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Westpac Banking Corporation v Leye [2005] VUSC 125; CC 161 2005 (2 November 2005)

IN THE SUPREME COURT OF
THE REPUBLIC OF VANUATU
(Civil Jurisdiction)

Civil Case No. 161 of 2005

BETWEEN:

WESTPAC BANKING CORPORATION
Claimant

AND:

MR ELOI LEYE & MRS EMMA LEYE
Defendants

Coram: Justice P. I. Treston

Ms. La'au for Claimant
Mr. Kilu for the Defendants

Date of Conference: 02 November 2005
Date of Decision & Orders: 02 November 2005

DECISION AND ORDERS

This claim by the Bank for VT9, 961,978 was commenced in the Magistrates' Court on 29 September 2004. It was within the jurisdiction of that Court. The claim was for the balance of rental monies owed by the Defendants to the Claimant pursuant to an asset purchase agreement.

On 24 May 2005, the Defendants filed a third party notice against the Director of the Department of Public Works. As a preliminary comment I note that the notice should probably have been filed against the Government. However in the notice, the Defendants sought indemnity against the Director because it was alleged that an employee of the Director was involved in a collision with the Defendants' vehicle when he was driving a government vehicle outside official hours. There was no allegation of negligence but simply an allegation that the driver of the government vehicle caused the accident. It seems that the driver of the vehicle, Mr. Dennis Alphonse, accepted liability for the accident and agreed to pay damages but never actually made any payments. In that event the third party notice, if appropriate, should have been issued against Mr. Alphonse and not the Government.

I am of the view that the third party notice issued against the Director in such circumstances was misconceived.

Rule 3.7 of the Civil Procedure Rules No. 49 of 2002 deals with third parties. That provides as follows: -

"Third parties

3.7 (1) If a defendant claims a contribution, indemnity or other remedy against a person not a party to the proceeding, the defendant may file and serve a notice (a "third party notice") on that person stating:

(a) that the defendant claims the contribution, indemnity or other remedy; and

(b) that the person is a party to the proceeding from the date of service

(2) The third party notice must be in Form 4

(3) The defendant must obtain permission of the court (leave of the court) if the third party notice is filed after the defence has been filed.

(4) The person becomes a party to the proceeding with the same rights and obligations in the proceeding as if the defendant had started a proceeding against the person."

No permission was ever sought under Rule 3.7 (3) even though a defence was filed on 8 April 2005. In this case when the Defendants issued their notice against the Director of the Department of Public Works, they effectively endeavoured to commenced a completely different fresh action against the Director within the confines of the present claim by the bank against the Defendants. In my view that is inappropriate when the Director has not admitted any liability for the Defendants' claim. If the notice were to be allowed to stand, the Court would be forced to determine the liability of the Director to the Defendants in relation to the motor vehicle collision before it could determine whether or not the Director had any liability to the defendants. In my view that is not the purpose of a third party notice, and it is not the function of this Court or the Magistrates' Court to deal with matters in that way.

The correct procedure is for the Defendants to sue whoever they choose in relation to the motor vehicle collision in a separate action in the usual way and obtain a judgment, if appropriate, against the Defendants in that case. Only then can it issue a notice for contribution or indemnity or other remedy. This is simply a claim by the bank against the Defendants under an asset purchase agreement and the Defendants cannot undertake a trial within a trial to establish the contribution or indemnity or other remedy against the Director in this fashion.

The case was transferred to the Supreme Court by the Magistrates' Court on the basis that the third party notice exceeded the jurisdiction of the Magistrates' Court. I do not consider that that would have been appropriate even if the third party notice should be allowed to stand because section 3 (3) of the Magistrates' Court Civil Jurisdiction Act [CAP. 130] provides as follows:-

"A magistrate's court may hear a counterclaim in a suit where the original claim is within its jurisdiction although the counterclaim exceeds its jurisdiction."

By simple analogy, I am of the view that the Magistrates' Court has the jurisdiction to hear a third party notice even though the amount in the notice exceeds the jurisdiction of the Magistrates Court because the original claim is within its jurisdiction.

The orders I make are as follows: -

(a) The third party notice is struck out.

(b) Civil Case no. 196 of 2004 is referred back to the Magistrates Court for determination.

(c) No order for costs

Dated AT PORT VILA, this 02nd day of November 2005.

BY THE COURT

P. I. TRESTON
Judge