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Petherick v Aussie Houses International Ltd [2011] FJHC 757; HBC129.2009L (22 November 2011)

IN THE HIGH COURT OF FIJI
AT LAUTOKA
CIVIL JURISDICTION

Civil Action No: HBC 129 of 2009L

BETWEEN:

STEVEN GRANT PETHERICK
Plaintiff

AND:

AUSSIE HOUSES INTERNATIONAL LIMITED
1st Defendant

AND:

HAROLD JOHN HEELEY
2nd Defendant

INTERLOCUTORY JUDGMENT

Of: Inoke J.

Counsel Appearing: Mr K Muaror (Plaintiff)
Ms M Muir (Defendants)

Solicitor: Muaror & Co (Plaintiff)
MK Sahu Khan & Co (Defendants)

Date of Hearing: 18 November 2011
Date of Judgment: 22 November 2011

INTRODUCTION

[1] On 31 July 2009, I granted injunctions ex-parte restraining the Defendants from selling a freehold property at Denarau Island and from removing fixtures and chattels from it. That judgment is reported in Petherick v Aussie Houses International Ltd [2009] FJHC 158; HBC129.2009L (31 July 2009).

[2] On 12 August 2011, the defendants filed an application to have those injunctions discharged. This is my judgment after hearing that application.

THE FACTS

[3] I reproduce the facts from my judgment of 31 July 2009. The parties entered into a sale and purchase agreement on 19 June 2006. The agreement is yet to be fully performed. The Plaintiff is the purchaser and the First Defendant is the vendor. The Second Defendant is a director of the First Defendant and signed the agreement on behalf of the First Defendant. Both parties were represented by the same lawyer for the sale and purchase. As is usual for purchases of land in Denarau Island the purchase price is over a million dollars and so is the deposit. I am conscious of the commercial sensitivity of these matters so in this judgment I will not refer to actual amounts but to approximations only.

[4] At the time of execution of the sale and purchase agreement, the vendor was in the process of constructing a luxury water front residence on the land. It was then agreed between them that the development and construction of the residence would be managed by the Second Defendant.

[5] The agreement required the consent of the Director of Lands which was obtained on 24 July 2006 and remains current till 24 October 2009. The Plaintiff was to pay a deposit of well over a million dollars to the solicitor's trust account to be released to the vendor on receipt of the Director's consent. The Plaintiff says that he has already paid the deposit as well as further sums pursuant to the agreement, all totalling close to half of the total purchase price. Payment of the balance of the purchase price was to be based on the progress of the construction work.

[6] The agreement required the vendor to complete construction of the residence within 12 months of the agreed commencement date of 19 June 2006. Construction work has now stopped so the Plaintiff has stopped making further payments.

[7] The agreement allowed the purchaser to lodge a caveat on the title to protect his interest until completion of the sale. On 12 September 2006, the solicitor acting for both parties lodged a caveat on behalf of the Plaintiff pursuant to the agreement. However, on 12 November 2008, notwithstanding the agreement, the vendor lodged an application pursuant to section 110(1) of the Land Transfer Act [Cap 131] requiring the Plaintiff to remove his caveat. That notice was apparently sent to the parties' former solicitors in December 2008. The Plaintiff instructed his current solicitor in late December 2008 to obtain an order extending the caveat, which order the solicitor obtained on 24 December 2008 and lodged with the Registrar of Titles on the same day. Unfortunately, it seems that the caveat was removed at 10.00am but the Court order was lodged at 12.40pm which means that there is no longer any caveat to protect the Plaintiff's interest in the land and unfinished residence.

[8] The vendor's new solicitors by letter dated 28 January 2009 gave notice of rescission of the agreement based on the Plaintiff's alleged failure to pay the balance of the purchase price. The notice of rescission says the deposit and all other sums paid by the Plaintiff are now forfeited to the vendor and the vendor will resell the property and sue the Plaintiff for any deficiency in the sale price. This matter has been the subject of without prejudice negotiations between the parties and their respective solicitors since then but negotiations appear to have broken down.

[9] The Plaintiff is concerned that his interest is not protected. He has already suffered stress and pecuniary losses personally and in his business interests in New Zealand as well as his family as a result of this dispute. He now seeks the Court's assistance.

THE CURRENT APPLICATION

[10] The Defendants summons, issued pursuant to O 32 r 6 of the High Court Rules 1988, seeks the following orders:

[a] That the injunction Order dated 31 July 2009 be discharged.

[b] That the Plaintiff, his solicitors, agents and/or servants be ordered to release the First Defendant's duplicate title to Certificate of Title No 35954 to the Defendant's solicitors.

GROUNDS OF THE APPLICATION

[11] The two grounds of the application were inadequacy of the plaintiff's undertaking as to damages and material non-disclosure.

UNDERTAKING AS TO DAMAGES

[12] In my earlier judgment this is what I said about the undertaking. The Plaintiff gives his personal undertaking and an undertaking by his companies to pay damages if the orders that he seeks turn out to be granted without merit because of what he has told this Court and causes loss to the Defendants. The Statement of Position of the Plaintiff's company as at 24 April 2009 shows that the Plaintiff's company has a net worth far in excess of the amounts involved here. I am therefore satisfied that the Plaintiff's undertaking is sufficient for present purposes.

[13] Counsel for the Defendants submitted that the Plaintiff's company is now in liquidation and there are grave doubts as to the Plaintiff's ability to personally honour the undertaking.

[14] Firstly, the company is not a party to this action. Secondly, the absence or adequacy of the undertaking is not fatal to the grant of an injunction. It is part of the consideration of the balance of convenience. See for example: Ali v Credit Corporation (Fiji) Ltd [2008] FJSC 56; CBV0001.2008S (27 February 2008); Natural Waters of Viti Ltd v Crystal Clear Mineral Water (Fiji) Ltd [2004] FJCA 59; ABU0011.2004S & ABU0011A.2004S (26 November 2004).

MATERIAL NON-DISCLOSURE

[15] The material non-disclosure was that the Plaintiff's claim is that the Defendants did not complete the contract by the original date of completion but failed to disclose to the Court that the original date had been extended by mutual agreement. I do not think this is material because the building remains incomplete in any event.

BALANCE OF CONVENIENCE

[16] I am satisfied that this is a case where damages are not an adequate remedy and that there are serious issues to be tried.

[17] Where does the balance of convenience lie? Or, as was put in Air Pacific Ltd v Air Fiji Ltd [2006] FJCA 63; ABU0066U.2006S (10 November 2006): where does the overall justice lie?

[18] In this case, the Plaintiff has paid 74% of the purchase price which a substantial sum but has nothing to show for it. He has been locked out of the property and the Defendants would be free to sell if they are not restrained. It is common ground that the reason construction stopped was a dispute between the Defendants and their contractor. Mr Heeley, the Second Defendant, deposed in his affidavit filed on 14 November 2011 that: "There was a valid dispute between the Defendants and the builder that the builder was invoicing the Defendants and demanding payment for work the builder had not actually done, but the Plaintiff was only talking to the builder". That dispute had nothing to do with the Plaintiff. It therefore seems to me that the Plaintiff has real prospects of success in its claim for specific performance or damages in the alternative for the Defendants failing to complete. The Plaintiff had tried to get the Defendants and the builder to resolve their dispute to no avail. It is my opinion therefore that the overall justice of the case requires that the injunctions continue until final determination of this action.

THE ORDERS

[19] The injunction orders granted on 31 July 2009 in paragraphs 1 and 2 are to continue until further order or until final determination of this action.

[20] The Defendants shall pay the Plaintiff's costs of this application of $1,200 within 21 days.

Sosefo Inoke
Judge