|
|
Home
| Databases
| WorldLII
| Search
| Feedback
High Court of Fiji |
IN THE HIGH COURT OF FIJI
CIVIL JURIDICTION
WESTERN DIVISION AT LAUTOKA
HBC 109 OF 2011
BETWEEN:
BLAIR TARRANT JACKSON, JEANETTE ROSEMARIE JACKSON&JOHN GRAEME COX.
PLAINTIFFS
AND:
MID WEST HOLDINGS LIMITED
DEFENDANT
Appearances: Mr. Lowing for the Plaintiffs
Ms. Tabuakuro for the Defendant
RULING
INTRODUCTION
[1]. As trustees of the Jackson Pacific Trust, the plaintiffs were the registered proprietors of Crown Lease No. 13500, Lot 5 Wailoaloa Beach on NS003957 ("Lot 5"). In 2008, the plaintiffs and Mid West Holdings Limited ("Mid West") entered into an agreement for the sale and purchase of Lot 5 ("Agreement") at the agreed price of $200,000-00 (two hundred thousand dollars).
[2]. Clause 4(a) of the Agreement stipulated that Mid West was to pay the deposit sum of $20,000 upon execution. Mid West duly complied with this stipulation and paid the said deposit sum when it executed the Agreement. The balance of the purchase price (i.e. the sum of $180,000-00 - one hundred and eighty thousand dollars) was to be paid at settlement[1]. This is stipulated in Clause 4(b) of the Agreement.
[3]. In early September 2009, the plaintiffs handed over to Mid West a transfer in registrable form indorsed with the Director of Lands' consent together with the duplicate title to Lot 5. Upon receiving these, Mid West immediately set about to get the transfer registered. By end of September 2009, Lot 5 was formally registered in Mid West's name.
[4]. However, Mid West did not pay to the plaintiffs the balance of the purchase price on the date of "settlement". And that sum remains unpaid to this day. Mid West does not deny that it owes the plaintiffs the sum of $180,000 being the balance of the purchase price. However, it argues that the debt is not payable now and it has filed the affidavit of Shiu Ram sworn on 19 September 2011 to that effect.
[5]. Ram is a director and shareholder of Mid West. His affidavit exhibits an Amendment Agreement dated 21 August 2008 (hereinafter the "addendum") which purportedly records the plaintiffs' agreement with Mid West to defer the time for settlement of the purchase price from settlement[2] to completion of the building of an apartment block on the land[3] (see below).
The Vendor and the Purchaser have entered into a Sale and Purchase Agreement for a property known as Crown Lease No. 13500 being Lot 5 on SO 3957 known as Wailoaloa Beach (Pt of) (LD Ref: 4/10/2892) having an area of 1040sqm.
The Purchaser has paid and the Vendor has received the sum of $20,000.00 (Twenty Thousand Dollars).
The Purchaser has agreed, and prepared a design, to erect a block of apartments on the said property. It is further agreed that the mode of payment and settlement of the original Sales & purchase (sic) Agreement shall be modified as follows:
[6]. I observe that Ram's affidavit says absolutely nothing about whether or not Mid West has actually begun construction of the apartment block – let alone, whether it has sought the necessary pre-construction regulatory consents. Nor does it say anything about whether Mid West is contemplating commencing construction work and if so – whether that is to be carried out on any specific timeline.
PLAINTIFFS' REACTION TO THE ADDENDUM
[7]. The addendum bears some signatures - purportedly of the plaintiffs. It also has affixed to it the common seal of Mid West. The plaintiffs all refute any knowledge of the addendum.
[8]. John Graeme Cox, a solicitor by profession, by his affidavit sworn on 18 November 2011 denies that he ever signed the addendum. He exhibits to his affidavit a letter dated 29 October 2008 which he sent to Patel & Sharma. The said letter suggests that Cox understood that the payment of the balance of the purchase price was being deferred:
We understand that settlement is to be deferred until the improvements to the property have been completed.
[9]. In paragraphs 6 and 7 of his affidavit, Cox deposes as follows:
6. I can say unequivocally that the Amendment Agreement is in such terms that I would not execute same. The Amendment Agreement effectively provides that the purchaser would not have to settle the purchase until it had completed the erection of a house on the land. There is no time limit expressed in the Amendment Agreement and further the terms are ambiguous and badly drafted and against the interests of the plaintiff.
7. I note the purported signatures of the vendors of the Amendment Agreement are witnessed by Fergus M Power. Power worked for my firm some time ago. He has left the firm Rennie Cox and is living in Thailand. I am informed Power does not have any memory of the Amendment Agreement. I have searched my file in respect to this matter and note that Power witnessed a Land Sales Act declaration sometime in 2008.
[10]. Blair Tarrant Jackson deposes inter alia as follows in his affidavit:
4. I would never have signed the Amendment Agreement as the terms are such that the purchaser could never settle and or sell the property should a house not be built on the land.
[11]. Jeanette Rosemarie Jackson also denies any knowledge of the addendum[4]. The plaintiffs have also filed an affidavit of Vikash Rao, a Legal Clerk employed at the Department of Lands in Lautoka. Rao sets out in his affidavit the history of dealings on the land from the time of the plaintiffs' predecessors in title. Rao deposes that Shiu Ram only presented the addendum to the Director of Lands for consent on 05 July 2011 and the consent was granted on the same day[5].
ORDER 86
[12]. What is now before me is the plaintiffs application filed on 18 July 2011 pursuant to Order 86[6] of the High Court Rules 1988 in which they seek the following summary orders:
- (a) that specific performance be entered against Mid West.
- (b) that Mid West forthwith settles the balance of the purchase price of $180,000 to the plaintiffs.
- (c) that interest calculated from 09 November 2008 to date be added to the sum pursuant to section 3 of the Law Reform (Miscellaneous Provisions) (Death & Interest) Act.
[13]. Essentially, the plaintiffs seek that the above order be made pursuant to the original sale and purchase Agreement.
SUBMISSIONS
[14]. To succeed in obtaining a summary judgement under Order 86 Rule 1, the plaintiffs must be able to show that Mid West has no defence to the action. Mid West however may yet avoid a summary judgement if it is able to convince the court that there is an issue to be tried or that there ought for some other reason, be a trial of the action[7].
[15]. Mr. Lowing is adamant that the signatures on the addendum are forged. But while he concedes that fraud and forgery are triable issues the burden of proving which falls upon his clients[8] - he is adamant that Mid West cannot raise a sustainable defence on the addendum anyhow even if the court is to ignore the allegations of forgery for the time being.
[16]. In making that argument, Mr. Lowing highlights that the Director of Lands' consent to the addendum was only sought and obtained on 05 July 2011 (see paragraph [9] above). The addendum however was dated 21 August 2008. He submits that the Director's consent was intended to have retrospective effect and in that regard violates the regulatory protective scheme of section 13 of the State Lands Act[9] which mandates that consent must be first had and obtained before any agreement can validly be entered into. The addendum therefore is null and void for lack of compliance with section 13[10]. Accordingly, argues Mr. Lowing, Mid West cannot validly plead the addendum in defence to avoid a summary judgement pursuant to the original sale and purchase agreement.
[17]. Ms. Tabuakuro insists that the Court should decline summary judgement because the very allegations of fraud/forgery that the plaintiffs raise ought to be tried to determine the validity of the addendum.
[18]. Let me just record here my observation that both counsel are in agreement that without the Director of Lands' consent, the addendum would be null and void. Their point of difference however lies in whether or not the consent which was granted three years after the date of the addendum[11] is good in law.
[19]. If I am to ignore the allegations of forgery and proceed to assess the application on other grounds as Mr. Lowing urges me to do – then I must begin on the footing that the parties did sign the addendum and freely agreed to be bound by it[12].
[20]. The plaintiffs therefore cannot just say willy nilly that they are not bound by the addendum. To succeed in their summary judgement application, they must convince me of some ground to void the document.
AN ILLUSORY CONSIDERATION
[21]. In my view, the addendum can be voided on the ground that it contains - but an illusory consideration.
[22]. Clearly, the document is only concerned about extending the time for Mid West to fulfil its promise (and obligation) to pay the balance of the purchase price.
[23]. That promise is in fact Mid West's consideration for the transfer to it of the title to Lot 5. Clause 4(b) of the original Agreement was clear about when performance of that obligation was to be completed[13]. The addendum however made that obligation contingent upon the completion of the construction of an apartment block. As to when completion of construction will happen is anyone's guess. In fact, as to when construction will even begin is also anyone's guess.
[24]. I get the impression from the affidavits filed that Mid West has not even begun construction – let alone apply for the pre-requisite regulatory consent of the Director of Lands (which is required separately over and above the earlier consents on the transfer and the addendum). Nor has it sought (let alone obtained) the planning and the engineering approvals of the Nadi Rural Local Authority.
[25]. It is for that very reason that the plaintiffs all say (see paragraphs 7 to 11 above) that they could not have agreed to the addendum because of its open-endedness.
LAW
[26]. The law books are abound with case law that resonate the common law position that a promise cannot constitute consideration if it is too uncertain to be enforced or if the promisor has reserved an absolute discretion on whether or not to perform that promise (see for example Dunton v Dunton [1892] VicLawRp 41; (1892) 18 VLR 114 (Supreme Court of Victoria, Full Court; Biotechnology Australia Pty Ltd v Pace(1988) 15 NSWLR 130[14]; Wellington City Council v Bodporat02 (We2 (Wellingtoington) [2002] NZCA 191; [2002] 3 NZLR 486; (2002) 7 NZBLC 103,777 (7 August 2002); Placer Development Ltd v The Commonwealth [1969] HCA 29; (1969) 121 CLR 353 (High Court of Australia).
[27]. In Placer Development Ltd (supra), Kitto J said as follows:
[T[he general principle is established which Vaughan Williams LJ in Loftus v Roberts (1902) 18 TLR 532 at 534, expressed in words that were subsequently adopted by Lord Wrenbury, as Buckley J, in Broome v Speak [1904] UKLawRpAC 30; [1903] 1 Ch 586 at 599. It is that wherever words which by themselves constitute a promise are accompanied by words showing that the promisor is to have a discretion or option as to whether he will carry out that which purports to be the promise, the result is that there is no contract on which an action can be brought at all. The succinct statement of the principle in Leake on contracts, 3rd ed, p. 3: "Promissory expressions reserving an option as to the performance do not create a contract" was approved by the Lord Justice, as it was later by Lord Wright in Hillas & Co Ltd v Arcos Ltd [1932] UKHL 2; (1932) 147 LT 503 at 517.
[28]. Applying the above, the wording of the addendum purportedly signed by the parties leaves it entirely to the discretion[15] of Mid West as to when it will pay the balance of the purchase price – because it leaves it entirely to the discretion of Mid West whether or not it will begin construction of the apartments and, if it does, whether it will carry out the construction to completion, and if so, on its own time line.
CONCLUSION
[29]. Four years has passed since the plaintiffs transferred the title to Lot 5 to Mid West. They have performed their part of the bargain. They are still waiting for the balance of the purchase price.
[30]. Mid West cannot hide behind the addendum to resist paying the balance of the purchase price indefinitely. If Mid West is to be allowed that concession now, then what is there to stop it from resisting payment on the same ground in another two or even twenty years' time?
[31]. The addendum is rather open ended. All it contains is an illusory promise which leaves performance entirely at the whims of Mid West.
[32]. This is not sufficient consideration. Any contract with such a promise is unenforceable at law and cannot give rise to any cause of action. The addendum must therefore fail for lack of adequate consideration.
[33]. Clause 4(b) of the original Agreement must therefore remain binding on the parties on how settlement should proceed.
[34]. Since the plaintiffs have fulfilled their part of the bargain, they are entitled to an order for specific performance under Order 86. In addition to the ground raised by Mr. Lowing regrading the nullity of the addendum by virtue of its non-compliance with section 13 of the State Lands Act, I conclude that Mid West has no defence to the action based on my finding that the addendum fails for lack of consideration.
ORDERS
[i]. I grant summary judgement for specific performance in favour of the plaintiffs. Mid West is to forthwith settle the balance of the purchase price in the sum of $180,000 - 00 (one hundred and eighty thousand dollars) to the plaintiffs within 30 days of the date of this Ruling.
[ii]. I also award post judgement interest at 6% from 09 November 2008 to the date of this Ruling.
[iii]. Costs in favour of the plaintiffs to be taxed on a standard basis if not agreed.
[iv]. Mid West is to make payments to the Trust Account of Messrs Lowing Nandan & Associates.
...................................
Anare Tuilevuka
Master
At Lautoka
27 March 2012.
[1] (i.e. upon Mid West receiving from the plaintiffs/vendor a transfer in registrable form which has been duly consented to by the Director of Lands)
[2]as stipulated under clause 4(b) of the original Sale and Purchase Agreement.
[3]see addendum in paragraph [6] above.
[4]her affidavit sworn on 24 November 2011 at Kerikeri in New Zealand.
[5] the addendum is dated August 2008.
[6]Order 86 Rule 1 of the High Court Rules 1988 states as follows:
1.-(1) In any action begun by writ indorsed with a claim –
(a) for specific performance of an agreement (whether in writing or not) for the sale, purchase, exchange, mortgage or charge of any property, or for the grant or assignment of a lease of any property, with or without an alternative claim for damages, or
(b) for rescission of such an agreement, or
(c) for the forfeiture or return of any deposit made under such an agreement,
the plaintiff may, on the ground that the defendant has no defence to the action, apply to the Court for judgment.
[7]Order 86 Rule 3 states as follows:
3. - Unless on the hearing of an application under rule 1 either the Court dismisses the application or the defendant satisfies the Court that there is an issue or question in dispute which ought to be tried or that there ought for some other reason to be a trial of the action, the Court may give judgment for the plaintiff in the action.
[8]the presumption of omnia praesumuntur rite esse ata will generally throw the burden of proving fraud upon the party asserting it – see Lee v Johnstone (1869) L.R. 1c. & Div. 426 (H.L.)
[9]formerly the Crown Lands Act.
[10] Mr. Lowing cites the Fiji Supreme Court case of Gonzalez v Akhtar [2004] FJSC 2.
[11] i.e. of August 2008.
[12] At least one of the parties understood that there was such an arrangement (see paragraph 9 above) which – after all –
seems to explain the parties’ departure from normal conveyancing practice in not having the balance of the purchase price
exchanged with the duly completed transfer document and the duplicate title (see paragraph 3 above).
[13] (see paragraph [2] and footnote 1 above).
[14]In that case, the defendant entered into an employment contract with the plaintiff which provided that the defendant would have ‘the
option to participate in the company's senior staff equity sharing scheme.’ There was no such scheme in existence at the time
of contract or at any time during the defendant’s employment. He sued for breach of contract. Kirby P discussed the differentween illusory terms and uncertain terms and cited the foll following passage of another case he had referred
to:
“... a promise to pay an unspecified amount of money is not enforceable where it expressly appears that the amount to be paid is to rest in the discretion of the promisor and the deficiency is not remedied by a subsequent provision that the promisor will, in this discretion, fix the amount of the payment. Promises of tharacter are are treated ... not as vague and uncertain promises - for their meaning is only too clear - but as illusory promises ....”
[1> The document is diss discretionary because it records an obligation on the part of Mid West “to pay up when I complete the building” or a promise "to pay but I am not obliged to complete the building on any particular time frame" or "I promise to pay up but you cannot have any remedy if I do not or delay in starting or in completing the building".
PacLII:
Copyright Policy
|
Disclaimers
|
Privacy Policy
|
Feedback
URL: http://www.paclii.org/fj/cases/FJHC/2012/989.html