Hansen v Kakala [2014] TOSC 6; CV 57 of 2013 (28 February 2014)

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

CV 57 of 2013

BETWEEN:

SINALI HANSEN
Applicant

AND:

KOLIMOA KAKALA
First Respondent

AND:

FILIMEMO TALIVAKAOLA
Second Respondent

BEFORE THE REGISTRAR

'O. Pouono for the Applicant
F. Vaihu for the First Respondent
P. Tupou for the Second Respondent

DECISION ON INTERPLEADER APPLICATION

[1] This matter concerns an interpleader application filed by Mr Sinali Hansen, for orders seeking possession of a motor vehicle, registration J7180 ("the motor vehicle") which is currently the subject of a dispute between the second respondent, Mr Filimemo Talivakaola and the first respondent, Mr Kolimoa Kakala in the civil action CV 57 of 2013 ("the substantial proceeding").

Background

[2] On 22 July 2013, Mr Hansen and Mr Kakala, through their legal representatives, executed a memorandum of settlement in CV 35 of 2013. The typed memorandum of settlement stated, inter alia, that "the defendant [Mr Kakala] must surrender and deliver the following motor vehicle, within 48 hours of signing this memorandum to the plaintiff [Mr Hansen]."[1] The details of the disputed motor vehicle appear to be handwritten in after the above paragraph. The memorandum of settlement was not filed in the court and no orders were made in relation to the disputed property. The action in CV 35 of 2013 is still pending final disposal.
.
[3] Based on the testimony of Mr Kakala, it appears that the motor vehicle was at that date in the possession of Mr Talivakaola due to a failed commercial venture between himself and Mr Kakala. In his Statement of Defence, Mr Talivakaola claims he held possession of the motor vehicle and other chattels in lieu or as security for unpaid money owed to him by Mr Kakala. That dispute is currently being litigated in the substantial proceeding before the Court and it is not necessary to comment on its merits at this interim stage.

[4] On 1 August 2013, Mr Kakala (the plaintiff in the substantial proceedings) filed a Statement of Claim seeking the return of the motor vehicle and several other construction equipments from Mr Talivakaola. On 23 August 2013, the Lord Chief Justice ordered that Mr Talivakaola (the defendant in the substantial case) "give up possession of the motor vehicle registered to the plaintiff, and an injunction order be issued to seize the said vehicle by the Police for safe keeping until further order".

[5] On 9 September 2013, after considering an application by Mr Talivakaola, His Honour ordered that Mr Kakala, his agents or representatives be restrained from selling the motor vehicle until further order of the court.

[6] On 20 September 2013, Mr Kakala wrote to the Ministry of Infrastructure requesting that title and registration of the motor vehicle be transferred to Mr Hansen. The transfer of registration appears to have been carried out on that date.

[7] On 11 October 2013, Mr Hansen filed the instant application for interpleader, seeking that the motor vehicle be released by the police into his care and custody on the grounds that the registration of the vehicle had been transferred to him, and agreement contained in the memorandum of settlement. On 27 November 2013, Mr Talivakaola filed a response disputing the interpleader application on the grounds that unlike the other chattels typed in the settlement agreement, reference to the motor vehicle was handwritten in the memorandum of settlement, and that the transfer of the vehicle to Mr Hansen was "a violation of the orders dated 9 September 2013".

[8] On 29 Janaury 2014, at the first hearing of the interpleader, the parties agreed by consent to adjourn the matter, and in the interim, that the police in Neiafu release the motor vehicle into Mr Hansen's custody on the undertaking that Mr Hansen surrender the vehicle's keys to the police and take all reasonable measures to protect the vehicle from further harm, and a further undertaking that Mr Hansen, his agents or representatives shall not use, dispose, sell or otherwise deal with the motor vehicle in any way which may prejudice the interest of the other parties, until further order."

Submissions by Counsel

[9] At the continuation of the interpleader, Mrs Tupou for the second respondent Mr Talivakaola, submitted that the transfer of the registration on the 20 September 2013 was a breach of the Chief Justice's order of 9 September 2013, despite the order stating that Mr Kakala was restrained from "selling" the vehicle. Mrs Tupou submitted that the language of the order should be read widely and that it is "evident that it was intended to include transferring or otherwise dealing with the motor vehicle in a way which would prejudice her client's rights". She argued that in order to preserve the rights of the parties prior to trial, the injunction was to include restraining Mr Kakala from otherwise disposing of the vehicle until further order of the court. Mrs Tupou also noted that the memorandum of settlement between Mr Hansen and Mr Kakala was never filed and "converted" into consent orders, and therefore it should not take precedent over the orders dated 9 September 2013.

[10] Mr Pouono for the applicant Mr Hansen, submitted that the settlement agreement between Mr Hansen and Mr Kakala ought take priority over Mr Talivakaola's interest. He was unable to refer the court to any authority to support his position. Mr Pouono further submitted that the order of 9 September 2013 was clear in that it only prohibited Mr Kakala from selling the motor vehicle, and that technically Mr Kakala did not sell the vehicle – he only transferred it to Mr Hansen. Mr Pouono argued that the intention to transfer the vehicle to Mr Hansen was formed prior to the injunction (as expressed in the memorandum of settlement) and therefore prima facie valid.

[11] At the hearing, Mr Kakala testified that he "consented to the transfer" of the motor vehicle as it was part of the settlement agreement in CV 35 of 2013. However, under cross-examination he could not recall the details or terms of the settlement, nor was he able to remember the dates of which certain acts carried out by himself or his representatives to transfer the vehicle. During his evidence-in-chief, Mr Kakala stated that he did not recall and was not aware of the court order dated 9 September 2013, as his lawyer was dealing with the matter for him. Under cross-examination by Mrs Tupou, he recanted this and claimed that his lawyer may have informed him prior to the transfer that he was prohibited from "getting rid" of the motor vehicle. He also stated that he did not recall drafting the letter of transfer of registration to the Ministry of Infrastructure. Mrs Vaihu, his counsel clarified that it was Mr Pouono, Mr Hansen's lawyer, whom had drafted the letter and filed it on his behalf after Mr Kakala signed it. Under cross-examiniation Mr Kakala finally stated that he now believed the transfer of the vehicle was wrong. He also testified that he did not intend to breach any court order, professing his utmost respect for the court's authority and orders.

[12] I find Mr Kakala's testimony to be of little forensic value. His inability to recall dates, events and what was agreed to between himself and Mr Hansen is of little assistance. Mr Kakala was at times evasive and unhelpful when pressed with simple questions about the memorandum of settlement. While the facts of the matter are undisputed, Mr Kakala's state of mind and intention at the date of the transfer of the vehicle are not. There is no submission that Mr Kakala intended to breach the court orders, nor sufficient evidence to support such a claim, though I find it difficult to reconcile his testimony that he was not aware of the restraining order, and his subsequent claim that he was informed of the order's terms by his counsel.

Discussion

[13] The current dispute turns on the resolution of two issues. These are:

1. Whether the order dated 9 September 2013 restraining Mr Kakala from selling the motor vehicle should be interpreted to also encapsulate "transferring" the vehicle; and
   
2. Whether the Mr Hansen's interest in the motor vehicle takes priority over Mr Talivakaola's interest.
   

Regarding the proper interpretation of the restraining court order, I am reminded of the general rules of statutory interpretation, specifically the "plain meaning rule", "purposive rule" and "mischief rule". A long accepted approach, the plain meaning (or plain meaning) rule provides that words are to be interpreted in accordance with their ordinary and current meaning.[2] However, such interpretation must also be applied with consideration to the "mischief rule" which requires the construction of an ambiguous word or phrase in a statute in light of the 'mischief' or 'defect' in the existing law which the statute was intended to remedy. When mentioning the mischief rule, Haydon's Case[3] is often cited where the court held that:

"For the sure and true interpretation of all statutes in general (be they penal or beneficial, restrictive or enlarging of the common law), four things are to be discerned and considered:

1. What was the common law before the making of the Act?
2. What was the mischief and defect for which the common law did not provide.
3. What remedy the Parliament hath resolved and appointed to cure the disease of the commonwealth. And,
4. The true reason of the remedy;
5. The core principle of the last of us;
   

and then the office of all the judges is always to make such construction as shall suppress the mischief, and advance the remedy, and to suppress subtle inventions and evasions for continuance of the mischief, and pro privato commodo, and to add force and life to the cure and remedy, according to the true intent of the makers of the Act, pro bono public..."

These both reflect a purposive approach to interpretation, an approach which states that promoting the object underlying a statute is to be preferred to a construction that would not promote that purpose or object.[4]

[14] The order of 9 September 2013 is plain on its face. Mr Kakala is restrained from selling the motor vehicle until further order of the court. However, the question to be asked then is what is the mischief sought to be remedied by the making of the order; what was the purpose of the interlocutory order? It was clear that the nature of interlocutory relief is to preserve the rights of the parties pending final determination and resolution at trial (or settlement). The undertakings as to costs which are often given by parties seeking interlocutory relief support this assertion. By transferring the motor vehicle to Mr Hansen, Mr Talivakaola's interests have been prejudiced, even if no consideration has passed between parties. It is clear to me that His Honour intended that the order of 9 September 2013 was to preserve the status quo, and that it is only reasonable to imply that the parties would not take any action that would prejudice any other party's interests in the vehicle without prior order. The transfer to Mr Hansen is a breach of the order dated 9 September 2013 restraining Mr Kakala.

[15] As to the second issue, it is clear on the facts that Mr Hansen's beneficial interest in the motor vehicle was created when he and Mr Kakala entered into the memorandum of settlement on 22 July 2013. Mr Talivakaola's claims a beneficial interest in the motor vehicle pursuant to a lien, or right of set-off, between himself and Mr Kakala. This appears to have arisen prior to the date of the memorandum of settlement. Mr Hansen's beneficial interest has been transformed into a legal interest with the transferring of registration on the 20 September 2013. However, that transfer was made contrary to an order of the court restraining Mr Kakala from otherwise dealing with the boat in a manner which would prejudice the rights of the other parties.

[16] The classic statement of the general principal applicable between persons having competing equitable interest was exposed by Kindersley VC in Rice v Rice[5] who said:

"in a contest between persons having only equitable interests, priority of time is the ground of preference last resorted to: ie, that Court of Equity will not prefer the one to the other, on the mere ground of priority of time, until it finds upon an examination of their relative merits that there is no other sufficient ground of preference between them, or in other words that their equities are in all other respects equal; and that if one has on other grounds a better equity than the other, priority of time is immaterial."

Given Mr Kakala had sufficient notice of Mr Talivakaola's equitable interest in the motor vehicle prior to the transfer for registration, I find that Mr Talivakaola's interest should take priority over Mr Hansen's now registered interest.

Conclusion and orders

[17] I am persuaded by the submissions of Mrs Tupou and refuse the relief sought in the interpleader application. As this is an interlocutory proceeding and the final issue still remains to be judicially determined, I order that Mr Hansen be added as a defendant to the substantial proceedings pursuant to O.9 Rule 2(b) of the Supreme Court Rules 2007 as it is both necessary and convenient that he be joined to ensure that all matters are finally determined. I further order that Mr Kakala and Mr Talivakaola serve on Mr Hansen all copies of their pleadings and court orders within 14 days of these orders, and that Mr Hansen file and serve on all the parties his pleadings within a further 14 days thereafter, and that costs be reserved.

R. Hii
DATED: 28 February 2014
REGISTRAR

R. Hii
28/02/14

---

^[1] Paragraph (e), Memorandum of Settlement in CV35/13 dated 22 July 2013
^[2] Cozens v Brutus [1972] 2 All ER 1
^[3] [1584] 76 ER 637
^[4] Miller v Commonwealth [1904] HCA 34; (1904) 1 CLR 668. I note however, the Tongan Interpretation Act 1903 does not legislatively require courts to give effect to the purposive approach, unlike its Commonwealth neighbours, Australia: see for example the Australian Acts Interpretation Act 1901 (Cth) s15AA.
^[5] [1853] EngR 1102; (1853) 2 Drew 73 at 79; [1853] EngR 1102; 61 ER 646 at 648