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Rakib v ANZ Banking Group Ltd [2008] FJHC 184; HBC277.2008 (2 September 2008)

IN THE HIGH COURT OF FIJI
AT SUVA
CIVIL JURISDICTION

CIVIL ACTION NO.: HBC 277 OF 2008

BETWEEN:

MOHAMMED RAKIB and MAIMUNA BEGUM
Plaintiff

AND:

ANZ BANKING GROUP LIMITED
Defendant

Mr. R. Singh for Plaintiff
Mr. S. Lateef for Defendant

Date of Hearing: 29th August 2008
Date of Ruling: 2nd September 2008

RULING

[1] The plaintiffs applied for an ex-parte injunction to restrain the ANZ Bank from exercising its powers of sale under a mortgage. The mortgage is dated 17th February 2006. It was registered on 14th March 2006. It is over Crown Lease 4298 being Lot 2 on Plan R 1866 Light Industrial Subdivision. The area of the land is 26.8 perches. The mortgage is stamped to cover advances to $561,000.00.

[2] In January 2007, the plaintiff was alerted to the fact that this property had been advertised in a newspaper under the heading Mortgagee Sale. The advertisement states that tenders close on 31st January 2007. I cannot understand why it took the plaintiffs so long to make this application and even that ex-parte against a Bank to which documents could easily be served in Suva. Courts generally do not encourage ex-parte applications unless there is gross urgency.

Consumer Credit Act:

[3] The plaintiffs main argument is that the bank failed to comply with Section 80 of the Consumer Credit Act 15 of 1999 in that it failed to give them 30 days default notice.

Section 80(1) provides:

"A credit provider must not begin enforcement proceedings against a debtor in relation to a credit contract unless the debtor is in default under the Credit Contract and -

(a) the credit provider has given the debtor, and any guarantor, a default notice, complying with this section, allowing the debtor a period of at least 30 days from the date of the notice to remedy the default; and

(b) the default has not been remedied within that period."

What contracts are outside the scope of Consumer Credit Act?

[4] Mr. Lateef appeared for the Bank. He had no time to file any affidavit but he was ready to argue a preliminary point, that is, that the Consumer Credit Act did not apply to the mortgage in question. The Consumer Credit Act is presumed to apply to all credit contracts unless the creditor can show that it falls into one of the exempt categories: Section 11.

[5] There are five essential requirements:

(a) The debtor must be a natural person ordinarily resident in Fiji: Section 6(1)(a).
(b) More than half of the credit is provided for or intended to be provided for the purpose of personal, domestic or household purpose: Section 6(1)(b) and 6(5)(a).
(c) Charge is or may be made for providing the credit: Section 6(c).
(d) The credit is provided in the course of business of providing credit or incidentally to any other business of the credit provider: Section 6(d).
(e) That the contract limited credit period to less than sixty-two (62) days: Section 7(1).

The above five requirements are conjunctive so all must be met.

[6] Therefore the Act does not apply if one of the following factors is triggered. These are:

(a) If a person is not ordinarily resident in Fiji.
(b) More than half the borrowers or debtors purpose is for business or investment.
(c) No charge is or may be made for providing credit.
(d) The credit provider is not in the business of providing credit e.g. like one off transaction.
(e) If the contract limits the credit period to less than 62 days: Section 7(1).

[7] From the foregoing it can be seen that if a loan is used predominantly (more than half) for business or investment purpose, then the Act does not apply. So it would not apply to a mortgage whose purpose was to secure a loan to start or expand a business or to buy apartments or house predominantly for business of renting them out.

[8] The plaintiffs in their affidavit state that the rent was their only source of income and inoccupancy of the said property caused them to fail to keep up with payments. These points to investment being the purpose of loan and not personal, domestic or household purpose as required by Section 6. Consumer is defined in the Act as "a person who acquires goods or services for personal, domestic and household purpose".

[9] Mr. Lateef in view of the urgency of the matter handed me a loan letter dated 19th January 2006 sent by the Bank to the plaintiffs. It is signed by both of them. It states that the loan is for New Residential Investment Property. So Section 6(1)(b) is not satisfied.

Conclusion:

[10] I am also aware that the Banks have a separate distinct mortgage form for loans granted under the Consumer Credit Act. The provisions of the Consumer Credit Act do not apply to this mortgage and therefore the application fails and is dismissed. I award nominal costs of $150.00 to the defendant.

[Jiten Singh]
JUDGE

At Suva
2nd September 2008