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Western Wreckers Ltd v HP Kasabia Brothers Ltd [1992] FJHC 56; Hbc0207d.92s (13 November 1992)

IN THE HIGH COURT OF FIJI
At Suva
Civil Jurisdiction

CIVIL ACTION NO. 207 OF 1992

Between:

WESTERN WRECKERS LIMITED
Plaintiff

- and -

H.P. KASABIA BROTHERS LIMITED
trading as "Tower Investment"
Defendant

Mr. K. Vuataki for the Plaintiff
Mr. R. Namasivayam for the Defendant

RULING

This is an application by the defendant company seeking to strike out the plaintiff company's action on the following 2 grounds:

"(a) That the present defendant is wrongly made defendant as the present defendant is not the owner of the property in dispute;

(b) That no consent of the Director of Lands has been obtained as is necessary."

There is also an existing injunction granted in the Lautoka High Court restraining the defendant company:

"... from increasing the monthly rental of the office and yard occupied by the plaintiff and situated at the corner of Ratu Mara Road and Belo Street, Samabula, Suva until the 8th day of February, 1994."

The following is a brief factual account of the background to this action which principally concerns the validity of a '10 year lease' which the plaintiff company claims to hold (and which the defendant company denies) over a piece of land situated at the junction of Ratu Mara Road and Belo Street in Samabula, Suva and from which it is conducting a Used Cars Sales business.

The 'lease' is said to be evidenced by a letter dated the 8th of February 1988 (hereafter referred to as the 'lease letter') granting the plaintiff company permission to occupy the land "... at $330 (Three Hundred Thirty) dollars a month for the first 6 (six) years and a further increase in rental by 20 percent thereafter for 4 (four) years."

Matters came to a head (so to speak) when Tower Investments Limited wrote to the plaintiff company on the 11th of March 1991 seeking to increase the monthly rental for the premises occupied by the plaintiff company from $330 to $650.

It is common ground that the title document of the land the subject matter of the dispute is Crown Lease No: 4693 in which the 'registered lessee' is TOWER INVESTMENTS LIMITED. The Crown Lease also contains an express declaration. "... that this lease is a Protected Lease under the provisions of the Crown Lands Act."

The significance of this latter declaration is that it incorporates into the lease the mandatory requirements of Section 13 of the Crown Lands Act (Cap.132) which provides:

"13.-(1) ... it shall not be lawful for the lessee thereof to alienate or deal with the land comprised in the lease of any part thereof, whether by sale, transfer or sublease or in any other manner whatsoever, nor to mortgage, charge or pledge the same, without the written consent of the Director of Lands first had and obtained, nor, except at the suit or with the written consent of the Director of Lands, shall any such lease be dealt with by any court of law or under the process of any court of law, nor, without such consent as aforesaid, shall the Registrar of Titles register any caveat affecting such lease.

Any sale, transfer, sublease, assignment, mortgage or other alienation or dealing effected without such consent shall be null and void.

(5) For the purposes of this section "lease" includes a sublease and "lessee" includes a sublessee."

It should be noted that the particular copy of the 'lease letter' which forms an annexure "A" to the plaintiff company's affidavit filed in support of the injunction application is signed in the following manner:

"Yours faithfully

TOWER INVESTMENT LIMITED

(Sgd.)

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

P.K. KASABIA

c.c.: Western Wreckers Lautoka"

I also note that there is nothing on the face of the particular copy of the 'lease letter' to indicate or signify that the consent or approval of the Director of Lands had been granted to the terms of the 'sub-lease' agreed between the parties and contained in the 'lease letter'.

Learned counsel for the plaintiff however opposes the application on both grounds and submits that the defendant company is properly sued on the principle that the defendant company is the 'agent' of Tower Investments Limited and that therefore this is an appropriate instance for "lifting the veil of incorporation". Further it is submitted that the necessary 'consent' was granted by the Director of Lands.

Why it was considered necessary to sue the defendant company '... trading as Tower Investments', is unclear from the plaintiff company's affidavits but in any event I do not consider that the evidence supports learned counsel's submissions in that regard.

I accept that the correspondence between the parties suggests that Tower Investments Limited does not have a separate letterhead of its own or for that matter, a separate postal or business address. I also accept that P.K. Kasabia exercises some form of 'dual capacity' in respect of both companies.

I cannot accept however that in the absence of 'fraud' or 'special circumstances' (which is no-where suggested in the plaintiff company's evidence) that this is an appropriate case for the Court to depart from the 'fundamental principle' in company law that a company and the members forming it, (whether private individuals or other companies) and however complete their control of the company might be, are nevertheless treated, as separate and distinct legal entities save in exceptional circumstances.

There is nothing 'exceptional' in the present circumstances which would persuade me to hold that the defendant company was an 'agent' of Tower Investments Limited or vice-versa or that a 'fraud' was being perpetrated on the plaintiff company by either the defendant company or Tower Investments Limited or that Tower Investments Limited was "a facade concealing the real facts".

In the circumstances I uphold the submissions of learned counsel for the defendant company on the first ground and order that "H.P. Kasabia Brothers Limited" be struck off and in exercise of the powers vested in the Court under Order 15 r.6 of the High Court Rules I order that Tower Investments Limited be substituted as the appropriate defendant in these proceedings and further that the plaintiff company do comply with the provisions of Order 15 r.9.

If I am incorrect however in that regard then I would have no hesitation in holding that the copy 'lease letter' which forms an annexure to the submissions of learned counsel for the plaintiff company and which bears an undated 'consent' of the Director of Lands endorsed on it (hereafter referred to as the 'consented lease letter'), raises, in the face of the written denial of the granting of any such consent by the Department of Lands and Survey in its letter of 16th October 1991, a serious question for determination upon which the existing affidavits are clearly inadequate.

In this latter regard I note that Section 13(4) of the Crown Lands Act (Cap.132) expressly provides:

"(4) Any consent required by this Section may be given in writing by any officer ... authorised in that behalf by the Director of Lands ..."

In the light of the above provision, the 'denial' contained in the 16th of October 1991 letter is not as 'categorical' as learned counsel for the defendant company seeks to make out in so far as it states "... our record reveals that no consent was granted by this office to Western Wreckers Limited to rent the subject property." (my underlining). I also note that the copy 'consented lease letter' bears on its face the relevant departmental file number and legal description of the land.

I would observe in passing that there does not appear to be any laid down 'forms' or 'procedure' nor any legal requirement in Section 13 of the Crown Lands Act whereby the person seeking the necessary consent of the Director of Lands must be or must include the 'registered lessee' of the land, indeed, if that were necessarily so (as appears to be implied in the submissions of learned counsel for the defendant company) then any action seeking to challenge the legality and/or enforceability of any agreement relating to a 'protected lease' would rest entirely at the 'whim' of the lessee which would in my view be a wholly unwarranted reading of the Section.

In the circumstances I reject the second ground put forward by the defendant company in its application and I dismiss it subject only to the 'substitution order' earlier made. The injunction granted to the plaintiff company is accordingly affirmed and extended until further order or until the determination of the action whichever occurs earliest.

(D.V. Fatiaki)
JUDGE

At Suva,
13th November, 1992.

HBC0207D.92S