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Prasad v Prasad [1992] FJHC 20; Hbc0105j.91s (1 May 1992)

IN THE HIGH COURT OF FIJI
At Suva
Civil Jurisdiction

CIVIL ACTION NO. 105 OF 1991

Between:

DAYA PRASAD
s/o Mahadeo Singh
Plaintiff

- and -

MANIK PRASAD
s/o Ramsukh Bhikku
Defendant

Mr. V. Parmanandam for the Plaintiff
Mr. H. Lateef for the Defendant

JUDGMENT

In this action the plaintiff seeks an order for specific performance of an oral sale and purchase agreement of a residential property of which the defendant is the registered proprietor.

In particular the plaintiff claims in his Statement of Claim:

"3. THAT in or about January 1988 the said defendant agreed to sell to the Plaintiff and the Plaintiff agreed to purchase the residential property situated at 17 Talasiga Street., Suva more particularly described in Certificate of Title Number 20194 for the price of $35,000.00 payable at the rate of $130.00 per month for five years and the balance at the end of five years."

The defendant for this part:

"... denies each and every allegation in paragraph 3 except that the plaintiff became a tenant of the defendant on a monthly basis at a rental of $130.00 per month."

It is common ground that the sale and purchase agreement (if any) that exists between the parties is purely an oral one and as such is prima facie unenforceable within the terms of Section 59 of the Indemnity, Guarantee and Bailment Act (Cap. 232) which provides (inter alia):

"59. No action shall be brought -

(d) upon any contract or sale of lands ... or any interest in or concerning them;

unless the agreement upon which such action is to be brought or some memorandum or note thereof is in writing and signed by the party to be charged therewith or some other person thereunto by him lawfully authorised."

Clearly in the absence of any signed documentary evidence of the sale and purchase agreement this action is doomed to failure. Learned counsel for the plaintiff however seeks to invoke the equitable doctrine of "part performance" which was developed in part as an answer to a defence based on Section 4 of the Statute of Frauds 1677 following which provision our Section 59 (op. cit) is framed.

The doctrine finds its 'locus classicus' in the judgment of the Earl of Selbourne L.C. in Maddison v. Alderson (1883) 8 A.C. 467 when he said in an oft-cited passage at pp. 475 and 476:

"In a suit founded on ... part performance, the defendant is really charged upon the equities resulting from the acts done in execution of the contract, and not (within the meaning of the statute) upon the contract itself ... The contract is not a nullity; there is nothing in the statute to estop any Court which may have to exercise jurisdiction in the matter from enquiring into and taking notice of the truth of the facts. All the acts done must be referred to the actual contract, which is the measure and test of their legal and equitable character and consequences ... The matter has advanced beyond the state of contract; and the equities which arise out of the stage which it has reached cannot be administered unless the contract is regarded. The choice is between undoing what has been done (which is not always possible, or, if possible, just) and completing what has been left undone. The line may not always be capable of being so clearly drawn ...; but it is not arbitrary or unreasonable to hold that when the statute says that no action is to be brought to charge any person upon a contract concerning land, it has in view the simple case in which he is charged upon the contract only, and not that in which there are equities resulting from res gestae subsequent to and arising out of the contract. So long as the connection of those res gestae with the alleged contract does not depend upon mere parol testimony, but is reasonably to be inferred from the res gestae themselves, justice seems to require some such limitation of the scope of the statute, ..."

and later at p. 478 his lordship continued:

"It is not enough that the act done should be a condition of, or good consideration for, a contract unless it is, as between the parties, such a part execution as to change their relative positions as to the subject matter of the contract."

Then in Chaproniere v. Lambert [1917] 2 Ch. D. 356 Warrington L.J. approved and adopted a passage in 'Fry on Specific Performance' in which the learned author set out 4 essential indicia or criteria that are required before any act or combination of acts may be treated as "part performance". These were:

"Firstly, the acts of part performance must be such as not only to be referable to a contract such as that alleged, but to be referable to no other title;

Secondly, they must be such as to render it a fraud in the defendant to take advantage of the contract not being in writing;

Thirdly, the contract to which they refer must be such as in its own nature is enforceable by the Court; and

Fourthly, there must be proper parol evidence of the contract which is let in by the act of part performance."

More recently in the leading case of Steadman v. Steadman (1976) A.C. 536, the House of Lords discussed and somewhat 'expanded' the doctrine from its earlier confines. It was there:

"Held (1) that the alleged acts of part performance had to be considered in their surrounding circumstances and, if they pointed on a balance of probabilities to some contract between the parties and either showed the nature of or were consistent with the oral agreement alleged, then there was sufficient part performance of the agreement"; and

(2) that the act of part performance did not have to be referable to that part of the agreement for the disposition of an interest in land; nor is there a general rule that the payment of money can not constitute an act of part performance of a parol contract."

In particular Lord Reid pointed out at p.540 that the equitable principle behind the authorities was the familiar one:

"If one party to an agreement stands by and lets the other party incur expense or prejudice his position on the faith of the agreement being valid he will not be allowed to turn around and assert that the agreement is unenforceable."

(See however the strong dissent of Lord Morris and the analysis of Mahon J. in Boutique Balmoral v. Retail Holdings [1976] 2 NZLR 222 at 225 and 226.)

So much then for the law. I turn next to consider the evidence in the case which has come principally from the parties themselves. The plaintiff in his evidence stated that it was in January 1988 whilst he was working as an administrative officer at the Ministry of Forests that he was first introduced to the defendant by a colleague and although they had only known each other for several days he had a discussion with the defendant who was selling his house at 17 Talasiga Street for $35,000 and he agreed to buy it at the asking price which he considered reasonable at the time (i.e. 7 months after the coups).

A few days later in early January 1988 the defendant came to his office and gave him the keys to the house at 17 Talasiga Street shortly before leaving the country for Australia. Thereafter the plaintiff entered into possession and occupation of the defendant's property.

In Morphett v. Jones (1818) 18 RR 48 it was said by the Master of the Rolls at p.54:

"The acknowledged possession of a stranger in the land of another is not explicable except on the supposition of an agreement, and has therefore constantly been received as evidence of an antecedent contract, and as sufficient to authorise an inquiry into the terms; the Court regarding what has been done as a consequence of contract or tenure."

In this latter regard, the plaintiff testified:

"We agreed on a sum of $35,000. This price was mentioned to me by the defendant. I agreed to it. I told defendant I couldn't make an immediate payment to him but I said I would pay him at Fijian $130 per month into his account in Australia and to pay him $20,000 at the end of 5 years from the time of first payment when normalcy returned."

It is common ground that the property at 17 Talasiga Street comprises 2 houses - a 'principal residence' which was occupied by the plaintiff and a second smaller house at the rear of the property which has been variously referred to in the evidence as the 'servants quarters' or 'boy house' and which was rented out at the time for $100 per month to one Kamlesh Sharma.

Although he was never given the keys to the 'boy house' either by the defendant or the tenant when the latter subsequently vacated the premises, the plaintiff said that after he had moved into the principal residence and in spite of the tenant's failure to follow the defendant's instruction to pay the rent to him as the 'new owner' he (the plaintiff) did nothing to stop the defendant's brother-in-law continuing to uplift the rent because he assumed the rent being collected was going towards the 'purchase price'.

Notwithstanding that assumption however, on receiving a 'notice to quit' the premises from the defendant's solicitor in August 1990, the plaintiff in a fit of 'disappointment' procured the tenant to lodge a complaint with the Fair Rents Board with the result that the monthly rental on the 'boy house' was reduced to $55.

In cross-examination the plaintiff explained the absence of any writing evidencing their agreement to the fact that: "... the defendant was in a hurry to leave Fiji and couldn't stay in the office." He understood they had a 'gentleman's agreement' (whatever that might mean) and was content to buy the house without knowing to whom? and for how much? the house was mortgaged.

He didn't pay the City Rates because the house had not yet been transferred to him and in any event the defendant agreed to pay for it. He denied that he had requested the defendant's agent (Hari Kumar) to carry out any repairs to the house although his wife may have because he (the agent) was a carpenter by trade. As for payment, the plaintiff said his wife may have assumed that any payments for the work done came out of the rental collected from the rear tenant which formed part of the 'purchase price'.

When asked what the arrangement was in regard to the outstanding balance of the purchase price the plaintiff said:

"There was none ... I was to pay if the defendant approached me."

He consistently denied that the defendant had merely rented the property to him and he attributed their rather 'slip shod' arrangement (Defence counsel's description) to the defendant's unseeming haste to leave the country and possibly because "during the coups (and shortly thereafter) people weren't thinking right". Finally he denied that he had made-up his account to take advantage of the defendant being absent overseas.

The plaintiff also called one witness Naresh Prasad Shandil a 'pandit' (Hindu priest) who saw the defendant handing over a key to the plaintiff in the plaintiff's office and later in the afternoon of that same day whilst in the company of the plaintiff at the defendant's house he heard the defendant say to the tenant of the 'boy house' that the plaintiff was the 'new boss' and whatever dealings he (the tenant) had was to be with the plaintiff. At the plaintiff's request he performed a religious ceremony at the house appropriate for a purchaser of the house as distinct from some one who had merely rented it.

In cross-examination he agreed that he performed the ceremony based on information received from the party requesting it and not from any independent verification or enquiry on his part.

The defendant who gave a Sydney residential address described how he first bought the vacant freehold land in 1981 for $15,000 and then built 2 houses on it at a total cost of $45,000, partly financed by the Home Finance Co. and partly from his own savings. In purchasing the land and in obtaining the loan from Home Finance he had used the professional services of a firm of solicitors and was therefore familiar with the need for some documentation in the sale and purchase of property. He still owes about $9,000 on the property.

He retired from government service after 20 years and decided to migrate with his immediate family to Australia. This he did on the 9th of January 1988. He had decided to rent his house out because he intended to return once his daughter who was then schooling in Sydney completed her studies. He continued to receive rental from the tenant of the 'boy house' and he had lodged an income tax return for 1990 showing the rental income from his property.

In particular the defendant described the agreement in the following terms.

"We agreed that he would rent my house at $130 per month. There was nothing about selling the house to him. He paid me cash and I gave him a receipt. He told me 'you take the cash today and my daughter will pay the rent in Sydney'. I already had an account in Sydney by then."

In cross-examination he agreed that he had unsuccessfully tried to evict the plaintiff in 1990 ostensibly because he had wanted to do renovations. He had not obtained Reserve Bank approval for the receipt of rental in Sydney and accepted that it 'made sense' to enter into the payment arrangement made with the plaintiff. He denied that property values had fallen after the coups, neither had he agreed to sell his property in a 'panic'. He was adamant that there was never any discussion about the plaintiff buying or him selling the house. "It was just (a) rental (agreement)."

The defendant also called as witnesses his brother-in-law and attorney Mahendra Prasad and Hari Kumar a carpenter.

Mahendra Prasad testified that as the defendant's lawfully appointed attorney he had collected the rent from the tenant of the 'boy house' and banked it in the defendant's account. Apart from that he had had repairs carried out to the 'principal residence' whenever he had been so advised by the plaintiff. He distinctly recalls that he had hired a private carpenter Hari Kumar to repair a broken water main twice and a toilet cistern in early and mid-1990. He paid the carpenter from his own monies which was later re-imbursed by the defendant.

In cross-examination he reasserted that it was the plaintiff who had personally telephoned him to carry out the repairs. Hari Kumar for his part confirmed all material details of Mahendra's evidence in addition to seeing the plaintiff at the house at the time of carrying out the repairs.

Having heard and observed both the plaintiff and the defendant I have no hesitation in saying that they have both 'tailored' their evidence to suit their own particular claims and purposes.

For instance I do not accept that had the plaintiff genuinely believed that the rental monies being collected from the rear tenant formed part of the 'purchase price' of the property he would have allowed it to continue unchecked or instigated a reduction in the rental in addition to lodging a caveat. Neither would a genuinely interested purchaser of real estate show so little concern about any outstanding mortgage on the property as was exhibited by the plaintiff in this case nor for that matter would a concerned vendor agree to such an "open-ended" contract.

The defendant on the other hand was quite implausible in the reason he proffered for wanting the plaintiff out of the premises as early as March 1990 when on his own account he was not due to return to Fiji until 1993. Neither did he strike the court as genuine when he denied that the value of properties had fallen after the coups. Certainly his witness and brother-in-law agreed that house values dropped just after the coups. Indeed the defendant appeared to agree to counsel's suggestion that his disclosure of 1990 rental income to the tax authorities was done to 'bolster his case'.

As for the witnesses however I can say that I have no reason to doubt their evidence and I accept them all as witnesses of truth insofar as their testimony goes. That is to say I accept that the plaintiff's witness did hear the conversation that transpired between the defendant and the tenant of the 'boy house'. Equally I accept that Mahendra Prasad did get and pay for Hari Kumar to carry out the repairs to the 'principal residence' at the plaintiff's request. The meaning of the conversation however and the inference to be drawn from the carrying out of the repairs are matters entirely for the court to decide having regard to all the circumstances.

In this latter regard mindful that the defendant's brother-in-law continued to collect the rental without hindrance or protest from the plaintiff or the tenant of the 'boy house', I am not satisfied that the evidence of the conversation (which materially differed between the plaintiff and his witness) is so unequivocal in its terms and meaning as to lend any assistance or support to the nature of the prior agreement reached between the plaintiff and defendant.

Furthermore I am fortified in my view by an entry in footnote 2, to para 45 entitled 'What acts amount to part performance' in Vol. 42 of Halsbury's Laws of England (4th Edition) which reads:

"Whaley v. Bagnel [1765] EngR 35; (1765) 1 Bro Parl Cas 345 where it was held that the vendor's direction to tenants to pay rent to the purchaser was insufficient."

Equally the mere fact that the plaintiff may have requested Mahendra to carry out minor repairs to the house is not such an inconsistent act as to amount to an unequivocal denial of the existence of an agreement to buy the house particularly when the plaintiff claims (mistakenly or otherwise) that the rental collected from the 'boy house' by Mahendra was part and parcel of the 'purchase price'.

In the final analysis suffice it to say that I am not satisfied from the evidence led before me that the plaintiff's entry into possession of the 'principal residence' at 17 Talasiga Street was more probably the result of an agreement to purchase the property than of an agreement to rent it.

In the circumstances I find the claim not proved and it is accordingly dismissed with costs to the defendant to be taxed if not agreed.

(D.V. Fatiaki)
JUDGE

At Suva,
1st May, 1992.

HBC0105J.91S