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Warner v Yalu [2019] TOCA 2; AC 1 of 2019 (17 April 2019)

IN THE COURT OF APPEAL OF TONGA

CIVIL JURISDICTION

NUKU’ALOFA REGISTRY

AC 1 of 2019 [CV 35&40&55 of 2014]

BETWEEN : DIANNE WARNER

- Appellant

AND : 1. GE YALU

2. KISIONE TUPOU

3. ANZ BANKING GROUP LTD

4. YANJIAN TONGA LTD

- Respondents

Coram : Handley J

Blanchard J

Randerson J

Counsel : Mr. S. Fonua for Appellant

Mr. W. C. Edwards SC for the First, Second and Fourth Respondents

Mr. W. Edwards for the Third Respondent

Hearing : 11 April 2019

Date of Judgment : 17 April 2019

JUDGMENT OF THE COURT

[1] On 23 July 2018 the Supreme Court made an order for the winding up of Yanjian Group Co Ltd (the company) and appointed Dianne Warner (the appellant) its liquidator.

[2] The winding up proceedings were brought by Lord Luani who had obtained judgment against the company and Yanjian Tonga Ltd in the Land Court on 5 May 2017 for TOP$5,506,000. Both companies appealed.

[3] On 10 September 2017 this Court reduced the judgment against the company to TOP$3,380,375 and set aside the judgment against Yanjian Tonga. The companies were separately represented.

[4] On 24 November 2017 the Lord Chief Justice dealt with an application by Lord Luani for a charging order over certain assets allegedly owned by the company in execution of his judgment against it. The application was opposed by both companies which were separately represented.

[5] The Chief Justice identified [22] the issue as “whether [the company] has a beneficial interest in any of assets against which a charging of order absolute may be made in favour of Lord Luani”. The basis of the application was that [23] “all assets ... in the possession or under the control of Yanjian Tonga are in fact owed by [the company].’’

[6] The company and Yanjian Tonga argued that they were wholly separate and independent companies and the company had no beneficial interest in any of the assets over which Lord Luani sought a charging order absolute.

[7] On 28 April 2017, shortly before the judgment in the Land Court the company and Yanjian Tonga entered into an agreement which cancelled, without payment, an earlier loan agreement dated 20 August 2013 under which the company lent Yanjian Tonga $2,278,087 in cash and in chattels which was repayable on 20 August 2021. The cancellation agreement stated that Yanjian Tonga was not indebted to the company.

[8] The Chief Justice was not prepared [48], on the evidence before him, to infer that the cancellation agreement was not genuine. He also found [49], on the evidence before him, that the plant and equipment in the possession of Yanjian Tonga was owned by CCECC, another Chinese Company. The charging order nisi was discharged.

[9] The company was later wound up. On 10 July 2018 the appellant, as its liquidator, applied for the following orders to be made against the respondents Yalu Ge and Kisione Tupou, employees of Yanjian Tonga:

to attend, and be questioned, with all books, records and documents of the company Yanjian Group, which they as employee (as Yalu Ge was) and as accountant (as Kisione Tupou was) of Yanjian Tonga had in their possession, concerning:

(a) a list of main engineering materials, including rebar, cement, steel mesh, bitumen, small machinery and accessories, with an estimated value of $1,670,028.77 that formed part of the loan advance from Yanjian Group to Yanjian Tonga in August 2013;
(b) All mobile office tables, chairs, other office equipment and air conditioners with an estimated value of $56,100;
(c) Bank statement of Yanjian Group and Yanjian Tonga showing the cash loan advance of US$56,952.06 which was equal to $104,222.45 and of $447,735.78.

[10] The respondents filed a notice of opposition on several grounds which did not include one that the application was barred by res judicata based on the judgment of the Chief Justice of 24 November 2017.

[11] On 9 August 2018 the appellant applied for the following orders to be made against the ANZ Bank:

1. The respondent appoint a bank officer to attend the court to be examined and recorded on oath.
2. At least 5 working days prior to the examination, the respondent produce to the applicant:
   1. Bank statements in the name of Yanjian Group Co Limited also known as or trading as Chinese Technical Team under account number 1826650 from 2008 to December 2013,
   2. Bank statement in the name of Yanjian Group Co Limited also known as or trading as Chinese Technical Team under account number 1613358 from 2008 to the present day,
   3. All books, records or documents of the Company in the respondent’s possession including but not limited to Bank statement of the company showing the case loan advance of US$56,952.16 which is equal to TOP$104,222.45 Pa’anga and TOP$447,735.78 pa’anga, from the company to Yanjian Tonga Limited on 20 August 2013 or thereabout,
   4. Debenture entered into between the company and Yanjian Tonga Limited to secure the loan advance if there is any,
   5. Any other relevant documents which are in the possession of and control of the respondent.

(c) The documents are to be delivered by the respondent to the applicant at the office of Sione T Fonua at House of Tonga, Mailetaha, Nuku’alofa.

[12] The Bank filed a notice of opposition on several grounds which did not include one that the application was barred by res judicata based on the judgment of the Chief Justice.

[13] The applications, including a motion for judgment in default of a defence in the substantive proceedings, were referred to Niu J on 12 November 2018. Shortly afterwards the Judge gave an exparte direction which included a provisional

view [6] that the three applications by the applicant “had been decided .... on 24 November 2017, and if so estoppel by record and/or res judicata may apply”.

[14] He directed counsel to consider both points “I have raised” and come prepared to argue it on 21 November.