Gateway Enterprises Ltd v Vaokakala Holdings Ltd [2002] TOSC 38; C 1388 1999 (19 December 2002)

IN THE SUPREME COURT OF TONGA
CIVIL JURISDICTION
NUKU’ALOFA REGISTRY

NO.C1388/1999

BETWEEN:

GATEWAY ENTERPRISES LTD
Plaintiff;

AND:

VAOKAKALA HOLDINGS LTD
Defendants.

BEFORE THE HON. CHIEF JUSTICE WARD in Chambers

Counsel: Mr. Fakahua for Plaintiff/applicant and Third party
Mr. Tu’utafaiva for defendant/respondent
Mrs Vaihu for TBD in garnishee proceedings in
case number C967/00

Date of Hearing: 18 December 2002
Date of Ruling: 19 December 2002

RULING

Judgment by consent was ordered in this case on 11 June 2002 following the terms of a memorandum of settlement.

Paragraphs 3 and 4 of that judgment provided:

"3. the defendant shall pay to the plaintiff $15,000.00 by instalment of $1,000.00 per month. The first payment shall be made on or before 30 June 2002 and all future instalments shall be made on or before the last day of every month.

4. if the defendant defaulted in the monthly payments as in number 3 above for 2 months the Bulldozer H1364 shall be sold to pay off the balance owing to the plaintiff and any money left after that shall be paid to the defendant."

The plaintiff has now applied for an order to enforce that judgment on the ground that "the defendant has defaulted to make payments in accordance to the Consent Judgment".

The affidavit in support, sworn by the third party, lists the payments by instalment as follows:

"First payment on 18/7/02 but it should be on 30/6/02

Second payment on 23/8/02 but it should be on 31/7/02

Third payment on 30/9/02 but it should be on 31/8/02

Fourth payment on 1/11/02 but it should be on 30/9/02"

Mr Fakahua has told the court that he has, since then, received one further payment.

Clearly by the terms of the judgment, there should, by now, have been 6 payments.

Mr Tu’utafaiva accepts that the payments were late, as deposed by the third party, but suggests the wording and intention of the consent judgment was that the bulldozer would only be sold if two months consecutive instalments remained unpaid.

I cannot accept that is the proper interpretation of the first words of paragraph 4 "if the defendant defaulted in the monthly payments as in number 3 for 2 months". If that is correct, it would allow the defendant to pay each alternate month only and never be sufficiently in default to invoke the provisions of paragraph 4.

I consider default of the terms of paragraph 3 include all the conditions for payment so there are two ways in which there can be default; failure to pay any instalment and failure to pay on or before the last day of the month.

Where there has been a failure to pay any instalment, that default becomes sufficient to invoke paragraph 4 if it remains unpaid for two months. Thus, for example, if the payment for July is not paid but those for August, September and October are, the default in relation to the July payment remains and, if it still remains unpaid for two months, paragraph 4 is brought into effect despite the payment of the subsequent instalments.

Where the default is failure to pay at the proper time, I consider paragraph 4 is invoked if the payment is not made at the proper time for two consecutive months.

On that basis the defendant is clearly in default on both limbs. It is clear the payment on 18 July was the payment for June. Thus the next payment was due on or before 31 July. That is clearly the payment made on 23 August. The third payment was on 30 September. As that was the last day for payment of the September instalment, it must be taken as the payment for that month. Therefore the payment for August is unpaid.

Following the payment for September the next due is on or before 31 October. It was paid late on 1 November. The payment recently received by the plaintiff must therefore be late payment of the instalment due on 30 November.

The result is clearly that the payment due on or before 31 August has not been paid and has been outstanding now for more than 3 months.

Equally clearly, the payments have been out of time in every case except September.

Mr Tu’utafaiva asks that the defendant be allowed time notwithstanding. It has a new contract that means it can pay $3000.00 immediately and it will then ensure there is no future default.

Mr Fakahua asks that the order to sell be made in any event and he is clearly on good ground.

Had this been a single default, the court might have considered deferring the execution of an order for sale but the defendant has failed to meet its obligation to pay properly in relation to every instalment except that for September. The terms it has failed to honour were the terms of a consent judgment based on agreed payment terms. I must also have regard to the fact that there has been a history of failure by the defendant to obey court orders. On the last occasion the court refused an application by the plaintiff to strike out and stated that it was only in rare cases that it would make such allowance. It might be thought that such a warning would have ensured the defendant was meticulous in the way it followed the terms of the judgment but it was not.

I allow the application and order that:

1. the defendant shall deliver or cause to be delivered the bulldozer H 1364 to a place nominated by the plaintiff so that it is received there by the plaintiff no later than 4.30 pm today, 19 December 2002.
   
2. the defendant shall give the plaintiff through the plaintiff’s lawyer not less than one hour’s notice of the time of delivery.
   
3. the defendant shall ensure that the bulldozer is not altered in any way nor any parts removed there from.
   
4. the plaintiff shall sell the bulldozer by tender and shall advertise for tenders in the Tonga Chronicle no later that 4 January 2003.
   
5. the plaintiff shall deal with any proceeds of the sale in accordance with paragraph 4 of the judgment by consent dated 11 June 2002.
   
6. the defendant shall pay the plaintiff’s and third party’s costs of this application.
   

NUKU’ALOFA: 19 DECEMBER 2002.

CHIEF JUSTICE