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Financière du Vanuatu Ltd v Morin [2008] VUCA 4; Civil Appeal Case 05 of 2008 (30 April 2008)

IN THE COURT OF APPEAL OF
THE REPUBLIC OF VANUATU
(Civil Appellate Jurisdiction)

Civil Appeal Case No. 05 of 2008

BETWEEN:

FINANCIÈRE DU VANUATU LIMITED
First Appellant

AND:

DOMINIQUE GOVAN
Second Appellant

AND:

DOMINIQUE MORIN
Respondent

Coram: Hon. Chief Justice Vincent Lunabeck
Hon. Justice Bruce Robertson
Hon. Justice Hamlison Bulu
Hon. Justice Christopher Tuohy
Hon. Justice John Mansfield

Counsels: Mr. George Boar for the First Appellant
Mr. Robert Sugden for the Second Appellant
Mr. Nigel Morrison for the Respondent

Date of Hearing: 22 April 2008
Date of Decision: 30 April 2008

JUDGMENT

This appeal appeared to raise the nature, if any, of an enforcement debtor’s interest in leasehold property, which has been sold under an Enforcement Warrant issued under Part 14 of the Civil Procedure Rules before the sale of the leasehold property has been perfected by registered transfer of title. However, a more fundamental issue emerged in the course of the hearing as to the validity of the purported enforcement warrant. We have decided the appeal on that latter point.

It is helpful to understand how the appeal arises. It explains why the Second Respondent Mr. Govan should feel quite frustrated at the time it has taken to recover a judgment debt.

On 10 September 2002 Mr. Govan started proceedings claiming damages from the First Respondent Mr. Morin for taking a fishing boat which Mr. Govan used to make his living. That claim was heard on 24 February 2004 in the Magistrate’s Court. Mr. Morin did not attend the hearing, although he was aware of it. Judgment was given in Mr. Govan’s favour against Mr. Morin, for damages as assessed. That order created a "Judgment debt" as defined in Rule 14.1 (1) of the Rules. Mr. Morin did not appeal from that judgment. He applied to set aside the judgment in the Magistrate’s Court, but that application was refused on 11 November 2004.

Mr. Govan set about enforcing his judgment. An Enforcement Order for payment of the debt was made eventually on 6 December 2005. That order was not complied with. The proceeding was referred to the Supreme Court for further enforcement steps by order of the Supreme Court made on 4 September 2006.

Ultimately, Mr. Govan applied for an Enforcement Warrant under Part 14 Division 4 of the Rules for seizure and sale of Mr. Morin’s property in lease title No. 03/OI83/052 to satisfy the judgment debt. On 14 June 2007 a document called "Enforcement Warrant" was issued. It purported to authorize Mr. Govan to take possession of Mr. Morin’s property and to sell it.

That at last prompted Mr. Morin to do something about the judgment debt. He appealed to the Court of Appeal against the issue of the purported "Enforcement Warrant", and for other order including seeking to set aside the original judgment of 24 February 2004. It is only necessary to refer to that part of that appeal that concerns the "Enforcement Warrant".

Mr. Morin’s only complaint about the "Enforcement Warrant" on that appeal was that it had not been preceded by an Enforcement Conference. In fact, as the Court of Appeal found, there had been an Enforcement Conference as provided by Rule 14.5 of the Rules on 6 December 2005, that, their Lordships said, was one of Mr. Morin’s "rare appearances". He did not attend the conference under Rule 14.12 (2) which the issuing judge called before issuing the "Enforcement Warrant". Consequently, on 24 August 2007, the Court of Appeal dismissed Mr. Morin’s appeal: Morin v. Govan [2007] VUCA 14.

Mr. Morin then took steps to arrange payment of the judgment debt. He should have done so much earlier. It had been owing by then for some 3 ½ years. Meanwhile, under the authority of the purported "Enforcement Warrant", Mr. Govan by contract dated 14 August 2007 had agreed on Mr. Morin’s behalf to sell the property for VT15,000,000 to Financière Du Vanuatu Limited (FVL). It has since been pressing to complete the sale. To date the Minister of Lands has not consented to the transfer of the lease, so settlement has not been able to be made.

By September 2007 Mr. Morin had the funds to pay the judgment debt and interest, and the accumulated costs on it. He applied for an order to set aside the Enforcement Warrant and to restrain the sale of the lease to FVL. On 18 October 2007, a judge of the Supreme Court refused to grant that relief. However, on 13 December 2007, that judge temporarily restrained the sale for a period of 4 weeks to enable Mr. Morin to settle his debt. As at 13 December 2007, Mr. Morin owed Mr. Govan VT8,425,000 including interest and costs, and interest has since continued to accrue at the daily rate of VT1,167. That order implicitly recognized that the equitable interest in the lease property had not fully passed from Mr. Morin by that date, so he could still redeem his interest by paying his debt. That is why we say at the start of these reasons that this appeal seemed to raise that question. Both FVL and Mr. Govan appealed from that order, but Mr. Morin has sought to support it because he is now able to pay the debt and he wants to keep his land.

In the course of submissions, the issue arose as to whether an Enforcement Warrant had ever issued. To identify the problems with the purported Enforcement Warrant of 14 June 2007 it is necessary to set out a substantial part of it. It provides:-

"1. DOMINIQUE GOVAN is authorized forthwith to take immediate possession of the property comprised in Lease Title Number 03/OI83/052 (hereinafter referred to as "the property") and to sell the property by or in such manner and for such value as he shall in his absolute discretion deem appropriate and he shall apply the proceeds from the sale of the property as follows:-

(a) first, to pay the costs of and incidental to the taking into possession of the property, all work relating to the sale and purchase of the property and other matters incidental thereto;

(b) second, to pay the Judgment Debt, Interest and Costs set out in the Judgment and Orders dated 24th February 2004 and the Enforcement Orders dated 06 December 2005 (including all accrued interests thereafter and to date);

(c) third, to pay the costs of and incidental to this action (including all costs and expenses incurred up to date);

(d) fourth, to pay the balance remaining (if any) to the Court pending further orders.

2. DOMINIQUE MORIN is ordered forthwith to provide all information, consent, pay such fees as may be required or necessary or execute any or all such documents as may be necessary or required to enable DOMINIQUE GOVAN to sell the property in accordance with paragraph 1 of this Order.

3. The Minister responsible for Lands or any other person acting on his behalf is ordered forthwith to provide and issue his Consent whenever such Consent is requested by DOMINIQUE GOVAN to enable DOMINIQUE GOVAN to sell the property in accordance with paragraph 1 of this Order.

4. The Director of Land Records Office is ordered forthwith to take all such steps as are necessary or appropriate to register the Deed of Transfer for the property in favour of such person who acquires the property for valuable consideration in accordance with paragraph 1 of this Order."

In our view, that document has significant defects by reason of the following requirements of the Rules:-

(1) As the document was for the seizure and sale of property, it had to be given to an enforcement officer: Rules 14.13 (2) and 14.16 (2), who is defined in Rule 14.1 (1) as the Sheriff or a police officer.

(2) An Enforcement Warrant may authorize only an enforcement officer (as defined) to seize and sell real or personal property of an enforcement debtor: Rule 14.16 (1), and only the enforcement officer may seize and take control of the property: Rule 14.16 (3).

(3) The enforcement officer (as defined) must sell the seized property by public auction, unless the Court otherwise orders, and must endeavour to get the best price reasonably obtainable: Rule 14.18, and must advertise the sale: Rule 14.19.

(4) The enforcement officer (as defined) must pay the proceeds of sale to the Court, which then pays first the enforcement officer the costs of enforcing the sale, then the judgment creditor, and finally the balance to the judgment debtor: Rule 14.21.

(5) An Enforcement Warrant must also state the date the warrant ends: Rule 14.13 (1) (b) and the amount recoverable under the warrant: Rule 14.13 (1) (c).

It is clear that the purported Enforcement Warrant did not satisfy any of those requirements. It was not issued to the Sheriff or a police officer, but to Mr. Govan. That was a fundamental flaw. The procedure by which a judgment may be enforced is carefully prescribed in Rule 14 of the Rules. That is to enable the Court to control those procedures in the interest of both the judgment creditor and the judgment debtor. One of those procedures is the seizure and sale of the property of a judgment debtor under an Enforcement Warrant. That is a very invasive power. It may involve the sale of real or personal property of great significance to a judgment debtor. When the Court authorizes the seizure and sale of the property of a judgment debtor, it is therefore important that it be done by a proper officer, and generally the Sheriff, who must comply with the Rules and is accountable for their compliance as an officer of the Court, and who is independent of the parties.

In our view, the document authorizing Mr. Govan to take possession of, and sell, Mr. Morin’s leasehold property is not a valid Enforcement Warrant under the Rules because it is not directed to an enforcement officer, that is the Sheriff or a Police Officer. Indeed, counsel for Mr. Govan at the hearing acknowledged that it could not have that status.

There are other problems with the document. It permits Mr. Govan to sell the property "by or in such manner and for such value as he shall in his absolute discretion deem appropriate". That permission does not reflect the protections imposed by Rules 14.18 and 14.19. That is not to suggest that Mr. Govan did not agree to sell the property to FVL for a proper price. But he was not required to, and did not, test the market by proper advertising and a public sale. He was not required to get the best price reasonably obtainable, and it is not possible to know if the sale and purchase agreement is at the best price reasonably obtainable. The document does not state the date the warrant ends, but is open ended in time, and it does not state the amount recoverable under the warrant as required by Rule 14.13 (1) (b) and (c). It also leaves to Mr. Govan the identification of the recoverable costs and expenses, both of the seizure and sale of the property and of the action, without superintendence of the Court as contemplated by Rule 14.21.

For these reasons, we consider that the document is not an Enforcement Warrant under Rule 14 of the Rules. Counsel for Mr. Govan suggested that, alternatively, the order made on 14 June 2007 should be treated as a form of mandatory injunction authorizing Mr. Govan to seize and sell the land. It was argued that the order was like an order authorizing a mortgagee to exercise the power of sale under the mortgage when there was a dispute about whether the power of sale could be exercised. We do not agree. Principally, that is because the judge clearly did not intend to make any such order. He was asked to issue an Enforcement Warrant, and that is how the document is headed. Also, the status of an enforcement creditor is not like that of a mortgagee. The status of an enforcement creditor does not include as of right any equitable interest in the property of the enforcement debtor, but the right to pursue recovery of the judgment debt in accordance with Rule 14 of the Rules.

Counsel for FVL and Mr. Govan rightly urged the Court not to consider the validity of the purported "Enforcement Warrant" on this appeal because Mr. Morin had already challenged its validity in the earlier appeal to the Court of Appeal.

There is much to be said for that argument. As long ago as Henderson v. Henderson (1843) 3 Hare at 115; 67 E. R. 319 it was recognized that a party to litigation must bring forward the whole case at the one time so that, except in special circumstances, the Court will not permit the same parties to open the same dispute by raising a further matter which might have been brought forward at the time the issue was first raised. Generally, a party will be estopped from raising the matter in the later proceedings if it was so relevant to the first proceeding that it would have been unreasonable not to rely upon it in the first proceeding. See for example Carl Zeiss Stiftung v. Rayner & Keeler Ltd. [1967] I A. C. 583; Port of Melbourne Authority v. Anshun Pty. Ltd. [1981] HCA 45; (1981) 147 C. L. R. 589. Adherence to that principle is necessary for the orderly administration of justice, to secure finality of litigation, and to ensure parties to litigation are fairly treated.

In our view, the present appeal is one of those rare cases where a party should be entitled to raise the matters now raised by Mr. Morin notwithstanding the earlier attack upon the issue of the purported Enforcement Warrant. By declaring the document not to be a valid Enforcement Warrant, we will not be making any declaration of rights inconsistent with the earlier Court of Appeal decision; it made no declaratory order on the validity of the document, but confined its orders to dismissing the proceeding before it as the particular point of complaint was not made out.

In addition, FDV was not a party to that earlier proceeding, although it was heard as an interested person, so it cannot directly claim the benefit of the principle. We also have taken into account that neither FDV nor Mr. Govan have changed their position between that earlier decision and this appeal: their contract for sale and purchase of the lease property was made on 14 August 2007 before the earlier Court of Appeal decision, and from then to the present time such interest as FDV had in the lease property (if any) remains unregistered. Next, we have taken into account that the means by which Mr. Govan purported to sell the lease property was apparent to FDV. The agreement for sale and purchase records Mr. Govan purported to sell it as agent of Mr. Morin, and he has signed it in that capacity. But clause 2 of the document clearly recognizes that Mr. Morin as the registered leaseholder would be required to sign any documents needed to sell the lease property, and he had not and has not done so. Finally, and most significantly, we have taken into account that an Enforcement Warrant under the Rules is a Court-controlled process for the enforcement and payment of judgment debts in the circumstances where it applies, and where a document so clearly does not comply with Rule 14 of the Rules the Court should not give it a status which it does not have simply because a party to the proceedings appears to have initially confined his attack upon its validity to one issue.

The above discussion of Rule 14 concerning Enforcement Warrants shows that the issue which initially appeared to be raised on this appeal is a false issue. When an Enforcement Warrant is issued to an enforcement officer, the enforcement officer does not take any interest in the property of the enforcement debtor. The enforcement officer at no time has any interest in that property, but is authorized and directed by the Court to seize and sell that property on behalf of the enforcement debtor to assist the Court in securing payment of the judgment debt. If the enforcement debtor is unable to, or not prepared to, sign the necessary documentation the Court may authorize the enforcement officer or some other person to sign the documentation on behalf of the enforcement debtor or (for example) may direct the Director of Land Records Office to register a transfer of real property executed by a particular person on behalf of an enforcement debtor.

We accordingly propose to dismiss the appeal because we consider that there was no valid Enforcement Warrant by which Mr. Govan could agree to sell Mr. Morin’s interest in the lease property. The document purporting to be an Enforcement Warrant of 14 June 2007 was a nullity.

However, we consider that Mr. Morin should pay the costs of FDV and Mr. Govan of this appeal. That is simply because, in our view, he could have raised the matters upon which we have decided this appeal in the earlier proceedings before the Court of Appeal. Had he done so, the outcome then would have been as it is now, but without the need for the further appeal.

Mr. Govan now apparently has the resources to pay Mr. Govan the judgment debt with interest and costs. As we understand some of the judgment debt and interest and costs has been paid into Court by Mr. Morin, so Mr. Govan may apply for that amount to be paid out to him. The balance is in his solicitors trust account and available for immediate payment. He should do so forthwith. If, for any reason, he is not paid there is nothing to prevent Mr. Govan from seeking an Enforcement Warrant under Rule 14 in the immediate future.

We comment that, generally speaking, the Court would appoint the Sheriff as the Enforcement Officer in an Enforcement Warrant, particularly one potentially concerning real property. The Sheriff as an officer of the court is recognized as an appropriate person for that purpose: see section 43 (5) of the Judicial Services and Courts Act [CAP. 270]. It is for the judge issuing the Enforcement Warrant to decide, in each instance, who should be appointed as the enforcement officer but we would expect the Sheriff would be so appointed unless there were circumstances suggesting that a particular police officer should be so appointed.

DATED at Port Vila, this 30th day of April, 2008.

BY THE COURT

Hon. Vincent Lunabek CJ
Hon. Bruce Robertson J.
Hon. Hamlison Bulu J.
Hon. Christopher Tuohy J.
Hon. John Mansfield J.