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Han Sin Construction Ltd v Westpac Banking Corporation Ltd [2001] SBHC 123; HC-CC 145 of 2001 (11 July 2001)

HIGH COURT OF SOLOMON ISLANDS

Civil Case Number 145 of 2001

HAN SIN CONSTRUCTION LIMITED

-V-

WESTPAC BANKING CORPORATION
& ATTORNEY-GENERAL (Representing Registrar of Titles)

High Court of Solomon Islands
(Palmer J.)

Hearing: 10th July 2001
Ruling: 11th July 2001

ANT Legal Services for the Applicant
A. Radclyffe for the First Respondent
A.Mekau for the Second Respondent

PALMER J.: Han Sin Construction Limited (“the Applicant”) was the registered owner of the Fixed-Term Estate in parcel number 191-011-50 (hereinafter referred to as “Parcel 50”). A copy of that fixed-term estate register is marked exhibit “LY1” annexed to the affidavit of Lydia Yeo filed 20th June 2001. On 28th January 1999 the Applicant took out a loan with the First Respondent (hereinafter referred to as “WBC”) for the sum of $250,000-00 (a copy of that loan agreement is annexed as exhibit “LY3” to same affidavit of Lydia Yeo). Parcel 50 was mortgaged against that loan. In the same year (1999) Parcel 50 was sub-divided and two new parcels of land created, 191-011-87 and 191-011-88. As expected WBC only consented to the sub-division on condition the two new parcels of land remained subject to its registered mortgage (a copy of that consent is annexed as “GB1” to the affidavit of Gregory John Blundell filed 25th June 2001). Unfortunately, when the two parcels of land were registered, only the Fixed-Term Estate in parcel number 191-011-88 (hereinafter referred to as “Parcel 88”) bore the encumbrance of that registered mortgage. The Fixed-Term Estate in parcel number 191-011-87 (hereinafter referred to as “Parcel 87”) did not contain the same encumbrance. WBC contends this was a mistake and had registered a caveat over the said parcel. At the same time it has commenced proceedings in Civil Case Number 141 of 2001 for the recovery of its loan of $271,471-45 together with an order for the sale of both properties. Part of the submissions in this hearing was for the two cases to be consolidated.

The Applicant on the other hand contends that registration of the mortgage was to be in respect of Parcel 87 only and not Parcel 88. At paragraph 7 of the affidavit of Lydia Yeo filed 20th June 2001, she deposes that she understood the consent of WBC to be only in respect of Parcel 87 and not 88. She deposes she did not know nor was informed that the mortgage would be over Parcel 88.

The Applicant now comes to Court by Originating Summons filed 20th June 2001 seeking essentially orders for rectification of the fixed-term estate registers in parcel 88 and 87 on the grounds that registration of the charge over Parcel 88 had been obtained by mistake or fraud.

The Respondents however have come to Court with two applications to strike out. WBC’s application to strike out is based on two grounds:

(a) that it is scandalous [Order 21 Rule 29 of the High Court (Civil Procedure) Rules, 1964 (hereinafter referred to as “the Rules”)];

(b) that no particulars of fraud are given as required by Order 21 Rule 6(1) of the Rules.

Is the Originating Summons of the Applicant filed 20th June 2001 scandalous? Scandalous is defined in Osborn’s Concise Law Dictionary sixth edition, Sweet & Maxwell 1976 as -

“The allegation in pleading of anything unbecoming the dignity of the court to hear, or contrary to good manners or which unnecessarily charges some person with crime or immorality.”

The problem with the Originating Summons filed 20th June 2001 is that it fails to give particulars of the mistake or fraud pleaded. The matters deposed to in paragraph 7 of the affidavit of Lydia Yeo refer only to her understanding and knowledge:

“To my understanding the First Respondent consented to the subdivision and the security for the loan would only cover the building in parcel number 191-011-87 until I received a letter dated 28th May 2001 from the First Respondent that the mortgage was registered against Parcel Number 191-011-88 instead. Prior to receiving this letter I did not know nor was I informed by anyone that the security for the loan was over parcel number 191-011-88.”

No details of the mistake or fraud pleaded were disclosed that would indicate to the Respondents what is the claim of the Applicant against them. If it was mistake how was the mistake made, where, when and in what way is it being pleaded as a ground for rectification? No details of a mistake have been provided. In contrast, WBC had filed documentary evidence of a Consent in writing expressly requiring that any sub-division was to be made pursuant to the condition that the two new parcels of land created were to be subject to its registered charge. When that is compared to the understanding and knowledge deposed to by Lydia Yeo, it does raise with gravity whether there is really any substance to the matters raised in the Originating Summons of the Applicant.

As to the issue of fraud, Rule 6(1) of Order 21 expressly requires that particulars be pleaded. None has been provided. To that extent I would agree that the Originating Summons of the Applicant is scandalous and ought to be struck out.

The second application for striking out alleges procedural irregularity under Order 58 of the Rules. Rule 1 confines the use of such originating process to the determination of any question of construction arising under any instrument. Rule 2 applies to the determination of a question of construction of any provision of a written law. Ms Mekau argues that no such question of construction arising from any written instrument or the provision of any written law arises in this Originating Summons. I can only agree. The Loan Agreement dated 28th January 1999 (Annexure “LY3”) is not in issue. No other written instrument has been referred to either apart from the Consent of the Bank dated 25th April 2000. No issue of construction however has been raised concerning the validity of that Consent other than the question whether the Applicant had knowledge of it or not and whether that was material or whether the Applicant can be deemed to have knowledge of it in any event. I am equally satisfied accordingly that the Originating Summons filed 20th June 2001 had been irregularly commenced and ought as well to be struck out.

The Applicant however has filed on 10th July 2001, an Amended Originating Summons apparently in an attempt to address the issues raised in the Summons of WBC and Notice of Motion of the Second Respondent. A second affidavit of Lydia Yeo had also been filed in support. Whilst that Amended Summons and supporting affidavit may have cured to some extent the defects raised in the Summons of WBC it still has not cured the irregularity raised in the Notice of Motion of the Second Respondent. Put simply this action should have been commenced by Writ and Statement of Claim and the issues in mistake and fraud particularized. The Amended Originating Summons too ought to have been struck out, but for the concession by learned Counsels that this Court rather should approach this matter on a practical basis. Accordingly I direct as follows:

1. Order that the Originating Summons filed 20th June 2001 and Amended Originating Summons filed 10th July 2001 be converted to Writ action.
   
2. Direct that Han Sin Construction Limited file within 7 days Writ and Statement of Claim failing which the whole action is to be dismissed.
   
3. Order this action and Civil Case number 141 of 2001 to be consolidated.
   
4. Costs of the First and Second Respondents to be paid by the Applicant.
   

THE COURT.