Ali's Civil Engineering Ltd v Habib Bank Ltd [2019] FJSC 12; CBV0016.2018 (8 May 2019)

IN THE SUPREME COURT OF FIJI
APPELLATE JURISDICTION
Civil Petition No. CBV0016/2018
[on appeal from Court of Appeal, Fiji Civil Appeal No. ABU0007 of 2014.]

BETWEEN:
ALI’S CIVIL ENGINEERING LIMITED
First Petitioner

VITIANA TIMBERS LIMITED
Second Petitioner

AND:
HABIB BANK LIMITED
First Respondent

AND:
CHALLENGE ENGINEERING LIMITED
Second Respondent

AND:
NATIONAL BANK OF FIJI
trading as COLONIAL NATIONAL BANK
Third Respondent

AND:
DIRECTOR OF LANDS AND SURVEYOR GENERAL
Fourth Respondent

AND:
REGISTRAR OF TITLES
Fifth Respondent

AND:
ATTORNEY-GENERAL
Sixth Respondent

Coram: Gates J

Counsel: Mr. V. Prasad for 1^st and 2^nd Petitioners
Ms S. Devan for 1^st Respondent
Mr. Devanesh Sharma with Mr S. Deo for 2^nd and 3^rd Respondents
Ms M. Motofaga for 4^th, 5^th and 6^th Respondents

Date of Hearing: 4^th March 2019
Date of Ruling: 8^th May 2019

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RULING ON STAY

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[1] On the 25^th October a Petition seeking leave was lodged with this Court. On 16^th November 2018 the 1^st and 2^nd Petitioners filed a summons for a stay on all further proceedings in the High Court until the determination of the petition. The summons also sought a stay of execution on the Court of Appeal judgment.

Proceedings in the High Court

[2] The petition is brought against the Court of Appeal’s decision setting aside the interlocutory judgment of the High Court of 13^th March 2013. The Court of Appeal gave its decision on 5^th October 2018, and awarded costs against the unsuccessful Respondents, the original plaintiffs, Ali’s Civil Engineering and Vitiana Timbers.

[3] The Registrar of the Supreme Court was also “directed to remit the case back to the High Court for trial on the substantive aspects of the rights of parties inter se, if necessary by raising fresh issues thereon”.

[4] The Plaintiffs had issued a summons in the High Court for Judgment on Admissions, seeking the following orders:

(i) A declaration that the varied relevant Mortgage registered as Number 8465 with the Registrar of Deeds is fraudulent, null and void;

(ii) A declaration that the First Defendant [Habib Bank] has no rights, estates or interest as a Mortgagee in respect of the land comprised in Lot 1 SO 4379 State foreshore containing 2.2938 hectares more or less or any part thereof and being LD Ref Number 60/511 situate in the District of Naitasiri in the province of Naitasiri;

(iii) A declaration that the purported Mortgagee Sale under Mortgage No 8465 registered on 8^th June 2004 is void;

(iv) An order that the First Defendant pay the costs of the Plaintiffs on an indemnity basis; and

(v) Any other order(s) that this Honourable Court considers appropriate in the circumstances.

[5] It would appear from the summons that orders (i) and (ii) follow on from each other. A declaration was sought that the mortgage was fraudulent and therefore that it was null and void. Similarly because of the fraud the 1^st Defendant [Habib Bank] has “no rights, estates or interest as Mortgagee” in this matter.

[6] The interlocutory judge made the following orders:

“a. Judgment is entered for a declaration (that) the Mortgage registered as No. 8465 is ab initio, null and void.

2. Judgment is entered for declaration that the purported Mortgage sale under the said Mortgage no. 8465 is void ...”
   

[7] The two plaintiffs had sought additional finance from the bank [the Appellant in Court of Appeal and 1^st Respondent in this court]. Further security was demanded by the bank. There remains a factual dispute as to whether there were two leases or one. The bank maintains that the 1^st petitioner applied to the Director of Lands by letter on 25^th July 1996. The application sought an amalgamation of its existing Approval Notice to Lease [ANL 60/511] with the land that was adjacent to the leased land. The 1^st Petitioner wished to extend the area of the lease. The letter does not refer to a request to have two leases.

[8] Ali’s Engineering wanted to obtain an enhancement of financial facility in favour of a third party, which was duly granted by the Habib Bank. The judge noted in his introductory remarks:

“The 1^st Defendant [Habib Bank] states, though the Plaintiff did not sign the said deed of mortgage no. 8465, he had made representation of the larger land of 2.2938 hectares to the 1^st Defendant in order to obtain an enhancement of loan, and also consented to mortgagee sale to the 2^nd Defendant, hence the 1^st Defendant is authorized to vary the earlier mortgage to change the description of the land to include the larger land unilaterally.”

[9] There was an issue as to whether the judge had misconstrued the date of execution of the mortgage. The judge had held it to be 3^rd August 1999 whereas the pleadings of the Petitioner stated it to be 3^rd August 1988. The bank had pleaded it to be 3^rd December 1998. The parties were at variance on this significant fact. It had been used in the arguments by his Lordship to find that the mortgage was void ab initio as lacking prior consent of the Director and for being in breach of Section 13(1) of the Crown Lands Act. The Court of Appeal picked up on this point saying:

“[13] But, that otherwise provision is well defined in Order 18 Rule 13 of the High Court Rules – viz:

“Such admissions may be made expressly in a defence to a counter-claim, or they may be admission by virtue of the rules, as where a defendant fails to traverse an allegation of fact, in a statement of claim or there is default of adherence or defence is struck out and accordingly the allegation of fact in the statement of claim is deemed to be admitted.”

[14] The Amended statement of claim nowhere had pleaded anything traversing Section 13(1) of the Crown Lands Act for the Appellant to have responded to if that issue in any event was to be brought within the said otherwise provision.

[15] Consequently, I agree with the Appellant’s submission that, the learned Judge in his reference to the provisions of the Crown Lands Act had exceeded his jurisdiction in that, his jurisdiction was confined to making a determination on whether there were admissions on which a judgment could have been decreed as prayed for by the 1^st Respondent.”

[10] Since this was a Judgment on Admissions, no judgment of this type could be delivered if the admissions were not clear. The Court of Appeal had referred to the order as stating [Order 27 of the High Court Rules 1988]:

“27: Admission of fact. Such admission may be expressed or implied but they must be clear...”

[11] The quotation in paragraph 7 of the judgment of the Court of Appeal refers to the doctrine of Judgment on Admissions taken from the White Book rather than to the Rules themselves. However it is abundantly obvious no judgment can be delivered on admissions, if there is ambiguity or conflict on the key facts. This, it is argued, was the difficulty with the High Court judgment. Without hearing evidence and deciding certain factual matters, it was not possible to use Order 27 to resolve the interlocutory application. It is difficult to find a way around this impasse. Ms Devan said it was their case that there were “no clear unequivocal admissions” nor could these be inferred from the pleadings themselves.

[12] In the result the judge had decided the issue of fraud and the legality of the mortgage as follows:

“The grant of the judgment on admission is a discretionary, and considering the circumstances of the case I will not use my discretion to grant a declaration as prayed in (ii) of the summons for judgment on admission. If I were to declare that the 1^st Defendant has no rights, estates or interest as mortgagee in pursuant to the Mortgage 8465, I will not hesitate to grant such declaration on the admitted facts of this case, but the wording of the order (ii) sought is wider than that and it simply seeks a declaration that the 1^st Defendant does not have any right or interest in the land described in the 99 year lease, approval notice for lease dated 3.04.2000. I will not use my discretion to such a wide declaration on the admitted facts considering the conduct of the 1^st Plaintiff in this whole dealing. So I will decline to grant the order (ii) contained in the summons for Judgment on Admission dated 26^th September, 2012 and by the same token will refrain from declaring that the conduct of the 1^st Defendant was fraudulent at this juncture, on admitted facts. The act of fraud in this case cannot be determined by the facts admitted. Considering the circumstances of the case I will not award any cost.”

[13] However this conclusion had been reached after relying heavily on supposed non conformity with section 13(1) of the Crown Lands Act which had not been pleaded, nor did it form an allegation in the summons facing the respondents. The conformity or otherwise with the Act was another issue on which there was factual conflict not permitting the procedure of Judgment by Admission.

Court of Appeal

[14] The Court of Appeal ordered the appeal to be allowed and the judgment of the High Court of 13^th March 2013 to be set aside. It gave directions to the Registrar for trial to proceed on the substantive aspects of the rights of the parties, and permitting the raising of fresh issues. Costs were to follow the event, the details of which I need not recite.

[15] Almeida Guneratne JA concluded, at para [27]:

“[27] In conclusion, for the aforesaid reasons, I hold that, the judgment of the High Court dated 11^th March 2013 must be set aside and this appeal must be allowed for the reasons (a) to begin with, the said impugned ‘judgment on admissions’ could not have been made and (b) consequently the case being required to be fixed for trial to be determined on viva voce evidence (having regard also not only to the Appellant’s submissions in the context of the circumstances in which ‘judgment on admissions’ could have been in the context of the confines of Order 27 of the High Court Rules but also to the concerns expressed by the 3^rd and 4^th Respondents.”

[16] The major plank of the Court’s reasoning lay in its opinion that the admissions or possible and clear inferences did not provide the necessary grounding for a Judgment on Admissions. In addition the judge had gone outside of the jurisdiction of the summons brought. In effect, the judge proceeded on an unamended summons without the necessary civil allegation being before the Court.

[17] The judge himself could not uphold the allegations based on fraud. Viva voce evidence would be required by the various parties before that issue could be decided. That claim would have to await the trial. Therefore summons prayer (i) failed.

[18] In denying fraud the bank made two admissions:

(a) That, an addition was made to the description of the land in question as regards the estimated area (originally 2,229 hectares).

(b) That, the said addition/variation was made to the clear copies held by the Appellant as the said Mortgage 6993 was not registered yet in terms of the Land Transfer Act and given a new registration no. 8465.

[19] The Court of Appeal found there were no express admissions made by the bank, [para 9(2)]:

“(2) The express admissions made by the Appellant as recounted above do not by any stretch of imagination amount to admissions that could have founded a basis for judgment to be given in as much as if at all, the Appellant’s averments are express denials of the averments contained in the Amended Statement of Claim. It would amount to doing violence to language if an express denial is to be construed as an admission.”

[20] The court found that the amended statement of claim nowhere had pleaded anything traversing section 13(1) of the Crown Lands Act [now State Lands] for the bank to have responded to, if that issue in any event was to be brought within the said otherwise provision. The Court concluded that without some agreement by the parties on the extension of meaning of the ‘otherwise provision’, there was doubt the impugned final orders could have been made by the judge on the basis of the admissions per se.

[21] The Petitioner’s counsel relied on Wallerstein v Moir [1974] 3 All ER 991, as authority for saying where the justice of the matter warranted the grant of the declaration, the underlying basis could be found in Order 27 Rule 3 namely, “where appropriate a judgment or order would be made pursuant to the rule so as to save time and costs.” Counsel for the bank and Challenge Engineering and NBF contended that “In general declaratory relief is granted only after trial.” I would add this would occur therefore after much more was known in evidence of the justice and value of the matters urged.

Application for Stay – Principles

[22] The relevant principles were conveniently set out in the judgment of the Court of Appeal in Natural Waters of Viti Ltd. v Crystal Clear Mineral Water (Fiji) Ltd. Civil Appeal ABU0011.04S, 18^th March 2005. They were:

“(a) Whether, if no stay is granted, the applicant’s right of appeal will be rendered nugatory (this is not determinative). See Philip Morris (NZ) Ltd. v. Liggett & Myers Tobacco Co. (NZ) Ltd [1977] 2 NZLR 41 (CA).

(b) Whether the successful party will be injuriously affected by the stay.

(c) The bona fides of the applicants as to the prosecution of the appeal.
(d) The effect on third parties.
(e) The novelty and importance of questions involved.
(f) The public interest in the proceeding.
(g) The overall balance of convenience and the status quo.”

[23] So far as (a) is concerned the Petitioner’s right of appeal will not be rendered nugatory. In the event that the Petitioner is unsuccessful in the Supreme Court, the case will return to the High Court for full trial on the issues, and indeed on some issues foreshadowed by the Court of Appeal which it considered not properly raised in the pleadings or the summons.

[24] Clearly the prejudice will lie with the bank and the purchasers, the 2^nd and 3^rd Respondents. They paid $2.5 million for the land in 2006 but have till now had no benefit (or income) from the purchase. On the other hand the Petitioners had their mortgage debt paid off and have had the use of the land till now.

[25] It is alleged the stay and the petition are delaying tactics (c). The Petitioners were very heavily in debt beforehand. As other judges in the case have commented, indulgence was extended to the Petitioner by the bank and the history of the conduct of the loans was one of continuous default. It is more likely this is a delaying tactic.

[26] The points of law raise no novel issue. They lack importance though the consequences have been expensive.

[27] The proceedings concern the parties only. There is no public interest factor. This is a purely party and party matter involving a piece of land.

[28] As for the overall balance and convenience, this is an interlocutory matter. It cannot be said to be exceptional requiring relief from the Court. In addition the grounds, some 23 in all, lack merit. None of these are likely to meet the threshold requirements of section 7(3) of the Supreme Court Act for leave to appeal.

[29] There were several lengthy affidavits filed in this matter and written submissions were helpfully provided. This was a matter of some complexity. It is right that there be costs awarded for the attendance of Senior Counsel and for the work necessarily brought to bear on the client’s cases. 4^th, 5^th and 6^th Respondents did not take part, other than to attend.

[30] In the result I order –

(i) Summons for stay on all further proceedings in the High Court is declined.

(ii) Stay on execution of Court of Appeal judgment is also declined.

(iii) 1^st and 2^nd Petitioner each to pay costs of $1,500 to 1^st Respondent, and each to pay 2^nd Respondent and 3^rd Respondent $1,000 each, such costs to be paid by 31^st May 2019.

The Hon. Mr. Justice Anthony Gates
Judge of the Supreme Court

Solicitors:
Cromptons for 1^st and 2^nd Petitioners
Ms S. Devan for 1^st Respondent
R. Patel Lawyers for 2^nd and 3^rd Respondents
Office of the Attorney-General for 4^th, 5^th and 6^th Respondents

uln

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