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Suva City Council v March [2011] FJHC 334; HBC957.1982 (7 June 2011)

IN THE HIGH COURT OF FIJI
AT SUVA
CIVIL JURISDICTION

Civil Action No. HBC 957 of1982
C/N 26/98

BETWEEN:

SUVA CITY COUNCIL,
a duly incorporated body constituted under the Local Government Act Cap. 125.
PLAINTIFF

AND:

K W MARCH
a limited liability company having its registered office at 71-81 Marks Street, Suva.
DEFENDANT

BEFORE : Master Deepthi Amaratunga

COUNSELS : LAJENDRA LAW for the Plaintiff
NACOLAWA & DAVETA for the Defendant

Date of Hearing: 1st June, 2011
Date of Ruling: 7th June, 2011

RULING

1. INTRODUCTION
   

1. This is an application by the Plaintiff to charge interest on the defaulted council rates from 1979, in terms of the Section 78 (1) and Section 78(2) of the Local Government Act.
   

2. FACTS AND ANALYSIS
   

2. The Plaintiff has filed an application on 8th April, 2011 supported by an affidavit, seeking orders for the following:
   
   • (a) To charge 11% interest on the sum of $378,714.42 from 20 June 2006 until 22 February 2011;
     
   • (b) To recover the sum of $562,565.73 from the amount currently held in Judicial Trust in respect of the above matter, the breakdown of which is as follows:
     
     • (i) The sum of $543,557.67 as outstanding rates;
     • (ii) The sum of $19,008.06 as legal cost.
       
3. On 20 June 2006, the Plaintiff had filed an Amended Statement of Claim in which it claimed the sum of $378,714.42 plus 11% interest until the date of settlement .On 29 November 2007, the Court had made an order that the Plaintiff is entitled to Judgment for the sum of $150,072.89 being the amount admitted by the Defendant in the Statement of Defence .In order to execute the said Order, the Plaintiff obtained a further Order for sale of the Defendant's property contained in Certificate of Title No. 6167 Lot 9 on DP 847 .On 16 February 2009, the Court had ordered Brij Lal & Co. Ltd the nominated associated company of Afton Development Limited, the Company that bided successfully in the judicial sale, to deposit $1,810,000.00 into Court and on 2nd July 2010, a further Order was made by the Court to vary the purchase price from $1,810,000.00 to $1,583,750.00 in order to adjust the Value Added Tax component of the sale price and the said adjusted sum is deposited in the court.
   
4. On 7 December 2010, the Court ordered in pursuant to the Summary Judgment application of the Plaintiff Judgment against the Defendant in the sum of $228,641.53 with 11% thereon until full payment together with cost in the sum of $400.00 .The sum of $228,641.53 was arrived at after subtracting the sum of $150,072.89 from the sum stated in the Amended Statement of Claim which is $378,714.42 .Though the Plaintiff had obtained Judgment of $150,072.89 and $228,641.53, respectively, the Plaintiff did not receive the said payment until the property was sold and settlement effected on 22 February 2011 and by the time settlement was effected on 22nd February 2011the interest had accrued to the Plaintiff in terms of Secton 78 (1) read with Section 78(2) of the Local Government Act.
   
5. From the judicial sale a sum of $150,072.89 was paid to the Plaintiff in 2011 and the balance was paid into Court.
   
6. The Plaintiff submits that it is entitled to charge 11% interest on the outstanding rates until full payment. The annexure "H" shows that as at 22 February 2011 the total owing by the Defendant to the Plaintiff was the sum of $693,630.56. On 22 February 2011, the Plaintiff received $150,072.89 in February, 2011,leaving a balance of $543,577.67 still unpaid rates inclusive of the interest at 11%.This is the amount that the Plaintiff is claiming that it is entitled to after calculations of interest rate pursuant to section 78 of the Local Government Act.
   
7. It is important to refer to Section 78 of the Local Government Act( Cap 125) which deals with rates recoverable by an action and state as follows:
   

78(1) A council may recover rates which have been levied under the provisions of this Act and are payable to the council and payment for which are in arrear and also the costs of proceedings. If any, for their recovery from a person liable to pay them, by action at the suit of the council in a court of competent jurisdiction.

78(2) Any rates which are overdue shall bear interest at the rate of 7 per cent per annum and such interest charged shall be included in the expression 'rates'; the Minister may by order vary the rate of interest. (Section 78(2) has been amended by virtue of Legal Notice No. 82 of 1982 and the new interest rate is 11%.)

78(3) Rates due by the same person to the coundil may be inccuded in one writ, summons or other process." (emphases are added)

8. Section 84 of the Local Government Act, Cap 125 states:
   

"Where money is paid to a council in respect of rates, the council shall apply such money for or towards the rates due on the rateable property in the order in which they become or become due".

9. To support the proposition that the Plaintiff is entitled to charge interest rate of 11% on all overdue rates, the following passage from Suva City Council v. K W March Limited, Civil Action No. 957 of 1982 of Justice Bryne at page 4 is relevant where his Lordship stated:
   

"....I have already mentioned Section 78 which allows a Council to charge interest at the rate of 11% on all overdue rates.

Section 84 states that where money is paid to a Council in respect of rates, the Council shall apply such money first to the rates longest outstanding. Because the Defendant had never paid each year's rates when they fell due not only outstanding rates accumulated but also the Defendant became liable for a greater amount of interest which is included in the definition of rates given in Section 78". (underling is added)

10. Furthermore at page 7, Justice Bryne approved the calculation method that the Plaintiff is entitled to charge 11% on the interest rates when he said the following:
    

"Mr Patel submitted that I should not allow the Plaintiff any interest which he said must be pleaded in the body of the Pleading and relief on Order 18/8/10 of the High Court Rules. With respect, this is simply not true. Paragraph 4 of the Further Amended Statement of Claim specifically claims interest at the statutory rate of 11% on arrears of rates in accordance with Section 78 of the Local Government Act".

11. The said High Court Judgment went on appeal. On appeal the Fiji Court of Appeal on page 2 of the Judgment noted that the claim of the Plaintiff for outstanding rates had increased and a considerable portion of the increase was due to interest including interest on interest. The exact quote of the Court of Appeal is as follows:
    

"....By this time the claim had increased to the sum of $96,446.81 of which a very considerable part represented interest including interest on interest".

12. The Court of Appeal in upholding the decision of Justice Bryne made the following remarks on page 3 of its Judgment:
    

"During the course of proceedings on opportunity was given to the appellant to inspect the rates books and outcome was the concession to which reference has already been made that the appellant would accept the correctness of that part of the statement which referred to the rates as struck. That is a limited concession since it does not apply to the other figures contained in the statement which led to the particular conclusion, resulting in judgment for the respondent of the sum awarded.

The Judge however, considered that the onus of establishing any error in recording the payments made by the appellant and the effect of such error on the calculation lay on the appellant.

He concluded this had not been discharged by the evidence upon which the appellant relied.

The Court of Appeal upheld the reasoning of the High Court Judge and held:

"We think that the Judge was right in the conclusion to which he came. Once it was conceded that the rates, the basis of the calculations contained in the statement, were correct we consider the onus of establishing the record of payments for which he was responsible was wrong passed to the appellant. This he did not discharge. The calculation of interest payable was a mechanical matter to be carried out on the basis of the evidence before the Court. If the appellant had concerns over the calculation then it was open to the appellant to express those concerns by alleging any mathematical error but he did not do so(emphases are added to suit the present ruling)

13. It is evident that the Plaintiff is entitled to charge interest on all overdue account pursuant to Section 78 of the Local Government Act and the judgment of the Court of Appeal in this case. The part payment was paid only on 22 February, 2011 though the order to pay that amount was delivered on admission on 29th November, 2007 in pursuant to a summons filed on 13th November, 2007.
    
14. It is to be noted though an order was made without any objections from the Defendant, no payment was made by the Plaintiff and no appeal was lodged against the said order to pay a sum of $150,072.98 and a judicial sale was carried out to recover the said amount and the Plaintiff received the money only in 2011 after execution of the said sale.
    
15. Annexed marked "H" to the affidavit in support, shows interest continued to apply as no payment had been received until settlement was effected on 22 February 2011. The Plaintiff is entitled to charge 11% interest on the outstanding rates until full payment in terms of the provisions in the Local Government Act. The Section 78(1) and Section 78(2) clearly state the law relating the charge of the interest. Annexure "H" shows that as at 22 February 2011 the total owing by the Defendant to the Plaintiff was the sum of $693,630.56. On 22 February 2011, the Plaintiff received $150,072.89 leaving a balance of $543,577.67. Though time was granted to the Defendant no affidavit in opposition was filed and these amounts were not disputed. At the hearing I requested the Plaintiff to show how these calculations were arrived at and to show the correctness of the amounts and it was also done with the help of a calculator. Though a counsel represented the Defendant no error in calculation was indicated even at that time. So, even without an affidavit being filed in opposition an opportunity was granted to dispute the calculations, but was unable to show any defect in the calculations. So I can safely deduce that the amount $543,577.67 is legally due to the plaintiff in terms of the above provisions of the law.
    

100. LEGAL FEES
     

16. The Plaintiff is also entitled for legal fees in terms of the Section 78(1) of the Local Government Act. This is a salutary provision, as errant evaders would seek a postponement of the council rates by proceeding to legal process. It is important to follow the due process, but at the same time a successful party should be entitle to cost and in appropriate instance indemnity cost. In this case the council tax has not been paid from 1979 and the summary judgment was entered on the summons filed by the Plaintiff on 7th December, 2010 and a cost was ordered by the High Court Judge and in that application for summary judgment the present application for interest would have been obtained. So it was due to Plaintiff's own act or omission that the present application was made necessary to recover the interest component. Considering this fact I will not venture to award cost of this application
    

4. CONCLUSION
   

17. For the reasons given above the Plaintiff is entitled to recover the sum of $543,557.67 from the Defendant. The amount currently held in Judicial Trust in respect of this matter is sufficient to settle the said amount, hence should be paid from that account.
    
18. The remaining money should be released to the Defendant.
    

Dated at Suva this 7th day of June,2011

.............................................
Mr Deepthi Amaratunga
Acting Master of the High Court
Suva