Asset Management Unit v Mael [2003] VUSC 18; Civil Case 106 of 2001 (13 April 2003)

IN THE SUPREME COURT OF
THE REPUBLIC OF VANUATU
(Civil Jurisdiction)

CIVIL CASE No. 106 of 2001

BETWEEN:

ASSET MANAGEMENT UNIT
of Oceania Building, Rue de Paris, Port Vila,
Efate in the Republic of Vanuatu
Plaintiff

AND:

ROBERT MAEL
of c/- Caillard Kaddour, PO Box 112, Port Vila,
Efate, in the Republic of Vanuatu
Defendant

Coram: Chief Justice Vincent LUNABEK

Counsels: Jennifer La’au for the Plaintiff
George Boar for the defendant

JUDGMENT

On the 11^th of July 2002, the Court makes the following orders-

1. Order that the Plaintiff as Mortgagee, be empowered to sell and transfer the leasehold property contained and described in Title Number 11/OG22.094 by such means and in such manner as it shall deem fit
   
2. Order that pending such sale and transfer the Plaintiff, as mortgagee, or any agent or agents duly authorized by it in writing be empowered to enter on the said leasehold property and act in all respects in the place and on behalf of the proprietor of the leases.
   
3. Order that the purchase monies to arise from the sale and transfer of the said leasehold property and the monies received (if any) by the Plaintiff pending such sale and transfer shall be applied-
   
   • (a) Firstly, in payment of the expenses occasioned by the sale and transfer or going into and remaining in possession (as the case may be), including the costs of this application;
     
   • (b) Secondly, in payment of the moneys then due and owing to the Plaintiff as Mortgagee;
     
   • (c) Thirdly, in payment of subsequent registered mortgages or encumbrances (if any) in order of their priority,
     
   • (d) Fourthly, the surplus (if any) shall be paid into this Honourable Court pending further order.
     
4. Costs for the Plaintiff against the Defendant. Costs are assessed at VT10,000 to be paid by the defendants within one month from the date of this order.
   

An agreement was made between the Defendant and the NBV on 24 January 1995. This is evidenced in Mr. Joe Ligo’s Affidavit. A mortgage was then registered against the leasehold title 11/OG22/094. The Defendant made payments in the sum of VT1,530,351 to the NBV. This again was in Mr. Ligo’s affidavit.

The Defendants file was transferred to the Plaintiff under the Asset Management Act No. 22 of 1998 because the Plaintiff made irregular payments to NBV. The Plaintiff charged the interest of 5% to the Defendant. The defendant then made irregular payments to the Plaintiff. His irregular payments were contrary to the agreed sum of VT77,000 to be paid every month.

The Plaintiff wrote a letter of demand dated 6 March 2001 demanding repayment of VT5,283,654. The Defendant relies on the rents received from tenants residing on the premises located on the mortgaged property. The Defendant agrees that if there are no tenants living on the premises on the mortgaged property he was unable to make repayments.

The Plaintiff refused to re-negotiate an agreement as the Defendant made irregular payments.

The Plaintiff submitted the following issues for the Court to consider-

(1) Is there a binding contractual relationship between the Plaintiff and the Defendant?
(2) Was there a performance in pursuance of the contractual relationship?
(3) Was there a breach of the terms and conditions of that contractual relationship?
(4) Is there evidence to support the Defendant’s defence and/ or counter claim?

It is undisputed that there was a binding contractual relationship between the Plaintiff and the Defendant. The Defendant consented to the agreement. He signed the agreement. He agreed on condition that he will pay VT77,000 per month towards the loan. Towards the process of payment, the defendant failed to satisfy payment of the above amount. There were irregularities of payment encountered along the process.

The question is whether such irregularities of payment affected the very nature of the agreement?

The answer would be in the affirmative. He has the legal obligation to ensure the terms and conditions of the contract are satisfied.

The Defendant of course, has the alternatives opened before him. He should have not signed the agreement. The defendant should have say, wait, let’s explore other alternatives, in circumstances where there are no tenants in the mortgaged property what will happen? This, he failed to explore. He breached the agreement.

The defendant closed his eyes to the unforeseeable risks. The total amount and interests of the loan is huge. It is important to emphasize that loans did consume the lives of the innocent. Men or Women of Vanuatu must act with sound wisdom before engaging in any financial transactions.

The Plaintiff demanded the total payment of VT5, 283, 645 from the Defendant. The payment must be made within 7 days. The defendant failed to make such payment coupled with irregular payments made beforehand.

The evidence was put before the Court by affidavit evidence in addition to oral evidence.

I have listened, recorded and considered the evidence of all witnesses before me and their demeanour. I accept the Plaintiffs evidence in connection to Mr. Ligo’s affidavit evidence. It relates to the true factual circumstances of the transactions to which the Plaintiff and the Defendant engaged themselves.

The Defendants evidence was recorded. I found it difficult to rely on his evidence. His evidence is uncorroborated. He admitted he has made irregular payments. This was contrary to the terms of the contract. I acknowledge the fact that there were no tenants on the mortgage property for sometimes. Such unfortunate circumstance breeds difficulties, which led to irregular payments. The Defendant however, must find alternative ways to fulfil his contractual obligations. That, he is legally bound in law to do.

The law that fits this kind of situation is clear. Section 58 of the Land Leases Act of 1983 states that any principle sum or interests due under a mortgage may, subject to the provisions of section 59(4), be recovered by action in any competent court.

Section 58 of the ‘Act’ must be read in conjunction with section 59.

Section 59(1) stipulates that ‘Except as provided in section 46 a mortgage shall be enforced upon application to the Court and not other wise.

Section 59(2) states that upon any such application, the Court may make an order-

(a) empowering the mortgagee or any other specified person to sell and transfer the mortgaged lease, and providing for the manner in which the sale is to be effected and the proceeds of the sale applied,
(b) empowering the mortgagee or any other specified person to enter on the land and act in all respects in the place and on behalf of the proprietor of the lease for a specified period and providing for the application of any moneys received by him while so acting, or
(c) vesting the lease in the mortgagee or any person either absolutely or upon such terms as it thinks fit but such order shall, subject to subsection 5, not take effect until registration thereof.

(3) The Court shall, in exercising its jurisdiction under this section, take into consideration any action brought under section 58 and the results thereof.

By virtue of the Mortgage Agreement dated the 15^th of November 1995, it provides a provision for the power of sale. It reads the Mortgagor hereby acknowledges that the statutory power of sale contained in section 58 of the Land Leases Act No 4 of 1983 shall arise on and be exercisable at any time after the Mortgagee has demanded the repayment of the moneys hereby secured and the Mortgagor has failed to repay the moneys so demanded.

The Defendant was aware of the above provision. He however went on and signed the mortgage agreement. He failed to comply with his contractual obligations as evidenced in the agreement. The court considers such failure seriously and weighs it against the above law and the contractual agreement. The result is that the Defendant failed to honour the agreement.

In that respect, the Court makes judgment in favour of the Plaintiff.

These are the reasons of the Orders issued on the 11^th of July 2002.

DATED AT PORT VILA, this 13th DAY OF APRIL, 2003

BY THE COURT

Vincent LUNABEK
Chief Justice