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Hoeller v Knab [2007] TOLawRp 14; [2007] Tonga LR 84 (3 July 2007)

[2007] Tonga LR 84

IN THE SUPREME COURT OF TONGA

Hoeller

v

Knab anor

Supreme Court, Nuku'alofa
Andrew J
CV 976/2000

14 and 15 June 2007; 3 July 2007

Civil proceedings – application to have court orders set aside – court was satisfied that property ordered to be seized did belong to applicant – application set aside

The applicant, Mr Knab, applied to the court to have certain court orders set aside. In earlier proceedings between the parties judgment by consent had been issued in favour of the respondent, a Mr Hoeller, in the sum of $43,716 against the applicant, Mr Knab, and his wife and the Polynesian Village Resort Ltd. Despite the issuance of a writ of distress, there had been no payment of the judgment debt. Mr Hoeller then learned that Mr Knab lawfully held 45,000 shares in Ritchie's Smokehouse Ltd and he obtained an injunction against Mr Knab in respect of his shares in that company and later he obtained an order transferring to him Mr Knab's shares in Ritchie's Smokehouse Ltd and a number of other goods which had been seized by the bailiff by way of special seizure. Mr Knab claimed that he had sold his shares in Ritchie's Smokehouse Ltd to a Mr Rudolph Makoschitz prior to service of the injunction upon him. Mr Makoschitz also claimed ownership of a computer that had been seized by the bailiff. Mr Knab's wife claimed ownership of the other goods seized by the bailiff and alleged that they had been gifted to her by her husband on their wedding day. Mr Knab also claimed that Mr Hoeller had verbally forgiven him for his indebtedness.

Held:

1. The court described Mr Knab as a judgment defaulter who had never had any intention of satisfying the judgment debt and who had been evading the bailiffs for years. He and Mr Makoschitz had no credibility and it was held that at the time the injunction was issued the shares had not been lawfully transferred from Mr Knab.

2. The appropriate procedure to enforce a judgment against a debtor's shares in a company was to seek a charging order in accordance with Order 26 Rule 11 of the Supreme Court Rules. However, the court could not say that the bailiff had no power to seize shares in a company and the order of the court for seizure was not invalid.

3. The court was satisfied that the other property belonged to the applicant and was, therefore, liable to be seized.

4. The court was not satisfied that Mr Hoeller had ever forgiven the debt and, in any event, there was never any consideration given for such so-called forgiveness.

5. The application to set aside the court orders was dismissed.

Rules considered:

Supreme Court Rules 1991

Counsel for the plaintiff : Mr Niu
Counsel for the defendants : Mr Corbett

Judgment

The applicant, Mr Peter KNAB applies to the court for orders as follows:

"1. The judgment of 26th of March 2007 granted in the respondents favour, shall be set aside.

2. The Registrar of companies shall delete from the government registry of company shares the name Bernard Hoeller as holding 45,000 shares in Ritchie's smoke house Co LTD.

3. The Registrar of companies shall insert in the said that registry the name Peter KNAB as holding 45,000 shares in Ritchie's smoke house Co LTD, on the 13th of June 2006.

4. The Registrar of companies shall record the transfer of 45,000 shares in Ritchie's smoke house Co LTD from Peter KNAB to Rudolph MAKOSCHITZ on the 14th of June 2006.

5. All goods held by the bailiffs under special seizure as per judgment of the court of the 26th of March 2007 shall be returned to the care of Peter KNAB.

6. Costs are awarded in favour of the applicant for nonappearance of respondent, and the respondents witnesses on the 16th of May 2007 four court hearing.

7. This case shall be struck out with costs and damages for the applicant."

A background to this matter is as follows:

• In earlier proceedings between the parties judgment by consent was entered in favour of the respondent in this application, that is Mr Hoeller in the sum of $43,716 .00 against the applicant, Mr Peter KNAB and his wife and Polynesian Village resort LTD.

• Then, despite the consent of Mr KNAB to the above liability and despite issuance of a writ of distress on the 23rd of October 2001, there has been no payment of the judgment debt.

• Then, the respondent here, Mr Hoeller having learnt that Mr KNAB lawfully held 45,000 shares in Ritchie's smokehouse LTD applied for and was granted an injunction against Mr KNAB in respect of the shares.

• That the injunction was served upon Mr KNAB on the 27th of October 2006. A few days later, Mr KNAB produced a contract dated the 13th of June 2006 and a share transfer dated 14th of June 2006 in which he purported to have sold and transferred the shares to one Rudolph MAKOSCHITZ.

• Mr. HOELLER applied for a writ of distress, which was issued on the 18th of November 2006 against the properties of Mr KNAB. Despite the execution of that writ by the bailiff on the 16th of November 2006 it was returned with a report "no goods found".

• In February 2007, Mr HOELLER in the belief that Mr KNAB did have goods, applied for and was granted the orders of the 26th of March 2007, by which the shares were transferred to Mr HOELLER and the several goods he had listed were seized by the bailiff by special seizure, except for the van which the Bailiff took into custody.

• The applicant, Mr KNAB and Makoschitz have now applied to have those orders set aside. Mr Knab's wife Sisifa Knab has also applied to set aside the orders on her claim that all the goods with the exception of a computer, which is also claimed by Makoschitz had been gifted to her by her husband on their wedding day, the seventh of March 2007

• Mr KNAB maintains that all the goods ordered by the court on the 26th of March 2007 for the bailiffs to seize and also with reference to the 45,000 shares to be transferred to the plaintiff in Ritchie's smoke house Co LTD in the said order are not his property. He claims that the 45,000 shares were transferred to Makoschitz on the 13th of June 2006.

What is apparent in this matter is that Mr KNAB it is a judgment defaulter, who has never had any intention of satisfying the judgment debt, and who has been evading the bailiffs for years. Now that the law has caught up with him he protests the loudest and somehow acts as if he is the injured party in all these matters. I do not accept him as an honest or reliable witness, and in my view he has no credibility. Neither do I except the evidence of Makoschitz or of the applicant's wife who are both parties to the evasion process.

In answer to the applicant's claims I make the following findings:

THE SHARES

There is no dispute that the 45,000 shares had been held by Mr KNAB. That is confirmed by the registrar of companies.

At the time the injunction was issued on the 19th of October 2006, the shares had not been lawfully transferred from Mr KNAB to Makoschitz in accordance with the provisions of the companies act. The shares were still lawfully the property of Mr KNAB when the injunction was issued and served. The order of the 27th of October 2006 that the registrar of companies register the shares in the name of Mr Hoeller was valid. There had been no transfer of the shares to Makoschitz.

What the applicant and Makoschitz have contrived is that they had in fact sold and transferred the shares from the applicant Mr KNAB to Makoschitz by a contract on the 13th of June 2006 and share transfer on the 14th of June 2006. They produced some hand written photo copies of an agreement. As submitted at the hearing, they both said they only signed those documents in October 2006 but they had signed another document back on the 13th of June 2006. This handwritten document was produced at the hearing. The document had never previously been mentioned. All of this is highly dubious. More probable is the evidence of FOKIKOVI MAAMALOA, the applicant's former wife, that what really happened was that after the injunction was served on the applicant that he telephoned Makoschitz and got from his passport the dates of his arrival in and departure from Tonga in 2006 in order that he could then draw up the contract and share transfer to have its signed on a date within that period. Those dates were written on a piece of paper, which FOKIKOVI produced in evidence. This evidence of a so-called share transfer in June 2006 was obviously invented after the injunction was served in October 2006. It has no credibility . But apart from that, the fact is that there had been no transfer to Makoschitz at the time the injunction was issued and the shares were lawfully the property of Mr KNAB at the time they were seized. I do accept that the appropriate procedure to enforce a judgment against a debtor's shares in a company is to seek a charging order in accordance with Order 26, Rule 11 of the Supreme Court Rules. However, I can't say that the bailiff had no such power, and I can't say that the orders of the court for seizure were invalid.

HOUSEHOLD GOODS

Consistently with Mr KNAB'S whole conduct in evading the judgment debt, he says that on his wedding day in early 2007 he transferred everything to his new wife. That is an easy claim to make. It is unsupported by anything much at all, apart from his wife. If one were to believe Mr KNAB he owns little if anything in this world, certainly nothing which could be seized to satisfy the judgment.

As stated I do not accept his evidence, and I do not believe that he parted with his household property. This is again consistent with his behaviour in avoiding payment.

MOTOR VEHICLE

The applicant says that a motor vehicle, Toyota HI Lux, registration number J5111 is the property of his wife. The evidence is that the applicant purchased this vehicle from SAIA MAAMALOA. It was paid in full. I except the evidence that it was used by the applicant without challenge or claim from anybody else. Ownership has not been registered in his name, which I think is again consistent with his conduct of evasion. I have no doubt that ownership of the van lawfully vested in the applicant.

I have no doubt that the vehicle is properly seized to satisfy the judgment debt.

COMPUTER

The applicant says that a computer seized was not his property but belong to Makoschitz. He claims that he only acted as an agent for Makoschitz when it was bought. That evidence is disputed by Fokikovi Maamaloa, who said that the applicant purchased it from one Arnold Kruger and Monica Schneider and that he used it as his own. The applicant's evidence is contradictory, that is, he said it was the property of Mr. Mueller, and then said he had purchased it. I do not accept his evidence, and am satisfied that the computer was his property and liable to be seized.

FORGIVENESS OF THE DEBT

The applicant claims that the defendant had verbally forgiven him for his indebtedness in a phone call in 2003. He called a witness Leonore Afuha'amango who says that Mr. Hoeller also told her that he had forgiven the defendant of his debt to him. That was said to be in 2003.

I except the evidence of Mr. Hoeller, who appeared as an honest and reliable witness and as one who was reasonable and not prone to exaggeration.

Extrinsically Mr. Hoeller has never ceased attempting to recover the judgment debt so that any attempt to say he forgave Mr KNAB is inconsistent with that. Mr. Hoeller is adamant that he did not forgive the debt. He quite fairly said that he could vaguely recall having spoken to Lenore but did not say he had forgiven the debt. He could not have said in 2003 that he was forgiving the debt as he no longer required the money. I think he may have said, with no doubt justification, that he was fed up or sick of chasing Mr KNAB. But that is hardly any forgiveness of the debt, and in any event, it is not a communication made to Mr KNAB.

On the balance of probabilities, I am not satisfied that Mr. Hoeller ever forgave the debt. Firstly, as stated, he did not ever desist from pursuing the debt. There is no record made by the defendant of any such conversation. There was no reconciliation or change of relationship that was apparent after such so-called forgiveness. Again, as stated, the applicant never previously claimed that the debt was forgiven at the time of injunction, (19th of October 2006) or when the writ of distress was executed on his property, the 16th of November 2006. Lastly, I do not accept the evidence of Mr KNAB. There was never any consideration given for such so-called forgiveness.

For all of these reasons I dismiss the application to set aside the judgment of the 26th of March 2007 in this matter.

ORDER

Application dismissed. Costs are awarded to the respondent Mr. Hoeller as agreed or taxed.

There was an application for separate costs by the applicant. This concerned an earlier hearing date of the 16th of May 2007 when it is said that the respondent did not appear. I have no real evidence of what transpired on that day, and as to who if anyone was at fault. In all the circumstances I make no order as to costs for that day.