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National Bank of Fiji Ltd v Devi [2012] FJHC 1022; HBC231.2010 (17 April 2012)

IN THE HIGH COURT OF FIJI
AT LAUTOKA

WESTERN DIVISION
HBC No. 231 of 2010

IN THE MATTER OF Mortgage No. 560932
given by ROHINI DEVI aka ROHINI VANDHANA DEVI
of 8 Lin On Place, Banaras, Lautoka in favour of
NATIONAL BANK OF FIJI LIMITED trading as
COLONIAL NATIONAL BANK
over property comprised in Housing Authority
Sub Lease No. 178489 being Lot 30 on DP No. 4445

BETWEEN:

NATIONAL BANK OF FIJI LIMITED trading as
COLONIAL NATIONAL BANK a limited liability company
having its registered office at Suva in the Republic of Fiji Islands.
Plaintiff

AND:

ROHINI DEVI aka ROHINI VANDHANA DEVI
of 8 Lin On Place, Banaras, Lautoka.
Defendant

Before : Master Anare Tuilevuka

Appearances : Mr Kamal Kumar of Young & Associates for the Plaintiff Defendant In Person
Date of Ruling : Tuesday 17 April 2012

RULING BACKGROUND:

[1]. Rohini Devi, the defendant, is the registered proprietor of all that piece or parcel of land comprised in Housing Authority Sub Lease No. 178489 being Lot 30 on DP No 4445 in the Province of Ba and in the District of Vuda. This property is situated at Lot 30, Lin On Place, Banaras in Lautoka.

[2]. Colonial National Bank ("CNB") holds a mortgage over the property as security for various advances, charges and interest and other banking accommodation it made to Devi.

[3]. Devi started defaulting on her repayments. This prompted CNB to serve Devi a Default Notice dated 01 June 2009. Devi however did not take any steps to remedy the default which then led CNB to advertise the property for sale.

[4]. According to an affidavit filed on 30 November 2010 of Jonathan Stevens[1], CNB has accepted a tender – the settlement of which is being delayed by Devi's refusal to give up vacant possession of the property.

[5]. Hence, on 04 October 2010, a 14-day Notice To Vacate by CNB was hand delivered to Devi by one Alifereti Tokoa, a registered bailiff of Lautoka. Devi however has stayed put.

[6]. CNB now seeks from this Court an Order pursuant to Order 88 of the High Court Rules 1988 against Devi to deliver vacant possession of the property and that Devi be restrained from interfering with the improvements thereon in any way so as to deplete its value. CNB also seeks costs.

DEVI'S POSITION[2]

[7]. Devi has been unemployed. She was sent on leave from her civil service job to await the outcome of some criminal proceedings pending against her at the Labasa Magistrates Court on some fraud-related charge(s).

[8]. According to Devi, she had requested CNB on 24 February 2009 to restructure the loan on "humanitarian grounds". Her request happened way before CNB's Default Notice of 01 June 2009 (see paragraph [3] above).

[9]. Devi argues[3] that the way CNB had proceeded with its Default Notice and its advertisement was an improper and an irregular exercise of its powers under the mortgage.

4. .....The Plaintiff prepared the Default Notice dated 1 June 2009 under the Mortgage on the Defendant to remedy the default failing to respond to the arrangements requested by the defendant with the Plaintiff dated 24 February 2009 to pay the default with a restructure of the payments under humanitarian grounds. Thus the Notice was posted on 3 & 4 June 2009 from Suva Mail Centre and received on 10 June 2009 by the Defendant.

5. Upon receipt of the Default Notice the plaintiff was contacted for arrangements thus there was nil response on restructure and without the accurate proceedings in accordance to the Default Notice the said Property was directly advertised in media as "Mortgage Sale" By R. Patel & Associates without any consultation to I, the existing Proprietor and Housing Authority.

[10]. Devi says that she tried to make arrangements for a direct payment from her Fiji National Provident Fund account to CNB to redeem the mortgaged property but her attempts were thwarted by CNB providing false information to FNPF[4].

6. Being the sole proprietor of the said property I, the Defendant made arrangements with the Plaintiff to get Payments reduce through FNPF transfer but this was rejected by Fiji National Provident Fund as the Plaintiff provided false information to FNPF.

7. Instead of correcting the information to the FNPF, the Plaintiff went ahead with promotional sale without the Defendant's knowledge. Nor providing any other default notice to the Defendant thus maintain the stand to the first Default notice. Where by an official complaint is lodged with Ministry of Fair Trade and Consumer Affairs as annexed hereto and marked with letter "RD1".

8. Second application for FNPF reduction to clear default was made again through the Plaintiff by the Defendant as annexed here to and marked with letter "RD2". Thus till to date FNPF has not received the second application annexed hereto and marked with letter "RD3" by the Plaintiff where by a complaint has been lodged to the RESERVE BANK OF FIJI AS annexed hereto and marked with letter "RD4".

9. The Plaintiff was fully aware on the lodgement of the Defendant's complaint thus accepted the FNPF reduction application from the Defendant whereby the Plaintiff should have waited for the result of investigation by the Ministry of Commerce Commission under the 2010 Decree.

10. To the Defendants knowledge the Plaintiff has breached its policy thus entertained fraudulent activities and has provided false information in the originating summon that the Defendant completely neglected the notice or failed to make any arrangements.

STEVENS' REPLY[5]

[11]. Stevens according to FNPF declined Devi's first application for withdrawal of funds because Devi was not occupying the property. She was renting it out at the time of the application. A copy of FNPF's letter dated 24 August 2009 addressed to the Manager, Colonial National Bank is exhibited in Devi's affidavit as well as in Steven's Affidavit in Reply. The letter simply states as follows:

We acknowledge receipt of the above-named member's application for transfer of funds under the above scheme and advise that it has been rejected for the following reason:-

➢ This scheme does not finance properties that are not occupied by the members. We note that the above-named member's property is currently rented-out.

Any inconvenience is regretted.

[12]. Stevens also states that CNB did not process Devi's second application to FNPF because Devi had neglected to provide the relevant supportive documentation which consists of the following:

• (i) latest salary slip to enable FNPF to calculate the loan repayment ratio,
• (ii) a letter from Housing Authority showing that ground rent is paid in full, and
• (iii) a statement from Lautoka City Council to show that the city rate was paid in full[6].
  

[13]. Stevens also mentions that CNB has responded to the Ministry of Trade letter of 02 July 2010 but the Ministry has not communicated further with the bank.

THE LAW

[14]. A mortgagee's right to go into possession of the mortgaged property is well established at common law[7]. In the particular mortgage contract in question, this right is set out in clause 5.2(b).

5.2 Consequences of default

If an event of default occurs, you are in default under each agreement between you and us, and we may:

(a) ...........
(b) take or give up possession (as often as we think necessary) of the property and of any rents and profits of the property; and...........

[15]. In Fiji, this right is codified in section 75 of the Property Law Act (Cap 130) which states as follows:

A mortgagee, upon default in payment of the mortgage money or any part thereof, may enter into possession of the mortgaged land by receiving the rents and profits thereof or may distrain upon the occupier or tenant of the said land for the rent then due.

[16]. The mortgagee's right may be waived if there is something – express or implied - in the mortgage contract to indicate that the mortgagee has contracted out of that right[8]. Hence, in National Bank of Fiji v Hussein, the very first point of inquiry that Mr. Justice Fatiaki directed his mind to was whether or not the mortgage before him contained any such waiver-clause.

[17]. Having found that there was no such waiver-clause in that document, Fatiaki J then referred to the following observations of Jayaratne J and Buckley LJ respectively in A.N.Z. v. ShantilalCivil Action 265 of 1990 and Western Bank Ltd. v. Schindler (1977) 1 Ch. 1 to emphasise the guarded approach that the Courts' have always applied whenever a mortgagee's right to possession is being challenged.

In Shantilal's case(op. cit) Jayaratne J. speaking of the procedure under Order 88 said (at p.7):

"Order 88 of the High Court Rules only deal with actions relating to mortgages. it gives mortgagees the right to claim possession without being the registered proprietor with or without foreclosures. To that extent Order 88 is available to him. Nothing can inhibit him from utilising Order 88."

Furthermore in Schindler's case[9] (op. cit) Buckley L.J. recognised the utility of such a remedy when he said at p.9:

"A legal mortgagee's right to possession is a common law right which is an incident to his estate in the land. It should not be lightly treated as abrogated or restricted. Although it is perhaps most commonly exercised as a preliminary step to an exercise of the mortgagee's power of sale, so that the sale may be made with vacant possession, this is not its only value to the mortgagee. The mortgagee may wish to protect his security ... He might wish to take possession for the purpose of carrying out repairs or to prevent waste."

[18]. Eventually, after taking into account:-

• (i) that the defendant had defaulted under the mortgage and was causing serious "economic waste" to the premises – and,
  
• (ii) that the bank had accepted an offer to purchase the mortgaged premises together with a cash deposit – and,
  
• (iii) that the bank was required to give vacant possession of the property - and,
  
• (iv) that a 'notice to quit' had been duly served on the defendant who has stayed put on the premises even after the expiration of the notice.
  

Fatiaki J ordered that the defendant do deliver to the plaintiff bank vacant possession of all the mortgaged property in that case.

OBSERVATIONS

[19]. If Devi seriously wants to redeem the mortgage-property – then she should be filing an injunction application to stop CNB from proceeding with the sale of the mortgage- property.

[20]. Because such an injunction would amount to a temporary denial to CNB of its right to possession – Devi would have to be prepared to pay into Court the amount claimed by CNB as security. This is the usual condition insisted upon by the Courts before granting such an interim injunction.

[21]. Even if Devi had filed such an application, I suspect she would have great difficulty fulfilling such a condition – considering that she has not been engaged in any form of employment for many years.

[22]. The Default Notice was issued to Devi in June 2009 and to date, the mortgage is still not redeemed. I see no reason why I should deny CNB now its right to possession. But having said that, I must point out that if Devi is still seriously interested in redeeming the mortgage property – she may still have time yet.

[23]. In National Bank of Fiji v Hussein, Fatiaki J resonated that the granting of an order for vacant possession does not at all extinguish the mortgagor's equity of redemption – if the Order is being sought as a preliminary step to ensure that a planned mortgagee sale proceeds with vacant possession. That equity remains intact at all times until the property is actually sold or transferred by the bank.

ORDERS

[24]. I grant Order in Terms of the plaintiff's application. I award costs to the plaintiff which I summarily assess at $750.00 (seven hundred and fifty dollars).

.........................
Anare Tuilevuka
Master

At Lautoka
17 April 2012

^[1]Manager, CNB Credit Management Unit in Suva.
^[2]Devi’s Affidavit in Opposition was sworn on 04 March 2011 and filed on 07 March 2011.
^[3] in paragraphs 4 and 5 of her Affidavit.
^[4]paragraphs 6 to 10 of her Affidavit.
^[5]Steven’s Affidavit in Reply sworn on 04 April 2011 was filed on 08 April 2011.
^[6]There is documentary evidence exhibited in Stevens’ Affdiavit which confirms that an e-mail dated 14 July 2010 was in fact sent from one Solomone Turagavou of BSP to the Defendant advising her of these requirements and that – because the defendant was unemployed – she does not qualify for FNPF debt reduction facilities.
^[7] In National Bank of Fiji v Hussein [1995] FJHC 29; Hbc0331j.94s (9 February 1995), Mr. Justice Fatiaki began by citing Goff LJ in Western Bank Ltd. v. Schindler (1977) 1 Ch. 1 at page 20 as follows:

It has for a very long time been established law that a mortgagee has a proprietary right at common law as owner of the legal estate to go into possession of the mortgaged property. This right has been unequivocally recognised in a number of modern cases: see, for example, Four Maids Ltd. v. Dudley Marshall (Properties) Ltd. (1957) Ch. 317. ... It has nothing to do with default: See per Harman J. in the Four-Maids case where he said, at p.320:

The mortgagee may go into possession before the ink is dry on the mortgage unless there is something in the contract, express or by implication, whereby he has contracted out of that right.

(my emphasis)

^[8] As per,Four Maids Ltd case above.
^[9]Western Bank Ltd. v. Schindler (1977) 1 Ch. 1.