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Scan Systems Investments Pty Ltd v Stewart [2011] FJHC 658; HBC163.2011L (18 October 2011)

IN THE HIGH COURT OF FIJI

AT LAUTOKA

Civil Action No. HBC 163 of 2011L

BETWEEN:

SCAN SYSTEMS INVESTMENTS PTY LIMITED
a duly incorporated company having its registered office at 112 Main Street, Blacktown, NSW 2148, AUSTRALIA.
APPLICANT

AND:

NICOLA JANE STEWART AKA NICOLA JANE MUDGWAY
c/- Neel Shivam Lawyers, Suite 1, Level 1, 22 Carnarvon Street, PO Box 260, Suva, Fiji.
RESPONDENT

RULING
[Removal of Caveat]

INTRODUCTION

[1]. Scan Systems Investments Pty Limited[1] (“SSIPL) seeks to remove the respondent’s caveat number 742823 which is registered on Certificate of Title No. 34907. SSIPL holds a first registered mortgage over this property. The registered proprietor of the property and mortgagor is one Craig Mudgway. Mr. Mudgway is the respondent’s estranged husband. On 06 April 2010, SSIPL served a 7 day notice to the defaulting Mr. Mudgway pursuant to section 77 of the Property Law Act. Mr. Mudgway did not comply with the notice. On 13 May 2011, SSIPL obtained an order for vacant possession of the property. SSIPL then proceeded to sell the property by way of mortgagee sale. In due course, on 30 June 2011, SSIPL was to enter into a sale and purchase Agreement with Beachcomber Island Resort Limited for $1,775,000.00. The Agreement stipulated that settlement was to take place by 31 July 2011 (i.e. within 30 days of the signing of the Agreement). A copy of the Agreement is exhibited to the affidavit of SAKE VAN DER KROEF aka STAN VAN DER KROEF[2] which is filed herein support of the application. Also exhibited is a copy of the Transfer document in registrable form which is currently being processed by the Fiji Islands Revenue & Customs Authority for clearance under the Capital Gains Tax Decree 2011.

THE CAVEAT

[2]. The respondent (“Mrs. Mudgway”) had lodged the caveat[3] in question on 28 February 2011 pursuant to an Order of the Family Division of the High Court dated the same day. She claims an interest as equitable beneficiary by virtue of being the legally married wife of Mudgway, the caveatee. A copy each of the said caveat and Court Order are exhibited to Van Der Kroeff’s affidavit.

REMOVAL OF CAVEAT

[3]. The application to remove the caveat is filed pursuant to section 109 of the Land Transfer Act (Cap 131). Section 109 of the states as follows:

Notice and opposition to caveat

109.-(1) Upon the receipt of any caveat, the Registrar shall give notice thereof to the person against whose application to be registered as proprietor of, or, as the case may be, to the registered proprietor against whose title to deal with, the land, estate or interest, the caveat has been lodged.

(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 be removed, and the court on proof of service of the summons on the caveator or upon the person on whose behalf the caveat has been lodged and upon such evidence as the court may require, may make such order in the premises, either ex parte or otherwise as to the court seems just, and, where any question of right or title requires to be determined, the proceedings shall be followed as nearly as may be in conformity with the rules of court in relation to civil causes.

[4]. Under section 109, the onus is clearly on the caveator to attend court to show cause as to why his or her caveat should not be removed. The court, upon proof of service of the summons on the caveator, may make such order either ex-parte or otherwise as the court seems just. However, where any question of right or title requires to be determined, the proceedings shall be followed as nearly as may be in conformity with the rules of court in relation to civil causes.

SERVICE

[5]. The summons for removal of caveat was served on Neil Shivam Lawyers because that was the address that the respondent had appointed on her caveat. Notably, at the time the applicant’s solicitors served the summons on Neil Shivam Lawyers, they were already aware, having been advised by Neil Shivam lawyers by letter dated 12 September 2011 - that they were no longer acting for Mrs. Mudgway and did not have her contact details. A copy of their letter is exhibited to Van Der Kroeff’s affidavit. I note also – and with interest - that the Order of the Family Division of the High Court that was sealed by Neil Sivam Lawyers[4] on 28 February 2011 describes Mrs. Mudway as follows in the heading:

NICOLA JANE MUDGWAY of 22a Upland Road, Remuera, Auckland, New Zealand, Domestic Duties.

[6]. Section 108 of the Land Transfer Act (Cap 169) states as follows:

Entry and service of caveats

108.-(1) No caveat shall be accepted by the Registrar unless some address or place within Fiji shall be appointed therein as the place at which notices and proceedings relating to such caveat may be served.

(2) Every caveat shall be entered in the register as of the day and hour of its receipt by the Registrar

(3) Every notice relating to a caveat and any proceedings in respect thereof if served at the address or place appointed in the caveat in accordance with the provisions of subsection (1) shall be deemed to be duly served.

THE LAW

[7]. The scheme of caveats under the Land Transfer Act ensures that equitable estates are temporarily protected in anticipation of legal proceedings or until the determination of those which are already afoot.

[8]. The onus is on the caveator to convince the court that her caveat should be extended until full trial.

[9]. The principles to be applied are analogous to those that apply in an interlocutory injunction application. The caveator must establish: firstly, that there is a serious question to be tried. Under this heading, it is relevant to consider the interest she claims on the land; secondly, that the balance of convenience favours maintenance of the caveat until trial; and thirdly, that the overall justice of the case favours keeping the caveat until trial.

(see the Fiji Court of Appeal’s judgment in Bahadur Ali v Fiji Development Bank[5]).

DISCUSSION

[10]. Although the respondent has not turned up in court to defend her caveat, the fact that she is the legal spouse of Mudgway is a strong indication of an arguable equitable interest in the estate in question.

[11]. About a year after the Family Division of the High Court had made orders allowing Mrs. Mudgway to lodge a second caveat on the property[6] and forbidding Mr. Mudgway from dealing, transferring, further mortgaging, alienating, or interfering with the property, SSIPL was serving a notice under section 77 of the Property Law Act to Mr. Mudgway.

[12]. Although section 108(3) of the Land Transfer Act deems that service is effective if made at the Fiji address[7] appointed on the caveat, I emphasize that section 108(3) is only a deeming provision. In this case, there are two things that operate against applying the deeming provision: firstly, the applicant has been advised that the solicitors whose address is appointed on the caveat has ceased to act for the respondent and, secondly, Mrs. Mudgway’s Auckland address must be known to SSIPL’s solicitors[8].

[13]. Furthermore, section 109(2) stipulates in part that where any question of right or title requires to be determined, the proceedings shall be followed as nearly as may be in conformity with the rules of court in relation to civil causes.

[14]. Ms Patel submits that the applicant is prejudiced by the said caveat in that it is standing in the way of the completion of the sale of the mortgaged property and that any further delay in settlement will incur ongoing interest costs to SSIPL. Ms Patel further submits that the Applicant has further incurred solicitor/client costs of $2,645.00 in making this application and it is anticipated that there will be further costs of $1,000.00 if the orders sought are made unopposed.

CONCLUSION

[15]. There is an ongoing injunction by the Family Division of the High Court retraining Mr. Mudgway (and/or his servants/agents) from dealing, transferring, further mortgaging, alienating or otherwise from interfering with the property being CT 34907.

[16]. As stated above, barely a year after that Order was sealed, SSIPL had commenced mortgagee action. Nicola Jane Mudgway’s interest requires to be determined. There is no pending writ action. The application has been filed in the form of an Originating Summons. I am certain that Nicola Jane Mudgway is unaware of these proceedings to remove her caveat.

[17]. The service of the notice and the summons are both ineffective in my view for reasons I have stated in paragraph 12 above.

[18]. Accordingly, I order – and grant leave for personal service out of jurisdiction - on the New Zealand residential address which I note in paragraph 5 above. This case is adjourned to Tuesday 08 November 2011 for mention. If Mrs. Mudgway does not appear in Court, I will then grant Order in Terms.

...............................
Anare Tuilevuka
Master
At Lautoka
18 October 2011

^[1] a company duly incorporated in Australia.

[2] of 56 Juniper Circuit, Stretton, Queensland 4116, Australia, a Director of SCIPL.

^[3] caveat number 742823 as it appears on the copy of the Certificate of Title annexed to VAN DER KROEF’s affidavit.

^[4] who were then acting Solicitors for Mrs. Mudgway.
^[5] Counsel for the appellant cited the leading Privy Council authority Eng Mee Yong v. Letchumanan [1980] AC 331. The essential holdings in that case, (by way of analogy with interlocutory injunctions) regarding serious issue to be tried and balance of convenience are well known and require no repetition here. We would add, however, that when those two matters have been addressed, the discretion vested in the Court requires the tribunal to stand back and look at the overall justice of the case. Cooke J. (as he then was) in Klissers v. Harvest Bakeries [1985] 2 NZLR at 142 line 25 delivering the judgment of the Court of Appeal put it this way.

“In any event the two heads (serious issue and balance of convenience) are not exhaustive. Marshalling considerations under them is an aid to determining, as regards the grant or refusal of an interim injunction, where overall justice lies. In every case the Judge has finally to stand back and ask himself that question.“

[22] In Eng Mee Yong (Supra) the Privy Council also recognized that disputed issues of the fact can in an appropriate case be resolved on affidavit evidence. Again Cooke P. in Barrett v. IBC International Limited [1995] 3 NZLR 170 at 175 line 30 dealing with what was described in that case as a 180 degree change of direction said:

“Evidently the learned Master was inclined not to rule out the possibility that this new allegation might be credible. I am afraid I am unable to take so generous a view. On the contrary, the case seems transparently to be one for the application of Lord Diplock’s well-known statement in Eng Mee Yong v. Letchumanan [1980] AC 331, 341:

“Although in the normal way it is not appropriate for a judge to attempt to resolve conflicts of evidence on affidavit, this does not mean that he is bound to accept uncritically, as raising a dispute of fact which calls for further investigation, every statement in an affidavit however equivocal, lacking in precision, inconsistent with undisputed contemporary documents or other statements by the same deponent, or inherently improbable in itself it may be.”

That proposition has been acted on in this Court more than once. It is sufficient to refer to Bilbie Dymock Corporation v. Patel [1987] NZCA 193; [1989] 1 PRNZ 84, 86, where encouragement was found in Lord Diplock’s words for adopting a robust and realistic judicial attitude.........”

We consider that aspects of this case call for a similar approach.

^[6] Orders were made on 28 February 2011.
^[7]Section 108.-(1) of the Land Transfer Act (Cap 131) stipulates that no caveat shall be accepted by the Registrar unless some address or place within Fiji shall be appointed therein as the place at which notices and proceedings relating to such caveat may be served.

^[8]Considering that they had attached a copy of the sealed Family Court Division Order to their supporting affidavit.