERTIES (FIJI) LIMITED
a limited liability company having its registered office at Neel Shivam Lawyers, 22 Carnavon Street, Suva.
PLAINTIFF

AND:

SHANTI PRASAD of Lot 37, Waqadra Road, Nadi, Company Director.
DEFENDANT

Counsel : Mr. Nandan for the Plaintiff
Mr. Bukarau for the Defendant

Before : Acting Master S. F. Bull
Judgment : 29 February 2016

JUDGMENT

1. This is the Plaintiff's application by way of originating summons, for the Defendant to show cause why he should not give up vacant possession of the property described as Housing Authority Sub-lease number 31306, Lot 37 on DP 5849. The summons seeks also an order for mesne profits, costs on an indemnity basis, and any other order that the Court deems just.
   
2. In support of the application is an affidavit sworn by Latchman Goundar, Director of the Plaintiff company. He says he is duly authorised to swear the affidavit on behalf of the Plaintiff.
   
3. He avers that the Plaintiff is the registered proprietor of the Housing Authority Sub-lease Number 31306, Lot 37 on DP 5849 (the Property). A copy of the said sub-lease is annexed and marked A.
   
4. On 17 January 2012, the Plaintiff and the Defendant entered into a Sale and Purchase Agreement, a copy of which is annexed. The Defendant has taken possession of the Property but failed to settle in accordance with the Agreement, on or before 20 April 2012.
   
5. On 21 May 2012, the Agreement was varied. A copy of this is also annexed.
   
6. The Defendant has failed to pay three months' rent as per the variation of 21 May 2012 and the Agreement has therefore come to an end.
   
7. Despite being served with a Notice to Vacate on 12 February 2014, the Defendant continues in occupation of the property.
   
8. A supplementary affidavit in support was subsequently filed with the same annexures A and B in the original affidavit. I note that the said annexures are the same, except that those in the supplementary affidavit are printed on one side only, whereas those in the original affidavit are printed on both sides of the page.
   
9. In opposing the application, the Defendant states as follows:
   
   • His acquisition of Lot 37 Waqadra was an extension of a two tier deal that included
     
     • the acquisition of all shares in QRCFL for $200,000 and;
     • The purchase of Lot 37 Waqadra for $120,000.
       
   • He entered into a Sale and Purchase Agreement with the Plaintiff on 17 January 2012 through their common solicitors, Messrs. Neel Shivam Lawyers.
     
   • He signed a copy of that Agreement at the office of Messrs. Neel Shivam but was not given a copy of the Agreement.
     
   • He had gone to the office of Messrs. Neel Shivam to try and obtain copies of
     
     • the Sale and Purchase Agreement for the property the subject of these proceedings;
     • the Agreement for his acquisition of shares in Quality Rent a Car (Fiji) Ltd., and;
     • other legal documents for other transactions
       

but these were not released to him by the law firm.

• He is not sure whether the contents of Annexure B in the Plaintiff's affidavit are the same as the agreement he had signed. His lawyers advised the Plaintiff's lawyers of this in a letter dated 15 July 2014 which is exhibited to his affidavit.
  
• He took possession of the property with the Plaintiff's consent from around January 2012 because he had, from the said property, also managed QRCFL for Latchman Gounden.
  
• There was in existence another agreement for him to acquire the shares in QRCFL which agreement he says ran "parallel" and "concurrently" with the Sale and Purchase Agreement.
  
• That parties did not settle as per the agreement of 20 April 2012 as the Plaintiff insisted that the sale of shares in QRCFL first be completed.
  
• That the acquisition of shares was completed around May 2012. He is not able to provide a copy of the share acquisition agreement as that is still with Neel Shivam Lawyers. He does however annex a copy of the stamp duty for the said acquisition, dated 27 June 2012, for the amount of $2,533.00.
  
• It was after he had signed off on the agreement for the acquisition of shares that he then entered into the Variation of Sale and Purchase Agreement of 21 May 2012, a copy of which forms annexure C of his affidavit.
  
• When he took over as proprietor of QRCFL, they rented the properties at 174 Ratu Mara Road, Samabula, Suva at $2,500 per month, and Lot 37 Waqadra, Nadi (Opposite Skylodge Hotel) at $500 per month from the Plaintiff.
  
• He paid $3,000 in rent to the Plaintiff for both properties from May to July 2012. They vacated the property at 174 Ratu Mara Road and moved to their current location after July, leaving him only with rental payments for the Waqadra property at $500 per month, as per the Variation of Sale and Purchase Agreement.
  
• He made three payments of $500 for rent for the months of July to September, on 01/08/13; 01/09/13 and; 09/09/13.
  
• He received a Notice dated 19 September 2013 from the Plaintiff's property manager unilaterally increasing rent from $500 which was the amount agreed in the Variation of Sale and Purchase Agreement of 21 May 2012, to $750.
  
• Because of the unilateral manner in which the Plaintiff had increased the rent, he stopped making any further rental payments to the Plaintiff.
  
• The rents under the variation were "a holding arrangement to allow the Plaintiff to advice on the settlement but since the Variation on 21 May 2012, the Plaintiff has not done so and he is still waiting for the same.
  
• On 4 October 2013, one Hitendra Swamy, a director of the Plaintiff Company, wrote saying there were arrears in rent in the sum of $750 for the month of October 2012 and that non-payment would result in eviction. He has been advised by his solicitors that the Notice is inconsistent with the terms of the Variation of 21 May 2012.
  
• On 13 November 2013, he received a Notice to Quit from Messrs. Neel Shivam Lawyers stating that the Plaintiff required the premises for his own use.
  
• On 13 February 2014, he received a Notice to Quit from Reddy Nandan Lawyers.
  
• There was no agreement to the rent being unilaterally increased to $750 by the Plaintiff. It was for this reason that they refused to pay the increased rent and waited instead for the settlement date.
  
• He is still waiting for the Vendor to advise him of the settlement date for the Sale and Purchase Agreement of 7 January 2012 and as varied on 21 May 2012.
  
• He is ready to settle the Sale and Purchase Agreement but the Plaintiff/vendor is making all sorts of excuses to avoid settlement.
  
• That after he acquired the shares in QRCFL in May 2012, FIRCA issued a Garnishee Order against them stopping their operations since there was an outstanding tax liability by Latchman Gounden as "former proprietor" of QRCFL for the years 2000 – 2011.
  
• Since the Plaintiff who was the former proprietor of QRCFL refused to pay the tax liability, the Defendant had to spend around $50,000 to free QRCFL as to be able to continue its operations.
  
• The sum of around $50,000 owed by the Plaintiff and paid by him to FIRCA should reduce the purchase price to $70,000.
  

The law

10. Section 169 of the Land Transfer Act provides:
    

The following persons may summon any person in possession of land to appear bea judge inge in chambers to show cause why the person summoned should not give up possession to the applicant:

(a) the last registered proprietor of the land;

(bessor with with power to re-enter where the lessee or tenant is in arrear for such period as may be provided in the lease and, i absence of any such provision therein, when the lessee or tenant is in arrear for one mont month, whether there be or be not sufficient distress found on the premises to countervail such rent and whether or not any previous demand has been made for the rent;

(c) a lessor against a lessee or tenant where a legal notice to quit has been given or the term of the lease has expired.

11. The procedure for applications under section 169 of the LTA is as follows:
    
    1. The person who issues a summons for vacant possession must be one of the following:
       
       1. the last registered proprietor of the land;
       2. a lessor with a power to re-enter where (i) the tenant or lessee is in arrears for the period stated in the lease, or; (ii) when the lessee or tenant is in arrear for one month...whether or not a previous demand has been made for the rent;
       100. a lessor against a lessee where (i) a legal notice to quit has been given, or (ii) the term of the lease has expired.
            
    2. The summons must meet the requirements of section 170. That is,
       
       • (i) it must contain a description of the land, and
       • (ii) it shall require the person summoned to appear at court not earlier than 16 days after service of the summons.
         
    3. On the day of the hearing of the summons,
       

(i) if the person summoned does not appear, the Court may order immediate possession to be given to the plaintiff if satisfied:

(a) that the summons has been served on the defendant, and;

(b) of the proprietor or lessor's title.

(c) If consent is required, then proof of such consent.

(ii) if the person summoned appears:

(a) he may show cause why he refuses to give possession of such land.

4. If he satisfies the judge he has a right to possession:
   
   • (i) the application shall be dismissed with costs against the proprietor, mortgagee, or lessor, or
     
   • (ii) the judge may make any order and impose any terms as he may deem fit.
     

12. The dismissal of the summons is not a bar to the plaintiff's right to take any other proceedings against the defendant as he may otherwise be entitled.

13. In the case of a lessor against a lessee, if, before the hearing, the lessee pays or tenders all rent due and all costs incurred by the lessor, the judge shall dismiss the summons.
    

Analysis

14. As required by section 169 of the LTA, the Plaintiff must first show it falls under at least one of the categories (a) – (c), and therefore has locus to institute these proceedings against the Defendant.
    
15. The Plaintiff exhibits to its affidavit in support a copy of the sub-lease showing that it is the last registered proprietor. The Defendant does not dispute that the Plaintiff is the last registered proprietor and therefore qualifies to bring these proceedings against the Defendant under section 169 (a) of the LTA.
    
16. I have considered section 170 of the LTA. The summons cites the lease number as 31306, though the correct number is 313206. Notwithstanding this error, I find that the Plaintiff's summons meets both requirements of s. 170.
    
17. Section 171 of the Act does not apply since the defendant opposed the application and was represented by counsel at the hearing of the summons.
    
18. The Plaintiff having satisfied the Court that it has standing to institute these proceedings, section 172 of the Act now requires the Defendant to show cause as to why an order for vacant possession should not be made against him.
    
19. I bear in mind that he need not prove conclusively a right to possession, and that it suffices if he shows some tangible evidence establishing the existence of a right. (Morris Hedstroms Ltd v Liaquat Ali(Action No. 153 of 1987)
    
20. I have considered the affidavit material before the Court, as well as counsel's submissions. The Defendant relies on the Sale and Purchase Agreement of 17 January 2012, the variation of the same on 21 May 2012, the alleged unilateral increase of rent from $500 in the Variation Agreement, to $750, his payment of $50,000 to FIRCA on behalf of the Plaintiff so as to free the Company QRCFL to operate, and the fact that there has been no settlement of the sale and purchase of the property, to say that he has an "arguable case" and should not therefore be made to give up possession to the Plaintiff.
    
21. It must be noted that section 172 does not require that Defendant show an "arguable case", and he need only prove to the Court's satisfaction that he has a right to possession.
    
22. Both parties agree that there was a Sale and Purchase Agreement of 17 January 2012 that was to have been settled on or before 20 April 2012, but that did not happen. It is also not disputed that this agreement was varied on 21 May 2012 as follows:
    
    1. The Vendor and the Purchaser [sic] has entered into a Sale and Purchase Agreement dated 17th January 2012 (hereinafter referred to as the said "Agreement") whereby the Purchaser has agreed to purchase the property described in Housing Sub-lease No. 313206 Lot 37 DP 5849 (hereinafter referred to as the said "Property" for the price of $120,000.00 (One hundred Twenty Thousand Dollar) plus Vat in the total sum of $138,000.00 (One Hundred thirty Eight Thousand).
       
    2. That a sum of $500.00 (Five Hundred Dollars) shall be paid by the Purchaser to the Vendor being rental over the said property commencing from the 1stJune, 2012 until the date of settlement. If the said rental is not paid for 3 consecutive months, then the entire Agreement will be void.
       
    100. That in all other respects the terms and conditions contained in the Agreement dated 17th day of January, 2012 are hereby confirmed.
         
23. I consider it necessary to deal first with the Defendant's objection to the summons on the ground that the Plaintiff needs to obtain the consent of the Housing Authority for the Sale and Purchase Agreement to be lawfully concluded.
    
24. Clause 2 of the Housing Authority Sub-lease states:
    

The lessee shall not transfer mortgage assign sublet or part with the possession of or alienate or deal with the demised land or any building thereon or any part thereof without the written consent of the lessor first had and obtained which consent may be withheld in the absolute discretion of the lessor.

25. In this case, the Defendant took possession of the land pursuant to the terms of the Agreement and the subsequent Variation. The Variation created a tenancy agreement requiring the Defendant to pay to the Plaintiff a monthly rent of $500. The Defendant says in paragraph 7 of his affidavit that he had also managed QRCFL from that property.
    
26. There is nothing before the Court to say that the consent of the Housing Authority, as lessor, was ever sought or obtained at any time by the parties, either as to the Agreement or Variation, to the Plaintiff dealing with the land, or the Defendant taking possession thereof.
    
27. I consider that the Plaintiff has dealt with the land in breach of Clause 2 of the Sub-lease, thereby rendering both the Agreement and Variation void for illegality. No reliance can be placed by the Plaintiff on the alleged breach by the Defendant of the Agreement and Variation by failing to pay rent. Nor can it, in the circumstances, call for mesne profits.
    
28. Similarly the Defendant cannot hope to obtain any advantage from a contract which is void for absence of the Authority's consent.
    
29. The Defendant in his affidavit cites a "concurrent" agreement to do with the acquisition of shares. No evidence of this agreement was placed before the Court, and this argument is accordingly rejected.
    
30. Having considered all the evidence before the Court and counsel's submissions, I am of the firm view that the Defendant has failed to satisfy the Court that he has a right to be in possession of the land.
    
31. Notwithstanding the Plaintiff's application being successful, I consider it just in the circumstances to stay the execution of the order for vacant possession for some time, three months being a reasonable period in my view.
    
32. As to indemnity costs, the Court in Rokotuiviwa v Seveci [2008] FJHC 221; HBC374.2007 (12 September 2008) stated:
    

After considering the various tests set out in Australia, England and Wales and the Fiji Islands, I concluded in Singh that there would need to be conduct which could be pointed to by the Plaintiff whereby the Defendants "had acted wholly unreasonably in connection with the hearing". Indeed, as I noted at paragraph 23:

"In relation to the four cases cited from the Fiji Islands, namely Naiveli and Dewa as well as the two Heffernan cases (supra), again, the conduct involved would need to be "reprehensible conduct".

33. While the Plaintiff in its summons seeks indemnity costs against the Defendant, it has not adduced any evidence supporting why an order to this effect ought to be made.
    

Orders

1. The Defendant is to give to the Plaintiff vacant possession of the property described as Housing Authority Sub-lease number 313206, Lot 37 on DP 5849;
   
2. Execution of the above order is stayed for a period of three months from the date of this judgment.
   
3. The Plaintiff's application for mesne profits and for indemnity costs is denied.
   
4. Though costs normally follow the event, it is not always the case, costs being always a matter for the Court's discretion. Given the circumstances of this case, I order for the parties to bear their own costs.
   

Dated at Suva this 29th day of February, 2016

S. F. Bull
Acting Master