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(DEVELOPMENT FINANCE CORPORATION (DFC) PLAINTIFF
BETWEEN (
(AND
(
(HONORIO DURAN
(ISIDRO CHAN
(PRUDENCIA DURAN
1ST DEFENDANT
2ND DEFENDANT
3RD DEFENDANT

Supreme Court
Action No. 49 of 1996
Shanks, J

Mr. K. Anderson, for the Plaintiff.
Mr. O. Sabido, for the Defendant.

Sale of motor vehicle at public auction on the order of the court after First Defendant had failed to pay a debt owed to Plaintiff - Purchaser of motor vehicle subsequently selling it to bona fide purchaser for value without notice - Supreme Court making an order with the consent of the Plaintiff and the Defendant, after vehicle had been sold to bona fide purchaser for value, allowing First Defendant to pay off debt and ordering vehicle to be returned to First Defendant by the Registrar - Application to join bona fide purchaser for value to Action - Application to set aside consent judgment - Whether application allowed by the Supreme Court Rules - Order 17, Rules 12 and 13 - Whether Rules permitting applications to join actions only before trial and on application only by motion or summons, or at trial in a summary manner - Inherent powers of the Supreme Court to allow a party to join proceedings - Supreme Court Practice, Volume 1, Paragraph 15/6/8 - Consent judgment - Whether consent judgment can be set aside without bringing a fresh action for that purpose - Whether principle applies to third parties with no notice of the consent judgment and not bound by the consent judgment - Third party prejudiced by consent judgment can intervene in an action in order to set it aside, provided he did not consent to the terms of the judgment - Principles on which court will set aside consent judgment on application of prejudiced third party - Delay - Need for court to hear all affected parties before making consent judgment - Need for court not to be unduly hampered by technicalities where third party interests are prejudiced - Determination of degree of prejudice attendant upon setting aside the consent judgment to each party involved in the application.

J U D G M E N T

This is an application by Amir Carillo for an Order allowing him to join this action and for an Order setting aside an Order made by Mr. Justice Moe on the 24th October, 1997.

Mr. Sabido, who appeared for the first Defendant, says that Mr. Carrillo is not entitled to be joined as a party at all but it is necessary in order to give a final ruling on that point to consider the facts.

As well as the evidence on the court file, I have received an affidavit from Mr. Carillo dated the 26th July, 1999, and affidavits from the 1st and 3rd Defendants dated the 7th February, 2000 and also helpful oral and written submissions from Mr. Anderson and Mr. Sabido. Indeed Mr. Sabido has been good enough to provide me with two sets of written submissions which I have read.

The action arose out of a claim by the D.F.C. against Honorio Duran, Isidro Chan and Prudencia Duran for repayment of a loan of $6,700.00. On the 6th June, 1996 Mr. Justice Moe gave judgment for $10,753.00 by consent. On the 13th February, 1997, the Assistant Marshall seized, by marking them, three vehicles under a Writ of Fifa. Those vehicles included a GMC Truck, Reg. OW-A2578, which was owned by the First Defendant.

On the 9th May, 1997 the court, at the request of the Plaintiff, directed Mr. Anthony Thurton, auctioneer, to proceed with a sale of the vehicles. On the 17th May, 1997 a Saturday, there was an auction. According to the auctioneer's evidence, the GMC Truck was subject to a bid but he did not sell it immediately because the First Defendant was to be given a further opportunity to pay off the outstanding judgment debt. On a Monday the 19th May, 1997, he sold it to the highest bidder for $6,500.00 and paid the net proceeds to the court. At that point he had not, according to his evidence, heard further from the First Defendant.

Mr. Carillo says in his evidence that he purchased this same vehicle for $11,500.00 on the 19th May, 1997 and he produces as an exhibit to his affidavit, a copy of the paid cheque as evidence of this purchase.

Mr. Duran, the First Defendant, has somehow obtained and exhibits to his affidavit a copy of the receipt given by the auctioneer to a Mr. Gonzalez for $7,000.00 dated the 17th May, 1997 and he also produces a certificate of transfer of ownership signed by Mr. Gonzalez dated the 19th May, 1997 recording the transfer of ownership of the vehicle to Mr. Carrillo and a copy of Mr. Carrillo's certificate of registration for the vehicle dated the 26th May, 1997.

On consideration, it seems to me that none of the other evidence, that is the evidence from the auctioneer and the evidence from Mr. Duran himself, is inconsistent with Mr. Carillo's evidence that he purchased the vehicle for $11,500.00 on the 19th May, 1997 and I accept that evidence. Mr. Duran also says in his affidavit that the vehicle was worth very much more than $6,500.00 or indeed $11,500.00 and that it was in fact worth $37,000.00. That claim I regard with a certain degree of skepticism though I have no doubt that the vehicle was potentially worth more than it would have obtained at an auction ordered by the court. On the 28th May, 1997, Mr. Sabido, on behalf of the Defendants, took out a Notice of Motion to set aside the sale … conducted by Public Auction at Corozal Town on Saturday 17th May, 1997. This Notice of Motion was brought on the grounds of non-compliance with Order 46 Rule 3 of the Belizean Rules of the Supreme Court on the basis that, "the execution on which the sale was based had taken place after sunset and that the goods had been sold less than five days from the date when they were taken in execution." Those contentions were based apparently on the actual seizure of the goods which took place on the 16th May, 1997 at about 8:00 pm. As I have already said the Marshall had in fact seized the goods by marking them some three months earlier.

Following Mr. Sabido's Notice of Motion and following an earlier Order of the 12th June, 1997 which related to the other two vehicles, on the 24th October, 1997, Mr. Justice Moe made an Order by consent of the Plaintiff and the Defendants in the Action that the First Defendant pay the Plaintiff $6,081.00 which was the balance outstanding on the claim and that the sale of vehicle OW-A-2578 be set aside and that the vehicle be returned by the Registrar to the First Defendant forthwith. There is no indication on the Order that there was any kind of hearing on the occasion it was made and Mr. Carrillo certainly had no notice of the application that led to it being made and the court did not hear any submissions on his behalf before it was made. Following the Order, the First Defendant paid the Plaintiff $6,081.00 and thus paid off the judgment debt. However, there was difficulty, apparently, in serving the Order on Mr. Carrillo. He admits that the Order was served on him at some stage in 1998. However, he took no action in response to it and continued to use the vehicle which he had purchased in May of 1997 until it was seized on behalf of the Registrar of the Court in July, 1999 and returned to the First Defendant. This application was launched by Mr. Anderson on the 26th of July, 1999.

The position, therefore, as of July, 1999 was that Mr. Carrillo had purchased a vehicle from a third party believing he had acquired good title to it but that he had now been deprived of that good title by virtue of an Order made in his absence of which he had no prior notice by consent of two other parties. Not surprisingly he seeks now to intervene and to set aside that Order.

Mr. Sabido says that he has no right to intervene in this Action at all because this is not contemplated by the rules of court. I confess I would find that an unsatisfactory and surprising result. Order 17 Rule 12 of the Belizean Rules of the Supreme Court says as follows:

"The court may at any stage of the proceedings, order that the names of any parties, whether Plaintiffs or Defendants, whose presence before the court may be necessary in order to enable the court effectually and completely to adjudicate upon and settle all the questions involved in the cause or matter, be added."

I have omitted irrelevant words, but it seems to me that the words that I have read cover this situation. However, Mr. Sabido points to Order 17, Rule 13, which states, "Any application to add a Plaintiff or Defendant may be made to the Court at any time before trial by motion of summons, or at the trial of action in a summary manner." It does not, therefore, contemplate an application after a trial. Of course in this case there has been no trial in any event but it seems to me that Rule 13 does not mean that applications to join parties can only be made before or at a trial. If it was necessary, and the Belizean Rules do not allow an application such as Mr. Anderson's to join Mr. Carrillo, I refer to The Supreme Court Practice, Volume 1 which includes the following passage at paragraph 15/6/8, "In addition to the powers contained in this rule the court has an inherent jurisdiction to enable it to do justice in particular cases to allow a person not a party to intervene in proceedings if the effect of such proceedings has been or is likely to be to cause such person a serious hardship, difficulty or damage, e.g. a person whose property is adversely affected by the presence of an arrested vessel in an Admiralty action in rem even though he has no interest in the vessel to entitle him to intervene under Order 75 r.17(1)".

It seems to me that the court must have the means to resolve disputes arising in the course of execution without a third party having to start a whole new Action and I believe that this is the case either under the Rules or under the inherent jurisdiction to which I have just referred. I therefore order that Mr. Carrillo be made a party to the Action as an intervener for the purpose of asserting his title to the Defendant's vehicle seized in execution by the Plaintiff.

Mr. Sabido next says that the judgment of Justice Moe of the 24th October, 1997 being a consent judgment cannot be set aside save by a new Action. He refers me to paragraph 4607 of volume 2 of the 1985 White Book. The relevant passages at that paragraph state as follows:

"A judgment by consent is binding until set aside and acts as an estoppel. Although no order made by consent of parties is appealable without leave, a consent order can be set aside in an action commenced for the purpose on any ground that would invalidate an agreement. But when a final judgment has been passed and entered the Court cannot set it aside unless a fresh action is brought for that purpose although it is being entered by a mistake a court has no power to vary a consent order made previously in that court and therefore the only means open to a party to set aside a consent judgment or order on the ground of fraud or mistake is to bring a fresh action for that purpose."

It seems to me that those passages and the point that Mr. Sabido makes are only intended to apply as between the parties to the consent judgment for good and obvious reasons. It surely cannot be right that a third party with no notice of a consent judgment between two other parties can do nothing about it save by starting a new Action. Indeed it is hard to see the basis of such a new Action and who should be a party to it, and I have no holding in that a third party prejudiced by a consent judgment can intervene in an Action in order to set it aside, provided that he himself did not consent to the terms of that judgment.

I come therefore to the merits of the application. Mr. Anderson's application was effectively based on the familiar terms of Order 76 of the Supreme Court Rules. I read Rules 1 and 2.

"(1) Non-compliance with any of these rules or of any rules or practice for the time being shall not render any proceedings void unless the court or a judge shall so direct, but such proceedings may be set aside either wholly or in part as irregular or amended or otherwise dealt with in such manner or upon such terms as the court or judge shall think fit.

(2) No application to set aside any proceedings for irregularity shall be allowed unless made within a reasonable time nor if a party applying has taken any fresh step after the knowledge of the irregularity."

It seems to me clear that the consent judgment was irregular in that it purported to affect the rights of a third party purchaser without him having an opportunity of being heard. However, it might not be appropriate to set aside the order even though irregularly, if either:

(a) there had been too much delay by the applicant,

(b) the order would or ought to have been made in any event if all the parties had been heard, or

(c) if the First Defendant or some third party would suffer undue prejudice by setting aside the order.

I deal first with delay. Mr. Anderson accepts that his client had notice of the order in 1998. He did nothing about it then but only took steps when his vehicle was seized. I accept Mr. Anderson's point that a layman in Mr. Carillo's position faced with the order that was made by Mr. Justice Moe cannot be expected to take steps to do anything about it until the vehicle had been physically seized from him. After all, the order is not addressed to him at all. What it says is, "That the truck, OW-A-2578 be returned by the Registrar to the first Defendant forthwith." It does not order Mr. Carillo to do anything and in my judgment the layman faced with that order would be justifiably baffled and would probably be entitled in my view simply to ignore it.

I turn to the next question which is whether the order should have been made if the court had heard submissions from all appropriate parties. In fact, the order was made by consent and as I understand it the court did not hear any submissions. The court was not put in a position to be satisfied that the grounds of the Notice of Motion were made out. From what I have seen, the grounds on which the Notice of Motion were based were very flimsy indeed. It looks as if the seizure made by marking which was effected on the 13th February, 1997 had been totally overlooked. In any event I do not believe a court would have set aside the sale by the Auctioneer for technical irregularities if to do so would have prejudiced the interest of a perfectly innocent third party purchaser.

Mr. Sabido also raises in this application, Order 46 Rule 7. That provision says, "All sales in execution of a decree shall be made under the direction of the Registrar and shall be conducted according to such orders the court may make on the application of any parties concerned. Such sale shall be by public auction provided that the court may always order such sale to be made in such other manner as may seem advisable." Mr. Sabido relies on the fact that apparently the original sale in this case may not have been made at public auction. It is not clear to me on the evidence I have got that there was any breach Order 46 Rule 7, but in any event, the point I have just made about an innocent third party purchaser would still apply equally. In other words, I do not believe that the court would have set aside the sale for a technical irregularity if the interest of an innocent third party purchaser would have been prejudiced thereby.

I turn now to the question of prejudice. The position is that if I set aside this order Mr. Carrillo will be restored to the vehicle which he purchased in May, 1997 and of which he had possession until July, 1999. The First Defendant, on the other hand, will obviously be entitled to the net proceeds of sale standing in court. Indeed no other party could possibly have a claim on them. Of course those proceeds of sale are less than the value of the vehicle according to the First Defendant, but that is often the case in sales made in execution and it is not in any sense Mr. Carrillo's fault. If I do not set aside the order and therefore the sale remains set aside, the First Defendant will retain the vehicle which has been seized by the court. But the position otherwise will be extremely confused. The First Defendant claims that Mr. Carrillo has not looked after the vehicle. He might therefore want to claim against Mr. Carrillo for the damage to the vehicle while it was in Mr. Carrillo's possession. But for part of the time that Mr. Carrillo had it at least, he had no knowledge that it was not his. It seems to me it would be most unfair to expose Mr. Carrillo to a claim for conversion of goods which he believed at the time on perfectly reasonable grounds to be his goods. And Mr. Carrillo would wish to get back the purchase price of the vehicle which he paid to Mr. Gonzalez. But he is not entitled to the money in court because this represents the money paid by Mr. Gonzalez and it is not clear how this conumdrum will be resolved. Overall then, it seems to me that far less prejudice is caused by setting aside Mr. Justice Moe's Order than by allowing it to stand.

I therefore accede to Mr. Anderson's application. I Order that the order of Mr. Justice Moe of 24th October, 1997 be set aside and that the vehicle be returned to his client, and that the money paid into court by the auctioneer as the proceeds of sale of the vehicle be paid out to the First Defendant along with any interest that may have accrued on it.


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