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Vuki v Kalouwarai [1994] FJHC 20; Hbc0249d.93s (25 February 1994)

IN THE HIGH COURT OF FIJI
At Suva
Civil Jurisdiction

CIVIL ACTION NO. HBC0249 OF 1993
(Consolidated with HBC0610 of 1993)

Between:

JONE PEKISENI VUKI
Plaintiff

- and -

MANASA KALOUWARAI
Defendant

Mr. V. Maharaj for the Plaintiff
Mr. D. Sharma for the Defendant

RULING

On the 2nd of July 1993 this court granted to the plaintiff an order for vacant possession of a piece of land under a Housing Authority lease occupied by the defendant. The order was sealed and served on the defendant but owing to his refusal to vacate the premises the plaintiff sought and obtained a Writ of Possession which was "executed" by the Sheriff of Fiji and possession was duly given to the plaintiff. In the absence however of a 'return' of the Sheriff or an affidavit from the plaintiff it is not clear when? or how long for? possession was given to the plaintiff as claimed in his counsel's affidavit.

Be that as it may the defendant has apparently regained possession of the property and remains in occupation of the premises contrary to the court's order. The plaintiff now seeks leave pursuant to Order 45 of the High Court Rules for the issuance of a 'writ of restitution' presumably to regain possession of the premises.

On the other hand the defendant by Motion pre-dating the plaintiff's application seeks:

"a stay of all proceedings in this action until the determination of the issues in Civil Action No. 610 of 1993."

The inter partes motion is supported by an affidavit deposed by the defendant in which he outlines the history of the events leading up to the sale of the property by the Housing Authority under a mortgagee sale to the plaintiff on the 26th of March 1993.

In particular the affidavit amongst other things raises 'estoppel' and 'fraud' on the part of the Housing Authority in the sale and transfer of the property to the plaintiff and states that a separate Civil Action No. 610 of 1993 has been instituted by the defendant against the plaintiff and the Housing Authority challenging the validity of the sale and transfer of the property to the plaintiff.

In this latter regard there is also a pending motion which also pre-dates the plaintiff's application, in Civil Action No. 610 of 1993 seeking inter alia:

"AN ORDER that all further proceedings in Civil Action No. 249 of 1993 be stayed until the hearing and determination of this action."

I propose to deal firstly with the plaintiff's application for leave to issue a "Writ of Restitution" which although made ex parte was heard inter partes and opposed by counsel for the defendant.

Learned counsel for the plaintiff who himself swore the affidavit in support of the application also appeared and argued the application. If I may say so the affidavit was singularly unhelpful as to the circumstances surrounding the 'execution' of an earlier 'Writ of Possession' by the Sheriff of Fiji and/or the circumstances in which the defendant is alleged to have wrongfully assumed possession after he was lawfully evicted from the property.

It also fails in several respects to comply with the requirements of Order 46 r.4(2) of the High Court Rules in particular, in elaborating upon any "... change which has taken place in the parties entitled to or liable to execution since the date of the judgment or order" sought to be enforced.

In this latter regard it would have been plainly obvious to counsel for the plaintiff who had accepted service of the writ, that the defendant who was "liable to execution" had issued Civil Action 610 of 1993 challenging the sale and transfer of the land to the plaintiff by the Housing Authority and more particularly the plaintiff himself was aware that the defendant had issued in the present action a motion seeking a stay of all proceedings.

Be that as it may the plaintiff's application, counsel says, is relatively simple and straightforward: The plaintiff is the registered proprietor of the property and as such has an 'indefeasible' title under Sections 39 and 40 of the Land Transfer Act. He has obtained an order for vacant possession and seeks to recover his property by way of a 'writ of restitution'. The plaintiff however has not filed any affidavit personally nor has one been filed opposing the defendant's application for a stay.

Learned counsel for the plaintiff however states that the defendant's affidavit in support of the stay application does not make any direct allegations of fraud against the plaintiff personally and as such there is no need to reply to it. The plaintiff he says was a bona fide purchaser for value without notice of any fraud and in any event, the last clause of Section 40 of the Land Transfer Act (Cap. 131) provides:

"... knowledge that any such ... unregistered interest is in existence shall not of itself be imputed as fraud."

In other words the allegations of 'fraud' against the Housing Authority are irrelevant to the plaintiff's claim and can only give rise to a claim for damages by the defendant against the Housing Authority.

I accept at once that mere knowledge of an unregistered interest is incapable of its own to impute fraud but in this case learned counsel for the defendant points to the following additional factors:

(1) the fact that both the plaintiff and defendant are co-workers;

(2) the fact that it is undisputed either by the plaintiff or the Housing Authority that a repayment agreement or arrangement had been entered into between the defendant and the Housing Authority and that an undertaking had been given that the Housing Authority would not sell the property;

(3) the fact that the property had been sold for a price far in excess of the monies owed by the defendant to the Housing Authority under its mortgage: and yet interest charges and repayments continued to be made and accepted by the Housing Authority;

(4) the strong inference that the purchase price had been loaned to the plaintiff by the Housing Authority to enable him to purchase the property;

(5) the fact that the defendant is the occupant of the premises and has been so since 1985 when he became the registered lessee of the property; and

(6) Counsel for the defendant points to Sections 39(a), 41 and 42(c) of the Land Transfer Act as provisions that clearly recognise that the title of a registered proprietor may be successfully challenged for fraud.

Section 40 of our Land Transfer Act is in identical terms to Section 189 of the Land Transfer Act 1885 (N.Z.). This latter Section has been considered in numerous decisions of the Court of Appeal (N.Z.) and the N.Z. Supreme Court and for the purposes of this application I need only refer to two such decisions.

The first being the judgment of Richmond J. in Locher v. Howlett (1894) 13 N.Z.L.R. 584 in which it was held:

"(1) Although, under Section 189 of the Land Transfer Act, 1885 a purchaser from a registered proprietor is not affected by knowledge of the mere existence of a trust or unregistered interest, he is affected by knowledge that the trust is being broken, or that the owner of the unregistered interest is being improperly deprived of it by the transfer under which the purchaser himself is taking.

(2) The purchaser's action must be judged by considering what, with the knowledge he possessed, it was reasonable that he should believe respecting the good faith of the transaction. Where the circumstances are such as should raise in his mind a strong suspicion that the transaction in which he is engaged is fraud on the right of another, he is bound to go no further in it without full enquiry. To omit such inquiry is a want of honest dealing, and he will not be entitled to shelter himself under Section 189."

In similar vein Salmond J. in the N.Z. Court of Appeal in the case of Waimiha Sawmilling Co. v. Waione Timber [1923] NZGazLawRp 32; [1923] N.Z.L.R. 1137 said at p.1175:

"The true test of fraud is not whether the purchaser actually knew for a certainty the existence of the adverse right, but whether he knew enough to make it his duty as an honest man to hold his hand, and either to make further enquiries before purchasing, or to abstain from the purchase, or to purchase subject to the claimant's rights rather than in defiance of them. If, knowing, as much as this, he proceeds without further inquiry or delay to purchase an unencumbered title with intent to disregard the claimant's rights, if they exist, he is guilty of that wilful blindness or voluntary ignorance which, according to the authorities, is equivalent to actual knowledge, and therefore amounts to fraud ..."

Reference may also be made to the judgment of the Fiji Court of Appeal in Ram Nandan v. Shiu Dutt Civil Appeal No. 29 of 1982 in which the court preferred the dissenting judgment of Turner P. in Sutton v. O'Kane [1973] 2 N.Z.L.R. 304 which recognised that there was not a 'cut-off' point for considering fraud solely as at the time of registration.

Clearly in the absence of an affidavit from the plaintiff it is impossible at this juncture to determine whether or not he can seek the protection of Section 40 of the Land Transfer Act. Equally Order 46 r.4(3) of the High Court Rules empowers the court in an application for leave to issue a 'writ of execution':

"... to order that any issue or question, a decision on which is necessary to determine the rights of the parties, be tried in any manner in which any question of fact or law arising in an action may be tried, ..."

In this latter regard Civil Action No. 610 of 1993 provides an appropriate procedure for trying the various questions of fact and law arising between the parties including the Housing Authority and in all the circumstances ought to be allowed to proceed with the 'pre-sale status' of the property maintained.

The plaintiff's application is refused. The defendant's application is granted and in the exercise of the court's powers under Order 4 of the High Court Rules I order the consolidation of the two actions.

By way of further directions in Civil Action 610 of 1993 I order the following:

(1) the plaintiff do file and serve on the 2nd defendant an amended Statement of Claim containing full particulars of his allegations of 'fraud' against the 2nd defendant within 14 days of the date hereof; and

(2) The 2nd defendant do file and serve a Statement of Defence on the plaintiff within 14 days after receipt of the amended Statement of Claim.

Thereafter the action is to follow its normal course.

(D.V. Fatiaki)
JUDGE

At Suva,
25th February, 1994.

HBC0249D.93S