Patunvanu v Government of the Republic of Vanuatu [2005] VUCA 18; Civil Appeal Case 10 of 2005 (18 November 2005)

IN THE COURT OF APPEAL OF
THE REPUBLIC OF VANUATU
(Appellate Jurisdiction)

CIVIL APPEAL CASE No. 10 of 2005

BETWEEN:

JEFF JOEL PATUNVANU
Appellant

AND:

THE GOVERNMENT OF THE REPUBLIC OF VANUATU
First Respondent

AND:

THE FEDERAL RESERVE BANK OF NEW YORK
AND ABDUL HAFEEZ MOHAMMAD
Second Respondent

Coram: Hon. Chief Justice Vincent Lunabek
Hon. Justice Bruce Robertson
Hon. Justice Daniel Fatiaki
Hon. Justice Patrick Treston

Counsel: Mr. Hillary Toa for the Appellant
Mr. Kiel Loughman for the First Respondent

Date of Hearing: 14th November 2005
Date of Judgment: 18 November 2005

JUDGMENT

This case was listed for hearing in this session.

At the call-over on Monday the 7th of November we drew to the attention of Mr Toa, who appeared on behalf of the Appellant, that there seemed to be some fundamental problems about the initiation of these proceedings.

Mr Toa was not counsel at an early stage but we drew to his attention our concerns about issues of service which appeared to date to have received insufficient attention.

We outlined the problems again on the 14th November and advised that Justice Robertson had taken the opportunity of reviewing the lengthy and extensive file which has accumulated from which the following appears to be uncontraverted.

The proceedings were commenced by a specially Endorsed Writ of Summons dated 12 June 2000 which was issued by the current Appellant against Westpac Banking Corporation (Westpac) as First Defendant, the Federal Reserve Bank of New York (FRBNY) as Second Defendant and Abdul Hafeez Mohammad (Mohammad) as Third Defendant.

The Plaintiff, a citizen of Vanuatu, asserted that he lived at the Hotel Santo and that Westpac is in business as a commercial bank in Vanuatu which transacts “Banking Business in United States Dollars not limited to FRBNY”.

FRBNY was shown as having a New York City address and was alleged to transact business globally and “had account relationships locally not limited to deposits and transaction accounts by, through and with Westpac”. Further that the FRBNY is a “settler of local currency in United States Dollars which transacts Banking Business to include United States Dollars of the FRBNY and the Federal Reserve System including but not limited to the Republic of Vanuatu”.

The Third Defendant was also alleged to reside at the Hotel Santo and have a permanent overseas address in North Carolina in the United States of America.

Mr. Patunvanu alleged that on 24th May 2000, Mohammad issued “an eleemosynary gift not limited to a promissory note with guarantee No.324 7621A to him for payment on demand”. The initial amount involved was US$5,000 payable to him “as eleemosynary gift for personal and business expenses”. Mr Patunvanu alleges that the promissory note was enforceable for payment on the payee in the jurisdiction where it was presented for payment which he alleged was Westpac in Luganville.

The Writ and statement included an allegation about other issues involving many millions of dollars of US money as a result of various transactions between the FRBNY and Mr. Mohammad wherefrom it was alleged that there was an obligation of many millions of US Dollars.

The statement of claim alleged that on Friday 2nd June 2000 the plaintiff sought to get payment from Westpac in Luganville but not surprisingly. This was refused. There is a whole series of particular allegations advanced which are not relevant to the issues which now require our attention. Suffice to say that Mr. Patunvanu alleged that there was money owing to him in respect of the promise of Mr. Muhammad which has not been paid in respect to which he alleged that there was some degree of responsibility by Westpac in Vanuatu.

There was on the Court file an affidavit of service in respect of Westpac of 13 June 2000.

On the 12th June 2000 there had been filed a Notice of Motion in the Supreme Court which made reference to Order 55 of the High Court [Civil Procedure] Rules 1964. As a result Orders were made that Mr Patunvanu be granted leave to serve a Writ of Summons and Statement of Claim out of the jurisdiction in the following terms:

“1. That the plaintiff be granted leave to serve a Writ of Summons and Statement of Claim out of the jurisdiction.

2. That the Writ of Summons and Statement of Claim be served on “Federal Reserve Bank of New York , 33 Liberty Street, New York, N.Y. 10045, United States of America. Attn: Jonathan I. Polk.
   
3. That service be effected by registered mail on the Second Defendant, Federal Reserve Bank of New York, 33 Liberty Street, New York, N.Y. 10045, United States of America. Attn: Jonathan I. Polk and that proof of service be support by affidavit.
   
4. That in any event, an extra copy of the Writ of Summons and Statement of Claim be served on the First Defendant.
   
5. That the date for trial be 20th July, 2000 at 9.00am.”
   

There was an affidavit of service filed by Mr. Patunvanu dated 21st August 2000 which as much as it is relevant provides:

“1. That on 9th August 2000, through the DHL world wide services Port-Vila, Vanuatu – I sent Writ of Summons and application for a default judgment against the Defendant – the Federal Reserve Bank of New York the above Defendant.

2. That the Summons with all the – documents attached on it was delivered by DHL Worldwide services – Agent from Port-Vila, Vanuatu delivered the documents on 15th August 2000 to SFB: Lawson at 10.55 am, and signed. The DHL Worldwide services Port-Vila certified the receipt of the delivery on 17th August at 11.30am. The DHL – shipment Airway Bill No. 165 9865535 attached for as exhibit ‘A’ of the evidence of the service of the court summons to the Defendant.
   
3. That the plaintiff attached the evidence of the previous receipt from Vanuatu Post International Express mail dated 26th July 2000 time 9.50am served to the Federal Reserve Bank of New York of 33 Liberty Street New3 York NY 10045 USA as exhibit ‘A’ (2) for my prove of services of the court notices to the Defendant to put appearances to the Supreme Court of Vanuatu at Luganville, Santo, Vanuatu.”
   

There were steps taken by Westpac to be removed from the proceedings. There is a helpful letter of the 14 June 2000 from Mr Garry Blake to the then counsel for Mr. Patunvanu which set out some fundamental problems about the alleged promissory note and the legal consequences flowing from it.

Notwithstanding the good sense contained in Mr Blake’s letter Mr Patunvanu pursued the matter. The counsel who had issued the proceedings had filed a Notice of Ceasing to Act on 10th June 2000. The matter proceeded to hearing and Westpac was struck out of the proceedings.

Nonetheless Mr Patunvanu persisted with these proceedings against the FRBNY and Mr Mohammad.

The High Court (Civil Procedure) Rule of 1964 are clear and unequivocal as to the processes which are to apply to service out of the jurisdiction.

These are set out in Order 11. They were not complied with in any way. Regrettably the proper framework was not referred to the Judge and unfortunately he in turn, did not pick up the special requirements which apply.

The starting point for jurisdiction in litigation is the place where a Defendant resides or is domiciled. There are exceptions when the dispute is about property, acts or omissions, breaches of duty or activities in another jurisdiction. Always there must be an actual nexus or connection between the Defendant and the Courts which are being sued.

In this case Mr Patunvanu says he and Mr Mohammad had dealings in Vanuatu. Mr Patunvanu says Mr Muhammad gave him a document which he said provided that the FRBNY would meet his obligations.

FRBNY had no connection at all with Vanuatu. They have not signed this document or acknowledged it any way. Even if it has validity (about which we are anything but persuaded) Mr Mohammad cannot make the FRBNY amenable to the Courts of Vanuatu by giving this document to Mr Patunvanu in this country.

If FRBNY is to be called to account that would have to occur in the Courts where that Bank is domiciled or conducts its business, namely, in the State of New York in the United States of America. Even if FRBNY had business dealings with other people or banks in Vanuatu that could not make FRBNY answerable to anyone but those entities in this country. There is nothing which has legal effect or force which connects FRBNY with Mr Patunvanu in Vanuatu. That means there cannot be legal proceedings between them here, unless there was a relevantly binding stipulation or consent. FRBNY is clearly not in that situation.

There was no service which could have any legal effect or consequence as far as FRBNY is concerned. There was no evidence to support any of the matters which are required to be established before service out of the jurisdiction can be allowed.

At the heart of the legal system of this country (as in all other democratic countries which involve the rule of law), there is a need for any persons against whom allegations are made to have a proper opportunity to respond. Proper service is a fundamental and indispensable part thereof. A foreign person is only answerable to the Courts of this country if there is a connection between them and the dispute which affects Vanuatu.

The Default Orders made by the Supreme Court on the 28th November 2000 in as much as they relate to the FRBNY are a nullity. There had been no proper service on FRBNY to give the Court the jurisdiction to take any of the steps which followed thereafter. There is not now and never has been any connection between this jurisdiction and FRBNY. The unsatisfactory evidence about a service in New York City and the promise by someone to come to Vanuatu to sort things out has no legal efficacy.

We should record one other bizarre aspect of this whole matter. Eventually Mr. Patunvanu began to assert that the FRBNY was in fact the US Government and therefore any Orders which were obtained against the FRBNY were against the US Government.

If that was the intention, then there are even more detailed common law rules which apply with regard to service on a foreign sovereign State. Even if there had been proper service in terms of Order 11 against the Bank (which there was not), that could not be treated as service of the process on the Government of the United States of America unless the other necessary steps had been taken.

It is regrettable that this matter has not had the appropriate scrutiny at the level of basic principle. But the inescapable conclusion is that there is no valid proceeding against the FRBNY which can be enforced in any way.

In respect of Civil Case 15 of 2000 in the Supreme Court of the Republic of Vanuatu in its civil jurisdiction the Judgment against the FRBNY dated 20 November 2000 is set aside. The proceeding against the FRBNY is struck out in its entirety. The consequence of that is that all steps taken by Mr. Patunvanu against the FRBNY or anybody or any entity alleged to be representative in any way of FRBNY has no legal reality or consequence.

There is nothing on the file to suggest that there was not valid service upon Mr. Abdul Hafeez Muhammad, the person with whom Mr Patunvanu chose to do business. Whether there is any impediment to Mr Patunvanu enforcing his Judgment against that man who has been deported is not before us. But the involvement of the unserved FRBNY has come to an end.

For the avoidance of doubt we should make it clear to everybody that this Court is not persuaded that there was ever any legal efficacy in the proceedings in any event. Had there been a proper service we have great doubt as to whether any legal responsibility was in any event established on the FRBNY. Especially when there is Judgment by default there is a heavy burden on the Court to ensure that its powers (which can have such far reaching consequences) are never exercised in a way which lacks legal integrity.

The Government of the Republic of Vanuatu, having been involved in this case only because of the misguided suggestions that there were possible enforcement processes against the Government of the United States should obviously be removed from the process also. Its involvement is consequent upon steps which were taken on the basis that there has been valid service on the FRBNY.

Mr. Patunvanu suggested that this case was a “first in the Pacific region or other parts of the world”. We certainly hope that there are no other instances of such inappropriate misuse of Court processes as are evident on this file.

Dated at Port-Vila this 18th day of November 2005

BY THE COURT

VINCENT LUNABEK CJ
J. BRUCE ROBERTSON J
DANIEL FATIAKI J
PATRICK I. TRESTON J