IN THE HIGH COURT OF FIJI
AT SUVA-CENTRAL DIVISION
CIVIL JURISDICTION

CIVIL ACTION HBC NO. 349 OF 2010

BETWEEN

MACIU TAMANI PALU also known as MACIU TAMANIBOLA PALU Lot 23, Maqbool Road, Nadera, Nasinu, Engineer.
PLAINTIFF

AND

AUSTRALIA & NEW ZEALAND BANK a duly constituted banking corporation having its registered office in Melbourne, Australia and carrying on business in Suva having branches throughout Fiji.
DEFENDANT

Appearances: Mr G. O' Driscoll for the Plaintiff. 
 Ms B. Narayan for the Defendant
Date of Hearing:, 23rd March, 2011
Date of Judgment: 19th April, 2011

Judgment of: Justice A.L.B.Brito-Mutunayagam

INTERLOCUTORY JUDGMENT

1.	By Inter-parte Notice of Motion, the Plaintiff has applied for Injunctions to restrain the Defendant from-

a)	evicting, entering and interfering with the Plaintiff's occupation from the property at Maqbool Road, Nadera, Nasinu, until the final determination of this action,

b)	calling for any tender by way of advertisement and exercising its mortgagee sale powers to sell the said property, and 

c)	that all court proceeding, suits and/or actions by the Defendant against the Plaintiff including Civil Action No. 335 of 2010 be stayed.

2.	The Plaintiff's case
The Plaintiff had obtained a loan from the Defendant. This facility was released to the Plaintiff upon securing the property referred to in paragraph 1 of his Statement of Claim, being the registered proprietor of the property .Having encountered financial difficulties, the Plaintiff fell into arrears. 

Consequently, the Defendant had made demands requesting payments of the monies due. had advertised the property for sale and given the Plaintiff 14 days to give vacant possession.

In an Affidavit supporting the Motion, the Plaintiff stated inter alia that the Defendant had misadvised, misrepresented and misinformed the Plaintiff to completely demolish the building built by him on his property. As a result, the Plaintiff claims, he has suffered loss in the sum of $378,000.

The Defendant had made demands requesting payments of the monies due. Thereafter the Defendant had advertised the property for sale and given the Plaintiff 14 days to give up vacant possession.

At the hearing, Counsel for the Plaintiff submitted that in terms of the principles laid down in American Cyanamid Ltd v Ethicon Ltd, [1975] 1 All E.R.504,there is a serious question to be tried and the balance of convenience to maintain the status quo lies with the Plaintiff. It was further submitted, that the Plaintiff was not relying on the averment in the Plaintiff's affidavit, that the loan was not fully drawn.

3.	The Defendant's case
The Defendant, in its Affidavit in Opposition, refuted the allegations of misadvise, misrepresentation and misinformation, and stated that the decision to demolish the Church was taken by the Plaintiff, when he had realised he could not sell the property with the illegal structure. 

Counsel for the Defendant submitted that there is no serious issue to be tried, and if the Plaintiff is successful in his claim, he can be adequately compensated by an award of damages. It was also asserted that the Plaintiff's undertaking as to damages had not been substantiated . 

4.	Issue
It is undisputed that the Defendant was in default under the mortgage. 

The Plaintiff's case is founded on the premise that the Defendant "misadvised, misrepresented and misinformed" the Defendant to demolish the building. The Statement of Claim and Affidavit filed do not support or particularise the misadvise, misrepresentation and misinformation.

The Plaintiff, in its Affidavit in Reply relied on documents "B" and "C" annexed to the Affidavit in Opposition filed by the Defendant to support its allegations. This contention was re-asserted by Counsel for the Plaintiff at the hearing.

"B" and "C" constitute letters written by the Plaintiff to the Defendant.

Letter dated 17 November,2009,marked "B" reads as follows:

 " RE:EXTENTION OF OUR MORTGAGE SALE PERIOD

As discussed with you today Monday 16/11/09 at 3.00pm that if we remove our Church building from the same property in which our double storey and single storey is built on you will give us an extension of time to sell our property.........

A couple of interested people have already visited the site but were discouraged and not willing to make an offer because of our illegal Church building sitting on the same property. This is what we did not realise in the first place. We thought that we could get a good price if the Church was sold together with the Freehold land & other Improvements.

We will now remove it within a month's time since it is a very big concrete building so that we can get a good price for our property. This enables us to pay off our dept with your Bank (ANZ) and buy a piece of land and resettle somewhere else with my family.

 We thank you for your kind consideration, foresight & wisdom in giving us some more time for the sale of our Property since it just cannot be sold with the Church building on it...."(emphasis added)

Letter dated 30th December,2009, marked "C" provides: 

"RE:REQUEST FOR EXTENTION OF TIME IN DEMOLISHING OUR CHURCH & SELLING OUR MORTGAGED PROPERTY FOR A REASONABLE PRICE

..From our agreement is that once our Church is removed we will be given time in the selling of our property to get a reasonable price. In which will pay off our debt with the Bank ie. now over $105,000 plus I believe and to have something left to resettle my family in another piece of Land elsewhere.

 Although a Church group from Australia ie. New Life Ministries is coming up with a reasonable offer. We will not wait for them because there are a lot of good offers available once our Church is removed."(emphasis added)

The said letters "B" and "C" express the writer's opinion that the property cannot be sold with the Church building on it. The Plaintiffs' allegations of misadvise, misrepresentation and misinformation on the part of the Defendant, is unfounded.

At the hearing, Counsel for the Defendant drew the attention of the Court to two letters written by the Plaintiff to the Defendant dated 15thJune,2010, and 15th July,2010, marked "F" and "L" respectively and annexed to the Affidavit in Opposition filed by the Defendant. 
The letter dated 15th June 2010, states:

"You have given me 7 days only to pay up my debt or arrange for a higher bidder to buy my property..

Let me inform you now that I have already arranged for a buyer who is buying my property for $ 170,000.I will need a month's time for purchase agreement deal i.e. until 15/7/2010 next month July. This will allow me to remove all my church materials etc from the site. Since it is not in the loans purchase agreement nor in the mortgage sale advertisement."

The letter dated 15th July 2010, states:

RE: Request for (2 more weeks) in the sale of my Property

I have now received my Bank statement this week, with my current balance of $112,000 as at 25/06/2010 last month.

According to my last month's letter I was expected to settle today 15/7/2010 with my buyer who's buying my property for $170,000.

Please bear with me Sir, of the delay, I will pay $5000 within these two weeks until 30/7/2010, just to reduce my balance by $5000.00 until my buyer and I have completed our dealing and settlement is done.

This will reduce my outstanding account and interest from $112,000 to $107,000 next month...............................

By the said letters dated 15thJune, 2010, and 15th July, 2010, the Plaintiff had sought extension of time to settle his debt.

Suppression of material facts
Counsel for the Defendant invited the attention of the Court to several Default Notices sent to the Plaintiff by the Defendant, and letters from the Plaintiff seeking extension of time to settle his arrears, all of which have been marked singularly as annexure "E" in the Affidavit in Opposition of the Defendant.

It was contended that the Plaintiff was in breach of its duty to disclose material facts in its application, since none of the aforesaid correspondence between the parties had been disclosed. The case of Mohammed Khan vs Habib Bank Ltd (HBC 659 D.98S) was cited as authority for the proposition that non-disclosure of material facts renders an application for an interim injunction to be dismissed in limine.

The documents referred to in the preceding paragraphs of this judgment comprise material facts to be considered by the Court, namely, the default notices sent to the Plaintiff, the extensions granted to the Plaintiff to settle his arrears and the opportunity granted to sell the property at a higher price. The Plaintiff's application for interlocutory relief must necessarily be dismissed for failure to disclose material facts .

The Plaintiff's claim 
In any event, the Plaintiff's claim that the Defendant "misadvised, misrepresented and misinformed" the Defendant to demolish the building, is for the reasons stated above, unfounded and frivolous. In my judgment, there is no serious question to be tried as submitted by Counsel for the Defendant, in terms of the principles laid down by Lord Diplock in American Cyanamid v. Ethicon Ltd .The Plaintiff's remedy, if he succeeds, lies in damages, which the Defendant as a Bank,will be able to meet. 

 The Court of Appeal of Fiji in the recent case of Strategic Nominees Ltd vs Gulf Investments (Fiji) Limited (Civil Appeal No.ABU0039 of 2009) held that the American Cyanamid principles have been introduced in a "wholly inappropriate context". William Marshall, Justice of Appeal delivering the judgment of the Court, emphasized that the quia timet interlocutory injunction to restrain alleged violation of a proprietary right, the test of "serious question to be tried" and the requirement to give a cross undertaking in damages do not apply to the rights of a mortgagee to exercise his power of sale, when there is default by a mortgagor .It was thus stated:

 " There is no violation of the mortgagor's rights when the mortgagee seeks to enter into possession or to exercise his right of sale. It is simply a question of realizing the security which was freely granted so that a commercial loan would be made to the mortgagor and his associates.

 It follows that with the mortgagee's power of sale, there is no balance of convenience arising out of a contested issue which will be resolved on trial."(emphasis added)

In support, the following passage from the judgment of Walsh J in Inglis v. Commonwealth Trading Bank of Australia (1972) 126 C.L.R 161 at page 166, was cited:

"But the proprietary rights as owners which the plaintiffs have are rights which are subject to and qualified by the rights over the property given to the defendant by the mortgage. If the defendant exercises the latter rights or threatens to do so that is not, as such, an act or a threatened act in contravention or infringement of the plaintiffs' proprietary rights."

Inglis v. Commonwealth Trading Bank of Australia is authority for the proposition that as a general rule, an application to restrain the exercise by a mortgagee of a power of sale given by a mortgage, will not be granted unless the amount of the mortgage debt, if this be not in dispute, be paid, or unless, if the amount be disputed, the amount claimed by the mortgagee be paid into Court. The judgment of Walsh J sitting at first instance was upheld by the Full Court of the High Court of Australia.

Dealing with cross claims for damages by mortgagees, Walsh J at page 165 observed:

"The benefit of having a security for a debt would be greatly diminished if the fact that a debtor has raised claims for damages against the mortgagee were allowed to prevent any enforcement of the security until after the litigation of those claims had been completed.

In my opinion the fact that such claims have been brought provides no valid reason for the granting of an injunction to restrain, until they have been determined, the exercise by a mortgagee of the remedies given to him by the mortgagee."(emphasis added)

The principles to be derived from a series of cases reviewed were summarised in Strategic Nominees Ltd vs Gulf Investments(Fiji) Limited (supra) as follows:

"(1) The law is that cross claims and equitable set offs claimed by a mortgagor debtor do not apply to the mortgagees rights when there is default by the debtor .

(2) This applies whether the cross claims and equitable set offs claimed by a mortgagor debtor or by a third party guarantor...

(3) The courts will not restrain the mortgagee from his remedies of possession or sale pending a trial on the alleged cross claim or equitable set off.

(4) The only way that the mortgagor can buy time and have his cross claim or equitable set-off heard is by bringing all the monies claimed by the mortgagee into court." 

The Plaintiff has not given an undertaking or indicated his willingness to pay the mortgage debt in Court. The Court will not in the circumstances, restrain the Defendant from exercising its power of sale under the mortgage .

5.	Mortgagee's right to enter into possession 
Counsel for the Plaintiff contended that the Defendant does not have the right to enter into possession of the mortgaged property.

The right to enter into possession of the mortgaged property is contained in Clause 7.3 of the Mortgage document in this case. The Defendant's contractual rights are fortified by Section 75 of the Property Law Act(Cap 130),which empowers a mortgagee to enter into possession of the mortgaged property, upon default in payment of the mortgage money or any part thereof .

6.	Proceedings in Civil Action No. 335 of 2010
The Plaintiff has sought to restrain the Defendant from proceeding against the Plaintiff in Civil Action No. 335 of 2010.In that case, the Defendant has sought to recover the amount outstanding on the loan granted to the Plaintiff, for the reason that no satisfactory tender had been received for the purchase of the property as averred in the Statement of Claim filed in that case. In Ram Prasad vs ANZ Banking Group Limited (HBC 0121/99S) as cited by Counsel for the Defendant, it was held that ".. a mortgagee, so long as part of the mortgage debt remains unpaid may pursue any or all of the remedies available to the mortgagee at the same time."

I hold the Plaintiff's application to restrain the Defendant from proceeding against the Plaintiff in Civil Action No. 335 of 2010 is misconceived.

7.	Orders

For the aforesaid reasons, I make the following orders;

a)	The Plaintiff's application for restraining Orders in prayer 1,2,3 and 4 of the Inter parte Motion is dismissed

b)	Costs to the Defendant, which is summarily assessed at $500.

c)	The Plaintiff shall pay the costs within 4 weeks from the date of this judgment.

A.L.B.Brito-Mutunayagam
Judge

At Suva
19th April, 2011