Mangisi v Minister of Lands [2008] TOCA 3; AC 05-2007 (25 July 2008)

IN THE COURT OF APPEAL OF TONGA
NUKU’ALOFA REGISTRY

AC 05 of 2007

BETWEEN:

‘OLIVE MANGISI
Appellant

AND:

1. MINISTER OF LANDS
2. MBf BANK LTD
Respondents

Coram : Burchett J
Salmon J
Moore J

Counsel: Mr Kaufusi for the Appellant
Mrs Vaihu for the Respondent

Date of hearing : 16 July 2008.
Date of judgment : 25 July 2008.

JUDGMENT OF THE COURT

[1] In August 2006 the appellant filed a statement of claim in the Land Court seeking a declaration that the transfer of a lease to Tevita Topui was void. The defendants were the Minister of Lands, MBf Bank Ltd ("the Bank") and Tevita Topui. This application became LA9/2006. On 20 June 2007, Andrew J dismissed the application as an abuse of process because of delay. The appellant challenges his Honour's conclusions on two bases. The first is that at the hearing of the strike out application, counsel for the Bank did not raise the issue of dismissing the application because of delay. The second concerns a number of findings said to have been made by Andrew J.

[2] A parcel of land which is now lease 6248 was owned by the appellant though used by her husband, Sione Mateialona Filipe under a deed they entered into on 12 January 1993 as part of the resolution of a more broadly-based dispute between them. In 1995, the appellant borrowed $150,000 from the Bank and provided security, by lease mortgage. In 2002, the Bank exercised a power of sale in relation to lease 6248. Tevita Topui tendered for, and acquired, lease 6248 which was transferred in early 2003.

[3] In his reasons for judgment, Andrew J described some of the litigation in the Supreme Court involving the land to which the proceedings related. Other litigation was referred to in the submissions in this appeal. This litigation is a matter of public record known to the parties. It can be briefly summarised as follows. Proceedings were commenced in 1999, L1201/99, by the appellant alleging breach of the deed. In L1201/99, the appellant sought the eviction of her husband from lease 6248. The appellant failed to persuade the Court that the 1993 agreement provided that the husband was to remain in occupation for three months only. Judgment was given against the appellant on 11 July 2001. In its reasons, the Court noted earlier litigation (19/98) in which the appellant had alleged, unsuccessfully, that her husband had breached the terms of the deed. That earlier application was dismissed on 22 October 1998.

[4] The next litigation was LA4/2003, commenced in March 2003. In that matter the appellant's husband sued, initially, Tevita Topui. The husband sued Tevita Topui seeking cancellation of the lease mortgage, a declaration that the lease mortgage was null and void, an order evicting Tevita Topui and an order restraining Tevita Topui from interfering or disturbing the husband in his use of the land. The appellant was later joined to those proceedings. In early 2006 an attempt was made by Tevita Topui to join the Bank as a party. On 3 March 2006, an order was made by Ford J (as he then was), in effect noting that the husband withdrew those proceedings.

[5] Before LA4/2003 had been resolved, the appellant commenced, in April 2005, proceedings LA8/2005. In those proceedings, the defendants were the Bank, Tevita Topui and another individual who was the leaseholder of another lease apparently sold by the Bank as mortgagee in possession. The appellant sought, in so far as the proceedings related to lease 6248, the cancellation of the lease mortgage and declarations the lease was null and void and unenforceable. In October 2005 an amended statement of claim was filed adding, relevantly, a claim for an order that the mortgaging of lease 6248 was null and void. A further amended statement of claim was filed in February 2006, restricting the relief, in so far as it related to lease 6248, to an order, in terms, that the mortgaging of the lease should be declared null and void. Later in February 2006, the appellant withdrew the proceedings, on the day fixed for hearing. She was ordered to pay the defendants' costs.

[6] The proceedings to which this appeal relates, LA9/2006, were commenced in August 2006, originally seeking an order that the transfer of lease 6248 is void because it was not available for transfer when the Bank advertised the lease for tender and an order declaring the occupation of Tevita Topui was unlawful and he be evicted. In due course an application was made by the Bank for an order striking out the claim. That application was filed on 9 November 2006. The grounds in the application were that the case was an abuse of process, res judicata and the appellant was ordinarily resident outside the jurisdiction. In the alternative, the Bank sought security for costs. Significantly, this application was supported by an affidavit sworn by an employee of the Bank who deposed to only two material facts. The first was that the appellant had commenced LA8/2005 which was withdrawn on the day of the hearing, 22 February 2006, that the parties were then ready with the witnesses to hear the case and the Bank had expended moneys in defending and preparing for the trial of LA8/2005. The second material fact was that the appellant was a permanent resident of New Zealand. Of considerable importance is that this affidavit said nothing about the availability of witnesses for any future trial of LA9/2006.

[7] On 12 January 2007, the appellant filed a notice of opposition to the application. In an affidavit in support, the appellant alleged she had been cheated by the Bank. She alleged that the property which became lease 6248 was included as security without her consent. She alleged that when she was called to sign the form, she found out that the property was included and she asked a bank officer, Tu’ihakavalu Ika, to take out the land because it was not yet registered and she had a court case against her husband which was awaiting judgment. The appellant alleged that Tu’ihakavalu Ika told her to sign the form and bring the judgment when it was entered so he could take the property from the list of assets. She alleged, in substance, that Tu’ihakavalu Ika did not honour his undertaking. She also alleged that lease 6248 was sold without her knowledge.

[8] For reasons which are not clear to us, this strike out application was not heard until 1 June 2007, almost 7 months after it was filed. In his reasons for judgment, Andrew J referred to a Supreme Court judgment, Fresha Export Ltd v Maseia Holdings Co Ltd [2006] TOSC 10 which, in turn, referred to an English case, Birkett v James [1978] AC 297. Both cases establish that proceedings can be struck out as an abuse of process because of delay caused by one of two reasons. The first was if the default (bringing about the delay) had been intentional and contumelious. The second was that there had been inordinate and inexcusable delay on the part of the plaintiff together with one of two other features. Those other features were that either the delay gave rise to a substantial risk that it was not possible to have a fair trial or the delay was likely to cause serious prejudice to the defendants.

[9] After referring to some of the history of the litigation discussed earlier and, in particular, LA8/2005, Andrew J indicated that he did not believe there was res judicata because LA8/2005 had been withdrawn. His Honour then said:

The present proceedings seek to raise questions about the legitimacy of the actions of the Bank when they repossessed the land in 2001. Of the two Bank Officers primarily involved in that process, I accept the evidence that one is deceased and the other no longer resides in Tonga. In my view that gives rise to a very substantial risk that it is not possible now to have a fair trial of the issues. I consider that there has been an inordinate delay in this matter which is not excusable. The history of commencing proceedings and withdrawing and commencing again nearly 2 years later has caused all parties considerable cost and will now cause further substantial costs. I consider the Plaintiffs claim to be without merit where argument is unnecessary to evoke the futility of the plaintiff's claim and I consider that the defendants are prejudiced in all the circumstances.

[10] In order to deal with the first ground of appeal, it is necessary to describe what happened at the hearing of the strike out application on 1 June 2008. It is to be recalled that the grounds identified in the application were that the case was an abuse of process, res judicata arose and the appellant was ordinarily resident outside the jurisdiction. At the commencement of the hearing, counsel for the Bank indicated that it would not pursue the contention that res judicata arose, but wished to add an allegation that the proceedings were scandalous, frivolous and vexatious. It is not apparent that the Bank abandoned its ground that the proceedings were an abuse of process though, for the first time, reference was made by the Bank’s counsel to delay which might prejudice a fair trial. It appears that at this point, there may not have been a common understanding between the Court, counsel for the Bank and counsel for the appellant about what was being pursued and what was being abandoned. Counsel for the appellant appeared to understand that all that was being pursued was an allegation that the appellant's claim was scandalous frivolous and vexatious.

[11] During submissions, counsel for the Bank addressed an allegation that there had been inexcusable delay which would prejudice or delay a fair trial of the action. In the course of dealing with this topic, counsel for the Bank referred to the position of two "star" witnesses. The first reference was to Tu’ihakavalu Ika, who counsel said had passed away. What she did not say was when that had happened and having regard to statements made in the appeal, it appears Tu’ihakavalu Ika died sometime around 2003. The second reference was to a bank employee who had moved to New Zealand where she lived permanently. Counsel for the Bank noted that she had been available to give evidence in February 2006, at the aborted hearing of LA8/2005. What counsel for the Bank did not say was that this witness would be unavailable for any further hearing. What is important about these factual allegations is that they were not the subject of evidence and in particular were not referred to in the affidavit in support of the strike out application. There was nothing in the application or the affidavit in support which would have alerted counsel for the appellant that an allegation of delay and consequential prejudice to the Bank was going to be made.

[12] During this submission concerning delay, counsel for the Bank referred to Fresha Export Ltd v Maseia Holdings Co Ltd which, in turn, (as we noted earlier) referred to an English case, Birkett v James. It cannot be said, as counsel for the appellant alleges in his first ground of appeal, that the ground of delay was never in issue. It was plainly raised by counsel for the Bank and submissions were made on that topic. It is conceivable that counsel for the appellant did not fully appreciate the case that was being put by the Bank having regard to the misunderstanding which appears to have arisen at the commencement of the hearing.

[13] What is important, in our opinion, is that the decision of Andrew J was based, in substantial part, on what he perceived to be the prejudice to the Bank concerning the two "star" witnesses referred to by counsel for the Bank. What his Honour was not told, and more importantly what was not addressed in the affidavit evidence, was whether Tu’ihakavalu Ika would ever have been called as a witness no matter when the trial occurred (bearing in mind that in LA9/2006 what is challenged is the lease to Tevita Topui which was finally effected in early 2003) because, it seemed from what we were told in the appeal, he died at about this time (early 2003). Also what his Honour was not told and again, more importantly, was not addressed in the affidavit evidence, was whether the bank employee who had been available to give evidence in 2006 would no longer be available.

[14] Dismissing an application for delay is a significant step. It denies the plaintiff the opportunity of having a case determined by a Court. In the present case the events challenged in LA9/2006 (the transfer of the lease) occurred in late 2002 to early 2003. The Bank was aware, at the latest, that the appellant challenged this transfer (though also the creation of the mortgage in 1995) when proceedings LA8/2005, were commenced in April 2005. It is difficult to see how it can be said that there was any prejudicial delay between the transfer of the lease and the commencement of those proceedings. It is true that those proceedings were withdrawn in 2006. However costs were awarded against the appellant. It is also true that by the time the strike out application was lodged in November 2006, almost 4 years had passed since the transfer of the lease. But in that time the appellant (and the Bank) had had to contend with the litigation commenced by the husband. In the absence of demonstrated substantial prejudice, we find it difficult to accept that the significant and fatal (for the rights of the appellant) step of dismissing the applicant's case is warranted.

[15] It may possibly be that the case as pleaded in LA9/2006 is doomed to fail. It appears to be based on a contention that the existence of what may have been a licence to the husband, precluded the transfer of the lease by the Bank as mortgagee in possession to Tevita Topui. It is not obvious to us that, as a matter of law, a case framed in this way could succeed. However we heard no submissions on this question and it was not a matter pursued before Andrew J in the strike out application. If this analysis is correct (and we should not be taken to be expressing a concluded view about it) then it would provide a firmer and more satisfactory foundation for striking out the appellant's claim. In our opinion the appeal should be allowed and the order striking out the proceedings, set aside. We consider that the costs of the strike out application as well the costs of the appeal should be costs in the cause. That is, whichever party ultimately succeeds in the proceedings will have its costs both of the strike out application and the appeal.

[16] In concluding, we should observe that the legal principles concerning the dismissal of proceedings as an abuse of process because of delay are evolving. The primary judge referred to the decision of the House of Lords in Birkett v James. That case was decided in 1978. Criticism of the approach in Birkett v James was comparatively recently considered by the House of Lords in Grovit and others v Doctor and others [1997] UKHL 13; [1997] 2 All ER 417.

[17] Birkett v James was recently considered, and not followed, by the High Court of Australia in Batistatos v Roads And Traffic Authority of New South Wales [2006] HCA 27; (2006) 227 ALR 425. The majority of the High Court concluded that in order for a stay on the ground of abuse of process by delay to be granted, there was no requirement that the conduct of the plaintiff be oppressive. Rather, the Court concluded that attention must be directed to the burdensome effect upon the defendants that has arisen by lapse of time. In assessing that effect, it is necessary to take into account the consideration that a litigant is entitled to submit a claim for determination which he or she believes he or she can establish, although its foundation may in fact be slender.

[18] The on going relevance of the principles in Birkett v James and what is the contemporary position in England have recently been helpfully discussed by the Court of Appeal of New Zealand in Bank of New Zealand v Savril Contractors Ltd [2004] NZCA 4; [2005] 2 NZLR 475.

[19] The judgment in Birkett v James cannot be treated as necessarily establishing a settled principle about the circumstances in which proceedings can be dismissed as an abuse of process because of delay. In England, the principles that case established have been overtaken by new practice rules. Courts are increasingly active in ensuring that court proceedings do not constitute an oppressive abuse of legal process. However, in the absence of argument, we have addressed, as Andrew J did, the principles in Birkett v James in this appeal.

Burchett J
Salmon J
Moore J