Coecon Ltd (In Receivership) v Steele [2004] PGNC 236; N2532 (14 April 2004)

N2532

PAPUA NEW GUINEA

[IN THE NATIONAL COURT OF JUSTICE]

OS. NO. 745 OF 2002

COECON LIMITED (IN RECEIVERSHIP)
Plaintiff

AND:

JOHN ROBERT STEELE
First Defendant

AND:

WARNER SHAND LAWYERS
Second Defendant

AND:

RAGA KAVANA REGISTRAR OF TITLES
Third Defendant

WAIGANI: KANDAKASI, J.
2003: 11th November
2004: 14th April

INFERIOR COURTS - Enforcement of District Court judgments – Whether District Court has power to order writ for levy of property – District Court limited to jurisdiction vested in it by its enabling legislation – No power in District Court to order levy of property.

COSTS – Costs would normally follow the event – Where a party acts in clear breach of the law and forces the opposite party to incur costs unnecessarily, it should bear the others cost on a solicitor/client basis.

STATUTORY INTERPRETATION – s. 173 District Court Act Chp. 40 – Meaning of - Having regard to the meaning of the words "goods and chattels" the provision does not authorize execution of judgment against any real property – Power to execute is limited to the monetary limit under the District Court Act.

STATUTORY INTERPRETATION – s. 171 (4) Land Registration Act. Meaning of – Process available to a judgment creditor to enforce a National Court judgment and not a District Court judgment.

WORDS & PHRASES – "Chattels" means moveable goods and property other than freehold or interest in land that has no time limitation and not replaceable – District Courts Act (Chp. 4) s.173.

WORDS & PHRASES – "Goods" means goods and value other than land that are moveable and personal as opposed to real property – District Courts Act (Chp. 40) s. 73, Goods Act (Chp. 251) s.1.

WORDS & PHRASES – "Warrant of Execution" process of enforcement of District Court judgments which is limited and not the same as "Writ of Execution" a process available at the National Court level – S.171(4) Land Registration Act, 013 Rule 17 National Court Rules.

Papua New Guinean Cases Cited:
Kiau Nikints v. Moki Rumits [1990] PNGLR 123.
Samson Dacany v. Noah Taia of the National Fisheries Authority (Unreported judgment delivered on 13/12/03) N2316.
Bank of South Pacific Limited v. The Public Curator as Administrator of The Estate of the late Geno Iari, Paul Wagun & Ors (Unreported judgment delivered on 20/01/03) N2320.

Overseas Cases cited:
Nwakobi v. Nzekwu [1964] 1 WLR 1019

Counsel:
Mr. B. Andrews for the Plaintiff.
Mr. J R Steele for the First & Second Defendant.

14th April 2004

KANDAKASI, J: By originating summons filed on 16th December 2002, the plaintiff is seeking a declaration that an entry on the 17th of September 2002 of a warrant of execution by the Deputy Registrar of Titles upon a title to land described as Portion 624 Milinch Karu Fourmil Namatanai Volume 27 Folio 68 (the property) is invalid and of no effect. Consequential, on the first relief sought, the plaintiff also seeks an order for a deletion of the entry of the warrant on the title.

On 16th December 2002, the plaintiff filed a motion seeking a number of interim restraining orders pending a determination of the substantive proceedings. On the 17th of December 2002, the defendants filed an undertaking not to do or take the kind of steps the plaintiff’s motion was seeking to restrain. In view of that, I directed on the 18th of December 2002 that, the substantive matter go before the Registrar of the National Court for the allocation of a date for an expedited hearing.

It seems no date was allocated by the Registrar of the Court for a hearing of the substantive matter. That resulted in the defendants filing a notice of motion on the 28th of August 2003, seeking to discharge the orders of the 18th of December 2002 and orders perfecting the registration of the transfer of title over the property. That motion came before me for hearing on 7th November 2003. At that time, the parties agreed to the Court dealing with both the substantive matter and the defendant’s applications at the same time. They also agreed that the facts where not in issue and that, it will be a matter for submissions only. I therefore directed the parties to file their respective submissions and return on 11th November 2003 for confirmation of the filing of their respective submissions and make any additional submissions if they wished.

On the 11th of November 2003, the parties confirmed filing their respective submissions and made no additional submissions. I then reserved a decision on the matter to a date when the Court is able to arrive at a decision. This is the Court’s decision.

The Relevant Facts

The relevant facts are not in dispute. In proceedings before the District Court in Mt. Hagen, the second defendant, through the first defendant acted for Wagi Valley Transport Limited as a complainant in Complaint number 72 of 2000. Judgment was entered for the complainants against the plaintiff in the sum of K7,087.85 and interest on 10th August 2000.

On 19th October 2000, the District Court issued a warrant of execution in the proceedings directing the police to enforce the judgment by taking the goods and chattels of Coecon Limited. On 29th February 2002, the first and second defendants caused on behalf of their client, Wagi Valley Transport Limited, the warrant of execution to be lodged with Lands Department for registration on the title to the property, the subject of these proceedings.

The Registrar of Titles refused registration of the warrant of execution. However, it seems on subsequent representation of the first and second defendants, the warrant was eventually registered on 17th September 2002.

By letter dated 17th October, the first and second defendant sought approval from the Sheriff of the National Court to conduct an auction sale of the property on the strength of the warrant that was entered on the title. The Sheriff responded by letter dated 29 October 2002 saying, "we are not able to execute the warrant of execution as the Sheriff has been directed to cease further activities" and that "this directive was issued by the Chief Justice on 16th October 2002."

The first and second defendants therefore went back to the District Court and obtained an order from that Court on 27th November 2002. The order authorized the first defendant to conduct an auction sale of the land by way of execution of the District Court Warrant.

On 6th December 2002, the first defendant conducted an auction for the sale of the land at the offices of second defendant at Kanudi, Port Moresby. That resulted in a contract of sale being entered into between a purchaser Mathura Trading Limited and the first defendant as vendor on 16th December 2002.

Arguments of the Parties

The plaintiff argues that the District Court exceeded its jurisdiction when it issued the warrant of execution against the land. This is so they argue because, there is no provision in the District Courts Act[1] for the execution of its judgments by the sale of real property. As for the order authorizing the first defendant to effect the sale of land by auction, they also submit that, that was also beyond the jurisdiction of the District Court, even if the warrant was within the powers of the District Court to issue. Consequently, they argue that the issue of the warrant and authorizing the first defendant to sell the land are both invalid and are of no effect.

The defendants argue that the issuance of the warrant of execution was within the ambit of s.173 of the District Courts Act and s. 2(2) of the Regulations under that Act. They also submit that the plaintiff is estopped by its acquiescence and laches as it had opportunity to prevent the sale of the property by auction. Further or in the alternative, if they do not succeed in that argument, the plaintiff should be ordered to meet their costs on a solicitor client basis by reason of the plaintiff’s failure to act promptly.

From these facts and arguments, the issues are obviously these:

1. Whether the powers of execution under s. 173 of the District Courts Act include a power to execute against real property or land?
   
2. Either following on from the answer to the first question or independent of it, did the District Court have the necessary power or jurisdiction to authorize the first defendant to sell the land by auction?
   
3. Has the plaintiff acquiesced and it’s therefore estopped from the relieves it is claiming? and
   
4. Are the defendants entitled to costs and if so on a solicitor client basis?
   

The first two issues go into the jurisdiction of the District Court. They are quite straightforward. I will therefore deal with them first. Thereafter, I will consider the remaining questions.

Jurisdiction of the District Court

It is clear law now that, the District Court is a creature of statute. As such, it has jurisdiction as are vested in it by its enabling legislation, the District Courts Act. The moment it purports to exercise a power not specifically vested in it by the Act, it amounts to an act outside its jurisdiction and therefore null and void. Initially, Woods J. in Kiau Nikints v. Moki Rumits[2] made this position clear. Subsequently a number of judgments followed him. The latest of this line of cases is my judgment in Samson Dacany v. Noah Taia of the National Fisheries Authority.[3]

In so far as is relevant s. 21 of the District Courts Act provides for the main civil jurisdiction of the Court, while the next section, s.21A provides for the Court’s ancillary powers. Section 21 in so far as is relevant stipulates:

"21. Civil Jurisdiction.

(1) Subject to this Act, in addition to any jurisdiction conferred by any other law, a Court has jurisdiction in all personal actions at law or in equity where the amount of the claim or the amount or value of the subject matter of the claim does not exceed—

(a) where the Court consists of one or more Principal Magistrates—K10,000.00; and

(b) where the Court consists of one or more Magistrates—K8,000.00.

. . .

(3) Subsections (1) shall not be taken to limit the jurisdiction of Courts in cases where, by any law, money, irrespective of amount, may be recovered before a Court.

(4) A Court has no jurisdiction in the following cases:—

...

(f) when the title to land is bona fide in dispute.

(5) Subject to this section, a Court has jurisdiction when—

(a) the defendant, or one of two or more defendants, as the case may be, is usually resident, or carries on business; or

(b) the cause of action wholly or partly arose; or

(c) the defendant has given an engagement or written promise to pay a debt or sum at a specified place,

in the area for which the Court is constituted."

Section 22 then provides the Court with ancillary powers in these terms:

"22. General ancillary jurisdiction.

Subject to this Act, a Court as regards a cause of action for the time being within its jurisdiction, shall, in proceedings before it—

(a) grant such relief, redress or remedy, or combination of remedies, whether absolute or conditional; and

(b) give the same effect to every ground of defence or counterclaim, whether equitable or legal,

as ought to be granted or given in a similar case by the National Court and in as full and ample a manner."

It is clear from these that the Court is limited, both by the monetary level, K10,000.00 maximum and by the nature of the case. The powers granted under s.22 would appear to be wider but a closer examination of the wording in that section makes it clear that these powers are limited to a cause of action over which District Court already has jurisdiction, by reference in my view to the provisions of s.21. This is obvious from the opening of the section and in particular, the words "Subject to this Act".

In the present case, there is no contest over the District Court having jurisdiction over the substantive complaint leading to the judgment of over K7,087.85. What is in contest is the execution of that judgment against a piece of land or real property.

Part IX of the Act provides for the enforcement of judgments of the District Court. Of direct application and one, which the defendants rely on, is s.173. This provision reads in relevant parts:

"173. Enforcement of order by warrant of execution.

Where an order of a Court requires the payment of a sum of money or costs, the sum is recoverable, without the direction of the Court making the order, by execution against the goods and chattels of the person liable to make the payment, and a warrant of execution may be issued for the purpose of levying that sum."

(Emphasis supplied)

The operative words, in my view, are the words "goods and chattels". Section 1 of the Goods Act defines the word "goods" in these terms.

"goods" includes—

(a) all chattels personal other than things in action and money; and

(b) emblements and things attached to or forming part of any land that are agreed to be severed before sale or under the contract of sale..."

The terms "chattels" and "personal" have a long legal history that goes back to the long English legal history. They stand in contrast with another technical term, "real property". These are technical terms that apply in the context of land law. They provide a broad distinction between land (real property) and other goods of value, which we can understand in terms of that which is movable and that which is not movable. Whilst real property is not movable, chattels and personal items are moveable. Generally speaking, "chattels" means "property other than freehold,"[4] or an interest in land that has no time limitation and is not replaceable. This distinction was and still is an important one because; these terminologies continue to appear in present day legislation as in the present case and one needs to clearly understand that distinction.

Having regard to these, I am of the view that s.173 of the District Court Act does no include a right or a power to execute a judgment against a real property or land but goods and things other than land. I am also of the view, even in the case of an execution against goods or chattels that, it can only be within the jurisdictional limits of the District Court. It would follow from this that, the District Court in the present case exceeded its powers or jurisdiction when it allowed enforcement of its judgment against the land, the subject of these proceedings.

The general scheme of the Land Registration Act[5], which governs the sale, transfer, and registration of interests in land, supports this view. As the plaintiff submits, s. 171 of the said Act covers the transfer of land in consequence of the execution of a judgment. In so far as is relevant, it reads:

"(4) Where an estate, interest or security is sold under a writ of execution registered under this section, the officer or person appointed to execute the writ shall execute a transfer of the estate, interest or security to the purchaser in the prescribed form".

Neither counsel was able to assist the Court as to a proper construction of this provision. There appears to be no case law in PNG on the construction of this provision. Generally, the phrase, "writ of execution" refers to the process relating to the enforcement of a judgment.[6] Order 13 r 17 of the National Court Rules defines the phrase "writ of execution" in terms of including a writ of levy of property, a writ of possession, a writ of delivery, a writ of sequestration and a writ in aid of these writs. The phrase "writ of execution" and or the word "writ" are familiar and or known at the National Court level as opposed to the District Court level. Indeed, neither the phrase "writ of execution" nor the word "writ" appears any where in the context of the provisions dealing with the enforcement of District Court judgments. In their place is the phrase "warrant of execution".

Whilst a "warrant of execution" and a "writ of execution" are effectively the same, in terms of enforcing a judgment, the distinction is significant. For one process is available at the District Court level while the other is available at the National Court level. This is important in terms of the different levels of jurisdiction, where the District Court is limited while the National Court is unlimited in their respective jurisdictions. It is also significant because it indicates the kind of property against which the respective processes are available.

Based on the foregoing discussion, it is reasonable to infer that, the process of sale, transfer and or registration of an interest in land under s. 171 (4) of the Land Registration Act is available only for the enforcement of a National Court judgment and not the District Court. This view is supported in my view, by s. 21(4)(f) of the District Courts Act, to the extent that it excludes from the jurisdiction of the District Courts disputes over title in land.

For these reasons, I am of the view that the District Court clearly acted outside its jurisdictional limits in every stage of the way. Firstly, it did not have any power to issue a warrant of execution against the land the subject of these proceedings. It further acted outside its powers when it authorized the first defendant to sell the land, the subject of these proceedings by auction. By reason of these, both the warrant of execution and the subsequent orders authorizing the first defendant to conduct the auction sale were null and void and of no effect from their very beginning as the District Court had no power to issue them at the first place. Consequently, every other step that followed these two processes were also invalid and of no effect.

Estoppel By Acquiescence and Laches

These then leads to the remaining issues before this Court. These questions are whether the plaintiff is precluded from claiming the relieves it is claiming by operation of the principle of estopped by it’s acquiesce and laches?

The defendants assert that the plaintiff acquiesced by not stopping the auction. The plaintiff argues that the principle is inapplicable because everything that happened including the conference of power on the first defendant to sell was ultra vires the powers of the District Court. Consequently they argue that, no acquiescence of the plaintiff (if there were any acquiescence), cannot as a matter of law confer on the Registrar of Titles power to register a transfer of the estate on the basis of a District Court warrant entered on the Title. In support of its argument, it refers to the following passage from the top of the defendants’ own submission at p. 3:

"Larches involve essentially a personal disqualification on the part of a particular plaintiff, it cannot be treated as a stigma on the title to land which, once impressed necessarily descends with the title and affects all succeeding owners".

This is an extract from a decision of the Privy Council in Nwakobi v. Nzekwu[7] [1964] 1 WLR 1019, at p. 1024, per Viscount Radcliffe.

The defendants’ argument effectively in my view, seeks to get this Court to legitimize an otherwise illegal and invalid transaction. This runs contrary to trite law that equitable principles such as the doctrines of laches and acquiescence come into operation to the do what the law cannot do in terms of providing a remedy where there is no legal remedy available in the interest of doing substantial justice. I referred to this principle in Bank of South Pacific Limited v. The Public Curator as Administrator of The Estate of the late Geno Iari, Paul Wagun & Ors[8]. That was in the context of legal and equitable mortgages. There, I reiterate the trite legal position that equity cannot apply in conflict with a legal remedy. This means where there is an available legal remedy; no equitable remedy can override that which the law already provides for.

In the present case, the law clearly is that, the District Courts only exercise powers vested in them by their enabling legislation. Any purported exercise of a power or function not specifically vested in them amounts to an ultra vires action, and is therefore null and void from the very beginning of the exercise of the purported power or function. Such purported exercises of power therefore, amount to illegal acts and are thus null and void from the outset, over which, equity has no power to render it legal by virtue of laches and acquiescence. This confirms with what Parliament has provided for in terms of the provisions of the District Courts Act.

A view opposite to the above view, would amount, in my view, to in effect, a rewriting of what Parliament has provided for in terms of limiting the powers and functions of the District Courts. Parliament is the ultimate lawgiver, and has the power to exercise that power or function unrestricted by any principle of equity. The Courts cannot therefore, in the disguise of interpreting and applying the law, legislate contrary to what Parliament has provided for. It follows therefore, that the principles of equity cannot override the positive statutory and generally any other clear legal position. Hence, in my view, the principles or equity argued for by the defendants are inappropriate and inapplicable to the present case. Consequently, I reject the submissions of the defendants.

In the consequence, I find that there is no proper legal basis for a grant of the orders or relief sought by the defendants in their cross motion. I therefore order a dismissal of that motion. In so doing, I find that there is good basis for the relieves sought by the plaintiff. Accordingly, I declare that the entry on 17th September 2002 of a warrant of execution by the Deputy Registrar of Titles upon the title to land described as Portion 624 Milinch Karu Fourmil Namatanai Volume 27 Folio 68 invalid and of no effect. Consequential, on that declaration, I order that Registrar of Titles delete the said entry of warrant of execution and any purported transfer based on the warrant.

Costs

Ordinary, costs follow the event in nearly all cases resulting in a court determination, unless a case is made out for an order otherwise than in those terms. In the present case, the defendants seek an order for costs on a solicitor/client basis for conducting the auction sale. I make a number of observations. Firstly, I accept the plaintiff’s argument that the conduct of an auction is not work undertaken by a lawyer for his client. Instead, it is an activity usually undertaken by a registered or licensed auctioneer. These are persons usually involved in the real estate business.

In the case of an auction in enforcement of a judgment, the Sheriff of the National Court usually does that, and where he is not able to perform that task, he briefs out. In either case, the costs are not substantial. In the present case, there is no evidence of the defendant’s lawyer, Mr. Steele being a licensed auctioneer. Similarly, there is no evidence of the Sheriff briefing him.

Secondly, the evidence shows that, the Registrar of Titles at first declined to register the District Court warrant of execution on the title. This appears in Warner Shand’s letter to the Registrar dated 31 July 2002. The letter makes this statement "...the Warrant of Execution has the same standing, force and effect as a National Court writ for levy of property, even though the wording of the two documents is very different". The letter then goes on to threaten the Registrar with legal action, should the warrant not be registered.

Clearly, this assertion by the first and second defendants was wrong and it did mislead the Registrar of Titles. Likewise, the threat of legal action was wrong and totally unfounded and did mislead the Registrar of Titles, who complied without seeking the legal advice of the State Solicitor.

Thirdly, the first defendant applied to the Sheriff of the National Court to execute the warrant, because of its entry on the title. But by letter dated 29 October 2002, the Deputy Registrar of the National Court advised the first and second defendants that the National Court was not able to execute the warrant of execution as the Sheriff was directed by the Chief Justice to cease further activities. This, in my view, suggested to the first and second defendants that the Sheriff was at no liberty to execute the warrant. This did not deter the first and second defendants. They went back to the District Court in Mt Hagen and persuaded the Magistrate to erroneously, confer a power of sale in the first defendant, despite a clear lack of jurisdiction in the District Court.

Fourthly, there is no evidence of the first and second defendants personally incurring the costs of conducting the auction. In the absence of any evidence to the contrary, it is reasonable to infer that their client, Wagi Valley Transport, met the costs. The auction was under the purported authority of the District Court order, in proceedings issued against the plaintiff by Wagi Valley Transport. The costs were therefore that of the client and not of the first and second defendants.

In these circumstances, I have no hesitation in arriving at the view that, the first and second defendants should bear the plaintiff and the third defendant’s costs, if any on a solicitor client basis. The first and second defendants clearly misrepresented their client and misrepresented the law. In my view, rather than assisting the Mt. Hagen District Court to arrive at a correct decision, they misrepresented the law, applied for and obtained orders clearly outside the jurisdiction of the District Courts. Thereafter, they exercised a power they never had or would have been legally given to them, in the particular circumstances of this case. Further, they also made misleading representations and issued threats against the Registrar of Titles without any firm legal foundation. I find this to be a case of a clear abuse of the process of the Court and the provisions under the Land Registration Act. I further find that, it is these very baseless conducts of the first and second defendants that have forced the plaintiff and the third defendant to come this far and incur costs unnecessarily.

Accordingly, it is only fair that the first and second defendants reimburse the costs the plaintiff and the third defendant have incurred. I therefore, order that the first and second defendants both jointly and severally meet the plaintiff and the third defendant’s costs (if any) on a solicitor client basis. Further, I recommend that the conduct’s of the first and second defendants be referred to the Lawyers Statutory Committee for its consideration and appropriate action, as I believe their conduct amount to a breach of the professional conduct rules.
____________________________________________________________________
Lawyers for the Plaintiff: Maladinas Lawyers.
Lawyers for the First and Second Defendants: Warner Shand Lawyers.

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^[1] Chapter No.40.
^[2] [1990] PNGLR 123.
^[3] (Unreported judgment delivered on 13/12/03) N2316.

^[4] L.B. Cruzon, A Dictionary of Law, Macdonald & Evan, Bungay, 1979, p. 53.
^[5] Chapter 191.
^[6] L.B. Curzon, A Dictionary of Law, (supra note 4).
^[7] Nwakobi v Nzekwu [1964].
^[8] (Unreported judgement delivered on 20/01/03) N2320.