Vaka'uta v Wong [1998] TOLawRp 14; [1998] Tonga LR 93 (6 July 1998)

IN THE SUPREME COURT OF TONGA
Supreme Court, Nuku’alofa

C 208/96

Vaka’uta

v

Wong

Finnigan J
9 June 1998; 6 July 1998

Practice and procedure ⎯ interim order ⎯ no grounds for lapse Creditors’ remedies ⎯ warrant of distress ⎯ assignment of chose in action

The claimant was registered owner and vendor of a vehicle under an agreement for sale and for payment by instalments — the full price was $8,600 + insurance of $387. At the date of hearing the purchaser (judgment debtor) still owed $3,837. The car was seized pursuant to a warrant of distress. The issue was between the claimant, who claimed to be the owner of the car, and the defendants, who were the judgment creditors and sought sale of the car in order to recover the $1,784 due to them in costs and court costs. The claim had already been denied once, in an order issued on 19 November 1997, for non-appearance of the claimant and for the absence of affidavit evidence with original documents. Costs for the judgment creditors and for the bailiff were added to the judgment sum and the balance was to be paid to the plaintiff/judgment debtor. The claimant had not been served notice of the 19 November hearing. Therefore, as an interim measure, the order had been set aside pending the hearing.

Held:

1. There was a common intention that both parties would have an interest in the vehicle and it would be inequitable to permit the legal owner to retain the entire benefit of the property for himself. The vehicle had both a legal owner and an equitable owner.

2. The judgment debtor was vested with a chose in action, a right to sue the claimant for continued possession of the vehicle so long as the instalments continued. A chose in action is a right which can be assigned to another. It is a remedy available to judgment creditors in satisfaction of the debt due to them. For this reason, the bailiff is entitled to seize the vehicle to satisfy the judgment debtor’s debt, and there were no grounds to set aside permanently the order made on 19 November 1997.

3. The claimant’s claim was declined.

Cases considered:

‘Alatini v LDS Church & Muti [1990] Tonga LR 1

Torkington v Magee [1902] UKLawRpKQB 119; [1902] 2 KB 427; [1900-3] All ER Rep 991

Statutes considered:

Contracts Act (Rep)

Traffic Act Cap 156

Rules considered:

Supreme Court Rules (UK)

Counsel for claimant: Mrs Taufaeteau
Counsel for respondent: Mr ‘Etika
Counsel for bailiff: Mr Malolo

Judgment

A claim has been made upon the bailiff by Tevita Misa Fifita, for return to him of a motor car which he has claimed is his property. The car has been seized pursuant to a Warrant of Distress. The Court had issued that warrant in September 1997 for enforcement of a judgment obtained by the defendants herein on 20 May 1997, which was for costs only. Those costs had been on 24 July 1997 taxed at $1768, to which was added $16 as costs on the writ, a total of $1784. The bailiff accordingly on 19 September 1997 had seized the car in question, a Toyota Carina C5204, which had till then been in the possession of the plaintiff.

The plaintiff, now judgment debtor, takes no part in these proceedings. The issue is between the claimant, who claims to be the owner of the car, and the defendants, who are now the judgment creditors and seek sale of the car in order to recover the $1784 due to them in costs and court costs. The claim has already been denied once, in an order issued on 19 November 1997, for non-appearance of the claimant and for the absence of affidavit evidence with original documents. Costs for the judgment creditors and for the bailiff were added to the judgment sum and any balance was to be paid to the plaintiff/judgment debtor.

The claimant has sought, not by application but by letter, to have that order set aside. He claimed that he had not been served with notice of the 19 November hearing. The court file shows this claim to be correct. The order of 19 November 1997 was subsequently set aside, on 24 April 1998, as an interim measure until a rehearing could take place and all counsel given the opportunity to be heard. After several attempts by the Court to arrange a hearing, counsel for all parties finally have had the opportunity to be heard in the present hearing.

The hearing took place on 9 June 1998. A witness for the claimant gave evidence, and counsel for both parties made submissions. Counsel for the bailiff abides the outcome, but seeks to preserve the bailiff’s right to costs on seizing and detaining the vehicle. All parties treated the rehearing as a hearing of the merits of the claimant’s claim, but the judgment creditors rely primarily on the point that the application is not properly before the Court because of the absence of an affidavit. However, counsel on his behalf at the present hearing has adduced the evidence in support of the claim from a witness on oath, who produced documents relating to title and was cross-examined by counsel for the judgment creditors.

The factual essence of the claim, as now revealed in evidence, is that the claimant is owner and vendor of the vehicle under an agreement for sale and for payment by instalments. On the registration certificate he is the registered owner. Both the agreement and the certificate are dated 12 February 1997. Both documents were put before me in evidence. The agreement is written in Tongan and was not explained to me except that the witness read clause 10 in Tongan, as the basis for a submission that the claimant had under the contract a right to repossession; but about the conditions for that right I did not hear any evidence. The agreement is signed by the purchaser alone, and by no other person, either as vendor or as witness. It states that the claimant sold the vehicle to the plaintiff/judgment debtor in February 1997, for a full price of $8600 plus insurance of $387. A deposit of $3500 was paid, leaving a balance due upon delivery of $5487. On the date of seizure, 19 September 1997, there was outstanding the sum of $4237. The claimant’s witness stated that by that time the payments were in arrears and the claimant contacted the plaintiff/judgment debtor for repossession under the contract, but the bailiff had already taken possession. The plaintiff/judgment debtor subsequently on 22 October 1997 made a further payment, being a pig, for which a deduction of $400 was made from the amount due.

For the judgment creditor, Mr ‘Etika submits that the claim should fail for non-compliance with the procedure at O 17 r 3, [English Supreme Court Rules], in particular that no affidavit was filed and served. He refers me to Halsbury Laws of England, 4th ed, Vol 25, para 1026, which in his submission was the basis of the dismissal of the claim on 19 November 1997. The passages in Halsbury make it clear that when there is a summons for interpleader relief an affidavit is required, and that a statutory form for the affidavit has been created, and that the courts regard interpleader summons as urgent matters. The purpose is obvious, to hasten the processing of an interpleader claim so that disposal of the goods, and thus execution of the judgment, is not unnecessarily delayed by the claim. I pause to note that photocopies of the registration certificate of the vehicle C5204 seem to have found their way to the file, but not until the present hearing has the claimant given evidence to make good his initial claim to the bailiff that he is the owner of the vehicle. It has not been until now that the judgment creditors, who are otherwise entitled to sale of the vehicle and payment of what they are owed by the judgment debtor, have been given the facts of the claim. They dispute that claim on its merits. They have suffered a delay of nine months, without knowing whether the claim holding them out of their money has merit or not.

Second, Mr ‘Etika submits that in law the judgment debtor is the owner of the vehicle, having purchased it from the claimant and being now merely his debtor. In his submission the agreement has no legal effect and is invalid because it was signed by the purchaser alone, not by the vendor nor by any witnesses. The Tongan Contracts Act having been repealed at all material times, he relies upon English law. He submits that with the payments made being more than half the purchase price, the purchaser has more than a half share in the vehicle, and that the two parties are joint owners. He submits that the judgment debtor has an interest valued at the total of his payments, against which the judgment creditor is claiming, and so is the claimant; but the claimant is entitled only to the value of the unpaid instalments, which represent his interest in the vehicle, namely the $3837 which the claimant’s records show as the outstanding balance still due after the credit for the pig.

Mr ‘Etika relies upon ‘Alatini v LDS Church & Muti [1990] Tonga LR 1 as authority for the proposition that the certificate of registration is not conclusive evidence of single ownership by the judgment debtor, and may be displaced by contrary evidence, as in the present case, of joint ownership. He submits that the public auction ordered by the Court should go ahead, with the proceeds being available to the judgment debtor and to the claimant pro rata their interests in the vehicle. The judgment debtor’s share is available in his submission to his clients the judgment creditors and any balance available from that belongs to the original purchaser, the judgment debtor. The pro rata share of the claimant one assumes on this submission goes to the claimant to reduce or satisfy the claimant’s claim as unpaid vendor for the balance owed by the judgment debtor.

On behalf of the bailiff, Mr Malolo submits that the claimant’s case is weakened, if not actually groundless, without the required affidavit. He points out that there is no allegation against the bailiff and seeks costs, first as ordered on 19 November 1997 and second from that date till this judgment.

On behalf of the claimant, Mrs Taufaeteau submits that the absence of an affidavit by the claimant is overcome by the viva voce evidence adduced at this hearing. She relies upon the registration certificate which the witness produced, and upon the Traffic Act Cap 156, particularly ss 5, 6(4) and 10. She submits that registration is prima facie evidence of ownership, pursuant to s 5, and that since the certificate shows registration of the claimant as owner on the day of the sale, 12 February 1997, there is clear evidence that the parties intended the claimant to be owner and intended ownership to remain with the claimant until the price was paid. Section 10 requires the owner, upon disposal of the vehicle, to notify change of ownership within 7 days, and this has not occurred.

Decision

It is necessary to remember that the primary purpose of the hearing has been to determine whether the interim order made on 24 April 1998, setting aside the 19 November order pending a rehearing, should lapse.

There is no dispute between the parties that for interpleader relief English practice applies. So far as the file reveals, the claim now in dispute was made by the claimant in writing by letter to the bailiff dated 22 September 1997. The claim was that the vehicle seized under the warrant belongs to the claimant. Upon that letter the Solicitor-General issued a Notice of Claim to the goods, and required any disputing party to advise within 7 days, failing which the bailiff might issue an interpleader summons. The judgment creditors gave notice that they disputed the claimant’s claim and that they required further particulars of it. The dispute thereafter was set down for hearing and no interpleader summons was issued. In the absence of the claimant, his claim was determined on 19 November, and dismissed. However, he had not been advised of the hearing because of an error in the Court, and he had not given farther particulars or any affidavit of the grounds for his claim. It is clear that the claimant’s grounds for a rehearing are that he did not have notice of the hearing. For that reason it could be said that he had not had the chance to remedy his failure to supply an affidavit and/or explain his failure. He has now had that opportunity and taken full advantage of it. He has revealed fully the details of his claim to be the owner of the car, and the merits of that claim have been challenged, and he has given an explanation for his failure to supply those details before the hearing of 19 November 1997. In my view he is entitled to a rehearing, and I make that order accordingly.

For the same reasons, in conducting the rehearing, I hold that the absence of an affidavit by him is not fatal to his claim. I turn now to decide the merits. The contractual relationship of contracting parties is determined by the terms of their agreement. There is an agreement in the present case, and I have been referred to no provision or principle of law that in Tonga the agreement for sale and purchase of a motor car must be in writing. As it happens there is a document, and although it is not executed as a contract, it nonetheless sets out clearly in writing some at least of the terms for sale and purchase upon which the vendor (the claimant) and the purchaser (the judgment debtor) agreed. I cannot say for certain whether it contains all the terms, but the registration certificate is evidence of a term about ownership, whether or not that term is contained within the agreement. There is no reason to suppose that the agreement contains a contrary term. The registration certificate, being of the same date as the agreement document, shows a common intention that along with the sale to the judgment debtor there would be registration of the claimant as owner, even though the judgment debtor paid simultaneously over one third of the value of the vehicle.

It seems that on that day, 12 February 1997, the judgment debtor took actual delivery of the vehicle. As in ‘Alatini (above), at p 3, (i) there was a common intention that both parties would have an interest in the vehicle and (ii) it would be inequitable to permit the legal owner to retain the entire benefit of the property for himself. Indeed, although the registered ownership vested that day in the claimant, the vehicle and the right to use it were taken by the judgment debtor. He had a benefit too, the right to use the car and the right to become the legal owner in due course. The judgment debtor had already paid a substantial amount of money for that. He had an equitable interest as part owner. So far as I am advised, there is nothing in the agreement about when legal ownership vests in the purchaser. The presumption must be that it will vest when the car is fully paid for. In the meantime, the vehicle has a legal owner and an equitable owner. So the evidence does displace the presumption that the registration certificate tells the full story. The claimant is not the only owner.

Where does that leave the judgment debtor? This situation appears not to have been considered before by the Court. No authorities have been cited to me other than ‘Alatini (above), and I do not think this is a joint ownership situation like that of the husband and wife in that case, who had each acquired ownership rights when each paid part of the purchase price. They both had bought the vehicle. In my opinion, the judgment debtor’s position in the present case is that he has what the law calls a “chose in action”. A chose in action is a personal property right which can be enforced only by legal action, and not by taking possession: Torkington v Magee [1902] UKLawRpKQB 119; [1902] 2 KB 427 at 430; [1902] UKLawRpKQB 119; [1900-3] All ER Rep 991 at 994 per Channell J. The term includes rights to sue that arise from contracts, and rights to sue that arise from breaches of contract and rights to sue that are given in other ways, such as by cheques and shares and deeds. A chose in action must be carefully distinguished from a future chose in action, ie, a right that has not yet come into being but is only expected. A chose in action may be assigned to another so that the other may sue on it, but a future chose in action may not be assigned, one can do no more than agree to assign it if it should come into being.

Now, what is the judgment debtor’s position? He has a contract with the claimant, under which he paid part of the purchase price and on the same day took possession of the car. At that moment he had enforceable rights against the claimant, which could be enforced only by action, and no longer by taking possession. For example, had the claimant then proceeded to purport to sell the car to another, the judgment debtor was entitled to come to court and have that stopped. In that sense, it was already his car. Since that time, he paid more and reduced the balance which the claimant is entitled to receive, and in return, his claim to ownership of the car strengthened. So long as he kept his side of the agreement and paid the instalments on time and in full, he would have become entitled to the legal ownership, or to damages, for which he could sue. It happens (I am told, but expressly do not find) that he has not kept up his payments, and that the claimant wished to exercise a right of repossession claimed under clause 10 of the written terms, only to find that the judgment creditors and the bailiff had got in first. Since that time the judgment debtor reduced the balance due by another $400. The Court does not know the effect of the subsequent payment. It cannot be said that the claimant has actually exercised a repossession right, nor is it established in the present proceedings that he has that right. There is no evidence about why the judgment debtor made no further payments after the $400 in October 1997, but it is reasonable to suppose that this is linked to the seizure of the car and its subsequent detention while the claimant tried to make good his claim. The vehicle has now been detained and unused for nine months. I am bound to treat the agreement as if it was being complied with and was in full effect at the time of seizure by the bailiff.

This means that the judgment debtor at that time was, and at the present time still is, vested with a chose in action, a right to sue the claimant for continued possession of the vehicle so long as the instalments continued. This chose in action is a right which he is entitled at law to assign to another, ie, his interest in the vehicle is something he can sell. This interest is available to the judgment creditors in satisfaction of the debt due to them. For this reason, which rests on the merits of the claimant’s claim, I hold that the bailiff is entitled to seize the vehicle to satisfy the judgment debtor’s debt, and I see no grounds to set aside permanently the order made on 19 November 1997.

The claimant of course is free to bid for the vehicle at the public auction, and thus buy out the judgment debtor. In the present proceedings I decline his claim, for the reason set out above.

The interim setting-aside order of 24 April 1998 now lapses. The order of the Court dated 19 November 1997 is now reinstated, and to it is added an order for costs in this hearing in favour of the judgment creditors, and a similar order in favour of the bailiff, these to be taxed and deducted from the sale proceeds.