Bank of Baroda v Fiji Registered Nurses Association [2018] FJHC 184; HBC88.2015 (14 March 2018)

IN THE HIGH COURT OF FIJI
AT SUVA
CIVIL JURISDICTION

HBC No. 88 of 2015

IN THE MATTER of an application to show cause under Section 109 (2) Part XXIV of the Land Transfer Act Cap 131.

BETWEEN : BANK OF BARODA a Government of India undertaking, incorporated in India and carrying on its business in Fiji.

PLAINTIFF

AND : FIJI REGISTERED NURSES ASSOCIATION of 26 McGregor Road, Suva.

DEFENDANT

BEFORE: Master Vishwa Datt Sharma

COUNSELS: Mr. Davenesh Sharma - for the Plaintiff

Mr. Isireli Fa - for the Defendant

Date of Decision: 14^th March, 2018

RULING
[Removal of caveat pursuant to section 109 (2) AND 168 OF THE Land Transfer Act, Cap 131]

1. APPLICATION
   

1. This is an Originating Summons filed by the Plaintiff seeking the following orders-
   
   1. That the Defendant show cause why caveat No 801321 registered against Certificate of Title No 20104 and lodged by the Defendant should not be removed immediately;
      
   2. That Caveat No. 801321 registered against Certificate of Title No 20104 be removed forthwith;
      
   3. That the Registrar of Titles be directed pursuant to section 168 of the Land Transfer Act Cap 131 to remove Caveat No. 801321 registered against the Certificate of Title; and
      
   4. That the Defendant do pay the costs of this Application on an indemnity basis.
      
2. This application is made pursuant to Section 109(2) and 168 of the Land Transfer Act.
   
3. The Defendant opposed the application for the removal of the Caveat No. 801321 and filed an affidavit deposed by Salanieta Matiavi in her capacity as the General Secretary of the Association.
   
4. The Plaintiff subsequently filed an affidavit in response to this Defendant’s affidavit.
   
5. The Plaintiff filed a written submissions and the Defendant chose not to furnish any written submission although reminders were sent to his office.
   

B. THE LAW

6. Part XVII of land Transfer Act, Cap 131 deals with “Caveats”.
   
7. Sections 106 and 107 of the Land Transfer Act, Cap 131 provides as follows-

106. Any person-

(a) claiming to be entitled or to be beneficially interested in any land subject to the provisions of this Act, or any estate or interest therein, by virtue of any unregistered agreement or other instrument or transmission, or of any trust expressed or implied, or otherwise howsoever; or

(b) transferring any land subject to the provisions of this Act, or any estate or interest therein, to any other person to be held in trust,

may at any time lodge with the Registrar a caveat in the prescribed form, forbidding the registration of any person as transferee or proprietor of, and of any instrument affecting, such estate or interest either absolutely or unless such instrument be expressed to be subject to the claim of the caveator as may be required in such caveat.

Particulars to be stated in and to accompany caveat

107. Ever caveat shall state the name, address and description of the person by whom or on whose behalf the same is lodged and, except in the case of a caveat lodged by order of the court or by the Registrar, shall be signed by the caveator or his agent and attested by a qualified witness and shall state with sufficient certainty the nature of the estate or interest claimed and how such estate or interest is derived.

8. Section 109 and 168 of the Land Transfer Act Cap 131 provides as follows-

Notice and opposition to caveat

109.-(1) Upon the receipt of any caveat, the Registrar shall give notice thereof to the person against whose application to be registered as proprietor of, or, as the case may be, to the registered proprietor against whose title to deal with, the land, estate or interest, the caveat has been lodged.

(2) Any such applicant or registered proprietor, or any other person having any registered estate or interest in the estate or interest protected by the caveat, may, by summons, call upon the caveator to attend before the court to show cause why the caveat should not be removed, and the court on proof of service of the summons on the caveator or upon the person on whose behalf the caveat has been lodged and upon such evidence as the court may require, may make such order in the premises, either ex parte or otherwise as to the court seems just, and, where any question of right or title requires to be determined, the proceedings shall be followed as nearly as may be in conformity with the rules of court in relation to civil causes.

Power of court to direct Registrar

168. In any proceedings respecting any land subject to the provisions of this Act, or any estate or interest therein, or in respect of any transaction relating thereto, or in respect of any instrument, memorial or other entry or endorsement affecting any such land, estate or interest, the court may by decree or order direct the Registrar to cancel, correct, substitute or issue any instrument of title or make any memorial or entry in the register or any endorsement or otherwise to do such acts as may be necessary to give effect to the judgment or decree or order of such court.

C. ANALYSIS and DETERMINATION

9. The Plaintiff filed this application in terms of Section 109 (2) and 168 of the Land Transfer Act, Cap 131 as the first mortgage holder over the Certificate of Title No. 20104 seeking an order for the removal of the Caveat No. 801321 lodged by the Defendant.
   
10. Firstly, it is essential to note that the Caveat procedure is an interim procedure designed to freeze the position until an opportunity has been given to a person claiming a right under an unregistered instrument to regularize the position by registering the instrument.
    
11. It appears in terms of section 106 of the Act that two main components are required to be established in order to constitute a legally enforceable caveat.
    

The first component is the existence of caveatable interest as defined under section 106 (a) and (b) of the Act.

The second component is the enforceable effect of the caveat. The caveat should be able to forbid or restrain the registration of any person as transferee or proprietor of and of any instrument affecting the estate and interest claimed by the caveator in the caveat.

12. The meaning and the scope of application of the section 106 of the Land Transfer Act has comprehensively expounded by the Fiji Court of Appeal in Cambridge Credit (Fiji) Limited v W.F.G. Limited (Vol 21 FLR 182), where it was held that;

"the respondent must however, bring itself within the provision of Section 106 and in order to do this must satisfy the court that the following are fulfilled.”-

(a) That it is a person claiming to be entitled to or to be beneficially interested in any land estate or interest under the act; and

(b) That is it so claiming by virtue of any unregistered agreement or other instrument or transmission or any trust expressed or implied or otherwise howsoever,..................................

Section 138 of the Land Transfer Act 1885 (N.Z) (which was not dissimilar from our section 106) was discussed in Staples & Co v Corby and District Land Registrar (1900) 19 N.Z.L.R.517 where Stout C.J. at page 536 said;

"Before a person can caveat under this section he must be a person who claims to be entitled to the land, or any estate or interest in the land, or to be "beneficial interested" in the land, or in any estate or interest in the land, and the person in either event must claim "by virtue of any unregistered agreement, or other instrument or transmission" (transmission meaning acquirement by title or estate consequent on death, will, intestacy, bankruptcy, &c) or of any trust expressed or implied, or otherwise howsoever".

Section 106 of the Fiji Act is designed to protect unregistered instrument in land. For instance an agreement for sale and purchase, an unregistered mortgage, an agreement to give a mortgage, or an option to purchase land is just a few examples of unregistered instruments which are capable of being protected by the lodging of a caveat".

13. Griffith C.J. in Municipal District of Concord v Coles [1905] HCA 35; [1905] HCA 35; (1906) 3 CLR 96 at 107) has discussed the definition of "an interest in any land", where his lordship found that:

"After a very anxious consideration of the words of the section and the whole Act, we have come to the conclusion that the intention of the legislature in using the word "interest" was that only a person having, or claiming to have some legal or equitable interest in the land partaking of the character of an estate, or of an equitable claim upon the land can be a caveator".

14. The Judicial observation outlined by Griffith C.J in Municipal District of Concord v Coles (supra) has adopted and approved by Justice Jitoko in Fiji National Providence Fund Board v Vivras Holdings Ltd (2004) FJHC 16, HBC0325D.2002S (3 June 2004), where Jitoko J while referring the passage of Griffith C.J, held that under the Torren system, a caveatable interest amount to a proprietary interest in land.
    
15. Stout C.J. in Staples & Co v Corby and District Land Registrar (1900) 19 N.Z.L.R.517 further elaborated and defined the scope of " an interest in land" where Stout C.J. held that;

"the person who can caveat against bringing under the Act is one who has, or claims that he has, an "interest" in the land. "Interest" is not defined, but it seems to be a legal interest, not an equitable one, or an equitable interest capable of being made legal".

16. Taking into consideration the scope of section 106 of the Act and the above discussed judicial precedents relevant to the issue of caveatable interest, the scope of the hearing under section 109 (2) requires the hearing of the two limb test.
    

The first limb to determine is whether the caveator has any caveatable interest as defined under section 106 (a) and (b) of the Act.

Once the first limb is considered, the court is then required to determine the-

Second limb whether such caveatable interest is capable enough to forbid or restrain the registration of any person as transferee or proprietor, or of any instrument affecting such interest and estate in the property as claimed by the caveator in the caveat. (In the current case as a shareholder).

17. I now turn my attention to Caveat No. 801321 lodged by the Defendant on the Certificate of Title No. 20104.
    
18. Upon a careful perusal of the Certificate of Title No. 20104, it confirms the following details-
    
    • That the property was transferred to Tropichealth Incorporated (Fiji) Limited (THIFL) on 23^rd March, 2004;
    • That the Plaintiff Bank of Baroda registered a Mortgage No. 600557 18^th December, 2006; and
    • That the Defendant registered a Caveat on the Certificate of Title on 29^th July, 2014.
      
19. It is now apparent from the above details that the Plaintiff’s mortgage was registered first and subsequently, some 7 years and 8 months later, the Caveat was lodged against the Certificate of Title by the Defendant.
    
20. In the affidavit deposed by Salanieta Matiavi, the Defendant stated that as an investor, they hold 100,000 ordinary shares in THIFL, the registered proprietor of Certificate of Title No. 20104.
    
21. It is not denied by the Defendant that at the time of their investment in THIFL, the Plaintiff had a registered mortgage over the property of THIFL which was the principal asset.
    
22. It was the intention of the shareholders of THIFL to undergo transition of Waimanu Medical Center into a hospital which would be called Suva Bayview Medical Private Hospital. The Fiji National Provident Fund Investment Limited (FNPFIL) would have been the financier to oversee this transition.
    
23. The FNPFIL upon assuming control breached its agreement with THIFL.
    
24. Hereafter, THIFL defaulted on the mortgage payments to the Plaintiff and therefore the Plaintiff had no other alternative but to exercise its mortgaged rights over the Defendant’s mortgaged property.
    
25. The Plaintiff Bank of Baroda has since entered into a Sale & Purchase Agreement with the Fiji National University to buy the said property accordingly.
    
26. The Plaintiff has now appraised this court with three (3) main grounds of challenge to the Defendant’s Caveat;
    

(a) Whether the Defendant has legal capacity to lodge a caveat;

(b) Whether the Defendant as an alleged investor/ shareholder in Tropichealth Incorporated (Fiji) Limited has a caveatable interest in CT 20104; and

(c) Whether the Defendant’s alleged interest in the land is entitled to priority over the Plaintiff’s Mortgage No. 600557.

27. The Plaintiff’s contention is that the Defendant’s Caveat No. 801321 is defective for the following reasons:-
    

Firstly, the caveat is in non-compliance with section 107 of the Lands Transfer Act, Cap131. The Caveat does not specify with particularity what is the unregistered interest that the Defendant is seeking to protect;

Secondly, Section 107 of the Lands Transfer Act Cap 131 deals with the particulars to be stated in and to accompany a Caveat. The Caveat does not provide any particulars as to how the Defendant claims an unregistered interest in the land merely by being an alleged shareholder in Tropichealth Incorporated (Fiji) Limited.

28. In terms of the affidavit deposed by Salanieta Matiavi on behalf of the Defendant, she quite categorically states the following-
    
    • “The Defendant is the holder of 100,000 ordinary shares in THIFL;
      
    • The Defendant herein is an investor in THIFL; and
      
    • At the time of the Defendant’s investment in THIFL, the Plaintiff had a registered first mortgage over the property of THIFL.”
      
29. I have thoroughly perused the Defendant’s Caveat No. 801321 registered on the Certificate of Title No. 20104.
    
30. The Caveat in question clearly shows that the Defendant has registered this Caveat claiming an interest as a shareholder in THIFL. However, I find that the Defendant has failed to furnish any evidence of such claim of a shareholder nor do I find any evidence in terms of an investor as claimed by the Defendant.
    
31. Tropichealth Incorporated (Fiji) Limited being the owner of the Certificate of Title No. 20104 had signed the Mortgage pledging the land as security for the Plaintiff’s debt. Therefore the Plaintiff’s interest herein is that of a registered First Mortgagee and not the second Mortgagee FNPF Investments Limited.
    
32. However, even if the Defendant was able to establish to this Court that the Defendant had some sort of an equitable interest in the land, then such interest cannot take precedence over a prior registered Mortgage.
    
33. I make reference to the case of FNPF v Vivrass Holdings Ltd Civil Action No. HBC 325s of 2002s, Justice Jitoko held-
    

“That an option holder’s rights cannot support a Caveat.”

Likewise, a shareholder in a Company doesn’t have an interest in land but in a Company.

34. The Fiji Court of Appeal In Cambridge Credit (Fiji) Ltd v W.F.G Ltd Vol. 21 FLR 182 stated that section 106 is concerned with the protection of Unregistered instruments in Land add (p. 185).
    

"Section 106 of the Fiji Act is designed to protect unregistered instruments in land. For instance an agreement for sale and purchase, an unregistered mortgage, an agreement to give a mortgage or an option to purchase land is just a few examples of unregistered instruments which are capable of being protected by the lodging of a caveat."

The Fiji Court of Appeal in the said case p 184 at paragraph [H] stated,

"That the Respondent must however, bring itself within the provisions of section 106 and in order to do this must satisfy the Court that the following are fulfilled".

(1) That it is a person claiming to be entitled to or to be beneficially interested in any land estate or interest under the Act; and

(2) That it is so claiming by virtue of an unregistered agreement or other instrument or transmission or any trust expressed or implied or otherwise howsoever."

35. Based on the above principles, I find that the Defendant's interest does not satisfy the requirements of section 106 of the Act for the following reasons and I uphold the submissions of the Plaintiff accordingly-
    
    • The Defendant's alleged investment in the Company does not create a beneficial interest in the said land;
    • The said Company is the owner and registered proprietor of the land;
    • The Defendant has not produced any unregistered instrument, or other instrument or transmission or of any transmission or any trust expressed or implied or otherwise submitted to show that it has a beneficial interest in the land;
    • The Defendant's interest at best may be an interest in the shares of the Company that owns the land but the Company is a separate legal entity; and
    • The protection afforded to shareholders by having a corporate structure is that they are not personally liable for the debts incurred by the Company unless they have signed personal guarantees to that effect.
      
36. Further, I find that the current action is between Bank of Baroda and Fiji Registered Nurses Association.
    
37. Tropichealth is the owner and registered proprietor of the Certificate of Title No. 20104. The Defendant Fiji Registered Nurses Association has registered a Caveat No. 801321 on this Title.
    
38. The Certificate of Title is mortgaged by Tropichealth to the Plaintiff, Bank of Baroda.
    
39. Since my attention was drawn to Civil Case HBC No. 143 of 2014, this prompted me to peruse HBC Case No. 143 of 2014 to find out the status of that case impending in the system.
    
40. My perusal of the Court file HBC 143 of 2014 revealed and confirmed that Tropichealth Incorporated (Fiji) Limited was a 3^rd Plaintiff with 2 others and Bank of Baroda as the 2^nd Defendant.
    
41. The Plaintiff’s sought for an order for Specific Performance against the 1^st Defendant, FNPF Investments Limited and a further order for an injunctive relief ‘restraining the 1^st and the 2^nd Defendants their servants and agents whomsoever from selling by way of mortgagee sale the 3^rd Plaintiff’s (THIFL) property being CT 20104.
    
42. The application seeking an order for the injunctive relief was struck off on 03^rd November, 2014 by the Court.
    
43. Therefore, in absence of any order for an injunctive relief to ‘restrain the 1^st and the 2^nd Defendants their servants and agents whomsoever from selling by way of mortgagee sale the 3^rd Plaintiff’s (THIFL) property being CT 20104 vide HBC Case No 143 of 2014 together with my finding hereinabove of the Defendant's interest not satisfying the requirements of section 106 of the Act for the reasons reflected therein, I have no alternative but to allow the Plaintiff’s application seeking an order for the removal of the Caveat No. 801321 from the Certificate of Title No. 20104 forthwith.
    
44. In light of the above order made for the removal of the Caveat forthwith , I further order and direct the Registrar of Titles to remove the Caveat No. 801321 registered against the Certificate of Title No. 20104 forthwith pursuant to section 168 of the Land Transfer Act Cap 131 accordingly.
    
45. In terms of the Plaintiff’s entitlement to costs in this matter, I have this to say.
    

The Defendant was very much aware of the fact that the Court had already determined the Injunctive relief order sought to ‘restrain the 1^st and the 2^nd Defendants (Bank of Baroda) their servants and agents whomsoever from selling by way of mortgagee sale the 3^rd Plaintiff’s (THIFL) property being CT 20104.””

“The application was struck off by the Court in favour of the Plaintiff (Bank of Baroda) being the 2^nd Defendant in HBC No. 143 of 2014”.

46. However, the manner in which the Defendant had the conduct of this matter, it calls for and I am inclined to grant summarily assessed costs against the Defendant @ $1,000, to be paid within 14 days’ time frame to the Plaintiff.
    
47. In conclusion, following are the final orders of this court-
    

FINAL ORDERS

(i) That the Defendant’s caveat No 801321 registered against the Certificate of Title No 20104 and lodged by the Defendant to be removed forthwith and with immediate effect;

(ii) That the Registrar of Titles is hereby directed pursuant to section 168 of the Land Transfer Act Cap 131 to remove Caveat No. 801321 registered against the Certificate of Title No. 20104 forthwith and with immediate effect; and

(iii) That the Defendant to pay the summarily assessed costs of this Application in the sum of $1,000 within 14 days’ time frame.

(iv) An order to this effect be immediately served onto the Registrar of Titles and the Defendant accordingly.

(v) Adjourned for further directions to 14^th March, 2018.

DATED AT SUVA ON 14^TH MARCH, 2018

................................................

VISHWA DATT SHARMA Master of the High Court Suva

cc: R. Patel Lawyers,Suva.
Fa & Company,Suva.