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Mohammed v Rafiq [2005] FJCA 78; ABU0036.2004S (25 November 2005)

IN THE COURT OF APPEAL FIJI ISLANDS
ON APPEAL FROM THE HIGH COURT OF FIJI

CIVIL APPEAL NO. ABU0036 of 2004S
(High Court Civil Action No. HBC0378 of 2000L)

BETWEEN:

SHER MOHAMMED
Appellant

AND:

MOHAMMED RAFIQ
Respondent

Coram: Ward, President
Smellie, JA
Penlington, JA

Hearing: Thursday, 17 November 2005, Suva

Counsel: Mr. Samuel K. Ram for the Appellant
Dr. Sahu Khan for the Respondent

Date of Judgment: Friday, 25 November 2005, Suva

JUDGMENT OF THE COURT

Introduction

[1]. This is an appeal from an order of Gates J. following a judgment give on 6 May 2004.

[2]. The Judge was faced with an application under s.73 of the Property Law Act wherein the plaintiff, now the respondent, sought an order that the defendant, now the appellant, transfer a specified mortgage to a named person, Jan Mohammed.

[3]. Gates J. made an order in favour of the plaintiff/respondent. The defendant/appellant appeals.

Background

The background to the application is as follows:

[4]. One Mohammed Hussain of Ba, Cultivator, died on 12 July 1985. He was married and had eight sons. He left a Will appointing two of his sons as executors. He left a life interest to his wife and the residue to be equally divided amongst his eight sons. One executor subsequently died, leaving the plaintiff/respondent as the sole executor. (Probate was granted to both sons on 17 August 1989).

[5]. The estate included a piece of freehold land which was mortgaged to the Bank of Baroda. In 1996 the Bank commenced a mortgagee’s sale.

[6]. The defendant/appellant had a daughter. She was married to another one of the deceased’s sons who was of course, one of the respondent/plaintiff’s brothers.

[7]. The appellant/defendant paid out the bank $7,176.50 as required. He became the mortgagee. In the course of these proceedings a dispute emerged as to the basis upon which he paid out the bank and became the mortgagee.

[8]. Then in or about October 1998 the appellant/defendant obtained the approval of the Ba Rural Local Authority to a subdivision of land to enable the appellant/defendant to give to his daughter the lot in question to build a house thereon. Approval to a subdivision was given by the Director of Town and Country Planning on 8 December 1998. In January 1999 the solicitors for the estate wrote to the Director of Town and Country Planning pointing out that the respondent/plaintiff was the registered proprietor of the land as trustee of the estate and that he had not signed any documents concerning a subdivision and that it was being done without his approval and consent. Revocation of the consent was sought forthwith on the threat of High Court proceedings. The consent was withdrawn on 18 March 1999.

[9]. On 3 October 2000 a letter from the solicitors to the estate, addressed to the appellant/defendant/mortgagee gave notice that the estate desired to repay $7,176.50 advanced by the mortgagee to the estate to pay the Bank of Baroda in 1996. The solicitors called on the appellant/defendant/mortgagee in pursuance of s.73 of the Property Law Act to transfer the mortgage in favour of Jan Mohammed.

The Application

[10]. The appellant/defendant/mortgagee did not make any arrangements to transfer the mortgage; hence the application to the Court brought in summary manner by way of summons under Order 5 Rules 3 and 4.

[11]. Affidavits were exchanged. The essence of the resistance to the application was that the mortgagee claimed that he was not obliged to transfer the mortgage. He said that he only paid off the bank on the understanding and promise by the plaintiff/respondent that he would undertake a survey of the Certificate of Title and transfer 20 perches from the title to his daughter (wife of the plaintiff’s brother and son of the deceased).

[12]. No prior consent to a subdivision was produced. No note or memorandum in writing as to the sale of land was produced by the appellant/defendant.

[13]. Submissions were filed and the Judge heard argument on 25 July 2001. No objection was taken to the form of the proceeding,. No application was made for a stay of the proceeding pending the resolution of an action between the appellant as plaintiff and the estate as defendant.

The Judgment in the High Court

[14]. Having recited the essential facts including the demand of the plaintiff/respondent for the transfer of the mortgage and having recited s.73 the Judge dealt with the matter under two main headings:

(a). Subdivision of Land Act; and

(b). No note or memorandum.

[15]. As to the Subdivision of Land Act, having covered the facts the Judge held that he did not find the defendant had raised a convincing account of “this unusual transaction by the Trustee of an estate.” He considered he did not need to hear further evidence beyond the affidavits and he accepted the plaintiff’s account. He went on to say that had there been an agreement that was otherwise enforceable he would have found it to be a collateral contract and therefore not a clog on the equity of redemption. He further found its existence could not have interfered with the plaintiff’s entitlement to have the mortgage redeemed and transferred to another mortgagee of his choosing.

[16]. As to the absence of a note or memorandum in writing, he accepted the submission that if here was an agreement to transfer a portion of the land it would be unenforceable as there was no note or memorandum in writing.

[17]. The Judge referred to the powers and duties of a Trustee.

[18]. The Judge granted the relief sought.

Appeal

[19]. Although initially six grounds were to be advanced, during argument the appellant’s position reduced to two essential propositions:

(1). The amount required to secure an assignment of the mortgage had not been identified and thus the right to redeem had not arisen.

(2). The right to redeem was dependant upon the performance of the alleged oral agreement to transfer the portion of the land to the appellant’s daughter.

[20]. The respondents answers to those contentions were as follows:

(1). The amount was established. The respondent Trustee deposed to the figure of $7,176.50 in paragraphs 2 and 3 of his affidavit sworn on the 6 November 2000. No affidavit disputing that figure was filed in opposition. (Even in this court when asked to stipulate an alternative sum, Counsel for the appellant was unable to do so).

(2). The provisions of sections 72 and 73 of the Property Law Act are a complete answer. In particular the provisions of ss.2 of s.73.

[21]. We uphold the respondents argument in respect of the first point. The issue there is resolved in his favour on the undisputed facts before the Judge in the High Court.

[22]. Concerning the answer given by the respondent to the appellant’s second proposition we first set out the relevant provisions of s.72 and s.73 of the Property Law Act.

“72 (1) A mortgagor is entitled to redeem the mortgaged property at any time before the same has been actually sold by the mortgagee under his power of sale, on payment of all moneys due and owing under the mortgage at the time of payment.

73 (1) Where a mortgagor is entitled to redeem he shall by virtue of this Act have power to require the mortgagee, instead of discharging, and on the terms on which he would be bound to discharge, to transfer the mortgage to any third person as the mortgagor directs; and the mortgagee shall by virtue of this Act be bound to transfer accordingly.

(2). This section applies to mortgages made either before or after the commencement of this Act, and shall have effect notwithstanding any stipulation to the contrary; but does not apply where the mortgagee is or has been in possession.”(emphasis added)

[23]. Given the provisions of the Act set out above we uphold the respondent’s answer to the appellant’s second point. In our judgment the provisions of ss.72(1) gave the respondent an absolute right to redeem. Section 73(1) gave the further right to require the appellant “instead of discharging ... to transfer the mortgage to any third person as the mortgagor directs; “whereupon” the mortgagee shall by virtue of this Act be bound transfer accordingly. “

[24]. Additionally s.73(2) provides that the section is to have effect notwithstanding any stipulation to the contrary. See the portion of the subsection emphasised above. That in our judgment defeats of the appellant’s second point. The alleged oral agreement, even if proved would, as Gates J. held, have been collateral and a “stipulation to the contrary” which could have no effect.

[25]. The appellant raised sophisticated arguments to avoid the provisions of the Subdivision of Land Act (Cap. 140), and the decision of the learned Judge in the High Court to the effect that in the absence of a written memorandum of the agreement to transfer the portion of the land s.59 of the Indemnity, Guarantee and Bailment Act (Cap 232) applied.

[26]. Given our conclusions on the two major issues in the appeal, however, there is no need for us to address the other issues discussed in the judgment and raised an argument before us.

Decision

[27]. Although on a different approach, we uphold the decision of Gates J. in the court below and dismiss the appeal. The appellant upon tender of $7,176.50 must transfer the mortgage to the nominated transferee. Should he fail to do so the Registrar is ordered to execute the assignment on his behalf and to hold the $7,176.50 in an appropriate interest bearing account the total of such account to be paid out to the appellant once the transfer has been registered. The appellant must also pay the respondent’s costs at the sum of $500.00.

Ward, President
Smellie, JA
Penlington, JA

Solicitors:
Samuel K. Ram Esq, Ba for the Appellant
Messrs. Sahu Khan and Sahu Khan, Ba for the Respondent