IN THE HIGH COURT OF FIJI
AT LAUTOKA
CIVIL JURISDICTION

CIVIL ACTION NO.: HBC0279 OF 2004L

BETWEEN:

DURGA PRASAD
PLAINTIFF

AND:

COLONIAL MUTUAL LIFE INSURANCE SOCIETY
DEFENDANT

Mr. S. Verma for the Plaintiff
Mr. C.B. Young for the Defendant

DECISION

This action concerns a mortgage given by plaintiff over his Crown Lease 10187 to the defendant. The advances were made jointly to the plaintiff and his brother. The Bank intended to exercise its powers of sale pursuant to the mortgage. The plaintiff on an ex-parte summons obtained an interim injunction restraining the defendant from selling the property. That was on 7th September 2004.

The defendant opposed the application and affidavits were ordered to be filed and that was done. The submissions by parties were filed in November 2004 after I had left Lautoka Court from my temporary relieving duties. For some reason the file was not sent to me until 18th May 2005 to write the ruling.

The plaintiff states that the advance of $70,000.00 secured under the mortgage was not lent to him and his brother jointly. He says some fifty nine thousand and sixty three dollars and eleven cents was given to his brother for him to clear his indebtedness to the Fiji Development Bank and only the balance roughly $11,000.00 given jointly to his brother and him.

Secondly he says that the amount secured has been fully paid as the Bank received $51,000.00 from insurance company after one of his brother’s property secured by another mortgage was burnt down. The proceeds of insurance were paid to the Bank. He adds that the damaged property was sold by the Bank for $24,000.00 which it kept. He also says that the insurance cover was for $75,000.00 but the defendant settled for $51,000.00 without his brother’s authority.

Thirdly he states the defendant coerced him to take over the balance of the debt by promising him financial assistance from his fishing venture.

The mortgage was executed on 5th May 1995. Moneys were advanced under it. The plaintiff did not complain then. Payments were made by the plaintiff under the mortgage.

Having looked at the affidavits, annexures and submissions of counsels, I have come to the firm conclusion that the injunction granted on 7th September 2004 must be dissolved for following reasons:

(a)	Material Non-Disclosure:

Litigants who seek ex-parte orders from courts carry a heavy responsibility of full and frank disclosure of all material facts both favorable and unfavourable to the grant of such an injunction. The court must be appraised of all relevant material facts not only those favourable to the applicant – Thomas A. Edison Ltd. v. Bullock – 1912 15 CLR 679. Lord Justice Warrington in R. v. Kensington Income Tax Commissioner, Ex-parte Princess Edmond de Polignac – (1917) 1 K.B. 486 at 409 stated:

“It is perfectly well settled that a person who makes an ex-parte application to the court that is to say, in the absence of the person who will be affected by that which the court is asked to do is under an obligation to the court to make the fullest possible disclosure of all material facts within his knowledge, and if he does not make that fullest possible disclosure, then he cannot obtain any advantage from the proceedings, and he will be deprived of any advantage he may have already obtained by means of the order which has thus wrongly been obtained by him.”

Lord Cozens-Hardy M.R. at p. 505 stated the brutal consequences of non-disclosure in ex-parte applications as follows:

“the court ought not to go into the merits of the case, but simply say, ‘we will not listen to your application because of what you have done.’”

Was there fullest disclosure

A number of letters written by the plaintiff were attached to the affidavit of Rajendar Kaur Goundar on behalf of the defendant. Each one of these letters acknowledges the indebtedness. These letters are:

(a)	Letter dated 21st August 1995 from the plaintiff and his brother annexure RS-2 to defendant’s affidavit: where the two brothers say that loan account repayments which were in dispute are now settled. According to the letter the plaintiff would pay $9,000.00 and his brother $61,000.00.

The two brothers had split the account between themselves for repayment purposes. The Bank’s response is contained in letter dated 23rd August 1995 saying “if any payments default then each partner is responsible for the other”.

Hence as far as the Bank was concerned the account was still one not two separate accounts and the Bank looked to both of them for keeping up the obligations for repayment. In face of this, the plaintiff’s assertion that his liability was limited to $9,000.00 is untenable.

Secondly,

There is annexure RKS-12 which is a letter written on 18th May 1997 where the plaintiff says “due to unforeseen circumstances last year I was unable to make monthly payments”. He then offered to pay $600.00 by 30th June 1997 and balance at the rate of $200.00 per month and requesting that the Bank not proceed further with the mortgagees sale advertisement in the Fiji Times of 1st May 1997.

Thirdly,

Letter dated 1st February 1999 annexure RKS-31 where the plaintiff says due to drought and floods he could not keep up payments but would make repayments as he has commenced exporting seafood to New Zealand.

Fourthly,

Letter dated 29th January 1998 annexure RKS-19 where the plaintiff offered to purchase his brother’s partly burnt property for $23,000.00. This property had also been mortgaged to secure the same debt.

The plaintiff says the letters were not material or alternatively incorrectly missed out. Each of these letters relates to a debt which arose out of the mortgage. The subject matter of the action is the mortgage and payments under it. As such these letters go to the heart of the case and extremely relevant to the core issue. I am firmly of the view that there was material non-disclosure in this case.

OTHER GROUNDS:

This application by the plaintiff was to restrain a mortgagee from exercising its power of sale. The law is clear. Generally, speaking the position is that the mortgagee will not be restrained from exercising its power of sale unless either the mortgage debt or if the debt be in dispute, the amount claimed by the mortgagee is paid into court – Inglis v. Commonwealth Trading Bank of Australia – (1972) 126 CLR 161.

The plaintiff admits executing a mortgage. However he says he is only responsible to pay $9,000.00 and no more. That may well have been the understanding between the two brothers themselves but as far as the Bank was concerned it looked to both jointly and severally to liquidate the debt. If what the plaintiff said is true, the Bank would have had two separate accounts one in the name of each brother. The mortgage given by the plaintiff would have been stamped to cover advances to $9,000.00. However, both the Director of Lands’ consent and stamp duty levied cover advances to $70,000.00. The stamp duty shown on the mortgage is $350.00 which covers advances to $70,000.00 in 1995.

The defendant deposes that it has entered into a contract to sell the land to one Salesh Kumar so any equity of redemption would now be lost.

The plaintiff also did not give sufficient particulars of his financial position in support of his undertaking as to damages. It is an important consideration when a court looks at the balance of convenience and whether damages would be an adequate remedy. In the present case, the history of case as evidenced by annexures shows the plaintiff constantly failing to make monthly payments. His undertaking as to damages to me appears extremely suspect.

Accordingly, I order that the interim injunction granted on 7th September 2004 be dissolved. I also note that the order I had granted differs from the sealed order. I had granted the interim injunction until further order of the court. I also award costs to the defendant summarily fixed in the sum of $450.00 to be paid in fourteen (14) days.

[ Jiten Singh ]
JUDGE

At Lautoka
17th June 2005