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Housing Authority v Bulu [2003] FJHC 242; HBC0028j.1999S (23 May 2003)

IN THE HIGH COURT OF FIJI
AT SUVA
CIVIL JURISDICTION

CIVIL ACTION NO. 28 OF 1999

Between:

HOUSING AUTHORITY
Plaintiff

and

PENIONI BULU as duly appointed
Trustee of TALAU HOUSING SCHEME
Defendant

Mr. V. Maharaj for the Plaintiff
Mr. K. Muaror for the Defendant

JUDGMENT

By writ of summons dated 21 January 1999 the plaintiff claims from the defendant the sum of $28,290.00 plus interest and costs which the defendant and two others owe to the plaintiff in their capacities as trustees of Talau Housing Scheme.

Background facts

The background facts have been set out fully in Mr. Maharaj’s written submissions as follows:

The sum advanced, was for the purpose of construction of a concrete house measuring 12m by 7.5m with 3 bedrooms and other amenities at Lomaloma, Lau (see P3)

Prior to the advancement of the above loan the members of TALAU Housing Scheme appointed the Defendant and two others as Trustees of the Scheme pursuant to a Deed of Trust. The terms and conditions of their appointment are stipulated in the Deed of Trust which document was duly signed by all three Trustees, including the Defendant (see P1).

Pursuant to the powers given to the Trustees by the said Trust Deed, the said Trustees entered into a written agreement with the Authority on 20th September 1991 (see P5) by virtue of which agreement the Authority agreed to advance and did advance a sum of $28,290.00 for the Housing Scheme through the said trustees.

It is to be noted from paragraph one of the said agreement that the trustees have bound themselves to the terms of the agreement both jointly and severally and as such the Plaintiff is entitled to recover the total debt either from one or all of the trustees and it has decided to recover the debt from the Defendant alone.

Defendants’ submission

The defendant admits that there was a Deed of Trust for the Talau Housing Scheme which was entered into on 20 September 1991 and that he was one of the three trustees named therein. He further agrees that he with the two other trustees entered into an agreement with the plaintiff on 20 September 1991 for the advance of $28,290.00 for the construction of a house for the community.

It is the defendant’s contention that although the plaintiff has established that the sum of $28,290.00 was approved as a loan, the plaintiff had by paying out $38,397.27 acted ‘in excess of its expressed authority conferred by the Housing Authority Act Cap. 267, the Minister, and the Resolution of the Plaintiff’s Board of Directors in advancing excess of $10,107.20 over and above the amount approved.’ Counsel submits that in cross-examination of the plaintiff’s witness there was no explanation for the discrepancy.

Counsel submits that the performance of the contract by the Plaintiff in the manner stated was ‘illegal’ and therefore the Court will not uphold or assist the plaintiff in regularizing this ‘illegality’.

Counsel further submits that ‘although a contract is legal in form it is performed unlawfully’ in this instance. The plaintiff did not have any authority to advance the sum as shown in the Statement of Account (exhibit P8).

Plaintiff’s submission

The learned counsel for the plaintiff submits as follows:

(a) that the agreement (ex.p5) was signed by all three Trustees; their liability is both joint and several

(b) that there is nothing illegal in the alleged extra advance in the light of Ajay Singh’s evidence on behalf of the plaintiff. His evidence has not been challenged as the defendant did not give evidence on oath. Therefore Ajay Singh’s evidence is the only version before the Court and therefore be accepted.

(c) that there have been no breaches of any of the statutory provisions of the Housing Act in relation to the alleged $10,107.20 advanced to defendant over and above the amount originally approved.

(d) that the alleged breach will not invalidate the loan agreement, the basis upon which the loan was advanced and accepted by the trustees, so long as the authority conforms to the general objective and purpose of its functions, one of which is to advance loan for the purpose of construction of houses.

Consideration of the issues

As I see it the issue for the Court’s determination is whether the amount claimed by the plaintiff is owed to it or not.

This has to be decided by analyzing the evidence adduced in this case. There are three trustees who signed the agreement and they are jointly and severally liable to the plaintiff for any debt that may be owed by it under the agreement. The plaintiff decided to sue the defendant who is one of the three trustees.

What is the evidence before me? The plaintiff called one witness and tendered several documents to prove its claim. The defendant chose not to give any evidence and did not wish to call any witnesses. Therefore the plaintiff’s evidence and the documents tendered as exhibits went in unchallenged except what was asked in cross-examination by counsel for the defendant.

Details of how the advance come to be made are set out fully in Mr. Maharaj’s written submission suffice it to say on the issue of whether any money is owing or not, the defendant does admit the advance of $28,290,00 as having been approved by the Housing Minister but not anything in excess of that.

Mr. Singh explained how the sum of $38,397.27 is made up and I accept his evidence in that regard. He said that $28,290.00 was approved by the Minister for Housing. The defendant paid a cash deposit of $8000.00, but the defendant helped himself to a further sum of $2107.27 without any express authority from the plaintiff. Consequently, the sum of $2107.27 was added to the initial loan and when all three sums are added together gives a total sum of $38,397.27 and that figure is shown as an initial loan in the very first line of Exhibit P.8. This evidence of Vijay Sigh has not been challenged by the defendant by him giving evidence to the contrary. From the contents of p6 it appears that the total amount required to build the proposed residence was $36,290.00 of which sum the Trustees were required to contribute and did contribute the sum of $8000.00 by way of deposit.

Singh also testified as to the system of accounting maintained by the plaintiff in respect of borrowers of the loan. He said that the total outstanding loan as at 31 January 2002 amounted to $77,307.51.

The defendant knew the state of the account as he was holding a managerial position with the plaintiff. At least upto 1997 he had direct access to the accounts of Talau Housing Scheme and raised no queries or dispute about the accounts except for solicitors' costs in 1998 which dispute was answered by the plaintiff (p14).

I accept the submissions made by Mr. Maharaj for the plaintiff. Mr. Muaror for the defendant merely questions the legality of the loan over and above the amount approved by the Housing Authority Board. I see no merit whatsoever in his argument in this regard and it is therefore rejected.

The accounts as submitted by the plaintiff are proper and accurate. All necessary approvals were given by the Board for the advance and I do not find any irregularity in it or any breach of the provisions of the Housing Act Cap. 267 for s15(2)(c) of the said Act provides:

“... for any other purpose which may be approved by the Minister”. (empahsis added).

I agree with Mr. Maharaj that the word ‘may’ suggests that the obtaining of the Minister’s consent is not ‘mandatory’ but merely ‘directory’. In this regard he refers to the following statement of principle as stated by Lord Penzance in Howard Bodington [1877] UKLawRpPro 14; (1887) 2 PD 203, 211:

“I believe, as far as any rule is concerned, you cannot safely go further than that in each case you must look to the subject matter; consider the importance of the provisions that has been disregarded, and the relation of that provision to the general object intended to be secured by the Act; and upon review of the case in that aspect decide whether the matter is what is called IMPERATIVE or only DIRECTORY”

At p211 he quoted the following passage from Lord Cambell’s judgment in Liverpool Borough Bank v Turner (1860) 29 LJ (CL) 827:

“No universal rule can be laid down for construction of statutes, and as to whether mandatory enactments shall be considered directory only or obligatory, with an implied nullification for disobedience. It is the duty of the Courts of justice to try to get at the real intention of the legislature by carefully attending to the whole scope of the statute to be construed”.

On the evidence before me I find that ‘the defendant has defaulted in making the required instalments under the terms of the agreement. The plaintiff has proved its claim against the defendant on a balance of probabilities and the debt now stands at $77,307.51 inclusive of interest as at 31 January 2002.

There will therefore be judgment for the plaintiff in the said sum of $77,307.51 with costs which is to be taxed unless agreed.

D. Pathik
Judge

At Suva
23 May 2003