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Home Finance Company Ltd v Sahib [2005] FJHC 604; HBC0233.2002 (18 August 2005)

IN THE HIGH COURT OF FIJI
AT LAUTOKA
CIVIL JURISDICTION

ACTION NO. HBC0233 OF 2002

BETWEEN:

HOME FINANCE COMPANY LIMITED
PLAINTIFF

AND:

LIAKHAT SAHIB
DEFENDANT

Mr K. Kumar for the Plaintiff
Ms M Muir for the Defendant

Date of Hearing: 4 July 2005
Dates of Submissions: 11 July, 25 July and 1 August 2005
Date of Ruling: 18 August 2005

RULING OF FINNIGAN J

I have before me an Originating Summons filed on 10 July 2002. It seeks vacant possession of a parcel of land together with all improvements thereon and an order that the Defendant be restrained from interfering with the improvements in any way so as to deplete the value of the property. It is clear the application is made under Section 169 of the Lands Transfer Act, Cap 131 although that is not stated. The Plaintiff relies also on Order 88 of the High Court Rules.

The land is a Crown Lease No 13679, a residential lot. It is part of what was a much larger Crown Lease No 12527 which was about 23 ½ acres or 9 ½ hectares. A property developer called Sautha Pasifika (International) Construction Limited bought the larger lease in 1995. It mortgaged that lease to the Plaintiff for development finance and the mortgage was registered against lease No 12527. The developer then subdivided that lease into smaller lots and new Crown leases were issued for the individual lots, each subject to the Plaintiff’s mortgage. As each individual lot was sold the Plaintiff partially discharged its mortgage in respect of that lot.

The Defendant has been living on the land since 1972. The land had belonged to his grandfather. The heirs to the estate included the Defendant’s father and his uncle. The Defendant’s father died in 1971 and the Defendant came on to the land in 1972. He says that he did so as beneficiary in his father’s estate. He has built a 4 bedroom house which he occupies with his family. For 23 years until 1995 he paid his uncle an annual rental of $125.00. He must have been his uncle’s tenant. In 1996 his uncle stopped collecting the rent although he continued to offer it.

He claims to have been unaware that in 1995 his uncle sold the land to the developer. It is clear from the partial discharges on the mortgage that the land around him was being sold off in residential lots. The land on which his house is built became lot 30 on Plan SO 3506 being Lease No 13679. He claims he did not know it had been sold to the developer. He has been living on the land rent free since 1995.

Sautha Pacifika defaulted in its loan repayments to the Plaintiff and the Plaintiff exercised its rights as mortgagor to sell off several of the residential lots. It now wants to sell the Defendant’s lot. It clearly has rights as the registered mortgagee. The Defendant is resisting. He says he lives there as beneficiary in the estates of his grandfather and his father and that he has his right to be there.

I cannot believe that he has remained unaware that the property had been sold and was being subdivided around him. He saw his lawyer readily enough when in December 2001 the Plaintiff served on him a notice requiring him to deliver vacant possession by 31 January 2002. Whether or not he knew that his uncle had sold the land he might have been prudent to establish his legal position a little earlier then that. His claim defies belief, but that that may be immaterial. His rights against the developer and the mortgagor whatever they are must have crystallized back in 1995 when his uncle sold him “down the drain” as it were.

What are those rights? I have had the benefit of excellent submissions from Counsel for both parties. The submissions cover every aspect of the application, legal and factual. The facts indeed are simple, the Plaintiff’s affidavit is 8 paragraphs and the Defendant’s (which includes what his lawyers have told him and his brief submission of law) is only 9. I have been offered many authorities, with full copies of each supplied. Plaintiff’s Counsel submits that the parties’ rights are clear and that the matter can be decided by the legal principles on the two affidavits without hearing. Counsel for the Defendant strongly diverges.

The Defendant is required and is given the opportunity to show cause (Section 172). Parts of his argument I think should be rejected and I shall dispose of them now. His arguments based upon a purported prior hearing of this matter, purported fundamental defects in the originating summons, failure to prove the mortgage, (I now have the original), and Section 19 (1) of the Crown Lease Lands Act are all adequately answered by the Plaintiff’s submissions in reply and I reject them. In particular there is no evidence at all about the true meaning of the Defendant’s claim that his father was a beneficiary in his grandfather’s estate and his claim that he is a beneficiary in his father’s.

It is a fact however that he has been allowed to live on the land since 1972, first by his uncle and since 1995 by Sautha Pacifika Ltd. On the present state of evidence, while the Register is everything, neither the new owner nor the mortgagee of his house and land gave him any notice of their interest in his property or any indication of what they required of him. The matter came to a head only when Sautha Pacifika Ltd defaulted on his mortgage. They both must be taken to have known that he was there. What were they proposing to do? The developer did not want rent from him nor any contribution towards the mortgage that was secured over his land. The mortgagee made no attempt to collect any payment from him so long as the developer was meeting its payments. Even on that basis I think it unjust to give the mortgagee now vacant possession and an order requiring the house to be left undisturbed. There seems to be substance in Ms Muir’s submission of unjust enrichment and Mr Kumar’s excellent submission is not so persuasive on this point.

The Plaintiff’s possession in respect of the house is that it has tried to purchase the property but the parties cannot meet on price. The Plaintiff should remember that to some degree the situation is of its own making. Its took title as mortgagee over the Defendant’s house apparently without notice to him. Its took no steps to notify him, it dealt only with the developer but against the developer (and perhaps his uncle) he had a prima facie equitable claim at least.

I am grateful to both Counsel for the wealth of authorities supplied, which I have read. This case of a mortgagee seeking possession seems to have no reported precedents in Fiji. I am sympathetic to Mr Kumar’s argument that this Defendant’s equitable claim is against other people notably his uncle and perhaps the developer. But part of that claim could be against the developer for mortgaging his house in which, following Maharaj –v- Chand (1986) 3 All ER 107, it had at best a diminished interest.

It seems to me the Defendant does have some valid reason to resist the Plaintiff’s attempt in these summary proceedings to gain possession of his home. I think he had some equitable rights as against the purchaser and it was this interest that the purchaser mortgaged so therefore the mortgagee stands with the purchaser. There are some similarities with Sudhir Babu –v- Ambika Prasad HBC0334 of 2003L, judgment 14 April 2005. The Defendant lived on the land with the consent and cooperation of the original title holders and has lived on it since the sale (at least until December 2001) without objection or demand for payment from the successors in title. The options open to me are either to dismiss the application or to direct a trial as if on a writ filed by the Plaintiff.

The Plaintiff wants the Defendant’s house. It cannot have it in this proceedings. Its can buy the house at a fair market rental if the Defendant is willing. In the meantime its rights to possession of the land are in my view diminished and for the time being overwhelmed by those of the Defendant. To dismiss this application however would be inequitable and would leave it unresolved. I therefore direct that it go to trial as if on a writ filed by the Plaintiff. The Plaintiff may now file a statement of claim and after service the High Court Rules will dictate the future course of the action. I place no time limit on that as the parties may wish to negotiate and settle. I have listed the matter in the callover on 28 October 2005.

I think the costs issue on this application is evenly balanced and I make no order.

D.D. Finnigan
JUDGE

At Lautoka
18 August 2005