IN THE COURT OF APPEAL OF TONGA
CIVIL NUKU'ALOFA REGISTRY

JURISDICTIONAPPEAL NO.AC 6 of 2011
[CV 115 of 2010]

BETWEEN:

1. THE EXECUTOR(S) (OR ALTERNATELY THE
ADMINISTRATOR) OF DR SAM LIN WANG
(a.k.a SAM LIN WONG) DECEASED

2. HELEN CHEN WANG
(a.k.a. HELEN CHEN WONG)
Appellants

AND :

COMMERCIAL FACTORS LIMITED
Respondent

Coram : Burchett J
Salmon J
Moore J

Counsel : Mrs P. Tupou for the Appellants
Mr Harrison SC QC for the Respondent
Mr Niu for the Intervenors Fund Management Ltd and Tourist Services Ha'apai Ltd 
Mr Stephenson for the Intervenor Christine Uta'atu

Date of Hearing : 22 September 2011
Date of Judgment: 30 September 2011

JUDGMENT OF THE COURT

INTRODUCTION

[1]	This is an application for leave to appeal and stay of execution out of time and an appeal. The former relates to orders of Ford CJ of 16 July 2010 and the latter relates to parts of orders of Scott CJ of 8 March 2011. There is an issue about whether the appeal should be an application for leave to appeal but we will address this issue later.

[2]	The background can be stated briefly. Dr Sam Wang was a businessman who died on 18 May 2010. The second appellant was his wife. It appears Dr Wang borrowed extensively to undertake his business activities though, unsurprisingly, those activities were undertaken through companies he apparently controlled. One such activity involved the construction and operation of a large hotel, the Royal Tonga International Hotel at Fua'amotu. It was constructed on land the subject of a lease, Lease 5404 ("the Lease"). 

[3]	Proceedings were commenced shortly after his death, on 14 July 2010, in the Supreme Court of Tonga by the respondent, Commercial Factors Ltd ("CFL"), which had lent significant sums to one of Dr Wang's companies. As plaintiff, CFL named the first and second appellants in these proceedings as the first and second defendants respectively. CFL sought judgment against the defendants in the sum of NZ $5,731,135.56. Ultimately summary judgment was given in its favour on 14 February 2011. Somewhat simplified, CFL's case was that Dr Wang and his wife had guaranteed the loans to the company which had not been repaid as agreed. The amount claimed represented the principal and interest.

[4]	At an early stage in the proceedings, CFL successfully sought certain ex parte orders in the Supreme Court of Tonga. The orders were made by Ford CJ on 16 July 2010. The orders were:

"1.	The second respondent is hereby appointed to represent the first respondent (being the estate of Dr Sam Lin Wang, also known as Sam Lin Wong) in relation to those proceedings;

2.	An injunction is hereby granted restraining, the disposition of any dealings by the first and second defendants, their agents and assigns with the assets and/or the estate of the late Sam Lin Wang (also known as Sam Lin Wong) of Nuku'olofa deceased, in particular (but not limited) his estate's interest as lessee or otherwise in Lease 5404 of the land situated at Fua'amotu, Tongatapu on which the Royal Tonga International Hotel is constructed and operates; his or his estate's interest in the business of the Royal Tonga International Hotel at Fua'amotu; his or his estate's interest in Golden Asia (Pacific) Ltd or any other company or entity carrying on or formerly carrying on the business of the Royal Tonga International Hotel; and his or his estate's interest in any proceeds of sale or disposition of any of the foregoing interests;

3.	A further injunction is hereby granted restraining, the disposition of any dealings by the first and second defendants, their agents and assigns with the following assets of the second defendant, namely her interest (if any) as lessee or otherwise in Lease 5404 of the land situated at Fua'amotu, Tongatapu on which the Royal Tonga International Hotel is constructed and operates; her interest in the business of the RoyalTonga International Hotel at Fua'amotu; her interest in Golden Asia (Pacific) Ltd or any other company or entity carrying on or formerly carrying on the business of the Royal Tonga International Hotel; and her interest in any proceeds of sale or disposition of any of the foregoing interests;"

[5]	As noted earlier, CFL obtained judgment on 14 February 2011. On one view orders were made that day which included an order appointing a receiver. On another view Scott CJ was then simply foreshadowing orders which would be made in due course. In any event the Chief Justice made orders on 8 April 2011 which included an order entering judgment in the sum of $7,790,332.40 in favour of CFL and also included an order for interest in the sum of $633,897. The Chief Justice also made an order (order 4) to appoint a receiver "to enforce and recover the foregoing judgments and orders". That appointment was subject to conditions and directions in the order. They identified the property the receiver could deal with to enforce the judgment and recover the judgment sums in the following way (as relevant for present purposes):

"All Tongan based real and personal property [of Dr Wang and his wife] including …. the lease of the land on which the [Royal Tonga International] Hotel stands….."

[6]	 It can be seen that the property available to the receiver to sell in order to recover monies to satisfy the judgment included the lease on which the Royal Tonga International Hotel stood, namely lease 5404 referred to earlier. 

[7]	In these proceedings the appellants seek to challenge the orders of 16 July 2010 and the appointment of the receiver on 8 April 2011 on the basis that the Supreme Court of Tonga had no jurisdiction to make the orders. As to the orders made on 16 July 2010 it is said that orders of that type (affecting land) could only be made by the Land Court. As to the appointment of the receiver, it is said no jurisdiction or power exists to make such an appointment for the same reason. In so far as the Supreme Court may arguably have power under its rules (Order 33 of the Supreme Court Rules 2007 ("the Rules")), properly construed the rules do not confer power to appoint a receiver and, in any event, are invalid. 

[8]	We should note at this point that Fund Management Ltd and Tourist Services Ha'apai Ltd ("FM" and "TSH") sought leave to intervene in this appeal as did the receiver.

THE EXTENSION OF TIME

[9]	As noted earlier, the appellants seek an extension of time in which to apply for leave to appeal against the injunction granted by Ford CJ on 16 July 2010. That application was not made until 24 March 2011. On any view, this was a lengthy delay. Counsel for the appellants accepted that two factors which would be relevant to extending time were the length of the delay and the explanation for the delay. 

[10]	The appellants relied on two affidavits. One was the affidavit of counsel sworn on 23 March 2011. The other was an affidavit of the second appellants of 1 April 2011. What emerges from those affidavits can be summarised in this way. The second appellant left Tonga sometime in 2010 for Singapore. She was told of the judgment on 14 January 2011 (in the affidavit she does not say which judgment) and had conversations with her staff at the hotel. She was advised on 10 February 2011 that instructions had been given to new counsel (the counsel appearing in these proceedings) and during this period and later she had difficulty understanding the nature of various judgments given. From the perspective of counsel, her position was that it took some time to gather the papers and to speak to the second appellant which she did on 21 March 2011 when she received instructions to "appeal the matters raised in the notice of appeal".

[11]	Counsel for the appellants referred to two authorities in which an extension of time had been given by the Court of Appeal: Bank of Tonga v 'Alatini [1990] Tonga LR 153 and Fonua v Tonga Telecommunications Corporation Ltd [2006] TOCA 3. Ultimately, however, each case must be decided by reference to the facts of that case. Other cases where time has been extended are of limited assistance.

[12]	We do not know with absolute certainty when the second defendant was served with the orders of 16 July 2010. However it was asserted in subsequent correspondence to her lawyer she was served on 17 July 2010. But we do know from material in the appeal book that the second defendant was aware of the proceedings by no later than 6 August 2010. On that day, a lawyer then acting for the second appellant wrote to CFL's lawyers about the matter indicating an intention to defend the proceedings. We think we can comfortably infer that the summons and statement of claim together with a copy of the orders of 16 July 2010 were served on the second appellant before 6 August 2010. 

[13]	As we noted earlier, the delay in challenging the injunction of 16 July 2010 has been extensive, well over eight months. The explanation for the delay is entirely unsatisfactory. The fact that the second appellant instructed a new lawyer in early 2011 really provides no explanation for the delay since, at the latest, 6 August 2010 when she had then retained lawyers to act for her in the proceedings. We refuse an order to extend time.

THE CHALLENGE TO THE ORDER APPOINTING A RECEIVER

[14]	This leads us to consider the appellants' challenge to the appointment of the receiver either by the orders of 8 March 2011 or 8 April 2011. The various documents filed by the appellants on 24 March 2011 (an application and a draft notice of appeal) do not raise, in terms, a challenge to the appointment of the receiver at all let alone on the basis that the Supreme Court had no jurisdiction to make the order or on the basis it had no power to do so. We explain this distinction later in these reasons.

[15]	However we are satisfied that the appellants should be allowed to ventilate these issues. They are of general importance and of immediate and fundamental importance to the appellants. While there may have been irregularities in the documentation filed by the appellants there has been no untoward delay in raising at least the issue of whether the Supreme Court had jurisdiction to make orders concerning land which was expressly raised in the documentation in relation to the orders of 16 July 2010 (the injunction) filed on 24 March 2011. While the same cannot be said of the jurisdictional challenge to the order appointing the receiver and the issue concerning power, we are satisfied leave should be given to raise them and, to the extent necessary, we extend time, give leave to appeal and leave to amend the notice of appeal.

JURISDICTION OF THE SUPREME COURT TO APPOINT A RECEIVER

[16]	We should immediately refer to the distinction we are drawing in these reasons between jurisdiction and power. It is unnecessary to descend into detail though it is a distinction which often arises in discussions about the authority of courts to adjudicate on legal controversies of a particular class or type, on the one hand, and their authority to make orders of a particular character, on the other. An illustration of judicial reference of this distinction can be found in Jackson v Sterling Industries Ltd (1987) 162 CLR 612 at 627-628. In the present proceedings the jurisdictional issue concerns the jurisdiction of the Supreme Court to make orders concerning land. If it has jurisdiction to make orders concerning land, then the issue that then arises is whether it it has power to make an order appointing a receiver to sell land.

[17]	The jurisdictional issue arises this way. Clause 90 of the Constitution provides:

"The Supreme Court shall have jurisdiction in all cases in Law and Equity arising under the Constitution and laws of the Kingdom (except cases concerning titles to land which shall be determined by a Land Court subject to an appeal to the Privy Council in matters relating to hereditary estates and titles or to the Court of Appeal in other land matters) and all matters concerning Treaties with Foreign States and Ministers and Consuls and in all cases affecting Public Ministers and Consuls and all Maritime cases."

[18]	The Constitution contemplates jurisdiction being exercised by a Land Court in cases relating to titles to land and hereditary estates. We accept that what this comprehends should not be viewed narrowly given the fundamental importance of land in the Kingdom of Tonga. However the real issue is whether this provision together with provisions of the Land Act CAP 132 and the Supreme Court Act CAP 10 (which we refer to shortly) confer exclusive jurisdiction on the Land Court preventing the Supreme Court making any order whatsoever which might affect land directly or even indirectly.

[19]	The jurisdiction of the Land Court is addressed in Part X the Land Act and specifically in section 149. The jurisdiction is identified in five paragraphs in subsection (1). Three of those paragraphs, (a), (c) and (d), create jurisdiction on quite specific matters namely defining the area and boundaries of parcels of land, appointing trustees to manage land of people under a disability and taking accounts of trust estates and removing and appointing substitute trustees. Paragraphs (b) and (e) are wider and more general in their scope. They provide:

"……..
(b) to hear and determine all disputes, claims and questions of title affecting any land or any interest in land in the Kingdom and in particular all disputes, claims and questions of title affecting any tofia, tax or town allotment or any interest therein; excepting any disputes, claims and questions affecting any land or interest in land resumed by the Crown under Part IX of this Act.
……..
(e) to hear and determine any question or amount of damage, loss, compensation, menses profits, rent or claim in request of any allotment, lease, sub-lease permit or interests of any kind in any land."

[20]	The way this jurisdiction is expressed is consistent with the fundamental constitutional role of courts in England and in legal systems based on the English system. That is, courts have jurisdiction and authority to resolve legal disputes or controversies by the application of the law to the facts. Plainly enough the Land Court is invested with jurisdiction to hear and determine such disputes insofar as they relate to land and in so far as they might arise in the circumstances identified in section 149. 

[21]	However this conclusion does not dictate a conclusion that the Supreme Court does not have any jurisdiction to make any order which might affect land either directly or indirectly. The only relevant limitation on its jurisdiction arises under section 4 of the Supreme Court Act which provides:

"(1)	The Supreme Court shall have jurisdiction to hear any proceedings, other than proceedings which –

(a)	 are excluded from the jurisdiction of the Supreme Court  by the Act of Constitution of Tonga; or 

(b)	 by law, are within the exclusive jurisdiction of another  court or tribunal, 

Provided that a summary offence arising from the same facts of an offence triable in the Supreme Court may be heard together in the Supreme Court. 

(2)	If proceedings are brought in the Supreme Court which could have been brought in another court or tribunal the Court shall, unless it is satisfied that it should not do so in the circumstances of the case, take that fact into account in determining any award of costs."	

[22]	Without deciding the point, we proceed on the basis that the jurisdiction of the Land Court discussed earlier is exclusive jurisdiction (though this was not the subject of detailed submissions - we assume it to be exclusive: see, for example, To'a v Veikune (1974-1980) Tongan LR 107; Tu'ipulotu v Ma'afu (1994) Tonga LR 125; Tu'ipulotu v Kingdom of Tonga (1997) Tonga LR 258) and accordingly such jurisdiction is carved out of the jurisdiction of the Supreme Court by operation of section 4(1)(b).

[23]	However, as we have endeavoured to explain, the jurisdiction of the Land Court is to determine legal controversies or disputes about land in the various ways we have described. An order that the receiver sell an interest in land does not raise or resolve any legal controversy or dispute about land or interests in land. Indeed such an order assumes that there is no controversy concerning title to the land or any legal defect infecting the interest in the land (in this case the late Dr Wang's interest in the land as lessee under the Lease) which might otherwise be a barrier to the sale. It is an order which contemplates a regular and orthodox dealing in the land on the footing that the judgment debtor has good title to whatever interest is being sold and the receiver will deal with the land as required by law and in particular the Land Act. The order assumes the sale will be free from legal controversy or disputes about the property to be sold. That is not to say that there may not be legal controversy or a dispute about the making of the order or its implementation but the subject matter of that controversy or dispute is not land.

[24]	We are fortified in this view by the judgement of the Court of Appeal in Intractor Trading Company (NZ) Ltd v Finau (1990) Tonga LR 133. In that case the Court of Appeal had to determine whether a charging order over land was an available remedy in Tonga. They concluded it was. In the trial before Martin CJ there had been an issue about whether the Supreme Court could make a charging order which would affect land. The argument was that the Supreme Court did not have jurisdiction because the only orders the Supreme Court could make over land were those set out in section 110 of the Land Act. Martin CJ rejected this argument. As to this issue, the Court of Appeal observed:

"Those conclusions [rejecting the argument about jurisdiction] of Martin CJ have not been challenged and we endorse them [emphasis added]"

 [25]	Plainly the Court of Appeal accepted that an order could be made, within jurisdiction, by the Supreme Court in furtherance of and enforcing a judgment of the Supreme Court even though the order had an impact on land. It is, in substance, precisely the same issue which arises in this appeal.

[26]	For the preceding reasons, we conclude that the Supreme Court did have jurisdiction to make an order appointing a receiver to sell property of the judgment debtors including their interest in the Lease.

POWER OF THE SUPREME COURT TO APPOINT A RECEIVER

[27]	Order 33 of the Rules concerns the appointment of a receiver. Rule 1 deals with the form of application to seek the appointment of a receiver and, importantly, identifies the purpose for which a receiver might be appointed. It is "to enforce a judgment or order". Rule 3 declares that an order for the appointment of a receiver may include such directions as the Court thinks fit for the giving of security by the person appointed. Order 33 does not expressly confer the power to make the appointment. However it is framed in terms that contemplates such an order can be made. It is not an order for the appointment of a receiver for some general purpose or purposes unrelated to the enforcement of a judgment. It is a quite specific purpose identified in the Order.

[28]	It can readily be implied, in our view, that the Order is intended to confer the power and does so. It must have been the intention of the framer of the rule to confer power. There would be little utility in conferring a right to make an application for the appointment of a receiver, identifying how the application should be framed and conferring a power to impose conditions on an order of appointment without also conferring the power to appoint as well. It seems to us the real issue is whether the rule maker had power to make a rule enabling or authorising the appointment of a receiver for the specific purpose of enforcing a court judgment.

[29]	In England and countries deriving their legal systems from England, receivers can be appointed for various purposes in a variety of contexts. In England, for example, receivers can be appointed to deal with the property of individuals convicted of serious crimes: see Mitchell v Holloway (2002) ECHR 818. It has long been the case that receivers could be appointed to deal with partnership property or the assets of a company. The power of a court to appoint a receiver might be authorised by statute or derive from the common law or equity. 

[30]	However in relation to the power to appoint a receiver to enforce the judgment apparently conferred by a rule of court, the immediate question is whether the rule-making power conferred on the court authorises such a rule. 

[31]	Clause 89 of the Constitution authorises judges "to make rules of procedure". In context, this is plainly a reference, at the very least, to the judges of the Court of Appeal and the Supreme Court. Section 6 of the Supreme Court Act is to similar effect though it speaks of the making of rules "for the practice and procedure" of the courts. In this general context of rule-making powers, the word "procedure" (which is the word in the Constitution) has not been narrowly construed and it often appears in the composite expression "practice and procedure" (which is the way it is expressed in the Act). It has been said that these terms are "convertible": see Mitchell v Harris Engineering Company Ltd [1967] 2 QB 703 at 720.

[32]	As explained in Halsbury's Laws of England 4th ed, vol 37, Practice and Procedure, at par 10, there is a vital and essential distinction between substantive law and procedural law, the former defining, creating or conferring substantive legal rights or legal status or defining or imposing legal duties (or the manner of their performance). The latter provides the machinery or the manner in which legal rights or status and legal duties may be enforced or recognised by court. 

[33]	We acknowledge that there is not always unanimity about what is comprehended by the expression "practice and procedure". An example of this is found in the judgment of the Federal Court of Australia in Commonwealth v Crothall Hospital Services (Aust) Ltd (1981) 54 FLR 439. In issue was whether the awarding of interest on claims before judgment was a matter of practice and procedure. Two judges concluded it was not though the third judge concluded it was.

[34]	For our part, we do not think that the rule-making power of the Supreme Court should be narrowly construed. The general principle is that a provision empowering a Court should be broadly construed, so as to give it full efficacy. The Court has been and is likely to continue to be confronted with procedural gaps in the processes necessary for the Court to administer justice in the Kingdom. The Constitution recognises the need for the Court to have power to make rules in relation to practice. That recognition reflects a view that the Court should be able to frame its procedures by rules to enable justice to be administered in the way just discussed.

[35]	The authority we have found most helpful in determining whether the Supreme Court's rule-making powers extend to authorising the appointment of a receiver is the decision of the English Court of Appeal in Lever Bros Limited v Kneale and Bagnall [1937] 2 KB 87. In that matter the plaintiffs sought damages against the defendants for libel and an injunction restraining publication of further libellous material. The plaintiffs were successful and, amongst other things, an injunction issued. One of the defendants continued to publish libellous material in breach of the injunction. The matter came before the court again and a judge ordered that the defendant be committed to prison for contempt. One issue was whether any appeal from such an order (the committal order) should be heard by the Court of Appeal or a Divisional Court. That latter court had jurisdiction to hear appeals "except in matters of practice and procedure". The appeal was brought to the Court of Appeal and the issue before the Court was whether ordering a person to be committed to prison was a matter "of practice and procedure". The Court of Appeal concluded it was.

[36]	Lord Justice Slesser cited with approval observations of Lush LJ in Poyser v Minors 7 Q.B.D. 329 that "practice" denotes the mode of proceeding by which legal rights are enforced, as distinguished from the law which gives or defines the right, and which by means of the proceedings the Court is to administer the machinery as distinguished from its products. Lord Justice Slessor said the order of committal was clearly a mode of proceeding by which a legal right is enforced. Lord Justice Greene agreed and spoke of "supplementary relief which would make the order effective".

[37]	There is one authority which suggests, quite explicitly, that an application for the appointment of a receiver is a matter of practice and procedure: Hood-Barrs v Cathcart 11 TLR 262 referred to in the definition of "practice" in Strouds Judicial Dictionary, 4th ed. 

[38]	In our view, Order 33 concerns a matter of practice and procedure, is a valid exercise of the Supreme Court's rule-making power and is the source of power to order the appointment of a receiver for the narrow and specific purpose of enforcing a court order. Accordingly, Scott CJ had power to order the appointment of a receiver in this case.

[39]	It has been suggested that the amendment of the law of Tonga to prevent resort to certain English statues has deprived the Supreme Court of jurisdiction to appoint receivers, a jurisdiction said to have its foundation in the Judicature Acts. Not only does this overlook the rule-making power of the Supreme Court; it also fails to appreciate that the power to appoint receivers long predated the 19th Century reforms embodied in the Judicature Acts. "By the time of Elizabeth 1 the jurisdiction of the Court of Chancery to appoint a receiver had become well established": Snell's Principles of Equity 26 ed. (1966) 726, where Lord Hardwicke LC is cited for the proposition that the power to appoint a receiver "is a discretionary power exercised by this court with as great utility to the subject as any sort of authority that belongs to them, and is provisional only for the more speedy getting in of a party's estate, and securing it for the benefit of such person who shall appear to be intitled, and does not at all affect the right": Skip v Harwood [1747) 3 Atk.564. 

OTHER MATTERS

[40]	In our judgment in another matter concerning the Lease in AC 16 of 2010 which we are delivering contemporaneously with this judgment, we have recounted events in which FM and TSH obtained judgment against Dr Wang, obtained a charging order over the Lease and an order that the existence of the charging order should be noted on the instrument of lease. In these proceedings, counsel for FM and TSH submitted that his clients had been denied procedural fairness by not being given notice of the application for an order to appoint a receiver. On the facts as we presently understand them, this appears to be correct. 

[41]	Somewhat simplified, what has occurred is that FM and TSH have obtained judgment and secured an order (of the Land Court) intended to make available the Lease to satisfy the judgment debt. Since then in later proceedings, another judgment creditor CFL has secured an order of the Supreme Court intended to make available the Lease to satisfy the judgment debt. In our view it is in the interests of justice that this position should not be allowed to stand at least without further investigation by the Supreme Court. Accordingly, in those circumstances we propose to refer the interlocutory order (or orders) appointing the receiver back to the Supreme Court to consider whether it is appropriate to make a further interlocutory order for the sharing as the Court sees fit of the proceeds of the sale by the receiver, and to that extent we grant leave to appeal and allow the appeal, but subject to any such further order the application for leave to appeal should be granted and the appeal dismissed. 

[41]	We grant leave to both FM and TSH and Christine Uta'atu to intervene. Until judgment is given in this matter, the receiver is restrained from disposing of any proceeds held by her and, in the event of further sale by CFL, it is restrained from disposing of any proceeds. 

Burchett J
Salmon J
Moore J