High Court of Fiji

may at any time lodge wie Regr a c in the prescribed form, forbidding the registratstration of any person as transferee or pror proprieoprietor of, and of any instrument affecting, such estate or interest either absolutely or unless such instrument be expressed to be subject to the claim of the caveator as may be required in such caveat.

11. In view of the section 106 of the Act, it appears that the section 106 constitutes two main components. The first component has defined the caveatable interest and who is entitled to lodge a caveat. The second component is the enforceable requirement of the caveat. The caveat should be able to forbid or restrain the registration of any person as transferee or proprietor and of any instrument affecting the estate and interest claimed by the caveator.
    
12. The meaning and the scope of application of the section 106 of the Land Transfer Act has comprehensively expounded by the Fiji Court of Appeal in Cambridge Credit (Fiji) Limited v W.F.G. Limited (Vol 21 FLR 182), where it was held that;
    

"the respondent must however, bring itself within the provision of Section 106 and in order to do this must satisfy the court that the following are fulfilled,

(a) That it is a person claiming to be entitled to or to be beneficially interested in any land estate or interest under the act; and

(b) That is it so claiming by virtue of any unregistered agreement or other instrument or transmission or any trust expressed or implied or otherwise howsoever,..................................

Section 138 of the Land Transfer Act 1885 (N.Z) (which was not dissimilar from our section 106) was discussed in Staples & Co v Corby and District Land Registrar (1900) 19 N.Z.L.R.517 where Stout C.J. at page 536 said;

"Before a person can caveat under this section he must be a person who claims to be entitled to the land, or any estate or interest in the land, or to be "beneficial interested" in the land, or in any estate or interest in the land, and the person in either event must claim "by virtue of any unregistered agreement, or other instrument or transmission" (transmission meaning acquirement by title or estate consequent on death, will, intestacy, bankruptcy, &c) or of any trust expressed or implied, or otherwise howsoever".

Section 106 of the Fiji Act is designed to protect unregistered instrument in land. For instance an agreement for sale and purchase, an unregistered mortgage, an agreement to give a mortgage, or an option to purchase land is just a few examples of unregistered instruments which are capable of being protected by the lodging of a caveat".

13. Griffith C.J. in Municipal District of Concord v Coles [1905] HCA 35; (1906) 3 CLR 96 at 107) has discussed the definition of "an interest in any land", where his lordship found that:
    

"After a very anxious consideration of the words of the section and the whole Act, we have come to the conclusion that the intention of the legislature in using the word "interest" was that only a person having, or claiming to have some legal or equitable interest in the land partaking of the character of an estate, or of an equitable claim upon the land can be a caveator".

14. Having considered the scope of section 106 of the Act and the above discussed judicial precedents pertaining to the issue of caveatable interest, it is my view that the scope of the hearing under section 109 (2) encompass two main limbs. The first limb is that to determine whether the caveator has any caveatable interest as defined under section 106 (a) and (b) of the Act. Once the first limb is considered, the court is then required to determine whether such caveatable interest is capable enough to forbid or restrain the registration of any person as transferee or proprietor, or of any instrument affecting such interest and estate in the property as claimed by the caveator.
    
15. I now turn to this instance case. The second Defendant's main contention is that it has entered into a sales and purchase agreement with JEL who is the registered proprietor of this property on 28th of March 2012 to purchase the property for sum of $ 1.75 million. However, the final settlement of that sale has been delayed due to various reasons. Meanwhile, the 1stDefendant has entered into another sales and purchase agreement with JEL for the same property with the consent and sanction of the Plaintiff as of the mortgagee on 26th of July 2013. The 1st Defendant deposed that they were informed by the previous solicitors of JEL that the previous sales and purchase agreement between the 2nd Defendant and JEL has being rescinded.
    
16. In view of the observation of the Fiji Court of Appeal in Cambridge Credit (Fiji) Limited v W.F.G. Limited (supra) where it held that the main purpose of the section 106 of the Act is the provide a protection to the unregistered instruments in land, such as sales and purchase agreements, it is my conclusion that the 1st and 2nd Defendant have caveatable interests in the property as defined under section 106 (a) of the Act.
    
17. Having determined that the Defendants have caveatable interest pursuant to section 106 (a) of the Act, I now turn to consider whether such caveatable interests of the Defendants could forbid or restrain the Plaintiff as the mortgagee from exercising their statutory and contractual powers pursuant to the mortgage.
    
18. Section 79 of the Property Law Act has dealt with the Mortgagee's powers in the event of default of repayment by the mortgagor, where it states that;
    

If default in payment of the mortgage money or in the performance or observance of any covenant continues for one month after the service of the notice referred to in section 77, the mortgagee may sell or concur with any other person in selling the mortgaged properr any ther thereof, eof, either subject to prior leases, mortgages and encumbrances or othe, and either together or in lots, by public auction or by p by private contract, or partly by the one and partly by the other of those methods of sale, and subject to such condition as to title or evidence of title, time or method of payment of the purchase money or otherwise as the mortgagee thinks fit, with power to vary any contract for sale and to buy in at any auction or to vary or rescind any contract for sale and to resell without being answerable for any loss occasioned thereby, with power to make such roads, streets and passages and grant such easements of right of way or drainage over the same as the circumstances of the case require and the mortgagee thinks fit, and may make and sign such transfers and do such actsـandgshings as aras are necessary for effectuating any such sale.

No purchaser shall be bound to see or inquire whether default has been madhas hed, or has continued, or whether notice has been been serveserved, or otherwise into the propriety or regularity of any such sale.

Where a transfer is made in purported exercise of the power of sale conferred by this Act, the titlehe transfereeferee shall not be impeachable on the ground that no cause had arisen to authorize the sale or that due notice was iven at the power was otherwise improperly or irregularly exercised, but any person daon damnifimnified by any unauthorized or improper or irregular exercise of the power shall have his remedy in damages against the person exercising the power.

19. Section 79 (1) of the Property Law Act has given a wider power to the mortgagee to sell the property in the event of default of repayment either by public auction or by private contract. Moreover the Mortgagee has powers to vary any contract for sale and to buy in at any auction or to vary or rescind any contract for sale and to resell without being answerable for any loss occasioned thereby. In this instance case, JEL has defaulted in their repayment and the Plaintiff has issued them a notice of demand pursuant to section 77 of the Property Law Act. JEL then failed to comply with the notice. Under such circumstances, the Plaintiff is allowed to sell this property either by public auction or by private contract pursuant to the section 79 (1) of the Property Law Act.
    
20. I now draw my attention to consider whether the rights of the Plaintiff as of the mortgagee to sell this property pursuant to section 79 (1) of the Property Law Act or under the terms of the mortgage, could be forbidden or be retrained by the caveatable interest as claimed by the 2nd Defendants.
    
21. In Prasad v Australia & New Zealand Banking Group Ltd ( 1999) FJHC 29; (1999) 45 FLR 101 held that;
    

"the high court of Fiji has for many years followed the long established rule that; The mortgagee will not be restrained from exercising his power of sale because the amount due is in dispute or because the mortgagor has begun a redemption action or because the mortgagor objects to the manner in which the sale is being arrange. He will be restrained however if the mortgagor pays the amount claimed into court, that is the amount which the mortgagee claims to be due to him"

22. In view of the Prasad v Australia & New Zealand Banking Group Ltd (supra), it appears that the court intervene to the rights of the mortgagee only at the instances where the mortgagor paid the amount claimed into court. Apart from that, the court has been hesitant to restrain the mortgagee in exercising his powers under the mortgage.
    
23. The duty of the mortgagee when exercising his power of sale has discussed in Prasad v Australia &New Zealand Banking Group Ltd (supra), where it was held that;
    

"the mortgagee is required to act in good faith and owes the mortgagor a duty to take reasonable care to obtain a proper price (Cuckmere Brick Co Ltd v Mutual Finance Ltd (1971) Ch 949; Alexandra v New Zealand Breweries Ltd (1974) I NZLR 497). Discharge of this duty requires the property to be adequately and sufficiently advertised and where an auction takes place it must be held in reasonable conditions"

24. Accordingly, it appears that the Plaintiff has been given a wider power to sell this property with a duty to take reasonable care to obtain a proper price, which in fact enables to minimize the residual loan balance after the sale. In this instance case, the Plaintiff has been trying to sell the property for a higher price than the amount agreed by the 2nd Defendant in order to satisfy their statutory and contractual obligation towards the mortgagor as well as to minimise the residual balance of the loan arrears. The Plaintiff has no duty of care towards the 2nd Defendant in respect of his alleged sales and purchase agreement with JEL. If the 2nd Defendant is damnified by any improper or irregularity of the mortgage sale, they have remedy in damages pursuant to section 79 (3) of the Property Law Act.
    
25. Moreover, it appears that the 2nd Defendant has entered into this alleged sales and purchase agreement with JEL almost two years after the mortgage, which in fact an indicator that the 2nd Defendant was aware of the existence of the mortgage as well as the priority rights of the mortgagee over him at the time of executing the said agreement.
    
26. The inability of subsequent encumbrance to restrain the mortgagee's right has discussed in Supreme and Auto Care Holdings Limited v Jims Enterprises Limited and others (Civil Action No HBC 323 of 2013) where Justice Corea held that
    

"in such a situation the later rights holder cannot injunct the former who is the mortgagee from exercising the statutory right of the mortgagee and proceeding with the mortgage sale. In Kerabee Park Ltd v Daley Karabee Park Pty Ltd v KarinyaInvestment Pty Ltd (1978) NSWLR 222 it was held;

"that a subsequent encumbrance, registered or unregistered, has no right to interfere in, or object to, a proper exercise by a mortgagee of the mortgagee's power of sale and would have no ground on which to seek the intervention of the court, notwithstanding that registration of the transfer to the purchaser would discharge or defeat all mortgage interests in the land whether registered or not".

27. Having considered the reasons discussed above, it is my conclusion that the Plaintiff's rights to sell this property as of the mortgagee could not be retrained by the subsequent caveatable interest as claimed by the 2nd Defendant. I accordingly hold that the 1st and 2nd Defendant must immediately remove their respective caveats lodged on the title of this property.
    
28. I now turn to consider the cost of this proceeding. Having considered the involvement of voluminous documentations in this proceedings, specially the series of affidavits filed by the 2nd Defendant, it is obvious that the parties might have incurred substantial cost to conduct this proceedings. The 1st Defendant actually did not object for this Summons and urged that both caveats must be removed. Wherefore, I do not see any reason to impose cost against them. It is my view that sum of $ 2500 would be a considerate cost for this proceedings.
    
29. In my conclusion, I make following orders that;
    
    1. The caveat No 783126 registered against the Certificate of Title No 19755 by the first Defendant be removed forthwith,
       
    2. The caveat No 783674 registered against the Certificate of Title No 19755 by the second Defendant be removed forthwith,
       
    3. The 2nd Defendant is hereby ordered to pay cost of $ 2500 to the Plaintiff.
       

Dated at Suva this 26thday of September, 2014.

.....................................
R.D.R. Thushara Rajasinghe
Master of High Court, Suva