Rosebelle (Pty) Ltd & Anor v Mauritius Commercial Bank (MA 248 of 2024 (Arising in CS 93 of 2024)) [2024] SCSC 176 (18 November 2024)

A. MADELEINE, J

Introduction

1. This Ruling arises from an application for stay of all proceedings relating to a commandment filed in the Supreme Court on 3^rd October 2024 in CM52/24 (The Mauritius Commercial Bank (Seychelles) Limited v Rosebelle (Pty) Ltd & Anor) (the “CM52/24”) for the seizure of the Applicants’ property, namely land title V1689 situated at Plaisance, Mahe which is also where the head office and principal sales outlet of the 1^st Applicant are located.

 

2. The application is made by way of notice of motion supported by affidavit, arising in civil suit CS93/2024 Rosebelle (Pty) Ltd & Anor v The Mauritius Commercial Bank (Seychelles) Ltd (the “main suit”) brought by the Applicants herein against the Mauritius Commercial Bank (the “MCB”). The MCB is the Respondent herein, the Defendant in the main suit and the creditor who filed the commandment in CM52/2024.

 

3. In the main suit, the Applicants aver that the issuance and filing of the commandment by the MCB in CM 52/24 amounts to a faute in law and more specifically an Abus de Droit intended to cause harm to the Applicants, amounting to mauvais foi and rests on no reasonable basis. The Applicants seek the following reliefs. First, a declaration that the issuance and filing of the commandment by the MCB amounts to a faute in law, an abus de droit amounting to mauvais foi with no reasonable basis. Second, a direction that the proceedings relating to all processes relating to the issuance and filing of the commandment are stayed pending determination of the main suit. Thirdly, an order that the MCB pays the Applicants sum of SCR200,000/-, with costs.

 

4. The MCB objects to the grant of stay of proceedings and filed an affidavit in reply.

 

Applicant’s Affidavit

 

5. The affidavit in support of the application is made by Jean-Pierre Mathieu Morin and dated 11^th October 2024.

 

6. In the said affidavit, the deponent produces, inter alia, the commandment filed before the Supreme Court, in CM 52/24 on 03^rd October 2024 and served on the Applicant on 7^th October 2024 (the “commandment”) to show that the Applicants have been required and summoned to pay the debt in the sum of SCR75,950,046.91/- in default of which land parcel V1689, being one of the properties charged to secure the loan, will be seized.

 

7. The deponent also produced a copy of the plaint filed in the main suit.

 

8. According to the deponent, on 15^th July 2022, the MCB granted the 1^st Applicant a long-term loan in the amount of SCR70,800,000/- for the purpose of refinancing an existing loan. This is made out in MCB’s facility letter and letter of conditions dated 15 July 2022 produced in the said affidavit. The loan was subject to 7 months moratorium during which period only interests were payable. Thereafter, the loan was to be repaid by a monthly instalment of SCR916,933.78/-.

9. The deponent states that he gave a personal guarantee in the sum of SCR70,800,000/- to secure the loan over and above continuing and subsisting floating charges over the assets of the 1^st Applicant (variously dated 5^th May 2015, 14^th December 2015, 10^th November 2016, 18^th July 2017 and 9^th July 2021) and encumbrances registered against several parcels of land purportedly belonging to the 2^nd Applicant. Namely, land parcels C89, V1689 and V1848.

10. It is also stated that the headquarters and the principal sales outlet of the 1^st Applicant is located on land parcel V1689 at Plaisance – being the charged property sought to be seized under the commandment. Further, the seizure of land parcel V1689 would cause severe prejudice to the 1^st Applicant, both in its business as a major importer, manufacturer, and retailer of meat products in Seychelles and in relation to its 147 employees. In support, the deponent produced records of all the employees of the 1st Applicant.

11. It is further stated that on 6^th May 2024, the 1^st Applicant received a letter of demand from MCB’s Attorney requesting payment of the sum of SCR.72,587,055.80/- within 21 days. The said letter is produced by the deponent.

12. Following receipt of this letter, the 1^st Applicant’s director and Attorney met with the MCB’s Attorney in good faith and as agreed, the 1^st Applicant made a counter proposal to the MCB in its letter dated 10^th May 2024. According to the said letter, produced in the affidavit, the 1^st Applicant proposed a scheme of settlement for the loan arrears based on financial forecast prepared by the company’s financial adviser, Mr Oliver Bastienne of the ACM and Associates Accountant firm, also produced in the Affidavit.

13. The 1^st Applicant proposed to restructure the loan facility over 7 years, capitalise interests and capital effective May 2024 to December 2024, for the 1^st Applicant to make an initial payment of SCR500,000/- per month from July 2024 to offset interests due, restart full loan repayment at the end of January 2025 at SCR1,200,000/- per month and accept any other restructuring options from the MCB.

14. The deponent produced letter dated 28^th May 2024, wherein the MCB rejected the 1^st Applicant’s proposal and insisted upon payment of a sum of SCR.7,343,014.42/- to clear the arrears and a clear timeline from the 1^st Applicant as to how it will resume monthly payments within a reasonable time.

15. The deponent also produced the 1^st Applicant’s letter of response dated 4^th of June 2024, wherein the 1^st Applicant submitted a second revised request to MCB to restructure the loan based on financial forecast.

16. The 1^st Applicant proposed to restructure the loan facility over 7 years, capitalise interests and capital over the next 8 years effective May 2024 to December 2024, for the 1^st Applicant to initiate a payment from July 2024 onwards to December 2024 to clear the arrears of SCR7,434, 014.42/-, restart repayment as from end of January 2025 at SCR1,100,000/- per month.

17. The deponent produced MCB’s letter dated 21^st August 2024 wherein the MCB rejected the 1^st Applicant’s proposal and demanded repayment of arrears in full failing which legal action will be instituted against the Applicants.

18. The deponent states that there was no unwillingness on the part of the Applicants to repay the MCB. The 1^st Applicant experienced financial difficulties and approached the MCB with proposals to restructure the debt.

19. According to the Affidavit, the Applicants’ inability to meet the monthly repayments is due to delay in completing the Market Street project, due to requirements of further approvals from the Seychelles Planning Authority. As a result, they were unable to complete the project within the scheduled time frame and to generate income therefrom.

 

20. It is also stated that the Market Street Rosebelle complex was officially opened on 24^th September 2024 and is now an operating business concern generating income from rental outlets. The proceeds can now be used to service the loan of the 1^st Applicant to the MCB.

 

21. The deponent further states that the Applicants have, at all material times, shown good faith and been willing to settle arrears and effect monthly repayments of the loan based on the revised payment restructures as is evident in all its correspondences with MCB but the MCB refused to consider the matter fully or sufficiently. The Applicants’ difficulty to effect monthly payments was clearly made known to the MCB forming the basis of their proposal to settle the arrears and repay the loan on the revised payment structures which the MCB refused or neglected to consider fully or sufficiently. Despite difficulties, the Applicants effected payments to the best of their abilities showing their good faith in complying with the terms of the Agreement, which again was never considered by the MCB. The Applicants had also proposed to transfer all point-of-sale payments/receipts from the 1^st Applicant’s bank account no. 90301 to loan account no. 419998 in order to service the loan repayment. Despite promising to consider the same, the Respondent failed to consider or accept the same. The MCB’s refusal to consider the proposals amounts to bad faith and their insistence for the clearing arrears before consideration of the proposals was unreasonable.

 

22. Based on the above and the advice of the Applicants’ Attorney, the deponent verily believes that this Court has the discretion in law, to stay any proceedings, including proceedings relating to the commandment, to meet the end of justice test.

 

23. The deponent is also advised and verily believes the same to be true that since an application has now been made before this Court, there are competing rights to be determined and it is thus just, fair, and reasonable in the interest of justice that all proceedings relating to the commandment be stayed pending the full determination of the same rights between the parties in pursuance to the plaint filed by the Applicants against the MCB.

 

MCB’s Affidavit in Reply

24. The MCB’s affidavit in reply is made by Maria Mazzorchi dated 4^th November 2024. The gist of the MCB’s objections is that the MCB granted the 1^st Applicant a loan facility in the sum of SCR59,700,000/- pursuant to Loan agreement dated 5^th July 2019 (the “2019 loan”), produced in evidence, to settle outstanding debts arising from overdrafts and loans granted over the period 2009-2019. The 1^st Applicant defaulted on repayment of the 2019 loan and upon its request the Respondent accepted to restructure the loan as per addendum letter dated 20^th January 2021 and loan agreement dated 15^th July 2022 for the sum of SCR70,800,000/- (the “2022 loan”). The 2022 loan was disbursed on 17^th March 2023 subject to 7 months moratorium, during which time only interests would be payable and thereafter to be repaid by monthly repayment instalment of SCR916,933.78/-. The 1st Applicant defaulted on loan repayment since 30^th March 2023 and loan repayment has since been erratic. The last payment was made on 6^th May 2024. Several reminder letters were sent to the 1^st Applicant, produced in evidence, and a meeting was held between the MCB and the representative and Attorney of the 1^st Applicant whereat the MCB was requested to restructure the loan.

25. The request to restructure the loan was refused because of the 1^st Applicant’s repayment history. It is averred that MCB had already provided the 1^st Applicant with a loan facility to settle outstanding liabilities in 2019. Upon 1^st Applicant default under the 2019 loan, the MCB accepted to restructure the loan in the 2022. As early as two weeks after disbursement, the 1^st Applicant defaulted on its repayment and despite MCB’s request for a year, the 1^st Applicant failed to clear the arrears in the sum of SCR7,000,000/- at the time.

26. It is also stated that the MCB’s refusal to reschedule the loan should not have prevented the 1^st Applicant from making any repayments it could to show good faith and ability to repay as per MCB’s letter of 21^st August 2024. Further, despite the 1^st Applicant’s own proposal in its letter of 10^th May 2024 to repay a sum of SCR500,000/- per month from July to December 2024, as their business at Plaisance is fully operational and having opened a new branch at market street, no repayment has been received to date. According to the MCB, this shows bad faith and mere refusal to make repayments towards the loan.

27. It is for this reason that the MCB commenced proceedings for the seizure and judicial sale of the charged property.

28. According to legal advice obtained from its Attorney, the MCB verily believes that the application, and the main suit in which it arises, are incompetent and or in bad faith. An equitable remedy cannot be sought given that statutory remedies are available under the Immovable Property (Judicial Sales) Act that would allow the Applicants to stop/delay the Judicial sale to the extent that they can show good cause. The sale should be stayed through the judicial sale proceeding under the Immovable Property (Judicial Sales) Act and not through a new suit. The motion has not merit in law or in fact.

29. It is further stated that MCB is ready and willing to abandon the judicial sale of the land and reschedule the loan if the accumulated arrears as of 30^th October 2024 in the sum of SCR12,315,297.30/- are cleared. This has been the position of the MCB even prior to issuing the commandment.

30. Furthermore, it is stated that the balance of hardship is in favour of the MCB. If the motion is allowed, the Applicant is likely to continue defaulting on repayment as the MCB would not be able to effectively enforce the 1^st Applicant’s repayment obligations.

Applicant’s submissions

31. Counsel for the Applicants relied entirely on the plaint filed in the main suit and on the 2^nd Applicant’s affidavit in support of his submissions.

32. It is submitted that given the cause of action in the main suit, alleging an abuse of the MCB’s rights against the Applicants as made out in the 2^nd Respondent’s Affidavit, the Applicant is not limited to the remedies under the Immovable Property (Judicial Sales) Act. He relied on the Seychelles Court of Appeal case of Seychelles National Party v Aglae ¹ to submit that the court can grant a stay of proceedings if there is a legal basis to do so whether as a temporary suspension of the execution of proceedings, pending the hearing of an appeal, or as a suspension of a case pending a court order.

33. It is also submitted that the Court has the discretion to grant a stay in any proceedings including a proceeding issued in the Immovable Property (Judicial Sales) Act or a proceeding that is filed in Court. A judicial sale is first filed at the registry and its pendency and conclusion are done in the Supreme Court. This shows that the court has the discretion to deal with any such matters.

34. Counsel also relied on the Court of Appeal case of Lafors Sosyal Demokratik v Linyon Demokratik Seselwa & Anor² to submit that abus de droit, being the cause of action in the main suit, is well established in our law and can be committed in the exercise of a right to obtain a legal remedy. Counsel argued that in opting to commence judicial sale by filing the commandment to seize the Applicant’s land the MCB exercised its right to obtain a legal remedy and in the circumstances mentioned amounts to an abus de droit.

35. The Applicants’ plaint in the main suit is not incompetent as argued by the MCB, and in the circumstances the Applicants have no ‘right to action.’ The court has equitable jurisdiction under section 6 of the Courts Act to stay the proceedings relating to the commandment, even where the proceedings sought to be stayed are not before the court as its jurisdiction has been seized with the filing of the commandment in the registry.

36. In effect, the Applicants are not challenging the judicial sale but rather impugning the commandment filed on the basis that it constitutes a faute in law.

MCB’s submissions

37. Counsel for the MCB submits that the application has no merit in law or even in fact. Firstly, the application seeks to stay proceedings in a judicial sale where only a commandment in respect of V1689 has been filed and served. In terms of the steps and timelines set out in the Immovable Property (Judicial Sales) Act, being the governing law for judicial sales, the Applicants have the right to file objections either before or after the reading of the memorandum of charges. Once they are served with the notice memorandum of charges, they can file their objections. In seeking to stop the process at this stage and by filing of a plaint, the Applicants seek to reinvent and or circumvent the process under the Immovable Property (Judicial Sales) Act.

38. Counsel further submitted that the judicial sale process takes months to complete, and this gives the Applicants ample time to clear the arrears on the loan in which case the MCB will abandon the judicial sale.

39. Counsel relied on the case of D Karunakaran v K Karunakaran (MA 94/21) Arising in DV 37/21 (16 July 2021) [2021] SCSC Simeon v Marie Civil Side No. 91 of 2007 (24th September 2009), David v Mortier v [2018] SCSC297 (26 March 2018) and Amusement Centre (Pty) Ltd v Victor & Ors [2015] SCSC 193 (25 June 2015) to submit that the equitable jurisdiction of the Supreme Court cannot be seized where there is a statutory remedy available. The Immovable Property (Judicial Sales) Act provides for statutory remedies that are available to the Applicants to stop or delay the judicial sale, which can be done as soon as they are served with the memorandum of charges.

40. It is further submitted that the application results in a conflict of jurisdiction in that a Judge of the Supreme Court is being asked to stay the proceedings which may eventually be brought before another Judge of the Supreme Court.

41. Furthermore, there are no competing rights to be determined as a judicial sale is not a case to be determined but a process. Determination will arise if the Applicants file objections in the judicial sale proceeding itself. Counsel argues that the Applicants’ objections can be filed through the judicial sale proceeding, and this is currently not the proper approach. Since it is known that a judicial sale takes a lot of time, there is time available for the 1^st Applicant to clear the arrears in payment.

42. Counsel relied on the case of Eastern European Engineering Limited v Vijay Construction (Proprietary Limited)³ and on the cases referred therein, namely Kenya Wildlife Service v James Mutembei (2019) KLR and Ticketmaster UK Ltd v The Information Commissioner (Case management decision to stay) [2021] UKFTT 83 (GRC) (12 March 2021), to submit that a stay of proceeding is the exception and not the norm as it amounts to a serious, grave, and fundamental interruption of the right of a party to conduct his litigation, and it is a power that must be exercised sparingly and only in exceptional cases.

43. On this basis, the MCB submits that the court should consider all the facts stated in its Affidavit and the resulting unfairness that would result to the MCB if it is unable to exhaust its only legal recourse by the grant of stay of proceedings.

Law and Analysis

44. Based on the respective affidavits and submissions of the parties, the central issue that arise for determination is whether this court has jurisdiction to stay all proceedings relating to the commandment by reason that it is seized in the main suit in an action based on faute more particularly an abus de droit allegedly committed by the issuance and filing of the same commandment?

45. The commandment was filed pursuant to the Immovable Property (Judicial Sales) Act (the “IPJSA”). Section 2 thereof stipulates that –

“Every seizure of immovable property shall be preceded by a commandment to be served upon the debtor in person. The creditor shall, in the commandment elect a domicile at the office of the attorney at law retained by him for the purpose of such proceedings, at which domicile all acts relative to or in connection with the proceedings, or the claims to be enforced thereunder, shall be served upon him. He shall thereby notify his debtor that, if he fails to pay the amount claimed, a seizure will be affected of his immovable property.

…………”

(Emphasis added)

46. At the stage of filing of the commandment, and the stage at which this application has been brought before the court in the main suit, there are no on-going proceedings in relation to the commandment before any Judge.

47. In Seychelles Commercial Bank Ltd v Estate of late Packirisamy Pillay⁴ the Court per Dodin J, made the following relevant observations on a motion for substituted service of a commandment –

“18. Secondly, at this stage the procedure does not involve a Judge of the Court. The Judge becomes involved only after the commandment has be served and the Memorandum of Charges is filed for reading. It appears to me that the legislators were logical in their approach not to provide for alternative means of service at this stage because the same could not be made even under the Seychelles Code of Civil Procedures without an order of the Court. Hence since the law does not provide for the Court to seize itself of the matter, such motion cannot be entertained by the Court at this stage.”

(Emphasis added)

48. Given the strict procedures and timelines under the IPJSA, it is unlikely that an application for stay of proceedings as presently styled would be entertained at this stage or at any time prior to the filing and service of a memorandum of charges. On that basis, the application is premature before the court.

49. I note that in Ailee Development Corporation Ltd v Air Et Chaleur M.T.S.A⁵, the court allowed a challenge to the filing of a commandment for seizure and sale proceedings under the IPJSA in relation to loans borrowed in the sum of 59.7 million Belgium francs. Ailee Development Corporation Ltd (“Ailee”) filed petition to resist foreclosure and repayment of the loans on the ground that pursuant to a Deferment Agreement, the loans were not yet due. The court held that Air Et Chaleur M.T.S.A (“Air Et Chaleur”) had no legal right to commence with seizure and sale proceedings under the IPJSA, and accordingly, the commandment was declared void ab initio and without effect.

50. The above case is distinguished from the present application. In Ailee (supra) a petition was brought under the IPJSA and as held by the court there were no sums due to the Air Et Chaleur, such that it had no right to commence seizure and sale proceedings. The present application is brought in the main suit for a stay of subsequent procedures commenced under the IPJSA. It is also not disputed that repayment of interests and capital on the loan facility granted to the Applicants are in fact outstanding.

51. Now, this court is asked to exercise discretion in its equitable jurisdiction under section 6 of the Courts Act, to stay all proceedings relating to the commandment until the determination of the main suit.

52. In Eastern European Engineering Limited v Vijay Construction (Proprietary) Limited) (supra) referred to me by Counsel for MCB, the Court of Appeal held that –

“Every court has inherent power to properly regulate its jurisdiction. In regulating that jurisdiction, the court may stay its proceedings in favour of other proceedings taking place in another court or tribunal.”

(Emphasis added)

53. The difficulties that arise in the present application are firstly, this court may only stay its own proceedings over proceedings taking place before another court or tribunal. Secondly, at this stage, there are no proceedings taking place before any court in relation to the commandment. Thirdly, this court has no inherent power to seize itself of the matter and suspend the subsequent procedures to be taken by the MCB under the IPJSA.

54. Section 6 of the Courts Act invests the Supreme Court with powers, authority, and jurisdiction to administer justice in all cases where no sufficient legal remedy is provided by the law of Seychelles –

“6. Equitable powers

The Supreme Court shall continue to be a Court of Equity and is hereby invested with powers, authority, and jurisdiction to administer justice and to do all acts for the due execution of such equitable jurisdiction in all cases where no sufficient legal remedy is provided by the law of Seychelles.”

 

55. The following provisions of the IPJSA are relevant to the question of availability of sufficient legal remedies to the Applicants –

“213. Incidental application before the Judge

All applications before a Judge relative or incidental to any of the matters treated in this Act, in respect of which express provision is not hereinbefore contained, shall be made by petition, in conformity with the provisions hereinbefore contained in sections 53 and 54.”

“209. Time of appeal

In all cases where a Judge shall have given any decision, or made any order, under or in execution of the provisions of this Act, a party dissatisfied therewith may appeal therefrom.

Such appeal shall be by notice with a summons to be served upon the opposite party or parties, or their attorneys if any have been appointed.

This notice with a summons shall set out the principal grounds of appeal. The procedure to be followed shall be that laid down for appeals in civil causes and matters”

“53. Form of incidental application

Every application to a Judge incidental to the seizure or sale of immovable property shall be made by petition setting forth summarily the grounds upon which such application is made and the parties against whom the same is made.

The Judge shall at the foot of such petition make an order fixing a day for hearing such petition and may in his discretion join as parties any persons whom he may think affected in their rights by the application in question.”

(Emphasis added)

56. The IPJSA makes provision for either party to bring either an incidental application or an appeal from a decision made by the Judge. However, no provision is made for a commandment to be stayed as the matter has not yet been heard by a Judge.

57. Further, section 36 of the IPJSA provides for the postponement of sale –

“36. Postponement of Sale

Nevertheless, the sale may be postponed either sine die, or to a specified day, at the instance of the execution creditor or of any one of the inscribed or judgment creditors, or the execution debtor; but only upon strong grounds of necessity or expediency to be established to the satisfaction of a Judge. The decision of the Judge postponing the sale shall be final and without appeal.”

(Emphasis added)

58. The IPJSA does provide for legal remedies, and the existence of such legal remedies under the IPJSA excludes this Court’s equitable jurisdiction.

Conclusion

59. Based on the above, I find that the application is premature before the Court, there are legal remedies available to the Applicants under the Immovable Property (Judicial Sales), Act and therefore this Court has no equitable jurisdiction under section 6 of the Courts Act as invoked by the Applicants.

Order

60. The application is dismissed.

Signed, dated, and delivered at Ile du Port on 18^th November 2024.

 

 

____________

1. Madeleine, J