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Latchan Holdings Ltd v Lagan [2019] FJHC 320; HBC352.2015 (9 April 2019)

In the High Court of Fiji
At Suva
Civil Jurisdiction

Civil Action No. HBC 352 of 2015
Latchan Holdings Limited
Plaintiff
v
Keolapati Lagan
First Defendant

And
Prakash Lagan

Second Defendant

Counsel: Mr N. Lajendra for the plaintiff

Mr N. Sharma for the defendants
Date of hearing 26^th November, 2018
Date of Ruling: 9^th April, 2019

Ruling

1. I have before me five summons filed by the parties. I will in the first instance, briefly set out the pleadings.
   
2. The plaintiff, in its statement of claim states that on 8^th July,2014, it entered into a Sale and Performance Agreement,(SPA) with the late Ram Lagan,(RL) to purchase his rights in Native Lease no. 29608, CT Register, Vol 36, Folio 3580 (freehold property) and chattels for a sum of $498,466.67. On 28^th July,2014, the late RL executed an instrument of transfer of his two thirds share of freehold property and his half share of the Native Lease, in consideration of the sums of $266.666.67 and $5000. The value of the chattels is $226,800.00.The first defendant is the wife and Administratrix of the estate of the late RL. The plaintiff seeks an order for specific performance of the SPA.
   
3. The defendants, in its statement of defence state that the plaintiff induced the late RL to enter into the “alleged” SPA and counter claim that the SPA be rescinded and declared null and void and for several orders referred to later in my judgment.
   

Summons to strike out

4. The defendants move that the statement of claim be struck out on the grounds that it does not disclose a reasonable cause of action and is an abuse of process.
   
5. The affidavit in support filed by the second defendant alleges that Gardiner Whiteside, a trustee of the estate of the late RL countersigned an “illegal mortgage document”, as Company Secretary of the plaintiff with Rohit Latchman, a Director, who has been charged in the Magistrate’s Court, on 3 counts of an undischarged bankrupt acting as a Director. Gardiner Whiteside failed to act in the best interest of the estate and secure the farm properties and livestock in the properties, but acted in the best interest of the plaintiff company.
   
6. It is alleged that B Solanki, solicitor represented the plaintiff company for the “undated alleged” SPA and acted for the late RL, in conflict of interest, in preparing the mortgage document. He failed to obtain the consent of the undivided 1/3 owner’s share of the freehold property for the mortgage. Next, the affidavit states that the first defendant, as executrix of the deceased’s estate revoked the SPA, as the 60 days settlement period had expired. FIRCA has cancelled the capital gains tax certificate based on the gross undervaluation of the properties.
   
7. Rohit Latchan in his affidavit in reply filed on behalf of the plaintiff company states that he signed the SPA, pursuant to a Company resolution. The mortgage was prepared by Solanki lawyers, on the instructions of the late RL. The late RL entered into the transaction at his own will. The SPA was witnessed by Mr D.Toganivalu, an independent solicitor. The transfer was witnessed by Ms V Narayan, an independent solicitor. Gardiner Whiteside has no financial interest and was appointed by the late RL with knowledge of his position in the plaintiff company. The correspondence relied on by the second defendant does not prove that he was acting in the best interest of the plaintiff company. The deponent states that he purchased 1/3^rd share of the freehold property with another. The order of adjudication against him was rescinded by the Magistrates’ Court. He was acquitted by the Magistrates’ Court of the charge of criminal trespass of the properties. The plaintiff company lawfully obtained possession of the properties.
   
8. The second defendant filed affidavit in response.
   
9. At the argument, Mr. Sharma, counsel for the defendants submitted that the SPA is unenforceable for the reasons that the consideration is illegal, the subject matter of the undated SPA is undivided and the capital gains tax certificate has been cancelled, due to the gross undervaluation of the land.
   
10. Mr Lajendra, counsel for the plaintiff in reply submitted that the pleadings raise conflicting issues. Three solicitors will testify on the mental capacity of the late RL and the alleged conflict of interest. Evidence will be lead to controvert the contention that the properties were undervalued and Rohit Latchman was incapable of executing documents.
    
11. In my view, the pleadings clearly disclose triable issues. I note that the affidavit in support contain 23 attached documents. The reply has 6. The affidavit in response has 8 documents annexed.
    
12. In my view, Or 18, r 18(1)(a) cannot be invoked to truncate the procedure laid down in the High Court Rules for a trial. Or 18, r18 (2) states that “No evidence shall be admissible on an application under paragraph (1) (a)”.
    
13. In Dey v Victorian Railways Commissioners, (1948-49) CLW 62 at pg 84 -85 Latham CJ said:

..the summary procedure.. was appropriate only to cases which were plain and obvious, so that any master or judge could say at once that the statement of claim was insufficient, even if proved, to entitle the plaintiff for what he asked...If, as a result of argument, the court reaches a clear decision which could not be altered by any evidence which could be adduced at the trial, then it is proper in the interests of both parties to dismiss the action instead of allowing the parties to incur completely useless expense. (emphasis added)

14. Lord Pearson in Drummond -Ja v. BritiBritish Medical Association, [1970]1 All ER 1091 at 1101 said “the power to strike out a statement of claim as disclosing no reasonable cause of action is a summary power which should be exercinly in plain and obvious ..I think reasonable cause of e of action’ means a cause of action with some chance of success”.
    
15. In my view, the defendants have not made out that there is no reasonable cause of action and the statement of claim is an abuse of process.
    
16. The summons for striking out is declined.

Summons to give vacant possession of the estate properties and release title

17. The defendants, in this summons seeks that the plaintiff company:
    1. releases the original duplicate titles of Native Lease no.29608 and
       CT Register, Vol 36, Folio 3580,
    2. give vacant possession of the properties,
    3. be restrained from interfering with the defendant’s right to peaceful enjoyment of the properties,
    4. provide an inventory or account of the farm assets and animals on the properties.
       
18. The second defendant has filed a joint affidavit in support of this summons and the summons to strike out. The plaintiff has likewise filed a joint affidavit in reply.
    
19. The second defendant, in his affidavit alleges that both titles were stolen, as the late RL was “critically ill” when the alleged transfer and mortgage were executed. A report from the Suva Private hospital is attached. The statement of claim states that the late RL transferred the properties to the plaintiff. In my view, these disputed issues have to be decided at a trial.
    
20. The defendants, in i) to iii) of this summons seek the relief sought in their counterclaim, in yet another attempt to truncate the procedure laid down in the High Court Rules.
    
21. I decline to restrain the plaintiff and order an inventory at this stage.
    
22. In my view, the interim relief sought would “virtually (bring) about the final relief that the Petitioner wanted”, as stated in Wakaya Ltd v Chambers (Civil Appeal No. CBV0008/11).
    
23. The summons for vacant possession of the estate properties, to release title, injunctive relief and provide an inventory is declined.
    

Summons to set aside the ex-parte order

24. The defendants move to set aside the ex parte order made by the Master on 10^th December, 2015, extending caveat no 804805 against Native Lease no.29608 and caveat no 804806 on CT Register, Vol 36, Folio 3580, until the final hearing and determination of these proceedings.
    
25. The affidavit in support filed by the second defendant states that the ex parte orders made are grossly unfair and a breach of his right to be heard. The failure of the plaintiff to serve summons for extension of caveat on the defendants is fatal to the application for extension and cannot be cured. The plaintiff misled Court and deliberately withheld material evidence that the Director of the plaintiff company who signed the SPA and caveat nos 804805 and 804806 under the common seal was an undischarged bankrupt. He has been charged in the Magistrates’ Court for acting as a Director, contrary to the Companies Act. The affidavit concludes that the plaintiff does not have a caveatable interest.
    
26. Section 110(3) of the Land Transfer Act provides that the caveator may apply to court for an extension of time after the 21 days notice given by the Registrar. The court may make order on the evidence and being satisfied that the application has been duly served on the caveatee.
    
27. It is not in dispute that application for extension was not served on the defendants.
    
28. In my view, clearly the Master erred in extending the two caveats without hearing the defendants.
    
29. I set aside the ex parte order made by the Master extending caveat no 804805 and caveat no 804806.
    

The plaintiff’s application for caveats

30. The plaintiff seeks leave to lodge a second caveat on the two properties. In support, the plaintiff relies on the affidavits filed by Leighton Turner and Viki Latchan of 6^th July, 2016.
    
31. The affidavits states that the plaintiff as bona fide purchaser of the properties will suffer grave prejudice, if the plaintiff is not permitted to lodge a second caveat
    
32. Section 106 of the Land Transfer Act provides that any person who claims to be entitled to be “beneficially interested in any land..by virtue of any unregistered agreement” may lodge a caveat.
    
33. In Cambridge Credit (Fiji) Ltd v. W.F.G. Ltd 21 FLR 182, the Court of Appeal stated :

Section 106 of the Fiji Act is designed to protect unregistered instruments in land. For instance an agreement for sale and purchase, an unregistered mortgage, an ..are just few examples ...

That the respondent must however, bring itself within the provisions of Section 106 and in order to do this must satisfy the Court that the following are fulfilled.

(1) That it is a person claiming to be entitled to or to be beneficially interest in any land estate or interest under the Act; and
(2) That it is so claiming by virtue of an unregistered agreement or other instrument or transmission or any expressed or implied or otherwise howsoever. Instruments which are capable of being protected by the loading of a caveat. (emphasis added)

34. In NBF Asset Management Bank v Taveuni Estates Ltd [2009] FJHC 1; HBC245.2008 (13 January 2009) Singh J cited McCARTHY P in Catchpole v Burke , (1974) 1 NZLR 620 at page 625 as follows:

... where there are doubts surrounding the rights of the caveator, the cases quoted by the Chief Justice seem to me to establish thae proper course is to extend the caveat until the conflictilicting claims of the different parties are determined in action brought for that purpose.

35. The plaintiff seeks to enforce a SPA. In my view, the plaintiff has a caveatable interest.
    
36. The plaintiff’s application to lodge a second caveat on CT Register, Vol 36, Folio 3580 and Native Lease no.29608 is allowed.
    

Summons for security for costs

37. The plaintiff seeks that the defendants provide security for costs in a sum of $20,000, since the defendants are not residents of Fiji and the second defendant owns only CT No. 22624
    
38. The affidavit in support of the summons states that the defendants will not be able to pay costs, in the event an adverse order is made against them at the conclusion of the hearing.
39. Or.23, r 1(1) states that where a party “is ordinarily resident out of the jurisdiction”, the Court may order the other party to give such security for costs of the action.
    
40. In Furuuchi Suisan Company Limited v Hiroshi Tokuhisa and Others, (Civil Action No. 95 of 2009) Byrne J cited Sir Nicolas Brown Wilkinson VC in Porzelack KG v Porselack (UK) Limited, [1987] 1 All ER 1074 at pgs 107-1077 as follows:

The purpose of ordering security for costs against a plaintiff ordinarily resident outside the jurisdiction is to ensure that a successful defendant will have a fund available within the jurisdiction of this court against which it can enforce the judgment for costs. It is not, in the ordinary case, in any sense designed to provide a defendant with security for costs against a plaintiff who lacks funds. The risk of defending a case brought by a penurious plaintiff is as applicable to plaintiffs coming from outside the jurisdiction as it is to plaintiffs resident within the jurisdiction.

41. This is an action to enforce a SPA. The defendants are admittedly, resident overseas. The trilogy of affidavits filed in respect of the summons for striking out indicates that the trial will be drawn out.
    
42. In Allan v Hill View Limited, [2003] HBC 366 Connors J said:

...... another matter of importance for the Court is exercising its discretion is the Plaintiff’s prospect of success in the action and of course as in any such situation that does not require the Court at this point in time to make any detailed determination of the likelihood of success but merely to do so based on the pleadings as they appear before the court.

43. Halsbury’s Law of England, (4^th Edition) Vol. 37 para 307 states:

The amount of security for costs ordered to be given is in the discretion of the court, which will fix such sum as it thinks just to do so, having regards to all the circumstances of the case. It is not the practice to order security for costs on a full party and party, still less on an indemnity basis. In the case of a Plaintiff resident out of the jurisdiction the more conventional approach is to fix the sum at about two-thirds of the estimated party and party costs up the stage of the proceedings for which security is ordered, but there is no hard and fast rule.

44. In the exercise of my discretion, I make order that the defendants deposit a sum of $ 7500.00 in Court, as security for costs.
    
45. Orders
    1. The summons for striking out is declined.
    2. The summons for vacant possession of the estate properties, to release title, injunctive relief and provide an inventory is declined.
    3. The ex parte orders made by the Master extending caveat no 804805 against Native Lease no.29608 and caveat no 804806 on CT Register, Vol 36, Folio 3580, is set aside.
    4. The application of the plaintiff to register caveats on Native Lease no.29608 and on CT Register, Vol 36, Folio 3580 is allowed.
    5. The defendants shall deposit a sum of $ 7500.00 in Court, as security for costs.
    6. The defendants shall pay the plaintiff costs summarily assessed in a sum of $3000 within 15 days of this Ruling.
       

A.L.B. Brito-Mutunayagam

JUDGE

9^th April, 2019