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Home Finance Company Ltd v Prakash [2014] FJHC 734; HBC334.2013 (13 October 2014)

IN THE HIGH COURT OF FIJI
AT SUVA
CIVIL JURISDICTION


Civil Action No. HBC 334 of 2013


IN THE MATTER of Part XVII and XXIV of the Land Transfer Act, Cap 131


BETWEEN :


HOME FINANCE COMPANY LIMITED a duly incorporated company having its registered office at Suva.

PLAINTIFF


AND:


PARVEEN PRAKASH of Namadi Heights, Suva, Fiji, Businessman.
DEFENDANT


BEFORE : Master Thushara Rajasinghe

COUNSEL : Ms. Vasiti M. for the Plaintiff

Mr. S. Singh for the Defendant


Date of Hearing : 5th & 20th March, 2014

Date of Judgment : 13th October, 2014


JUDGMENT


  1. INTRODUCTION
  1. This Originating Summons was filed by the Plaintiff pursuant to sections 109 (2) and 168 of the Land Transfer Act (hereinafter referred as the "Act") seeking following orders inter alia;
    1. That the caveat No 766103 and Judgment No 781375 together with or any other Court order registered against the Certificate of Title No 14869 in favour of the Defendant be removed immediately,
    2. That the Defendant pay the costs of this application on an indemnity basis,
  2. The Plaintiff filed an affidavit of Mr. Admond James Chandra who is the Acting General Manager Credit of Home Finance Company Limited (HFC) in support of this Summons. Mr. Chandra deposed in his affidavit that the Plaintiff is the registered mortgagee under mortgage No 501630 (hereinafter referred as the mortgage) given by Gyaneshwar Prasad Lala and Daimon Devi Lala as mortgagors in respect of the property morefully described in the certificate of title No 14869. Mr. and Mrs. Lala are the registered proprietors of the certificate of title No 14869. The mortgagors defaulted in repayment; accordingly the Plaintiff issued them a demand notice dated 3rd of September 2012. The mortgagors failed to comply with the demand notice, wherefore; the Plaintiff has proceeded with the mortgage sale and concluded a sale and purchase agreement with a buyer for the sum of $400,000 on 8th of October 2013. At that point, the Plaintiff found that the Defendant has lodged a caveat No 766103 and the Judgment No 781375 on the title of the property morefully described in the summons (hereinafter referred as the property), which prevented them to proceed with the mortgage sale. Mr. Chandra urged that the defendant has no caveatable interest on this property and the Plaintiff has a priority over the caveat and the registered judgment of the Defendant.
  3. Upon being served with the Summons, the Defendant appeared before the court and filed his affidavit in opposition. The Defendant raised a preliminary objection that the affidavit of Mr. Chandra is not in conformity with Order 41 r 8 of the High Court rules, wherefore; the affidavit should be struck out. He then deposed that the Plaintiff is only entitled to recover sum of $328,000 which is the amount stamped on the mortgage. If it claims more than that, it would amount to an unsecure debt. The Defendant further stated that it is unfair to remove his caveat and the judgment as it allows the Plaintiff to recover full amount from the mortgage sale.
  4. Mr. Chandra in his reply affidavit denied the allegation made by the Defendant and contended that his affidavit in support is in conformity with the Order 41 r 8. He further deposed that the Plaintiff is only exercising its statutory and contractual rights pursuant to the mortgage.
  5. Subsequent to the filing of respective affidavits of the parties, the matter was then set down for hearing on 5th and 20th of March 2014. The learned counsel for the Plaintiff and the Defendant made their respective oral arguments and submissions during the cause of the hearing. Both of them then tendered their written submissions at the conclusion of the hearing. Having carefully considered the respective affidavits and submissions of the parties, I now proceed to pronounce my judgment as follows.
  6. Before I proceed with the substantive issues of this Summons, I first draw my attention to the two preliminary objections raised by the Defendant. The first objection is that the affidavit of Mr. Chandra, which was filed in support of the Summons, is not in conformity with the Order 41 r8. The second objection is that this court has no jurisdiction to remove the registered judgment as it has been extended until further order of the court by Justice Mutunayagum in his order dated 10th of December 2013 pursuant to section 105 (2) of the Land Transfer Act. I first deal with the first objection and the second objection will be discussed during the cause of my deliberation for the substantive issue.
  7. The objection raised by the Defendant in respect of the affidavit of Mr. Chandra is that the affidavit was sworn before Mrs. Jatten who is the manager legal of the Plaintiff. The Defendant counsel argued that Mrs. Jatten is the legal counsel for the Plaintiff wherefore; it is not in conformity with the requirements stipulated under Order 41 r 8. The Plaintiff in its response submitted that Mrs. Jatten is the legal manager of the Plaintiff and she is not representing the Plaintiff in this action.
  8. Order 41 r 8 states that

"No affidavit shall be sufficient if sworn before the barrister and solicitor of the party on whose behalf the affidavit is to be used or before any agent, partner or clerk of that barrister and solicitor".


  1. It appears that the barrister and the solicitor of the party on whose behalf the affidavit is to be used, is prohibited to endorse the affidavit pursuant to Order 41 r 8. In this instance case, Mrs. Jatten is not the solicitor of the Plaintiff. Nand's Law is the solicitor for the Plaintiff. Accordingly, I find the objection raised by the learned counsel of the Defendant has no merit. Thus I refuse and dismiss the first preliminary objection of the Defendant.

C. THE LAW & ANALYSIS,


  1. The Plaintiff has made this application pursuant to section 109 (2) of the Land Transfer Act. Section 109 (2) of the Act states that;

"Any such applicant or registered proprietor, or any other person having any registered estate or interest in the estate or interest protected by the caveat, may, by summons, call upon the caveator to attend before the court to show cause why the caveat should not be removed, and the court on proof of service of the summons on the caveator or upon the person on whose behalf the caveat has been lodged and upon such evidence as the court may require, may make such order in the premises, either ex parte orrwiseoas to the court seet seems just, and, where any question of right or title requires to be determined, the proceedings shall be followed as nearly as may be in conformity with the rules ort intion to civil caul causes" ses"


  1. Section 109 (2) of the Act has provided a mechanism for a person whose interest or estate in the property has been affected from a caveat, to summon the caveator before the court to show cause why the caveat should not be removed. In such an application, the court is required to consider whether the caveat lodged by the caveator would fall within the scope of the section 106 of the Act.
  2. I now draw my attention to review the section 106 of the Act and laws pertaining to the issue of caveatable interest. Section 106 of the Land Transfer Act states that;

Any person-


(a) cla to be entitled or to beto be beneficially interested in any ;land &#/b> subjo the provisions of thif this &#16>Act, or any estate tate or interest thereinvirtuany unregistered ered agreement or other instrument or transmission, or of any trust expresxpressed or implied, or otherwise howsoever; or

(b) transtransferring any land; subjesubject to the provisions of this Act, or anyte ta interenterest therein, to any other person to be held in trust,


may at any time lodge wie Regr a c in the prescribed form, forbidding the registratstration of any person as transferee or pror proprieoprietor of, and of any instrument affecting, such estate or interest either absolutely or unless such instrument be expressed to be subject to the claim of the caveator as may be required in such caveat.


  1. In view of the section 106 of the Act, it appears that two main components are required to constitute a legally enforceable caveat. The first component is the existence of caveatable interest as defined under section 106 (a) and (b) of the Act. The second component is the enforceable effect of the caveat. The caveat should be able to forbid or restrain the registration of any person as transferee or proprietor of and of any instrument affecting the estate and interest claimed by the caveator in the caveat.
  2. The meaning and the scope of application of the section 106 of the Land Transfer Act has comprehensively expounded by the Fiji Court of Appeal in Cambridge Credit (Fiji) Limited v W.F.G. Limited (Vol 21 FLR 182), where it was held that;

"the respondent must however, bring itself within the provision of Section 106 and in order to do this must satisfy the court that the following are fulfilled,


(a) That it is a person claiming to be entitled to or to be beneficially interested in any land estate or interest under the act; and

(b) That is it so claiming by virtue of any unregistered agreement or other instrument or transmission or any trust expressed or implied or otherwise howsoever,..................................

Section 138 of the Land Transfer Act 1885 (N.Z) (which was not dissimilar from our section 106) was discussed in Staples & Co v Corby and District Land Registrar (1900) 19 N.Z.L.R.517 where Stout C.J. at page 536 said;


"Before a person can caveat under this section he must be a person who claims to be entitled to the land, or any estate or interest in the land, or to be "beneficial interested" in the land, or in any estate or interest in the land, and the person in either event must claim "by virtue of any unregistered agreement, or other instrument or transmission" (transmission meaning acquirement by title or estate consequent on death, will, intestacy, bankruptcy, &c) or of any trust expressed or implied, or otherwise howsoever".


Section 106 of the Fiji Act is designed to protect unregistered instrument in land. For instance an agreement for sale and purchase, an unregistered mortgage, an agreement to give a mortgage, or an option to purchase land is just a few examples of unregistered instruments which are capable of being protected by the lodging of a caveat".


  1. Griffith C.J. in Municipal District of Concord v Coles [1905] HCA 35; (1906) 3 CLR 96 at 107) has discussed the definition of "an interest in any land", where his lordship found that:

"After a very anxious consideration of the words of the section and the whole Act, we have come to the conclusion that the intention of the legislature in using the word "interest" was that only a person having, or claiming to have some legal or equitable interest in the land partaking of the character of an estate, or of an equitable claim upon the land can be a caveator".


  1. The Judicial observation outlined by Griffith C.J in Municipal District of Concord v Coles (supra) has adopted and approved by Justice Jitoko in Fiji National Providence Fund Board v Vivras Holdings Ltd (2004) FJHC 16, HBC0325D.2002S (3 June 2004), where Jitoko J while referring the passage of Griffith C.J, held that under the Torren system, a caveatable interest amount to a proprietary interest in land.
  2. Stout C.J. in Staples & Co v Corby and District Land Registrar (1900) 19 N.Z.L.R.517 further elaborated and defined the scope of " an interest in land" where Stout C.J. held that;

"the person who can caveat against bringing under the Act is one who has, or claims that he has, an "interest" in the land. "Interest" is not defined, but it seems to be a legal interest, not an equitable one, or an equitable interest capable of being made legal".


  1. Having considered the scope of section 106 of the Act and the above discussed judicial precedents pertaining to the issue of caveatable interest, it is my view that the scope of the hearing under section 109 (2) encompass two main limbs. The first limb is that to determine whether the caveator has any caveatable interest as defined under section 106 (a) and (b) of the Act. Once the first limb is considered, the court is then required to determine whether such caveatable interest is capable enough to forbid or restrain the registration of any person as transferee or proprietor, or of any instrument affecting such interest and estate in the property as claimed by the caveator in the caveat.
  2. I now turn to caveat No 766103. The Defendant in his affidavit in opposition did not produce any evidence to satisfy the court that he has any form of caveatable interest to lodge the caveat No 766103 against this property. In his affidavit in opposition the Defendant mainly contended that the Plaintiff is only entitled to recover the amount stamped on the mortgage and any further claims would amount to unsecure debt, over which his registered judgment has a priority.
  3. In the absence of any evidence to satisfy the court that the Defendant has a caveatable interest to lodge the caveat No 766103, it is my conclusion that the Defendant has no caveatable interest to lodge the caveat No 766103 pursuant to section 106 (a) of the Act and it should be removed pursuant to section 109 (2) of the Act.
  4. In respect of the registered judgment No 781375, the Defendant has exercised a statutory right given to him as the judgment creditor pursuant to section 104 (1) of the Act. By virtue of such registration under section 104 (1) of the Act, the registered judgment have the effect as of the caveat lodged under section 106 of the Act. Under such circumstances, the Defendant is not required to satisfy the court of his caveatable interest as defined under section 106 (a) of the Act. It is now required to determine whether the registered judgment under section 104 (1) of the Act, could forbid the Plaintiff of exercising its statutory and contractual rights pursuant to the mortgage.
  5. The Defendant's main contention in respect of registered judgment No 781375 is founded on his argument that the Plaintiff is only entitled to a priority in respect of the amount stamped on the mortgage and nothing more. Wherefore, his registered judgment has a right of priority over the additional amount claimed by the Plaintiff. However, the Defendant failed to provide any evidence of Plaintiff claiming any additional amount which the Plaintiff is not entitled under the mortgage. I accordingly find this contention of defendant is misconceived and not substantiated with credible evidence.
  6. The learned counsel for the Defendant raised a preliminary objection during his submissions that this court has no jurisdiction to remove the registered judgment No 7813375 as it has been extended until further order of the court by Justice Mutunayagam on 10th of December 2013. I now turn to consider the preliminary objection raised by the learned counsel of the Defendant.
  7. Section 104 (2) of the Act deals with the effect of the registration of judgment pursuant to section 104(1) of the Act, where it stipulates that;

"the registrar, on being served with a copy of a judgment, decree or order under the provisions of subsection (1) shall, after marking upon such copy the time of service, enter the same in the register; and with effect from the time of service thereof upon the Registrar such judgment, decree or order shall, subject to the provision of subsection 2 of section 105, have the effect of, and be deemed to be, a caveat lodged under the provision of section 106, subject to any prior registered mortgage or charge forbidding the registration of any person as transferee or proprietor of and of any interest affecting, the estate or interest affected by such judgment, decree or order other than in pursuant of such judgment, decree or order".


  1. It appears that the registration of a judgment pursuant to section 104 (1) of the Act has the effect as of a caveat lodged under section 106 of the Act, subject to prior registered mortgage or charge. In fact, the learned counsel for the Defendant did not dispute the right of the priority of the Plaintiff as of the mortgagee. The objection is founded on the argument that the registered judgment has been extended by justice Mutunayagam until further order of the court pursuant to section 105 (2) of the Act, wherefore, this court has no jurisdiction to remove the registered judgment pursuant to section 109 (2) of the Act.
  2. In order to determine this objection raised by the learned counsel of the Defendant, it is prudent to discuss the effect of the caveat lodge pursuant to section 106 of the Act.
  3. According to section 106 of the Act, a properly registered caveat is capable of forbid the registration of any person as transferee or proprietor of, and of any instrument affecting the estate or interest claimed in the caveat.
  4. Section 113 of the Act states that no entry to be made in register affecting land in respect of which caveat continues in force. Section 113 (1) states that;

"Subject to the provisions of subsection (2), except in the cases referred to in section 117, so long as any caveat shall remain in force prohibiting absolutely any registration or dealing, the Registrar shall not enter in the register any change in the proprietorship of or any transfer or other instrument purporting to transfer or otherwise deal with or affect the estate or interest in respect of which such caveat may be lodge".


  1. It appears that according to section 113 (1) of the Act, the Registrar is only restrained to enter in the register any change in the proprietorship of or any transfer or other instrument purporting to transfer or otherwise deal with or affect the land in respect of which the caveat has lodged, as long as the caveat is remain in force prohibiting absolutely any registration or dealing affecting the estate or interest claimed in the caveat. Under such circumstances the Registrar is required to satisfy that the caveat in question is actually in force forbidding absolutely any registration or dealing affecting the land. Otherwise, section 113 of the Act does not restrain the Registrar to enter in the register any encumbrances affecting the estate or interest in the land.
  2. It is now required to determine whether this registered judgment is actually in force to forbid the Plaintiff of exercising its statutory and contractual rights pursuant to the mortgage and also whether it restrains the Registrar under section 113 of the Act to make any entry in the register any encumbrances made pursuant to the mortgage in respect of this property. As discussed above, the registered judgment is deemed to be a caveat subject to prior registered mortgage. Hence, this registered judgment could not forbid the Plaintiff of exercising its rights under the prior registered mortgage as the Plaintiff's rights as of the mortgagee have been given a priority.
  3. At this point I draw my attention briefly to discuss the rights of the mortgagee in the event of default of repayment by the mortgagor. Section 79 of the Property Law Act has dealt with the Mortgagee's rights in the event of such default of repayment, where it states that;

If default in payment of the mortgage money or in the performance or observance of any covenant continues for one month after the service of the notice referred to in section 77, the mortgagee may or coor concur with any other person in selling the mortgaged &property, or any part ther thereof, either subject to prior leases, mortgages and encumbranr otherwise, and either together or in lots, by public auct auction or by private contract, or partly by the one and partly by the other of those methods of sale, and subject to such condition as to title or evidence of title, time or method of payment of the purchase money or otherwise as the mortgagee thinks fit, with power to vary any contract for sale and to buy in at any auction or to vary or rescind any contract for sale and to resell without being answerable for any loss occasioned thereby, with power to make such roads, streets and passages and grant such easements of right of way or drainage over the same as the circumstances of the case require and the mortgagee thinks fit, and may make and sign such transfers and do such acts and things as are naressor for effectuating any such sale.


No purchaser shall be bound to see or inquire whether defaas bede orhappeor has continued, or whether notice has been served, or otherotherwise wise into into the pthe propriety or regularity of any such sale.


Where a transfer is made in purported exercise of the power of sale conferred by this Act, thee of ran transfereeferee shall not be impeachable on the ground that no cause had arisen to authorize the sale or that due notic not or that the power was otherwise improperly or irregularly exercised, but any pery person dson damnified by any unauthorized or improper or irregular exercise of the power shall have his remedy in damages against the person exercising the power.


  1. Section 79 (1) of the Property Law Act has given a wider power to the mortgagee to sell the property in the event of default of repayment either by public auction or by private contract. Moreover the Mortgagee has powers to vary any contract for sale and to buy in at any auction or to vary or rescind any contract for sale and to resell without being answerable for any loss occasioned thereby.
  2. In Prasad v Australia & New Zealand Banking Group Ltd ( 1999) FJHC 29; (1999) 45 FLR 101 has discussed the role of the court in respect of the mortgagee's rights in the event of default of repayment by the mortgagor, where it was held that;

"the high court of Fiji has for many years followed the long established rule that; The mortgagee will not be restrained from exercising his power of sale because the amount due is in dispute or because the mortgagor has begun a redemption action or because the mortgagor objects to the manner in which the sale is being arrange. He will be restrained however if the mortgagor pays the amount claimed into court, that is the amount which the mortgagee claims to be due to him"


  1. In view of the Prasad v Australia & New Zealand Banking Group Ltd (supra), it appears that the court has adopted a non- intervention policy in respect of the rights of the mortgagee. The court only intervenes at the instances where the mortgagor has paid the amount claimed into the court. Apart from that, the court has been hesitant to restrain the mortgagee of exercising his powers under the mortgage.
  2. In view of the section 79 of the Property Law Act and the above discussed judicial precedents, it appears that the rights of the mortgagee to proceed with the mortgage sale pursuant to the mortgage in the event of default of repayment has been given a priority over other subsequent encumbrances registered against the title of mortgaged property, which in fact has been effectively stipulated under section 104 (2) of the Act.
  3. Accordingly, it is my opinion that this registered judgment has no enforceable effect to forbid the Plaintiff to proceed with the mortgage sale pursuant to both the mortgage and section 79 of the Property Law Act. Having this conclusion in mind, I find that this registered judgment is not actually in force to restrain the Registrar to register any change of proprietorship of or any encumbrances made pursuant to the mortgage in respect of this property.
  4. Having concluded that this registered judgment has no enforceable effect to forbid the Plaintiff to exercise its rights pursuant to the mortgage and the Registrar is also not restrained to enter in the register any changes of the proprietorship of or any transfer made pursuant to the mortgage in respect of this property, it appears that the order of Justice Mutunayagam made on 10th of December 2013 to extend the registration of this judgment until further order of the court has also made subject to the rights of the Plaintiff to proceed with the mortgage sale. In fact I concur with the objection of the learned counsel for the Defendant that this court has no jurisdiction to remove the registered judgment extended by Justice Mutunayagam in his order dated 10th of December 2013. However, having considered the reasons discussed above, it is my conclusion that the registered judgment No 7813375 is actually not in force to forbid the Plaintiff of exercising its statutory and contractual rights pursuant to the mortgage, hence this registered judgment is not restrained the Registrar to enter in the register any changes of the proprietorship of or any transfer made pursuant to the mortgage in respect of this property.
  5. In my conclusion, I make following orders that;
    1. The caveat No 766103 registered against the Certificate of Title No 14869 by the Defendant be removed forthwith,
    2. The Registrar is hereby directed to enter in the register any changes of the proprietorship of or any transfer made pursuant to the mortgage No 501630 in respect of the property morefully described in the Certificate of Title No 14869,
    1. The Plaintiff is awarded sum of $ 1,500 for cost assessed summarily,

Dated at Suva this 13th day of October, 2014.


.......................................................
R.D.R. Thushara Rajasinghe
Master of High Court, Suva

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