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High Court of Fiji |
IN THE HIGH COURT OF FIJI
AT SUVA
CIVIL JURISDICTION
Civil Action No. HBC 70 of 2011
BETWEEN:
FIJI DEVELOPMENT BANK,
a body corporate duly constituted under the Fiji Development Bank Act, Cap 214 and having its principal office at 360 Victoria Parade, Suva, in Fiji.
PLAINTIFF
AND :
MANUELI VURUYA of Vunisea, Kadavu, Businessman.
DEFENDANT
BEFORE : Master Deepthi Amaratunga
COUNSELS : LAJENDRA LAW for the Plaintiff
GORDON & CHAUDHRY LAWYERS for the Defendant
Date of Hearing: 18th May, 2011
Date of Ruling: 6th June, 2011
RULING
Whether the Plaintiff has the locus to bring these proceedings
2. The High Court Rules of 1988, Order 88 reads as follows:
88. 1.-(1) This Order applies to any action (whether begun by writ or originating summons) by a mortgagee or mortgagor or by any person having the right to foreclose or redeem any mortgage, being an action in which there is a claim for any of the following reliefs namely:
a) payment of moneys secured by the mortgage;
b). sale of the mortgaged property;
c) foreclosure;
(d) delivery of possession (whether before or after foreclosure or without foreclosure) to the mortgagee by the mortgagor or by any other person who is or is alleged to be in possession of the property;
(e) redemption;
(f) re-conveyance of the property or its release from the security;
(g) delivery of possession by the mortgagee.
3. In terms of the Order 88 rule1(3) and action to which this Order is referred to is called a mortgage action and Order 88 rule 1 (4) reads as follows:
"these Rule apply to mortgage actions subject to the following provisions by this Order".
4. It is clear that the Order 88 of the High Court Rules is a self contained and stand alone provision irrespective of the provisions in any other law. This was also held in the case of Fiji Development Bank v. Ratu Tevita Komaisavai, Civil Appeal No. ABU 0018 of 2010.
5. In that case Justice Izaz Khan stated with reference to Land Transfer Act as follows:
"In the circumstances, it is our considered view that the provisions contained in the Order 88 of the High Court Rules, 1988 should stand independent of the provisions contained in the Land Transaction Act,.....". (emphasis is added)
6. Order 88 rule 3 of High Court Rules of 1988 deals with the action for possession or payment and lays down the requirements and procedure in institution of an action in terms of the Order 88 of the High Court Rules for recovery of possession.
It states as follows:
3(1) The affidavit in support of the originating summons by which an action to which this rule applies is begun must comply with the following provisions of this rule. This rule applies to a mortgage action begun by originating summons in which the plaintiff is the mortgagee and claims delivery of possession or payment of moneys secured by the mortgage or both;
(2) The affidavit must exhibit a true copy of the mortgage and the original mortgage or, in the case of a registered charge; the charge certificate must be produced at hearing of the summons;
(3) Where the plaintiff claims delivery of possession the affidavit must show the circumstances under which the right to possession arises and except where the Court in any case or class otherwise directs, the state of the account between the mortgagor and morgagee with particulars of
(a) the amount of the advance,
(b) the amount of the periodic payments require to be made,
(c) the amount of any interest or instalemts in arrear ath the date of issue of the originating summons and at he thdate fo tha affidavit, and
(d) the amount remaining due under the mortgage". (emphasis is added)
Clearly only the Mortgagee can institute action in terms of the above provision and no other party can do it. Mortgagee does not denote previous mortgagees.
7. It is pertinent to cite the provisions contained in the Property Law regarding the mortgages and Section 79 of the Property law state as follows:
79. -(1) If default in payment of the mortgage money or in the performance or observance of any covenant continues for one month after the service of the notice referred to in section 77, the mortgagee may sell or concur with any other person in selling the mortgaged property, or any part thereof, either subject to prior leases, mortgages and encumbrances or otherwise, and either together or in lots, by public auction or by private contract, or partly by the one and partly by the other of those methods of sale, and subject to such condition as to title or evidence of title, time or method of payment of the purchase money or otherwise as the mortgagee thinks fit, with power to vary any contract for sale and to buy in at any auction or to vary or rescind any contract for sale and to resell without being answerable for any loss occasioned thereby, with power to make such roads, streets and passages and grant such easements of right of way or drainage over the same as the circumstances of the case require and the mortgagee thinks fit, and may make and sign such transfers and do such acts and things as are necessary for effectuating any such sale;
(2) No purchaser shall be bound to see or inquire whether default has been made or has happened, or has continued, or whether notice has
been served, or otherwise into the propriety or regularity of any such sale;.
(3) Where a transfer is made in purported exercise of the power of sale conferred by this Act, the title of the transferee shall not be impeachable on the ground that no cause had arisen to authorize the sale or that due notice was not given or that the power was otherwise improperly or irregularly exercised, but any person damnified by any unauthorized or improper or irregular exercise of the power shall have his remedy in damages against the person exercising the power. (emphasis is added)
8. It is clear that once the sale is completed the transferee will get an absolute impeachable title and that would mean that the Plaintiff in this case does not have any residual right in the property to institute this action in terms of Order 88 of the High Court Rules after the execution of the transfer.
9. The Plaintive submits that it has the locus to bring these proceedings. The Plaintiff in its letter dated 9 February 2010 to the Purchaser under mortgagee sale had undertaken to provide possession to the Purchaser of settlement. Clause 2 of the said letter states:
The property is sold on "as-is-where-is" basis with the existing tenants. Possession will be given on the date of settlement. No undertaking or warranties are given on to the existing improvements on the said property. (emphasis added)
10. It is clear that though such an assurance was given it never materialized. Already the date of settlement has expired as the property was transferred to Mr Vasuturaga, who on the same day mortgaged it to Home Finance and the Plaintiff's mortgage was cancelled. Though an assurance was given by the Plaintiff to give possession on the date of settlement it never materialized and now the plaintiff cannot rely on that letter as Plaintiff's rights to possession extinguished due to the transfer to Mr Vasuturaga, and the subsequent mortgage to Home Finance Company on 31st December, 2010.
11. This action was filed on the 10th March, 2011 and clearly by that time the Plaintiff was not the mortgagee of the property and there is no residual right to the Plaintiff to bring this action in terms of Order 88 of the High Court Rules. The present owner is Mr Vasuturaga and the mortgagee is Home Finance from 31st December, 2010.
12. The Sale and Purchase Agreement dated 30th March 2010 stated as follows:
"POSSESSION
The Vendor shall hand over possession of the said property with the existing occupants to the Purchaser on the Date of Settlement. The Purchaser agree that the Vendor has not given any undertakings or warranties on the existing improvements on the said property and the Purchaser shall accept the same on an 'as-is-where-is' basis.
13. According to the Plaintiff that the reference to the existing occupants is reference to existing tenants as being consistent with the Bank's letter of 9 February 2009, where it was agreed that possession will be given on settlement with existing tenants, but in that event why there was not another provision to deal with the possession of the proprerty needs an explanation. It is clear that the sale was admittedly done on 'as is where is' basis and the Plaintiff has not only executied a sale and purchase agreement in terms of the Seciton 79 of the Property Law Act, but has failed to provide any provision in the said contract regarding the delivery of the possession from the Defendant, and the transfer of the property was executed and Mr Vasuturaga became the owner of the property and Home Finance, the Mortgagee.
14. The letter dated 7 January 2011 to the Defendant by the Plaintiff state as follows:
"The Mortgagee sale formalities have been completed and the property has now been legally transferred to the successful tenderer. Therefore, you are to provide vacant possession with immediate effect. Should you fail to vacate the premises, eviction proceedings may be initiated and all legal cost of the same will be borne by you".
But it should be noted that by writing a letter a party cannot create a non existent legal right. By this time the Plaintiff did not have a right to possession. The position now is that the Purchaser who is a bona fide Purchaser for value has not been able to take possession of the property as the Defendant refuses to give up possession. The Defendant also is collecting all the rental income that the said property is generating. This issue cannot be dealt in this action.
15. Plaintiff relies on the following passage from Court of Appeal in Fiji Development Bank v. Ratu Tevita Komaisavai, Civil Appeal No. ABU 0018 of 2010 where the Justices of Appeal on page 9 had this to say:
In the circumstances, it is our considered view that the provisions contained in the Order 88 of the High Court Rules, 1988 should stand independent of the provisions contained in the Land Transaction Act, Furthermore, it is evident that there is no specific procedure found in the Land Transaction Act, for such a remedial measure as well as to prevent the defaulters enjoying the property for which they are not rightly entitled to. In the event the mortgagee is to make an application for foreclosure before moving for an order under Rule 88, as Justice Inoke has determined, a mortgagor who had defaulted payments in terms of the agreement, would have an opportunity to enjoy the fruits of the property. In such situation, the defaulter may continue to enjoy the property even though he/she is at fault. Such a proposition may not meet out the justice.
However, the terminology found in Rule 1(1) of the High Court Rules reads that"...any person having the right to foreclose."
Plain reading of this phrase denotes that mere right to foreclosure of the person, who is to make the application under Rule 88, would be sufficient to make an application under Rule 88. It does not mean that the persons referred to in the said Rule should have necessarily completed the registration of foreclosure according to law. In making an application under Rule 88, that person who makes the application should establish the position namely, "having the right" by adducing evidence by way of an affidavit. Therefore, it is clear that even the plain reading of the Section does not require the person who makes an application under Rule 88 to have that right enforced under the Land Transfer Act before making such an application".
16. It is clear that the above finding will not confer an additional right to the Plaintiff who executed the mortgagee sale after the said mortgage is cancelled and property is transferred to a new owner namely Mr Apisai Vasuturaga, who then mortgaged the property to Home Finance.
17. This action was filed on 10th of March, 2011 and the mortgage to the Plaintiff was cancelled on 31st December, 2010 and the Plaintiff cannot bring this action after the cancellation of its mortgage with the defendant, for the reasons given above.
18. The preliminary objection is upheld and the action is struck out.
19. Considering the facts of this action I will not order a cost.
Dated at Suva this 6th day of June, 2011
.............................................
Mr Deepthi Amaratunga
Acting Master of the High Court
Suva
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