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Pat Consulting Ltd v Matapo Ltd [2012] FJHC 1278; HBC237.2009 (8 August 2012)

IN THE HIGH COURT OF FIJI AT SUVA
CIVIL JURISDICTION

CASE NUMBER: HBC 237 0F 2009

BETWEEN:

PAT CONSULTING LIMITED trading as TEMO CONSULTING
Judgment Creditor

AND:

MATAPO LIMITED
Judgment Debtor

AND:

FIJI NATIONAL PROVIDENT FUND
Interested Party

Appearances: Mr. A. Vakaloloma for the Judgment Creditor.
Mr. S. Titoko for the Judgment Debtor.
Mr. G. O'Driscoll for A.K. Lawyers for the Interested Party.

Date/Place of Judgment: Wednesday, 08 August, 2012 at Suva.

Coram: The Hon. Justice Anjala Wati.

___________________________________________________________________________

JUDGMENT

CATCHWORDS:

CHARGING ORDERS – CONSENT JUDGMENT AGAINST JUDGMENT DEBTOR- POWER AND JURISDICTION OF COURT TO GRANT ABSOLUTE CHARGING ORDERS ON THE PROPERTY- CONSIDERATIONS GOVERNING GRANT OF ORDER ABSOLUTE- POWERS OF COURT TO GRANT EXTENSION OF JUDGMENT REGISTERED ON THE PROPERTY UNDER S. 104 OF THE LAND TRANSFER ACT CAP. 131-CONSIDERATIONS FOR EXTENSION TO BE GRANTED.

LEGISLATION:

THE HIGH COURT ACT, CAP. 13 ("HCA"): S. 32.
THE HIGH COURT RULES, 1988 ("HCR"): Order 15 rule 6 (2) (b) (i); Order 50 Rule 1(1) and (7).
THE PROPERTY LAW ACT, CAP 130 ("PLA"): S. 86.
THE LAND TRANSFER ACT, CAP. 131 ("LTA"): S. 104; S. 105(2).

CASES:

Roberts Petroleum Ltd v. Bernad Kenny Ltd [1981] EWCA Civ 10; [1982] 1 W.L.R. 301; [1982] 1 All E.R. 685. C.A.
Rainbow v. Moorgate Properties Ltd [1975] 1 W.L.R. 788, [1975] 2 All. E.R. 82, C.A.

___________________________________________________________________________

The Cause

1. The judgment creditor has applied for the interim charging order on the debtors properties being Certificate of Title Number 36990 to 37734 being Lots 1 to 42 on DP 9640 Part of CG 1585 and CT 36804 to be made final and for the properties to be used to satisfy the creditors debt.
   
2. A further order is sought that the Court grant an extension of the consent judgment which was registered on the property on 29 September 2009 under s. 104(2) of the Land Transfer Act, Cap. 131.
   
3. Interim charging orders were granted on the properties on 6 August 2009. At the time FNPF was not served and did not appear as an interested party.
   
4. The basis of the application is that there is consent judgment against the debtor in the sum of $624,156.25. Judgment was registered on the above properties on 29 September, 2009. The creditor could not make an application for renewal of the registration as a result of the events of 10 April 2009 and the closure of the Court. The creditor says that the debtor has not satisfied the judgment debt.
   
5. The Judgment Creditor says that it did not move to a transfer by way of sale because there are several proceedings in relation to the said debtor including a winding up action. The lands are also encumbered by the FNPF and the Fiji Development Bank. The FNPF was going to proceed to exercise their rights by way of sale of the property owned by the judgment debtor. The debtor has lodged proceedings in Court to restrain the FNPF from selling the properties. An order is therefore prayed for the charging orders to be made absolute on the said properties.
   
6. The debtor has no objection to the application however the interested party, the FNPF has.
   

FNPF's Position

7. On its right to be heard, FNPF argues that it is a first secured creditor having registered mortgages against the said titles. It says that its pecuniary interest and its actions of exercising its rights over the properties pursuant to its mortgages, entitles it to be heard on the issue. FNPF states that under Order 50 Rule 1 (7), the Court must hear it too.
   
8. The first ground of opposition is that the charging order application is founded under Order 50 Rule 1 of the HCR. It was argued that a Court can only exercise powers to impose a charge on a land under order 50 Rule 1, if it is authorised by any enactment. It was argued that apart from s. 104 of the Land Transfer Act, Cap. 131, which permits registration of a judgment on the titles, and not being a provision to impose a charging order, there is no other enactment which permits imposition of a charging order. There is therefore no legal basis for the any charging orders to be imposed on the debtor's properties.
   
9. It was argued that the mortgages have not been redeemed by either the judgment debtor or the judgment creditor. FNPF says that under the mortgage it has exercised its rights to enter into possession of all the properties. It has put in motion action to foreclose the property. It proceeded on 25th August, 2009 to sell the properties by auction but the bids did not realise the reserve price. The debtor and Herbert Construction, another creditor had challenged the right of the FNPF to exercise its powers under the mortgages and other securities. The Court delivered a ruling refusing to restrain the FNPF from realising its securities.
   
10. FNPF also argues that under s. 105 of the Land Transfer Act, the judgement which was registered on the properties has ceased to exist as the judgment creditor has not effected a sale arising from the said registration within 6 months of the registration of the judgment. FNPF says that there is no provision in the Land Transfer Act for extension of the registration. FNPF says that under s. 105 (2) of the Land Transfer Act, an extension can only be made if a sale has arisen.
    
11. FNPF states that even if there was power to grant charging orders, the judgment creditor does not obtain any priority over its charges and encumbrances. The judgment creditor would have to redeem the mortgage debt first.
    

The Issues

12. I need to consider the following:-
    
    • (a) The Courts jurisdiction to grant the charging orders;
      
    • (b) Should the interim charging orders be made absolute;
      
    • (c) The Courts jurisdiction to grant extension of judgment lodged on the property;
      
    • (d) Should extension of judgment be granted?
      

The Law and Analysis

13. I had allowed the FNPF to be joined and heard as an interested party on the basis that it is a secured creditor over the debtors property and having exercised its rights under the mortgage over the property sought to be charged, it may have issues on its rights and interest which may need to be taken into account to decide the question of making the order absolute: Order 15 Rule 6(2) (b) (i) of the High Court Rules 1988.
    
14. Order 50 Rule 1 (1) of the High Court Rules, 1988 is the provision which empowers the Court to impose charging order on the debtors land.
    
15. Order 50 Rule (1) states that:-
    

"This rule shall apply to any order which by virtue of any enactment the Court is empowered to make imposing a charge on any land or interest in land of a judgment debtor or levying execution thereon"

16. The order permits the Court to impose a charge if by virtue of any enactment the Court is empowered to so impose.
    
17. Mr. G. O'Driscoll states that there is no enactment which empowers the High Court to make charging orders on the debtors land. I find the submission fallacious. Mr. Vakaloloma was not of much help on this aspect.
    
18. S. 32 (1) of the HCA is the enactment which empowers the Court to impose charging orders on the debtors land. It reads:-
    

"32.(1) The Court may, for the purpose of enforcing any judgment or order for the payment of money, by order impose on any land, or any estate or interest therein, of the debtor as may be specified in the order, a charge for securing the payment of any moneys due or to become due under the judgment or order.

(2) An order made under the provisions of subsection (1) may be made either absolutely or subject to such conditions as to notifying the debtor or as to the time when the charge is to become enforceable or as to other matter"

19. The question now is whether the interim charging order should be made absolute.
    
20. The general principles governing the exercise of the discretion to make a charging order may be summarised as follows:
    
    1. The question whether a charging order nisi should be made absolute is one for the discretion of the Court.
       
    2. The burden of showing cause why a charging order nisi should not be made absolute is on the judgment debtor.
       
    3. For the purpose of the exercise of the Court's discretion, there is in general, no material difference between the making absolute of a charging order nisi on the one hand and a garnishee order nisi on the other.
       
    4. In exercising its discretion the Court has both the right and the duty to take into account all the circumstances of a particular case, whether such circumstances arose before or after the making of the order nisi.
       
    5. The court should so exercise its discretion as to do equity so far as possible, to all the various parties involved that is to say the judgment creditor, the judgment debtor and all other unsecured creditors.
       
21. The above principles which were stated by Lord Brandon in Roberts Petroleum Ltd v. Bernad Kenny Ltd [1981] EWCA Civ 10; [1982] 1 W.L.R. 301, p.307; [1981] EWCA Civ 10; [1982] 1 All E.R. 685, p.690, C.A. are not affected by the reversal of that case by the House of Lords [1983] A.C 192; [1983] 1 All E.R. 564).
    
22. Under the factors stated above, I am entitled to take into account the two major matters before me. The first being the FNPF's exercise of its powers under the mortgage, payment of which was secured by the same properties, and the fact that there are many unsecured creditors having filed an action for winding up in Court.
    
23. With the debt history of the debtor company, I can say that the debtor is probably insolvent. By giving the creditor an absolute charging order would mean to give it priority over unsecured creditors who have instituted the winding up action. I do wish to exercise my discretion because this would be prejudicial to other unsecured creditors who have already instituted the action: Rainbow v. Moorgate Properties Ltd [1975] 1 W.L.R. 788, [1975] 2 All. E.R. 82, C.A.).
    
24. FNPF has also moved into possession of the judgment debtor's property and initiated foreclosure proceedings after it could not sell. After foreclosure, FNPF would become the legal owners of the property until it later sells the same as the legal owners. The property effectively now belongs to FNPF and therefore I find it improper that the charging orders be imposed on the properties now.
    
25. The next question is that of the extension of the judgment which was registered on the property. The provision for the life of such judgment is found in s. 105(2) of the LTA. It reads:-
    

"Every judgment, decree or order shall cease to bind, charge or affect any estate or interest in land in respect of which it is registered unless a transfer upon a sale under such judgment, decree, or order shall be presented to the registrar for registration within six months, or such extended period as the court by order made on application to it upon summons shall determine, from the day on which the copy of such judgment, order or decree was served".

26. S. 105(2) is very clear. It states that the registered judgment will cease to have effect unless within 6 months a transfer upon sale is presented to the registrar for registration or the Court extends the period of registration. In this case the registration is of no effect now as neither the transfer upon sale was presented to the registrar nor did the court extend the period of registration. I find that the Court has powers to grant an extension if it is sought and granted before expiry. In this case the creditor cannot get an extension now as the judgment has ceased to exist.
    
27. The obligation imposed on the creditor under section 105(2) is that the creditor must move to sell the property under the appropriate provisions of the law, perhaps under s. 86 of the PLA.
    
28. S. 86 reads as follows:-
    

"86---(1) A person having an equitable mortgage or charge on land created by writing or by deposit of an instrument of title registered under the provisions of the Land Transfer Act, for securing the payment of money and who has obtained a judgment of the court for the sum due may apply for and obtain an order for sale of the property subject to such terms and conditions as the court may direct. (Cap 131.)

(2) a person who has, under the provisions of section 32 of the Supreme Court Act, obtained an order imposing a charge on any land for securing the payment of any moneys due or to become due under any judgment or order of the court may, subject to the provisions of any law for the time being in force requiring the registration of such charge, on default being made by the debtor in payment of any such money, apply to the court for and obtain an order for the sale of such land, subject to such terms and conditions as the court may direct.

(3) Where an order for sale is made by the court under the provisions of this section, the court may in favour of the purchaser make a vesting order transferring the property or may appoint a person to transfer the same".

29. In this case the creditor made no efforts to sell the property and as such even if extension was sought before expiry, the Court would be very slow to allow such an extension in light of the creditor's failure to fulfil its obligation to move for sale of the properties.
    

Orders

30. For the reasons stated above, I refuse to make the interim charging orders final.
    
31. Each party to bear their own costs.
    

ANJALA WATI
Judge

08.08.2012