Chand v Singh [2009] FJMC 30; Civil Case 365.2008 (30 October 2009)

IN THE RESIDENT MAGISTRATES COURT
CENTRAL DIVISION
SUVA

Civil Case No. 365 of 2008

BETWEEN:

RAMESH CHAND
PLAINTIFF

AND:

SAKATH SINGH
DEFENDANT

Counsel for the Plaintiff: Mr S Kumar, Esq.
Counsel for the Defendant Mr N Lajendra

Date of Hearing: 01 September 2009
Date of Judgment: 30 October 2009

JUDGMENT

[1] This is the Plaintiff’s claim against the Defendant claiming refund of payments alleged to be deposits under agreement for purchase of land and shop and special damages for loss of stock.

[2] The Defendant admits the agreement for sale of his land and says that the Plaintiff let the premises from him pending settlement. When the Plaintiff stopped paying rent the Defendant evicted him.

[3] The Defendant says that the Plaintiff failed to complete the purchase of the said land and counterclaims for rent arrears and damage to the said shop.

[4] The Defendant further says that $10,000.00 of the Plaintiff’s deposit came from the Plaintiff’s brother, Ravinesh Chand, and that the Defendant signed a Promissory Note for the same.

[5] That is the Promissory Note sued upon in the related action, No. 302 of 2008, the trial of which was conducted on the same day as the trial of this action.

[6] The parties’ solicitors were ordered to file simultaneous submissions by 29th September 2009. Only the Plaintiff’s solicitor has filed submissions herein.

The Exhibits

[7] The following documents were tendered into evidence at trial as exhibits:

Photocopy of Receipt No. 229830 - Exhibit 1

Photocopy of Receipt No. 229828 - Exhibit 2(a)

Photocopy of Receipt No. 229829 - Exhibit 2(b)

Photocopy of Receipt No. 229831 - Exhibit 2(c)

Photocopy of Bill for Acct No. 4000003387 - Exhibit 3(a)

Photocopy of FEA Acct. No. 2627725510 - Exhibit 3(b)

Photocopy of Receipt No. 0228, AEPVAL - Exhibit 4

Photocopy of letter dated 12th March 2007 - Exhibit 5

Photocopy Loan application – 1 page - Exhibit 6

Photocopy Letter dated 9th May, 2008 - Exhibit 7

Receipts for July, 2007 – November, 2007 - Exhibit 8

Photocopy Native Lease No. 27929 - Exhibit 9

Photocopy Letter dated 21 April, 2008 - Exhibit 10

High Court Order dated 27 August 2998 - Exhibit 11

The Plaintiff’s Evidence

[8] The Plaintiff [PW1] went into the witness box and gave evidence. The Plaintiff did not call any witnesses other than himself.

[9] PW1 gave evidence that he made a verbal agreement with the Defendant to buy the Defendant’s shop and land, and tendered Exhibit 5 dated 12th March 2007 as confirmation of the same.

[10] PW1 said he paid the Defendant a deposit of $15,000.00 towards the purchase price on 5th January, 2007, and tendered Exhibit 1 as the receipt therefore.

[11] PW1 said he made additional deposits, and tendered Exhibits 2(a), (b) and (c), being photocopies of receipts, as evidence of the same.

[12] PW1 said he took possession of the Defendant’s shop as he had agreed to purchase the same, and denied that the said payments constituted rent for the shop.

[13] PW1 admitted that he had rented the Defendant’s shop for approximately 6 months starting 18 June, 2006 at $1,000.00 per month.

[14] When PW1 was asked his status after December, 2006 in cross examination, he answered that he was renting but then said that from January, 2007 he paid deposit for payment of shop and no rent.

[15] PW1 blamed the Defendant for his failure to obtain financing, claiming that the Defendant refused to provide the cash flow statement required by his bank before approving any loan.

[16] PW1 said the Defendant did not have title from the Native Land Trust Board at that time, and that the Defendant needed to deposit money before the Native Land Trust Board would release the title. It should be noted that this is contradicted by Exhibit 9, which shows the Native Lease was registered in the Defendant’s name on 21st July, 2006.

[17] PW1 said there was a power surge from FEA, that he asked FEA to repair it but the Defendant would not sign the consent to repair. PW1 said he didn’t get power, and the items in the 3 freezers, including lamb chops, chicken and ice cream, were damaged. It should be noted that this evidence differs from paragraph 10 of the Plaintiff’s Statement of Claim, which alleges that the Defendant disconnected electricity from the shop.

[18] PW1 admitted that he had refused to vacate the shop when served with notice to quit by the Defendant, and that the Defendant had recovered possession of the property by way of 169 summons in the High Court of Fiji. PW1 also admitted not paying rent from May 2008 through October 2008.

[19] In cross examination PW1 denied getting any deposit monies from Ravinesh Chand, but he did state that he got $10,000.00 of the $15,000.00 deposit monies from his brother in law.

[20] PW1 further admitted in cross examination that the loss of stock was from the power surge, and that the shop had a counter scale when he took possession but claimed the counter scale had been stolen and that the billiard tables were already damaged.

[21] On re-examination PW1 identified certain rent receipts from July, 2007 through November, 2007, which receipts were tendered as Exhibit 8.

The Defendant’s Evidence

[22] The Defendant [DW1] went into the witness box and gave evidence. The Defendant did not call any witnesses other than himself.

[23] The evidence of DW1 was that he was looking to sell his shop in April, 2006, he agreed to sell his property to the Plaintiff, and to that end had finalised his lease with Native Land Trust Board and obtained a lease in registrable form on or about July, 2006.

[24] DW1 said he let the shop to the Plaintiff on a rent of $1,000.00 per month while awaiting settlement. This was because DW1 was waiting for his lease to be finalised.

[25] DW1 said that $10,000 of the Plaintiff’s deposit was actually paid by the Plaintiff’s brother on his behalf, and a further $5,000 was paid by the Plaintiff in January, 2007. DW1 said he issued a receipt for $15,000.00 in January 2007 at the Plaintiff’s request, as the Plaintiff needed to show it to his bank in order to get a loan. DW1 denied that that Plaintiff paid him $15,000.00 in January, 2007; he insisted that $10,000.00 of that amount was paid by the Plaintiff’s brother Ravinesh Chand in April, 2006.

[26] The Defendant insisted that the $1,000.00 payments in January, February and March, 2007 were rent payments, despite clear language to the contrary on the receipts.

[27] DW1 said he wrote the letter dated 12th March 2997 at the Plaintiff’s request, as the Plaintiff’s bank had requested it.

[28] DW1 said he didn’t have any financial or cash flow statements for his shop to give the Plaintiff, and that the Plaintiff had been operating the shop for about a year at the time so he could provide his own cash flow statement to the bank.

[29] DW1 stated that the Plaintiff continued to reside on the property and operate the shop without proceeding to settlement, and when the Plaintiff stopped paying rent, DW1 asked him to vacate the premises but the Plaintiff refused. DW1 said he told the Plaintiff he would pay back the $10,000.00 deposit from Ramesh Chand and the $5,000.00 deposit from the Plaintiff by taking over the shop himself and making money.

[30] DW1 said it was a problem with the FEA line that caused FEA to switch off the Plaintiff’s power, and that he did not disconnect the power.

[31] DW1 also said that the shop was stocked with $4,000.00 worth of goods when he let it to the Plaintiff, and that when the Plaintiff vacated the premises there was no stock left, the counter scale was missing and the billiard tables were damaged.

Oral Agreement for the Sale of Native Land

[32] Both the Plaintiff and the Defendant are well aware that the premises in question are native land under lease from the Native Land Trust Board.

[33] Any sale or transfer of or dealing in native land requires prior consent of the Native Land Trust Board under s 12 of the Native Land Trust Act, Cap 134 of the Laws of Fiji, and any dealing effected without consent is null and void and unlawful. As a result, any agreement for sale and purchase must be conditioned upon receipt of consent and must not be carried into effect until such consent is obtained. Chalmers v Pardoe, [1963] 3 All ER 552, [1963] 1 WLR 677; Fong Lee v Mitlal and Ram Kissun, [1966] 12 FLR 4 at p.11.

[34] The evidence before the Court is that the consent of the Native Land Trust Board was never obtained as it was never applied for.

[35] We refer to the case of D. B. Waite (Overseas) Ltd. v Sidney Leslie Wallath, [1972] 18 FLR 141, in which the Fiji Court of Appeal held that, in the context of an agreement that had not been effectuated except for payment of deposit, the purchaser was entitled to return of monies paid but not damages upon repudiation of the agreement by the vendor. It was particularly noted that the purchaser had not taken possession.

[36] The Court of Appeal discussed the issue as follows:

“In Jai Kissun Singh v Sumintra (1970) 16 F.L.R. 165, this court relied upon that aspect of the judgment in Chalmers v. Pardoe to which I have just referred and held that an agreement for the sale of a native lease, under which the purchaser had, on his own showing, taken over possession and control for a number of years, had passed the state at which it could be called a permissible agreement and had become unlawful as a “dealing” contrary to section 12.

It was not sought in that case to say exactly at what point an agreement, lawful when made, becomes unlawful, but I have no doubt, on the facts as found and outlined above, that the present agreement never reached the latter stage and it was never intended that it should do so. The payments of $2 on signature and $2000 the following day were obviously by way of deposit; completion was to be after fourteen days and possession was not taken, even when the date for completion had passed.”

[37] If the agreement in question was not put into effect except for payment of deposit, the Plaintiff can claim refund of his deposit monies. If the agreement was put into effect, then it was unlawful and the Court should not assist the Plaintiff, as stated in Chalmers v Pardoe, supra at p.557:

“Their lordships after full and anxious consideration of the whole matter have reached the same conclusion as the Court of Appeal, namely, that a dealing in the land took place here without the prior consent of the Board as required by s. 12 of the ordinance: that the dealing was accordingly unlawful: and that in these circumstances equity cannot lend its aid to Mr Chalmers. Their lordships will, therefore, humbly advise Her Majesty that the appeal should be dismissed.”

[emphasis added]

Oral Tenancy of Native Land

[38] Both the Plaintiff and the Defendant agreed that there was a letting of the shop to the Plaintiff on an oral tenancy agreement. No consent of the Native Land Trust Board was obtained to this tenancy.

[39] The Plaintiff has admitted letting the shop from June, 2006, which is prior to the January date he alleges for the agreement to purchase the same.

[40] However, the Plaintiff has also given evidence that he was in possession of the shop in January on account of paying deposit towards purchase of the shop, and that the instalments he paid from January, 2007 through March, 2007 constituted payments towards purchase of the shop, and that he did not pay rent from January, 2007 because he was in possession of the shop at that time due to the deposits he had made.

[41] The Defendant’s evidence is that the Plaintiff was allowed into possession of the shop as a tenant in contemplation of the purchase of the shop by the Plaintiff once the Defendant regularised his lease.

[42] The Defendant’s lease was regularised and issued in registrable form in July, 2006. The Plaintiff remained in possession until 31 October 2008. No consent was ever obtained from Native Land Trust Board.

[43] The circumstances of this case are quite similar to those in Dulare v Tuiwainikai, High Court of Fiji Civil Case No. HBC 13 of 1994 (12 July 1994), in which the High Court granted an order for possession under s 169 to the registered proprietor of certain land, despite the defendant’s claim to have an equitable right to remain on the land by virtue of an agreement to purchase same. The defendant had let the premises from the plaintiff prior to entering into such agreement, and was served with a notice to quit when he stopped paying rent.

[44] The High Court found the agreement to purchase the said land, and the defendant’s possession of the same, to be unlawful as the land was native land and the consent of the Native Land Trust Board had not been obtained. In his judgment the Honourable Justice Pathik referred to the tenancy agreement and found it to be null and void for lack of consent, as follows:

“I further find that although there is nothing in the affidavits to indicate that consent of the Native Land Trust Board was obtained to the initial letting out, the defendant did pay rent as a monthly tenant and the plaintiffs have been accepting it but for the last twelve months he is in arrears. One might ask could he be regarded as a "tenant" in the absence of the necessary consent? The answer would, in my view, be in the negative. Therefore were there any tenancy agreement the same would be null and void in accordance with S12 of Native Land Trust Act.”

[45] The High Court also found the purchase and sale agreement null and void for lack of consent, saying as follows:

“To sum up, in this case possession was given even before the agreement was executed. At the time of giving and taking of possession or later at the time the agreement was executed consent of the Native Land Trust Board was not obtained or even applied for. The transaction or dealing therefore created an immediate interest in land in a person other than the owner before consent was applied for or obtained but in this case not obtained at all. The dealing therefore was void ab initio because the defendant was put in possession of the land first, then the agreement was executed.

In these circumstances I therefore hold that the defendant's entering into possession and the subsequent agreement was an unlawful dealing in land comprised in the Native Lease and null and void.

The defendant is in unlawful possession of the said property and he cannot justify remaining in possession.

In MISTRY AMAR SINGH v KULUBYA 1963 3 AER p.499 a Privy Council case it was held that a registered owner of land was entitled to recover possession because his right to possession did not depend on the illegal agreements in that case but rested on his registered ownership and as the person in possession could not rely on the agreements because of their illegality he could not justify his remaining in possession.”

[emphasis added]

In Conclusion

[46] The Court finds that both the tenancy and the sale and purchase agreement were entered into without prior consent of the Native Land Trust Board.

[47] The sale and purchase agreement was carried into effect as the Plaintiff was put in possession and he operated the shop and resided on the native land.

[48] Therefore these transactions are unlawful for lack of prior consent of the Native Land Trust Board as required by s. 12 of the Native Land Trust Act.

[49] We refer to the case of Damodar & Rantanji Limited v Redwood Investment Limited, [1988] 34 FLR 30, in which the Fiji Court of Appeal said as follows as regards the lower court’s declaration that a plaintiff was entitled to avoid the payment of the purchase price under an unlawful agreement:

“On the fact of his finding that the transaction between the interested parties was tainted with illegality the learned Judge clearly erred in granting the fourth declaration. In doing so he was clearly though perhaps unwittingly lending aid to a party to an illegal transaction. It is trite law that equity will not aid a party to an illegality

The principle on which courts act in cases involving illegal contracts was enunciated by MacKinnon L.J. in his judgment in Harry Parker v. Mason (1940) 2 K.B. 590. At page 601 he said-

"The rule ex turps causa non oritur actio is of course not a matter by way of defence. One of the earliest and clearest enunciations of it is that of Lord Mansfield, in Holman v. Johnson (1775) 1 Cowp. 343. The objection that a contract is immoral or illegal as between plaintiff and defendant sounds at all times very ill in the mouth of the defendant. It is not for his sake however that the objection is ever allowed; but it is found on general principles of policy which the defendant has the advantage of contrary to the real justice, as between him and the plaintiff, by accident, if I may so say. The principle of public policy is this: ex dolo malo non oritu ractio. No court will lend its aid to a man who founds his cause of action upon an immoral or an illegal act. If, from the plaintiff's own stating or otherwise, the cause of action appears to arise ex turpi causa or the transgression of a positive law of this country, there the court says he has no right to be assisted. It is upon that ground the Court goes; not for the sake of the defendant, but because they will not lend their aid to such a plaintiff. So if the plaintiff and defendant were to change sides and the defendant was to bring his action against the plaintiff, the latter would then have the advantage of it, for where both are equally in fault potior est conditio defendentis."’

[50] This Court holds that the entirety of the dealings between the Plaintiff and the Defendant regarding Native Lease No. 27929 were unlawful for lack of consent of the Native Land Trust Board.

[51] Because their dealings were unlawful, neither party can be aided by this Court, whether in law or in equity, to recover damages arising from their unlawful transactions, neither deposit monies nor rent arrears nor special damages pleaded.

[52] The Supreme Court of Fiji affirmed that the doctrine of illegality still applies in Fiji and declined to overrule the case of Hunter v Apgar [1989] 35 FLR 180 or adopt a balancing test in its judgment in Gonzalez v Akhtar, Supreme Court Appeal No. CBV 00011 of 2002S (21 May 2004).

[54] The Court dismisses the Plaintiff’s Statement of Claim , with no order as to costs, on the grounds of illegality.

[55] The Court dismisses the Defendant’s Counterclaim, with no order as to costs, on the grounds of illegality.

DATED this 30th day of October, 2009.

Mary L Muir
RESIDENT MAGISTRATE
SUVA