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Bolalailai v Narayan [2007] FJHC 142; HBC 406.2006 (7 February 2007)

IN THE HIGH COURT OF FIJI
AT SUVA
(CIVIL JURISDICTION)

CIVIL ACTION NO.; HBC 406 OF 2004

BETWEEN

BRENNAN SUKHDEO
and LUSIANA BOLALAILAI
Plaintiffs

AND

AVENDRA NARAYAN
Defendants

Mr. G. O'Driscoll for the Plaintiffs
Ms M. Chan for the Defendant

Date of Hearing: 29^th and 30^th January 2007
Date of Judgment: 7^th February 2007

JUDGMENT

BACKGROUND:

[1] This action arises out of a sale and purchase agreement entered between the defendant as vendor and the plaintiff as the purchaser. The plaintiff lives in Fiji. The defendant lives in Australia. The agreement concerns residential Crown Lease 2057 at Flagstaff, Suva. The agreement is dated 7^th April 2004.

[2] A transfer was also drawn. It was consented to by the Director of Lands on 20^th July 2004. The defendant refused to proceed further with the transfer alleging that the agreement required settlement within three months that is on or before 7^th April 2004. That he says had not happened so he rescinded or attempted to rescind the agreement.

[3] The plaintiff on the other hand says that he was able and willing to settle and that the defendant's attempted .rescission was ineffective as it contravened the provisions of the agreement. He brought these proceedings asking for specific performance of the agreement by the defendant.

SHOULD DIRECTOR'S CONSENT BE OBTAINED BEFORE FILING OF ACTION?

[4] Crown Lease 2057 is a protected lease under the provisions of the State Lands Act Cap 132. As such it cannot be dealt with by a court without consent of the Director of Lands - Section 13 of the Act. This section reads:

"13. (1) whenever in any lease under this Act there has been inserted the following clause:-

"This lease is a protected lease under the provisions of the Crown Lands Act"

(hereinafter called a protected lease) it shall not be lawful for the lessee thereof to alienate or deal with the land comprised in the lease of any part thereof, whether by sale, transfer or sublease or in any other manner whatsoever, nor to mortgage, charge or pledge the same, without the written consent of the Director of Lands first had and obtained, nor, except at the suit or with the written consent of the Director of Lands, shall any such lease be dealt with by any court of law or under the process of any court of law, nor, without such consent as aforesaid, shall the Registrar of Titles register any caveat affecting such lease.

Any sale, transfer, sublease, assignment, mortgage or other alienation or dealing effected without such consent shall be null and void."

[5]Mr. O'Driscoll before commencement of evidence being taken stated that he accepts that these proceedings were filed on 14^th September 2004 but consent to the proceedings was obtained on 1^st November 2004. For some reason Ms Chan tried to establish these admitted facts during the trial despite my interference and Mr. O'Driscoll's objections of time wasting. Ms Chan submits that because consent to take proceedings was obtained after commencement of proceedings, the entire proceedings are null and void. She relies on an ex-tempore judgment in Ratna Wati Sharma v. Veer Mati & Another - HBC 425 of 2003L. That case can be distinguished because in that case there was no evidence before the court that consent to commence proceedings had been obtained at any stage.

[6] In the present case there is consent albeit obtained after commencement of proceedings. The critical words in the section are "be dealt with by a court of law". Simply filing an action in a court is not a dealing in land. Actions can be discontinued at any time before any orders are made. Dealing with a land occurs if the orders or judgment of a court in some way affects some interest of the lessee in the land. The prior consent of the Director is confined to transferring, alienating mortgaging charging etc. It does not extend to filing of actions.

[7] There is nothing in this section which requires one to obtain the consent of the Director before an action is filed in court. Such consent can be obtained at any time before the land is 'dealt with' by the court. Dealing with occurs when an order is made or judgment is delivered: Mohammed Rasul v. Jeet Singh - 10 FLR 16.

WHETHER THE DEFENDANT IS ENTITLED TO RESCIND THE CONTRACT:

[8] Issue 2 and 3 in the Pre-trial Conference Minutes are really the same issue. If the defendant is entitled to rescind and has rescinded the agreement, then the plaintiff is not entitled to specific performance. This issue entails the court closely examining some of the terms of the contract.

[9] The agreement is dated 7^th April 2004. Clause 3.1 provides:

"The date of settlement is three months from the date of execution of this agreement but the parties may extend the date of settlement by mutual agreement."

[10] The settlement date therefore is three months from the date of execution of the agreement not necessarily the date of agreement. Execution would be execution by both parties. The plaintiff says that the defendant signed the agreement some time after 19^th April 2004. He relies on an e-mail from the defendant's solicitors (page 10 of agreed bundle). The e-mail says that because of one further change, the solicitors will send a corrected copy for re-signing. The corrected copy therefore must have been sent to the' defendant who lived in Australia either on 19^th April 2004 or some time later. Of course, mail must have taken time to reach.

[11] Giving the defendant the most advantageous view of facts, the date of completion would be three months from 19^th April 2004 that is 19^th July 2004. However, in view of what I say later, the date of execution be it 7^th April or 19^th April does not really matter.

[12] Time was made the essence on the agreement - Clause 7.1. Clause 8 provides for remedies available to the vendor in the event of purchaser's default in payment of purchase price or observing or performing any of the terms and conditions. It reads:

"8.1 If the purchasers default in payment of the purchase price or in the performance or observation of any terms and conditions for a period of fourteen days from the date the vendor notifies such default, the vendor without prejudice to any other remedies available to him may:

(a) rescind this contract and any monies paid by the purchasers will be forfeited, less any money expanded by the purchasers in pursuance of this Agreement."

[13] This clause is one of general application. It applies if there is failure to make payment or breach of any term or condition by the purchaser. It applies to all the terms across the board so the fourteen-day period is a sort of grace period given to the purchaser. A somewhat similar and more detailed clause was the subject of dispute in Hickey v. Bruhns - [1977] NZHC 1; 1977 2 NZLR 71. The relevant portion of the clause there provided:

"If the purchaser shall make default in payment of any instalment of the purchase moneys hereby agreed to be paid or of interest thereon or in the performance or observance of any other stipulation or agreement on the part of the purchaser herein contained and such default shall be continued for the space of fourteen days then and in such case the vendor without prejudice to his other remedies may at his option exercise all or any of the following remedies..."

[14] The court after adopting the reasoning from the decision of Court of Appeal in Thomas v. Monaghan - 1975 1 NZLR 1 concluded that the parties had not only fixed a date of completion but also the period of time which must elapse before the contractual right to rescind arises. It stated that "one purpose of the fourteen day requirement is to provide some mitigation in favour of the purchaser of the otherwise stringent provisions of the clause".

[15] Clause 8 in the agreement requires the vendor to give notice of default specifying what term or condition has been breached unless of course it is obvious. Then the vendor must wait for fourteen days to see if the purchaser has rectified the default. Only if default continues for further fourteen days after such notice can the vendor rescind the agreement.

[16] The defendant is relying on the notice dated 20^th July 2004. It is written without prejudice but tendered by consent. It says that more than three months has elapsed since the date of execution. It says that the plaintiff had therefore defaulted and withdraws the sale from the market. The full text of the notice reads:

"Our Ref: N4

20 July 2004

Mr. Anil Tikaram

Messrs Tikaram & Associates

P O Box 95880

SUVA

Dear Sir,

Re: Avendra Naravan to Brennan and Lusiana Sukhdeo - Sale and Purchase of CL 2057(17 Vesi Street, Flagstaff)

We refer to the sale and purchase agreement in this matter (clauses 3.1 and 7.1) and advise that as more than 3 months has elapsed since the date of execution of the agreement, we consider your client to have defaulted on the agreement. Our client instructs us to withdraw the sale from the market.

Our client has expressed his disappointment with your placing a caveat against his property as Mr. Narayan assured your client that he was going to sell it to Mr. Sukhdeo as per the sale and purchase agreement. He remained committed even though there were other higher offers. We request that you immediately remove the caveat. Kindly show us lodgment slip for withdrawal of caveat.

We consider the $8,500.00 deposit forfeited to our client under clause 8.1(a) of the sale and purchase agreement.

Your sincerely

Marie A Chan"

[17] The defendant too in his evidence stated that he did not give fourteen days to rectify the default. His instructions to his solicitors were "no more dealing". In short the curtain had fallen on 20^th July 2004.

[18] The defendant's default notice did not comply with the requirements of Clause 8.1. It failed to give the fourteen days grace period. It is a defective notice. It was incapable of rescinding the agreement.

[19] Ms Chan tried to resurrect the default notice by submitting that in any event the defendant's solicitors were not informed of grant of consent by 4^th August 2004. Consent had been endorsed on the transfer on 20^th July 2004 and by letter dated 22^nd July 2004 (pages 21 and 22 of the agreed bundle) the defendant's counsel was informed not only that the notice was defective but also that the plaintiff was ready willing and able to pay the balance purchase price. A sum of $76,490.00 was in fact paid into Mr. Tikaram trust account. For some reason the Bank had deducted $10.00 an insignificant sum and which could easily be met by the plaintiff. It is the defendant who had contrary to the agreement shut the doors to completion of agreement. Even on 20^th July he considered the deposit forfeited but later made a number of efforts to refund it.

[20] I therefore hold that the defendant's letter of 20^th July 2004 failed to rescind the agreement. The agreement therefore still subsists and can be enforced.

SHOULD I GRANT SPECIFIC PERFORMANCE?

[21] The defendant also suggested that specific performance ought not to be granted because his brother and his family live on the property. They will, I believe, suffer inconvenience if they are forced out. I am of the view that is not a compelling enough reason to refuse specific performance. They can move out elsewhere or engage in discussions with the plaintiff to rent the premises. In fact it is the plaintiff who has lost out on rent for all the time past.

[22] Accordingly I order specific performance. The defendant had in his evidence stated that he would forego damages if specific performance was ordered. So I order no damages.

IMPROPER ATTESTATION:

[23] During the course of trial it emerged that the transfer and sale and purchase agreement were signed by the defendant in Australia but witnessed by Ms Chan who was in Fiji and had not actually seen document being signed. Yet the certificate says it was signed in her presence and that she read over and explained the contents to the defendant. When questioned during her submissions she said she is familiar with the defendant's signature. I am not aware whether such practice is widespread or confined to be a few. The sooner this practice is given up, the better it is for all. It is a matter of serious concern for the court and I ask the Registrar of the High Court to forward a copy of the judgment to the Fiji Law Society for it to consider whatever action it may wish to take.

[24] Accordingly I hold that:

(1) the agreement has not been validly terminated.

(2) the plaintiff is entitled to specific performance.

(3) the plaintiff was entitled to lodge a caveat against the title.

[25] I order specific performance of the agreement dated 7^th April 2004. I order that upon the plaintiff paying the balance sum of $76,500.00 by Bank cheque at the Registrar of Titles Office on 20^th February 2004 at 11.00 a.m. the defendant shall simultaneously hand over the following documents to the plaintiff or his solicitors.

(a) Original Sale and Purchase Agreement

(b) Transfer

(c) Land Sale Declaration

(d) Crown Lease 2057 free of all encumbrances except for any caveat that has been lodged by the plaintiff.

[26] I further order the defendant to pay plaintiffs costs which I summarily fix at $3,200.00 to be paid in 21 days.

[Jiten Singh ]
JUDGE

At Suva
7^th February 2007