Westpac Banking Corporation v Chandra [1991] FJHC 84; HBC 0356.1991 (2 August 1991)

IN THE HIGH COURT OF FIJI
(AT SUVA)

CIVIL JURISDICTION

CIVIL ACTION NO. 356 OF 1991

BETWEEN

WESTPAC BANKING CORPORATION
Plaintiff

AND

SATISH CHANDRA
(f/n Ganga Ram)
Defendant

J. Howard for the Plaintiff
E. Leung with H. Ram for the Attorney-General

REASONS FOR DECISION

This matter originated in the Suva Magistrates' Court (Action No. 944 of 1991). By writ dated 24 July 1991 the Plaintiffs sought the sum of $6866.00 being a sum of $6760.00 plus fees and costs alleged to be owing by the defendant to the Plaintiff.

On 25 July 1991 the Plaintiff to the Suva Magistrates' Court for an absconding debtors warrant under the provisions of the Magistrates' Court Rule ORD. XX. The application was supported by an affidavit in the usual form averring the debt and further averring that it had come to the Plaintiff's knowledge that the Defendant and his wife, a former employee of the Plaintiff, were intending to depart from Fiji permanently on 30 July 1991 in order to settle in Australia.

The Learned Magistrate very properly drew Counsel's attention to the judgment of the Fiji Court of Appeal (Sundarjee Bros. Ltd. v. Jeffrey John Coulter - Civil Appeal 65/1986)which had upheld a decision of the Supreme Court (Rooney J. Civ. 756/1986) ruling Section 6 of the Debtors' Act (Cap. 32) void for unconstitutionality to the extent only that the warrant was sought to enforce payment of a debt owed by an absconding debtor where the debt arose out of contract as opposed to being a debt "imposed by law" - See section 14(3) (h) of the 1970 Constitution and section 15(3) (h) of the 1990 Constitution.

Although the Fiji Court of Appeal did not specifically refer to the Magistrates' Court Rules the penultimate Sentence of Rooney J's judgment reads as follows:

"Although this application is not concerned with Order XX of the Magistrates' Court Rules it is difficult to see how that Order can be considered any differently."

In these circumstances the Learned Magistrate referred the matter to this Court for opinion and direction under the provisions of section 32 of the Magistrates' Court Act Cap. 14.

I have some doubt as to whether this was in fact the correct procedure. It seems to me that section 37 would have been more appropriate but given the urgency of the subject matter and the general powers of supervision vested in the High Court by section 114(1) of the Constitution I agreed to accept the procedure initiated by the Magistrates' Court.

Having heard Counsel for the applicant and very briefly Counsel for the Attorney-General I held that the effect of the decision of the Fiji Court of Appeal was to render void for unconstitutionality Order XX of the Magistrates' Court Rules insofar as the absconding debtor procedure was applied to the arrest of a purely private debtor. I now give my reasons for so ruling.

The overriding purpose of Chapter II of both the 1970 and 1990 Constitutions is to be found in its title:

"Protection of fundamental rights and freedom of the individual."

The general scheme of each section of the chapters is to affirm basic freedoms in general terms subject to derogations reasonably necessary to preserve law and order and the well being of the state and its people. Section 14 of the 1970 Constitution is in identical terms to section 15 of the 1990 Constitution. Both sections are concerned with protection of freedom of movement.

In Sundarjee's case the Fiji Court of Appeal subjected section 14(3) (h) to most careful and detailed analysis. The conclusion reached by the Court as already stated was that section 6 of the Debtors' Act insofar as it relates to purely private debt is void for unconstitutionality.

True, the opinion of the Court was strictly speaking obiter and true also the Court stated that:

"Each individual case must be considered in the light of its own intrinsic nature and its own facts"

But the Court went on to say that:

"the enquiry in each instance is whether or not an order is reasonably required in order to secure the fulfilment of any obligation imposed on the person by law."

Given the precise interpretation by the Court of the meaning of phrase "obligation imposed by law" namely to be that according to it by Fry L.J. in Badcock v. Hunt 1888 QBD 147, viz. an impost imposed by superior authority, it is clear to me that once the intrinsic nature of a case is found not to involve a debt arising out of such an impost there is no scope for a Court to consider whether on the facts it should exercise its discretion to issue a warrant.

Order 111 of the High Court Rules and Order XX of the Magistrates' Court Rules are merely different procedural avenues for attaining the same relief namely the arrest of an absconding debtor. In my opinion the law in Fiji is that neither avenue may properly be used to seek the arrest of an absconding debtor who is seeking to avoid repayment of a purely private debt as opposed to payment of an impost for which he is liable. In these circumstances I declined the applicants request to direct the Suva Magistrates' Court to issue the warrant sought.

That however is not the end of the matter, Learned Counsel for the applicant, with great eloquence and skill addressed me on the consequences that will flow from this striking down of the absconding debtor procedure in the Magistrates' Court which I was advised had continued unabated despite the ruling of the Fiji Court of Appeal. It was pointed out that, perhaps because of the extended family system in Fiji, arrested debtors invariably settled their debts, that creditors have for-many years relied on the procedure to enforce repayment of unsecured loans, that with the demise of the procedure there will be a severe loss of business confidence, that bona fide intending borrowers will find themselves turned away unless able to provide security and that the law will be powerless to prevent the deliberate and systematic avoidance of debt repayment by those persons who may be planning to move abroad. In present case it was submitted that there was clear evidence of a substantial debt to a respected financial institution and equally clear evidence of an intention to avoid repayment. This, it was submitted, was far removed from the circumstances envisaged by the Fiji Court of Appeal in Sundarjee's case where it was said:

"Those persons minded to leave Fiji who may be impeded by a mere money claim for ten dollars or so which may be frivolously or fraudently made and which may or may not be sustainable in a Court of Law."

As an alternative to the absconding debtor warrant sought Counsel invited me to grand a Mareva injunction against the defendant and/or to issue the prerogative writ against him of Ne Exeat Regno. Both applications were made ex parte on undertakings to file a Writ of Summons and supporting Affidavit in the High Court in like terms to those already filed in the Magistrates' Court.

It seemed to me that there was much sense in the Counsel's submission. I cannot believe that it is in the interests of the law abiding population of the Fiji that persons intending to depart the jurisdiction should be able to do so while at the same time avoiding repayment of debt justly due. I do not believe that a court properly exercise its discretion would ever see fit to order the restraint of a person claiming small sum such as ten dollars or a debt arising out of a frivolous or fraudulent claim. The sanction of damages against an applicant moving the court mala fide seems to be sufficient deterrent.

At same time the rights of the individual whether he be creditor or debtor must be jealously guarded.

Faced with similar difficulties (although unrestrained by a written constitution) the Courts in England have since 1975 issued injunctions restraining Defendants from removing or disposing out of the jurisdiction of assets with intention of defeating justice. (See generally paragraphs 29/1/20 et seq. of the Supreme Court Practice 1988 Edition) and Mareva Compania Naviera S.A. v. International Bulk Carriers "The Mareva" (1980) 1 All ER 213; (1975) 2 Lloyds Rep. 509. The matters a court should take into account before granting such an injunction were set aside in Third Chandris Corporation v. Unimarine S.A. (1979) QB 645; 2 ALL ER 972.

In the present case although the supporting affidavit might with advantage have been rather more detailed I found myself satisfied that the issue of a Mareva injunction ex parte against the Defendant was proper.

There remained the question of the prerogative Writ Ne Exeat Regno (more property in Fiji to be entitled Ne Exeat Civitate). The history of the writ and the circumstances of its then availability are explained in Felton v. Callis (1968) 3 All ER 673. Two propositions arising from Felton's case are clear: there must be an equitable and not merely a legal foundation for the issuance of the writ and secondly the issuance of the writ is subject to the restrictions imposed by section 6 of the Debtors Act 1869, the somewhat less restrictive counterpart of which in Fiji is section 6 of the Debtors Act, Cap. 32.

Both these preconditions were found to have been satisfied in Al Nahkel Trading Limited v. Lowe (1986) 1 All ER 729. The Mareva injunction granted by the Court provided the equitable foundation and the restrictions imposed by the Debtors Act 1869 were found to have been satisfied. The rationale behind the Court's decision was that without the issuance of the writ Ne Exeat Regno the purpose of the Mareva injunction would be vitiated. Tudor Price J. concluded his judgment with the following words:

"In my judgment this ancient remedy (or tool of the law as Megarry J. called it) is available in support of the modern Mareva Injunction to prevent a defendant leaving the jurisdiction with assets in order to frustrate a lawful claim before the Court".

In issuing a Writ Ne Exeat Regno coupled with a Mareva Injunction the aim of the Court is to require a defendant to provide the plaintiff with a full statement of assets and to preserve those assets before the defendant departs from the jurisdiction. The direct purpose of the orders is not to prevent departure simpliciter. As the cases reveal the discretion of the court to make such orders will not be lightly exercised. I do not think that a court would be inclined to grant such orders unless the sum claimed was substantial and the claim palpaply well founded. I am of the opinion that a court issuing a writ in Fiji of Ne Exeat Civitate would meet the criteria required to be satisfied by section 15(3) (h) of the Constitution and that accordingly such a writ is constitutional.

In all the circumstances of the case before me I concluded that it was a proper exercise of my discretion to grant both the injunction and the prerogative writ Ne Exeat Civitate sought and I so ordered.

I further direct that Magistrates' Court file 944 of 1991 be transferred back to the Suva Magistrates' Court.

M.D. SCOTT
JUDGE

At Suva
This 2nd day of August 1991.