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Credit Corporation (Fiji) Ltd v Fiji Public Trustee Corporation Ltd [2013] FJHC 150; HBC100.2012 (2 April 2013)

IN THE HIGH COURT OF FIJI
AT SUVA
CIVIL JURISDICTION

Civil Action No. HBC 100 of 2012

IN THE MATTER of Mortgage No: 706450 given by SAIRA of 11 Fulaga Street, Samabula, Suva, Fiji as Mortgagor to CREDIT CORPORATION (FIJI) LIMITED a limited liability company having its office in Suva, Fiji as Mortgagee affecting the land comprised in Certificate of Title No: 10155.

BETWEEN :

CREDIT CORPORATION (FIJI) LIMITED a limited liability
company having its registered office at 10 Gorrie Street, Credit House, Suva. Fiji.
PLAINTIFF

AND:

FIJI PUBLIC TRUSTEE CORPORATION LTD of 1st Floor,
LICI Building, 11 Butt Street, Suva, Fiji as a nominal defendant for THE ESTATE OF SAIRA, deceased.
1ST DEFENDANT

AND:

ABDUL RAHMAN of 33 Ritova Street, Samabula, Suva, Fiji,
occupation not known to the plaintiff.
2ND DEFENDANT

AND:

SUMAN LATA ALI of 11 Fulaga Street, Samabula North,
Suva, Fiji, Businesswoman.
3RD DEFENDANT

BEFORE : Hon. Justice Susantha N Balapatabendi

COUNSEL : Mr. Naidu for the Plaintiff
Ms Naliva for the 1st Defendant
Appear in person for the 2nd Defendant
No appearance for the 3rd Defendant

Date of Judgment : 2 April 2013

JUDGMENT

1. The Plaintiff by his originating summons dated 20 April 2012 as a mortgagee brought a mortgage action against the defendants seeking following orders:-
   
   • (i) Delivery by the 2nd defendant Abdul Rahman alias Abdul Rehman and his family to the plaintiff of vacant possession of all that property comprised and described in certificate of title no: 10155 . Lot 6 on Deposited Plan no: 2150 together with the improvements thereon, situated at 33 Ritova Street, Samabula, Suva. Fiji.
     
   • (ii) An injunction restraining the 2n defendant and his servants or agents from interfering with the improvements on the said property in any way so as to deplete its value.
     
   • (iii) That such other Order maybe made in the premises as shall be just.
     
   • (iv) Costs on an indemnity basis.
     
   • (v) Further or other reliefs.
     
2. The application is supported by an affidavit of Neelem Kavita Sharma, General Manger, Legal of the Plaintiff, sworn on 10 April 2012, filed on 17 April 2012.
   
3. The 2nd Defendant, Abdul Rahman, filed an affidavit in opposition, sworn on 15 May 2012 to the affidavit of Neelem Kavita Sharma.
   
4. Affidavit in reply to the affidavit of Abdul Rehman, was filed by Neelem Kavita Sharma, sworn on 26 July 2012.
   

Plaintiff's affidavit in support briefly:-

5. Saira, now deceased (mother in law of 3rd defendant) is the registered proprietress of the property described in CT number 10155 Lot 6 on deposited plan no. 2150.
   
6. By a 3rd party mortgage registration number 706450 made between plaintiff and Saira, the said property was charged to secure the repayment to plaintiff of all the loans; advances charges interest and other financial accommodation made by the plaintiff to Saira's daughter in law, Suman Lata Ali (3rd defendant), on terms and conditions contained in the mortgage 706450.
   
7. The plaintiff is claiming for delivery of possession of the said property and right to possession arises because of the default in repayment made to plaintiff. The plaintiff exercises its power of sale order to the said mortgage.
   
8. State of the account between 3rd defendant and plaintiff is as follows:-
   

[a] The amount of advance

$150, 000.00 (one hundred fifty thousand dollars) plus 1% establishment fee amounting to $1,500 (one thousand five hundred dollars) giving a total of $151, 500.00 (one hundred fifty one thousand five hundred dollars) being the principal sum.

[b] The amount of the periodical payments required to be made

$3,787.50 (three thousand seven hundred eighty seven dollars fifty cents) per month over a term of 60 months.

[c] The amount of interest or installments in arrears at the date of issue of the originating summons an at the date of the affidavit.

The amount of installments in arrears is $150,088.00 as at the date of issue of the originating summons an at the date of the affidavit.

[d] The amount remaining due under the mortgage $165, 205.00.

9. Plaintiff is informed and believed that the 2nd defendant is presently in

occupation and possession of the said property.

10. Plaintiff by its demand notice to the 3rd defendant claimed the

outstanding balance in the account but there is no reply to same.

11. Due to the default of the 3rd defendant in payment of advances made by

the plaintiff to her, plaintiff proceeded to exercise its power under mortgage and called for tenders.

12. The 2nd defendant on 15th October 2010 instituted proceedings in the High Court of Suva to restrain the plaintiff from exercising its power under mortgage number 706450 until further determinations. On 25 March 2011, Justice Pradeep Hettiarachi delivered his judgment dismissing the application for interim injunction sought by the 2nd defendant.
    
13. The Plaintiff thereafter has accepted tender for the said property from one Previn Anand and has entered in to a contract for sale for a sum of $220,000.00.
    
14. On 26 August 2011, Plaintiff issued notice to the 2nd defendant requiring him to deliver vacant possession which 2nd defendant has refused to do so.
    
15. Plaintiff states that the occupations of 2nd defendant in the property interferes and prejudices the rights of mortgagee.
    

2nd defendant's affidavit in opposition briefly:-

16. The 2nd defendant states that his mother Saira, now deceased is the registered proprietress of this CT No. 10155 and the principle place of residence of him and his siblings.
    
17. The 2nd defendant's mother, Saira had made a last will and testament naming him and his brother Zainul Abid as beneficiaries with respect to undivided half share of the subject property.
    
18. The Plaintiff has failed to apply due diligence in making the said loan offer as it took a personal guarantee from the husband of 3rd defendant, namely Akbar Ali, as he was receiving order recorded from the official receiver.
    
19. The 2nd defendant further states that he verily believes that his mother had not been aware of having to give subject property as security as the document has been executed with thumb print and not signature.
    
20. He further states, his mother Saira had not been to school but was able to sigh her name on legal documents given such opportunity.
    
21. The plaintiff has failed to take any security from the 3rd defendant to secure the sum advanced to her and thereby the 3rd defendant defrauded both plaintiff and mortgagor.
    
22. The plaintiff further deposed in his affidavit as grounds to restrain the delivery of possession:-
    

[i] The Plaintiff is not the registered proprietor of the subject property and therefore it does not have the right to vacate him and his family from the premises since his mother is still the registered proprietress of the subject property. There is misnomer in the notice to vacate.

[ii] Second defendant do currently reside at the subject property with his family and that they have been residing there for more than seventeen years to date. That during the last seventeen years he has contributed to certain improvements on the subject property including maintenance, painting and putting up burglar bars, mosquito screen etc. for security reasons as it is the principal place of residence for his family and him.

[iii] To the best of his knowledge, when such a large sum of money is advanced to a borrower, the creditors conduct a thorough search with respect to the applicant's financial status to confirm whether the applicant is financially stable to repay the debt. This is not only done to protect the interest of the Creditor but also to ensure that the innocent Mortgagor who is giving the third party security is not taken any undue advantage of by the parties concerned. It appears that the Plaintiff did not conduct any such search or would have established that the borrower and /or the surety were in no such state to make repayments with respect to the loan.

The Plaintiff's affidavit in reply briefly:-

23. [a] It appears from the mortgage document that Saira obtained

independent legal advice from Mr Irshadd H Qureshi Samad who is a Solicitor before signing the mortgage. Irshadd H Qureshi Samad Witnessed Saira's signature on the mortgage.

[b] Credit Corporation took security over Certificate of Title No: 1015 because that was the property which Saira offered to Credit Corporation as a Security.

The Law:-

[i] The application is brought under Order 88 of the High Court Rules, 1988.

[ii] By virtue of order 88 Rule 1 (1) (d), an application for delivery of possession (whether before or after foreclosure or without foreclosure) to the mortgagee by the mortgagor or by any other person who is alleged to be in possession of the property can be made.

[iii] Order 88 Rule 3 mandates that an affidavit in support of an originating summons seeking an action for possession must comply with certain rules. The rules that the plaintiff affidavit in support must comply in this case are:-

(a) The affidavit must exhibit a true copy of the mortgage: Order 88 Rule 3 (2).

(b) The original mortgage or, in the case of a registered charge, the charge certificate must be produced at the hearing of the summons: Order 88 Rule 3 (2).
(c) 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 account between the mortgagor, and mortgagee with particulars of the amount of the advance, the amount of periodic payments required to be made,

the amount of any interest or installments in arrears at the date of the issue of the originating summons and the date of the affidavit, and the amount remaining due under the mortgage: Order 88 Rule 3 (3).

(d) The affidavit must give particulars of every person who to the best of the plaintiff's knowledge is in possession of the mortgaged property: Order 88 Rule 3 (4).

24. Clauses 6 and 7 of the mortgage expressly empower Credit Corporation in the event of a default in repayment to go into possession of the mortgaged property. That the said contains the following provisions which are material to these proceedings:-
    

"6 That the covenant powers conditions and provision implied I Mortgages by virtue of the Property Law Act 1971 and any amendment thereof shall for the purposes hereof be negative or varied so far only as the same are varied by or shall be inconsistent with the terms and provisions hereof and subject to any negation or variations the Mortgages shall be entitled to all rights powers and remedies conferred on Mortgagees by the said Act and any amendment thereof.

7 That the rights and powers conferred upon the Mortgagee by clauses (5) and (7) of the scheduled to the said Act shall be extended to cover and shall be exercisable in respect of any default by the mortgagor in compliance with any of the covenants conditions or agreements in this Mortgage contained whether expressed or implied."

25. The Determination
    

It is admitted in the affidavits of plaintiff and defendant that mother-in-law of 3rd defendant, Saira, Mortgaged her property for the purpose of getting a loan facility from the plaintiff to the 3rd defendant. Further admitted that the 3rd defendant has defaulted the repayment of loan installment to the plaintiff and failed to respond to the demand notice issued by plaintiffs.

Clause 11 of the mortgage reads as follows:-

"That upon default by the Mortgagor in the payment when due of any part of the principal interest or other moneys hereby secured or in the observance or performance of any covenants condition or agreement herein expressed or implied the whole of the principal interest and other moneys then remaining hereby secured shall (at the option of the Mortgagee) become immediately due and payable."

It is further admitted that contract of sale has been entered in to with a new buyer by the plaintiff upon the failure to respond to demand notice

and after the dismiss of the action filed by the 2nd defendant to restrain the mortgage sale.

The second defendant's first ground to challenge to the plaintiffs action for delivery of possession, is that his mother has executed the mortgage under duress either before or after that her admission to hospital. It should be noted at no circumstance of this case, that 2nd defendant has afforded any evidence to substantiate such assertion. A mere statement of duress in the affidavit and submissions would not suffice to vitiate to the rights vested with the bank under mortgage and order 88 of High Court Rules.

The 2nd and 3rd grounds of contention of the 2nd defendant is that his mother was illiterate, never went to school did not understand English and not aware of the implication of execution of the mortgage, and also the fact that she did not benefit from the said mortgage. I am not inclined to accept the above grounds on the premise that the mortgagor has obtained independent legal advice from the solicitor prior to mortgaging her property to the plaintiff and she ought to be aware of the consequences of default of the loan advanced to the 3rd defendant.

26. On a mortgagee's right to possession of the mortgaged property Lord Goff LJ in Western Bank Ltd vs Schindler [1976] 3 WLR 341 (at pg 357)states that:-
    

"It has for a very long time been established law that a mortgagee has a proprietary right at common law as owner of the legal estate to go into possession of the mortgaged property. This right has been unequivocally recognized in a number of modern cases:

See, for example, Four Maids Ltd v Dudley Marshal (Properties Ltd (1957) Ch. 317 ....... It has nothing to do with default: See per Harman J. in the Four Maids case where he said, at p. 320:

"The mortgagee may go into possession before the ink is dry on the mortgage unless there is something in the contract, express or by implication, whereby he has contracted out of that right."

In an appeal against the order of delivery of possession by the High Court, Fiji Court of Appeal in the case of Livai Nakuta vs Housing Authority (Civil Appeal No. ABU 0036 of 2011) held:-

" It is not disputed that this property had been sold. It was held in an appeal from an order of possession that the bank was entitled to require payment of the full amount which was due and secured by the mortgage, and failing that, to sell the property and to commence proceedings in ejectment (Vere vs. NBF Assets Management Bank (2004) FJCA 50). It was held that "the (bank's) powers were properly exercised; a contract of sale was lawfully executed. It remains on foot, and the Respondent (Bank) was entitled to the orders which were made, particularly in circumstances where the debt was continuing to grow as further interest installments fell due".

For the foregoing reasons, I am of the view that 2nd defendant has neither in his affidavits nor in his submissions afforded any acceptable grounds to continue to be in occupation of the property, and to prevent the exercise of the delivery of the possession. The plaintiff has duly complied with order 88 of High Court rules and therefore is entitled to the order of vacant possession.

Final Orders

27. a. Delivery by the 2nd defendant Abdul Rahman alias Abdul Rehman and his family to the plaintiff of vacant possession of all that property comprised and described in certificate of title no: 10155, Lot 6 on Deposited Plan no: 2150 together with the improvements thereon, situated at 33 Ritova Street, Samabula, Suva. Fiji within 28 days from today.
    

2. The 2nd defendant and his servants or agents be restrained from interfering with the improvements on the said property in any way so as to deplete its value.
   

100. Cost to the plaintiff in the sum of $1,500.00 payable by the 2nd defendant.
     

28. Orders accordingly.

Susantha N. Balapatabendi
Judge