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Fiji Development Bank v Miller [1999] FJHC 164; HBC197.1999 (5 October 1999)

IN THE HIGH COURT OF FIJI
AT SUVA
CIVIL JURISDICTION

CIVIL ACTION NO. HBC 197 OF 1999

BETWEEN:

FIJI DEVELOPMENT BANK
Plaintiff

AND:

VERNON MILLER
Defendant

Counsel : Mr. D. Sharma for Plaintiff
Mr. H. Robinson for Defendant

Hearing : 28th September, 1999

Decision : 5th October, 1999

DECISION

This is an application for the removal of two caveats entered by the Defendant in respect of which the Plaintiff holds registered mortgages.

The application was made by way of Notice of Motion supported by the affidavit of Lusiana Qeleni, Bank Officer. The Motion was filed on 28th April 1999. The Defendant filed an affidavit in reply resisting the application. The Plaintiff then filed a supplementary affidavit dated 3rd August 1999. The facts of the case are simple. In June 1988, the Defendant entered into a Sale and Purchase Agreement for the purchase of property described as C.T. 21875 and C.T. 21876, in Savusavu, with the late Vijaya Parmanandam. The land was subject to mortgages in favour of the Plaintiff bank which had been registered on 16th May 1983. C.T. 21875 is subject to Mortgage N0.201305, and 21876 is subject to Mortgages N0. 201305 and 377851.

Vijaya Parmanandam died. On 28th May 1993, the company Parmanandam Investments Limited changed its name to Sky Investments Limited . On 13th April 1993, the Defendant had registered Caveat N0s 336629, 430073 against the property.

On 27th February 1995, transmission by death was registered in the name of Sushila Parmanandam. On 27th February 1995 the title was transferred to Sky Investments Limited. On 18th May 1995, a second mortgage was registered in favour of the Plaintiff and on 7th October 1997, the Defendant registered Caveat N0. 430073 in respect of C.T. N0. 21876.

In his submissions, Mr. D. Sharma for the Plaintiff argued that the Defendant was seeking to protect an equitable interest which could not take priority over a registered legal interest held by the Plaintiff. He submitted that the Statement of Claim annexed to the Defendant's affidavit asked for damages, and not for specific performance. As such, the registration of the caveats was pointless. He submitted that the Defendant had no rights over a prior registered mortgage that he would have discovered on a search at the Titles Office before he had executed the Sale and Purchase Agreement . He asked for the caveats to be removed under section 168 of the Land Transfer Act Cap.131, and said that the Plaintiff was prejudiced because the debt under the mortgage was unpaid and the Plaintiff could not sell the land to recoup its losses.

Mr. H. Robinson argued that the caveats protected an equitable interest in the land. He conceded that they did not take priority over registered legal interests, but submitted that the Defendant 's equitable interest should be protected until the issues in respect of the statement of claim were resolved. He said that although the Defendant could be compensated in damages, the existence of the caveats strengthened his bargaining position in respect of a possible settlement.

Section 106 of the Land Transfer Act Cap.131 provides:

"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 express or implied ......... may at any time lodge with the Registrar a caveat in the prescribed of form ........."

Section 109 (2) of the Act provides;

"Any ....... Person having any registered estate or interest protected by the caveat may, by summons, call upon the caveat or attend before the Court to show cause why the caveat should not be removed. ..... "

The question is, whether the Defendant's equitable interest arising out of the Sale and Purchase Agreement with a previous registered proprietor, can prevent a mortgagee from exercising its powers of sale.

This matter is comparable to the facts in National Bank of Fiji v. Jung Mook Jun and Registrar of Titles Civil Action N0. HBC 0043 of 1999S, a decision referred to by counsel for the Plaintiff. In that case the Defendant lodged a caveat over freehold land which had been subject of a Sale and Purchase Agreement. Unlike the present case however, the substantive action included specific performance as relief sought. The land was the subject of registered mortgages.

Scott J. in ordering the removal of the caveat said;

"The first Defendant's interest is purely equitable (Galvasteel Pty v. Monterey Building Pty Ltd (1974) 10 SASR176 and in my view can neither prevail over the mortgages which are properly registered nor, in the absence of anything to suggest that the mortgagee Bank's powers are being abused, over the mortgagee's statutory right of sale (see Property Law Act Cap.130 Section 79 and generally Kerabee Park Pty Ltd v. Daley (1978) 2 NSWLR 222, Lawenberg v Direct Acceptance Corp Ltd [1981] VicRp 36; (1981) VR 344"

The same principle is appropriate here.

The Defendant's statement of claim does not seek specific performance although Paragraph 14 does mention the right to specific performance. The claim is for damages.

In the circumstances I am satisfied that Defendant has failed to show cause why the caveats should not be removed.

I therefore order the removal of Caveat No 336629 against CT No 21875 and Caveat No 430073 against CT No 21876 pursuant to section 168 of the Land Transfer Act.

NAZHAT SHAMEEM
JUDGE

5th October 1999, SUVA