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Hae v NBF Asset Management Bank [2000] FJHC 88; HBC0588D.1998S (27 July 2000)

IN THE HIGH COURT OF FIJI
AT SUVA
CIVIL JURISDICTION

CIVIL ACTION NO: HBC 0588 OF 1998

BETWEEN:

TONU HAE a.k.a TONU HAE NATANIELA
Plaintiff

AND:

NBF ASSET MANAGEMENT BANK
Defendant

Counsel: Ms T. Jayatilleke
: Mr W. Clarke

Hearing: 20th July 2000
Decision: 27th July 2000

DECISION

On 2nd November 1998 the Plaintiff filed a writ of summons against the Defendant Bank. The Statement of Claim endorsed on the writ states that the Plaintiff and his wife (who died on 17th May 1995) are the joint tenants of the property described as 8 George Place, Raiwaqa. The Plaintiff lives in the property with his three children. The Defendant Bank was, and is, mortgagee of the property under Mortgage 273827, and was the Plaintiff’s employer. The Bank was then known as the National Bank of Fiji.

Mortgage repayments were directly deducted from the Plaintiff’s salary. The Plaintiff was also a member of a Group Insurance Scheme, with an insurance company called Alexander Stenhouse. The Plaintiff says that when he signed the policy, he was informed by the Defendant that upon the death of the Plaintiff or his wife, the mortgage would be paid by the insurance company.

In 1996, the Plaintiff was made redundant. In 1997 he was told that his insurance claim had been rejected. The Defendant then demanded $121,130.88 from the Plaintiff, being the sum in arrears on 31st January 1998. The Plaintiff did not pay the arrears and the Defendant moved to exercise its power of sale over the property. The writ claims an injunction to prevent the Defendant exercising that right and a declaration, inter alia, that the Defendant had no right to exercise its rights and powers under the mortgage.

On 13th November 1998, the Plaintiff applied inter partes for an interlocutory injunction. There being no appearance by the Defendant, Pathik J granted the application.

On 2nd December 1998 the Defendant applied for dissolution of this injunction. On 30th September 1999 Pathik J dissolved the interim injunction.

The Plaintiff then filed a Notice of Appeal and Notice of Motion for Stay of Pathik J’s order. It appears that the Plaintiff forgot to apply for leave to appeal. That application was made ex parte, and was granted on 10th May 2000.

The Defendant now moves to set aside that order. It also opposes the Defendant’s application for stay. Both applications were heard on 20th July 2000.

Leave:

The Defendant seeks to set aside leave granted, on the ground that this appeal has no merit whatsoever. Counsel for the Plaintiff submitted that the learned judge failed to properly consider the impact of the insurance policy on the mortgage. The grounds of appeal are:

“1. The Learned Trial Judge erred in law and in fact in dissolving the injunction granted in High Court Action No. 588 of 1998 if the Plaintiff/Appellant fails to deposit into court the full amount due and owing under Mortgage.

2. The Learned Trial Judge erred in law and in fact in not taking into consideration that the Plaintiff/Appellant and his late wife executed in favour of the Defendant/Respondent bank over their property as jointly and/or severally.

3. The Learned Trial Judge erred in law and in fact by not taking into consideration that the Plaintiff/Appellant together with his late wife executed a Mortgage protection Policy from Alexander Stenhouse (Group Finance Scheme).

4. The Learned Trial Judge erred in law and in fact by not upholding that under Group Finance Scheme for Mortgage Protection if either the Plaintiff/Appellant or his wife dies then the mortgage will be paid off by the insurance company.”

In his judgment, Pathik J found that the rights of the mortgagee under a mortgage should not be interfered with, and that the Plaintiff could proceed with his claim, and be adequately compensated in damages. It appears that Pathik J therefore dissolved the injunction on the ground that there would be adequate compensation in damages, even if the Plaintiff had a serious question to be tried.

Applying the American Cynamid -v- Ethicon (1975) AC criteria to this case, this finding appeared an inevitable one in the circumstances. Counsel’s submission that the insurance arrangement had not been properly considered, appears to be irrelevant. Pathik J must have considered it and accepted that the facts disclosed a triable issue, because he would not otherwise have proceeded to the issue of the adequacy of damages.

As such, the issue of whether or not there was an enforceable contractual arrangement between the Plaintiff and the Defendant, whether or not the mortgagee’s rights under a mortgage could be fettered by some contractual arrangement between the Plaintiff and a third party (the insurance company) who is not a party to these proceedings, and the nature of the insurance policy, which the Defendant says was intended only to cover the borrower (the Plaintiff) and not his wife, are matters for hearing at the trial proper.

Assuming that these issues are triable, the judge hearing an application for an interlocutory injunction must consider the special position of mortgagees. The reference to the oft-quoted Inglis and Another -v- Commonwealth Trading Bank (1971-72) 126 CLR 161 out tout the law in this regard.

The argument about the insurance policy, did not, in Pathik J’s opinion raiseptional circumstances which might justify departure from this general rule. Furthermore, hre, he ordered that he was only prepared to restrain the mortgagee from exercising its powers if the Plaintiff deposited the full amount due to the Defendant, into court.

In these circumstances, and given the well-established law in this area, I am unable to conclude that the Plaintiff has shown that there are any merits in this appeal.

The principles governing applications for leave to appeal from interlocutory decisions were canvassed by the Court of Appeal (per Tikaram JA) in Kelton Investments Ltd. & Anr. -v- Civil Aviation Authority Civil App. ABU0034 of 1995. The Court
said, at page 6:

“I am mindful that Courts have repeatedly emphasised that appeals against interlocutory orders and decisions will only rarely succeed. As far as the lower courts are concerned, granting of leave to appeal against interlocutory orders would be seen to be encouraging appeals (see Hubball -v- Everitt & Sons Ltd. [1900] UKLawRpKQB 17; (1900) 16 TLR 168).”

The requirement for leave under section 12(2)(f) of the Court of Appeal Act is intended to reduce appeals from interlocutory orders. The Appellant must show not only that the appeal has merit, but also that a substantial injustice will be done, if it is not corrected at interlocutory stage (Nieman -v- Electronic Industries Ltd. [1978] VicRp 44; (1978) VR 431 at 441).

In the circumstances leave to appeal is set aside.

The Plaintiff must pay the Defendant costs of this application, which I set at $200.

Nazhat Shameem
JUDGE

At Suva
27th July 2000