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Brunet v Westpac Banking Corporation [2006] VUSC 18; CC 010 2006 (27 February 2006)

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

Civil Case No.10 of 2006

BETWEEN:

PIERRE JEAN-MARIE BRUNET and CHRISTIANE MARIE BRUNET
Claimants

AND:

WESTPAC BANKING CORPORATION
Defendant

Coram: Justice H. Bulu

Counsels: Mr. Robert Sugden for the Claimants
Mr. Wade Roper for the Defendant

Date of Hearing: 16 February 2006
Date of Decision: 27 February 2006

DECISION ON APPLICATION BY BRUNETS FILED ON 23 FEBRUARY 2006

History of the Dispute

1. The full history to this matter can be found in the Reserved Judgment of this Court in Civil Case No.237/04 and in the Decision on the Application by the Brunets for Interlocutory orders filed on 13 February 2006.
   
2. On 13 February 2006, the Burnets applied to the Court on an urgent basis seeking orders of the Court to restrain the Bank from entering into any agreement for the sale of the Grand Hotel registered title No.11/0C22/042.
   
3. One of the grounds advanced for the order on 13 February 2006 was that the Brunets "are and have for some time been in a position to redeem the said mortgages by means of funds located partially overseas and partially within Vanuatu."
   
4. Another ground advanced was that the Bank had wrongly refused to accept the Brunets funds thus allowing them to redeem the mortgages.
   
5. Mr. Sugden had submitted on behalf of the Brunets, that the orders made after the final judgment, i.e., on 30 August and 1st September 2005 are ultra vires the powers of the Court. That on giving final judgment in the matter the court did not have any powers to make such orders. The application is set out fully below.
   

"APPLICATION

"We, PIERRE JEAN-MARIE BURNET and CHRISTIANE MARIE JOSETTE BRUNET of Port Vila, the Defendants herein, apply for the following Orders:-

1. That all orders made in this proceeding after the 11th August, 2005, including the so-called Consent Orders of 30 August 2003 be set aside.
   
2. That the Claimant pay the costs of and incidental to this Application.
   

UPON the grounds that:-

(1) That the jurisdiction of this Honourable Court in relation to Civil Case No.237 of 2004 ended save for the making of Orders necessary to give effect to this judgment of 24 January, 2005 so that in making the Consent Order the Court was functus officio and the Orders therefore were void as a nullity.

(2) The Court has no power to make an Order by consent or otherwise taking a way in futuro the right of a party to litigation to appeal a decision, to bring an application, or to raise an objection in the court of litigation so that the Consent Orders, in as much as they purport to do so are beyond power and void as a nullity.

(3) The Consent Orders were part of an agreement that was unconscionable so that the Orders should be set aside.

(4) The Claimant is in breach of the agreement out of which the Consent Orders arose in that it refused to accept payment by the Defendants in performance of the Agreement and therefore is not entitled to rely on the Consent Order and estopped from doing so.

(5) The Consent Order have been held in Civil Case No.10 of 2006 to be a fetter on the Applicants’ equitable right to redeem their mortgage although the Applicants’ equitable right to redeem their mortgage was not litigated in Civil Case No.237 of 2004 and it is a right that is separate from and overriding of the mortgagee’s legal powers of sale, so that there was no power to make Orders that touched on the equitable right to redeem and certainly not to fetter it."

Issues

6. This Application raises two main issues. Firstly whether, the Court had jurisdiction to make the orders it did on 30 August 2005 and 1st September 2005 after the Judgment in Civil Case No.237 of 2004 became finalized on 11 August, 2005.
   
7. Secondly, whether the equitable right to redeem the mortgages was part of the claim or pleading in Civil Case No.237 of 2004.
   

First Issue

Did the Court have jurisdiction to make the orders it did on 25 August and 1st September 2005.

Submissions by Brunets

8. Mr. Sugden submitted that the Default Judgment of 24 January 2005 became final on 11th August, 2005 with the delivery of the decision refusing the Application to set aside the default judgment.
   
9. The only Jurisdiction remaining lay with the Court of Appeal. As far as this Court is concerned the case was dead.
   
10. A number of authorities were cited by Mr. Sugden including –
    
    • (a) Bailey v. Marinott (1971)129 CLR 529;
      
    • (b) FAI General Insurance Co. Ltd v. Southern Cross Exploration NL [1988] HCA 13; [1958] 62 ALJR 216 at 219.
      
11. The Courts’ jurisdiction had concluded on 30 August 2005 so the Orders were a nullity and should be set aside.
    
12. The settlement agreement could only have resulted in consent orders from the Court of Appeal.
    

Submissions by Bank

13. Mr. Roper on behalf of the Bank submitted that the Court had the powers to make the orders it did on 30 August 2005 (the Consent Orders).
    
14. If we were to accept argument by Sudgen that only powers Court had at that point in time was in relation to enforcements, then, orders Sugden is asking cannot be granted either.
    
15. No appeal was made. As such the appropriate place to lodge consent orders was in this Court. Proceedings were already in Court and the Court therefore has jurisdiction to make consent orders if the parties come to Court with it.
    

LAW

16. Civil Procedure Rules
    

"Overriding objective

1.2 (1) The overriding objective of these Rules is to enable the Courts to deal with cases justly.

(2) Dealing with cases justly includes, so far as is practicable:

(a) ensuring that all parties are on an equal footing; and

(b) saving expense; and

(c) dealing with the case in ways that are proportionate:-

(i) to the importance of the case; and

(ii) to the complexity of the issues; and

(iii) to the amount of money involved; and

(iii) to the financial position of each party; and

(d) ensuring that the case is dealt with speedily and fairly; and

(e) allotting to it an appropriate share of the Court’s resources, while taking into account the need to allot resources to other cases.

Interlocutory Orders

7.7 "A party may apply for an interlocutory order, after a proceeding has been dealt with."

Judgment

13.1(3) "The Court may give judgment and make an order at any stage of a proceeding."

Agreement about compliance

14.38 " If the parties agree about how the person required to comply with the Order proposes to do so, the Court may make an enforcement order in the terms of the agreement."

Extending & Shortening time.

18.1 "Court may extend or shorten times set out in these rules for doing an act."

17. LAND LEASES ACT [CAP.163]
    

"ENFORCEMENT OF MORTGAGES

59. (1) Except as provided in section 46 a mortgage shall be enforced upon application to the Court and not otherwise.
    

(2) Upon any such application, the Court may make an order -

(a) empowering the mortgage or any other specified person to sell and transfer the mortgaged lease, and providing for the manner in which the sale is to be effected and the proceeds of the sale applied;

(b) empowering the mortgage or any other specified person to enter on the land and act in all respects in the place and on behalf of the proprietor of the lease for a specified period and providing for the application of any moneys received by him while so acting; or

(c) vesting the lease in the mortgagee or any person either absolutely or upon such terms as it thinks fit but such order shall, subject to subsection (5), not take effect until registration thereof.

(3) The Court shall, in exercising its jurisdiction under this section, take into consideration any action brought under section 58 and the results thereof.

(4) After the Court has made an order under paragraphs (a) or (c) of subsection (2) or while an order under paragraph (b) of subsection (2) is in force, no action may be commenced or judgment obtained under section 58 in respect of the mortgage except with the leave of the Court and subject to such conditions (if any) as the Court may impose.

(5) Any order made by the Court under this section for the purpose of subsection (4) be effective from the time when it is made."

18. I have considered submissions by both counsels on behalf of their respective clients and I have also taken into account the law and I have arrived at a view that, the Court did have the powers to endorse the Consent Orders on 30 August 2005. The parties through the Deed executed on 22 August 2005:
    
    • (a) agreed to resolve all matters and disputes between them on the terms and conditions in the Deed;
      
    • (b) the Brunets agreed to forgoe any right to appeal the August Ruling and will execute and provide consent orders accordingly.
      
19. In the circumstances, there was nothing for the Court of Appeal to determine or consider. No appeal was being lodged to the Court of Appeal for its consideration.
    

Second Issue

Was the equitable right to redeem the mortgage(s) part of the claim or pleading in Civil case No.237 of 2004?

20. Again, I have considered submissions by both Counsels on this point relating to the history of the equitable right to redemption of a mortgage.
    
21. One must look not only at the form but the substance of the mortgage Agreements that have been entered into including the Deed of 22 August 2006. These are basically agreements concerning the substance of the transactions between the Brunets and the Bank.
    
22. A mortgage is a mere security for money and no bargain can be validly made which will prevent the mortgagor from redeeming on payment of what is due, including principal, interest, and costs. This position at common law must be read together with the provisions of the Land Leases Act, in particular section 59. That right exists up to the time of sale of the property by the Mortgagee, i.e., he must be in a position to redeem the mortgage before the sale occurs.
    
23. It is my view that the mortgagee will not be restrained from exercising his power of sale because the mortgagor objects to the manner in which the sale is being arranged
    
21. The Mortgagee will be restrained if the mortgagor pays the amount claimed into Court. If, the debt has not been actually paid, the Court will not, as a general rule, interfere to deprive the mortgagee of the benefit of his security. Further the issue of the Mortgagors right to redemption was never pleaded in the claim.
    
22. Consent Orders were part of an agreement that was unconscionable so that the orders should be set aside.
    
23. When the Deed was prepared and executed the Claimants were represented by legal counsel. The Deed had as its annex the draft consent. I do not see how the Consent Orders as part of the Deed was unconscionable when the Claimants had legal advice all along.
    

ORDERS

23. The Application that all orders made in this proceeding after 11the August 2005, including the Consent Orders of 30 August 2005 be set aside, is refused.
    
24. The Brunets pay the costs of and incidental to this application and to be taxed if not agreed.
    

DATED at Port Vila this 27th day of February, 2006.

H. BULU
Judge.