Asset Management Unit v Tang [2003] VUSC 89; Civil Case 069 of 2002 (16 October 2003)

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

Civil Case No. 69 of 2002

BETWEEN:

ASSET MANAGEMENT UNIT
Claimant

AND:

BERNARD NGUYEN VAN TANG
Defendant

Coram: Justice Treston

Mr. Hurley for the Claimant
Mr. Kilu for the Defendant

Hearing: 26 September 2003

JUDGMENT ON SET-OFF BY DEFENDANT

The defendant claims a set-off against the judgment sum in favour of the Claimant in a summary judgment entered for the Claimant against the Defendant by Justice Coventry on 23 May 2003 in the sum of VT18, 851, 034.

In 1998 the Defendant purchased a lease over 534 hectares of land in North Efate to raise cattle. The property was uncleared bush. It seems that his aim was to clear the bush to run his cattle business. He borrowed money from the Development Bank of Vanuatu and secured it with a mortgage for VT18.2 million over the land. Further sums were borrowed and as repayments were not made, the power to sell was invoked. Eventually, part of the property was sold but only VT3.5 million was realised from the mortgagee sale. The Claimant, Asset Management Unit was created by statute and took over much of the business of the Development Bank of Vanuatu including the mortgage and the loan. It is now the Claimant.

The Defendant had developed 141 hectares of the land and the remaining 393 hectares remained undeveloped. Certain improvements were effected to the property utilizing the mortgage monies including the building of a farm manager's residence. As I have said, the Defendant failed to make repayments and was served with a notice to vacate the property and left in October 1995 leaving certain assets on the property including a Bulldozer, two trucks, some cattle, the manager's residence and a piggery.

It was not until 2002, that the Claimant obtained the orders to sell the property which was some years after the Defendant had left. During that period the Claimant had tried to run the farm instead of selling it under the mortgage terms. The Defendant argued that the Claimant depleted and wasted the assets during that period and was obliged to sell the property as soon as possible under the mortgage agreement.

Justice Coventry in his summary judgment, gave leave to the Defendant to apply to the Court for any appropriate set-off and the Defendant applied for set-off on three bases:-

(1) The Defendant argued that on 30 April 1996 the Plaintiff sold 104 head of cattle to a Mr. Dinh Van Than and although the actual price is not known, he claimed a set-off VT2.6 million.

(2) The Defendant contended that most of the borrowed money of VT18.2 million had been applied towards developing the 141 hectares which was sold for only VT3.5 million to the Matarisu Community and that there was a failure on the Claimant's part to carry on with "due diligence and a business like manner" particularly as the Community was causing a dispute over the property. The Defendant contended that that was a commercially bad decision and the Claimant should write off the sum of VT10.5 million from the loan as a result.

(3) At the hearing itself, the Defendant contended that the Claimant should set-off against the amount owed to it the sum of VT1.670 million in relation to the sale of two trucks by the Claimant.

The Defendant submitted that the detail of the sale of cattle left on the farm and not taken into account was set out in paragraph 2 (b) of the affidavit of Joe Ligo sworn on 2 October 2002 where Mr. Ligo said:-

"On 30 April 1996 it was confirmed that Mr. Dinh Van Than only purchased 104 heads of cattle".

The Defendant set out his view of the value if the cattle in paragraphs 5, 6 and 7 of his sworn statement of 19 May 2003. The Claimant in response argued that while there was evidence of sale of cattle there was no independent expert testimony of the value of the cattle nor any evidence of the sale price realised. Thus it was argued the Court could not make a decision as to the market value of the cattle nor decide as to the actual sale price realised and the Defendant had failed to prove his claim in that regard to the proper standard.

In relation to the set-off for VT10.5 million due to the Claimant's bad business decision in underselling the 141 hectares, the Defendant claimed that that amount, in the words of Counsel, was a "guesstimate". The Defendant's affidavit referred to the dispute with the Matarisu Community. In that regard the Claimant argued that, once more, there was no independent evidence of the value of the property as at the date of sale and whether or not it was sold for any undervalue as alleged. As to the value of improvements of the property such as the Manager's residence there was no independent evidence as to their value either. In addition, the Claimant submitted that the Defendant was estopped from making such a claim because the issue was res judicata in the light of His Lordship ruling of 25 February 2003 when he said:-

"The Plaintiffs acted in good faith in obtaining the best price for the mortgaged property. The fact the security might have been devalued by the actions of third parties did not extinguish the debt."

It seems that that ruling was made after a contested hearing when the deponents were subject to cross-examination.

In relation to the third element of set-off, I note that that was not set out in the actual application but was made orally at the hearing. The Defendant claimed that two other assets, namely trucks, had been sold by the Claimant and the proceeds had not been taken into account by the Claimant. Reference was made to the affidavit of Joe Ligo where exhibit F1 referred to the sale of a Mazda truck for VT850, 000 and exhibit F3 where there was reference to the sale of another vehicle for VT820,000. The Defendant submitted that these figures were not taken into account and that there should be a further deduction from the judgment amount. The Claimant objected to this third claim for set-off on the basis that it had never been pleaded in the application nor referred to in the affidavit of the Defendant and the Court should not consider it at such a late stage. In any event, the Claimant argued that Justice Coventry had said in his judgment:-

"some cattle and other sales took place and were credited to Defendant's account."

In summary, the Defendant agreed to pay to the Claimant the sum of VT5, 512, 212.

I am of the view that it is inevitable that the set-offs claimed by the Defendant cannot succeed. The Defendant has failed to satisfy the Court on the balance of probabilities, which is the appropriate standard, that the proceeds of sale of the cattle and the trucks have not been already taken into account. In any event the Defendant has failed to prove, on the balance of probabilities, either what the market value of the cattle was or what the realised sale price was, either from independent expert evidence or by reference to actual sale documents. His "guesstimate" of the loss caused by the sale of the property was not substantiated in any way whatsoever let alone on the balance of probabilities and in any event I agree with the Claimant that the Defendant is estopped from alleging such matters as the impropriety of the sale on the basis that Justice Coventry has already ruled upon that after hearing evidence. As to the third set-off, the Defendant has applied for that relief far too late and in any event I am not persuaded, on the balance of probabilities, that the sale price for the trucks has not already been taken into account by the Claimant as acknowledged in the earlier ruling of Justice Coventry.

The application for set-off by the Defendant is accordingly dismissed. I award costs at the standard rate to the Claimant against the Defendant.

Dated AT PORT VILA, this 16^th day of October 2003

BY THE COURT

P. I. TRESTON
Judge