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Roberts v Australia and New Zealand Banking Group Ltd [2023] SBHC 78; HCSI-CC 351 of 2022 (14 September 2023)

HIGH COURT OF SOLOMON ISLANDS

IN THE HIGH COURT OF SOLOMON ISLANDS
CIVIL JURISDICTION

Civil Case No. 351 of 2023

BETWEEN

GUSTO ROBERTS, ARTHUR WATKINSIN IRON, MAKULATA TUITA, JOHNMARK WATEALA, JOAN TORA, HELLEN MAUNIALA AND CHRISTINA KUKITI
Claimants

AND:

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED
Defendant

Date of Hearing: 21 August 2023
Date of Decision: 14 September 2023

Mr Jack To’ofilu for the Claimants
Mr John Taupongi for the Defendant

RULING

Bird PJ:

1. On 12 May 2023, Mr Taupongi of counsel for the Defendant filed an application under rule 9.75 of the Solomon Islands Courts (Civil Procedure) Rules 2007 (CPR) to strike out the claim of the Claimants filed on 18 August 2022. In support of that application was the sworn statement of Joyce Luiramo filed on 11 May 2023. That application was heard by the court on 21 August 2023.
2. During the hearing, Mr Taupongi of counsel for the Defendant read his application filed on 12 May 2023 and the sworn statement of Joyce Luiramo filed on 11 May 2023. Mr Taupongi of counsel set out the background to the dispute as follows:
   1. The dispute relate to registered lands situated in Kombivatu in Honiara. All of the lands originated from a single parcel of land described as PN 191-052-239. In 2005, the Fixed Term Estate over that land was vested on Ramo Dausabea.
   2. In 2005, the Defendant granted a loan to Mr Dausabea secured by a charge over PN 191-052-239.
   3. 2005 – 2015 - Mr Dausabea caused PN 191-052-239 to be subdivided and that parcel number ceased to exist and was replaced by multiple parcels including 192-052-525, 192-052-526, 192-052-527, 192-052-528, 192-052-621, 192-052-622, 192-052-623, 192-052-636, 192-052-637 and 192-052-638 respectively.
   4. On 23 October 2015, the Defendant commenced CC 543 of 2015 against Mr Dausabea defaulting in his loan seeking foreclosure of parcels of land originating from PN 191-052-239.
   5. On 23 March 2016, judgment was entered against Mr Dausabea in CC 543/15 including an order for sale of parcels originating from PN 191-052-239 by public tender provided leave of the court is obtained for each sale.
   6. In 2016, the Defendant discovered that Mr Dausabea had purportedly sold the 10 subject parcels to the Solomon Islands Government on behalf of the Ministry of Health and Medical Services.
   7. In 2017, Mr Dausabea died.
   8. Between 2017 – 2020, the Defendant negotiated with MHMS for a direct purchase by the Ministry for the 10 parcels of land.
   9. In 2021 MHMS advised the Defendant that they were no longer interested to purchase the 10 subject lands due to shift of priorities given the COVID-19 pandemic.
   10. On 22 April 2021, the Defendant advertised the 10 subject lands for sale by tender through Solomon Star. After receiving bids, the Defendant selected the winning bidders for each of the 10 parcels of land. All of the Claimants tendered bids but only 3 of them were successful.
   11. In June/July 2021, the Defendant accepted the bids of the winning bidders for each of the 10 parcels of land and signed Sale and Purchase Agreements (SPA) with them. The Defendant was preparing to apply for the court’s leave to bless the SPA in CC 543/15 but Mr Dausabea was deceased and needed replacement. Then CC 213/21 was commenced by Mrs Dausabea seeking Letters of Administration. It was objected by the late Dausabea’s sons.
   12. In early 2023, CC 213/21 was decided in favour of Mrs Dausabea. She was then granted Letters of Administration.
   13. In 12 May 2023, the Defendant filed their application to strike out this claim.
3. Having stated the background to this proceeding, it is submitted by Mr Taupongi of counsel that the Claim of the Claimants filed on 18 August 2022 does not disclose any reasonable cause of action and is an abuse of the process of the court. The remedy sought by the Claimants is a declaratory order that the public tender made by the Defendant on 22 April 2021 was made in breach of court judgment dated 23 March 2016 in CC543/15. Consequently, they further seek that the public tender of 22 April 2021 be declared null and void.
4. Upon the above, it is submitted by Mr Taupongi that the Claimants in this proceeding lack locus standi. Firstly, they were non-parties to CC543/15. It is submitted that only parties to that case have the locus to come to this court and complain of any alleged breach of the said judgment. The Claimants have never applied to be joined as parties to CC 543/15.
5. Secondly, it is submitted by Mr Taupongi of counsel that the grounds raised by the Claimants in their Claim does not accord with the normal foreclosure process involving this court and forced sales. That process, it is submitted is fully explained at paragraph 13 of the Defendant’s application and paragraphs 16 to 21 of the sworn statement of Joyce Luiramo filed on 11 May 2023. The forced sale process is the following:
   • Step 1 -Bank files a foreclosure claim;
   • Step 2 -Bank obtains judgment;
   • Step 3 -Bank advertises the land for sale by tender;
   • Step 4 -Interested person tender bids;
   • Step 5 -Bank evaluates the tenders and select the winning bidders;
   • Step 6 -The winning bid is taken as an offer and the bank accepts that offer;
   • Step 7 -Bank and winning bidder execute a SPA. This is not the end of the sale but the start.
   • Step 8 -Bank files an application to the court seeking leave to sell the property.
   • Step 9 -Court grants the leave sought to sell the property to the winning bidder for the purchase price indicated in the SPA.
   • Step 10 -Bank obtains the consent of the Commissioner of Lands for the proposed transfer to the winning bidder.
   • Step 11 -Bank gets the transfer document signed by the Registrar of the High Court.
   • Step 12 -Bank meets with the winning bidder to settle or complete the sale
6. In respect of the processes indicated above, it is submitted by counsel that the sale process in CC 543/15 had reached step 7. The Defendant was unable to complete the process because Mr Dausabea was deceased and had to be substituted. In early 2023, the late Mr Dausabea was substituted by Mrs Dausabea and so then the Defendant could apply for leave of the court to sale the subject properties to the winning bidders. That process had yet to be done because of this current proceeding.
7. It is further submitted by Mr Taupongi of counsel that the claim of the Claimants does not plead any reasonable cause of action. They are merely complaining because they were unsuccessful bidders to the bidding process in steps 3, 4, 5, 6 and 7 above. The Claimants had taken part in the bidding process and were unsuccessful. On the face of the facts as pleaded they do not have any cause of action against the Defendant that would warrant a trial. It is submitted that the Claimants Claim is not just weak, but it is certain to fail and no amendment could possibly cure its defects.
8. It is also submitted that since the Claim does not plead any fault with the tender process, it is frivolous and vexatious. They were not a party to CC 534/15 and they are fighting against the process which was legally obtained by the Defendant in that case.
9. On behalf of the Claimants, Mr To’ofilu submits that the Claimants have locus to commence this proceeding on the basis that they were parties to the tender process. It is submitted that leave of the court was not obtained under paragraph 2 of the orders in CC534/15 and therefore the public tender of 22 April 2021 was null and void.
10. Apart from the above submission, Mr To’ofilu also made submission in respect of the Claimants application for default judgment filed on 25 November 2022. It is submitted by counsel that the Claim (Category C) was served on the Defendant at their registered office at Panatina on 18 August 2022. It is further submitted that since the date of service, the Defendant had not filed any response or any defence to the Claimants Claim. In view of the default by the Defendant, the Claimants application for default judgment must be granted pursuant to rule 9.17 (a) of the Solomon Islands Courts (Civil Procedure) Rules 2007 (CPR).
11. In response to the application for default judgment of the Claimants, it is submitted by Mr Taupongi of counsel for the Defendant that the application of the Claimants under r. 19.7 of the CPR relates to the failure of the Defendant to file a defence. It is conceded that the Defendant did not file a Defence and local case authorities are very clear on the application of r. 19.7 of the rules.
12. It is however submitted by counsel that the granting or otherwise of applications for default judgment is at the discretion of the court and principles of equity are usually taken into account when considering such applications. Those principles it is submitted is purposely to avoid injustice and unfairness to the parties.
13. Mr Taupongi also submits that he was instructed by the Defendant to file a conditional appearance with a view of filing an application to strike out. Due to oversight on his part the conditional appearance and the application to strike was not filed until 12 May 2022. Mr Taupongi relies upon the case of Kumagai Gumi Ltd v Attorney General (2002) SBHC 52, HC-CC 092 of 2002 in support of his argument.
14. In view of the above argument and supported by the principle in the Kumagai case, it is submitted by counsel that the Defendant has valid reason not to file any Defence in this case at all. It is therefore further submitted by Counsel Mr Taupongi that the Claimants application for default judgment must be dismissed with cost.

Discussion

15. Having discussed the applications of the Claimants as well as the Defendant, it is obvious that the Claimants were losing bidders in CC 543/15. This court had made orders in CC543/15 whereby inter alia, “an order for sale by tender of the fixed term estate in the parcel numbers listed in the Schedule to the Claim filed herein on 23 October 2015 and that leave of the court to be obtained to the sale”.
16. The interpretation of the above order is the issue raised by the Claimants in their Claim filed on 18 August 2022. It is asserted by the Claimants that the Defendant was in breach of paragraph 2 of the orders dated 23 March 2016 because they have not sought leave of the court to sale the subject lands. See paragraphs 15 and 16 of the statement of case.
17. The position of the Defendant is that they are not in breach of any order of the court dated 23 March 2016. They have explained in the sworn statement of Joyce Luiramo filed on 11 May 2023 the process in chronological order of the normal tender process by the bank. From that information, those processes as alluded to, are the normal processes of conveyancing until completion of the sale process.
18. The court can understand that the court’s leave can only be obtained after winning bidders have executed their respective Sale and Purchase Agreements (SPAs) with the Defendant. That process mentioned in paragraph 5, step 8 above, can now be utilised and facilitated by the Defendant upon the granting by this court for Letters of Administration to Mrs Dausabea. I am therefore of the view that there is nothing sinister or unlawful about the action of the Defendant in this case. The tender process is yet to be completed and the court’s leave will be sought by them in due course to comply with order 2 of the judgment dated 23 March 2016 in CC 543/15.
19. In light of the above discussion, I hereby refuse to grant orders for default judgment as per the Claimants application filed on 25 November 2022. Upon the same discussion, I grant the orders sought in the application of the Defendant filed on 12 May 2023. Consequently, I hereby strike out the Claim of the Claimants filed on 18 August 2022 pursuant to r. 9.75 of the CPR. I also order cost against the Claimants on the standard basis.

THE COURT
Justice Maelyn Bird
Puisne Judge