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Nawasarawa v Vatucicila [2002] FJHC 321; Civil Action 394.2001 (1 November 2002)

IN THE HIGH COURT OF FIJI
AT SUVA
CIVIL JURISDICTION

CIVIL ACTION NO.: 394 OF 2001

BETWEEN:

LITIA NAWASARAWA
1st Plaintiff

ETA NAWASARAWA
2nd Plaintiff

FILIMONE NAWASARAWA
3rd Plaintiff

AND:

SEKAIA VATUCICILA
1st Defendant

COLONIAL NATIONAL BANK
2nd Defendant

Mr. N. Vere-Counsel for the Plaintiffs
No Appearance-1st Defendant
Mr. I. Razaak-Counsel for 2nd Defendant

DECISION

By notice of motion dated 12th August 2002 the second defendant is seeking removal of caveat number 491338 registered on 27th January 2001 on Certificate of Title Number 18305. The motion is brought pursuant to the High Court Rules and Section 110 of the Land Transfer Act Cap 131.

FACTS – BACKGROUND

On 27th September 2001 the plaintiffs filed a writ of summons with an endorsement of claim only seeking –

(i) a Declaration that the property described in the Schedule below are held by the Defendants and each of them for the Plaintiffs pursuant to a constructive trust in which the Plaintiffs are beneficiaries.

The Schedule

(ii) an inquiry as to the beneficial interests in the properties comprised in the Schedule.

(iii) an injunction restraining the Defendant from disposing of or otherwise from dealing in the properties described in the Schedule pending the final determination of these proceedings.

On the same day they filed an Ex-parte summons for extension of time to withdraw the caveat and obtained an order "extending beyond the 21 days notice in the Registrar of Title notice dated 10th September 2001 to withdraw caveat number 491338 until the determination of this action."

Having obtained the ex-parte order, the plaintiffs lay dormant. Neither the writ of summons nor the order was served on the first defendant who is the registered proprietor of Certificate of Title 18305 or on the second defendant which holds a mortgage over the said title. Up till today over a year later no statement of claim has been filed in this action. The second defendant, the mortgagee, found out about the caveat after it attempted to sell the property by virtue of its powers of sale under the mortgage.

On 28th August 2002, when the matter came before the court, this court ordered the plaintiff to serve writ of summons, copy of the motion and affidavit on the defendants within 14 days but this had still not been done till 11th October 2002, when the matter was for hearing. The writ of summons is now stale, one year having elapsed on 26th September 2002 since its issue.

According to Counsel for the Bank, the Bank only became aware of the caveat after it wanted to exercise its powers under the mortgage and search of title showed the caveat. It then, of its own initiative, learnt of existence of this action against the Bank and writ and other process were obtained from the Court registry.

SERVICE OF WRIT AND APPEARANCE

I have no doubts that anyone who is affected by any order of a court in a proceedings need not wait for service of writ and other orders before he may move to have the action or any orders adverse to his interest struck out.

In PIKE v. MICHAEL NAIRN & CO. LTD. 1960 2 All E.R. 184 at p. 186 Cross J. stated as follows –

"The service of the process of the court is made necessary in the interests of the defendant so that orders may not be made behind his back. A defendant, therefore, has always been able to waive the necessity of services and to enter an appearance to the writ as soon as he hears that it has been issued against him, although it has not been served on him."

Perhaps, the leading case on this aspect of service and appearance is the GNIEZNO 1967 2 All E.R. 738. BRANDON J. IN GNIEZNO at p. 744 referred to the above passage from PIKE and commented as follows –

"Looking at the matter as one of principle, it seems to me that a defendant ought to have the right to enter a voluntary appearance in this way so that in any case where an action is hanging over him he may take steps to have it dismissed. Under the present rules there is no obligation to serve a writ earlier than within twelve months, and even then a plaintiff may, if he shows cause, obtain a renewal of the writ ex-parte. In this way a defendant may have an action, the existence of which is known to him, hanging over him for a very considerable period. It seems to me desirable in principle that a defendant, faced with such a situation, should be able to obtain some finality."

So it appears from above authorities that a defendant is free to enter an appearance to a writ of which he has knowledge even though he is not served with the writ. That is what the second defendant has done.

ISSUE OF CAVEAT – GROUNDS

A mortgagee has by virtue of Section 79 of Property Law Act, a statutory power to sell if there is default in payment of mortgage money. It is not denied that the first defendant is in arrears of payments. The mortgagee intends to exercise the power of sale but is met with the caveat registered subsequent to registration of mortgage.

Section 79 of the Land Transfer Act reads –

"Upon the registration of any transfer executed by a mortgagee in exercise of a power of sale, the estate and interest of the mortgagor expressed to be transferred therein shall pass to and vest in the purchaser freed and discharged from all liability on account of such mortgage, or of any other estate or interest except an estate or interest created by any instrument which has priority over such mortgage or which by reason of the consent of the mortgagee is binding on him, and the purchaser when registered as the proprietor thereof shall be deemed to be a transferee of such estate or interest."

In light of the above section, one would consider that there would be no need to ask the court to remove the caveat as it was registered subsequent to the mortgage. However, the Registrar of Titles takes the view that it is for the court to decide whether the nature of interest protected by the caveat is such that a transfer should not be registered.

In RAM DUTT PRASAD v. AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – HBC Civil Action 121 of 1999 Justice Scott looked very closely and succinctly at the problem of caveats registered subsequent to the registration of a mortgage and he recommended certain legislative changes suggesting that the registrar ought to notify not only the registered proprietor but all those who had prior interests registered against the title. This would include the mortgagee.

Justice Scott’s suggestions make eminent good sense. All I wish to add is that one cannot expect a mortgagee to keep going back to the Titles office to check whether subsequent encumbrances have been registered against the title.

The situation, as it is now, causes delays. Commercial world does not operate efficiently with delays. A mortgagee who has found a buyer and accepted a tender may lose the prospective purchase due to delays and uncertainty. If the mortgagee were served with notice of caveat immediately after it was filed as suggested by Justice Scott, such problems would be eliminated and would result in business efficacy.

To succeed in having the caveat to continue, the applicant must impeach the conduct of the mortgagee in some way. All the plaintiffs have shown the court is that the first defendant was a signatory to a family Bank account, that he withdrew money from that account and bought a property which he mortgaged to the Bank and obtained a loan. They have not shown that the Bank was a party or in any way infected with first defendant’s conduct. The mere fact that the first defendant was an employee of the second defendant is by itself not sufficient to impeach the second defendant’s conduct particularly in this case as the first defendant was a signatory to the account.

I am not convinced therefore that the caveat should continue. Hence I order the removal of caveat number 491338 forthwith. I also order costs against the plaintiffs to be taxed if not agreed.

Jiten Singh
JUDGE

At Suva
1st November 2002