Home | Databases | WorldLII | Search | Feedback High Court of Fiji

Suva City Council v Waqanika [2014] FJHC 212; Civil Action 253.2008 (28 March 2014)

In the High Court of Fiji at Suva
Civil Jurisdiction
Civil Action No. 253/2008

Between:

Suva City Council
Plaintiff

And:

Tanya Waqanika
Defendant

Appearances: Ms M.Rakai for the plaintiff
Ms L.Vaurasi for the defendant
Date of hearing: 28th and 29th May,2013

JUDGMENT

1. Om Chand, a city dweller was in arrears of property rates to the plaintiff, Suva City Council. The plaintiff had instituted legal proceedings to recover the arrears. There followed on a bankruptcy action. A receiving order was made against the debtor. He was adjudged bankrupt. It is alleged that the defendant, the plaintiff's in-house solicitor had acted improperly and/or negligently, in accepting the Official Receiver's request to waive part of the unpaid rates, without obtaining the approval of the Minister of Local Government, as directed. The plaintiff claims it has suffered financial loss. The defendant denies the charge. Her defence was that ministerial consent was not required. The plaintiff was entitled to receive only the sum declared in the proof of debt lodged with the Official Receiver.
   
2. The statement of claim

The statement of claim provides that the plaintiff lodged proof of debt with the Official Receiver claiming $48,162.04 together with interest and costs. The defendant made recommendations to the plaintiff that the rates owing from Om Chand, subsequent to its proof of debt,(excluding the rates for 2006) be waived, as requested by the Official Receiver. Consequently, at a meeting in February,2006, the plaintiff resolved that the rates be waived, provided approval of the Minister for Local Government was obtained .

The statement of claim proceeds to state that on 4th April, 2006,the defendant wrote to the Official Receiver accepting a sum of $50,466.65,as a final settlement, without obtaining the consent of the Minister for Local Government or that of the plaintiff. On 23rd November,2006, the Official Receiver sold Om Chand's property for $ $200,000.00.

It is alleged that the defendant, as Legal Advisor of the plaintiff acted improperly and/or negligently. The particulars of negligence pleaded read:

Failed her duty as a Solictor/Legal Advisor to act in the best interest of the Plaintiff.

Failed to advise the Plaintiff that the said property of Om Chand was being sold for $200,000.00 ..

Acted recklessly in recommending the Plaintiff that the sum of $48,162.04 be accepted from Official Receiver and failed to advise the Plaintff that full recoverability of rates and interest is possible.

Acted recklessly and or negligently in that the Defendant did not properly consider the sale price at which the Official Receiver was selling the property for which could have enabled the Plaintiff to recover whole of the rates plus interest.

Failed to obtain the approval of the Ministry of Local Government before writing to the Official Receiver on behalf of the Plaintiff on 4th April 2006.

Wrote to the Official Receiver that the Plaintiff had approved to accept payment of $50,466.65 in full and final settlement inclusive of 2006 rates when this was not so.

Allowed the transfer of the property from the Official Receiver to Icon Investments Limited when recovery of the full rates and interest was possible.

Allowed the Plaintiff's charge on the property to be removed without recovery of the full outstanding rates an interest.

The plaintiff claims a sum of $ 75,946.34 as arrears of rates and claims general damages.

3. The statement of defence

3.1 The defendant, in her statement of defence states that she was subject to the direction and control of the Director,(Administration and Operations) and the Town Clerk of the plaintiff council.

3.2 The Official Receiver, by letter of 14th February, 2006, requested that the unpaid rates for the years the debtor was in receivership be waived, and that the plaintiff cancel the caveat on the property upon receipt of the sum of $48162.04.On 17th February,2006,the defendant replied that the Council would consider the request at the next Finance Committee meeting.

3.3 The defendant denies that she acted improperly and/or negligently in not obtaining the prior approval of the Minister of Local Government. The plaintiff was not entitled to recover any amount in excess of the proof of debt it filed with the Official Receiver. She was not aware that the property was sold for $200,000.00 or that full arrears of rates was recoverable.

3.4 The defendant concludes that she was not in employment with the plaintiff at the time the receiving order was obtained. The outstanding rates has not been sought from the purchaser of the property. The defendant pleads the defence in section 18 of the Local Government Act.

4. The reply to defence

The plaintiff, in its reply to defence states that the defendant, as its legal officer was required to update herself on the Om Chand matter. It is averred further that she should have been aware of the sale transaction between the Official Receiver and the purchaser of Om Chand's property.

5. The determination

5.1 The plaintiff is suing the defendant for their alleged financial loss.

5.2 It is convenient to refer to the actions instituted by the plaintiff against the debtor for the recovery of rates. On 14th July,1987, a judgment by default was obtained in action no 1138 of 1987 in a sum of $ 785.24.This was followed by Bankruptcy Action no 58 of 1987. A receiving order was made against the debtor on 29th February,1988.He was adjudged bankrupt on 25th March,2004.On 28th November,2000,the plaintiff filed proof of debt in a sum of $48,162.04 plus interest and costs. This sum was then entered as a default judgment in action HBC 400/1999S and recorded on a property of the debtor.

5.3 On 14th February,2006, the Official Receiver wrote to the plaintiff requesting that the unpaid rates for the years the debtor was in receivership, be waived. The letter,as so far as relevant, reads:

..This debtor has been in Receivership for about 18 years and has a property title number CT 5897 on lot DP 575 which may have accumulated town rates.

Suva City Council had lodged a Proof of Debt amounting to $48,162.04 being municipal rates. I also note that Suva City Council placed a caveat number 197825...

I am in the process of selling the debtors property and in this regard would like to settle all debts owed by the debtor and bring this matter to finality.

In this regard the Officer Receiver as Receiver of the said debtor request that you:-

1. Waived the unpaid rates over the years the debtor was in receivership.
   
2. Confirm that on the receipt of $48,162.04 (as per your Proof of Debt) Suva City Council will cancel caveat number 197825 so that the Official Receiver could issue a clear title to the buyer.
   

5.4 The defendant by her letter of 4th April,2006, replied that the "Council has approved to accept the full and final settlement payment of $50,466.65 (inclusive of 2006 rates)..".

5.5 The case for the plaintiff is that the defendant acted improperly and/or negligently, in accepting the Official Receiver's request to waive part of the unpaid rates, without obtaining the consent of the Minister of Local Government, as directed by the council

5.6 PW 2(Ratu Peni Volavola, the Lord Mayor of the plaintiff council from 2003 till 2008), in his evidence, said that a ministerial direction was sought, since the relevant statute: the Local Government Act,(cap125)does not contemplate a case in receivership and which had dragged on for fifteen years. In cross-examination, the defendant admitted eventually that at a meeting of the council, she was requested to obtain ministerial consent.

5.7 The defendant advanced two arguments in riposte. The first was that it was legally not necessary to obtain the stated consent. Section 80 of the Local Government Act stipulates that a council may, in a case of "hardship", write off rates with the approval of the Minister. Om Chand was admittedly, not in impecunious circumstances. He owned a property. I do not see any affinity in his case to section 80. Moreover, he was adjudged bankrupt . His matter fell within the purview of the Official Receiver, in terms of the Bankruptcy Act, as stated by the Deputy Official Receiver, DW1(Viliame Katia) in her evidence. It follows that the Minister's consent was not required.

5.8 The second contention, as pleaded in the statement of defence was that the Official Receiver was restricted to the proof of debt lodged with that office. I agree that the plaintiff was restricted to its claim in the proof of debt lodged.

5.9 The plaintiff also alleges that the defendant was negligent in permitting the transfer of the property from the Official Receiver to the purchaser, Icon Investments Limited, when recovery of the full rates and interest was possible. Finally, it is contended that the defendant permitted the plaintiff's charge on the property to be removed.

5.10 The defendant said that she was unaware of the sale price of the debtor's property. DW1 believed that the price was not disclosed to the defendant. The statement of claim provides that the property was sold for $ 200,000 on 23rd November,2006. A period of six and a half months had gone by, since the defendant's impugned letter of 4th April,2006.

5.11 The plaintiff did not adduce any evidence to substantiate its ultimate allegation against the defendant. On the contrary, it transpired that the Director, Finance of the plaintiff council uplifted the caveat on Om Chand's property. Ravinesh Chand, Director, Finance had signed the "Withdrawal of Caveat" before Ms Poonam Maharaj-Wong, solicitor. It also emerged that nine days after the defendant's letter of 4th April,2006, he had informed the Official Receiver there is no charge or caveat on the property and requested for the sum of $ 50,466.55 to be paid. The operational staff of the plaintiff council at the relevant time was headed by the Town Clerk as Chief Executive Officer, under whom there were four Directors, as Sectional Heads of Administration and Operations; Finance; Engineering; and Health Services.

5.12 In the light of all the circumstances, I conclude that the defendant acted "bona fide for the purpose of executing provisions of this Act" within the meaning of section 18 of the Local Government Act.

5.13 I cannot leave this case without noting the concluding paragraph of the closing submissions of the plaintiff, which states "the Plaintiff did not go into the evidence on the actual loss (it)suffered".

6. Orders

The plaintiff's action is dismissed with costs summarily assessed in a sum of $ 4000 payable by the plaintiff to the defendant.

28th March, 2014

A.L.B.Brito-Mutunayagam
Judge