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Ali's Civil Engineering Ltd v Habib Bank Ltd [2013] FJHC 108; HBC94.2006 (11 March 2013)

IN THE HIGH COURT OF FIJI
AT SUVA
CIVIL JURISDICTION


Civil Action No. HBC 94 of 2006


BETWEEN:


ALI'S CIVIL ENGINEERING LIMITED
a limited liability company having its registered office at Labasa and carrying on business in Suva and elsewhere.
FIRST PLAINTIFF


AND:


VITIANA TIMBERS (FIJI) LIMITED
a limited liability company having its registered office at Labasa and carrying on business in Suva and elsewhere.
SECOND PLAINTIFF


AND:


HABIB BANK LIMITED
a banking body duly incorporated under the laws of the Companies Act 1913 having its registered office at Habib Bank Plaza 1.1 Chandigar Road Karachi and carrying on the business of banking in Fiji and elsewhere.
FIRST DEFENDANT


AND:


CHALLENGE ENGINEERING LIMITED
a limited liability company having its registered office at Suva.
SECOND DEFENDANT


AND:


NATIONAL BANK OF FIJI trading as COLONIAL NATIONAL BANK having its registered office in Suva.
THIRD DEFENDANT


AND:


DIRECTOR OF LANDS AND SURVEYOR GENERAL
FOURTH DEFENDANT


AND:


REGISTRAR OF TITLES
FIFTH DEFENDANT


AND:


ATTORNEY GENERAL OF FIJI
SIXTH DEFENDANT


BEFORE : Justice Deepthi Amaratunga


COUNSEL : Mr. V. Prasad for the Plaintiffs
Ms. B. G. Narayan for the 1st Defendant
Mr. P. Sharma for the 2nd & 3rd Defendant
Mr. Pratap for the 4th, 5th & 6th Defendant


Date of Hearing : 27th & 28th February, 2013
Date of Judgment: 11th March, 2013


JUDGMENT ON ADMISSION


  1. INTRODUCTION
  1. The Plaintiff filed the summons for judgment on admission 26th September, 2012. The Plaintiff's action is for nullification of a purported mortgage No 8465 registered with the Registrar of Deeds in 2004, between the Plaintiff and 1st Defendant. The 1st Defendant admittedly 'varied' the earlier Mortgage No 6993 unilaterally, and state that it was a 'variation' of an earlier Mortgage No 6993, between the same parties, for a smaller part of a land, and this was altered to depict the larger land, since the Plaintiff made representation to the 1st Defendant regarding a larger land in order to obtain an enhancement of financial facility granted to a third party, that was duly granted by the 1st Defendant. The Plaintiff is seeking nullification of the said mortgage No 8465 and the mortgagee sale which resulted the 3rd Defendant's offer being accepted by the 1st Defendant with the concurrence of the Plaintiff. The 1st Defendant states, though the Plaintiff did not sign the said deed of mortgage No 8465, he had made representation of the larger land of 2.2938 hectares to the 1st Defendant in order to obtain an enhancement of loan, and also consented to mortgagee sale to the 2nd Defendant, hence the 1st Defendant is authorized to vary the earlier mortgage to change the description of the land to include the larger land unilaterally. The Plaintiff seeks to enter judgment on admission seeking nullification of the said mortgage admittedly 'varied' by the 1st Defendant and also registered it using an earlier executed document which was unilaterally altered to depict the larger land. Irrespective of any representation made by the Plaintiff in order to obtain a consideration, the said changes effected to an earlier mortgage contract between the same parties cannot be considered as 'variation' since the most vital component in mortgage contract is the subject matter which is land mortgaged in this case. The purported variation from an area of 3,500 square meters (0.35 hectares) to 2.938 hectares which is not only significant considering the varied extent of the of the area, but also considering the execution date as per said mortgage of the mortgage No 8465, was 3rd August, 1999. The approval notice to lease for a land comprising 2.938 hectares was only granted from 1st December, 1999. The Plaintiff neither had obtained consent form the Director of Lands nor had made application for such an extent for a mortgage of 2.938 hectares. Admittedly, the Plaintiff did not signed any mortgage contract for said extent. So, (Mortgage No 8465), the parties could not have entered in to a mortgage on 3rd August, 1999 since the validity of the approval notice for larger land is effective only from 1st December,1999 and prior to the execution of the mortgage no consent for land comprising 2.938 hectares was obtained. In any event the mortgage no 6993, which Plaintiff and 1st Defendant executed is also illegal and void ab initio since at the time of execution there was no interest to be mortgaged by 1st Plaintiff, since the approval notice of lease for 3,500 square meters had expired by 3rd August, 1999, the date of execution of the mortgage 6993 hence the consent of the director of land which was contingent on the right had also expired, making the mortgage 6993 an illegal and void ab initio in terms of the Section 13 of the Crown Lands Act: No variation is possible to such illegal document. There was no authority for the 1st Defendant to vary the subject matter unilaterally in terms of clause 16 and or 20(g) as contended. The purported mortgage No 8465 for 2.938 hectares, is illegal in more than one manner and no right should derive from that. This action is filed by the Plaintiff (mortgagor) seeking nullification of the said unilaterally 'varied' instrument mortgage No 8465 and the mortgagee (1st Defendant) only sought dismissal of this action and the 2nd and 3rd Defendants are seeking possession and eviction of the Plaintiff.
  1. FACTS
  1. The Plaintiff filed the writ of summons against the Defendants seeking nullification of a purported mortgage bond No 8465 Registered on 8th June, 2004, in accordance with the Land Transfer Act (as stated in the said mortgage heading), lodged by Tamara & Associates (as stated in the first page of the said mortgage).
  2. On 1st April, 2009 the Plaintiff filed the second amended statement of claim and for that the 1st Defendant filed statement of defence 3rd August, 2012 admitting certain facts in the statement of claim regarding the execution of the Mortgage No 8465 which admittedly executed utilising an earlier signed document between the parties depicting a smaller land namely the copies of the mortgage executed on 3rd August, 1999 and varied it to include a larger land, without the knowledge of the Plaintiff. The following admissions were made by the 1st Defendant.
  3. In Paragraph 14 of 2nd Amended Statement of Claim states:

'After execution of the Said Original Mortgage the same was in the custody of the First Defendant and/ or its Solicitors.'


Paragraph 14 of First Defendant's Statement of Defence to the 2nd Amended Statement of Claim reads:


'The 1st Defendant admits paragraph 14 of the Amended Claim to the extent that the Mortgage was in the custody of the 1st Defendant and the Registrar of Deeds.'


  1. Paragraph 28 of 2nd Amended Statement of Claim reads:

'At all material time when the Original Mortgage was registered vide dealing No 6933, Messrs. Tamara and Associates acted for the First Defendants and on or about year 2001, Messrs. Tamara and Associates seized to operate as a Barristers and Solicitor in Fiji.'


Paragraph 28 of First Defendant's Statement of Defence to the 2nd Amended Statement of Claim reads:


'As to paragraph 28 of the Amended Claim the 1st Defendant admits same only to the extent that the Mortgage No. 6933 was lodged with the Registrar of Deeds by Messrs Tamara & Associates who were acting for the 1st Defendant at that time. The 1st Defendant however has no knowledge and therefore is not in a position to admit or deny as to when Tamara & Associates ceased to operate as a law firm.'


  1. Paragraph 29 of 2nd Amended Statement of Claim reads:

'That in or about 8th June 2004 the First Defendant and or by its servants or agents or its Solicitors fraudulently and without any authority of the Plaintiffs varied the said Original Mortgage by inserting thereon by different typing the following "now known as Lot1 S0 4379 State Foreshore" under the margin "Description" and adding further "now 2.2938 ha (estimated area) "under the margin "Area" (which additions are hereinafter referred to as "The Said Variations".)


Particulars of Fraud


  1. That the Original Mortgage stated L.D 60/511 of Lot 2 on Plan DSS1116 Laucala Beach Estate in the province of Naitasiri consisting of an area of 3500 square meters and not what had been added by the 1st Defendant or its agents.
  2. That the First Defendant through its Servants or Agents or Solicitors added with different typing and well after the execution by the Plaintiffs agents or servants as "now known as Lot1 S04379 State Fore Show.
  1. That the First Defendant through its Servants or Agents or Solicitors added Lot 1 SO 4379 being 2.2938 ha when it was not subject to the said Mortgage.'

Paragraph 29 of First Defendant's Statement of Defence to the 2nd Amended Statement of Claim reads:


'The 1st Defendant denies the whole of the allegations of fraud against it or its servants or agents or Solicitors in paragraphs 29 (a) to (c) of the Amended Claim and puts the 1st Plaintiff to strict proof of its allegations. As further defence the 1st Defendant states as follows:


  1. The 1st Plaintiff defaulted in its payment under its Mortgage to the 1st Defendant.
  2. ..............
  1. ..............
  1. ..............
  2. ..............
  3. ..............
  4. ..............
  5. The 1st Defendant admits that the addition on the Mortgage was as to the Description of the land to read as "now known as Lot 1 SO 4379 State Foreshow and the Area to read as "now 2.2938 hectares (estimated area)".
  6. ...............
  7. ...............'
  1. Paragraph 30 of 2nd Amended Statement of Claim reads:

'That the fraud was committed by the Defendant and or its Solicitors as follows:


  1. By making photocopy of the Said Original Mortgage.
  2. The having the Original registration Number as registered with the Registrar of Deeds and the signature of the registrar of Deeds erased.
  3. Then unlawfully making the Said Variations on the photocopy of the said Original Mortgage.
  4. Then after carrying out the Said Variations as aforesaid had the unlawfully varied Said Original Mortgage certified true copy by the First Defendants Solicitor.
  5. Then had the same again registered with the Registrar of Deeds in the 8th day of June, 2004 as Original Documents (and which unlawfully varied Said Original Mortgage and as unlawfully registered is hereinafter referred to as ("The Varied Mortgage").
  6. To avoid detection the 1st Defendant and/ or its Solicitors lodged the varied Mortgage for registration with the Registrar of Deeds in the name of Tamara and Associates, Barristers and Solicitors.
  7. That the 1st Defendant and or Solicitors are now not disclosing the alleged Original Mortgage registered on 8th June 2004 to avoid being detected for the Fraud.'

Paragraph 30 of First Defendant's Statement of Defence to the 2nd Amended Statement of Claim reads:


The 1st Defendant denies the whole of the allegations of fraud in paragraphs 30 (i) to (vii) of the Amended Claim and puts the 1st Plaintiff to strict proof. As further defence the 1st Defendant states as follows:


  1. The 1st Defendant denies that it or its solicitors made photocopy of the Original Mortgage or that anything was erased on the Original Mortgage.
  2. Nothing whatsoever was erased on the Mortgage No. 6933 registered at the Registrar of Deeds on 11 November 1999. The variation was only to the clear copies held with the 1st Defendant (as is normal procedure) as the Mortgage was not registered yet in terms of the Land Transfer Act. The varied Mortgage showing the correct description of land was registered on 8th June 2004 and given a new registration No.8465.
  1. The original Mortgage registered on 8th June 2004 was lodged with the Registrar of Titles together with the Transfer document when the property was sold to the 2nd Defendant.
  1. Paragraph 31 of 2nd Amended Statement of Claim reads:

The variations and registration of the Varied Mortgage on 8th day of June, 2004 was an absolute forgery as the First Plaintiff nor its agents or servants ever authorised the insertion of the variation and or allowed the Mortgage over the Property known as Lot 1 Plan SO 4379 consisting 2.229 ha that was approved on 18th July 2002.


Paragraph 31 of First Defendant's Statement of Defence to the 2nd Amended Statement of Claim reads:


The 1st Defendant denies paragraph 31 of the Amended Claim and as its defence repeats paragraphs 29 (a) to (j) hereinabove and further states that it had to take the said necessary measures to protect its mortgage security as the 1st Plaintiff was not only avoiding payment of the debt which was in excess of a million dollars and which was outstanding since the year 2002 but also tried to restrain the 1st Defendant from proceeding with the mortgagee sale and further wrongfully tried to alter the position regarding the mortgage security by applying to the Director of Lands to separate the amalgamated land. It was far from expecting such mortgagor/debtor to consent to any variation of the mortgage. It if the 1st Plaintiffs conduct which in fact tantamount to attempting to defraud the 1st Defendant by on the hand making on genuine effort to pay its debt and on the other hand trying to alter the position of the security given for the debt.


  1. LAW AND ANALYSIS
  1. White Book 1988 at p 463 under Order 27 states 27/3/1

'Admission of fact- Such admission may be express or implied but they must be clear (Ellis v Allen [1913] UKLawRpCh 144; [1914] 1 Ch 904, p 909; Ash v Hutchinson & co (publisher) [1936] Ch489, 503; Technistudy v Kelland [1976] 1 W.L.R 1042; [1976] 3 All E.R. 632 C.A.). .......


Where the defendant admits a document but does not admit that its terms are fully or correctly pleaded, the plaintiff may obtain judgment if the document, on production, clearly establishes his claim (Barnard v Wieland (1882) 30 W.R. 947: ....
27/3/2


'Either by his pleadings or otherwise- Such admissions may be made expressly in a defence or in a defence to a counterclaim, or they may be admission by virtue of the rules, as where a defendant fails to traverse an allegation of fact in a statement of claim (see O18, r 13) or there is a default of adefence or a defence is stuck out and accordingly the allegation of fact in the statement of claim are deemed to be admitted (Caroli v Hirst (1883)31 W.R 839; Mackellar v Hornsey (1901) 49 W.R. 301; Gillot v Ker (1876) 24 W.R. 428) An admission may be made in a letter before or since action brought .... Or even orally if the admissions be proved (Re Beeny [1894] UKLawRpCh 18; [1894] 1 Ch. 499); but oral evidence in other proceedings, alleging certain matter, may not be an admission of such matter (see British Thomson – Houston Co v British Insulated & Helsby Cable [1924] 2 C.h. 160)' (emphasis added)


  1. The 1st Defendant had admitted unilateral alteration of the mortgage 6993 and also admitted facts/ documents and circumstances contained in their affidavit in opposition of 1st Defendant in order to justify the said alteration. In the pleadings the 1st Defendant stated that they had to alter the copies of the mortgage signed on 3rd August, 1999 in order to protect the 'mortgaged' property. Apart from these admitted facts the 1st Defendant also relies on clauses 16 and 20 (g) of the mortgage No 6993 and state that it warranted the 1st Defendant to effect the unilateral alteration, which it asserts as 'variations' and further states since the 1st Defendant is an attorney of the mortgagor they can do so. I have dealt the issue of alleged authority contained in clauses 16 & 20 (g) of the mortgage contract later in this judgment.
  2. The 2nd amended statement of claim seek declarations and orders from the court in the following manner

' (i). That the said Varied Relevant Mortgage registered as Number 8465 with the Registrar of Deeds is fraudulent, null and void.


(ii). That the First Defendant had no rights estates or interests as a Mortgagee in respect of the land comprised in Lot 1 SO 4379 state Foreshore containing 2.2938 hectares more or less or any part therefore and being LD Ref Number 60/511 situate in the District of Natasiri in the province of Naitasiri;


(iii) For an order restraining the Fist, Second and Third Defendant and /or the Solicitors, servants or agents from in any way proceeding and /or completing the Purported Mortgage sale under Mortgage Number 8465 registered on 8th day of June 2004.


(iv). For the declaration that the Purported Mortgage Sale under Mortgage No 8465 on 8th June 2004 is void.


(v). For an order that the Fifth Defendant remove or cancel the Registration done through the Mortgage Sale void Mortgage No 8465.


(vi). For a declaration that the Sale Purported Varied Mortgage was registered in the Registrar of Deeds by the Fifty Defendant and negligently and /or in breach or Registration Act.


(vii) General Damages in the sum of $12 million dollars.


(ix) Exemplary and Punative Damages in the sum of $12 million dollars.


(x) Such further.....'


  1. In the summons filed on 26th September, 2012 seeking judgment on admission request following orders

'(i) A declaration that the varied relevant Mortgage registered as Number 8465 with the Registrar of Deeds is fraudulent, null and void.


(ii) A declaration that the First Defendant has no rights, estates or interest as a Mortgagee in respect of the land comprised in Lot 1 SO 4379 State Foreshore containing 2.2938 hectares more or less or any part thereof and being LD Ref Number 60/11 situate in the District of Naitasiri in the province of Naitasiri.


(iii) A declaration that the purported Mortgagee Sale under Mortgage No 8465 registered on 8th June, 2004 is void.


(iv). An order the First Defendant pay the costs of the Plaintiff on an indemnity basis and ....'


  1. The date of execution of the purported mortgage No 8465 as per said mortgage is 3rd August, 1999 and by this time the Plaintiff did not have any interest in the land described in the said mortgage. The mortgage 8465 described the land as L.D 60/511, Lot2 on Plan Dss 116 Laucala Beach Estate, now known as Lot 1 SO 4379 state foreshore and under area it states now 2.2938 ha (estimated area).
  2. Plaintiff was the 'mortgagor' for a loan facility granted by the 1st Defendant in pursuant to registered 'mortgage' No 6993 registered (in accordance with the Land Transfer Act as per the heading of the said mortgage), on 11th November, 1999 lodged by Tamara & Associates. The extent of the said land was 3,500 square meters (subject to survey) and in the description of the mortgage land is described as Lot 2 on Plan DSS116 Laucala Beach Estate. This mortgage was for a consideration of any loans or advances made by Habib Bank Limited (1st Defendant) to or for, Valebasoga Tropik board Limited (referred to in the mortgage contract as the Customer, who is not a party to this action). The alleged mortgage was executed on 3rd August, 1999.
  3. The alleged mortgaged land was a state land and was subject to an approval notice for 10 years from 1st August, 1989. Initially, the approval notice for the said land was granted to a third party and the plaintiff with the consent of the Director of land obtained the transfer of the approval notice, signed on 3rd January, 1994 registered on 5th January, 1994. It is noteworthy that when the Plaintiff 'mortgaged' the same to the 1st Defendant, by Mortgage No 6993 on 3rd August, 1999 1st Plaintiff did not have an interest in the said land, since the approval notice had expired on 31st July, 1999. So the Plaintiffs could not have entered in to any agreement with the 1st Defendant on an expired notice of approval since at the time of execution of the mortgage both the approval notice as well as the consent of the director of lands was not valid. It is evident that consent of the Director of Lands is contingent on the interest that the Plaintiff had, namely the approval notice of lease dated 20th July, 1989 which had a validity period of 10 years from 1st August, 1989 and after the expiration of the approval notice the consent of the Director of Land had expired ipso facto.
  4. The Director of Lands had consented the said land being mortgaged to the 1st Defendant on 2nd March, 1999, before the expiry of the said time period. It may be presumed that before the execution of the mortgage the said mortgage the actual unexecuted 'mortgage' was presented to the Director of Lands for his consent and this process would have taken some time, and when the approval was granted the validity of the approval notice was not an issue, though it was about to be expired within 6 months when the consent was granted, and by the time mortgage was ultimately executed between the Plaintiff and the 1st Defendant the time period stated in the approval notice had expired and there was no valid approval notice in favour of the Plaintiff to be mortgaged to the 1st Defendant. Though consent to mortgage was obtained prior to execution it is trite law that the said consent is subject to the validity of the approval notice which expired on 31st July, 1999 and by virtue of the said expiration the consent of the Director of Land also expired. Hence the mortgage No 6993 executed on 3rd August, 1999 and registered on 11th November, 1999 violates the Section 13 of the Crown Lands Act and deemed null and void.
  5. Section 13 of the Crown Lands Act state as follows

''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."(emphasis added)


  1. The Approval Notice of Lease dated 20th July, 1989 stated inter alia

'Lease to be subject to the conditions set out in the Crown Lands (Lease and Licences) Regulations, summary which conditions are attached herewith. This is protected lease under the provisions of the Crown Lands Act.'


  1. So, the approval notice of lease which the Plaintiff obtained through a transfer, with the consent of the Director of Lands, is clearly covered under the Seciton 13(1) which states 'any lease' and further states that if such instrument contains words 'This lease is a protected lease under the provisions of the Crown Lands Act' the consent of the Director of Lands is a mandatory provision and there was no valid consent of the Director of Lands on 3rd August, 1999, the date of execution of the mortgage and it is null and void ab initio. The registration of the same would not attach any validity to it since Section 13(1) clearly state 'Any sale, transfer, sublease, assignment, mortgage or other alienation or dealing effected without such consent shall be null and void'. The said mortgage 6993 is void ab initio null and void and has no force in law, irrespective of what had been done subsequently. It cannot be revived by subsequent actions as the law makes it null and void and also illegal. So, no variation to it is possible even with the consent of the Plaintiff or any other party including the Director of Land.
  2. Mortgage Bond no 8465, admittedly a variation of mortgage no 6993 cannot attach any validity, assuming the contention of the 1st Defendant that it was a variation of the mortgage no 6993. So, the contention of the 1st Defendant holds no water as no variatioin is possible on a document which is void ab initio.
  3. A loan was obtained by the 'customer' as per the said mortgage, in pursuant to the mortgage No 6993 registered on 11th November, 1999. But at the time of execution there was no valid approval notice in favour of the Plaintiff and that was the only interest that he was purportedly mortgaged since the land in issue belongs to state and also accepted as a valid mortgage by the 1st Defendant. It is an accepted principle in law that one cannot grant more than what that person had and the Plaintiff did not have an interest that could be mortgaged at the time of the execution of the said mortgage No 6993.
  4. Even if am wrong on that, the purported mortgage No 8465 needed consent of the Director of Lands before the execution of the said mortgage. The date of execution of the mortgage is 3rd August, 1999 and by this time Plaintiff did not have any interest on the land and no valid consent was obtained for the mortgage of land comprising 2.2938 hactares before that date. This land comprising 2.2938 hectares was granted to the 1st Plaintiff, upon an Approval Notice of Lease dated 3rd April, 2000, which granted 99 year 'lease' from 1st December,1999 which is annexed to the affidavit in opposition of 1st Defendant marked as AA1. So, no right derived to the Plaintiff to mortgage a land comprising 2.2938 hectares prior to 1st December, 1999.
  5. Prior to the execution of the mortgage No 8465 the consent of the Director of Land was needed in terms of the Section 13 of the Crown Lands Act and according to the 1st Defendant's affidavit in opposition annexed AA7 the consent of the Director of Land was sought on 4th June, 2004 by a letter of 1st Defendant's solicitor, which annexed the formal application for the same. The letter dated 4th June, 2004 sought 'fresh consent' for the land described in the mortgage 8465, but seeks to obtain some retrospective effect in the second paragraph. The fresh application for the land stated in the mortgage 8465 is contained in the application for consent to a mortgage where solicitor for the 1st Defendant had signed on behalf of the 1st Plaintiff. Whether the 1st Defendant's solicitors could make an application seeking consent of the land mortgaged to the Plaintiff is an issue that is dealt later, but at this moment it is sufficient to state, that this was seemed to have done in pursuant to clause 16 of the mortgage contract.
  6. So, no consent was requested prior to 4th June, 2004 regarding a land leased under the approval lease dated 3rd April, 2000. At the date of execution of mortgage 8465, (i.e. on 3rd August, 1999) no consent for land described in mortgage no 8465 was forthcoming, hence the mortgage no 8465 is illegal in terms of Section 13 of the Crown Lands Act.
  7. The 1st defendant sought consent of the Director of the land on a document which is illegal and also the said application for the consent was also signed by the 1st Defendant's solicitor on 4th June, 2004 on a document purported to be executed between the Plaintiff and the 1st Defendant which is illegal since the Plaintiff did not have an interest on land described in the mortgage on 3rd August, 1999, and any subsequent consent by the Director of Land cannot change the void instrument.
  8. The Plaintiff obtained further enhancement of the loan facility from the 1st Defendant but no fresh mortgage was executed between the parties and only an up stamping of the Mortgage No 6993 was done in order to cover the enhanced value, which was void ab initio.
  9. The Plaintiff without obtaining an extension of the time period for the expired approval notice dated 19th July, 1989 had requested for approval notice for the 'amalgamated land' and this was issued to the Plaintiff in pursuant to an approval notice for 99 year lease from 1.12.1999 for an estimated are of 2.2938 hectares depicted as Lot 1 of SO 4379, state foreshoreland. So, the Plaintiff did not have any right, to either amalgamated land or to 3500 sqare meter of land during the period of 1st August, 1999 to 1st December, 1999. Since the mortgage 8465 is dated 3rd August, 1999 no right derived from that mortgage irrespective of the validity of the mortgage no 6993, which I have held as void earler in this judgment.
  10. Without prejudice to what I have held above I will examine the validity of the variation of the mortgage 6993. If the mortgage 6993 executed on 3rd August 1999 is valid the 1st Defendant's contention is that mortgage 8465 is only a 'variation'. This again is not tenable, the most important issue in a mortgage is the subject matter. The mortgage no 6993 is for a land comprising 3,500 square meters (subject ot survey) depicted in Plan DSS 116 Lot 2 of the Laucala Beach Estate, this land was under a 'lease' in terms of the approval of lease dated 19th July, 1989. The 'variation' was done to include the land leased in pursuant to 99 year lease, approval of lease dated 3rd April, 2000 where the extent of land is 2.2938 hectares (estimated area), State Foreshore land. This is a significant change of the extent of the land when 3,500 square meters (i.e 0.35 hectares) was 'varied' to 2.2938 hectares.
  11. The most important thing in mortgage is the thing that is mortgaged and proper identification of the same is vital to the agreement between the parties. If one party could unilaterally change the extent of the land from 0.35 hectares (= 3,500 square meters) to include 2.2938 hectares this is a significant change and even in the valuation of the Plaintiff which was submitted to the 1st Defendant and annexed as AA1 to the affidavit in opposition of the 1st Defendant the land area is depicted as 1.3833 hectares. This indicates that even for the enhancement of loan facility the valuation was obtained for only to a land area of 1.3833 hectares which according to the said valuation under 'Encumbrance' state as 'Mortgage in favour of Habib Bank'. The 1st Defendant relied heavily on this document, to indicate that 'variation' was done in pursuant to representation by the 1st Plaintiff, to obtain enhancement of loan facility, but closer look at the valuation indicate an extent stated in the valuation namely 1.3833 hectares, is smaller than the varied extent of 2.2938 by significant extent ( more than 40%) which indicate that valuation was carried out to land significantly smaller than the extent of mortgage no 8465 which the 1st Defendant allege was presented to them for mortgage for enhancement of a loan to a third party.
  12. So, the unilateral 'variation' of the mortgage executed by the 1st Defendant is a significant alteration of the mortgage 6993 which cannot be considered as a variation, because if it is a variation both parties should be certain as to the variation. The variation to the land in a mortgage is fundamental and cannot be done unilaterally and if done it should be considered as rescission of the contract rather than a variation since it changes the fundamental nature of the mortgage contract between the parties. The production of valuation for a land of 1.3833 hectares cannot be considered as consent to vary the mortgage bond unilaterally to mortgage a land of 2.2938 hectares, irrespective of the consideration being passed by enhancement of the loan. It is the duty of the 1st Defendant to ensure an execution of a valid mortgage if it desired to acquire the rights of a mortgagee under the mortgage contract and also desired to acquire the rights derived from the said contract including asserting its rights in a court of law as mortgage in terms of the said contract. If not the one party cannot unilaterally change the mortgage property as was done in this case by the 1st Defendant.
  13. The Plaintiff has obtained a valuation for the property as at on 9th September, 2001 and in the description of the 'Encumbrance' of the said valuation it is stated as 'Mortgage in favour of Habib Bank' though in actual fact there was no mortgage bond in existence between the Plaintiff and Habib Bank (1st Defendant) this refers to a land area of 1.3833 hectares. There was no actual mortgage signed between the Plaintiff and the 1st Defendant for such a land, and this valuation cannot create a right to the 1st defendant to vary the mortgage 6993 unilaterally.
  14. Before this on 9th May 2000 the 1st Defendant had made an offer to the Directors of the Valebasoga Group of Companies, seeking approval of the existing banking facilities by way of an offer which indicated under the securities inter alia as follows

'Valebaoga Tropik board Ltd

  1. First registered mortgage over property LD ref. 60/511
  2. Lien over fixed deposit for F$0.05 mln
  1. P/Guarantee of Directors.'
  1. The said offer letter was purportedly signed by the Valebasoga Group of Companies but the common seal in the said acceptance indicate it as common seal of 'Valebasoga Tropik Boards Limited' and not by the offeree namely Valebasoga Group of Companies, and the two signatories were not described either in their name or by designation and this offer and the purported 'acceptance' cannot be utilized for the unilateral variation of the mortgage 6993.
  2. In any event there was no first registered mortgage over the property LD ref 60/511 at that time before the said offer being 'accepted' by the Valebasoga Group of Companies. Even if that offer was accepted it was neither an offer addressed to neither the Plaintiff, nor being accepted by the Plaintiff or placed its common seal to it. The offer was addressed to Valebosoga Group of Companies and not to any other person or company in the said group. So the signature placed on the said offer cannot legally bind the Plaintiff for the mortgage of the said property. According to the said offer the requirement was 'First Registered Mortgage over property LD ref 60/511' and there was no such document at that time or around that time and this cannot be used to alter the mortgage 6993, which was also illegal and void.
  3. 1st Defendant unilaterally varied the extent of the land in the mortgage 6993 and it is pertinent that any enlargement of land area needed the Director of Land's consent and no such consent for a land comprising 2.2938 hectares or around that extent was sought subsequent to the mortgage no 6993 till 2004. The only consent that was obtained subsequently was only for a land of 3,500 square meters which was obtained by 'N8' to the affidavit in support filed on 26th September, 2012, this fact is admitted (see paragraph 21 (i) of the Affidavit in opposition of the 1st Defendant issued on 17th October, 2012), but the 1st Defendant state as follows (paragraph 21 (i))

'(i) When the Director of the First Plaintiff had executed the Application for Consent to a Mortgage dated 2.06.00, annexure 'N8' therein, Lot 2 on Plan DSS 116 for an area of 3500 square meters no longer existed but a new Approval Notice of Lease over LD 60/511 had been issued vide Approval Notice of Lease dated 03.04.00 for the amalgamated land Lot 1, SO 4379 with a total area of 2.2938 hectares. The late Bahadur Ali and Jaibul Nisha as Directors had therefore signed a false document' (emphasis added)


  1. If the document 'N8' which is the application for consent of Director of Lands, is false document as alleged in the final sentence of the quoted paragraph, then no consent of the Director of Lands, could be obtained on a false document and no legal consent could be derived from a 'false document' for an enhancement of the loan.
  2. 1st Defendant is also admitting that by the time said 'N8' was made only a new approval notice over LD 60/511 for 2.2938 hectares dated 03.04.2000 existed. If so, any approval granted for mortgage 6993 cannot be valid in the circumstances and in that event a fresh mortgage has to be executed indicating the new land, which was not done. So, by admitting that 'Lot 2 on Plan DSS 116 for an area of 3500 square meters no longer existed' the mortgage No 6993 is to be rescinded, hence no variation of such a rescinded contract is valid in law.
  3. The 1st Defendant also relied on two clauses of the Mortgage for justification of the variation. These are clause 12 (g) and clause 16 of the mortgage no 6993 which I have held as illegal in this judgment earlir, but without prejudice to what I have already held, the issue of alleged variation to the mortgage is discussed below. First the 1st Defendant relied on clause 12(g) of the mortgage 6993 which states;

'That the Bank may from time to time increase or otherwise vary the limit if any of advance and accommodation to the Customer or otherwise amend or vary or agree to any amendment or variation of the contracts or other arrangement or variation of the contracts or other arrangements now from time to time hereafter in force between the Bank and the Customer or replace the same with new contracts or arrangements and may transact any business with for or on account of the Customer at its absolute discretion and without any consent by the Mortgagor being necessary to the intent that this security shall intend to cover the contracts or arrangements from time to time in force between the Bank and the customer.' (Emphasis added)


  1. The mortgage 6993 defines who the Customer is for the said contract, on the first page of the mortgage and accordingly the 'Customer' is not the Plaintiff but the legal person by the name of 'Valebasoga Tropikboards Limited'. This clause 12(g) cannot be resorted to vary or alter any agreement between the Bank and the Mortgagor as the Plaintiff is defined in the said mortgage as the Mortgagor and not as the Customer.
  2. The counsel for the 2nd and 3rd Defendant who is also opposing this summons for judgment sought refuge under clause 16 of the mortgage 6993 and the 1st Defendant also joined in for the said contention. Clause 16 states as follows

'16. That all acts and things which under all or any of the covenants and agreements herby contained or implied ought to be done by the Mortgagor or which the Bank is hereby or by virtue hereof or by statute authorized or empowered to do may be done by any Attorney of the Mortgagor or of such Attorney appointed either in the name be done by any Attorney of the Mortgagor hereinafter appointed either in the name of the Bank or of the Mortgagor or of such Attorney and the Mortgagor hereby irrevorcably appoints each of them the Manager of the Bank the Chief Manager...... the Accountant of any Branch of the Bank and also the assign of the Bank severally the Attorney of the Mortgagor for the purposes aforesaid with full power for all or any of such purposes from time to time to appoint a substitute. (underlining added for emphasis)


  1. The clause 16 of the mortgage 6993 quoted above is applicable in specific instances and they are underlined by me for emphasis. The authority given to the Bank (1st Defendant) by the Mortgagor (1st Plaintiff), is not a blank cheque as argued by the counsel for the Defendants. If that is so there is no need of such an exhaustive agreement for mortgage of the property. If the argument for the defendants is correct, and the 1st Defendant (Bank) is appointed as an attorney for the Mortgagor to do anything that the mortgagor could do, it could have stated very clearly, but what is stated in clause 16 is confined to acts that the mortgagor is 'ought to do' under the said contract and any act the 1st Defendant is statutorily authorized to do and any change to the mortgage land is clearly neither authorized in any statute nor in the mortgage contract. If such power is conferred the whole mortgage would become a nugatory by untilateral action of the Bank, and if so such an exhaustive agreement is superfluous, since the Bank could alter any clause at its pleasure. The clause only qualifies to specific instances that are laid down in the said clause at the beginning which are underlined, for emphasis. The alleged 'variation' of the land contained in the mortgage 6993 does not fall in to any of the said qualifications; hence the 1st Defendant cannot act as attorney for the 1st defendant for the alleged 'variation', of the subject matter, namely the land mortgaged.
  1. CONCLUSION
  1. The Mortgage 8465 is illegal void and cannot have any force in law for more than one reason. First it was an alteration of an illegal and void contract under in terms of the Section 13 of the Crown Lands Act as I have dealt earlier in this judgment. No rights flows from such an instrument which is void ab initio and the issue of variation of that would not arise, but without prejudice to the said reasoning I have discussed the other issues as well. The 1st Defendant did not obtain the Director of Land's consent as per Mortgage 8465 prior to the execution of the said mortgage as it was executed in 1999 and consent for larger land was sought only on 6th June, 2004. So, even on the said ground the Mortgage 8465 is illegal and void since no prior consent was obtained which is mandatory according to Section 13 of the Crown Lands Act. Any subsequent consent would not revive an ab initio void and illegal instrument in terms of the Section 13(1) of the Crown Lands Act. So the consent of the Director of Lands granted on 4th June, 2004 would not attach any legality to an already illegal and void instrument. Even if I am wrong on that the variation to the mortgage 6993 is not clearly authorized in terms of clauses 16 and, or 20(g) as contended by the Defendants. If the 1st Defendant is appointed as an attorney to alter the most importanct thing like the land mortgaged in a mortgage contract, it defeats the whole purpose of having a mortgage for specific land or thing as mortgagee in that event could add anything under the guise of attorney of the mortgagor! The fallacy of the argument based on Clause 16 is evident and I do not wish to labour any more. The clause 20(g) cannot be resorted as it applies to 1st Defendant and the Customer, who is not the 1st Plaintiff in this case who was the mortgagor. So, the mortgage 8465 is illegal in more than one manner and no rights would derive from that and instrument and the mortgagee sale in pursuant to that illegal mortgage 8465 is also void. The grant of the judgment on admission is a discretionary, and considering the circumstances of the case I will not use my discretion to grant a declaration as prayed in (ii) of the summons for judgment on admission. If I were to declare that the 1st Defendant has no rights, estates or interes as mortgagee in pursuant to the Mortgage 8465, I will not hesitate to grant such declaration on the admitted facts of this case, but the wording of the order (ii) sought is wider than that and it simply seeks a declaration that the 1st Defendant does not have any right or interest in the land described in the 99 year lease, approval notice for lease dated 3.04.2000. I will not use my discretion to such a wide diclaraiton on the admitted facts considering the conduct of the 1st Plaintiff in this whole dealing. So I will decline to grant the order (ii) contained in the summons for Judgment on Admissioin dated 26th September, 2012 and by the same token will refrain from declaring that the conduct of the 1st Defendant was fraudulent at this juncture, on admitted facts. The act of fraud in this case cannot he determined by the facts admitted. Considering the circumstances of the case I will not award any cost.
  1. FINAL ORDERS.
    1. Judgment is entered for a declaration the Mortgage registered as No 8465 is ab initio, null and void.
    2. Judgment is enterd for declaration that the purported motgagee sale under the said Mortgage no 8465 is void.
    1. No cost awarded.

Dated at Suva this 11th day of March, 2013.


Justice Deepthi Amaratunga
High Court, Suva

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