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High Court of Fiji |
IN THE HIGH COURT OF FIJI
AT SUVA
CIVIL JURISDICTION
Civil Action No. HBC0543 of 2004
BETWEEN:
NBF ASSET MANAGEMENT BANK
Plaintiff
AND:
1. TAVEUNI ESTATES LTD
1st Defendant
2. REGISTRAR OF TITLES
2nd Defendant
3. ATTORNEY GENERAL OF FIJI
3rd Defendant
Before: Master Udit
Counsel: Ms Chan for the Plaintiff
Mr Naidu for the defendants
Date of Decisions: 7th April, 2009
DECISION
(S43 Banking Act 1995 - leave to continue a counter claim against a bank
under controllership - principles applicable)
Introduction
[1] On 11th September 2007 the Defendant, Taveuni Estates Ltd ("the defendant") filed a summons seeking an order that leave be granted to it to continue with the counter-claim against the Plaintiff, under S. 43(2) of the Banking Act 1995 ("the Act"). The Reserve Bank of Fiji, which is, the Controller of the plaintiff, NBF Asset Management Bank ("the Bank") by a letter dated 10th October 2007, declined to grant any leave to the defendant Taveuni Estates Limited to pursue with the counter-claim. Likewise by the letter, it even opposes the court from granting such leave. Consequently, this application was filed.
NBF Asset Management Bank
[2] I will begin by describing the creation and existence of the plaintiff, NBF Asset Management Bank, which is important to understand the background to the present application. The financially stricken National Bank of Fiji gave birth to the Bank. I will interpose here briefly to allude to the relationship between National Bank and the NBF Asset Management Bank. The National Bank of Fiji was established and incorporated under the National Bank of Fiji Act (Cap 213) in 1976. It was a bank owned exclusively by the Government of Fiji. Due to mismanagement in the late 80's and early 90's the bank encountered difficulties requiring direct intervention by the Parliament.
[3] In 1996 the Parliament enacted National Bank of Fiji (Restructuring Act) 1996. The primary objective of the Act was to create two banks. The first was National Bank of Fiji, which was to continue as "a bank offering personal banking services." It is now operating as Colonial National Bank of Fiji. The second bank established was NBF Asset Management Bank, the function of which was to "dispose of over an appropriate period of time all assets and liabilities transferred to it" by the Act. Ever since the coming into effect of the said Act, the Plaintiff has continued to perform its primary objective.
[4] Since the passing of the Act in 1996, whilst the Bank pursued with its statutory function, the Legislature or the Regulatory Authorities did not review the performance of the Bank especially to monitor its operation as to whether the desired legislative goal was being executed satisfactorily. Furthermore no timeframe was fixed for the Plaintiff to dispose off the liabilities and assets of the former National Bank of Fiji. It continued its operation for an uninterrupted period of over 11 years. As a consequence of persistent delay, perhaps many of the defaulting borrowers have escaped the wrath of the justice system. Many viable assets capable of being realised may have been dissipated, perished and/or otherwise are now beyond the reach of those entrusted with the statutory task. Some of the claims may even now be stale under the Limitation Act Cap 35).
[5] Be that as it may, after the coming into effect of the 1996 Act, probably the first and only regulatory control effected over the administration of the Bank was on 4th May 2007, when the Governor of the Reserve Bank of Fiji (RBF) acting under S. 30(2)(6)(i) of Banking Act 1995, with consent of the Minister for Finance, National Planning, Public Enterprises and Sugar Industry assumed control of the Plaintiff. With effect from 1st April, 2007, the Plaintiff was declared to be under Controllership of the Governor of the Reserve Bank under S. 32(4) of the Act. I will discuss the effect of this statutory intervention later in the decision.
Background facts
[6] Presently, the Bank and the Defendant are involved in a series of litigation over a piece of land. This action in particular involves a Deed of Conveyance which was duly executed between National Bank of Fiji and the Defendant on 27th June 1995. Under the 1996 Act the Bank inherited the Defendant's debt and the Deed.
[7] The Plaintiff claims that it has an enforceable Deed of Conveyance over CT 28215. Pursuant to the Deed executed on 27th June 1995, the Plaintiff pleads that the Defendant by transfer registration No 379880 transferred to it, Lot 1 on Deposit plan 7340 known as "Soqulu, Nadawa" and "Nakawakawadawa" and Lot 1 on reported plan 7341 known as "Soqulu", "Nadawa" and "Nakawakawadawa", both situated in the Province of Cakaudrove on the island of Taveuni, comprising of 48 hectares, 8453 square metres and 867 hectares, 6751 square metres respectively.
[8] The Deed of Conveyance between the Defendant and National Bank of Fiji was for a consideration sum of $8000,000.00, which figure was agreed as the total sum of monies owing to the Bank by the Defendant under Mortgage Numbers 139162 (30/09/1992), 178615 (13/08/1980), 178619 (03/08/1980) and 294217 (10/12/1990). In satisfaction of the debt, the Defendant allegedly agreed to forgo its right to challenge the validity of the securities then held by the Bank, which was the position it had earlier taken. On settlement, the Defendant was to be discharged from a number of securities as contained in Clause 3 of the Deed.
[9] On behalf of the Plaintiff it is pleaded, that pursuant to the Deed the Plaintiff has partly performed its part of the obligation to the Defendant by discharging the securities. Furthermore, in consideration thereof certain properties were allegedly transferred to the National Bank of Fiji pursuant to Transfer No 379880. On 27th June 1995 the National Bank of Fiji obtained a Certificate of Title No 28286, which endorsed NBF as the registered proprietor of Lot 1 on Deposit Plan 7340. Likewise a Certificate of Title No 28202 was obtained by NBF for the property described in Lot 1 on deposited plan No 7340.
[10] In paragraph 12 of the Statement of Claim the Plaintiff states that "Transfer No 379880 had been registered against Certificates of Title Nos 28202 and 28286 pursuant to request Nos 363858 and 363859 for these titles which were granted on 19th August 1994."
[11] The dispute arose when the Plaintiff discovered after a search of the land register at the Registrar of Titles office that:-
"(a) it was not the registered proprietor of the Certificates of Title Nos 28286 and 28202.
(b) Certificate of Title No 28286 in the Registrar of Titles record relates to land known as "Naiqereqere" situated in the Town of Levuka in the island of Ovalau and is Lot 2 on Deposited Plan 6734.
(c) Certificate of Title No 28202 in the Registrar of Titles record relates to land known as "Naiqereqere" situated in the town of Levuka in the island of Ovalau and as Lot 1 on Deposited Plan 6734.
(d) The documents/title numbers 28286 and 28202 were/are in the possession of the Plaintiff, which had been endorsed by the Second Defendant as being transferred to the Plaintiff.
(See paragraph 13 of Statement of Claim)
[12] At all material time the Plaintiff believed that it was the registered proprietor of the said properties. However, the belief was short lived dating back to the search of the respective titles. On the basis of the search, it is alleged that on 31st March 1999, the Defendant, fraudulently and/or in breach of its obligations under the Deed requested new Certificates of Title in respect of the same land to defeat the Bank's proprietary interest over the land.
[13] The Registrar of Titles issued Certificates of Title to Taveuni Estates Ltd over the said properties as follows:
| CT 31921 | Lot 1 on DP 7340 |
| CT 28820 | Lot 1 on DP 7341 |
[14] In paragraph 16 of the Statement of Claim the Plaintiff alleges that the conduct of the Defendant in transferring the said properties in its own name is fraudulent. Apart from fraud, the Plaintiff pleads many other causes of action against the Defendant as well as the Second Defendant.
[15] By way of relief the Plaintiff seeks:
"(a) An order that the Second Defendant endorse transfer of Certificate of Title No 28414 to the Plaintiff on the Second Defendant's registry forthwith;
(b) An order that the Second Defendant endorse transfer of Certificates of Titles Nos. 28383 and 28598'B' to the Plaintiff forthwith;
(c) A declaration that transfer No.379880 is at all times a valid dealing between the Plaintiff and Defendant;
(d) Damages;
(e) Interest upon damages under the Law Reform (Miscellaneous Provisions) (Death and Interest) Act Cap. 29, on the judgment given to the Plaintiff at the rate of 10% per annum."
[16] On the other hand, the Defendant in paragraph 6 of the Amended Statement of Defence pleads:-
"As to Paragraph 6 of the Third Amended Statement of Claim, the Defendants denies that the properties, as contained in the Deed of Conveyance, were transferred to the Plaintiff in part performance and in partial satisfaction of the obligations of the Defendant to the Plaintiff. It says that the properties which were intended to be transferred to the plaintiff pursuant to the terms of the Deed of Conveyance were so transferred to the Plaintiff, in full performance and complete satisfaction of the obligations of the Defendant to the Plaintiff.
The Transfer of the properties as set out in Annexure 3 of the Deed of Conveyance was prepared by the Plaintiff's then-solicitors and signed correct by that firm and, to the best of the Defendant's information, knowledge and belief it properly conveyed all the properties intended to pass to the Plaintiff pursuant to the Deed and completed the transactions between the Defendant and the Plaintiff.
Certain properties, as set out in Annexure 4 of the Deed of Conveyance, and listed in paragraph 45 of the Third Amended Statement of Claim, did not form part of the transaction between the Defendant and the Plaintiff, as the Defendant had supplied evidence of full payment by third parties in respect of the 40 Certificates of Title contained in Annexure 4 to the Plaintiff within the required period of ten days of the execution of the Deed. The Defendant and the Plaintiff were both in agreement as to this and this was confirmed in writing, in letters dated the 9th and 12th of June, 1995."
[17] Further in paragraph 8 of the Statement of defence the Defendant pleads:
"The Defendant denies the contents of paragraph 8 of the Third Amended Statement of Claim save to say that there were certain properties, referred to at Clause 13 of the Deed of Conveyance and as contained in Annexure 4 to the Deed of Conveyance, that were only to be conveyed to the Plaintiff if they were not in the ownership of a third party as set out in Clause 13 of the Deed of Conveyance, as follows:
(a) That the 40 certificate of titles numbers annexed hereto as annexure 4 may have been fully paid. In the event that evidence is produced of full payment, each such lot for which evidence is not produced will form part of this transaction.
(b) That in the event that there are any titles that are unencumbered, such titles shall be made available for transfer in a title for title basis to the Transferees herein in substitution for those in (a) for which evidence of full payment is provided.
(c) That the matters mentioned in (a) and (b) above must be resolved within 10 days of the date of this deed.
The Defendant subsequently advised the Plaintiff, in a letter dated 09th June 1995, that there were no other unencumbered titles and that the 40 Certificates of Title, as listed in Annexure 4 of the Deed of Conveyance, would not form part of the transaction, as they were all in the ownership of third parties.
The Defendant further says that it has since facilitated the transfer of 24 Titles from the list of Titles contained in Annexure 4 of the Deed of Conveyance to the rightful third party owners of those Lots, where those owners have made full payment of any outstanding service charges due to the Defendant pursuant to their sales contracts and Deeds of Covenant. The balance of the 40 Titles contained in Annexure 4 of the Deed of Conveyance are still held on trust for third party purchasers by the Defendant and will be transferred to them upon payment by them to the Defendant of the outstanding service charges, due to the Defendant by the third party purchasers of those balance Lots."
[18] In addition, the Defendant is resisting the claim on a number of grounds. To begin with in paragraph 5 of the Statement of Defence the defendant admits entering in to a Deed of Conveyance. In accordance with the Deed of Conveyance, the Defendant concedes that the Plaintiff was eligible to be the registered proprietor of the subject properties. However any such registration was subject to "certain obligations and conditions and encumbrances attached to the properties as contained in the Deed of Conveyance" (see para 5 of the Statement of Defence). It claims that its obligation under the Deed is fully performed.
[19] The reasons for non-conveyance of the properties now sought by the Plaintiff are contained in paragraphs 6, 7, 8 and 16 of the Statement of Defence. I have already reproduced in full paragraphs 6 and 8. Paragraphs 7 and 16 respectively provides:-
7 -"The Defendant admits the contents of paragraph 7 of the Third Amended Statement of Claim insofar as certain properties were conveyed by it to the Plaintiff pursuant to the Deed of Conveyance. It denies that this transfer was in partial compliance with the Deed of Conveyance and says that it was in full compliance with its obligations pursuant to the Deed. The Defendant repeats paragraph 6 herein.
16 - (a) The Defendant denies that it acted fraudulently and/or in breach of its obligations to the Plaintiff in requesting new CTs for Lot 1 on DP 7340 and Lot 1 on DP 7341. It further says that, as registered proprietor, it applied to the Registrar of Titles for the issuance of a number of Certificates of Title for Lots it owned at Soqulu, as it was entitled to do pursuant to Section 15 of the Land Transfer Act, Cap 131.
(b) In response to paragraph 16(b) of the Third Amended Statement of Claim the Defendant admits requesting and obtaining CT 31921 and CT 28820 in its name but denies that it acted fraudulently and in breach of the Plaintiff's rights and the Deed of Conveyance in doing so. It repeats paragraph 16(a) herein.
(c) The Defendant denies acting dishonestly in executing the requests for CT 28820 and 31921 and denies that it had any knowledge that these Titles were already transferred to the Plaintiff and further says that CT 28820 and 31921 did not appear in the Transfer. Annexure 3 of the Deed of Conveyance did not contain any area description for the Lots referred to therein and the Defendant did not have and could not have had any actual or constructive knowledge that the land subsequently shown to be Lot 1 on DP 7340 and Lot 1 on DP 7341 and for which it obtained the two titles, being CT 31921 and CT 28820, were intended to be transferred to the Plaintiff. It further says that, at the time of the execution of the Deed of Conveyance, the then representatives of the Defendant satisfied themselves that CT 31921 and CT 28820 were not mortgaged and were in its possession and ownership and, on that basis, they in the knowledge that those parcels of land, in the case of the land contained in CT 28820, being the water source for the whole development had not been conveyed to the Plaintiff nor were they ever intended to be so conveyed.
(d) The Defendant admits presenting the requesting to the Second Defendant for the issuance of new CTs but denies that it acted dishonestly in representing to the Second Defendant that the property as comprised in Lot 1 DP 7340 and Lot 1 DP 7341 had been surveyed but that Certificates of Titles had not been issued for these properties. To that best of the Defendant's knowledge and belief at the time it made the request for the issue of the new Certificates of Title there were no Certificates of Titles issued for Lot 1 on DP 7340 and Lot 1 on DP 7341.
This knowledge and belief was founded on the fact that no such CT numbers appeared in Annexure 3 to the Deed of Conveyance nor in the transfer of the properties to the Plaintiff. The Deed of Conveyance was dated 02 June, 1995 and the Transfer was dated 27 June 1995. If any such Certificates of Title existed before the date of the Deed of Conveyance the Defendant was unaware of them as registered proprietor of all the land in the Soqulu Estate at the time other than those properties belonging to third parties. Any such CTs could only be bogus and the Defendant therefore acted properly in requesting the issue of Certificates of Titles for Lot 1 on DP 7340 and Lot 1 on DP 7341.
(e) The Defendant denies the allegations in paragraph 16(e) of the third Amended Statement of Claim and/ or representing that any such survey plan was its. The Defendant further says that a deposited plan, being DP 7341, was lodged by Rupeni Consultants with the Registrar of Titles showing as registered proprietor the National Bank of Fiji as Mortgagee, being the Plaintiff's predecessor in Title, and which DP is dated 9 February, 1994, being some (14) months before the Deed of Conveyance was entered into and at which time the Defendant, and not the Plaintiff's predecessor in title, was the registered proprietor of all the land at Soqulu, other than the land which belonged to third parties.
DP 7341 shows as Lot 1 an area of 867.6751 hectares marked with the notation CT 28820.
(f) The Defendant admits refusing to surrender Certificates of Title 28820 and 31921 as it was, at all times and remains, the bona fide registered proprietor of those parcels of land and further says that Plaintiff has no right/claim/authority to request the surrender of CT 28820 and CT 31921 for cancellation of these CTs.
(g) The Defendant denies the contents of paragraph 16(g) of the Third Amended Statement of Claim and denies any prior interest of the Plaintiff in CT 28820 and CT 31921.
[20] Allegations of fraud are categorically denied in relation to the requisition and obtaining of Certificates of Title Numbers 28820 and 31921 over DP 7340 and 7341. In para 16(c) the Defendant denies having knowledge of any prior title or interest existing over the subject land it obtained Certificates of Title. Reference is made to Annexure 3 of the Deed of Conveyance which is alleged not to be making any reference to the subject Lots. Consequently the Defendant did not have any constructive and/or actual knowledge that the subject lots were intended to be transferred to the Plaintiff. In addition, at the time of the execution of the Deed, the then representatives of the Defendant were satisfied that the only lots registered in the Plaintiff's name were all mortgaged.
[21] In reply the Plaintiff claims that the defendant is estopped from denying and/or applying for new certificates of title subsequent to the execution of the Deed. By way of relief the defendant seeks a plethora of orders as follows:-
"(a) A Declaration that is has complied fully with the terms of Clause 13 of the Deed of Conveyance and that the Plaintiff has no claim nor right to the forty (40) lots referred to in Annexure 4 of the Deed of Conveyance.
(b) A Declaration that the Second Defendant had no grounds for signing and lodging the caveats.
(c) A Declaration that the Third Defendant had no grounds for registering the caveats.
(d) A Declaration that the Defendant is the bona fide registered proprietor of the land contained in Certificates of Title 31921 and 28820.
(e) A Declaration that there was no unencumbered land available for transfer by the Defendant to the Plaintiff at the time the Deed of Conveyance was entered into.
(f) A Declaration that any purchaser from the Plaintiff shall comply with the provisions of the Deed of Conveyance.
(g) An Order that the Plaintiff provide full particulars of the transfer of any land to any third party to the Defendant.
(h) Special damages in the amount of $21,548,000.00.
(i) An order that the Plaintiff provide the Defendant with copies of all Sale and Purchase Agreements together with the Deeds of Covenants in the manner prescribed by the Deed of Conveyance dated 02nd June 1995 in accordance with Clause (6) of Deed of Conveyance.
(j) Special damages (to be calculated before trial) for outstanding land rates and service charges.
(k) General damages for failing to comply with Clause (6) of the Deed of Conveyance.
(l) General damages.
(m) Indemnity costs against the Plaintiff of and incidental to this action.
(n) Such further and other as this Honourable Court deems just."
[22] Clearly, the facts as pleaded gives rise to some real issues warranting judicial inquiry and decision. Presently, the Defendant is vested with the subject property claimed by the Plaintiff. One would have thought that it would be in the Bank's interest to resolve the issue of the title over the subject land, which is seriously contested. How would the Controller resolve the issue if the Defendant does not co-operate? Equally important, if the contents of the statement of defence forms the basis of the cause(s) of action in the counter claim, the court will be required to adjudicate the whole action and not the issues the Bank wants to be decided albeit in its favour. Why is the Controller opposed to the Court deciding the entire dispute over the subject properties? Does it seek an answer in its favour only to the exclusion of the defendant's counter-claim? These questions do give rise to the consideration of the various provisions of the Banking Act, which I will discuss next.
[23] Whilst the Act provides for a multitude of matters pertaining to the banking industry, I will limit the discussion to the narrow issue of controllership of a financial institution. The object or purpose of Act is provided for in the preamble as follows:-
"To provide for the regulation of the business of banking; providing for the licensing and supervision of financial institutions carrying on banking business, in the interests of the soundness of the financial system and to minimise detriment to the interests of depositors and creditors of financial institutions and for purposes connected therewith"
(emphasis added)
[24] Part V captioned "Control Over Licensed Financial Institutions", deals with the control of licensed financial institution "becoming unable to meet its obligation or suspending payments" (S. 29(1)), and "carrying on business in a detrimental manner to the interest of its depositors or creditors, without being able to meet its obligation," (S. 30(i)(c)). The Reserve Bank under S. 30 (2) is empowered to take a number of action against such an institution. One such course open to the Reserve Bank is to put the institution under controllership. Once an institution is placed under controllership the Reserve Bank must gazette the same; S. 30(4). For the purposes of the present action, a notice relating to the Plaintiff was duly gazetted. The bank in this case was placed under the controllership of the Reserve Bank of Fiji with effect from 1st April 2007.
[25] Once a declaration of controllership is made the management of the financial institution vests with the controller. After such a declaration, the Reserve Bank may appoint a person or it may itself assume the role of a Controller.
[26] A Controller in due execution of the power conferred to it must have regard to the following matters:-
"Considerations affecting exercise of powers by Controller
42.-(1) In exercising the powers conferred by this part of this Act a Controller of a licensed financial Institution shall have regard to-
(a) the need to maintain public confidence in the operation and soundness of the financial system and to minimise detriment to the interests of depositors and creditors of the licensed financial institution;
(b) the need to avoid significant damage to the financial system;
(c) to the extent not inconsistent with the considerations referred to in paragraphs (a) and (b) of this subsection, the need to resolve as quickly as possible the difficulties of that institution;
(d) to the extent not inconsistent with the considerations referred to in paragraph (a) (b) and (c) of this subsection, preserving the position of creditors and maintaining the ranking of claims of creditors; and
(e) the advice of the Reserve Bank."
(emphasis added)
S. 43 of the Banking Act (Act)
[27] I will now turn to S. 43(1) and (2) of the Act under which provision the present application is made. These provisions provide:
"Moratorium
43.-(1) Where a licensed financial institution is declared to be subject to Controllership, no person shall-
(a) commence or continue any action or other proceedings, including proceedings by way of counterclaim, against that licensed financial institution;
(2) Notwithstanding subsection (1) of this Section, an action or proceeding may be commenced or continued against a licensed financial institution for the purpose of determining whether any right or liability exists if the leave of the Controller or the High Court is obtained.
(emphasis added)
[28] S 43(1)(a) places a moratorium on a number of matters pertaining to the financial institution under Controllership. Amongst those matters is that no person shall "commence or continue with any action or other proceedings by way of a counter-claim against that financial institution." The application for my consideration concerns a "counter-claim".
[29] A "moratorium" connotes a suspension of a planned activity. It is "a legally authorised period of delay in the performance of a waiting period set by the authority"; (See Merrian Webster of Law (1996)). Therefore in the context of S 43(2), it translates into a "temporary suspension" as opposed to a permanent curtailment of the institution or continuance of a legal action against a financial institution under Controllership; Batkin Holdings Ltd -v- DFC Ventures Ltd (1994) 1 NZLR 629 at 631 per Thomas J.
[30] The legislative intent of the moratorium is plainly reflected in the Hansard Report of 15th February 1995. At page 2438 of the Hansard, the then Minister responsible in presenting the Bill to the House of Representatives unreservedly stated that "...such claims are not destroyed but their enforcement is suspended during Controllership...."
[31] S. 43(2) provides that "Not withstanding sub section (1) of this Section, an action or proceeding may be commenced or continued against a licences financial institution for the purpose of determining whether any right or liability exists if the leave of the Controller or High Court is obtained."
[32] In moving the Banking Bill 1995, the Hon Minister in respect of clauses 43(1) & (2) expressly stated:
"Clause 43 provides for a moratorium on claims existing against Institution in controllership. Without a moratorium, the task of the controller would be impossible. Such claims are not destroyed but their enforcement is suspended during Controllership to give the controller a breathing space in which to act. The clause permits actions or proceedings to be taken, notwithstanding controllership, to ascertain existence of rights or obligations. This, we believe, is a useful provision, at least allowing clarification of rights even in a Controllership situation. The moratorium does not affect existence of securities and allows full freedom of action against a licensed financial institution in Controllership in respect of contracts entered into or obligations incurred after commencement of Controllership."
(emphasis added)
[33] Following the decision of the House of Lords in Pepper -v- Hart [1992] UKHL 3; [1993] AC 593, it is settled law that as an aid to interpretation of Statutes, the Court may refer to extrinsic material such as Hansard Reports. Our Supreme Court (Honourable Lord Cooke of Thorndon, and Honourable Sir Anthony Mason J SC) in Bull v Commissioner of Inland Revenue (Majority Judgment [1999] FJSC 5; CBV0005.1998S (10 March 1999) tacitly adopted and applied Pepper -v-Hart (supra) as:
"It is now widely accepted in many common law jurisdiction that recourse by the courts to legislative history and extrinsic materials is a legitimate aid to interpretation. For present purposes it is sufficient to refer to the decision of the House of Lords in Pepper v. Hart [1992] UKHL 3; [1993] AC 593 where the rule excluding reference to Parliamentary materials as an aid to statutory construction was relaxed so as to permit such reference when-
(1) the legislation is ambiguous or obscure or leads to absurdity,
(2) the material relied upon consists of statements by a Minister or other promoter of a Bill together with such other Parliamentary material as is necessary to understand such statements, and
(3) the statements are clear".
(emphasis added)
[34] Furthermore, Madam Justice Shameem in State -v- Naqa & Ors, Suva High Court Criminal Case No HAA0023.2003 (18th July 2003) noted that "Hansard containing statement by the Minister introducing the Bill was of a particular relevance," and therefore should be available to the court as cogent evidence to elucidate the intent, purpose and meaning attributed to a particular provision of or an Act as a whole by the Legislature.
[35] S. 43(1) & (2) has not been subjected to judicial scrutiny since its enactment. The reason being, since its enactment, no financial institution has been placed under controllership. For this reason of the novelty of the issue for determination, it is permissible to refer to the Hansard, although on the face of the legislation, there is no apparent ambiguity as to S. 43(2). The requirements of and the criteria for granting of leave is not prescribed by the Act. What the Act has bestowed to the Controller or Court is a very wide discretion. Whilst I accept that the prescription of criteria is not an absolute necessity, but for the reason of maintaining consistency it is a very helpful guide. Furthermore, it will in future cases provide a guide for the parties to a litigation faced with such an application. For this reason I intend to consider this subject at length. The Honourable Minister's speech for this purpose is a good starting point. His speech as reproduced in paragraph 32 is succinct and helpful.
[36] From the speech, it is patently obvious that a moratorium is necessary to allow the Controller to effectively perform his/her statutory duty. It is equally important to allow the potential litigants to take legal proceedings against the financial institution. In order to balance the two diametrically opposite demands, the Parliament vested power to the Controller and the Court to decide the question of whether leave to pursue a particular claim against a controlled financial institution may be given to a claimant. In reality s/he is the most appropriate and qualified person to deal with the issue. In exercising the discretion s/he must do with great candour, fairness and rationality. By simply refusing an application for leave unceremoniously, for that matter the Controller in preference to an application to the court decline to exercise the power, it tantamount to abdication of the same. It is dereliction of his/her statutory duty. In the order of things, it is only after the Controller has exercised the powers conferred to it, an application to the court for leave under S 43(2) ought ordinarily to be made. Although it is not an express legislative requirement, this would be the most practical course to take. Because it is the Controller who is vested with the statutory function, as such s/he posses the requisite knowledge of the institution. A Controller exercising the jurisdiction impartially will no doubt come to a fair decision. This in turn will result in fewer and only warranted applications to Court. The present stance taken by the Controller to decline every application is a clear case of failure to exercise the discretion.
Why need leave?
[37] The reason for the leave is expressly set out in the Honourable Minister's speech, quoted above. It needs no further elaboration. However, a similar provision is contained in the Reserve Bank of New Zealand Act 1989; S 122. In addition, New Zealand also has a similar provision for corporations placed under statutory management pursuant to Corporations (investigation and Management) Act 1987; S42. Both these provisions of both the Acts in New Zealand have been subjected to a thorough judicial scrutiny in a number of cases.
[38] S.122 of the Reserve Bank of NZ Act 1989 relevantly provides:
"Moratorium
(1) Where a registered bank is declared under section 117 of this Act to be subject to statutory management, no person shall-
(a) Commence or continue any action or other proceedings, including proceedings by way of counterclaim, against that registered bank:
..........................................
(2) Notwithstanding subsection (1) of this section, an action or proceeding may be commenced or continued against a registered bank for the purpose of determining whether any right or liability exists if the leave of the statutory manager or the High Court is obtained.
[39] S. 42 of the Corporation (Investigation and Management) Act 1989 relevantly provides:
"Moratorium
(1) Where a corporation is declared under section 38 of this Act to be subject to statutory management, no person shall-
(a) Commence or continue any action or other proceedings, including proceedings by way of counterclaim, against that corporation............................
(2) Notwithstanding the provisions of subsection (1) of this section, an action or proceeding may be commenced or continued against a corporation for the purpose of determining whether any right or liability exists if the leave of the statutory manager or the Court is obtained."
[40] In New Zealand the reasons advanced for the requirement of leave under both the Acts are held to be:
(a) to prevent pointless and unnecessary proceedings; Downer & Co Ltd -v- A B Herman & Ors, High Court of New Zealand (Christchurch) CP 321/89 at P. 10. Leave is permissible only in cases which has the purpose of deciding a right or liability; Kraseman -v- DFC New Zealand Limited [1990] 3 NZLR 606
(b) certain disputes are capable of and will actually be resolved in the ordinary course of Controllership; Joseph & Another -v- Equiticorp Nominees Ltd (in Stat Management) NZ CLC 96 - 382, instead of diverting Controller's attention, resources and expanding substantial funds to defend court proceedings; Re Gordon Grant and Grant Pty Ltd (1983) 2 QD R. 314.
(c) A moratorium is designed to prevent the bank's affairs from rapidly falling in to a state of disorder and so to allow a breathing space within which the situation be assessed and options considered by the Controller.
(d) It is a screening mechanism in that the statutory managers will not be burdened by precipitate or unnecessary litigation when carrying on their statutory functions; Batkin Holdings Ltd -v- DFC Ventures Ltd [1994] 1 NZLR 629 at 632. Where adjudication becomes absolutely necessary to resolve a dispute then only it must be pursued; Joseph & Anor v Equiticorp Nominees Limited (in stat management) (1990) 5 NZCLC 66, 358 at 65 360.
(e) Where possible and authorised, the Controller must be able to assume control of and preserve the business of a financial institution; Wilson & Others -v- Aurora Group Ltd (1989) 4 NZ CLC 65, 275 per Master Williams QC. This is to protect the position of the shareholders, creditors and beneficiaries of the financial institution; Batkin Holdings Ltd -v- DFC Ventures Ltd (supra)
(emphasis added)
[41] Due to the similarities in the legislative provisions, the reasons advanced in New Zealand for leave is very persuasive and in fact applicable to our Act, especially when considered in conjunction with the Minister's speech. As such, in my view it is important for a Controller to bear the above when considering an application under S 43(2) of the Act. In the end, the Controller or the Court must ask the question as to whether the proposed or pending action has any unresolved issues of rights or liabilities requiring a judicial decree.
[42] His Lordship, Mr Justice Jitoko has considered and compared S112 of the Reserve Bank of New Zealand Act and S 43 of our Banking Act 1995 in Pita Allan Rigamoto & Anor -v- NBF Asset Management Bank, Suva High Court Civil Action No: HBC0069.2000 (24/10/2009). At page 4 of judgement, His Lordship stated that "the principles of law applicable to the moratorium under S 122(2) of the Reserve Bank of NZ Act are the same as those under S 43(2) of our Banking Act".
What are the criteria or guiding factors for granting leave?
[43] The Act is silent as to any criteria which must/may be taken in to account in considering an application for leave under S 43(2) of the Act. However, in the forefront are the two primary competing interests. Firstly, the Controller must be permitted to execute his/her statutory duty from the time of assumption of the office. Secondly, is the right of a person to have his/her grievance determined by a court of law and/or an independent Tribunal. Thus access to Court should not be unreasonably withheld by the court for any unmeritorious reason. To do so would countermand the notion of access to justice. I may add that a Controller is the best person to decide as to whether a party needs to resolve the case by engaging other forum or in the due process of Controllership.
[44] Certainly, reading through the Hansard Report, it is patently obvious that S 43(1) is not an absolute bar to commencing action against a financial institution under Controllership. But any such action must be brought with the leave of the Court or the Controller. The requirement of prior leave certainly requires an exercise of discretion.
[45] In other words the Controller or Court both may or may not grant leave. Whilst the Act confers to the Controller and the Court with an unfettered discretion, it must be exercised fairly and justly. In doing so, the court will have to consider some factors, although there cannot be an exhaustive list of the same. Whatever the criteria be, the emphasis must be on doing justice to the particular facts and parties of the case.
[46] In view of this being a new issue for determination, I find it prudent to refer to the consideration of identical or similar issue in other jurisdictions in all analogous situation.
[47] Mr Naidu very helpfully referred me to cases dealing with the requirement of leave to commence proceedings against a company in liquidation under the Companies Act. The gist of the statutory prohibition under the various States Corporation Laws in Australia is that, where a company is being wound-up by the Court or Provisional Liquidator, no action could possibly be commenced or proceeded with, without prior leave of the Court.
[48] The leading judgment on the granting of leave to commence an action against a company in liquidation in Australia is that of Master Lee QC in Re Gordon Grant and Grant Pty Ltd. [1982] 1 ALLC 196. At page 199, His Honour set out the guiding criteria for considering an application for leave to commence or continue with the action or proceeding against a company in liquidation as follows:-
"1. An application for leave nunc pro tunc to commence any action or to continue any action which was commenced without obtaining leave may be given if good cause is shown on the merits: Australian Company Law and Practices (Wallace and Young) p. 654.
2. Section 230(3) ensures that assets of the company in liquidation will be administered in accordance with the Act and that no person obtains an advantage to which, under the Act, he is not properly entitled. It enables the Court effectively to supervise all claims brought against the company: Re Sydney Formworks Pty.
3. There must be no prejudice to the creditors or to the orderly winding-up of the company if the action is allowed to proceed: Re Sydney Formwork. Pty.(supra); Re A.J. Benjamin Ltd (in liq.) and the Companies Act (supra).
4. The applicant's claim must be of a type which should proceed by action to judgment, rather than one which is capable of being dealt with in an ordinary way by proof of winding-up: Century Mercantile Co. -v- Auckland Provincial Fruitgrowers' Society (1929) N.Z.L.R. 272; Batterson -v-Miella Constructions Pty. Ltd. (sic) [1967] VicRp 40; (1967) V.R. 349.
5. Leave is more likely to be granted where there is an insurance company standing behind the company to pay any judgment which the plaintiff might obtain against it. If successful, such an action is unlikely to prejudice the creditors or the company; Re Sydney Formworks Pty. Ltd. (in liq.) (supra): Re A.J. Benjamin (in liq.)
6. A condition is often imposed that the plaintiff will not enforce any judgment against the company without leave of the Court. This ensures that the Court retains ultimate control: Re Sydney Formworks Pty. Ltd. (in fig.) (supra): Re: A. J. Benjamin (in liq.) (supra).
7. Mere delay itself in applying for leave will not prevent leave being granted. Leave is not to be withheld simply and solely as a punishment: Re A.J. Benjamin (in liq.) (supra).
8. Leave may be granted after the expiry of the relevant period of limitation, to continue an action commenced within the limitation period without the leave of the Court."
(emphasis added)
[49] Weinberg J (who apparently is/also one of our Justices of Appeal of the Supreme Court) sitting in the Federal Court of Australia, when speaking on the subject said that the aforesaid principles "appear to be well settled"; BHG Nominees Pty Ltd. -v- Ellis Young Investment Ltd. & Ors. [1998] FCA 1019.
[50] In my opinion, these principles are helpful because they deal with statutory provision with a similar purpose. In addition the predicament of a limited liability company in liquidation is identical or similar to that of a financial institution under controllership.
[51] The second group of authorities referred to were those, where leave to commence an action or proceeding was considered under S 42 of the Corporations (Investigation and Management) Act 1989, and S 122 of the Reserve Bank of New Zealand Act. I find these authorities most relevant because the provisions prohibiting the commencement of any action and the requirement of leave are identical to S. 43 of our Banking Act.
[52] Cases referred to me by the Counsel were Wilson -v- Auroro Group [1990] NZLR 61 (per Master Williams QC), Joseph & Anor. -v- Equiticorp Nominates Ltd. (in statutory management) NZ CLC 96, 832 (per Wylie J) Morris -v- Equiticorp Finance Ltd. [1990] 5 NZ CLC 66, 465 (Wylie J), Kraseman -v- OFC New Tompkins J) Zealand Ltd. [1990] 3 NZLR 606 in Downer & Co. Ltd -v- Herman (unrep) Christchurch High Court, CP 321/89 (16th March, 1992) per Holland J.
[53] Generally, reading and dissecting from the decisions in the above case, the common criteria or factors considered by court in granting leave to commence or continue with all action under both the Acts in New Zealand are as follows:
(i) strength of the Applicant’s case.
(ii) seriousness of the issue vis-à-vis from the litigant's as well as the institution's perspective.
(iii) possibility of the resolution of the dispute during the course of Statutory Management.
(iv) whether resolution of the claim is necessary for the carrying out of the Statutory Management.
(vi) The nature of proceedings and its impact on the statutory Management and entity at large.
(vi) Delay in commencing the proceedings.
[54] However, let it be emphasised that in all cases their Lordships acknowledged that:
(i) the factors are not to be treated as exhaustive.
(ii) all the factors may not be relevant or applicable to be peculiar facts of a case.
[55] Initially the applicable list factors was formulated and stated by Wylie J in Morris -v- Equiticorp Finance Ltd (in Stat Management) (Supra) under the Corporations (Investigation and Management) Act 1989. Wylie J at page 66, 471 of the report stated the criteria as follows:-
"1. The strength of the applicant's case. I doubt it is desirable to specify a standard to be applied - eg a serious issue to be tried, a prima facie case, or a strong case. But at the not a hopeless one. Thereafter it should not be a matter of overcoming a defined higher threshold. If there is a case at all its strength is but one of the factors to be considered against the statutory objectives.
2. The amount or seriousness of the issue involved from the point of view of both applicant and the statutory manager.
3. Whether the issue is likely to be resolved in the ordinary course of statutory management.
4. Whether it is necessary or desirable for the issue to be resolved in order for the statutory management properly to be carried out.
5. Whether the termination of the statutory management - leading inevitably to either winding up or return to normal operations - is likely to be postponed for so long as to delay unfairly resolution of the applicant's case.
6. Whether the applicant's right to have his claim determined after cessation of the statutory management would be rendered nugatory by delay.
7. Whether in the event of winding-up an application for leave is likely to attract considerations favourable to the applicant.
8. Whether the litigation would impede the Statutory Management.
9. Whether the litigation would dissipate the funds to the detriment of creditor or shareholders.
10. Any special feature of the applicant which puts him/her in different positions.
(emphasis added)
[56] Subsequently in Kraseman -v- DFC New Zealand Limited [1990] 3 NZLR 606, Tompkins J (who was a former Justice of Appeal of our Court of Appeal) whilst acknowledging the ten factors stated by Wylie J in Morris -v- Equiticorp Finance Ltd (supra) observed S. 122 of the Reserve Bank of New Zealand Act does not prescribe any criteria to guide the Court. His Lordship whilst adopting some of the criteria from Justice Wylie's list formulated and added some of his own. His Lordship, Mr Justice Tompkin's criteria were as follows:-
(i) The strength of the application case
(ii) The seriousness of the issue
(iii) The resolutions of the issue during statutory management.
(iv) Whether proceeding is necessary for the carrying out of the statutory management
(v) The nature of proceedings
(vi) Delay in commencing the proceedings.
[57] On the criteria, Holland J in Downer & Co. Ltd -v- B Harman & Other High Court of NZ (Christchurch) (Unrep) CP. 321/89 at page 10-96 of the judgement said:-
"It is in my view it is unwise to limit the unfettered discretion given to the court in this relatively modern legislation but obviously consistency in approach is desirable. I am happy to adopt the criteria adopted by Tompkins J. but I would not expect it to be considered that those criteria will necessarily apply in every case, nor that they will be exhaustive".
(emphasis added)
His Lordship opted to follow the criteria adopted by Tompkins J with expressly noting that the criteria may not fit in all the cases. This does not necessarily imply that His Lordship rejected the criteria set-forth by Wylie J, because a number of them are same.
[58] Subsequently, Thomas J in Batkin Holdings Ltd -v- DFC Ventures Ltd [1994] 1 NZLR 629 at 632 said that S. 122 is not:
"... intended to preclude valid or meritorious claims against a registered bank. To prevent such a claim being brought, if it were well-founded, would be to prefer other creditors whose may be no more nor less valid or meritorious than that of claimant. It may well be, of course, that such a claim should be deferred until a statutory manager has the opportunity to rectify the failure of the bank or minimise the damage ................But to adopt that course is not to bar the claim."
(emphasis added)
His Lordship stated that the moratorium is "...a screening mechanism so that the statutory managers will not be burdened by precipitate or unnecessary litigation when carrying out their statutory function," (see page 632)
His Lordship was of the view that:-
"The key question, to my mind, therefore is whether the applicant can demonstrate that it has an arguable case. Other issues, such as any delay in pursuing the claim, may have a bearing on the question of leave, but I do not apprehend that a claimant with a legitimate claim be turned away simply because its claim could or might hinder the conduct of the statutory management...."
(emphasis added)
[59] In Pascoe Ltd -v- DFC Overseas Investments Ltd [1994] 3 NZLR 627 after referring to the decided cases at pages 629 & 630, Gallen J (a former Justice of Appeal of our Court Appeal) concluded that:
"There are therefore some disagreements on the authorities as to the appropriate approach. On examination, I am not sure that those differences are in the end more than a matter of words. The case which is not hopeless is one which must have some prospects of success. An arguable case is one where tenable arguments can be put forward so that it cannot immediately be predicated that the proceedings will fail. Perhaps it could be said that if an applicant can succeed in convincing the Court that if it could succeed in establishing the factual basis upon which the claim depends, the application of relevant legal principles would lead to a successful claim, then leave should be granted".
(emphasis added)
[60] Barker J (a former Justice of Appeal of our Court of Appeal) in DFC NZ Ltd (in Stat Man), Re Callis [1996] NZCLC 260543 at 26 096l preferred the approach of Thomas J in Batkin Holdings (supra).
[61] I find all the authorities cited above and referred to by counsel very helpful for considering an application for leave under S. 43 of the Banking Act 1995.
[62] In considering an application for leave under the Act, it must be borne that:-
(a) The power to grant leave is restricted to an action or proceeding which has the purpose of determining whether a right or liability exists; Kraseman -v- DFC [1990] 3 NZLR 606 of 610 and see also S 43(2).
(b) Further the Act itself does not prescribe any criteria for the granting or otherwise of leave to commence or continue with an action or proceeding under S 43. However, a court in considering an application for leave must take in to account the general policy of the Act and that the right of a litigant to have his/her claim determined in a court of law. By virtue of S 43(1)(a) this latter right of a litigant is interfered with, "in a manner as being one which is at once dramatic and automatic"; Wilson -v- Auroro Group [1990] 1 NZLR 261.
(c) The onus is on the applicant to "establish a legal and factual foundation for the claim. In such a case, the Court is not only permitted to, but probably will be required "to review the evidence in order to ascertain whether there is a proper basis for the allegations" made; Batkin Holdings (supra).
(d) An application for leave to commence a proceeding against a financial institution under Controllership must be made by an Originating Summons; Re DFC New Zealand Ltd (in Stat man) [1996] 7 NZCLC 260953 at 260955 (per Barker J). On the other hand, where an action is already filed, leave nunc pro tunc to continue with the same is to be made by an ordinary interlocutory summons with supporting affidavit.
(e) Where the Controller vigorously opposes the grant of leave, s/he must comprehensively set out the reasons for it in an affidavit. Where a claim, to his/her mind is hopeless, it must accordingly be stated. However, when it becomes obvious that there is in extant a right or liability that needs to be resolved, the Controller must explain how s/he intends to deal with the matter without the need for an action or proceeding in court. Even if the matter is likely to be resolved during the course of the controllership, s/he must depose the same. Likewise, where a particular proceeding or action will or may become in impediment to the exercise of the statutory function, the onus is upon the Controller to disclose the same in detail. In doing so, the Controller in my view must pay regard to his/her statutory function, as well the resolution of meritorious issue pertaining to the subsisting rights or liabilities of a litigant.
[63] Since the Act gives the Controller and Court an unrestricted discretion, the statement of some criteria will provide valuable guide to the parties, Controller and Court in future. It will assist in maintaining consistency when considering such an application. In addition, the litigant or the Controller will be able to adduce relevant and cogent evidence in making or opposing an application. However, in the same vain I concur with the views of their Lordships in the cases cited above that:-
(a) the statutory discretion is unfettered and any criteria introduced by the court are not designed to fetter the discretion. It is for the purposes of maintaining consistency and offering some form of future guidance.
(b) the criteria do not necessarily apply uniformly to the facts of each and every case.
(c) by no means any statement or listing of criteria is intended to be exhaustive. However, some of the criteria will commonly apply in all cases.
[64] Having considered the authorities cited above, when taken together with the intent and purpose of our legislation, I propose to adopt the following criteria:-
(a) The strength of the applicant's case. It must be considered in light of the rights or liabilities which the proceeding or action is set to determine.
(b) The seriousness of the issue to be determined by an action or proceeding.
(c) Whether judicial determination of the issues in the action is necessary for the controllership and/or for the determination of the issue at large between the parties.
(d) Delay in commencing or continuing an action or proceeding.
(e) Whether the issue is likely to be resolved in the ordinary course of controllership.
(f) Whether the applicant's right to have a claim determined by an impartial tribunal is likely to be defeated at the conclusion of the controllership, especially if the institution is to be wound-up.
(g) Whether the litigation may impede the prompt and efficient execution of the Controller's statutory duty. This must be considered in conjunction with para (c) above.
(h) Further, (which is relevant to the fact of this case but not considered by the Courts in New Zealand) is where there is a counterclaim, the court must pay heed to the statement of defence to the financial institution's claim. Where both the defence and counter-claim are so intertwined, leave merely becomes a formality. A cause of action in a counterclaim which is independent of the plaintiff's claim or the defence thereto, is to be treated in the same manner as a originating claim.
[65] I will now consider the present application in light of the above criteria.
(a) Strength of Applicants' case
[66] Wylie J in Morris -v- Equiticorp (supra) was of the view that it is not desirable to specify a standard for the proposed action. As long as the case is not hopeless, leave ought to be granted. Thomas J in Batkin Holdings Ltd (Supra) at 632 held that the applicant must have an arguable case. "An arguable case is one where tenable arguments can be put forward so that it cannot immediately be predicted that the proceeding will fail". Poscoe Ltd (Supra) at 630 per Gallen J.
[67] Since S 43(2) permits the commencement or continuance of a proceeding against a financial institution "for the purposes of determining any right or liability". In my view, this legislative intent connotes that the applicant must be able to establish an arguable case. Without there being an arguable case, there will be no rights or liabilities that warrant the granting of leave to commence an action or proceeding. To the contrary, it will interfere with the prompt and efficient execution of the Controller's functions. Therefore, I hold the test to be one of an arguable case before leave may be granted.
[68] In the case before me, the counterclaim is intrinsically linked to the statement of defence filed in response to the claim filed by the Plaintiff bank itself. The subject matter of this action, that is, the land is already before the Court at the instigation of the Bank and not the defendant. As it stands, the defendant for all intent and purpose is the registered proprietor of the said land. The Deed by virtue of which the subject land was alleged to have been conveyed to the Bank is now challenged. At stake for the bank is a substantial sum of money held up in the subject property. At least there is evidence by the Bank that the whole transaction encompassed by the Deed amounted to $8,000,000-00. Also on the premise of the Deed, the Bank discharged the securities for the debt owed to it. It now holds no security for the monies owed by the defendant. In my view, both the Bank's claim and the defendant's defence is an arguable one. Equally important, the counter-claim is not a hopeless one.
(b) Seriousness of the issue
[69] Seriousness of the issue ought to be looked at from the perspective of all the parties to action or proceeding. From the view point of the Bank, it seeks a transfer of CT 28414, 28383 and 28598 to it. Presently the defendant is the registered proprietor of the said properties. In order to succeed, the Bank relies on the number of cause(s) of action including fraud, misrepresentation, breach of duty, breach of the terms and conditions of the Deed and so forth, to which I have already alluded to at the beginning of this decision. If Bank does not acquire title to the said properties, it stands to lose a substantial sum of money, which really is debt owed by the Defendant. For the release of the debt, it is alleged by the Bank that the Deed was entered into. The consideration recorded in the Deed is $8000,000-00. One of the Controller's duty under S 42(b) is the "...need to avoid significant damage to the financial system" of the controlled institution. Undoubtedly, the issue is a serious one. His Lordship Mr Justice Singh in NBF Asset Management Bank -v- Taveuni Estates Ltd, Suva High Court Civil Action No. HBC0254.2008, which was filed subsequently for removal of certain caveats, expressly noted that:-
"... The plaintiff's [the Bank] claim in Civil Action No. 543/04 is that it entitled to 40 certificates of title. Whether it succeeds or not, only the trial will tell. It is not a claim, which I can say is doomed to fail."
(emphasis added)
His Lordship, in that action concluded that "the caveats be extended "...until the disposal of Civil Action 543/04." The direction by the Court is self indicative of the outcome of the application for leave to continue with this action. An application such as the present one is not necessary.
From the Defendant's perspective, it has fully complied with the Deed as such it does not owe any money to the Bank. In addition, it has conveyed to the bank all the land which it was obliged to do so by virtue of the Deed. On that basis it claims that it is the registered proprietor of the CT 31921 and CT 28820.
[70] The other serious issue relates to the issuance of CT 28286 and 28202 for land situated in Levuka and not Taveuni despite the Banks' request Nos: 363858 and 363859. These Certificates of Title ought to be properly adjudicated to reflect in the land registrar, in the Registrar of Titles custody. This has a much wider ramification as the hallmark of the Torrens System is the Register.
[71] In addition, the determination of this issue is important for both the Bank am Defendant because both have the desire to convey titles to third parties. If the issue of the titles is not resolved, it may have detrimental effect for the Third Parties.
[72] Thus, in my opinion, the counter-claim does raise serious issues not adequately covered by the claim which may leave issues between the parties unresolved. This may later give rise to a multiplicity of suits as has been the case so far. There is judicial comity in resolving all issues between the same parties over a subject matter in one action in lieu of several suits. Apart from that, a latent action would directly affect the prompt and efficient process of controllership.
(c) Delay
[73] The issue of delay does not arise. The counter-claim was filed on 28th March, 2007. At that point in time the Bank was not under Controllership. Furthermore, the Bank has actively been involved in the conveyance of the alleged property contained in the Deed since 1995. Despite having encountered difficulties, the bank did not commence this action until 2004. Although the action was filed in 2004, the writ has been amended three times, the last of which was on 3rd July, 2006. So far much of the delay has resulted by the bank's pursuance of meaningless interlocutory applications. A controversial matter as this certainly cannot be resolved by interlocutory applications. A classic example is the Controller's attitude in this case to decline the leave, despite him and his counsel's knowledge that there are numerous cases pending in court pertaining to or attached to the subject land. In any event the delay has no bearing on this application.
(d) Issue resolved in the ordinary course of Controllership
(g) Applicants right to have its claimed determined by an impartial tribunal would not be defeated at the conclusion of the Controllership
[74] It is convenient to deal with these two factors together. Where the Controller is able to resolve or for that matter any of the issues of rights or liabilities are likely to or will be resolved in the ordinary course of the Controllership, an action or proceeding in court is not necessary. In such a case, the Court would inevitably decline leave under S 43(2). The bottom line is that, irrespective of the means, in the end a warranting issue of determination of rights or liabilities ought to be resolved at the conclusion of the Controllership, especially where the process will lead to the cessation of the operations of the institution.
[75] Where the Controller is desirous of resolving the matter in the ordinary course of Controllership and despite that a party applies for leave, the Controller must depose an affidavit outlining how s/he intends to resolve it and further the duration of time it may take to resolve the same. In addition, the Controller must explicitly advert to the facts that the subject dispute would be considered and not simply disregarded, during the process of the Controllership.
[76] It may be a case, where the Controller may require further time to consider the dispute S 43(1) is enacted for that purpose and I have no doubt if sufficient evidence and reasons are provided, the Court will accede to the request.
[77] In this action, on 25th September 2007, the Solicitors for the Defendant wrote a very comprehensive letter to the Governor of Reserve Bank, seeking his leave to continue with the counterclaim in accordance with S43(2). On 10th January, 2008, the Acting Deputy Governor, Mr Barry Whiteside responded to the letter. In the letter, lie questioned the reasons for simultaneous applications for leave from the Court (which was/is still pending) and the Controller. In any event, in the concluding paragraph of the letter, Mr Whiteside formed a firm opinion that the counter-claim does present an arguable case in law or facts. On that basis, the leave was declined.
[78] Thus for the purposes of this action, the Controller has ruled that the counter-claim has no merits. Implicit in the decision is that the counterclaim would not be considered or resolved by the Controller in the ordinary process of controllership. It is clear that if leave is now declined by the Court, the applicant's right to have its claim determined would be defeated upon the Controller finalising the controllership.
(e) Will Litigation impede the prompt and efficient execution of the Controllership?
[79] The short answer to this question was submitted by Ms Chan. That is, the parties must convene the pre-trial conference and proceed with the case to trial. I concur with in her views entirety. This action will not impede the statutory functions of the Controller. To the contrary, it will assist him in expediting the process of Controllership by getting rid of one of the most difficult cases, which has resulted in enormous legal expenditure and has remained unresolved for a considerable period of time. I will add here that the judicial resolution of the case, which is a necessity, will not meddle with the tenacity with which the process of Controllership is expected to be undertaken by the Controller.
[80] In this action the Bank is the Plaintiff. It has no desire to withdraw the action to allow it to be resolved through the Controllership. Equally important, it does not find this action as impeding the due process of Controllership. It will have to proceed with its action. Therefore the key to promptness lay in the hands of those who are directing these proceedings on behalf of the Controller. The Bank's counsel plays a pivotal role for expediting this action to trial. Energy now must be diverted to the case and not writing letters to the court as to the assignment of this file to a particular judge. Once the case is ready for trial, the Registry will assign a judge.
One thing for sure, the rights and liabilities in issue of the action as a whole, needs to be judicially determined. At least, the Counsel are in agreement on this point.
Conclusion
[81] In view of the above discussion, I am convinced that leave to continue with the counter-claim ought to be given, which I so grant.
Order:
(1) Leave is granted to the Defendant to continue with the counterclaim Under S 43(2) of the Banking Act 1995 against the NBF Asset Management Bank.
(2) Due to the importance of the issue Involved in this application, I will make no order as to costs.
J J. UDIT
MASTER OF HIGH COURT
7th April, 2009
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