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Mechtler v Natonga [2015] VUSC 169; Civil Case 332 of 2014 (24 November 2015)

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

Civil Case No. 332 of 2014

BETWEEN:

LESLEY MECHTLER
Claimant

AND:

SABY NATONGA & ARTHUR KNIGHT
Defendants

Hearing: 24 November 2015
Before: Justice Chetwynd

Counsel: Mr Malcolm for the Claimant
Mr Kapapa for the Defendants

JUDGMENT

1. This matter was listed for a trial over two days commencing at 9 am today 24th November. The date had been set at a conference which was held on 28th August. It is probably helpful to look at what happened before that conference. Previously this case had been managed by Harrop J. He published a minute on 2nd February 2015. The minute was distributed to Mr Malcolm who represents the Claimant and to Mr Kapapa who had filed a response on behalf of the Defendants. In the minute His Lordship pointed out that despite the response being filed on 10th November 2014 there had been no subsequent defence and counterclaim. He ordered a defence to be filed by 13th February and fixed a conference for 27th February.
   
2. No one appeared for the Defendants on 27th February. Harrop J commented on that absence and made further orders including the filing of an amended claim (it was filed on 10th March) and the filing of a defence to that amended claim. Another conference was fixed for 17th April.
   
3. On 17th April Harrop J recorded the effects that cyclone Pam had had on Port Vila and in particular the damage to Mr Kapapa's office. Mr Malcolm agreed to copy all the documents on his file and give the copies to Mr Kapapa. The Defendants were given until 22nd May to file their defence. Sworn statements in support of the claim were to be filed by 22nd May as well. Sworn statements from the Defendants were to be filed by 6th June. A further conference was listed for 8th June.
   
4. Both sides were legally represented at the conference on 8th June. Harrop J noted the absence of any defence and it was agreed that one would be filed no later than noon on Friday 19th June. Mr Kapapa also indicated the possibility of a settlement and whilst the Judge acknowledged that welcome prospect he indicated the urgency of the situation and the need for a trial on an exigent basis. A conference was fixed for 19th June.
   
5. On 19th June the Defendants had still not filed a defence to the amended claim and His Lordship was also informed that settlement was unlikely as no realistic propositions were forthcoming. He fixed the date for a two day trial starting 1st September, some two months ahead in the hope that, in the interim, a settlement could be negotiated. The Judge emphasised the need for strict compliance with a new timetable he set out for dealing with pleadings and evidence in preparation for trial.
   
6. For administrative reasons on 6th July the file was transferred to me. As I was unable to hear a two day trial on 1st and 2nd September I moved the trial date to 23rd and 24th September. At the request of the Claimant's legal representative I also fixed a conference for 28th August.
   
7. Both sides were again represented at the conference on 28th August. Mr Malcolm explained he was in difficulties as he was representing one of the politicians charged in bribery and corruption case and the trial of all the Defendants in that matter was due to start soon. As that trial was scheduled to last two or three weeks the trial in this matter would have to be moved yet again. My minute from the conference points out the criminal trial of the politicians would have to take precedence over a civil matter. The minute also mentions how fortuitous this was for the Defendants as they had still not filed a defence to the amended claim or complied with any of the other directions in the case. The Defendants were given another chance to comply and warned that they could not abuse the Court's patience any more. The trial was fixed for 24th and 25th November.
   
8. Yesterday afternoon 23rd November, I sent an Email to the legal representatives for both Claimant and Defendants reminding them of the scheduled trial. Mr Malcolm acknowledged receipt, Mr Kapapa did not. When the case was called on this morning at 9 am there was no sign of the Defendants or their legal representative. At about 9 am my Associate telephoned counsel. When he responded he appeared to be saying he was unaware of the hearing. He asked to speak to counsel for the Claimant. He apparently asked if he could have an adjournment. That request was refused and he was informed the trial would proceed at 09:30 hours. At 9:30 am there was still no sign of him or his clients the Defendants and so the case was called on and I proceeded in accordance with Rule 12.9(1) (c) of the Civil Procedure Rules. That rule provides that if a defendant does not attend when the trial starts the claimant, with the permission of the court, may call evidence to establish that he or she is entitled to judgment against the defendant. Counsel for the Defendants eventually arrived at about 9:45. He apologised to the court saying his mind was unsettled due to the recent events where he had been arrested and charged along with others in connection with allegations of conspiracy. He asked for an adjournment. He was informed that whilst the court had sympathy for his plight the matter would not be adjourned as the trial date had been set nearly three months previously and in addition the Defendants had still not complied with directions and orders some of which had been made by Harrop J in April, 7 months ago. They had been warned about delay at the conference in August.
   
9. Counsel for the Claimant continued with the evidence for the Claimant. That was going to come from Mr Kalpokor Kalsakau who holds a power of attorney from Mr Mechtler, and from Mr Morgan Bragg. They had filed sworn statements earlier in the proceeding. Mr Kalsakau on 31st October 2014 and 27th May 2015 and Mr Bragg on 20th August 2015. There were no notices filed pursuant to Rule 11.7 (4) requiring the witnesses to attend and be cross examined. Also in evidence was a bundle of documents filed by the Claimant on 14th August 2015. Of course there was also reference to the pleadings. The details of the pleadings filed to date are set out briefly below.
   
10. The claim was filed on 31st October 2014. The Statement of Claim contained an averment the Claimant was the Registered Proprietor of Lease, which comprised a property at Tagabe, and that he had entered into an agreement with the Defendants to rent them the front part of the property from which to run a night club business known as Planet 107 Entertainment Centre. The Claim set out the current terms of the tenancy, namely a rental of VT240,000 per month, a monthly term, and a condition there were to be no alterations to the property without the Claimant's permission. The claim then went on to allege that no rent had been paid for some time, that alterations had been carried out without permission and that despite a notice to quit the Defendants were still occupying the property.
    
11. On 13th February 2015 the Defendants filed a defence. By paragraph 1 the Defendants agreed the claimant was the Registered Proprietor of lease 11/0J14/016. In paragraph 2 they agreed they operated the night club and confirmed the First-named Defendant Mr Saby Natonga was the owner of the business. In paragraph 3 there was an averment that there was a Commercial Lease Agreement between the parties. The Defendants do not give particulars of the terms of the "Commercial Lease Agreement" except it is said in paragraph 16 of the defence that part of the agreement provided that in the event the Claimant wished to terminate the agreement, the Claimant "shall compensate for all material improvements made". That formed the basis of a counterclaim for VT 38,900,000. The Defendants also deny being given a notice to quit.
    
12. The Claimant filed an amended claim on 10th March 2015. It refers in more detail to the notice to quit. It contains a claim the Defendants have refused to vacate the property, particulars of the rent remaining unpaid, particulars of the mesne profits claimed and a claim for damages for damage to the property. The amendments in the claim from that filed originally remain unanswered because to date still no defence has been filed.
    
13. The Claimant filed a defence to the counterclaim on 23rd February 2015. It says that the "renovations" were carried out without authority. The details of the renovations are nowhere set out by the Defendants. What is claimed is that in 2010 the property leased was worth VT 16,300,000 and in 2015 it was worth VT 38,900,00. Neither the basis for the valuations nor details of who carried them out are provided by the Defendants. The Defendants also claim the Claimant, "has fail (sic) to honour the terms of the agreement and was using improper ways outside the terms of the agreement". Again no further details have been provided. In the defence to the counterclaim the Claimant can only deny the assertion. Without further details of what exactly is alleged that is the best he can do.
    
14. This morning Mr Kalsakau gave oral evidence. He referred to a document in the bundle. By way of a reminder, this bundle was lodged in court on 14th August this year. A copy was served on the Defendants through their counsel. No objections to any of the documents in the bundle were or have been raised. Mr Kalsakau said the tenancy agreement at page 14 of the bundle was the original agreement for the lease of the property to Planet 107. The Defendants' legal representative sought to challenge this evidence. It is obvious on the face of it that that agreement signed in 2010 was between Mr Kalsakau "the Landlord" and Jay Ngwele signing for Starside Ltd. I suggested to Mr Kapapa that he was in difficulty challenging the existence of the lease or agreement given the admissions made in the defence about the existence of a "commercial lease agreement" and the lack of detail as to any other agreement or lease that was relevant. I asked him if the lease he was alleging existed was the one set out in the amended claim (or indeed the original claim). He confirmed that was not what the Defendants claimed. However, he insisted that he was entitled to ask any question he thought necessary in cross examination. I agreed with him but said he should be careful that the questions implied a contradiction of what had been admitted in the defence. The questions being asked of the witness were to the effect that he had no authority to enter into any agreement on the Claimant's behalf and that there was in fact no agreement.
    
15. Counsel then indicated he had no further questions and following the formal tendering of Mr Kalsakau's two sworn statements as exhibits 1 and 2, the tendering of a certificate from Vanuatu Financial Services Commission showing the registration by the first-named defendant of the business name of Planet 107 Entertainment Centre as exhibit 3 and a sworn statement by Morgan Bragg as exhibit 4 the Claimant's case was closed.
    
16. The Defendants did not seek to introduce any evidence.
    
17. After hearing closing arguments I indicated that I would be giving judgment in favour of the Claimant and I would provide written reasons later. These are those reasons.
    
18. This case demonstrates the dangers of not complying with directions and orders and failing to conduct litigation in an appropriate manner. The Defendants in this case have failed to file a defence to the amended claim and have failed to file any sworn statements of evidence supporting the defence and counterclaim that had been filed. They have been given every opportunity of remedying those deficiencies, every assistance in overcoming the problems created by cyclone Pam and ample warning of the possible consequences of doing nothing.
    
19. The Claimant has shown that there was a "formal" agreement at sometime between him and a business trading as Planet 107 Entertainment Centre. The persons he dealt with over the years were a Mr Jay Ngwele, Mr Saby Natonga and Arthur Knight. That is evident from the documents in the bundle including "Rent invoices" (pages 19 -28) and copy correspondence at pages 31 to 39 inclusive. Whilst I am not entirely convinced that the agreement referred to by Mr Kalsakau (at pages 14 to 18) was the original agreement in all probability it was. The description of the property in that agreement, the use to which it was going to be put and the involvement of Mr Ngwele all point to the probability that it was the original agreement. The Defendants say there was an agreement but have produced no evidence to gainsay what Mr Kalsakau stated in evidence.
    
20. That agreement was for two years. There was an option to renew for a further year. There is no evidence that there was a renewal at that time or indeed any other time. When the agreement or lease came to an end then by operation of law a periodic tenancy was created. That is clear from the Land Leases Act [Cap 163]. The starting point must be section 48. That section allows the proprietor of a registered lease to sublease his property and by section 48 (2) the provisions of the Land Leases Act apply to subleases in the same way they apply to leases. Next we turn to section 37 relating to "Holding over". The Defendants were in lawful occupation of the property. That is not disputed. They continued to occupy the property with the consent of the Claimant, at least to begin with. Section 37 therefore comes into operation and the Defendants were holding the land on a periodic tenancy. If reference is then made to section 33 (3) it can be seen that the period of a periodic tenancy is the period by reference to which the rent is payable. Rent was payable monthly by the Defendants and so by operation of law, the Defendants held the land on a monthly periodic tenancy.
    
21. There were clearly negotiations going on about renewing the lease. The terms could not be agreed and the eventually the Claimant gave the Defendants notice to quit. Section 33(3) required the Claimant in this case to give a months notice. That was given by the Claimant on 29th August 2014 as is evidenced by the documents exhibited to Mr Kalsakau's first sworn statement (exhibit 1 annexure "C"). The Defendants did not quit the property and remain in occupation to this day. The process of obtaining vacant possession was started by these proceedings. There is no evidence of any new lease being granted and as the Defendants are holding over as periodic tenants the Claimant is entitled to an order that they give up possession of the property.
    
22. There is evidence from Mr Kalsakau that the rent was in arrears prior to the notice to quite being given. No evidence has been produced to say that the Defendants have paid the rent said to be outstanding. No evidence has been produced in relation to the invoices which are annexed to Exhibit 2 the second sworn statement of Mr Kalsakau. All the Defendants offer is a bare averment in the defence filed that they, "have paid up all the rents as pursuant to the Agreement". No further details are given and there is no evidence produced by the Defendants in respect of the rent, paid or unpaid. In the circumstances and on the balance of probabilities the Claimant is entitled to recover the unpaid rent which he claims. There is no evidence to contradict what is said on the Claimant's behalf that the Defendants are using land which was not included in the original agreement. The letter from Mr Knight dated 2nd March 2012 (see page 38 of the bundle) is an acknowledgment that the Defendants are and have been making use of Claimant's land which was not included in the original agreement. The Claimant is entitled to charge for that unauthorised use.
    
23. The Claimant also asks for damages in relation to unauthorised works carried out by the Defendants. He has produced a quotation detailing the cost of carrying out this work (annexure "A" to Exhibit 4). The figures mentioned in that quote are well in excess of the amount claimed. The Claimant acknowledges this and says he will not seek to amend the Claim further to increase the claim for damages. Again there is a distinct lack of evidence from the Defendants. As mentioned in paragraph 11 above, the Defendants refer to "renovations" and they imply those renovations have increased the value of the property from VT 16.3 million to VT 38.9 million. They offer absolutely no evidence about that and the implication that they are responsible for, or entitled to the increase in valuation is illogical and untenable. There may be many other reasons why the value of the property has changed that have nothing to do with the defendants' "renovations" to or occupation of, the property. There is no explanation of the basis of the valuation. There is no detail about the work carried out. There is no evidence that any work carried out was done with the Claimant's permission. The Claimant is entitled to recover the damages set out in his claim.
    
24. In addition to unpaid rent, the Claimant is entitled to recover mesne profits from the effective date of the notice to quit up until the date vacant possession is given. The amount to be paid monthly as mesne profit is the same as the monthly rental claimed.
    

25 All money judgments will attract interest at the rate of 5% per annum from the date of judgment until paid.

25. The Defendants counterclaim is dismissed.
    
26. The Defendants shall pay the Claimant's costs and those costs, if not otherwise agreed, will be taxed by the Master of the Supreme Court on a standard basis.
    

ORDER

1. The Defendants shall give vacant possession of the property comprised in registered lease No.11/0J14/016 at Tagabe Port Vila to the Claimant forthwith and in any event no later than 24th December 2015;
2. The Defendants shall pay arrears of rent in the sum of VT 480,060;
3. The Defendants shall pay mesne profits at the rate of VT 240,000 per calendar month from 31st October 2014 to the date vacant possession is given;
4. The Defendants shall pay to the Claimant the sum of VT 4,230,000 in respect of damage caused to the property;
5. The Defendants shall pay interest at the rate of 5% per annum on amounts ordered to be paid in accordance with 2, 3, and 4 above from todays date until payment;
6. The Defendants counterclaim is hereby dismissed;
7. The Defendants shall pay the costs of the Claimant which costs shall be taxed at the standard rate if not agreed;
8. There shall be an Enforcement Conference fixed for 9 am on Tuesday 26th January 2016
   

DATED at Port Vila this 24th November 2015
BY THE COURT

DAVID CHETWYND
Judge