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Australia and New Zealand Banking Group Ltd v Ministry of Civil Aviation [2003] TOLawRp 39; [2003] Tonga LR 281 (18 September 2003)

IN THE SUPREME COURT OF TONGA
Supreme Court, Nuku'alofa

C 893/2002

Australia and New Zealand Banking Group Limited

v

Ministry of Civil Aviation anor

Ward CJ
19 August 2003; 18 September 2003

Practice and procedure – application for summary judgment – Court found possible defence – application refused

The first defendant entered into an oral agreement with the third party, Fifita, for work to be carried out. Fifita applied for a loan from the plaintiff and presented a letter on Ministry letterhead signed by one Faletau, the head of the first defendant's finance division, confirming his Ministry's satisfaction with the standard of Fifita's work under the contract and stating future work which was certainly to be carried out by Fifita. Fifita also produced a letter addressed to the first defendant dated three days later in which he authorised the payment directly to the plaintiff of the sum claimed in this action namely $45,000. That letter was stamped with the Ministry stamp and signed by the same Faletau. The plaintiff made the loan. Fifita defaulted and the plaintiff wrote to the first defendant seeking payment of the assigned debt. Their request was denied by the first defendant. The plaintiff claimed there was a valid assignment. The plaintiff sought summary judgment under Order 14.

Held:

1. The pleadings and affidavit suggested that the plaintiff may well be able to prove his claim but the defence and the affidavit in support raise a possible defence, the strength of which can only be determined by evidence at trial. The application for summary judgment is refused.

2. The form of the defence filed and the evidence in support of the application for Order 14 judgment was such that if, on trial, the plaintiff's claim succeeded, the Court may be inclined to hear an application for costs on a solicitor/own client basis.

Cases considered:

Anglo-Italian Bank v Wells [1878] LT 197

Home and Overseas Insurance Company v Mentor Insurance Limited [1990] 1 WLR 156

Counsel for plaintiff/applicant: Mr D Garrett
Counsel for defendants/respondents: Mr 'A Kefu

Judgment

The plaintiff claims payment of a debt due from the defendants to a third party and assigned by that third party to the plaintiff.

The brief facts alleged are that the first defendant entered into an oral agreement with the third party, Fifita, for work to be carried out. Fifita applied for a loan from the plaintiff and presented a letter on Ministry letterhead signed by one Faletau, the head of the first defendant's finance division, confirming his Ministry's satisfaction with the standard of Fifita's work under the contract and stating future work which was certainly to be carried out by Fifita.

Fifita also produced a letter addressed to the first defendant dated three days later in which he authorised the payment directly to the plaintiff of the sum claimed in this action namely $45,000. That letter was stamped with the Ministry stamp and signed by the same Faletau.

The plaintiff made the loan. Fifita defaulted and the plaintiff wrote to the first defendant seeking payment of the assigned debt. Their request was denied by the first defendant. The plaintiff claims this was a valid assignment.

The defence filed admits the letters but denies there was any assignment of the loan and therefore no liability.

The plaintiff seeks summary judgment under Order 14.

In a detailed submission, counsel for the applicant sets out the "three central issues:

- whether Faletau had the authority to bind the Ministry; and

- whether the letters dated 5 and 8 February and in particular their mode of execution, together constituted a valid assignment of the debt of TOP$45, 000 owed by the Ministry to Fifita.

- whether in the light of Faletau's actions, the Ministry is estopped from now claiming that he had no authority to bind it or the Crown."

Mr Garrett argues that the pleadings reveal a clear case of actual authority or, if not apparent or ostensible authority, in Faletau to bind the Ministry and, in that case, the letters can only be read as a valid assignment. On that basis the defendants are now estopped from denying Faletau's authority and therefore the debt.

The defendants' affidavit in support of their opposition denies that Faletau's functions included the power to commit the Ministry or to assign any debt to any third party. The affidavit suggests in addition that a letter from an officer of the plaintiff in June 2002 showed the plaintiff only regarded the correspondence from Faletau as a guarantee and not an assignment.

An order for summary judgment under Order 14 will only be given where there is no defence to the claim. That has been stated to mean where there is plainly no defence. In Home and Overseas Insurance Company v Mentor Insurance Limited [1990] 1 WLR 156, Parker LJ explained at 158:

"The purpose of Order 14 is to enable a plaintiff to obtain a quick judgment where there is plainly no defence to the claim. If the defendant's only suggested defence is a point of law and the court can see at once that the point in misconceived the plaintiff is entitled to judgment. If at first sight the point appears to be arguable but with a relatively short argument can be shown to be plainly unsustainable the plaintiff is also entitled to judgment."

Mr Garrett's case is that this is just such a case. He suggests the letters, which are admitted, clearly establish a valid assignment and the plaintiff is therefore entitled to its judgment.

Had this case turned entirely on the point of law, he may well have succeeded in his application. However, I do not accept it is clearly solely an issue of law. The defence raised is that the authority to commit the Ministry to guarantee personal loans or to assign debts of the Ministry to third parties does not exist under the terms of Faletau's appointment. They suggest the Bank's own correspondence shows the Bank itself did not regard this as an assignment so much as a form of guarantee. Those are matters of fact and law upon which the court will require further evidence.

In order to obtain summary judgment under Order 14, the plaintiff must satisfy the court that he can prove his claim clearly but the court must also be satisfied that the defendant is unable to set up a bona fide defence or raise an issue against the claim which ought to be tried. In Anglo-Italian Bank v Wells [1878] LT 197 at 199 Jessel MR pointed out that Order 14 is intended to prevent a man clearly entitled to money from being delayed, where there is no fairly arguable defence to be brought forward. At 201 he stated:

"When the judge is satisfied not only that there is no defence but no fairly arguable point to be argued on behalf of the defendant it is his duty to give judgment for the plaintiff."

The pleadings and affidavit suggest that the plaintiff may well be able to prove his claim but the defence and the affidavit of Havea in support raises a possible defence, the strength of which can only be determined by evidence at trial.

In those circumstances the application is refused.

The plaintiff had sought payment of costs, if successful in its application, on a solicitor/own client basis. They have not succeeded and so they are not entitled to their costs but I shall order that the costs of this application shall be in the cause.

The form of the defence filed and the evidence in support of the application for Order 14 judgment is such that if, on trial, the plaintiff's claim succeeds, the court may be inclined to hear an application for costs on a solicitor/own client basis including those for this application.