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Chandra v NBF Asset Management Bank [2001] FJHC 216; HBC259.1999 (16 July 2001)

IN THE HIGH COURT OF FIJI
AT SUVA
CIVIL JURISDICTION

CIVIL ACTION NO. 259 OF 1999

Between:

PREM RAM CHANDRA
f/n Lotan
Plaintiff

And

NBF ASSET MANAGEMENT BANK
Defendant

Mr. T. Fa for the Plaintiff
Mr. W. Clarke for the Defendant

DECISION

On 24th May 1999, the plaintiff (hereafter referred to as ‘the plaintiff’) issued a Writ of Summons against the NBF Asset Management Bank (hereinafter referred to as the ‘Bank’) seeking declaration that the Bank has no right to foreclose, declaration that the purported exercise of its powers to foreclose Mortgage No. 261194 is unlawful and an order directing the Bank to provide the plaintiff’s solicitors with full particulars of how the sum of $511,109.98 is made up in Accounts 02-204331-2001-5 and 02-204331-5001-2.

On the same day the plaintiff sought an injunction supported by an affidavit seeking an Order restraining the Bank from advertising for sale, selling or dealing in any manner whatsoever with Certificates of Title 27982, 27983, 27984, 27985, 27988, 27989, and 27990 until the final determination of this case.

An affidavit in opposition was sworn by Mr. Trevor Seeto, Manager Legal employed by the Bank. He said in his affidavit that details of how the sum of $511,109.98 is made up has already been supplied to the plaintiff. He says that the plaintiff was unable to meet even the interest component of the debt and that is why the debt has escalated. Mr. Seeto, inter alia, further stated that:

it is highly unconscionable for the Plaintiff to now claim that the mortgages over the subject properties are not valid. They clearly are and were registered as such. They form the only real security the Defendant has to recover the massive debt owed to it by the Plaintiff. To now assert the mortgage is not valid after the numerous correspondences from him to the Defendant which clearly shows his reliance on the said properties as his security and the sums advanced to him makes his present conduct not only deplorable, but also very dishonest.

He goes on to say:

I also verily believe that given the debt owed by the Plaintiff to the Defendant and his clear inability to meet even the interest owing thereon, any undertaking made by him as to damages is of negligible value. He is not in a position to compensate the Defendant for losses which arise from the debt of over half a million dollars he owes it. In any event, if he were to succeed at trial which I submit is negligible to say the least, damages are an adequate remedy for him. The Defendant is certainly in a position to pay such damages if found liable.

In his response to Mr. Seeto’s said affidavit the plaintiff, inter alia, denies that he owes the defendant the said sum of $511,109.98. He says that lots 2, 3, 4, 5, 8, 9 and 10 have not been mortgaged to the defendant ‘and that the stamping of each of the above seven Certificates of Title Nos. 27982 to 27990 inclusive with mortgage No. 261194 without my consent, has no legal force and therefore not binding on these respective titles’.

Subsequent to the Motion for injunction, the learned counsel for the defendant undertook not to proceed with mortgagee’s sale as advertised. In the meantime various orders were made for the filing of affidavits and written submissions after the hearing of the motion for injunction.

I have before me helpful written submissions from both counsel.

Plaintiff’s contention

Mr. Fa. for the plaintiff/applicant complains that the Bank has not as yet supplied full particulars of how the amount claimed by it is made up despite repeated requests for them. He said that on 16 June 1999 he was unable to proceed to legal arguments for the reason that the Bank had failed to furnish information required by him. Mr. Fa submits that dissolution of current injunction could only be considered when the Bank provides the information required by the plaintiff.

Defendant’s contention

Mr. Clarke for the Bank submits that the debt is disputed by the plaintiff and this dispute is only in relation to lack of particulars on accounts. But, he says, this dispute is completely without merit and that the Bank has provided the plaintiff with all the information required. He further states that the other cause for dispute is whether the mortgage relied upon by the defendant covers all the properties at issue here. He said that according to the affidavit it was the plaintiff himself who solicited the Bank’s assistance in obtaining the sub-division. Also the mortgage itself is registered against the titles and the plaintiff not having pursued this with any real vigour is clear probative evidence of the fact that this argument has no real chance of success.

Mr. Clarke says that the debt continues to grow daily at the rate of $241.40. Now it stands at $677,777.02. There is little to no chance that the plaintiff will ever be able to compensate the Bank the losses it has incurred as a result of its inability to realize its security. He says that the Bank has waited two years since this action commenced and in which time no repayments have been made causing the Bank’s losses to compound.

Determination of the issue

On the affidavit evidence before me, and it is also admitted by Mr. Fa, that some money is owing by the plaintiff to the Bank. The plaintiff does not say how much it is owing nor does he say what amount is disputed. The amount alleged to be due under the mortgage is over $677,000.00. The plaintiff has not been making any payments under the mortgage for a long time. Surely he will know what he has paid over the years. He cannot be heard to just say that he is not satisfied with the accounts supplied to him and therefore he will stop paying under the mortgage.

The Bank is well within its rights to apply to have interlocutory injunction dissolved. The plaintiff I find has a very weak case for the continuance of the Banks’s undertaking that it will not exercise its powers of sale. It should not be forgotten that the Bank is merely exercising its power of sale under the mortgage. There is no question of waiver of terms and conditions of the mortgage document arising here because of some dispute as to alleged insufficiency of particulars relating to accounts.

The plaintiff does not say that he is prepared to deposit the amount due or any part of it into Court. His counsel says that no progress can be made in this case until the particulars are furnished by the Bank. In Antech International Limited and Harish Mahendra Singh and Westpac Banking Corporation (Civ. App. No. 29/96) the Court, in an application for interim injunction to restrain the Bank from realising certain securities, granted an order for interim injunction subject to payment being made to the Bank of the total sum claimed, namely, $100,945.83 together with interest.

In Inglis v Commonwealth Trading Bank of Australia (1972) A.L.R. 591 at 592 a case involving the exercise by mortgagee of its power of sale, Walsh J. said:

"A general rule has long been established, in relation to applications to restrain the exercise by a mortgagee of power of sale given by a mortgage and in particular the exercise of a power of sale, that such an injunction will not be granted unless the amount of the mortgage debt, if this be not in dispute, be paid, or unless, if the amount be disputed, the amount claimed by the mortgagee be paid into Court.

The rule, as it affects the exercise by a mortgagee of the power of sale, is stated in the following terms in Halsbury Laws of England 3rd Edition Volume 27, p.301:

The mortgagee will not be restrained from exercising his power of sale because the amount due is in dispute, or because the mortgagor has commenced a redemption action, or because the mortgagor objects to the manner in which the sale is being arranged. He will be restrained however, if the mortgagor pays the amount claimed into court, that is, the amount which the mortgagee swears to be due to him ...." (emphasis mine).

It is clear from the affidavit evidence that the Defendant’s loan is properly secured by means of a mortgage. There is no acceptable evidence in writing as between the parties of any variation of the said mortgage. The defendant’s rights under the security document cannot be defeated by wild allegation that the titles referred to by the plaintiff are not covered by the mortgage.

The security document is enforceable and the court will not grant an injunction which would have the effect of helping to break a contract if that contract was specifically enforceable. It will of course require a very strong argument and the ‘Court must feel a high degree of assurance that at the trial it will appear that the injunction was rightly granted’ (Megarry J in Shephard Homes Ltd v Sandham (1971) Ch 340) before the Court will interfere with the security document bearing in mind of course that at this stage "the court is not justified in embarking upon anything resembling a trial of the action upon conflicting affidavits in order to evaluate the strength of either party’s case" (Footnote to The Supreme Court Practice 1979 29/1/11) pertaining to grant of interlocutory injunction.

Here the defendant as Mortgagee is intending to exercise a statutory power and the plaintiff has adduced no proper grounds why the Court should interfere with the exercise of such a power by granting an injunction. I am not convinced that there is a serious question to be tried.

As to "balance of convenience" the court should first consider whether if the Plaintiff succeeds at the trial, he would be adequately compensated by damages for any loss caused by the refusal to grant an interlocutory injunction.

In this case, having considered Mr. Clarke’s submissions in this regard I consider that this is a case in which the appropriate remedy is not interlocutory injunction but an award of damages and the defendant would be in a financial position to pay them. Hence this is not a case for the grant of an interlocutory injunction however strong the plaintiff’s case appears to be at this stage.

On the facts and circumstances of this case the plaintiff has not convinced me that he has laid the proper basis for his claim on which to have the interim injunction continue.

In Hubbard v Vosper (1972) 2 WLR 389, Lord Denning at p.396 gave some guidance on the principles of granting an injunction which I think is pertinent to bear in mind in this case when he said:

"In considering whether to grant an interlocutory injunction, the right course for a judge is to look at the whole case. He must have regard not only to the strength of the claim but also to the strength of the defence, and, then, decide what is best to be done. Sometimes, it is best to grant an injunction so as to maintain the status quo until the trial. At other times, it is best not to impose a restraint upon the defendant but leave him free to go ahead. For instance, in Fraser v Evans [1969] 1 QB 349, although the plaintiff owned the copyright, we did not grant an injunction because the defendant might have a defence of fair dealing. The remedy by interlocutory injunction is so useful that it should be kept flexible and discretionary. It must not be made the subject of strict rules."

In this case the following passage from the judgment of Megarry J in Vosper (supra) at p397 is pertinent:

"One can really imagine a case in which the plaintiff appears to have a 75% chance of establishing his claim but in which the damage to the defendant from the granting of the interlocutory injunction, if the 25% defence proved to be right, would be so great compared with the triviality of the damage to the plaintiff if he is refused the injunction that an interlocutory injunction should be refused. To my mind, it is impossible and unworkable to lay down different standards in relation to different issues, which fall to be considered in an application for an interlocutory injunction. Each case must be decided on a basis of fairness, justice and common sense in relation to the whole issues of fact and law which are relevant to the particular case."

In these circumstances the balance of convenience must be exercised in favour of the Defendant for it is a party which would be most affected by the continuation of the injunction.

Conclusion

To sum up, on the affidavit evidence and the principles applicable as stated by Lord Diplock in the American Cyanamid case [1975] UKHL 1; (1975) A.C. 396 damages will be an adequate remedy if the plaintiff is successful. There are no serious questions to be tried.

This is not a case for the continuation of the interlocutory injunction or to maintain the status quo.

The grounds are not strong enough to prevent the exercise by the defendant of its powers under the mortgage and without proper variation of any of the covenants in the documents. No heed could be given to the counsel’s argument in regard to the alleged exclusion of the titles in the mortgage. The plaintiff overlooks the terms and covenants to which he found himself engaged when the mortgage document was executed.

I conclude with the remarks of Barwick C.J. in his judgment in Inglis (supra) at 169 when he said:

"The case falls fairly, in my opinion, within the general rule applicable when it is sought to restrain the exercise by a mortgagee of his rights under the mortgage instrument. Failing payment into court of the amount sworn by the mortgagee as due and owing under the mortgage, no restraint should be placed by order upon the exercise of the respondent mortgagee’s rights under the mortgage".

For these reasons the interim order for injunction is discharged with costs against the plaintiff which I fix at $300.00.

D. Pathik
Judge

At Suva
16 July 2001