IN THE HIGH COURT OF FIJI
AT SUVA
CIVIL JURISDICTION

Civil Action No. HBC 285 of 2010

BETWEEN:

VISION PROPERTIES LIMITED
PLAINTIFF

AND:

NORTHERN PROJECTS FIJI LIMITED
DEFENDANT

AND:

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED a duly constituted banking corporation having its registered office in Melbourne, Australia and carrying on business in Suva and branches throughout Fiji.
INTERVENER

BEFORE: Master Deepthi Amaratunga

COUNSELS: Parshotam & Co for the Plaintiff 
Pacific Chambers for the Defendant 
Lateef & Lateef for the Intervener

Date of Hearing: 11th February, 2011
Date of Ruling: 5th April, 2011

RULING

A.	INTRODUCTION

1.	This is an application in terms of the Order 86 for specific performance; Summary Judgment, for sale of land. 

B.	BACKGROUND OF THE CASE

2.	This is an application for specific performance filed by the Vision Properties (the Plaintiff).

This matter initially came before the Court because of Northern Project Fiji Limited (the Defendant)’s summons in pursuant to Section 109 and Section 114 of Land Transfer Act, Chapter 131, being application for orders that Caveat registration number 734824, lodged by the Defendant against all that freehold property being Lot 1 on DP 8349 as comprised in Certificate of Title number 32768 and which the Plaintiff is the registered proprietor, be removed forthwith. The said action was not successful and the caveat was extended and directions were given as follows:

i.	The caveator must bring proceedings to establish the right it claims in the caveat without undue delay. Since the only legal issue pending is whether ort not there was a prior oral agreement immediately proceeding the circulation of the unsigned Sale and Purchase Agreement immediately proceeding the circulation of the unsigned Sale and Purchase Agreement between Patel and Toogood, and as this would also be the only pending issue in the related Civil Action pending in Court , and as Mr Parshotam had suggested in Court – the plaintiff is to file and serve an application under Order 86 Rule 1 of the High Court Rules within 14 days in the related civil Action pending in Court. If this is not complied with by 3 p, on 22nd October 2010 the caveat is to be removed forthwith.

ii.	The caveatee/Plaintiff is thereafter, upon service on it of the above Order 86 Rule 1 application, is to file and serve an affidavit in opposition with 14 days i.e. by 3.00 p.m. on Friday the 5th of November, 2010.

iii.	Thereafter, the caveatro is to file and serve any affidavit in Reply by 3pm, on Friday 12th November 2010.

iv.	This matte is then to be adjoined to Monday the 15th of November 2010 at 9.30 a.m together with related Civil Action pending in Court for mention to fix an early hering date and to consider whether viva voce evidence is to be taken of Mr. Patel, Mr Toogood and of any other witness.

3.	The ANZ Bank intervened in this action as an interested party as they have obtained a first registered mortgage on the property in dispute of this action.

4.	Oral evidence of Mr Suresh Patel, the person with whom the Defendant’s estate agent dealt with the offer of $2.4 million + vat, Mr Toogood the real estate agent (for Bayleys) were led on behalf of the Plaintiff and Mr Milan Raniga, the financial controller of the Defendant, gave evidence for the Defendant and Mr Sundaralal of ANZ bank gave evidence on behalf of the intervener. 

5.	Both Mr Patel and Mr Milan have also submitted sworn affidavits on behalf of the respective parties.

6.	It is evident from the ruling of HBC 270 of 2010, relating to the removal of caveat that the main issue is whether there was an oral agreement between the parties prior to the circulation of the unsigned ‘draft’ sale and purchase agreement and whether the submission of the said agreement constitute an intentional acceptance of the offer. The Defendant also maintains that the said agreement was sent to Mr Patel by mistake, and in any event Mr Milan did not have the authority to accept an offer onbehalf of the Defendant.

C.	ISSUES

7.	The following issues are for determination by the Court:

(a)	Whether there was an agreement for the sale of the said property by the Defendant to the Plaintiff.

(b)	If there was an agreement, then were the provisions of Section 59 of the Indemnity, Guarantee and Bailment Act (Cap 232) complied with.

(c)	If so, should the Defendant be ordered to specifically perform this agreement by transferring the said property to the Plaintiff?

(d)	What effect, if any, does the fact of the mortgage (and other charges against the title) have on this remedy?

D.	SECTION 59 INDEMNITY, GUARANTEE AND BAILMENT ACT

8.	This relevant provides as follows:

“59. No action shall be brought – 
 …
(d)	 Upon ay contract or sale of lands …. or any interest in or concerning them ….

Unless the agreement upon which such action is to be brought or some memorandum of note thereof is in writing and signed by the party to be charged therewith or some other person thereunto by him lawfully authorized.”
(emphasis is added)

This has been taken from the English Statute of Frauds, and though Fiji does not have a statute of frauds the English and common-law authorities on this is equally applicable in Fiji. If there is a contract for the sale of land, that contract, or some memorandum or note of it, must be in writing and signed by the party to be bound, or by someone lawfully authorized to sign on that party’s behalf before the contract will be enforced at common law.

9. This has been subjected to a degree of judicial interpretation to ascertain its exact meaning:

(a)	 The memorandum or note need not have been intentionally written as a memorandum or note of the agreement or couched in legal language but it must be in writing and it must contain all the material terms of the agreement and an acknowledgment, either express or implied that the agreement was intended to be contractual. See Tiverton Estates Ltd v. Wearwell Ltd [1975] Ch. 146.

(b)	 What “material terms” will differ from case to case but invariably the memorandum or note will not satisfy the Section 59 requirements unless it clearly identifies the parties,the subject matter, the consideration and any special terms.

(c)	 If some material term is not referred to in the memorandum, the whole contract will generally be unenforceable (because there is not a sufficient memorandum of the whole agreement) unless that term was for the benefit of one party only.

(d) The requirement for the memorandum of not to be “signed by the party to be charged, or by some person thereunto by him lawfully authorized” has been interpreted to mean that the name of the Defendant – the “party to be charged” – must be appended to the document, in whatever form, with the intention that it serve as an acknowledgment of the obligation. Consequently, if that party’s name is printed, written or signed anywhere on the document, or indicated by a mark or initials, that will suffice as a signature. A signature in the normally understood sense is not necessary and the critical requirement is that the name be placed on the document in order to authenticate it.

10.	Even if there is no signature attached to the document that has been held in certain circumstances sufficient to create a legally binding authority. This was held specifically to prevent any undue advantage by a party who is yet to sign the document, but has reached an agreement with the other party and a clear offer and unconditional acceptance is evident. This is called doctrine of Authenticated Signature Fiction. This is a doctrine under which a document is treated as having been signed in certain limited circumstances where it has not been literally signed. It is noted that this section 59 of Indemnity, Bailment and Gurantee Act was based on the statutes that meant of prevention of frauds in commonlaw countries and the reasoning behind was to prevent frauds. Hence, the unsigned document that constitutes an offer and acceptance prior to the drafting of the document would not vitiate the already established contract, merely because it was not signed. It is clear if a strict requirement of signature is insisted that would create an injustice and the courts have found a device to defeat such injustice to parties. This is called the authenticated signature fiction doctrine. Under this an unsigned document in certain limited conditions is treated as signed for the purpose of law.

11.	In Sturt v. McInnes [1974] 1 NZLR 729 at 732, Wilson J stated that the doctrine of authenticated signature fiction applies if the following three conditions are established:

“(1) The contract or some memorandum or note thereof containing the terms of the contract must have been prepared by the party sought to be charged, or by his agent duly authorized in that behalf, and must have that party’s name written or printed on it.

(2) It must be handed or sent by that party, or his authorized agent, to the other party for that other party to sign.

(3) It must be shown, either from the form of the document or from the surrounding circumstances, that it is not intended to be signed by anyone other than the party to whom it is sent and that, when signed by him, it shall constitute a complete and binding contract between the parties.”

12. This principle has been applied in common law counties including the Courts of England and Australia and particularly by the Courts in New Zealand. Examples are: Leeman v. Stocks [1951] All ER 1043, Bilsland v. Terry [1972] NZLR 43; Dellaca v. PDS Industries [1992] 3 NZLR 88. 

13. The doctrine has also been cited in the Court of Appeal in Fiji: Latchman Bala v. Wasu Dewan (Civil Appeal No. 7 of 1998). The Court of Appeal stated that this doctrine, while not specifically admitting or rejecting its applicability in general in Fiji in that case the Fiji Court of Appeal, applied the Doctirne and held that that Doctrine will not apply to the facts of that case.
 
14. In that Judgment it was futher held as follows:

“The present case there was no evidence of any standard practice in Fiji in respect of contracts for the sale of land. However, the appellant clearly envisaged that a formal agreement in writing would be drawn up and signed by himself and the respondent. Lyons J. made no finding whether there was a valid oral contract enforceable in equity. We are unable to conclude from the facts which he found that there was such an oral contract

The "authenticated signature fiction" concept has been discussed by the courts in England and Australia but particularly by the courts in New Zealand; it has been developed as part of efforts by the courts in all those countries to prevent section 4 of the Statute of Frauds - and legislation derived from it - being used as an instrument of injustice. It is applied where one party, either personally or by his agent, has induced the other party to sign an agreement, or a note or memorandum thereof, by representing that he regards himself as bound by it even though neither he nor his agent has signed it.

 In Sturt v. McInnes [1974] 1 NZLR 729 at 732 Wilson J. stated the conditions for application of the concept as follows:

"(1) The contract, or the memorandum containing the terms of the contract, must have been prepared by the party sought to be charged, or by his agent duly authorized in that behalf, and must have that party’s name written or printed on it.

(2) It must be handed or sent by that party, or his authorized agent, to the other party for that other party to sign.

(3) It must be shown, either from the form of the document or from the surrounding circumstances, that it is not intended to be signed by anyone other than the party to whom it is sent and that, when signed by him, it shall constitute a complete and binding contract between the parties."

The appellant has referred us to the English case of Leeman v. Stocks [1951] All ER 1043, which concerned the sale of land by auction. The purchaser signed a written form of private treaty in respect of the sale agreement, showing the vendor’s name; it had been prepared and handed to the purchaser by the auctioneer but the auctioneer had not signed it; the vendor was not present. Roxburgh J. held that there was evidence outside the language of the document to show that it was presented to the purchaser by the auctioneer as the vendor’s agent as a complete and perfect document in itself.

 In Bilsland v. Terry [1972] NZLR 43 Quilliam J., stating that he was following Leeman, decided that an agreement sent by the vendor’s solicitor to the purchaser’s solicitor and signed by the purchaser was intended by the parties to be a complete and perfect document in itself, even though it was not signed by the vendor or his agent. In Short v. Graeme Marsh Ltd [1974] 1 NZLR 722 Haslam J., applying what he referred to as the principle in Bilsland but without further discussion of any authority, held that a written agreement, which was prepared to give effect to a prior oral agreement and was sent by the vendor’s solicitor to the purchaser accompanied by a letter signed by the solicitor and which was then signed by the purchaser, was as enforceable as if the vendor had actually signed it and that the typed name of the vendor in the agreement constituted his signature.

 Wilson J. in Sturt and Beattie J. in Van der Veeken v. Watsons Farm (Pukupoto) Ltd. [1974] 2 NZLR 146 were not willing to follow the decisions in Bilsland and Short. Wilson J. at page 732 of Sturt noted that in Leeman v. Stocks Roxburgh J. had found at page 1048 that "neither the purchaser nor the auctioneer, acting on behalf of the vendor, ever intended any other signature to be added to [the] document" and that "it was the intention of both the purchaser and of the vendor’s agent, the auctioneer, that this should be the final written record of the contract". That distinguished the facts from those in Hubert v. Treherne (1842) 3 Man. & G. 743; [1842] EngR 236; 133 ER 1338 where an agreement in a form which provided for signature by both parties was held not to be binding on a party who did not sign it. It was on that basis that Wilson J. framed the principles set out above so as to include the third of those principles. In Van der Veeden Beattie J. approved of the principles as so framed; he pointed out that they were consistent with the decision of the High Court of Australia in Neill v. Hewens (1953) 89 CLR 1, where the statutory requirement was held not to have been met because the form of the agreement provided for signature by both of two trustees as vendors and one of them expressly declined to sign until certain conditions were met. We similarly regard Wilson J.'s reasoning to be soundly based.

 Counsel for the appellant contends, however, that, while the principles enunciated in Sturt are appropriate in New Zealand, the third principle should not be applied in Fiji. He draws attention to a comment in a New Zealand text-book that the decision in Sturt reflects "the understanding of the New Zealand man in the street that his verbal commitment to a real estate contract is not binding on him until the terms are recorded in writing and he has actually signed the document". He suggests that the understanding of the man in the street in Fiji is different and that he regards himself as bound by an oral agreement for the sale and purchase of land. By "understanding" we take him to refer to the expectation of those agreeing to sell and purchase land to which reference is made in Carruthers (supra). As stated above, there is no evidence in this case what the expectation is of people in Fiji"

15. While thoroughly discussing the concept and its applicability his lordship held as follows:

"The "authenticated signature fiction" concept is a gloss on a statutory provision. There is a danger in putting any gloss on a statutory provision. Unless cogent reasons are shown for expanding any gloss that has been applied by the courts, it would, in our view, be unwise and inappropriate to do so. Nothing which we have heard in this appeal causes us to believe that there is any cogent reason for doing so."

The above reasoning gives the authenticated signature doctrine be applied where cogent reasons are shown. 

16. After stating the above reasoning his lordship applied the principle of authenticated signature fiction to the facts of the said case, but held that it cannot establish the ingredients to hold in favour of the authenticated signature fiction and held as follows:

"It is not entirely clear to us whether by the conclusion of the hearing Mr Patel was proceeding with any submission that Mr Young's presentation of the written agreement to the appellant for his signature gave rise to the "authenticated signature fiction" that the respondent had signed it. Undoubtedly an agent's conduct may give rise to the fiction that his principal has signed a contract (see e.g. Leeman (supra)). However, his act can bind his principal only if it is authorised. When the written contract was presented to the appellant by Mr Young, the respondent was present. He expressly stated that he would not sign the contract for the time being. Mr Young was, therefore, not authorised to represent to the appellant that the respondent was to be taken to have signed the contract and, what is more, Mr Young accepted that he did not want to sign then. Clearly the "authenticated signature fiction" concept was not applicable and the written contract did not meet the requirements of section 59 of the Act.

17. It is clear though it was not successful, the authenticated signature fiction was applied, but without a success since the ingredients to fulfill the application of 'authenticated signature fiction was not available in the said judgment.

18. It was further held in the said judgment;

"It is not entirely clear to us whether by the conclusion of the hearing Mr Patel was proceeding with any submission that Mr Young's presentation of the written agreement to the appellant for his signature gave rise to the "authenticated signature fiction" that the respondent had signed it. Undoubtedly an agent's conduct may give rise to the fiction that his principal has signed a contract (see e.g. Leeman (supra)). However, his act can bind his principal only if it is authorised. When the written contract was presented to the appellant by Mr Young, the respondent was present. He expressly stated that he would not sign the contract for the time being. Mr Young was, therefore, not authorised to represent to the appellant that the respondent was to be taken to have signed the contract and, what is more, Mr Young accepted that he did not want to sign then. Clearly the "authenticated signature fiction" concept was not applicable and the written contract did not meet the requirements of section 59 of the Act."

19. It is evident form the above judgment that the 'authenticated signature fiction' can be applied in Fiji and in a fit and proper case and that its application and success will depend on the circumstances of the case.

20. The estate agent Bayleys in his oral testimony said in no uncertain terms that he was informed of the acceptance of the offer of Mr Patel for $ 2.4 million +vat and the sale and purchase agreement was sent to him upon his request for the same and in the evidence it is clear that it was not sent to him by mistake or by error. The contention that it was an internal communication also cannot be accepted as there was a clear acceptance by the Defendant's financial manager who dealt with this land sale. It is to be noted even the agreement to engage Bayleys as estate agents for the sale of the said land was also signed my none other than Mr Milan and there were no written authority to support his capacity to sign on behalf of the Company and Mr Toogood also dealt with him regarding previous offers and it did not transpired that he did not have authority to act on behalf of the company.

21. In his work on "Specific Performance", Lord Justice Fry wrote:

"If a contract be made one party to it make default in performance, there appears to result to the other party a right at his election either to insist on the actual performance of the contract, or to obtain satisfaction for the non-performance of it. It may be suggested from this that it follows …. That it sought to be assumed that every contract is specifically enforceable until the contrary be shown. But so broad a proposition has never, it is believed, been asserted by the judges of the Court of chancery or their successors in the High Court of Justice, though if prophecy were the function of a law writer, it might be suggested that they will more and more approximate to such a rule."

22. Specific Performance is often regarded as a superior remedy to damages in contracts for the sale of land. Specific Performance will not be granted where damages would be an adequate remedy, but in contracts for the sale of land generally the courts do not regard damages as adequate. This remedy is available equally to both the Vendor and Purchaser of property.Where the Vendor refuses to complete, the Purchaser can apply to the Court for an Order of Specific Performance. This involves the enforced performance of an agreement by a court of equity and it is available as soon as the Vendor refuses or threatens to fail to comply with a promise where the time has arrived for its performance.

23. The remedy is discretionary and reasons which the court recognizes as a ground for refusal: Buckle v. Mitchell (1812) 18 Ves 100, 34 Er 255. Examples of this are where the Plaintiff's conduct has not been fair (Phillips v. Homfray (1871) 6 Ch App 770 LC; misrepresentation, mistake (Price v. Ley (1862) 4 Giff 235, 66 ER 692, laches (Fitzgerald v Masters (1956) CLR420), hardship (in some cases); illegality and defective title.There are a number of defences to specific performance, In D'Arcy-Smith v. Stace (2003) 4 NZ ConvC 193, 771, Master Gendall reviewed the authorities to the defence of impossibility and saw merit in the Plaintiff's (the Purchaser) submission that to allow the defendant's own default to resist specific performance would "threaten to emasculate the solemnity and sanctity of the law of contract". Unless an objection to title is prominently put forward in the pleadings, that matter will not be determined on the hearing of the application for specific performance. The Court will order specific performance conditional upon the vendor having on settlement the title contracted to be sold, and may, if necessary, order an inquiry as to title: Hurrell v. Townsend [1982] 1 NZLR 536 @ 550.

24.	 The Defendant is alleging the sale and purchase agreement was not intended to be sent by Bayleys to the Plaintiff; and that secondly, in any event it was marked "draft". 

25.	 In so far as the first point is concerned – that the said agreement was not intended to be sent to the Plaintiff (Mr Patel),the Plaintiff cannot be privy to that, as Mr Patel dealt with the estate agent namely Bayleys. The person who dealt with this land sale on behalf of the Estate Agent was Mr Toogood and he explained the circumstances that led to the receipt of the email, which contained an attachment of the said sale and purchase agreement. An email dated 26th July 2010 at 9.55 a.m was sent by Mr Toogood to Mr Milan and it states as follows;

"Hi Milan,

Thank you for your call this morning confirming acceptance of F$2.4 m plus VAT for the Laqere property.
The purchaser is:
Challenge Engineering Ltd and or nominee.
I look forward to getting the Agreement for Sale and Purchase at the earliest opportunity.

Regards
Philip

It is clear that acceptane of 2.4 +vat as the final price was not an issue and was never contradicted, by an email and further the name of the pruchser was changed and also requested a sale and purchase agreement indicating the new purchaser's name in the agreement.

On 26th July 2010 at 7.18 pm Mr Toogood sent an email to Mr Milan and stated as follows

Hi Milan,

Purchaser is Vision Properties Limited

Lawyer subsh Prshotam

Registered office is Suva, Fiji

I am in NZ from tomorrow until Sunday however Susan Pritchard will earn her keep and wrk with you to get the agreement executed and the deposit paid into our Trust Account. Her mobile is +679 999 1458.

The deposit will be 10% .i.e F$ 240,000.

Sapna Vithal will invoice you for the commission (F$72,000+Vat 12.5+ F$ 81,000) once it is executed and the deposit in the Trust Account. This will then be deducted from the turs Accunt and the balance (F$159,000) forwarded to your lawyers in time for settlement.

Upon my return we can meet and sort out Enamanu Road.

Thank you for your continued support.

I will have my phone on in NZ if you need me for anything.

Best regards

cheers
Philip

It is clear the Plaintiff became the buyer and again the modalities of execution of the agreement were also discussed in detail that would clearly indicate a deal done. So it is clear the only thing left was to sign the agreement once it was forwarded. So authenticated signatures fiction can be applied to the agreement though it was not signed by the Defendant.

On 27th July 2010 at 11.44 a.m an email was addressed to Mr Milan from Juris Guilbis(for Pacific Chambers- the lawyers for the Defendant Company) which is also sent to Philip Toodgodd, Barbara malimali, greg carr and copied to Susan Prithchard( of Beyleys) and states as follows:

 Dear Milan,

Please find attached hereto draft sales and purchase agreement for the above property, please note that we have to this hour not been able to carry out a registry search. This is due to this particular batch of tilts being bound. We have now requested the registrar of titles to hav the titl available to us in the next day or so.

Please let us know if you have any change and / or additions to this document.

Yours faithfully

Juris Gulbis
For Pacific Chambers
 
It is clear that the said draft was sent upon the request of Mr Toogood, for a sale and purchase agreement, and it also states that registry search is also needed.

This email was sent to Mr Patel by Ms Susan Pitchard on 27th July, 2010 at 12.23 pm

26.	The Defendant also stated that since the email was only copied to Ms Susan it was an internal communication and not for circulation. This was flatly refused by Mr Toogood who confirmed that he as the agent of the Defendant had a confirmed unconditional acceptance from the Defendant before this email and the said email was also forwarded on his request. He also stated in no uncertain terms that if an email is sent to him, irrespective of to whom it is addressed that it was for him to act upon. This can be accepted when taking all the circumstances that led unto the sending of email.

27.	The contention that the sale and purchase agreement was not meant to be communicated to the Plaintiff cannot be accepted as even if it were the case that the Plaintiff was not to receive the said agreement (which is denied), at no time in any communications between the Plaintiff and the Defendant and/or their respective solicitors was any mention of the said agreement not to have been sent to the Defendant was made. It is also important to consider the circumstances that led to the sending of this email to Mr Toogood and the reason why he send this to the prospective vendor.

28.	The following email communications explains conduct of the parties:

Annexure "E" of the Patel 1 Affidavit (email dated 27 July 2010 (21:47) from the Defendant's solicitors to the Plaintiff's solicitors):

 "Further to our telephone conversation this afternoon I write to confirm that the Directors of Northern Projects (Fiji) Limited has been informed of your offer to purchase the Laqere Property. The directors of Northern Projects will be meeting in Australia this Friday to discuss your offer. We anticipate to be informed of their final decision on the sale of this property by Midday Monday 2 August 2010.

We will keep you informed of the board's decision shortly thereafter.

Kind regards.
Barbara Malimali"

Annexure "E" of the Patel 1 Affidavit (email dated 6 August 2010 (00:09) from the Defendant's solicitors to the Plaintiff's solicitors):

"Dear Mr Parshotam

To this hour we hold no instructions relating to the sale of this property, your client's offer is still on the table and a final decision shall be made in due course. Your client's assumption to having a deal in place in incorrect and premature, our client remains at liberty. Once the shareholders/directors give us their decision and instructions we will inform you accordingly.

We will be meeting our client over this weekend and will raise this issue during our meeting.

B Malimali"

Annexure "I" of the Patel 1 Affidavit (email dated 10 August 2010 (5:47pm) from Bayleys to Mr Patel forwarding an e-mail dated 9 August 2010 (1:49pm) from the Defendant's solicitors to Bayleys):

"Philip,

We will revert to you upon our return from New Zealand.
Juris.

in response to an email dated 9 August 2010 (10.37am) from Bayleys to the Defendant's solicitors:

"Dear Juris and Barbara,

I look forwarded to hearing from either of you in respect of the status of the Laqere sale at the earliest opportunity.

Thank you and regards.

Philip"

Annexure "L" of the Patel 1 Affidavit (e-mail dated 18 August 2010 (16:13) from the Defendant's solicitors to the Plaintiff's solicitors):

"Dear Subhas,

Our client have instructed us an hour ago to convey to you that they did not accept your original offer.

We would like to take this opportunity to express our most sincere apologies for the delay in this matter, which was due to circumstances beyond our control.

Pacific Chambers"

29.	The Defendant was at all times aware that the said agreement was forwarded to the Plaintiff (Mr Patel) but at no time did it indicate to the Plaintiff that it was done by an error or mistake. The first time the Defendant is contending this is within its Affidavits. No time did the Defendant request for the same, if done by an error.

30.	At the same time in this proceedings Defendant is alleging that Mr Milan, the financial controller did not have the authority to accept the offer. This again is contraray to the email exchanges between the parties prior and after the offer of Mr Patel. The Estate Agent, Bayleys was engaged by Mr Milan and they dealt with him for previous offers as well as in this offer and there was no indication of lack of authority mentioned in any of the offers.

31.	The general understanding of the reply from the Defendant's solicitors to Mr Toogood is suggestive of the fact that an issue existed between the Defendant and Mr Toogood as to the acceptance of Mr Patel's offer to purchase the said property and the sale agreement that was sent by Mr Toogood to Mt Patel.

32.	As to the issue of the said agreement being marked "Draft", is also used as a defence to show that there was no acceptance by the Defendant. It is a draft document that has been tendered by (or on behalf of) the Defendant to the Plaintiff. It is for the Plaintiff to get back to the Defendant if it has any comments on the said agreement – that does not vitiate the fact the said agreement as to material terms were still in place. But just marking a document "draft" does not make it as part of negotiations, always. In this instance the negotiations were completed and an agreement was in place. The agreement was then to be presented for signing. When the Defendant presented the agreement, it was marked as draft – that does not mean that the deal was still in the process of negotiation. The submission of the agreement though it was titled 'draft' will not change its validity, as parties have reached an agreement before the document was sent it was only an action that followed the acceptance and cannot go back and start afresh from the negotiations merely because the document was marked 'draft' and the document is marked as it is not a rigid and inflexible on its terms, but the Defendant has put its conditions and it was left with the Plaintiff to suggest any variations and if not it should be accepted.

33.	There was an agreement for the sale of the said property by the Defendant to the Plaintiff for the price of $2.4m + VAT. Bayleys were the agents appointed by the Defendant to sell the said property and for it to negotiate a price with the Plaintiff. When a written offer was received by Bayleys from the Plaintiff, Bayleys placed this before the Defendant's financial controller namely, Milan Raniga who then got back to Bayleys – after having obtained confirmation from his directors that the offer be accepted – and then confirmed the acceptance to be relayed to the buyer. The Evidence of Mr Toogood supported by emails will confirm that the offer was accepted by the Defendant. After the discussions between Milan Raniga and Philip Toogood concerning the acceptance of the offer, Philip Toogood confirmed the same by way of an email to Milan Raniga and this is fact not denied by Milan Raniga and that fact he did not traverse. If he did not have any authority to accept or reject the offers he would have indicated at this time.

34.	The Plaintiff asked for a sale and purchase agreement to be forwarded to it and Philip Toogood set out the essential terms in his email to Milan and asked for a sale and purchase agreement to be forwarded to him (see email of 26 July 2010 (7:18pm). The next day – 27 July 2010 (11:44am) – a sale and purchase agreement was sent by the Defendant's solicitors to Bayleys (and other persons). The agreement was marked draft and comments were invited from Mr Patel.

35.	The 'draft' sale and purchase agreement contained all the essential terms of the transactions (as to the parties, the property, the price and settlement). Importantly, it contained no conditions nor did the email under which it was sent set out have any pre conditions.The agreement was for comments and it is clear from the last line of the email – "Please let us know if you have any changes and/or additions to this document". This is clear indication that if Plaintiff agrees to this, there is only one thing that is left and that is the signatures of the parties. If there were any additions it was clear that it has to be forwarded again and approval of the Defendant was required, but if no additions the contract can be as it was and parties cannot retract from that position.

36.	 Suresh Patel and Philip Toogood, who was employed by Bayleys and Bayleys were all time acting as agents for the Defendant testified to the effect that there was an offer and counter offers between the parties and finally the offer of $2.4 million+ Vat was accepted on behalf of the Defendant unconditionally.

37.	As was testified by Philip Toogood when Bayleys took up the agency that he informed Milan Raniga that any offers were not be used as leverage, there was a lot of interest in the property, including some of the best entrepreneurs in Fiji but there was only one written offer was forthcoming to Bayleys and it was from Mr Patel. This was the one later became the offer of the Plaintiff and Defendant readily agreed to the said change. 

38. After the said acceptance there was another higher offer and Mr Toogood testified, that he had warned the Defendant's officials of the consequences of having reached an agreement with the plaintiff and Plaintiff's offer of $2.4m + VAT being used as leverage to obtain a higher offer. The Defendant then had stated that there was no agreement with the Plaintiff in the first place.

38.	The Defendant had engaged Bayleys to act as its agents to sell the said property on 7 June 2010. At that time, the Defendant was in clear financial difficulties and had been having ongoing discussions with the Bank to put arrangements in place for the Bank not to act on its securities. One of the arrangements was for the Defendant to sell the said property.

40. By its letter dated 10 June 2010, the Bank wrote to the Defendant with respect to the banking arrangements that the Defendant had with the Bank.
41. In this letter, the Bank makes reference to "our recent discussions" and agreed to "further review the Company's current arrangement based on the following".

Then followed a number of events, described by Mr Sundarlal as "milestones to be achieved by the Defendant" and included:

"5 The Laqere property is sold within 3 months".

There was no fixed or minimum price put forward by the bank and the condition and the understanding was that proceeds of the sale would divert to reduce the debt of the company as the bank was the first registered mortgagee. There was no condition at least to the effect that the sale price be subject to the approval of the Bank. It is understandable from the evidence of the Mr Sundarlal himself. He said that still the account of the Defendant has not been referred to Asset Management Unit, which under normal circumstances deal with defaulters of the debt. He also explained the reason for not doing so and stated that still the Bank believe that defendant company is having sufficient assets to meet its debt obligation. So, it is not necessary to attach a minimum price as there are other assets that bank can resort to recover its debts.

 Mr Sundarlal also explained why they selected this property to reduce the debt initially and the nature of the properties at Defendant's hand and the special nature of them.

42. The Bank went on to say in this letter that "non adherence to any of the above will leave the Bank with no option but to withdraw its support" and that "the Bank's position will be further reviewed on 30 June 2010."

43. On 26 October 2010, the Bank wrote a further letter to the Defendant. It starts of:

"Further to our various discussions, the Bank had agreed to continue its support for the Group on the basis that certain milestones were complied with.

This included the sale of the Laqere property within three months ….. All proceeds were to be directed towards debt reduction.

We note that the Laqere sale has not been formalized and neither has there been significant assets sale top facilitate debt reduction.

As such the bank now puts the Company on notice that it needs to finalise the Laqere land sales and pursue sale of other assets by 30th November 2010, to achieve significant debt reduction.

Should there be no progress by 30th November 2010; the Bank will have little option but to pursue alternative action for recovery of its debt."

44. The Bank wrote to the Defendant's solicitors by its letter of 2 December 2010. It relevantly reads:

"As part of the strategy put in place by the Bank, Northern Projects Fiji Limited is required to sell the Laqere property to reduce its debt with the Bank.

As holders of the Fiji Registered Mortgage over the Laqere Property the bank will not consent to a sale price below $2,800,000.00."

45. When asked how they reached this figure of $ 2.8 million, the answer was that the bank became aware of the second offer and the sole reason was that bank as the mortgagee would always seek the highest bid in order to reduce its debts owed by the Defendant. Bank was not informed at the time of negotiations were going either between Defendant or prospective buyers including the Plaintiff's offer. So, it is admittedly a condition that was communicated after the event in dispute occurred. It should be noted that there was no condition regarding the approval of the price by the bank, though the, accepted and bided prices were lower than the valuation of the land. If there was such a condition precedent that would have certainly being used to reject and increase the bids that were below the valuation of the property. There was no evidence to that effect. There was no communication that stated bank approval was a prerequisite and it is clear that this sale of property was not the only property that the bank holds as security, and the bank had not put any condition regarding a minimum price at that time.
 
46. The Defendant's debts are still not being transferred to the Asset Management Unit, of the bank, as in usual similar circumstances, and still the bank considers that the Defendant is liquid enough to pay its all debt obligations. 

47. This was evident from the evidence of Mr Sundaralal. The reason for bank stipulating a condition regarding the minimum price is the fact that they became aware of a second offer which is higher than the Plaintiff's offer. The bank was unaware and cannot evaluate the facts to arrive at a conclusion as to whether there was an offer and acceptance between the Plaintiff and the defendant. The bank was only aware of a dispute between the plaintiff and defendant and a higher offer from a third party. Under the circumstances the bank, whose only concern was to obtain the highest price has indicated the higher price known to them at that time as the minimum bid. But what if another party makes a higher offer? Will it increase its minimum bid and what will be the position of the Defendant who had already accepted an offer? It is clear that if minimum price was required that would have been communicated earlier and not after an acceptance was done. So, the condition that bank will not agree to a price less than $2.8 million cannot be used to reject the already accepted offer of the Plaintiff. In fact there was no offer for $2.8 million as an agreement was reached between Plaintiff and the Defendant and there cannot a valid legal offer once the Plaintiff's offer is accepted. So the said 'offer' of $2.8 million cannot be a basis of any condition that subsequently imposed on parties.

48. The Defendant has not raised any issue of impossibility, futility, unfairness, hardship or laches that would prevent the Court from making an order for Specific Performance.

49.	The Plaintiff cannot be held responsible for the obligations of the Defendant, and the Defendant is obliged to fulfill its obligations to other parties as they were at no time became parties to the agreement between the Plaintiff and the Defendant. It is evident that no such conditions were attached to the 'draft' sale and purchase agreement and cannot impose additional obligation to the Plaintiff and the Defendant should convey the title free of all encumbrances to the Plaintiff upon Payment of $2.4 + vat as the sale price of the land in question.

50.	The Bank has also requested to remove the caveat. This is an action plaintiff filed for specific performance. The intervener was added since they will be an affected party. This is not a proceeding to remove the caveat in terms of Section 110 of the Land Transfer Act. In any event in terms of Section 110 of the Land Transfer Act "Except in the case of a caveat lodged by the Registrar the caveatee or his agent may make application in writing to the Registrar to remove the caveat…." . So the power to remove the Caveat is given to the caveatee or his agent and the mortgagee is not an agent of the caveatee. 

If a Mortgagee wishes to have a Caveat removed, it has to file an application under Section 109(2) of the Land Transfer Act. This relevantly reads:

"(2) Any such applicant or registered proprietor, or any other person having any registered estate or interest in the estate or interest protected by the Caveat, may, by summons, call upon the caveator to attend before the court to show cause why the caveat should not removed…." (emphasis added)

In other words:

(a)	 For a registered proprietor to require a Caveat to be removed: It uses the provisions of Section 110(1) by giving a Notice to Remove to the Registrar of Titles.

(b)	 For any other persons (which includes a mortgagee): It uses the provisions of Section 109(2) by taking out a Summons.

If the Bank therefore requires the Caveat to be removed, it will need to make an application under Section 109(2), a copy of the application is served on the Plaintiff and the matter will then be dealt through the normal court process. The bank as an intervener in a specific performance application between Plaintiff and Defendant cannot seek to remove the caveat already in place.

E.	CONCLUSION

51.	The Defendant is ordered to transfer the property in issue to the Plaintiff free of all encumbrances upon the payment of $ 2.4 million + Vat by the Plaintiff. 

52.	Considering the circumstances of the case I will not make an order for cost.
The caveat is also extended till it is removed by courts.

Dated at Suva this 5th day of April, 2011.

Mr. Deepthi Amaratunga
Acting Master of the High Court

Suva