Home | Databases | WorldLII | Search | Feedback High Court of Fiji

Daulat v J Santa Ram (Stores) Ltd [2000] FJHC 126; Hbc0455d.1997s (29 November 2000)

IN THE HIGH COURT OF FIJI

(AT SUVA)

CIVIL ACTION NO HBC 455 OF 1997S

Between:

DAULAT

(f/n Baldeo)

Plaintiff

and

J. SANTA RAM (STORES) LIMITED

Defendant

H.K. Nagin for the Plaintiff

S. Chandra for the Defendant

DECISION

On 21^st October 1997 the Plaintiff mortgagor issued a writ seeking principally a declaration that a mortgage granted by her to the Defendant in January 1986 over land comprised in CT 9352 Lot 71 on DP 2274 was unenforceable.

On the same day an application for an injunction restraining the Defendant from proceeding with a mortgagee sale was filed.

On 28 November 1997 an affidavit in answer and a Defence were filed by the Defendant.

On 19 May 1998 after hearing the Plaintiff’s application on 15 May I granted the injunction sought. My written Decision sets out my reasons.

On 28 October 1998 the usual orders were made by the Deputy Registrar on a summons for Directions taken out by the Plaintiff.

On 3 April 2000 the Defendant filed an application to have the injunction dissolved and the action dismissed for want of prosecution. In an answering affidavit the Plaintiff averred that discussions between the parties were continuing with a view to settlement.

On 8 May 2000 both Mr. Nagin and Mr. Chandra appeared before me. After discussion I recorded both counsel as agreeing that there were no fundamental issues of fact and that the legal validity of the mortgage was the only issue. In these circumstances I ordered written submissions to be filed.

In due course both Counsel filed helpful and comprehensive written submission.

Both Counsel agree that whether or not the mortgage is subject to the provisions of the Moneylenders Act (Cap. 234) (the Act) is at the heart of this dispute.

Put simply Mr. Nagin’s argument is that the mortgage represented the lending of a sum of money in consideration of a larger sum of money being repaid and accordingly was presumed by Section 3 of the Act to be lending by a moneylender. Since the Defendant is not a licensed moneylender Section 15 provides that the mortgage is unenforceable.

Mr. Chandra on the other hand submits that this lending of money was “one off” and not part of a course of money lending by the Defendant. Furthermore he relies on Section 29 (1) (a) of the Act and submits that the transaction is excluded from the Act and is therefore enforceable.

Among other authorities cited I was referred to Ashni Kumar v. Hasid Ali (FCA Reps 86/20). In that case the Fiji Court of Appeal, which was also dealing with the enforceability of a mortgage said to have been granted to an unlicensed moneylender, recommended that in such a situation the Court should first look at the applicability of Section 29. If satisfied that the mortgage fell within the Section then that would be the end of the matter since it would then be excluded from the other provisions of the Act.

On the undisputed facts before me the mortgage (a copy of which is exhibited to the Plaintiff’s first affidavit) provided for a rate of interest of 13.5%. This rate exceeds the 12% limit imposed by the Act (Section 29 (I) (b) and see also LN 22/82). Although the Defendant has sought retrospectively to vary this rate to bring it within the limit I am satisfied that a retrospective unilateral variation of a mortgage term for the purpose of avoiding the Act is impermissible (see Kasumu v. Baba – Egbe [1956] 3 All ER 266, 271 I and 272A.)

Having reached the conclusion that Section 29 cannot avail the Defendant the question which then presents itself is whether the Defendant has discharged the statutory onus upon him of rebutting the presumption that he was a moneylender.

In his written submission Mr. Chandra argued that there “is no evidence that the Defendant has been involved in frequent transactions to be possibly classified as a moneylender”.

In answer, Mr. Nagin pointed at that the Defendant had presented no evidence on the issue and therefore had failed to rebut the statutory presumption.

While I agree with Mr. Nagin there are two factors which I believe should prevent me leaving the matter there. In the first place as has been seen this is merely an interlocutory application brought by the Plaintiff. In the second place the Plaintiff does not deny the initial loan which, had it carried rate of interest of only 12% less would have been perfectly legal.

In all circumstances I believe that it would not be just to exclude investigation of the facts and matters relevant to Section 3 at this stage.

The Plaintiffs application is dismissed and the parties should now apply for the remaining issue to be set down for a short trial as soon as possible.

M.D. Scott

Judge

29 November 00