Resolution Trust Corporation v Bortles [1994] FijiLawRp 16; [1994] 40 FLR 138 (14 September 1994)

[1994] 40 FLR 138

HIGH COURT OF FIJI

Civil Jurisdiction

RESOLUTION TRUST CORPORATION

v

1. LEINANI K. BORTLES
2. LARRY LYNEL BORTLES

Fatiaki J

14 September 1994

Practice (civil) - oral examination of deponents - mareva injunction - relevance of assets said to belong to third party.

On application by the Defendants to vary a Mareva Injunction the High Court considered the relevance of alleged ownership by a third party and also discussed its discretion to order cross examination of deponents.

Cases cited:

Bayer v Winter (No. 2) [1986] 2 All ER 43
Carnley v Hoff [1942] 1 Ch 298
Comet Products U.K. Ltd v Hawkex Plastics Ltd [1971] 2 QB 67
Galaxia Maritime S.A. v Mineralimportexport [1982] All ER 798
Narain Shipping Co. Ltd v Government of American Samoa (1979) 25 FLR 153
Oceanica Castelana v Mineralimporexport [1983] 2 All ER 65
S.C.F. Finance Co. Ltd v Masri [1985] WLR 876

Interlocutory application in the High Court

A. Daubney for Plaintiff
R. Smith for Defendants

Fatiaki J:

On the 25th August 1994 this court granted on the ex-parte application of the plaintiff corporation a mareva injunction:

"... restraining ... (the defendants) ... from dealing with, charging, mortgaging, assigning, disposing of, ... or removing from the jurisdiction any ... property or monies or assets including property held by third party entities over which the defendants ... have ownership and/or control within the jurisdiction of this Honourable Court including but not limited to the properties being described as Certificate of Title 6684 and Native Lease 8720."

The defendants were also required to file affidavits disclosing the nature and value of their assets within the court's jurisdiction. This they have done in terms of separate affidavits sworn and filed on the 7th of October 1994.

In addition to the above the second defendant specifically deposed in his affidavit:

"(that) although I am registered as the proprietor of C.T. 6684 comprising vacant land at Deuba and have been so registered since September 1984 I merely hold this property in trust as the General Partner of the Fiji Marina Partners Partnership which is a limited partnership and I will continue to so hold it until such time as the property is sold."

He further volunteered:

"I am the purchaser named in a contract for the purchase from Pacific Hotels and Development Limited of 10 housing lots at Pacific Harbour being Certificates of Title 14932, 14933, 14934, 15051, 15052, 15056, 15066, 15067, 15068 and 15069. I have no personal interest in these properties either, merely holding them also in trust as General Partner of the Fiji Pacific Partners Partnership, a further limited partnership which is about to trade such properties for an industrial building on Crown Lease 5245 at Wailada Estate."

Six (6) months later on 13th April 1994 the defendants issued a summons seeking a declaration and a variation of the mareva injunction designed specifically to exclude C.T. 6684 and the above-mentioned 10 Pacific Harbour lots from the ambit of the injunction on the sole ground that both sets of properties are held in trust by the second defendant for the benefit of two limited partnerships registered in Hawaii under the names 'Fiji Marina Partners' and 'Fiji Pacific Partners', respectively.

The primary affidavit sworn by the 2nd defendant on the 13th of April 1994 and filed in support of the summons sets out in some detail together with annexures the history and purpose of the formation of the two above-mentioned limited partnerships, the acquisition of C.T. 6684 and the 10 Pacific Harbour lots and the reason(s) why the transfer of C.T. 6684 and the purchase agreements of the 10 Pacific Harbour lots were transacted in the name of the second defendant namely, "... the laws of Fiji did not recognise a Hawaii limited partnership as a legal entity ..."

The plaintiff corporation in opposing the defendants' application has filed 2 affidavits one from a Rex Malott and the other from Gopal Krishna annexing 10 Certificates of Title relating to the 10 Pacific Harbour lots which indicates that none of the lots has been transferred to anyone nor are they subject to any caveat lodged to protect any agreement entered into with anyone to buy the said lots as might be expected.

There is also annexed to Krishna's affidavit C.T. 6684 and Transfer No. 215869 which collectively indicate that C.T. 6684 was sold and transferred to the second defendant on 13th September 1984 for the sum of $1,021,254. No mention is made in the recitals in the transfer of any fiduciary capacity of the second defendant in the purchase of the land comprised in C.T. 6684 nor does the entry on the C.T. disclose that the transfer was made to the second defendant as Trustee.

Even the written Sale and Purchase Agreements referred to in the transfer nowhere mentions the limited partnership on whose behalf the land was being acquired other than the deletion of the partnership's name and the insertion of the second defendant's name as the purchaser. In this regard para. 3 of the letter explaining the alteration to the second defendant is significant where it reads:

"(The alteration) is made possible in light of the fact that you signed each of the contracts personally and not with the partnership signature."

There are also 5 unexplained judgments in favour of B.N.Z. entered on C.T. 6684 during a time when the limited partnership has effectively lain dormant and therefore presumably was not trading.

Quite simply on the face of the Transfer and C.T. 6684 the second defendant is the sole registered proprietor of an indefeasible estate in fee simple of the land comprised in the title.

The affidavit from Rex Mallot on the other hand sets out an intriguing series of assignments of the second defendant's interests as a general partner of both Fiji Marina and Fiji Pacific which learned counsel for the plaintiff corporation describes as having the effect of "round-robbining" his interests and formed the subject matter of a fraudulent conveyance claim against the second defendant in U.S. proceedings which was subsequently resolved.

In this latter regard the written argument of the defendants' attorney placed before the U.S. District Court in support of a motion seeking a stay of an order compelling the testimony of the defendants amongst others contains the rather revealing concession at p. 9 where he says: