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Ali v Ambalal [1995] FJHC 112; HBC0593j.94s (6 July 1995)

IN THE HIGH COURT OF FIJI
(AT SUVA)
CIVIL JURISDICTION

ACTION NO. HBC 593 OF 1994S

BETWEEN:

MOHAMMED ESHAQ ALI
(father's name Razak Ali) and
ZAHEERUN NISHA ALI
(father's name Wali Mohammed) both
of Nadi in Fiji, Airport Manager
and Domestic Duties respectively
- Plaintiffs

AND

ROHIT TARUN KUMAR AMBALAL
(father's name Chhaganlal Ambalal) of 15 Knolly
Street, Suva in Fiji, Businessman
- Defendant

H.K. Nagin for the Plaintiffs
M.B. Patel for the Defendant

Date of Hearing: 22nd March 1995
Date of Judgment: 6th July 1995

JUDGMENT

The Plaintiffs claim that on the 6th of May 1994 the Defendant entered into an Agreement to sell the commercial property comprised in Certificate of Title No. 13196 being Lot 39 situate at Martintar, Nadi in Fiji for the price of $180,000.00. The Plaintiffs claim that the document constituting the agreement is a letter dated 6th May 1994 from the Defendant which, omitting formal parts reads as follows:

"06th May/1994

Mr. Issac Ali,

c/- Qantas Airlines,

Nadi.

Dear Sir,

Re: Commercial Property CT13196 Lot: 39 at Martintar

This is to inform yourselves that I have agreed to sell above located property for sum of F$180,000.00 validity until end of month May/94 (31-05-94). Hereafter, this time of selling will not be valid at above price or may be sold to other interested parties in Nadi.

Thanking you, I remain.

Yours faithfully,

(Sgd.)

Rohit Tarun Ambalal"

The Plaintiffs subsequently applied for a loan from the Home Finance Company Limited to purchase the property.

On 17th June 1994 the Home Finance Company Limited wrote to the Defendant that it was processing the Plaintiffs' loan application.

On or about 13th July 1994 the Plaintiffs' loan was approved by the Home Finance Company Limited whereupon the Plaintiffs then instructed their former solicitors Messrs Khan & Co. to prepare the necessary documents. These documents were duly prepared and according to the Plaintiffs were uplifted by the Defendant to be executed before his solicitors. The Defendant denies this allegation as well as an allegation by the Plaintiffs that the Defendant did not return the documents to Messrs Khan & Co.

On the 8th of September 1994 the Plaintiffs' solicitors Messrs Khan & Co. wrote to the Defendant asking him to attend to execution of the transfer document and to advise the date of settlement.

The Plaintiffs claim that the Defendant did not respond to Messrs Khan & Co's letter and they therefore instructed Messrs Sherani & Co. to write to the Defendant on the 22nd of September 1994. This letter omitting formal parts reads as follows:

"Re: Transfer of CT. No. 13196

Lot 39 on DP No. 2069 "Cawa" (part of)

FROM: YOU

TO: MOHAMMED ESHAQ ALI (f/n Razak Ali) and

ZAHEERUN NISHA ALI (f/n Wali Mohammed)

In Consideration of $180,000-00 (ONE HUNDRED AND

EIGHTY THOUSAND DOLLARS)

-------------------------------------------------

We refer to the above matter and confirm to you our earlier advise that our clients are ready to settle with you.

Please attend to the execution of the Transfer document which you had uplifted from our office for execution by you before your solicitors. We await your advise as to date of settlement."

The Plaintiffs then instructed Messrs Sherani & Co. to prepare a Caveat which was lodged against the Defendant's title on the 15th of September 1994. The Caveat alleges that the Plaintiffs claim an estate and interest as purchasers by virtue of an Agreement to Sell dated 6th May 1994.

On 28th November 1994 the Defendant applied to the Registrar of Titles to remove the Caveat.

As a result the Plaintiffs issued a Writ herein on the 15th of December 1994 and applied ex parte to this Court on the same day for an order extending the time for removal of the Caveat until the hearing and determination of this Action.

Fatiaki J. granted this application on the 15th of December 1994 following which the Defendant applied by Notice of Motion dated the 11th of January 1995 for an order that the Plaintiffs' Caveat be removed.

In his affidavit in support of that Motion the Defendant alleges that the Plaintiffs have always been employing delaying tactics and further that the time stipulated for the currency of the Agreement was 31st May 1994.

The Defendant claims that it was explicitly agreed between himself and the First-named Plaintiff that after the 31st of May 1994 the dealing was to be rescinded if no settlement was made. The Defendant also deposes that in its letter of the 17th of June 1994 to the Defendant Home Finance Company Limited stated that it would take seven days to have the loan approved. This is confirmed by the letter.

The Defendant denies the allegation by the Plaintiffs that he agreed to extend the time for settlement due to delay in processing the loan application by Home Finance Company Limited. Furthermore the Defendant states that because settlement was not effected by 31st May 1994, time being of the essence of the agreement, the Defendant has entered into an Agreement for the sale of the property with a third party for the sum of $220,000.00.

In an affidavit sworn on the 14th of March 1995 the Defendant exhibits a copy letter to him from Fiji Development Bank dated 3rd February 1993 stating that the Bank has approved a loan of $220,000.00 to the proposed purchaser. He also exhibits a copy of the relevant transfer signed by the proposed purchaser but not as yet signed by the Defendant.

On the 22nd of March 1995 I heard argument by counsel on the Defendant's motion to have the Caveat removed and for an order dissolving the order made by Fatiaki J. on 15th December 1994.

The Defendant submits that the parties made an unconditional agreement not subject to finance and that the last date for settlement was 31st May 1994. He says that the letter from Home Finance Company Limited to the Defendant of the 17th of June 1994 is evidence that the time for settlement had long expired. Further he says that the Plaintiffs paid no deposit and there has been no consideration, the absence of which is fatal to the case for the Plaintiffs. The Defendant submits that the uplifting of the transfer document from the Plaintiffs' former solicitors is not tantamount to an extension of time and that there is no evidence of any such extension. It is submitted that since the Defendant has now entered an agreement to sell the property to a third party which was not known to the Plaintiffs when the original order was made, this is a further reason why the Caveat should be removed.

For the Plaintiffs Mr. Nagin argued that although the Statute of Frauds requires a contract for the sale of land to be in writing one exception to this requirement is the doctrine of part performance. In this case, says Mr. Nagin, there is both a contract in writing and part performance. In addition Mr. Nagin submits that the failure of the Defendant to reply to the letter dated 8th September 1994 from Messrs Khan & Co. and the letter of the 22nd of September 1994 from Messrs Sherani & Co. and his failure also to reply to the letter of Home Finance Company Limited of 17th June shows that the Defendant had not made time the essence of his contract and that he was not insisting on settlement by the 31st of May 1994. He further relied on an affidavit sworn by one Jaffar Ali Khan on the 14th of March 1995 who alleges that the purchase price was subsequently reduced by the Defendant to $170,000.00, that the Defendant agreed to extend the time for settlement until the loan was approved and that at no time prior to settlement did the Defendant inform either the Plaintiffs or Jaffar Khan that he was not going to sell the property to the Plaintiffs.

As to the claim that there was no consideration, Mr. Nagin concedes that no deposit was paid by the Plaintiffs but that consideration can also be constituted by a promise for a promise.

Finally Mr. Nagin repeats that there has been part performance here by the Defendant uplifting the original transfer from the Plaintiffs' former solicitors Messrs Khan & Co.

In reply Mr. Patel for the Defendant submits that this is a clear case where time was made the essence of the agreement. He submits that a unilateral act by the Plaintiffs or their solicitors does not constitute an extension of time. He refers here to the letters the Plaintiffs' solicitors wrote to the Defendant which were ignored by the Defendant.

Mr. Patel submits that the Defendant was under no obligation to reply to the letters and that the undisputed evidence is that a transfer was never signed by the Defendant.

Although there is a certain conflict in the affidavits which have been filed on behalf of the parties which at first glance might be thought to raise some triable issues, I have come to the conclusion that the two questions which I have to decide here are questions of law only and that their resolution will determine the matter. These questions are:

(1) Has there been part performance of the agreement by the Plaintiffs?

(2) Do the Plaintiffs have any Caveatable interest in the land?

Having considered the evidence and counsels' submissions in my opinion both questions must be answered in the negative. I shall now give my reasons.

The nature of the acts necessary to constitute part performance of a contract is set out in pages 85 to 90 of that authoritative text book "Voumard's The Sale of Land" Third Edition and I state those relevant here.

(1) The act relied on must be unequivocally and in its own nature referable to "some such agreement as that alleged" - see McBride v. Sandland [1918] HCA 32; (1918) 25 CLR 69, at pp78, 79; Cooney v. Burns (1922) 30 CLR at p.222 and Francis v. Francis [1951] VicLawRp 48; (1952) VLR 321.

As Knox C.J., who dissented in the actual decision, said in Cooney v. Burns,

"It is, in general, of the essence of such an act that the court shall, by reason of the act itself, without knowing whether there was an agreement or not, find the parties unequivocally in a position different from that which, according to their legal rights, they would be in if there were no contract".

In Francis v. Francis at p.332 Sholl J. said the Court has to consider whether in the circumstances of the particular case, the acts indicate "a clear reference according to normal probabilities" to a contract between the parties.

(2) By "some such agreement as that alleged" is meant some contract of the general nature of that alleged, that is, some agreement for the disposition of some interest in the land in question.

(3) The circumstances in which the act was done must be proved or that it may be seen whether the act refers unequivocally to such an agreement as is alleged.

(4) The act must have been done by the party relying on it, on the faith of the existence of the alleged agreement, and that the other party must have permitted it to be done on that footing - McBride v. Sandland 25 CLR at 79.

The facts of Cooney v. Burns (supra) seem closest to those in the present case. In Cooney v. Burns it was held that the handing over to the Plaintiff's solicitors, by the Defendant, of the lease of a hotel for the purpose of having prepared the assignment of the lease and the notice of application for transfer of the licence, and the subsequent preparation of the assignment and notice did not constitute part performance by the Plaintiff of a contract to purchase the hotel.

In the instant case applying Cooney v. Burns in my judgment the mere fact that the Defendant uplifted the transfer from the Plaintiffs' solicitors office does not constitute part performance of the agreement. It is the Defendant's case, which I accept, that the time for settlement of his agreement with the Plaintiffs to sell the property for $180,000.00 expired on 31st May 1994. In my view the Defendant's letter of 6th May 1994 is clear evidence of this. I am further satisfied that the Defendant's failure to reply to the letter from Home Finance Company Limited of 17th June 1994 and subsequent letters from the Plaintiffs' solicitors can not be construed as evidence of any extension of time given by him to the Plaintiffs or of any acquiescence in the Plaintiffs delay in obtaining loan finance.

In Francis v. Francis [1951] VicLawRp 48; (1952) VLR 321 the facts in favour of the Plaintiff were stronger than those in the present case but the Full Court of Victoria still refused to find there had been part performance of the contract and followed Cooney v. Burns.

In Francis v. Francis the plaintiff claimed specific performance of a verbal agreement, alleged to have been made between himself and his elderly mother, that in consideration of the plaintiff paying to his sister the sum of 500l., the defendant would transfer to him the dwelling-house which they occupied together. The defendant handed the certificate of title relating to the premises to the plaintiff some weeks after he had paid the 500l. to his sister, with a direction that he "see a solicitor".

It was held that the act relied upon as part performance of the contract was, having regard to the relationship and relations of the parties, equivocal and insufficient to constitute part performance. I accordingly reject the Plaintiffs' submissions as to part performance.

In support of the Plaintiffs' claim that they had a Caveatable interest in the land Mr. Nagin relied on a judgment of myself in Fiji Forest Sawmilling Company Limited v. Victory Tours Limited unreported judgment of 1st October 1993 in which I held that if there is some proprietary interest in the land then a Caveat must be extended.

In my view Fiji Forest Sawmilling Company Limited can be distinguished on its facts from those of the present case.

There a standard Sale and Purchase Agreement had been executed by both parties as distinct from the mere letter as in the instant case.

Secondly the interest in the land concerned was in subsistence. By contrast in the present case I hold that if there was a Caveatable interest, it had lapsed by the 31st of May 1994.

Thirdly in Fiji Forest Sawmilling Company Limited the Defendant had paid the sum of $107,000.00 in reduction of a bank loan and on account of the purchase price. In the present case there has been no payment of any money.

I accordingly make the orders in terms of the Defendant's Notice of Motion of 11th January 1995, namely that the ex parte order made on the 15th of December 1994 be dissolved and that the Caveat No. 365428 registered by the Plaintiffs be removed forthwith. The Plaintiffs are also to pay the Defendant's costs to be taxed in the absence of agreement.

JOHN E. BYRNE
JUDGE

List of authorities referred to in judgment:

Voumard's The Sale of Land, Third Edition.
Cooney v. Burns (1922) 30 CLR at p. 222.
Francis v. Francis [1951] VicLawRp 48; (1952) VLR 321.
Fiji Forest Sawmilling Company Limited v. Victory Tours Limited unreported judgment of Byrne J. of 1st October 1993.

No other authorities were referred to in argument.

HBC0593J.94S