Fresha Export Ltd v Tonga Cooperative Federation Society Ltd [2013] TOLC 4; LA08.2013 (11 October 2013)

IN THE LAND COURT OF TONGA
NUKU'ALOFA REGISTRY
LA 8 of 2013

BETWEEN:

FRESHA EXPORT LIMITED
Judgment Creditor

AND:

TONGA COOPERATIVE FEDERATION SOCIETY LIMITED
Judgment Debtor

T.B. Afeaki for the Judgment Creditor
R. Stephenson for the Judgment Debtor

DECISION

[1] On 7 December 2009 judgment was entered in Supreme Court of Tonga Civil Action CV 220 of 2009 against the Judgment Debtor (TCF) and in favour of the Judgment Creditor (Fresha) in the amounts of NZ$297,140.30 and US$177,721.85 with interest at the rate of 10% until payment. The judgment has not been satisfied.

[2] On 2 March 2010 Christine 'Uta'atu was appointed receiver to enforce the judgment following application ex parte by Fresha. On 15 November 2010 after hearing an inter partes application by a Third Party, Crosby Exports Limited, I set the appointment aside. Apart from an application filed on 29 August 2013 which will be considered below, inspection of Supreme Court file CV 220 of 2009 does not reveal that any further step has been taken in that civil action since 15 November 2010.

[3] According to an affidavit by Christine 'Uta'atu sworn on 10 May 2013 filed herein, she was appointed Liquidator of TCF on 2 November 2011 by the Registrar of Cooperative Societies under the provisions of Section 46 of the Cooperative Societies Act (Cap 118). This is an application by the Liquidator for an order under Section 137(5) of the Land Act for the removal of a caveat lodged in respect of certain numbered leases registered in the name of the TCF on 28 October 2008. The nature of the interest in the said leases was described in schedule 2 to the Section 137(2) notice as follows:

" Security over land for unpaid debts.

• Schedule of unpaid debts overdue from Tonga Cooperative Federation, payable to the Caveator, as contained in the attached Fresha Export Ltd Debtor Enquiry details dated 8 July 2008".
  

[4] In paragraphs 4 to 7 of her supporting affidavit Mrs 'Uta'atu deposed that one lease 3780A had never belonged to TCF, that 3075 was acquired by the Government of Tonga prior to the caveat being lodged and that lease 3007A had been transferred in error by the Ministry of Lands despite the existence of the caveat.

[5] In paragraphs 8 to 14 Mrs 'Uta'atu raised a more fundamental objection to the caveat which had been lodged. Her evidence was that while it was accepted that TCF was indebted to Fresha, there was no evidence of any security agreement ever having been granted to Fresha by TCF in respect of that debt. In paragraph 14, it was deposed that counsel for Fresha had been requested to supply a copy of any security agreement relied upon but none had been forthcoming.

[6] On 1 July 2013 Mr Stephenson filed written submissions in support of the application. He suggested that in the absence of a security agreement between the parties no caveatable interest in the leases was available for registration. Mr Stephenson referred to Section 137(1) of the Land Act which reads as follows:

"Any person claiming to be interested under any will settlement or trust deed or any instrument or transfer or transmission under any unregistered instrument or otherwise in any leasehold land may lodge a caveat."

In the absence of some form of security agreement between the parties or even an agreement that the caveat be lodged, it was submitted that a mere contractual right to payment of a debt did not amount to an interest in land and could not therefore constitute a caveatable interest.

[7] Written submissions in answer and a supporting affidavit were filed by Mr Afeaki on the day before and on the morning of the hearing. Such late filings should be avoided as they create embarrassment and inconvenience.

[8] Mr Afeaki's central submission, put briefly, was that TCF knew of the lodgment of the caveat which was "supported by" the judgment of 2009 in its favour and, as evidenced by Exhibits C, D and E to Mr Don Claasen's affidavit sworn on 13 August 2013, entered into negotiations with Fresha (in connection with the proposed sale of a property on Vava'u) for its removal in respect of that property. Mr Afeaki described Fresha as "desperate" to recover the money it was owed which was why the caveat was lodged.

[9] While I have some considerable sympathy with Fresha, I am not satisfied that it has shown that it has ever had more than a mere contractual right (resulting in due course in a judgment debt) to recover the amount owed to it by TCF. On established authority, this right is not, without more, a caveatable interest. In my opinion a misguided acknowledgement by an officer of TCF that there was a valid caveat in place could not affect its legal character. Furthermore, the caveat, even if it was not properly lodged, was clearly a nuisance to TCF which wished to sell an unencumbered interest. A possible purchaser would in all likelihood be deterred by the existence of the caveat and therefore TCF was (and is) anxious to see it removed.

[10] Mr Afeaki's notice of opposition to the present application was alternatively intituled "In the Supreme Court of Tonga .... CV 220/2009" and contained an application for "further orders regarding enforcement of judgment in CV220/2009 of 7 December 2009". I declined to hear this second application since:

(a) The caveatee's application was made to the Land Court which has jurisdiction in this matter. The 25 July notification of appointment for a hearing of the application on 30 August was in the Land Court only and was not a notification of an appointment to hear an additional application to the Supreme Court.

(b) The Supreme Court application did not comply with the requirements of Order 13 of the Supreme Court Rules, not least because no opportunity was given to the Respondents to file evidence in answer before the application was to be heard.

(c) Only one hour had been allocated for the hearing of the application in the Land Court and, even had I been inclined to allow the Supreme Court application to proceed, there would not have been enough time to hear the application before the Court was required to rise before leaving, on the afternoon of 30th August, for the 'Eua circuit.

There is, of course, nothing to prevent Mr Afeaki renewing the application to the Supreme Court by refiling it in conformity with the rules. The application itself has not been dismissed.

Result:

1. There will be an Order for the removal of the caveat lodged on 28 October 2008 forthwith.

2. TCF's costs are to be taxed if not agreed.

DATED: 11 October 2013.

PRESIDENT