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Tupua v Fiji Development Bank [2012] FJHC 917; HBC103.2011L (8 March 2012)

IN THE HIGH COURT OF FIJI
AT LAUTOKA
CIVIL JURISDICTION

Civil Action No: HBC 103 of 2011L

BETWEEN:

VILISI RANADI TUPUA
Plaintiff

AND:

FIJI DEVELOPMENT BANK
Defendant

INTERLOCUTORY JUDGMENT

Judgment of: Inoke J.

Counsel Appearing: Ms B Narayan (Plaintiff)
Mr V Kapadia (Defendant)

Solicitors: Lateef & Lateef (Plaintiff)
Sherani & Co (Defendant)

Dates of Hearing: 6 March 2012

Date of Judgment: 8 March 2012

INTRODUCTION

[1] The plaintiff applies to restrain the defendant bank from effectively proceeding with mortgagee sale of the mortgaged property. The plaintiff alleges that the bank was fraudulent in having its mortgage executed.

THE BACKGROUND FACTS

[2] The plaintiff and her husband were registered as proprietors of the property in question, Housing Authority Lease No 2121981, as tenants in common in equal shares in 2004. They have separated and live apart, the plaintiff in Australia and the husband in Fiji. On 27 November 2007, the husband and a woman, passing herself off as the plaintiff, executed a mortgage of the property in favour of the bank. The mortgage was subsequently registered in 2008. It is a second mortgage, the property had already been mortgaged to the Colonial National Bank as first mortgagee, to secure advances to the husband for him to develop a poultry farm.

[3] It is common ground that the woman that executed the mortgage with the husband was not the plaintiff and a fraud had been committed by the husband and the imposter. The mortgage was witnessed by a justice of the peace who was not connected with the bank. It is common ground also that a justice of the peace is a person qualified[1] to witness the mortgage.

THE STATEMENT OF CLAIM

[4] The plaintiff seeks: (a) an injunction restraining the bank from disposing of the property, entering into any contract to sell and executing the demand notice, (b) a declaration that the mortgage is void ab initio, (c) general damages, and (d) costs. The claim rests on allegations of fraud and negligence. Paragraph 15 of the Amended Statement of Claim provides the following particulars of fraud and negligence:

• (a) There was no due diligence carried out by the defendant to confirm if the plaintiff had in fact permitted the purported second mortgage to be taken of the said property and had signed the same together with the alleged purported loan agreement.
  
• (b) The mortgage document alleged to be signed by the plaintiff does not contain a full signing page where all parties sign off together in front of a commissioner for oaths.
  
• (c) The mortgage document was not witnessed by a commissioner for oaths as legally required but rather a justice of the peace purportedly witnessed the signatures without asking for proper photo identification nor being in a position to provide any proper legal advice on the effect of the mortgage security.
  

THE APPLICATION FOR INTERIM INJUNCTION

[5] The plaintiff's motion sought essentially the same injunctive relief as in her amended statement of claim pursuant to O 29 of the High Court Rules 1988.

[6] The law is well settled: Natural Waters of Viti Ltd v Crystal Clear Mineral Water (Fiji) Ltd [2004] FJCA 59; ABU0011.2004S & ABU0011A.2004S (26 November 2004). The plaintiff must show:

• (a) That there is a serious issue to be tried;
  
• (b) That damages are not an adequate remedy; and
  
• (c) If damages are not, the balance of convenience lies in her favour.
  

CONSIDERATION OF THE APPLICATION

[7] Is there a serious issue to be tried? The plaintiff's claim rests on its allegations of fraud and negligence by the bank. The facts in this case are not dissimilar to those in Frazer v Walker (1967) 1 All E R 649. The law, since it was pronounced authoritatively by the Privy Council in that case, has been that fraud sufficient to displace the indefeasibility provisions of the Land Transfer Act must be "actual fraud by the registered proprietor or his agent" (p 652). That is to say, in the present case, the bank or its agent must have committed a fraud in having its mortgage executed.

[8] Does the claim as pleaded sufficiently show fraud by the bank or its agent? The plaintiff attempts to impute fraud to the bank by the actions of the witnessing justice of the peace and by the bank's alleged failure to do "due diligence".

[9] The justice of the peace in this case is not an agent of the bank. She is authorised by law to witness the mortgage. I do not think the bank should be required by law to verify that the witness was in fact a justice of the peace. Nor do I think that the bank should be required to ensure that the justice of the peace satisfied herself that the signatories had properly identified themselves before executing the mortgage. That is a matter entirely for the witnessing justice of the peace, and even if she failed to do so, I do not accept that the failure should be sheeted home to the bank on the facts of this case. In any event, the witnessing justice of the peace swore an affidavit to the effect that she had seen the plaintiff's husband and this woman together on morning walks on many occasions, she knew that the couple lived together and the couple produced a marriage certificate at the time they executed the mortgage. There was nothing to suggest to the witnessing justice that a fraud was being perpetrated. Further, even if the witnessing justice was negligent or the bank was negligent, it seems to me to lack the element of knowledge, dishonesty or recklessness that would turn such negligence into fraud.

[10] I am of the view that these facts and the particulars as pleaded fall far short of showing fraud by the bank sufficient to displace the indefeasibility provisions of the Act. I am not satisfied that there are serious issues to be tried as between the bank and the plaintiff in this case. The plaintiff's application fails accordingly.

[11] Counsel for the defendant cited several cases and both counsels made submissions on other issues and I acknowledge their industry but I think I need not say any more in that regard.

COSTS

[12] The bank is entitled to its costs which I summarily assess as $1,500.

ORDERS

[13] The orders are as follows:

• (a) The plaintiff's motion for interim injunctions against the defendant filed on 6 July 2011 is dismissed.
  
• (b) The plaintiff shall pay the defendant's costs of $1,500 within 21 days.
  
• (c) The matter is to take its normal course.
  

Sosefo Inoke
Judge

^[1] Reg 18 Land Transfer Regulations and Second Schedule.