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Pacific Royale Hotel v Tevita Siale Trading As Siale Tyre Shop [2009] TOLawRp 61; [2009] Tonga LR 450 (2 October 2009)

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

CV 662/2006

Pacific Royale Hotel

v

Tevita Siale Trading As Siale Tyre Shop

Ford CJ
29 July 2009; 2 October 2009

Debt recovery – bailiff seized property – judgment debtor non-legal entity – could still be enforced against individual owners - seized goods could be sold

On 5 December 2008 a writ of distress was issued against the judgment debtor, the Hotel, in the sum of $10,538 which represented the total amount owing to the judgment creditor, Siale, under the judgments in both the Supreme Court and Court of Appeal. The bailiff initiated interpleader proceedings to determine whether property seized by him on 11 December 2008 pursuant to a distress warrant, belonged to the judgment debtor Pacific Royale Hotel (the Hotel), and therefore could be seized, or to the interpleaders. Interpleaders argued that the Hotel (judgment debtor) was "an unincorporated body not recognised by law as being a body capable of suing or being sued." Counsel submitted that because the Hotel was a non-legal entity, there was no legal basis under which Siale could enforce his judgment against the individual owners of the Hotel, 'Olive Ramanlal and her husband Joseph.

Held:

1. As a general proposition judgment against a non-legal entity was worthless. It was equivalent to having judgment against "the Raintree" in Post Office Square. One of the first things that counsel in any civil litigation should do was check the status of the parties to ensure that, in the event of a successful outcome, judgment in the client's favour would not be rendered otiose.

2. Leave was granted by the Court for the judgment creditor to issue execution in the form of a warrant for distress against Mr and Mrs Ramanlal. The bailiff acted pursuant to the warrant and there was no reason why the Court should not order the vehicles and other goods seized to be sold by public auction with the proceeds going towards the reduction or extinguishment of the judgment debt owed.

3. The Court would ordinarily award full costs to the judgment creditor but it declined to do so because it was clear from the submissions filed that counsel had not carried out even basic research into the law. No authorities or rules of court were cited or referred to. Clients should be able to expect more from their counsel in commercial litigation. To show the Court's concern over the issue, the judgment creditor was awarded costs against Mr and Mrs Ramanlal in an amount to be agreed or otherwise fixed at 50% of those allowed on taxation together with reasonable disbursements.

Cases considered:

FC Nichols (Wholesales) Pty Ltd v 'Ofa Simiki, trading as OSB (CV 215/03, judgment dated 16 August 2006, Webster CJ)

Pacific Royal Hotel v Vakalahi anor [2007] Tonga LR 36

Pacific Royal Hotel v Vakalahi anor [2007] Tonga LR 46 (CA)

Sadler v Whiteman [1910] UKLawRpAC 41; [1910] 1 KB 868

Rules considered:

Civil Procedure Rules (UK)

Supreme Court Practice (UK)

Supreme Court Rules 2007

Counsel for the defendant/judgment creditor : Mr Fakahua
Counsel for the interpleaders : Mrs Vaihu

Judgment

[1] The bailiff has initiated interpleader proceedings to determine whether property seized by him on 11 December 2008, pursuant to a distress warrant, belonged to the judgment debtor Pacific Royale Hotel (the Hotel), and therefore could be seized, or to the interpleaders.

[2] The judgment creditor Tevita Siale, trading as Siale Tyre Shop, (Siale) was sued unsuccessfully by the Hotel in a complicated case relating to repair work carried out on a motor vehicle allegedly owned by the Hotel. I need not go into the facts of that case but in a judgment dated 14 May 2007, Laurenson J. found against the Hotel and entered judgment for Siale on his counterclaim in the sum of $4,130.00 together with interest, costs and disbursements [see Pacific Royal Hotel v Vakalahi anor [2007] Tonga LR 36].

[3] The Hotel then appealed against the judgment of Laurenson J. but in its decision dated 20 July 2007 the Court of Appeal dismissed the appeal and ordered costs against the Hotel. On 5 December 2008 a writ of distress was issued against the Hotel in the sum of $10,538.00 which represented the total amount owing to Siale at that time under the judgments in both courts [see Pacific Royal Hotel v Vakalahi anor [2007] Tonga LR 46 (CA)].

The seizure

[4] On 11 December 2008, a bailiff officer acting pursuant to the writ of distress taken out by Siale seized by way of special seizure the following goods:

1. Three 50ft Tapas;

2. One white car, registration No. C11400;

3. One black car, registration No. C13856;

4. Two tapas;

5. Three mats.

[5] On 12 December 2008 the lawyer acting for the interpleaders gave notice making claims against the seized property which can be summarised as follows:

(i) "J R Rental Car" produced certificates of registration issued by the Traffic Department dated 20 February 2003 and 31 October 2005 respectively which stated that motor vehicles registration numbers C13856 and C11400 were "the property of J R Rental Car".

(ii) "J R Finance" claimed to be a loan company that loaned money to the public taking Tongan mats and tapas as security. The notice stated: "Once paid off the security assets are returned to each borrower. If unpaid the company would then sell them on account of the borrower's debt." No details were provided, however, of any loan taken out by the Hotel from J R Finance.

(iii) Mr Solomone K. Vi claimed to be the owner of another motor vehicle, registration No.J5404 which was also allegedly seized by the bailiff. The certificate of registration produced to the court shows this vehicle to be the property of "Pacific Royale". Mr Vi claims in his notice that he was employed as "handyman for Pacific Royale Hotel" and in April 2007 "his employers Mr and Mrs Ramanal" gifted him the vehicle because they had been happy with his work performance. It is not clear whether the bailiff did, in fact, seize vehicle No.J5404. It was included in the original list of seized goods but on the copy before the court, the item has lines through it and appears to have been deleted.

The contentions

[6] The Hotel, which was also known as Ramanlal's Hotel, was a well-known establishment located in Taufa'ahau Road close to the centre of Nuku'alofa. It was one of the many businesses looted and completely destroyed by fire in the riots of 16 November 2006.

[7] The principal contention by Mrs Vaihu acting for the interpleaders was that the Hotel is "an unincorporated body not recognised by law as being a body capable of suing or being sued." Counsel submitted that because the Hotel is a non-legal entity, there is no legal basis under which Siale can enforce his judgment against the individual owners of the Hotel, 'Olive Ramanlal and her husband Joseph.

[8] Mr Fakahua, for Siale, contended that the Ramanlals, as owners of the Hotel, were sole traders and, without citing any authority on the point, submitted that they were, therefore, liable for the judgment debts of the Hotel. Counsel for Siale further submitted that the "JR" in both JR Finance and JR Rental Car stood for "Joseph Ramanlal" and the bailiff was therefore entitled to seize the motor vehicles and goods in question.

[9] In addition to the documentation filed in respect of the interpleader proceedings, the court did hear evidence given on oath by Mrs 'Olive Ramanlal in the course of an oral examination on 4 September 2008. From all the evidence, I am prepared to accept that the Hotel was owned by the Ramanlals; that they operated the business as a partnership under the name Pacific Royale Hotel and JR Finance and JR Rental Car were trade names for two of Mr Ramanlal's ventures. When Mrs Ramanlal, who was represented by counsel, was orally examined as to her means she did not dispute these issues nor did she dispute liability for the debt. She did, however after giving her own evidence, seek an adjournment of the examination until her husband returned from overseas. An adjournment was granted but there has been no subsequent request to the court to have the examination reconvened.

Discussion

[10] As a general proposition, it is difficult to take exception with Mrs Vaihu's principal contention. Judgment against a non-legal entity is worthless. It is equivalent to having judgment against "the Raintree" in Post Office Square. One of the first things that counsel in any civil litigation should do is check out the status of the parties to ensure that, in the event of a successful outcome, judgment in the client's favour will not be rendered otiose. So, without more, Mr Fakahua's submissions could not succeed.

[11] In FC Nichols (Wholesales) Pty Ltd v 'Ofa Simiki, trading as OSB (CV 215/03, judgment dated 16 August 2006) Webster CJ was faced with a submission that the plaintiff had not been proved to be a legal entity in Tonga. As to this point, His Honour said:

"I have to say that I am not at all sure that it is necessary for a party to be proved to be a legal entity for it to raise an action, as was submitted for the defendant -- no authority was cited for that -- though from a plaintiff's point of view it is important for him to be sure that he is suing a legal entity as defendant if he wishes to have prospects of recovering any monetary award."

The same would apply, of course, to a defendant making a counterclaim against a plaintiff. He would need to be sure that the plaintiff is a legal entity if he wishes to have any prospect of recovering any monetary award.

[12] Although Mr Fakahua made no reference in his submissions to the rules of Court, it would seem that the situation faced by his client is covered by Order 81 of the English Supreme Court Practice which is applicable in the Kingdom of Tonga under Order 2, Rule 3 of the Supreme Court Rules 2007, formerly Rule 2(2) of the 1991 Supreme Court Rules.

[13] Order 81/1 provides:

"Subject to the provisions of any enactment, any two or more persons claiming to be entitled, or alleged to be liable, as partners in respect of a cause of action and carrying on business within the jurisdiction may sue, or be sued, in the name of the firm (if any) of which they were partners at the time when the cause of action accrued."

[14] The comment on this rule in the White Book includes the following passage:

"The firm name is a mere expression, for a firm is not a legal entity, nor for some purposes is it a "person," although for convenience under this Order, the firm name may be used for the purpose of suing and being sued."

[15] In Sadler v Whiteman [1910] UKLawRpAC 41; [1910] 1 KB 868, 889, Farwell L.J., who was dealing with the same provision in an older version of the English rules said:

"In English law a firm as such has no existence; partners carry on business both as principals and as agents for each other within the scope of the partnership business; the firm name is a mere expression, not a legal entity, although for convenience under (the equivalent of Order 81) it may be used for the sake of suing and being sued."

[16] Order 81, r.2 provides that a defendant to an action brought by partners in the name of the firm is entitled to request a written statement setting out the names of all persons who were partners in the firm at the time when the cause of action accrued. Counsel for Siale did not, of course, take this step but I do not see his failure in this regard as being fatal to his right to enforce judgment against the firm.

[17] Order 81, r.5 deals with the enforcement of a judgment against a firm and paragraph (4) allows a plaintiff who has obtained such a judgment to apply for leave to issue execution against any other person as being a member of the firm at the time the cause of action arose, provided he had not to the knowledge of the plaintiff left the firm before the issue of the writ. This provision would apply equally, of course, to a successful defendant in a counterclaim.

[18] Under O.2 Rule 3 of the Tongan Supreme Rules 2007, the English Rules of the Supreme Court (the "White Book") apply where there is no relevant provision in the Tongan rules and it is only in the event of there being no relevant provision in either set of rules that the English Civil Procedure Rules have application.

[19] For completeness, however, I record that the situation in England is now covered by r.7.2A of the English Civil Procedure Rules (which came into force on 1 October 2006) and associated Practice Direction (Number 7) paragraphs 5A and 5B.

Paragraph 5A provides as follows:

"Claims by and against partnerships within the jurisdiction

5A.1 Paragraphs 5A and 5B apply to claims that are brought by or against two or more person who —

(1) were partners; and

(2) carried on that partnership business within the jurisdiction at the time when the cause of action accrued.

5A.2 For the purposes of this paragraph, 'partners' includes persons claiming to be entitled as partners and persons alleged to be partners.

5A.3 Where that partnership has a name, unless it is inappropriate to do so, claims must be brought in or against the name under which that partnership carried on business at the time the cause of action accrued."

Conclusions

[20] Leave was granted by the court for Siale to issue execution in the form of a warrant for distress against Mr and Mrs Ramanlal. The bailiff acted pursuant to the warrant and I see no reason why this court should not now order the vehicles and other goods seized to be sold by public auction with the proceeds going towards the reduction or extinguishment of the judgment debt owed.

[21] As noted above, there appears to be some confusion as to whether motor vehicle No. J5404 claimed by Mr Vi has been seized by the bailiff but, if that is not the position, then I direct the bailiff to proceed and seize that vehicle forthwith so that it can be sold along with the other vehicles. Mr Vi's interpleader claim is rejected. His alleged title to the vehicle does not supersede Siale's rights to enforce his judgment.

[22] Ordinarily, I would award full costs to Siale but I decline to do so in this case because it is clear from the submissions filed that counsel had not carried out even basic research into the law. No authorities or rules of court were cited or referred to. Clients should be able to expect more from their counsel in commercial litigation. To show the court's concern over this issue, Siale is awarded costs against Joseph and Olive Ramanlal in an amount to be agreed or otherwise fixed at 50% of those allowed on taxation together with reasonable disbursements.