Home | Databases | WorldLII | Search | Feedback Tonga Law Reports

Gough Finance Ltd v Westpac Bank of Tonga [2004] TOLawRp 42; [2004] Tonga LR 279 (24 August 2004)

IN THE SUPREME COURT OF TONGA

Gough Finance Ltd

v

Westpac Bank of Tonga

Supreme Court, Nuku'alofa
Ford J
CV 684/2003

18 March and 2 July 2004; 24 August 2004

Practice and procedure – declaration that Tongan Court had no jurisdiction – dismissed

In November 1999 a Christchurch farm equipment company, Gough Gough & Hamer Ltd, which had some association with the plaintiff, sold a D8 bulldozer on hire purchase to a Tongan man, Sione Foaki Fifita ("Fifita"). The sale price was NZ.$130,410.54. Fifita paid a deposit of $37,068.75. After allowing for finance charges and service fees, the balance owing under the hire purchase agreement was NZ.$116,954.88. Fifita undertook to pay off that debt by 48 consecutive payments of $2,436.56 commencing on 15 January 2000. By February 2002 Fifita had reduced the debt to NZ.$79,807.29. On the same date that the hire purchase agreement was entered into, Gough Gough & Hamer Ltd assigned all its interest therein to the plaintiff. The hire purchase agreement contained a retention of title clause which provided that the property in the bulldozer did not pass to Fifita until he had paid all the monies owing under the agreement. Another clause in the agreement prohibited Fifita from removing the bulldozer out of New Zealand without the plaintiff's permission. In the early part of 2000, Fifita, without permission, transported the bulldozer and other items of machinery to Tonga and in November 2000 he took out a loan of $97,100 from the defendant bank in Tonga against the security of the bulldozer. Fifita represented to the bank that the bulldozer belonged to his father and a change of ownership form was registered with the Vehicle Registry at the Traffic Department in Tonga recording the transfer of ownership from the father to Fifita and then to the defendant. The defendant claimed that, at all material times, it was completely unaware of the plaintiff and its interest in the bulldozer. At one stage it caused a search to be carried out in New Zealand and that showed the hire purchase agreement in question had never been registered under the Personal Property Securities Act 1999 (NZ). There was a civil court proceeding under which the bank obtained an order allowing it to seize the bulldozer. The machine was then sold by the bank on 7 November 2002 to a third-party for approximately $50,000. The plaintiff alleged two causes of action -- the tort of conversion and restitution for money had and received. The defendant did not file a defence but disputed jurisdiction and applied for an order to set aside the writ and it sought a declaration that the Court had no jurisdiction over the defendant in respect of the subject matter of the claim or, in the alternative, that the more appropriate jurisdiction was New Zealand.

Held:

1. The challenge to jurisdiction must be dismissed. The defendant did not persuade the Court that any of the grounds it relied upon fell within the converse situation of one or other of the scenarios set out in Order 12 rule 1. In other words, the dispute as to jurisdiction did not meet the threshold test of falling within one or other of the recognised grounds for such an application.

2. The Court would have ruled against the applicant had it been necessary to exercise its discretion in the matter. The Supreme Court of Tonga did have jurisdiction in the case. The plaintiff submitted to its jurisdiction; the defendant was domiciled in the country; the alleged tortious act occurred in Tonga, as did the alleged enrichment.

3. The application that disputed the jurisdiction of the Court was, accordingly, dismissed. The plaintiff was entitled to costs in respect of the application to be agreed or taxed.

Case considered:

Spiliada Maritime Corp. v Consulex Ltd,. the Spiliada [1986] UKHL 10; [1986] AC 460; [1986] 3 All ER 843

Statute considered:

Personal Property Securities Act 1999 (NZ)

Rules considered:

English Supreme Court Practice

Supreme Court Rules 1991

Counsel for plaintiff: Mr Niu
Counsel for defendant: Mr Waalkens

Judgment

The issue for determination in this interlocutory dispute is whether the proceeding should be tried in Tonga or in New Zealand. The plaintiff company, which is based in Christchurch, New Zealand, commenced the action in the usual way in this Court and contends that it is entitled to have the matter tried in Tonga. The defendant, the Westpac Bank in Nuku'alofa, maintains that the proper forum is New Zealand. Accordingly, it has made formal application pursuant to Order 7 of the Supreme Court Rules 1991 disputing the jurisdiction of this Court to hear the matter. Extensive and helpful submissions have been filed by both parties.

The case concerns a D8 bulldozer. In November 1999 an old established Christchurch farm equipment company, Gough Gough & Hamer Ltd, which obviously has some association with the plaintiff but it is not defined in the pleadings, sold the bulldozer on hire purchase to a Tongan man, Sione Foaki Fifita ("Fifita"). The sale price was NZ.$130,410.54. Fifita paid a deposit of $37,068.75. After allowing for finance charges and service fees, the balance owing under the hire purchase agreement was NZ.$116,954.88. Fifita undertook to pay off that debt by 48 consecutive payments of $2,436.56 each commencing on 15 January 2000. By February 2002 Fifita had reduced the debt to NZ.$79,807.29.

On the same date that the hire purchase agreement was entered into, Gough Gough & Hamer Ltd assigned all its interest therein to the plaintiff. The hire purchase agreement contained a retention of title clause which provided that the property in the bulldozer did not pass to Fifita until he had paid all the monies owing under the agreement. Another clause in the agreement prohibited Fifita from removing the bulldozer out of New Zealand without the plaintiff's permission.

It appears that in the early part of the year 2000, Fifita, without permission, transported the bulldozer and other items of machinery to Tonga and in November 2000 he took out a loan of $97,100 from the defendant bank in Tonga against the security of the bulldozer. Fifita represented to the bank that the bulldozer belonged to his father and a change of ownership form was registered with the Vehicle Registry at the Traffic Department in Tonga recording the transfer of ownership from the father to Fifita and then to the defendant.

The defendant claims that, at all material times, it was completely unaware of the plaintiff and its interest in the bulldozer. At one stage it apparently did cause a search to be carried out in New Zealand and that showed the hire purchase agreement in question had never been registered under the (NZ) Personal Property Securities Act, 1999.

Although there are no details before the Court of Fifita's indebtedness to the defendant bank, there is a reference to another civil court proceeding under which the bank had obtained an order allowing it to seize the bulldozer. The machine was then sold by the bank on 7 November 2002 to a third-party for approximately $50,000.

The above summary of relevant facts has been taken from the pleadings and the affidavits and other documentation filed in support of the application challenging jurisdiction. At this stage, as is the proper practice with such applications, no evidence has been heard in the case.

The plaintiff in its statement of claim relies upon two alleged causes of action -- the tort of conversion and restitution for money had and received. The defendant has not filed a defence but in its application disputing jurisdiction it has applied for an order setting aside the writ and it seeks a declaration that "the Court has no jurisdiction over the defendant in respect of the subject matter of the claim" or, in the alternative, that "the more appropriate jurisdiction is New Zealand given the circumstances of the case."

The stated grounds upon which the defendant disputes jurisdiction are, first, that the hire purchase agreement between the plaintiff and Fifita is governed by the (NZ) Personal Property Securities Act 1999 and because the hire purchase agreement was never registered under that Act, then the plaintiff, allegedly, has lost its rights to ownership of the bulldozer. The defendant claims that for this reason it will be "unfairly disadvantaged" if the matter is not heard in the New Zealand courts.

For its part, the plaintiff contends that this ground of objection is "unfounded" because the PPSA (as the Act is apparently commonly referred to in New Zealand) affects priority of security interests but not title in goods. The plaintiff maintains that registration of a security under the Act is not a compulsory step but if a security is registered under the Act then what it means is that the registered security has priority over any prior unregistered security. In other words, as I understand it, the plaintiff contends that the PPSA has no relevance to these proceedings whether the case is to be heard in Tonga or in New Zealand.

The other grounds of objection advanced by the defendant appeared to be an amalgam of evidentiary matters. It is claimed, for example, that when the defendant bank seized the bulldozer in Tonga it had no knowledge of the plaintiff. The defendant also alleges that the plaintiff was guilty of contributory negligence in that it should have ascertained much earlier in time that the bulldozer had been moved from New Zealand to Tonga in breach of the hire purchase agreement. Finally, there is a rather equivocal submission put forward to the effect that the plaintiff's agent, a Mr Worthington, who had apparently been in Tonga for over a month before the bank sold the bulldozer, should have ascertained prior to the sale what was going on and informed the plaintiff accordingly.

Order 7 of the Tonga Supreme Court Rules is identical for all practical purposes with O.12 r.8 of the English Supreme Court Practice. A note in the "White Book" 1991 vol 1, para 12/7-8/4 states that the grounds of an application under O.12 r.8 will depend upon the circumstances of the case but they will be found in the Orders of the Supreme Court Practice dealing with service out of the jurisdiction, the validity of writs and with interim relief. Again, when it comes to these Orders, although not identical, there is considerable similarity between the relevant English and Tongan Rules of Court.

The present case is not concerned with the validity of the writ itself or with the grant of interim relief. The relevant rules, therefore, are those contained in Order 12 of the Tonga Supreme Court Rules that deal with service out of the jurisdiction. If a plaintiff seeks leave to serve a writ out of the jurisdiction then the burden is on him to satisfy the Court that his case falls within the scope of one or other of the subparagraphs in rule 1 of Order 12.

On the other hand, if a defendant seeks to challenge the jurisdiction of the Court under Order 7 then he must be able to persuade the Court, by reference to one or other of the subparagraphs in rule 1 of Order 12, that the justice of the case requires his application to be upheld. However, whereas a plaintiff seeking leave to issue a writ out of the jurisdiction must be able to bring his case within one or more of the situations listed in the subparagraphs under O.12 r.1, a defendant disputing jurisdiction must be able to prove that the converse situation applies. In other words, that the case does not fall within any of the situations envisaged in O.12 r.1.

The White Book (para 11/1/6) notes that in obtaining leave to serve a writ out of the jurisdiction, an applicant must show that his case falls within the rule, that he had a good arguable case and that it is proper in the exercise of the Court's discretion to grant leave. When disputing jurisdiction, the criteria is different. It is still measured against the same rule, although from the opposite perspective, and there is still a residual discretion element vested in the Court.

The discretion element is specifically provided for in the English O.11 r.4(2). Whilst that provision has not been duplicated in the Tonga Supreme Court Rules, there will inevitably be a discretion vested in the Court in deciding whether or not to make an order in response to an application disputing jurisdiction. The discretion is to be exercised having regard to the common-law principles that have been developed in this area of the law but foremost amongst the considerations must always be the "forum conveniens", as it has been historically referred to, and the overall interests of justice.

Under this head, a useful starting point is the following passage from the White Book:

"The question which is the appropriate Court, or "forum conveniens," is a matter to be considered by the Court in exercising its discretion under this Order. The test is whether the interests of justice are best served by proceedings here or abroad. The same question arises when an application is made to stay proceedings already begun and validly served within the jurisdiction, on the ground that a foreign Court is the forum conveniens. Decisions on such applications are helpful provided that it is remembered that the question, and burden of proof, in such cases is the opposite to that in applications under O.11; the applicant for a stay must show that it would be right to deprive the plaintiff of the right to sue in England, while under O.11 the plaintiff is asking for the exercise of the discretion of the Court in his favour and must show that the English Court is the forum conveniens."

Reference is also made in the White Book to the recognised leading authority in this area of the law --Spiliada Maritime Corp. v Consulex Ltd,. the Spiliada [1986] UKHL 10; [1986] AC 460; [1986] 3 All ER 843. The relevant passage (11/1/7) begins:

"(i) The fundamental principle applicable to both the stay of English proceedings on the ground that some other forum is the appropriate forum and also to the grant of leave to serve proceedings out of the jurisdiction, is that the Court will choose that forum in which the case can be tried more suitably for the interests of all the parties and for the end of justice."

Applying the foregoing principles to the application before the Court, I have come to the very clear conclusion that the challenge to jurisdiction must be dismissed. The defendant has simply not been able to persuade me, first of all, that any of the grounds it relies upon fall within the converse situation of one or other of the scenarios set out in Order 12 rule 1. In other words, the dispute as to jurisdiction does not meet the threshold test of falling within one or other of the recognised grounds for such an application.

Moreover, had it been necessary for me to exercise my discretion in the matter, I would have ruled against the applicant. The Supreme Court of Tonga clearly does have jurisdiction in the case. The plaintiff has submitted to its jurisdiction; the defendant is domiciled in this country; the alleged tortious act occurred in Tonga, as did the alleged enrichment. If the (NZ) Personal Property Securities Act 1999 does have the effect contended for by the defendant then that can be proved in the usual evidentiary way at the hearing in this Court, as can the other factual matters upon which the defendant seeks to rely.

The application disputing the jurisdiction of this Court is, accordingly, dismissed. The plaintiff is entitled to costs in respect of the application to be agreed or taxed.