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Raghwan Construction Company Ltd v Endeavour Youth Investment Co-operative Society [2005] FJHC 233; HBC0322.2005 (18 August 2005)

IN THE HIGH COURT OF FIJI
AT SUVA
CIVIL JURISDICTION

CIVIL ACTION NO.: HBC0322 OF 2005

BETWEEN:

RAGHWAN CONSTRUCTION COMPANY LIMITED
PLAINTIFF

AND:

ENDEAVOUR YOUTH INVESTMENT
CO-OPERATIVE SOCIETY
1ST DEFENDANT

REGISTRAR OF TITLES
2ND DEFENDANT

Ms D. Devan for Plaintiff
Mr. D. Sharma for 1st Defendant
Ms K. Naidu for 2nd Defendant

Date of Hearing: 4th August 2005
Date of Decision: 18th August 2005

DECISION

EXTENSION OF CAVEAT:

By ex-parte summons supported by an affidavit the plaintiff sought extension of caveat number 535084 over CT 7538 until further order of the court.

BACKGROUND:

The defendant had mortgaged its title to Fiji Development Bank (FDB). The FDB had exercised its powers of sale under the mortgage and called for tenders. The plaintiff had successfully tendered and its offer of $330,000.00 was accepted. A sale and purchase agreement was drawn and signed by the mortgagee and the plaintiff on 6th August 2002. The plaintiff had arranged for finance to enable it to complete the purchase.

The purchase was forestalled as there was a caveat lodged on 24th September 2002 by Mere Thaggard against the title. On 19th November 2004 solicitors for the FDB wrote to the plaintiff cancelling the sale and purchase agreement on the grounds that application to the High Court to remove Thaggard caveat had not been finalised. They also referred to Clause 13 of the agreement.

NOTICE OF REMOVAL:

The plaintiff alleged that it received notice of removal of caveat sent by the 2nd defendant on 17th June 2005. The notice was dated 24th May 2005.

APPLICATION FOR EXTENSION OF CAVEAT BY PLAINTIFF:

I granted the extension to caveat on 29th June 2005 and had the matter adjourned to 18th July 2005 at 9.00 a.m.

APPLICATION FOR DISSOLUTION BY DEFENDANT:

On 8th July 2005, the 1st defendant made an application for dissolution of orders I made on 29th June 2005. That Notice of Motion was also fixed for 18th July 2005 at 9.00 a.m.

On 18th July 2005 by 9.10 a.m. there was no appearance of plaintiff. The annexure to defendant’s affidavit dated 8th July 2005 showed that caveat number 535084 lodged by the plaintiff had been removed on 22nd June 2005 before the plaintiff’s application for extension had been filed. The caveat was no longer registered against the title. Accordingly I dissolved my earlier order.

STAY PENDING APPEAL:

On 20th July 2005, the plaintiff filed the present application for stay pending determination of appeal against my order of 18th July 2005 and for orders prohibiting the 2nd defendant from accepting any instrument which would change the proprietorship of the land in question.

The application for stay is resisted.

SUBMISSION:

Ms Devan submitted that the court ought not to have summarily disposed of the matter in absence of plaintiff or his solicitors. It should have adjourned the matter or stood it down because the plaintiff had an interest in land.

She submitted there was no urgency or emergency so the court should not have rushed.

Secondly, she submitted that the mortgagee bank acted unconscionably by entering into a series of sales and purchase agreements.

Thirdly, she submitted that the 2nd defendant erred in cancelling the caveat when the notice was served on 17th June 2005.

Fourthly, she submitted that for over two years between the signing of the agreement and its cancelling, the Bank had led the plaintiff to believe that the transaction would be completed. The Bank is acting in bad faith now and it is merely using Mere Thaggard caveat as an excuse.

Fifthly, she submitted that damages is not an adequate remedy as the plaintiff intended to develop the property.

Mr. Sharma submitted that an application under Section 110(3) of Land Transfer Act cannot be made ex parte. It must be served and a caveat cannot be extended unless summons has been served.

Secondly he submitted that by the time the plaintiff had applied for extension, the caveat in fact had been removed. The plaintiff’s claim, if there is one, is for wrongful removal of caveat.

Thirdly he submitted that the defendant admits there was an agreement between the Bank and the plaintiff. That agreement was terminated on 19th November 2004. The plaintiff had not done anything since then to protect its interest and claim specific performance. Plaintiff’s action lies against the Bank and not against the 1st defendant.

CONSIDERATION OF SUBMISSIONS:

The first argument that the court should have adjourned the matter or stood it down when counsel was not present is a novel one. While I have no problems in standing down matters if I am made aware that a counsel is engaged in another court, the work of the courts would be severely affected if each time counsel was not present on time, it stood down matters. It would also cause inconvenience to other counsels who are in court in time. Where orders have been obtained ex parte, there is a correspondingly heavier obligation on those obtaining such orders to be present in time on next call date and satisfy the court why such orders should continue to remain especially if there is opposition to continuance of such orders. This argument has little merit.

I shall next deal with 1st defendant’s submission that the plaintiff’s application was misconceived. Section 110(3) of the Land Transfer Act Cap 131 reads:

“The caveator may either before or after receiving notice from the Registrar apply by summons to the court for an order to extend the time beyond the twenty-one days mentioned in such notice, and the summons may be served at the address given in the application of the caveatee, and the court, upon proof that the caveatee has been duly served and upon such evidence as the court may require, may make such order in the premises either ex parte or otherwise as the court thinks fit.”

Mr. Sharma submitted that a caveator cannot come to court by ex parte summons. The summons must be served.

Part 17 of the Land Transfer Act deals with caveats. Section 107 requires the caveator to give his address on the caveat. Section 108(3) is a deeming provision which treats service of notices or proceedings at the address shown on the caveat as proper service. Section 110(2) requires the caveatee or his agent giving notice of removal to provide his address in Fiji at which notices of proceedings may be served.

By permitting service at address shown on the caveat or on notice of removal, the legislature has provided, for the limited purposes of dealing with caveats by court, a quick and inexpensive means of service. The caveator if he wishes may serve the caveatee personally.

Ms Devan submitted that the notice of removal was received by the plaintiff on 17th June 2005 even though it is dated 24th May 2005. Ms Naidu, counsel for the 2nd defendant brought a photocopy of the relevant page of mail despatch register kept by Titles Office and showed it to the court and other counsels. The Registered Mail Receipt has the post office stamp on it and is dated 2nd June 2005. That is the date the Notice of Removal of caveat was posted out and it would take a few days before the mail would reach the addressee. Section 110(1) is very clear. The Registrar can only remove a caveat on expiry of twenty-one (21) days after service of the notice not from the date of notice. For the purposes of calculating the twenty-one days Section 51(a) of the Interpretation Act is also relevant. It reads:

“In computing time for the purpose of any written law, unless a contrary intention appears –

(a) a period of days from the happening of an event or the doing of any act or thing shall be deemed to be exclusive of the day on which the event happens or the act or thing is done;”

Hence the twenty-one days start to run from the day next after service and not from the actual day of service. Subsequent to the postage of the notice, by a memorial dated 22nd June 2005 caveat number 535084 was cancelled. It appears, on basis of documents filed and copy of page of despatch register, that the caveat may have been prematurely cancelled before expiry of twenty-one days of service of notice.

The problem in this case is due to the fact that the plaintiff’s original application for extension of caveat did not show the current status of memorials on the title. The affidavit in support was sworn on 28th June 2005 but the title annexed to the affidavit did not even have caveat lodged by Dynax Holdings Limited on 16th February 2005 on it so the title attached was probably obtained sometime before 16th February 2005.

I therefore agree with Mr. Sharma’s submission that the plaintiff’s cause of action lies against the Registrar of Titles for wrongful removal of caveat and that the court could not order Caveat No. 535084 to remain registered when in fact it had been cancelled before 29th June 2005 which is the date order for extension was made ex parte.

Section 110(3) requires the caveator to apply by summons to the court. The summons may be served at the address shown on the notice of removal. The court can only make an order “upon proof of service” – see ANZ Banking Group Ltd. v. Oline Maya Maharaj – ABU0049 of 1983 (judgment delivered 26th March 1984) where the Court of Appeal dissolved an injunction where respondent had obtained on an ex parte application in her divorce proceedings an order that the caveat should not be withdrawn. At page 7 of the report the court went on to say “the procedure following a notice pursuant to Section 110(1) is prescribed, step by step, by the subsection, and such steps not having been taken, we are compelled to conclude that the Judge in making the order as to the caveat exceeded his jurisdiction”. The court dissolved injunction which was granted ex parte in the divorce proceedings.

The procedure therefore set out in Section 110 is mandatory. Failure to comply with the requirements of such procedure is fatal for the applicant. I am further fortified in my conclusions by the decision of Justice Fatiaki (now the Chief Justice) who in Mahendra Vijay Anganu v. Daya Wanti – HBC0629 of 1993 expressed the view that “the application for extension ... must come by way of inter partes summons and be supported with proof that the caveatee has been duly served ... The use of the term “ex parte” in the last sentence of Section 110(3) refers to the order of the court and NOT to the nature of the caveator’s application.”

Hence if an application is sent by post to the address shown and adequate time has passed the court would presume it was duly served. If in such circumstances, the caveatee does not appear (as he may not have checked his mail) the court can make an order ex parte in his absence.

The position under Section 110 of Land Transfer Act may be summarised as follows:

(a) Registrar sends notice of removal, to the caveator.
(b) He can remove the caveat after twenty-one (21) days of service of notice.
(c) Caveator can apply for extension at any time either before or after service of such notice.
(d) The application must be by summons inter parte and not ex parte.
(e) The summons must be served either personally or sent by post to the address shown.
(f) There should be proof of service of summons by affidavit.

Accordingly on appeal the plaintiff is unlikely to surmount this difficulty on non-compliance with Section 110 by having made an application ex parte.

I could easily dispose of the matter here but in fairness to counsels I will briefly consider other issues raised by them.

On 19th November 2004, the mortgagee Bank FDB had written to the plaintiff stating that it was cancelling the sale to it of the property. The plaintiff did not act then. If it seriously wanted to proceed with the sale, it ought to have issued a writ for specific performance and sought an extension of caveat until disposal of the matter. Further subsequent to the termination of agreement by above letter, the 1st defendant that is the registered proprietor entered into a sale and purchase agreement on 3rd February 2005 for the purchase price of $800,000.00. I was also told from the bar table by Mr. Sharma that the Registrar has on 25th July 2005 now accepted a dealing between the 1st defendant and Dynax and the Westpac Banking Corporation has taken a mortgage over the property. It therefore is clear that transactions have taken place in respect of the land and any stay application would create uncertainty and cause prejudice to those who acted upon after search of title.

The plaintiff’s remedies, if any, and I express no conclusions on that, lie against the Fiji Development Bank and not against the first defendant. The FDB is not even a party to these proceedings.

Accordingly I refuse stay pending appeal and other orders sought. Application refused with costs summarily fixed in the sum of $400.00.

[ Jiten Singh ]
JUDGE

At Suva
18th August 2005