Attorney-General v Namoa [2002] TOSC 7; C 0100, C 0101 & C 0104 2002 (25 February 2002)

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

No.C.100/2002
No.C.101/2002
No.C.104/2002
NO.C.100/2002

BETWEEN:

THE ATTORNEY GENERAL
Plaintiff

AND:

‘ESAU NAMOA
Defendant

NO.C.101/2002

BETWEEN:

THE ATTORNEY GENERAL
Plaintiff

AND:

JOE TU’ILATAI MATAELE
Defendant

NO.C.104/2002

BETWEEN:

THE ATTORNEY GENERAL
Plaintiff

AND:

SIONE TEISINA FUKO
Defendant

BEFORE THE HON CHIEF JUSTICE WARD

Counsel: Solicitor General for the Attorney General
W. Edwards for Namoa
L. Foliaki for Mataele
Sione T. Fuko in person

Date of Hearing: 22 and 23 February 2002
Date of Judgment: 25 February 2002

JUDGMENT

The defendants in these cases are all candidates in the forthcoming 2002 election to the Legislative Assembly. In each case, the Attorney General is seeking a declaration that the defendant’s candidacy is invalid because it could lead to a breach of clause 65 of the Constitution if he should be chosen by the electorate and consequential orders that each should be disqualified from standing in this election and have his name removed from the Roll of Candidates.

Each case is separate and turns on its own facts but all require the court to determine the effect of clause 65 on those facts. Counsel and Mr Fuko have agreed that, in order to expedite the determination of their cases, all three should be heard together. By so doing, it is possible to consider some of the more general aspects of the law and facts first but, thereafter, as the facts to be considered in each of the cases are so different, I shall deal with each case entirely separately.

On 17 December 2001, the Prime Minister issued writs of election under section 7 of the Electoral Act 1989 for a general election of representatives of the People to be held on 7 March 2002. The Supervisor of Elections fixed 10 January 2002 as the nomination day and, on that day, properly supported nomination papers were received and deposits paid for each of the defendants. There is no challenge to the propriety of those nominations. This case concerns a possible conflict with the saving to clause 65 of the Constitution. That clause provides:

"Representatives of the people shall be chosen by ballot and any person who is qualified to be an elector may be chosen as a representative, save that no person may be chosen against whom an order has been made in any Court in the Kingdom for the payment of a specific sum of money the whole or any part of which remains outstanding or if ordered to pay by instalments the whole or any part of such instalments remain outstanding on the day on which such person submits his nomination paper to the Returning Officer."

After the close of nominations, the Supervisor of Elections received information that there were sums of money outstanding against each of the defendants from judgments in the Supreme Court. He has no power to reject a nomination that is apparently valid and so he has reported them to the Attorney General who seeks a ruling from this court. Each defendant denies that the sum in his case would result in a contravention of the terms of clause 65.

The Registrar of the Supreme Court and the Supervisor of Elections gave evidence for the Attorney General.

In her submissions, the Solicitor General prefaced her remarks with two general observations which apply to all three cases.

Her first observation is that all three of the defendants are public figures and seasoned Parliamentarians who should reasonably be expected to know and comply with the law substantively and procedurally.

The second is the suggestion that the rationale behind clause 65 is to try to ensure that only honest candidates will be elected as people’s representatives; the restrictions of clause 65 do not apply to any other members of the House. She points out that the courts have consistently construed the provisions of clause 65 strictly and suggests that the words are cast widely because the provision generally only becomes relevant if a candidate has so failed to honour his debts that his creditor has been forced to take the case to court to obtain his money. Her point is all the stronger in cases such as these where judgment was in default of defence because it suggests that not only have they forced their creditors to bring proceedings but they did so knowing they could not dispute their liability.

I now pass to the individual cases.

Namoa’s case; Number C100/02

Mr Namoa has been nominated as a candidate for the Tongatapu district for which he was a representative in the last session of the Legislative Assembly.

He was the defendant in an action (number C948/99) brought by ‘Isita Liu in which judgment was given for the plaintiff on 10 November 1999 ordering the defendant to pay a total of $6,037.02 and interest at 10% from the date of the judgment and costs.

The court heard evidence that the returning officer received a letter dated 25 January 2002 from Lopeti Foliaki, the lawyer who had represented the plaintiff in the case saying that the defendant had paid only $900.00 and, despite a promise to pay, no further payment had been received. As a result the Supervisor of Elections wrote to the Registrar of the Supreme Court and she replied by letter on 4 February confirming that there was no evidence on the file of payment of the judgment debt. A writ of distress had been issued by the court but the last action recorded on the file was an application on 27 February 2001 by the plaintiff to withdraw that writ on the ground that the defendant had made "certain payments" and had signed an agreement for payment of the debt in full. That agreement has never been produced but counsel for the plaintiff, when asking for the withdrawal, advised that "this matter be left for resolution outside the Judicial System". As there is no requirement to advise when and if judgment debts have been paid, the court record is not conclusive and so the Registrar suggested the Supervisor should ask Mr Namoa about the case. This was done and Mr Namoa was advised to contact counsel in the case. He refused to withdraw his name from the Roll.

On 7 February 2002 Mr Foliaki again wrote to the returning officer stating;

"I wrote to you previously regarding an outstanding judgment issued in Civil case number 948/99 against Mr ‘Esau Namoa and requesting that Mr Namoa’s candidacy as a Peoples Representative for Tongatapu be struck out.

On Tuesday 5 February 2002 Mr Namoa has paid the debt in full and my client is satisfied that Mr Namoa be allowed to continue with his candidacy for re-election"

Mr Namoa gave evidence. He told the court that he had paid the debt in full. He said that it was paid in various instalments, some to the plaintiff and some to her lawyer. The last payment was made in December 2001 and was of $500.00. He added that he had, in fact, paid more than the judgment debt because, when he made the last payment, the plaintiff said that he had paid her more than the actual amount due. He had generously told her to take it all.

He told the court that he had been given receipts when he had paid the lawyer but not when the payments went to the plaintiff. On the latter occasions, he made a note in his diary. He agreed it was a business transaction but he had moved office a number of times and he had lost the receipts, his diary and the file relating to the deal that was the subject of the judgment. He gave no explanation of how he calculated the interest due on the outstanding debt as each instalment was made nor could he recall the total sum paid.

He called the judgment creditor, ‘Isita Liu. She was initially confused between the case in question and an earlier one but she then told the court that the money had not been paid. The defendant had paid some of it but, in December, he had spoken with her and she felt pity on him and told him he need not pay any more. She said he had paid only a small proportion of the debt but she had told Mr Foliaki that the debt was paid.

Finally, Mr Namoa called Mr Foliaki. He told the court that his information about the payment came from ‘Isita Liu after he had written the first letter to the returning officer and prompted the second letter. He had no personal knowledge of the payments to her neither was he asked about the payments to himself.

The conflict in the evidence from the defendant and ’Isita Liu is impossible to reconcile. If the debt has been truly forgiven, then it is no longer outstanding in terms of clause 65 but that is not the evidence of Mr Namoa. He insisted that it was paid in full and a record kept of the payments although they have all unfortunately since been mislaid. I do not believe him. Neither do I believe his first witness.

On the evidence before me. I am satisfied to the high standard of probability required in such a case that the sum of money ordered to be paid by the judgment of Finnigan J on 10 November 1999 has not been paid. If it has been forgiven, and I am far from satisfied that it truly has, that "forgiveness" occurred after the first letter from Mr Foliaki, which was itself after nomination day, and I am satisfied it was outstanding on 10 January 2002.

I make the declaration sought that his nomination is invalid because it could lead to a breach of the Constitution and I order that his name be removed from the Roll of Candidates for the 2002 General Election. I do not consider the other order sought is necessary and I decline to make it. He must also pay the plaintiff’s costs of this action.

Mataele’s case; Number C101/02

Unlike the previous case, there is little dispute over the facts in the case concerning Mr Mataele. The case depends on the effect of those facts on the provisions of clause 65.

Mr Mataele has been nominated as a candidate for the Tongatapu district.

In 1999, the Tonga Development Bank brought an action (number C937/99) against the defendant and another person for repayment of a loan. On 23 November 2000 judgment in default of defence was ordered by Ford J for $523,735.93 and interest at 8% from June 1999 and costs. The judgment also ordered that if the sum was not paid within one month, the bank could sell various assets of the defendants including Joe’s Tropicana Hotel and the Kahana Beach Resort.

On 12 January 2001 the defendant filed an application to set aside the judgment on substantial grounds the main one of which was that the court had given leave to the plaintiff to file an amended statement of claim on 12 November 2000 but that amended claim had not been properly served on the defendant. It would also appear that the default judgment was issued before the date for filing an amended defence had elapsed.

In order to determine the application to set aside, Ford J gave directions for the filing of affidavits by the defendant followed by affidavits in reply by the plaintiff. No affidavits were filed by the plaintiff. However, on 13 July 2001, the plaintiff made an offer that, if the defendant withdrew his application to set aside the default judgment, the plaintiff would not sell the properties as long as the defendant paid at an agreed rate each month. The defendant accepted the offer and the application to set aside was withdrawn.

Notwithstanding, however, the plaintiff took possession of Joe’s Tropicana Hotel on 4 October 2001 and invited tenders. The case was taken back to the court and, on 13 December 2001, Ford J made the following order:

"1. The court confirms that at the Chambers hearing, on 13 July 2001 when counsel for the defendant withdrew the application to set aside the default judgment, it was agreed between counsel that the plaintiff would not take any steps to repossess the assets so long as the defendant continued to keep making the monthly payment.

2. It is noted that counsel intend to meet next week to ascertain whether the condition in the preceding paragraph has been complied with.

3. Unless counsel are able to progress that matter further by way of consent order application the action stands adjourned for a directions hearing on 25 January 2002."

The hearing on 25 January had to be adjourned to 13 February 2002 when an order by consent was made:

"1. The court order dated the 23 November 2000 of judgment in default of defence in favour of the Plaintiff/judgment creditor against the defendants/judgement debtors ....is confirmed.

2. The parties agree for the debt in paragraph 1 herein to be paid by the plaintiff/judgment creditor affecting a mortgagee sale of....Joe’s Tropicana Hotel....

3. The parties further agree to withdraw the various applications filed by each party and pending with the court prior to the date of this [order]."

In the meantime the defendant had filed an application on 12 December 2001 to reinstate the application to set aside the judgment of 13 November 2000.

The question for the court, therefore is whether on the nomination date, 10 January 2002, there was a sum of money outstanding from a court order.

Mr Foliaki submits that the "order" in clause 65 must, in all sense, be a final order. Whilst that would be the effect of the default judgment on 23 November 2000, as soon as there was an application to set it aside it became, in effect, an interlocutory order as there were thereafter a number of pending and unresolved issues which went to the validity of the original order. He refers to Order 59 rule 1A of the English Rules of the Supreme Court where a judgment in default of defence is specifically treated as an interlocutory order. I do not accept that assists. O59 r1A applies to the determination of the proper form of appeal to the Court of Appeal.

Our Supreme Court Rules have no equivalent rule but Order 13 rule 1 of our Supreme Court Rules clearly allows the entry of "final Judgment" in default of defence. I have no doubt such a judgment is a final order.

However, I do not think that is an end to the matter. There is a long line of authority that, in any civil action when a judgment in default has been ordered, the court itself can always set it aside for good cause; Evans v Bartlam [1937] AC 473; Piukala v Bank of Tonga [2001] number CA 14 and 26/99. Whilst it is a final judgment, it can be challenged in the same court and set aside by the same judge in contrast to the position with final orders made after a hearing which can only be challenged on appeal. Once an application is made to set such a judgment aside, it is unenforceable until the application has been resolved.

It is possibly not relevant but should be mentioned that the grounds for the application to set aside in this case, if correct, were well founded. The importance in the present case is that, once the application was filed, the operation of the judgment of 13 November 2000 was suspended and it was not an effective order.

Of course, that application was withdrawn on 13 July 2001 and so the judgment would have been effective from that date unless ordered otherwise. The order of Ford J on the same day refers to an agreement between the parties. That agreement was for the debt to be paid by instalments. The purpose and effect of the confirmation of that agreement by the learned judge is unclear from the words of the order but I am satisfied it was an acknowledgement by the court that any future instalments would become outstanding only as each falls due.

However, the situation again changed on 12 December 2001 when application to reinstate the application to set aside was filed. Once again the effect was to suspend the operation of the default judgment pending determination.

It is relevant to mention that, when the case came before the court on 13 February 2002, after nomination day, Ford J confirmed the judgment in default on the withdrawal of the pending applications. He did not need to decide, therefore, the application to reinstate the application to set aside and did not do so but his confirmation of the earlier judgment indicates that he did not consider it had been an effective judgment while the application was pending. That was the position on the nomination date. There was no effective order for the payment of money.

In those circumstances, I do not consider the defendant’s candidacy is invalid on the ground that it could lead to a breach of clause 65. I decline to make the declaration or orders sought. The application of the Attorney General is therefore dismissed with costs to the defendant.

Fuko’s case; Number C104/02

Again in this case there is little dispute about the facts and the case requires a determination of the effect on the operation of clause 65.

The defendant is a candidate for the Ha’apai district. He was a representative for that district in the last session of the Legislative Assembly having been elected in a bye-election in 2000 following the death of a previous representative.

He admits two judgment debts but relies on arrangements made with his judgment creditors the effect of which he suggests means they were not outstanding on 10 January 2002. The Attorney General claims they are outstanding and therefore in breach of clause 65.

Mr Fuko points out that these arrangements had first been made to enable him to stand in the bye-election. They were not challenged then and he was able to take his seat in the House and he relied on them to have the same effect for the general election

Following the Supervisor’s submission of the list of candidates to the Registrar, she sent a list of candidates who appeared to have outstanding judgment debts. It included this defendant and referred to two cases, numbers C106/95 and C412/00.

In fact the former number was a previous case that has been settled in full and the case in which it is admitted there is an unpaid debt is C1336/98. In that case judgment in default of defence was entered on 12 May 1999 by Finnigan J for the Bank of Tonga against the defendant and another person in the sum of $62,488.09 with interest at 10% from October 1998 and costs.

That debt was not honoured and so on 28 June 2000 the Bank obtained a court order for possession of the defendants’ house in order to sell it to satisfy the judgment debt. However, the defendant approached the Bank to propose a scheme for the repayment of the debt. An arrangement was made and, on 19 October 2000, the defendants and the Bank entered into an agreement that, if payments were maintained in accordance with it, the Bank would not continue with its sale of the house nor would it object to his candidacy in the bye-election.

The defendant called the Bank’s Legal Counsel to tell the court that he had adhered to the agreement and all payments had been made properly up to 15 January 2002. She had sent a letter to the same effect to the deputy Registrar of the Supreme Court on 9 January 2002.

In case number C412/00 judgment in default of defence was entered for the Tonga Development Bank by Ford J on 18 August 2000 in the sum of $19,480.37 with interest at 12% from March 2000 and costs.

Again the defendant did not pay but requested an arrangement to satisfy the debt. On 25 October 2000 he entered into a written agreement with the TDB that he would repay according to that arrangement and the Bank would not oppose his candidacy in the bye-election but that, if he breached any clause of the agreement, the Bank would sell the assets with which he had secured the loan.

The Deputy Managing Director (Operations) of the TDB gave evidence that the defendant had honoured the agreement and was, in fact, two payments in credit on nomination day.

The defendant called the deputy Registrar of the Supreme Court who had been acting as Registrar at the time of the bye-election. He recalled that the defendant came to see him just prior to the bye-election and produced copies of the agreements with the two banks. It is clear from the court file in the TDB case that the agreement was filed with the court on 25 October 2000.

There is no note of an agreement having been filed in the Band of Tonga case but I accept the evidence that it was produced to the deputy Registrar and I do not find it credible in those circumstances that the defendant would have filed one and not the other.

The basis upon which they were filed is not clear. There is no covering note with the copy of the agreement nor is there any application for a consent order – a fact that was specifically noted on the file in the TDB case by Ford J on 27 October 2000. In neither case was any order made incorporating them and they do not therefore form any part of the judgment.

Where, as here, there is an agreement, not incorporated in the court order, made between the defendant and his judgment creditor to pay the judgment debt by instalments and the agreed date of payment of some or all of the instalments has not been reached on nomination day, the question for the court is whether they are outstanding in terms of clause 65.

The terms of the clause are clear and unambiguous and must be given their ordinary meaning. As Mrs Taumoepeau points out, the clause must be read strictly within that meaning. She suggests that the wording relates to an order made in any court for payment and the reference to instalments also envisages them being part of such an order. Therefore, if the order has not been fully paid on nomination day, the unpaid portion is outstanding.

With respect, I do not consider the words should be read in that way. It is correct that the sum of money must have been ordered by the court to be paid but the reference to it being outstanding relates to the question whether it is due.

Clause 65 refers to a court order for the payment of a specified sum of money "which remains outstanding". In the case of Vaikona v Fuko (No 2) [1990] Tonga LR 68 Webster J at 73 adopted the dictionary definition of outstanding, as meaning "remains unsettled, unpaid, unresolved or owing, payable" and commented that it would be almost impossible for the court to give the word a wider meaning.

The Attorney General needs only prove that there is a judgment debt and that it is not satisfied. To do that he calls the court official to produce the court order and to testify that there is no evidence of payment. That was done in this case. The difficulty, as was adumbrated by the Registrar in her letter to the Supervisor in the Namoa case, is that there is no obligation for the parties in a civil claim to advise the court if and when the judgment debt is satisfied. Thus it may be necessary to ask one or both of the parties whether the judgment has been satisfied. If there is any doubt it can be brought to court so evidence may be called to show whether or not the debt is outstanding.

If a judgment debtor makes an agreement with his creditor whereby he will pay the debt by instalments, I do not consider that any part of the sum is then outstanding in terms of the definition accepted by Webster J until each individual instalment becomes due and payable. I do not accept the court can only accept proof of that if it is incorporated in the court order. In the Vaikona case, Webster J clearly anticipated the possibility that a debt deferred by an arrangement between the parties outside the terms of the order may not be outstanding although the point did not fall for decision by him.

The evidence of both the arrangements into which Mr Fuko has entered is that he has paid the instalments promptly when each has fallen due. The remaining instalments will equally become payable as each is due. If he fails to pay anyone of them by its date, it will immediately be outstanding in terms of the clause but until, and if, he does it will not be outstanding. I am satisfied there were no payments due and outstanding on 10 January 2002.

Mr Fuko also suggested that the fact he had been sworn in as a member of the House without challenge following his previous election acted as a bar to these proceedings because they are based on the same agreements with his creditors. He cited no authority for the proposition. I am satisfied it is wrong and had it been the only basis for disputing the Attorney General’s claim it would have failed.

I am satisfied that there were no sums under the court order outstanding against the defendant on the 10 January and I decline to make the declaration or the orders sought. The claim is refused with costs to the defendant.

NUKU’ALOFA: 25 February, 2002.

CHIEF JUSTICE