Jtanco Construction Ltd v Latu [2023] TOSC 31; CV 39 of 2022 (12 June 2023)

IN THE SUPREME COURT OF TONGA
CIVIL JURISDICTION

NUKU'ALOFA REGISTRY

CV 39 of 2022

BETWEEN:

JTANCO CONSTRUCTION LIMITED Plaintiff

-and-

SIUA LATU (deceased, by the Administrator of his estate, Lisia Uaine Latu) Defendant

Judgment Creditor’s application for Order in relation to Bailiff’s sale

RULING

BEFORE: LORD CHIEF JUSTICE WHITTEN QC
To: Mrs S. Ebrahim for the Plaintiff / Judgment Creditor
Ms Lisia Uaine Latu
Th Chief Bailiff
Date: 23 June 2022

1. On 23 June 2022, judgment in default of defence was entered for the Plaintiff (“Jtanco”) against the Defendant (“Siua”) in the sum of $120,000 together with pre-judgment interest and costs. Pursuant to Order 30 rule 2, the judgment debt also carries interest at the rate of 10% per annum from the time of judgment until the judgment is satisfied.
2. On 8 October 2022, Siua died intestate.
3. On 18 January 2023, upon the application of Jtanco, Orders were made herein appointing Lisia Uaine Latu as Administrator of Siua’s estate (“the Administrator”). At that time, the total judgment debt was stated to be $145,500.
4. On 2 June 2023, Mrs Ebrahim, as counsel for Jtanco, filed an ex parte application seeking orders, in effect, for the Bailiff to transfer title and registration of a motor vehicle (registration number L26309) belonging to Siua’s estate, to Jtanco, in exchange for a reduction in the judgment debt of 10% or $14,550.
5. The application is supported by an affidavit of Hua Huag, who is described as the owner of Jtanco. Mr Huag deposes, relevantly, that:
   • (a) on 25 May 2023, the Chief Bailiff informed Mrs Ebrahim that the vehicle had been seized in respect of the judgment debt;
   • (b) he visited the Bailiff’s area and observed the vehicle that same day and saw that it was in good condition;
   • (c) he was told by someone from the Bailiff’s office (not identified) that the vehicle would be put up for sale at public auction without a reserve price;
   • (d) he considers the possibility of a bidder at such an auction being able to successfully purchase the vehicle for as little as, say, $200 to be "very inappropriate"; and
   • (e) he therefore offers to deduct 10% from the judgment debt in exchange for the vehicle to be released to him and registered in his name.
6. There is no indication on the face of the application as to why it was filed on an ex parte basis. It should have been filed and served on notice to the Administrator and the Chief Bailiff.
7. The application does not contain any reference to any legislative provisions or authority in support of the Order sought. Both the Supreme Court Rules and the Bailiffs Act are silent on the issue. Order 31 rule 2 provides that the Court may direct that any property seized pursuant to a writ of distress be sold in some manner other than by public auction. Rule 3 requires a writ of distress to be executed by a Bailiff as directed by the Court and in accordance with the procedures prescribed in the Bailiffs Act. That Act does not prescribe any procedure which is relevant to the instant application. In fact, the only reference to sale by public auction (unless otherwise ordered by the Court) appears in Form 13 - Writ of Distress - in the Schedule to the Rules.
8. In this regard, the position in Tonga is similar to that described by the UK Court of Appeal in Wilson v South Kesteven District Council [2000] 4 All ER:

“If ever clarity were needed in the law it is surely with regard to the seizure and sale of a debtor's goods. What are the powers and obligations of the bailiff? What rights has the debtor? The answers to such questions should be simple and readily accessible. Yet the process of levying distress is an arcane one and the present law, as noted in the Law Commission's Working Paper on Distress for Rent (Law Com no 97) (1986) p 145, para 5.1(1) 'is riddled with inconsistencies, uncertainties, anomalies and archaisms'.”

9. The position in Australia, where the relevant court rules are generally more explicit, is summarised in Halsbury's Laws of Australia.^[1] Relevantly, it is not permissible for the bailiff (sheriff there) simply to deliver the seized goods to the judgment creditor,^[2] although the judgment creditor^[3] or debtor may purchase them when offered for sale to the public. In each jurisdiction, the rules vary in detail in their requirements as to time, place, advertisement and manner of sale.https://advance.lexis.com/document/?pdmfid=1230042&crid=b7a35878-96aa-44f9-afb5-5f14ab9424b6&pddocfullpath=%2Fshared%2Fdocument%2Fanalytical-materials-au%2Furn%3AcontentItem%3A59M3-1FX1-F5KY-B0S2-00000-00&pdcontentcomponentid=120761&pdteaserkey=sr1&pdicsfeatureid=1517127&pditab=allpods&ecomp=kmJ4k&earg=sr1&prid=18b58f4c-0e19-4df4-a3ad-5105423f73a1 Although ordinarily sale will be effected by public auction, the bailiff may sell by private treaty.^[4] The bailiff is entitled to accept any genuine bid that bears a fair relationship to what is being sold and it is in that sense that he or she must obtain a reasonable price.^[5] In Bob Jane Corp Pty Ltd v Acn 149 801 141 Pty Ltd [2016] FCA 533, the Supreme Court of Victoria was prepared to make a ‘no reserve’ order on the application of a judgment creditor. The bailiff is not obliged to obtain a valuation.^[6] However, in New South Wales, the sheriff may not sell by public auction at a price substantially below the appropriate market value, which he or she must determine by making appropriate inquiries before proceeding to sell.^[7]
10. In New Zealand, goods seized pursuant to warrants issued by the District Court must be sold by public auction unless the Court orders otherwise.^[8] For sale other than by public auction, at least 48 hours' notice must be given on any application for an order for such sale. For such sale, notice of the application must be served on the bailiff and on all other parties having an interest in the enforcement.^[9]
11. In my view, it is implicit from the legislative provisions that do exist in Tonga that it is incumbent upon the Bailiff, in the performance of his statutory duty, to make all reasonable efforts to obtain a fair and reasonable price for goods seized pursuant to a writ of distress. The most common method of gauging the market value for such goods is by way of a properly advertised public auction. However, it would appear that the Rules also contemplate an order for a private sale, including to a judgment creditor. In my view, the exercise of such a discretion must include considerations of fairness to all parties concerned.
12. To that end, I make the following Orders:
    • (a) If, within 14 days of service of this Ruling on her, the Administrator gives written notice to Mrs Ebrahim and the Chief Bailiff, of her consent to Jtanco’s proposal, the Chief Bailiff may proceed to transfer the vehicle to Jtanco, whereupon the judgment debt shall be reduced by 10%.
    • (b) If the Administrator does not provide her consent in accordance with the above, the Chief Bailiff is to obtain a valuation of the vehicle from a suitably qualified expert and:
      • (i) if that value is less than the value of Jtanco’s proposal, the Chief Bailiff may, if Jtanco maintains its proposal and indemnifies the Bailiff’s office for the cost of the valuation, proceed to transfer the vehicle to Jtanco, whereupon the judgment debt shall be reduced by 10%;
      • (ii) if the said valuation is equal to or greater than the value of Jtanco’s proposal, then the Chief Bailiff shall sell the vehicle at a public auction, at which, Jtanco shall also be entitled to bid.^[10]
13. The parties have liberty to apply upon 48 hours written notice.

NUKU’ALOFA	M. H. Whitten KC
12 June 2023	LORD CHIEF JUSTICE

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^[1] 325 — Practice and Procedure, VII JUDGMENT AND EXECUTION, (3) EXECUTION
^[2] Thomson v Clerk (1596) Cro Eliz 504; 78 ER 754.
^[3] Re Rogers; Ex parte Villars [1874] UKLawRpCh 63; (1874) LR 9 Ch App 432 at 437; Simpson v Forrester (1973) 132 CLR 499.
^[4] Hunter BNZ Finance Ltd v Plateau Holdings Pty Ltd [1985] 2 Qd R 97.
^[5] Anderson v Liddell (1968) 117 CLR 36.
^[6] Anderson v Liddell, supra.
^[7] (NSW) Uniform Civil Procedure Rules 2005 rr 39.7(2), 39.10.
^[8] District Court Act 2016, s 172(1).
^[9] District Court Rules 2014 (LI 2014/179), r 19.60(2).
^[10] Vaka'uta v Wong [1998] Tonga LR 93.