Balcarran Bundhoo v State of Mauritius

Balcarran Bundhoo

Appellant

v.

State of Mauritius

Respondent

FROM

THE COURT OF APPEAL OF

MAURITIUS

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JUDGMENT OF THE LORDS OF THE JUDICIAL

COMMITTEE OF THE PRIVY COUNCIL

Delivered the 25^th April 2007

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Present at the hearing:-

Lord Scott of Foscote

Lord Rodger of Earlsferry

Lord Walker of Gestinghope

Lord Brown of Eaton-under-Heywood

Sir Peter Gibson

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[Delivered by Lord Scott of Foscote]

The litigation that has led to this appeal arises out of the sale by judicial auction of Stratford College, Victoria Avenue, Quatre Bornes. The auction took place on 31 October 2002. The State of Mauritius (“the State”) was the purchaser. Stratford College belonged to Mr Balcarran Bundhoo, the appellant before the Board. He is seeking to set aside the sale. It is convenient, before outlining the issues raised in this appeal, to provide a little background.

Judicial Sales

The Sale of Immovable Property Act provides procedures whereby the immovable property of a judgment debtor may be seized, sold by auction under judicial authority, and the proceeds of sale applied in or towards discharge of the debt owing to the judgment creditor. Following the issue of a writ of execution on behalf of the judgment creditor, the sale procedures start with a Memorandum of Seizure of the property (see sections 5 and 6 of the Act). Next the execution creditor must deposit at the Master’s Office a Memorandum of Charges (the “cahier des charges”). This memorandum must, among other things, set out the conditions of sale under which the property is to be sold (section 20(1)). The execution debtor is given an opportunity to examine the memorandum (section 21) and can apply to the Master for amendments to it to be made (section 30). The Master fixes the date for the sale (section 20(2)) but the execution debtor can apply for a postponement (section 36). The execution debtor is not entitled to bid at the auction (section 42).

After the sale before the Master has taken place, any person may, within 8 days from the adjudication, on “good cause shown to the Master’s satisfaction” and on providing a deposit, make an “outbidding”. An “outbidding” is a formal offer made at the Master’s Office to acquire the property for a sum that must not be less than one-sixth of the sale price (see section 139). The effect of the outbidding is that the property must be put up for sale by auction a second time. If, at the second auction, the property makes less than it made at the original auction, the outbidder is liable to make up the difference and, as well, may in certain circumstances forfeit his deposit (section 145). An adjudication after this second auction cannot be overridden by a further outbidding (section 146).

Section 207 of the Act provides that:

“(1) No appeal shall lie against a judgment of adjudication which is not objected to at the time of the adjudication.

…”

Where there has been an adjudication in favour of a successful bidder but the adjudicatee fails to complete the purchase, the adjudicatee becomes liable “without prejudice to any other legal remedy against him” to be sued by way of folle-enchèré (sections 44 and 45) and the property must be resold by folle-enchèré (section 148).

The folle-enchèré procedure is dealt with in sections 149 to 152 of the Act. The point to notice for present purposes is that the procedure involves further delay before the judgment creditors, for whose benefit the judicial sale is taking place, can expect to receive their money.

The facts leading up to the sale of Stratford College to the State

Stratford College was, as its name suggests, run by Mr Bundhoo and his wife, Mrs Sobha Ramphul, as a school. Proceedings against Mr Bundhoo, brought in the Industrial Court by 33 teachers formerly employed at the school, led to judgment in their favour given in June 1993. The judgment was upheld in the Appellate Court of the Supreme Court of Mauritius on 5 July 1994 and by the Judicial Committee of the Privy Council on 5 July 2000. But the judgment debt was not paid.

On 22 October 2001, a writ of execution against Mr Bundhoo’s property was issued at the request of the 33 teachers, followed, on 27 November 2001, by notification to Mr Bundhoo of a Memorandum of Seizure of Stratford College. The Memorandum of Seizure stated that, as at 12 October 2001, the amount owing under the Industrial Court judgment, including interest and costs, was Rs 3,272,010.56. A Memorandum of Charges was filed on 24 December 2001 and a judicial sale was fixed for 11 April 2002. Article 1 of the “Conditions of Sale” contained in the Memorandum of Charges said that the sale of Stratford College would take place subject to the provisions of the Sale of Immovable Property Act, and Article 6 provided, so far as relevant, that:

“The purchaser or purchasers of [Stratford College] … shall be bound, if required so to do, by any of the parties to the sale or by any creditors inscribed on the said property/properties … to deposit cash at the time of the adjudication into the hands of the Master and Registrar of the [Master’s Court] one fourth of his or their purchase price …”

No application was made by Mr Bundhoo for any change to be made to any of the Conditions of Sale.

On 11 April 2002, Stratford College was put up for sale by judicial auction and sold to the State for Rs 10 million. But on 12 April 2002, a Mr V Ramphul petitioned the Master for an order that “the property be resold by way of outbidding”. He said, in his petition, that Stratford College was worth more than Rs 25 million. The Master acceded to the petition, ordered Mr V Ramphul to pay a deposit of Rs 250,000 to the Cashier of the Supreme Court and fixed 31 October 2002 as the date for the re-auctioning of Stratford College. Mr V Ramphul was Mrs Sobha Ramphul’s brother and, thus, Mr Bundhoo’s brother-in-law.

The Sale to the State

At the re-sale on 31 October 2002, the highest bid, Rs 35,025,000, was made by a lawyer, Mr Abbasakoor, acting for Mrs Sobha Ramphul. What then happened is recorded in the minutes of the proceedings:

“Mr P Balmano [the attorney in charge of the sale on behalf of the execution creditors] moves for deposit and adjudication.

Court so orders

Mr O N Abbasakoor, SA states that the adjudicatee is making a deposit of Rs 5 million and tenders a cheque in that amount.

Mr P Balmano, SA objects to same and insists that the whole of the ¼ deposit be made as per conditions of sale embodied in the Memorandum of Charges.

Mr O N Abbasakoor, SA states the Rs 5 million being tendered is more than sufficient to pay the clients of Mr P Balmano, SA, the seizing creditors [i.e. the 33 teachers].

Mr P Balmano SA maintains his objection, whereupon Mr O N Abbasakoor moves for some time to make the deposit as enunciated in the cahier des charges i.e. up to 2.50 p.m. (Time being now 2.35 p.m.)No objection from Mr P Balmano who states that he is ready to wait until 3 p.m.

Court maintains the matter up to 3 p.m.

Later: - Time is 3.25 p.m.

Case is called anew.

…

Mr M I Dauhoo replacing Mr O N Abbasakoor, SA, apologises for the delay caused and states that the adjudicatee is on her way to Court from the bank and moves for some more time.

Mr P Balmano, SA objects to above motion and moves that the order of adjudication made earlier be recalled in as much as the adjudicatee has not been able to comply with the conditions of sale and the property be put anew for sale.

Mr Dauhoo remarks that some of the bidders have already left.

Court remarks that the bidders were aware that the matter has been maintained and those who have left have themselves to blame and that it appears that there are sufficient bidders waiting till now.

RULING

Court is of opinion that more than ample time has been given to the adjudicatee and latter not having complied with the conditions of sale i.e. to make the ¼ deposit, recalls the order of adjudication and orders that biddings be reopened.

The property is put anew for sale at the outbid price of Rs 11,666,700 and after several biddings, Mrs Moolna makes a bid of Rs 20 million, being the highest bid, in the name of the State of Mauritius represented by Mr Abdool Hamid Soobratty.

Mr P Balmano SA moves for adjudication …

Court so orders.”

The adjudication in favour of the State was formerly entered and recorded by the Master. It appears from p.28 of the Record provided to their Lordships that this was done on 12 November 2002, the same date as that on which Mr Bundhoo gave notice of appeal to the Supreme Court “against the judgment and/or Order delivered by [the Master] on 31 October 2002 …”. The relief sought from the Supreme Court was that “the said judgment and/or order [be] quashed …”. Prior to this notice of appeal no objection by Mr Bundhoo to the 31 October 2002 adjudication in favour of the State had been made. There is an unresolved factual dispute as to whether or not Mrs Ramphul was present before the Court when the biddings were reopened and the bid of Rs 20 million was made.

The appeal to the Supreme Court

Mr Bundhoo’s main grounds of appeal were, first, that the Master was wrong to have recalled the order of adjudication he had made in favour of Mrs Sobha Ramphul and, second, that the re-sale procedures for a sale by folle-enchèré should have been followed. It is somewhat of an oddity that Mrs Sobha Ramphul was not made a party to the appeal. Nor, originally, were the execution creditors parties to the appeal. They, however, intervened and became parties to the appeal in order to prosecute the preliminary point, taken in reliance on section 207 of the Act, that since Mr Bundhoo had not objected on the day of the sale, 31 October 2002, to the adjudication in favour of the State, he was barred from appealing against the adjudication.

The Supreme Court (Senior Puisne Judge Y.K.J. Yeung Sik Yuen and Mrs Justice N Matadeen) delivered its judgment on 21 October 2003. As to the power of the Master to re-call his original adjudication in favour of Mrs Sobha Ramphul, the Court held that the Supreme Court (and therefore a Master of the Supreme Court) had power to alter, vary or suspend a judgment or order during the sitting of the Court at which the judgment or order had been given or made. The Court so held in reliance on an express power to that effect given to magistrates by the District and Intermediate Courts Rules and on the footing that it would be “unthinkable” for a judge of the Supreme Court to have lesser powers than a magistrate. The Court observed that “all Courts in Mauritius have always considered it within their powers to entertain the recalling of any order or judgment made on the same day or same sitting whenever that is considered necessary.” As to the question whether, in the circumstances, it had been proper for the Master to exercise his power to re-call the adjudication, the Court concluded that there had been no procedural unfairness or impropriety and that, on the contrary, the Master had been “kind and considerate” to Mrs Ramphul in giving her an extended time, until 3.25 p.m., to produce the requisite deposit. As to the section 207 point, the Court held that the execution creditors’ reliance on the section was “well taken”. Mr Bundhoo had not, at the time of the adjudication in favour of the State, raised any objection. Finally, as regards the point that the response to Mrs Ramphul’s failure, in breach of the conditions of sale, to pay the requisite deposit ought to have been an action against her by way of folle-enchèré, the Court held that the deposit referred to in section 45 referred only to the deposit of the costs referred to in section 44(a) and that section 45 of the Act did not override Article 6 of the conditions of sale. So the appeal was dismissed.

Mr Bundhoo applied to the Supreme Court in November 2003 for leave to appeal to the Judicial Committee but, on 30 September 2004, the Supreme Court dismissed the application. In August 2005, Mr Bundhoo petitioned the Judicial Committee for special leave to appeal and on 16 November 2005 the petition was granted. Hence this appeal.

Completion of the Sale to the State

In the meantime, Mr Bundhoo had, in October 2003, petitioned the Master for a stay of the procedures necessary to complete the sale to the State but, prior to any hearing, the petition was withdrawn. The completion of the sale then proceeded. The balance of the Rs 20 million purchase price, a deposit having already been paid, plus interest was paid into court, the execution creditors were paid and other creditors who held security over Stratford College, too, were paid. Costs were paid. Mr Bundhoo refuses to accept payment of the residue of the price which, therefore, remains in court.

The issues on this appeal

The issues before the Board raised by the parties’ respective written cases are both procedural and substantive. Most of the procedural issues have either been overtaken by events or have not been pressed before their Lordships. Only one remains potentially live, namely, whether the appeal can proceed in the absence of Mrs Sobha Ramphul as a party. The effect of the substantive relief sought by Mr Bundhoo might, arguably, be to restore Mrs Ramphul as an adjudicatee entitled to purchase Stratford College for the Rs 35 million odd that she had bid. But she has at no stage been a party to Mr Bundhoo’s proceedings to upset the adjudication in favour of the State and has at no stage given any indication that she wants to be re-instated as adjudicatee. Her absence as a party might well have constituted a serious impediment to Mr Bundhoo’s ability to prosecute proceedings to quash the adjudication in favour of the State. However, as will appear, their Lordships have concluded that Mr Bundhoo’s substantive points all fail and it is, accordingly, not necessary for their Lordships to reach a conclusion on this, or any other, procedural point.

The first substantive point for their Lordships to consider is whether the Master had power, on Mrs Ramphul’s failure to produce the requisite deposit, to annul the adjudication that he had pronounced in her favour, or whether, as Mr Hurnam has argued on behalf of Mr Bundhoo, the relatively lengthy procedure by way of folle-enchèré should have been resorted to.

In their Lordships’ opinion, the Master was entitled to take the course he did and annul the adjudication. First, the adjudication, as recorded in the Minutes, was not, in their Lordships’ opinion, an unconditional stand-alone order. It was pronounced by the Master in response to Mr Balmano moving “for deposit and adjudication”. The order was for Mrs Ramphul to pay the deposit and, as their Lordships would construe it, for Mrs Ramphul to be adjudicated the purchaser upon the deposit being paid. When Mr Abbasakoor asked for and was allowed time for her to raise the money necessary to pay the deposit, i.e. ¼ of the Rs 35 million that she had bid, the adjudication was, in their Lordships’ view, held in suspense for the period allowed. If the deposit had been paid, the adjudication would have stood. In the event, however, the basis on which the adjudication had been ordered failed and, in their Lordships’ view, the adjudication failed with it. This conclusion is consistent with the decision of the Supreme Court in Tatayah v. Ramonet and Ramonet v. Poupard (1965) MR 218 where Lalouette J said:

“An essential condition of an outbidding under section 139 of the Ordinance is the deposit provided for under section 141, without which there can be no effective outbidding” (p.224)

and the Court held that the Master was entitled to recall his order when the cheque for the deposit bounced.

Second, there is long-standing jurisprudence in the United Kingdom establishing that a court may, before entry of a judgment or the drawing of an order has been completed, reconsider the matter and amend its order if thought fit to do so (see e.g. Willé v. St John [1910] 1 Ch 701, 703 and Shepherd v. Robinson [1919] 1 KB 474). Their Lordships see no reason why the same rule should not apply in Mauritius.

Third, their Lordships accept the cogency of the reasoning of the Supreme Court based on an analogy drawn from rule 59 of the District and Intermediate Courts Rules.

Fourth, Mr Hurnam’s reliance on section 45 of the Sale of Immovable Property Act for the proposition that proceeding by way of folle-enchèré provided the only remedy available once Mrs Ramphul had failed to pay the deposit required by the Conditions of Sale is, in their Lordships’ opinion, misplaced. Section 45 is expressed to be “without prejudice to any other legal remedy”, and does not purport to prescribe an exclusive avenue for relief. In any event their Lordships accept the construction placed by the Supreme Court on sections 44 and 45 of the Act.

For all these reasons, their Lordships agree with the Supreme Court that the Master had power to annul the adjudication he had made in favour of Mrs Ramphul and that his decision to do so in the circumstances that had happened cannot be invalidated on the ground of unreasonableness or unfairness.

23. There remains the section 207 point. It is not entirely clear from the Record whether, for section 207 purposes, the judgment of adjudication in favour of the State should be treated as made on 31 October 2002, when it was announced, or on 12 November 2002, when it was formally transcribed. If the latter is the appropriate date, Mr Bundhoo’s objection, made manifest by his notice of appeal of that date, would have complied with the section. But Mr Bundhoo’s notice of appeal, which describes the judgment of adjudication in favour of the State as having been “delivered” on 31 October 2002, seems to accept that that was “the time of the adjudication” (see section 207(1)). If that is right, then Mr Bundhoo’s appeal would stand barred by section 207. Their Lordships’ favour 31 October 2002 as being the relevant date for section 207 purposes. Subsection (1) refers to “the time of the adjudication”; subsection (2) says that the objection must be recorded “on the day of adjudication”. This language seems apt to refer to the actual day on which the bidding takes place and the adjudication is announced and somewhat inapt as a reference to some later day when the events of the sale are transcribed into the official books maintained by the Master. In their Lordships’ opinion, the section 207 objection is well-taken and Mr Bundhoo’s appeal would, in any event, have been barred by section 207.

24. Accordingly, their Lordships dismiss this appeal. Mr Bundhoo must pay the respondent’s costs of the appeal. Without prejudice to the rights of the respondent to recover their costs from Mr Bundhoo, their Lordships will direct payment of their costs from the sum in court.