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Sharma v Deans Signs Ltd [2011] FJHC 67; Civil Action 108.2006 (17 February 2011)

IN THE HIGH COURT OF FIJI
AT SUVA
CIVIL JURISDICTION

CIVIL ACTION NO. 108 OF 2006

BETWEEN:

HEMANT SHARMA (f/n Parshu Ram)
of Nabua, Suva in the Republic of Fiji Islands.
Plaintiff

AND:

DEANS SIGNS LIMITED
a limited liability company having its registered office at Suva
in the Republic of Fiji Islands.
1st Defendant

AND:

PARWEEN GHAZALA AKBAR (f/n Saiyed Mohi-Ud-Dean)
of 12 Leka Street, Suva in the Republic of Fiji Islands, Florist.
2nd Defendant

AND:

NITYA NAND trading as
PREMIER REAL ESTATE of 35 Ono Street, Samabula, Suva.
3rd Defendant

AND:

ABHINESH ASISH CHAND f/n Prem Chand)
of Rifle Range, Vatuwaqa, Suva in Fiji, Businessman.
4th Defendant

Before: Master Anare Tuilevuka
Solicitors: R. Patel & Co. for the Plaintiff
Jamnadas & Associates for the 1st and 2nd Defendants
M.A. Khan & Associated for the 3rd Defendant
Sherani & Co. for the 4th Defendant

Date of Ruling: 17th February, 2011

RULING

[1]. What is before me is an application by Sherani and Company for the 4th defendant to strike out the statement of claim on the ground that it discloses no reasonable cause of action against the 4th defendant.

[2]. The application was filed on 28th March, 2006 and was actually heard by Mr. Justice Jitoko on 16th June 2006. Ruling was to be on Notice. No Ruling has since been delivered. Notably, all along, the matter appears to be taking its normal course. Summons for directions for example was filed on September 2009 and Order in Terms granted on 24th February 2010. The plaintiff did file his list of documents on 25th March, 2010.

[3]. However, on 26th March, 2010, Sherani & Company filed another summons to strike out under Order 18 Rule 18 (1)(a) of the High Court Rules, 1988. When the matter came before me in August 2010, both counsels indicated that they were both relying on submissions filed in 2006.

[4]. The first thing that the Courts will do when faced with an application to strike out under Order 18 Rule 18 is to assume that each and every one of the facts pleaded in the statement of claim is true and will be capable of proof at trial. Once that assumption is made, the next step is to assess whether or not the pleaded facts do raise a reasonable cause of action.

[5]. In essence, what this second step requires of the court is some analysis to see whether or not the pleaded facts could sustain some legal argument or raise some legal questions of importance.

[6]. Otherwise – if - on the facts as pleaded, it appears that the plaintiff could not succeed as a matter of law – then the Court will not hesitate to strike out the claim (see Attorney General –v- Shiu Prasad Halka 18 FLR 210 at 215, as per Justice Gould VP; see also New Zealand Court of Appeal decision in Attorney -v- Prince Gardner [1998] 1 NZLR 262 at 267.

[7]. The plaintiff is a sitting tenant on Crown Lease 4983. He operates his business from CL 4983. He had been keen for some time on acquiring this piece of land as he sees great potential in it for expanding his business.

[8]. CL 4983 is owned by the 1st defendant. The 2nd defendant – according to the plaintiff – is the agent of the 1st defendant who had authority to sell CL 4983. On 21st August 2003, the 2nd defendant made an offer to sell CL 4983 to the plaintiff for $185,000. The plaintiff accepted the offer verbally to the 2nd defendant and then applied for and obtained finance-approval from Home Finance Company Limited. When he got that approval, he informed the 2nd defendant who then informed the plaintiff to finalize the sale through the 3rd defendant – a real estate agent for the 1st defendant. The plaintiff then contacted the 3rd defendant and informed him that he had finance approved.

[9]. However, the 3rd defendant then told the plaintiff that the 1st defendant now wanted to vary the contract by increasing the purchase price to $260,000-00 (two hundred and sixty thousand dollars).

[10]. The plaintiff agreed and informed the 3rd defendant accordingly. But the 3rd defendant then told the plaintiff that he would require $10,000 deposit to be paid to him. The plaintiff then secured finance through Colonial National Bank and on 25th November 2004, the plaintiff's solicitors sent a cheque of $10,000 to the 3rd defendant as deposit. However, the third defendant demanded a cash payment. This, observes the plaintiff, was contrary to the Trust Account Act which prohibits lawyers from writing out cash cheques from their trust accounts. However – the 3rd defendant still refused to accept the plaintiff's solicitors' trust account cheque of $10,000. According to the plaintiff – the 3rd defendant henceforth simply refused to deal with him. Then – on 14th December 2004, the plaintiff managed to get a caveat registered against the title.

[11]. Then on 20th September 2005, the 3rd and 4th defendants entered into a contract for the sale and purchase of CL 4893.

[12]. Paragraph 32 of the statement of claim contains the only allegation against the 4th defendant which is as follows:

32. THAT the Fourth Defendant is not a bona fide purchaser for value as he would have had knowledge of the Plaintiff's claim in the land by virtue of his caveat.

[13]. Amongst the relief sought, is an "Order rescinding the purported sale of Crown Lease No. 4893 to the 4th defendant".

[14]. The gist of the 4th defendant's argument in this application is that – from the pleaded facts, the plaintiff's claim is against the 1st, 2nd and 3rd defendants. The plaintiff cannot bring any action against the 4th defendant for any alleged breach of contract or agreement the plaintiff had with the 1st, 2nd and 3rd defendants.

[15]. In my view, the plaintiff's claim against the 1st, 2nd and 3rd defendants is extremely weak for the following reasons:

• (i) the land in question is a crown lease.
  
• (ii) presumably – the director of lands' consent has not been sought let alone granted on any of the purported dealings between the plaintiff and the 1st, 2nd and/or 3rd defendant. It is not pleaded otherwise in the statement of claim.
  
• (iii) absent any prior consent of the director of lands, it is hard to see how the plaintiff can even argue that he has an equitable proprietary interest in the land in question.
  
• (iv) in fact – it is hard to see how the plaintiff can even argue a right in personam – let alone – a right to specific performance – because a right to specific performance can only arise if there is – firstly – a valid contract on foot. Frankly – it is trite that - absent any consent from the director of lands – there can never be any valid contract.
  
• (v) having said all the above – it is even more impossible to see how the plaintiff can even fathom a cause of action against the 4th defendant.
  
• (vi) the reference to the 4th defendant as not being a "bona fide purchaser for value as he would have had knowledge of the Plaintiff's claim in the land by virtue of his caveat" - appears to be misguided because the 4th defendant is technically not even yet a "purchaser for value" as money has not been paid, and no transaction has yet taken place pursuant to the agreement. Also, it is misguided because the caveat does not establish the validity of the claim it asserts. And it is not fraud if the 4th defendant were to try and register his interest to defeat the interest therein the caveat. The following submissions (and cases cited) by the 4th defendant's solicitors are to the point:
  

It is always open to the holder of an unregistered interest to protect his interest by caveat, and "a purchaser may shut his eyes to the fact of there being an unregistered interest, and need not take any consideration of the persons who claim under the unregistered interest"- Munro v. Stuart [1924] NSWStRp 54; 1924 41 S.R. (N.S.W.) 203, at 206. In the words of Kitto J: "merely to take a transfer with notice or even actual knowledge that its registration will defeat an existing unregistered interest is not fraud" – Mills v. Stokman [1967] HCA 15; 1967 116 C.L.R. 61, at 78.

Nor is it fraud to register promptly with the purpose of defeating a claim over the land which may be established by pending litigation: that is not cheating a person of a known existing right – Waimiha Sawmilling Co. Ltd. v. Waione Timber Co. Ltd. 1926 A.C. 101. On the other side of the line, a registered title is defeasible for fraud where the purchaser takes not merely with notice of the unregistered interest but having given an assurance that the interest will be preserved – Loke Yew v. Port Swettenham Rubber Co. Ltd. [1913] UKLawRpAC 11; 1913 A.C. 491, at 501-502.

(vii) the point is – the 4th defendant is not even a registered proprietor yet. And any allegation of fraud against the 4th defendant is irrelevant. Any such allegation would only be relevant if the 4th defendant is in fact already registered as proprietor of CL 4983 and the plaintiff was seeking to impeach the indefeasibility of his title (see Assets Co. Ltd v Mere Roihi [1905] UKLawRpAC 11; 1905 A.C. 176 at 210, Privy Council; Waimiha Sawmilling Co. Ltd. v. Waione Timber Co. Ltd. 1926 A.C. 101, at 106-107).

[16]. In my view, the plaintiff's claim against the 1st, 2nd and 3rd defendants is so weak. But – while even a weak case is entitled to the court's time (as per Mr. Justice Kirby in Len Lindon -v- The Commonwealth of Australia (No. 2) S. 96/005) – the claim against the 4th defendant however does not deserve the same latitude as it simply is devoid of a reasonable cause of action and is clearly frivolous and/or vexatious. Fraud would have been a triable issue if it was – supposedly - used by the 4th defendant to defeat the plaintiff's interest to become the registered proprietor. No such allegation is raised in the pleadings. In fact, the 4th defendant – as stated – is not even a registered proprietor.

[17]. The plaintiff's caveat will suffice to protect his purported interest in CL 4893 (see paragraph 10 above). He does not have to concoct some wishy washy allegation of fraud against the 4th defendant to protect his interest.

[18]. In the final, I grant order in terms of the 4th defendant's application and strike out the claim against the 4th defendant only. I award costs in favour of the 4th defendant against the plaintiff in the sum of $600-00 (six hundred dollars) to be paid in 14 days.

[19]. Further directions on the course of the continuing action against the 1st, 2nd and 3rd defendants are to be given by Master Amaratunga.

Anare Tuilevuka
Master

At Suva
17th of February 2011.