Sali v Bank South Pacific (Vanuatu) Ltd
JUDGMENT OF THE COURT
Introduction
1. On 23rd February 2026, the Supreme Court made an order under s.59 of the Land Leases Act authorising the First Respondent (the Bank) to sell and transfer property the appellant had mortgaged to it to secure loans: Bank South Pacific (Vanuatu) Ltd v Sali [2026] VUSC 92. The Court also made consequential orders to which we will refer shortly.
2. The appellant now appeals against those orders.
Background Circumstances
3. On 26th June 2017, the appellant mortgaged his interest in Leasehold Title No.11/OF33/004 (the Property) to the Bank to secure advances made to him by the Bank (the Mortgage). The advances included a home loan of VT12,150,000 as well as a car loan and a personal loan. It was a specific term of the mortgage that the appellant would pay to the Bank the secured monies on the due dates and, if no time for payment was specified, on demand (cl. 2.1).
4. Clause 5.4 of the Mortgage concerned the Bank’s power to sell the Property in the event of default by the appellant. Relevantly, it provided:
5.4– That the powers of the sale, subleasing and all or any other powers conferred on a mortgagee by the Land Leases Act, the general law/or otherwise may be fully exercised by the Mortgagee… in respect of the mortgaged land immediately upon or at any time after default in payment at the respective times and in the manner mentioned of any monies (whether of principal, interest or otherwise) secured hereby…. AND no notice or expiration of time whatsoever shall be required previous to the exercise of any such powers except where the same is required by statute and such requirement cannot be excluded by agreement.
5. As is apparent, cl.5.4 does not itself purport to confer a power of sale. Instead, it specifies when a power of sale conferred on the Bank from some other source may be exercised. We also note that cl. 5.4 specifically stipulated that a notice of demand was not required before a power of sale could be exercised.
6. Clause 5.7 provided for all the secured money to become immediately payable in the event of default by the appellant:
5.7 – That upon the occurrence of an event of default as specified herein all monies hereby secured shall immediately become due and the Mortgagor will repay the same upon demand AND to the extent possible by law it shall be lawful for the Mortgagee (whether the power of sale or any other power has or has not been sought to be exercised or exercised) to sue for recover and receive the same as and for debt due under covenant.
7. Again, we note that service of a notice of demand was not required in order for all the secured moneys to become immediately payable.
8. However, on 3rd July 2025 the Bank served on the appellant a notice of demand requiring him to pay the full amount owing within 7 days. We will refer to some relevant terms of the notice later in these reasons.
9. There being no compliance with the demand, on 11th October 2025 the Bank applied to the Supreme Court for an order pursuant to s.59 of the Land Leases Act empowering it to sell and transfer the Property.
10. The appellant attended personally at the first conference in the Supreme Court on 4th December 2025. He did not then have legal representation but told the Court that he wished to retain counsel.
11. A lawyer, Mr A Bal, appeared for the respondent at the second conference on 18th December 2025. He told the Judge that he had been instructed only moments before the conference. Given that circumstance, the Judge adjourned the matter to a third conference on 26th January 2026 and directed Mr Bal to file and serve a Notice of Beginning to Act. The Judge also directed that any response or defence be filed by 19th January 2026.
12. Neither the appellant nor Mr Bal complied with those directions. At the third conference on 26th January 2026, the Judge listed the matter for a “Formal Proof” hearing on 25th February 2026.
13. On Friday 20th February 2026, Mr Molbaleh filed a Notice of Beginning to Act for the appellant and, at the hearing on Wednesday 25th February, sought a further adjournment. This was refused and the Judge proceeded with the hearing.
14. The consequence was that, while the appellant was represented by counsel at the hearing, it proceeded without the Judge having any filed defence or evidence from him. The only evidence before the Judge was the sworn statement of Florence Bolenga, a Collection Officer employed by the Bank. Despite not having any supporting evidence, Mr Molbaleh submitted to the Judge that the appellant was not in arrears and that the Bank may have overlooked a payment of VT2,094,931 which had been made on 22nd May 2024.
15. The Judge was satisfied that the Bank had proved its claim to the required standard and made the orders in the form it sought.
16. The appellant’s notice of appeal contains four grounds but the first is only an unparticularised assertion that the Judge erred in making the order. It does not identify any particular error and is accordingly not a proper ground of appeal.
17. It need not be addressed. We will address the remaining three grounds below.
Application to receive Fresh Evidence
18. The appellant asked the Court to receive as fresh evidence his own sworn statement made on 28th April 2026 and sworn statements from each of his parents.
19. The proposed further evidence was directed to establishing the following matters:
a) The appellant had himself in the past been employed by the Bank or a predecessor banking business and had some familiarity with the Bank’s internal processes;
b) While in the past the appellant had been in arrears in the loan repayments, he had cleared the arrears by a loan repayment of VT2,094,931 on 22nd May 2024;
c) Since May 2024 he had made the repayments required under his loan agreements with the Bank on a consistent basis and so was not further in arrears;
d) The market value of the property in August 2023 had been valued by a registered valuer retained by the Bank as being VT 15,300,000, with the implication that this amount exceeded the appellant’s indebtedness to the Bank;
e) The appellant had the means to go on making regular repayments;
f) The appellant’s parents were supporting him, including by offering financial assistance in repaying the loan.
20. Rule 27(2) of the Appeal Rules recognises the power of this Court to receive further evidence on appeal. However, in the case of appeals like the present, further evidence (other than evidence as to matters which have occurred after the date of trial or hearing) is not to be admitted except on “special grounds”.
21. Rule 27 (2) was discussed by this Court in Salwai v Boulekone [2012] VUCA 19 at [10]-[13]. The Court noted that the authorities establish four cumulative conditions to be satisfied by a party seeking to adduce fresh evidence on appeal:
a) the evidence could not have been procured by the exercise of reasonable diligence for use at the substantive hearing;
b) the evidence is relevant and otherwise admissible;
c) the evidence is apparently credible;
d) there is a significant possibility that the evidence, if believed, would have an important influence on the result of the case.
22. Mr Molbaleh did not refer to these conditions, despite them being well known. Nor did he make any submissions as to how the Court could conclude that they were satisfied on this appeal. He did little more than submit that the evidence should be admitted to make the hearing “fair”.
23. We very much doubted that it could be said that the appellant’s proposed further evidence satisfied the four conditions. However, rather than rule on the matter at the hearing, we permitted the parties to make their submissions with reference to the fresh evidence and said that we would rule on the appellant’s application in these reasons. Both counsel, but in particular Mr Molbaleh, make submissions with reference to the proposed further evidence and, in the circumstances, we consider it convenient to address it in the reasons which follow.
Section 59 of the Land Leases Act
24. Section 59 provides:
59. Enforcement of mortgages
(1) Except as provided in section 46 a mortgage shall be enforced upon application to the Court and not otherwise.
(2) Upon any such application, the Court may make an order –
(a) empowering the mortgagee or any other specified person to sell and transfer the mortgaged lease, and providing for the manner in which the sale is to be effected and the proceeds of the sale applied;
(b) empowering the mortgagee or any other specified person to enter on the land and act in all respects in the place and on behalf of the proprietor of the lease for a specified period and providing for the application of any moneys received by him while so acting; or
(c) vesting the lease in the mortgagee or any person either absolutely or upon such terms as it thinks fit but such order shall, subject to subsection (5), not take effect until registration thereof.
(3) The Court shall, in exercising its jurisdiction under this section, take into consideration any action brought under section 58 and the results thereof.
(4) After the Court has made an order under paragraphs (a) or (c) of subsection (2) or while an order under paragraph (b) of subsection (2) is in force, no action may be commenced or judgment obtained under section 58 in respect of the mortgage except with the leave of the Court and subject to such conditions (if any) as the Court may impose.
(5) Any order made by the Court under this section shall for the purposes of subsection (4) be effective from the time when it is made.
25. Section 59 is applicable whenever a mortgagee wishes to exercise a power of sale. The parties’ submissions in the present case assumed that the Bank’s power of sale in the event of default was found in cl.5.4, set out above. As noted earlier, cl.5.4 has the effect that the Bank may exercise a power of sale conferred “by the Land Leases Act, the general law and/or otherwise”. However, the Land Leases Act does not in terms bestow a power of sale in the event of default by a mortgagor. Instead, section 59 enables the mortgagee to apply to the Court for an order empowering it to sell the mortgaged property.
26. The parties did not refer to any authority in the “general law” (by which we assume is meant the common law) conferring a power of sale in circumstances like the present. It is likely however that, before it became commonplace for mortgagees’ powers of sale in the event of mortgagors’ defaults to be regulated by statute, the common law did recognise such a power.
27. Another possibility is that s.101 of the Law of Property Act 1925 (UK) (which provides that certain powers, including the power of sale, are an incident of a mortgage) continues in force in Vanuatu by virtue of Art. 95 of the Constitution. We note in this respect that this Court found in Nutley v Kam [2003] VUCA 29 that s.40 of the Law of Property Act 1925 (UK) continues in force in Vanuatu.
28. The parties’ submissions did not address these matters and it is accordingly inappropriate for the Court presently to make a finding about the source of the power of sale in this case on which s.59 operates. It is sufficient to say that, whether by the “general law” or s.101 of the Law of Property Act 1925 (UK), the Bank did have a power of sale. Even if it did not, s.59 empowered the Supreme Court to authorise the sale of the Property.
29. This Court considered s.59(2) of the Land Leases Act in ANZ Bank (Vanuatu) Ltd v Lulum [2000] VUCA 7 and said:
[W]e are of opinion that the word “may” used in subsection 2 of section 59 of the Land Leases Act [ Cap] 163 is not used to convey a discretion, but to convey a power upon the Court and Judge and the exercise of such power depends, not upon the discretion of the Court or Judge, but upon the proof of the particular case out of which such power is being exercised.
30. Section 59 reflects a legislative intention that there be some judicial supervision of a mortgagee’s power of sale. When the power of sale is contained in the mortgage document, the Court must be satisfied that the conditions for the exercise of that power are established. In the common case that will usually require proof that there has been default by the Mortgagor in making payments of the required character (principal or interest or both) in the agreed amounts and at the agreed time or times.
31. Section 59 has its counterparts in the United Kingdom, Australia, and New Zealand. In general, these provisions require that a mortgagor in default be served with a notice specifying the nature and extent of the default and the action required of the mortgagor to remedy the default, as well as the mortgagor being given a reasonable opportunity (often at least 30 days) to remedy the default. The legislation commonly prescribes that monies due under a mortgage will only become payable once the period of notice has expired without the mortgagor taking the required action. See, for example, s.103 of the Law of Property Act 1925 (UK), ss.119 and 120 of the Property Law Act 2007 (NZ) , s.103 of the Property Law Act 1958 (Vic), s.55A of the Law of Property Act 1936 (SA), s.84 of the Property Law Act 1974 (Qld) and s.77 of the Land Titles Act 1980 (Tas). This is not an exhaustive list. Common to these provisions is the evident intention of the respective legislatures to ensure that defaulting mortgagors (or mortgagors who are alleged to have defaulted) have a reasonable opportunity to remedy the default and thereby to preclude mortgagees acting peremptorily.
32. We see no reason why the service of a notice specifying the default, or its absence, as the case may be, should not be taken into account by the Supreme Court when considering an application under s.59.
33. Likewise, the affording to a defaulting mortgagor of a reasonable opportunity to remedy the specified default will be a relevant matter. This would be consistent with the position in other jurisdictions. We do not regard such an approach as inconsistent with Lulum, as the Court then recognised that the exercise of the power in s.59 depended on proof of the particular case.
34. In the present case, over three months elapsed between the service of the notice of demand on 3rd July 2025 and the filing in the Supreme Court of the Bank’s Application on 11th October 2025. Mr Molbaleh did not raise any issue about the adequacy of the contents of the notice.
Ground 2: Was the appellant in arrears?
35. In Ground two, the appellant contend that the Judge erred by not accepting his argument that he had already “paid off the loan arrears”. On the material before the Judge, this ground is untenable. It is unsurprising that the Judge acted on the evidence provided by the Bank and not by reference to a bald assertion by Mr Molbaleh unsupported by any evidence.
36. The appellant sought to make good this shortcoming in the fresh evidence. Mr Molbaleh submitted that:
a) A payment by the appellant of VT 2,094,931 on 22nd May 2024 had cleared the arrears and had reduced the loan balance to VT 11,871,081;
b) The appellant had been consistent in making the loan payment since clearing the arrears on 24th May 2024;
c) There is presently VT 1,119,349 in the appellant’s current account with the Bank which can be applied in reduction of any arrears.
37. These submissions face a number of difficulties. First, whether the relevant date for determining the existence or otherwise of a circumstance of default is the date of the notice of demand, the expiry of the period stated in the Notice of Demand, the date on which the Bank made application to the Supreme Court, or the date of the Court’s order, it cannot be 22nd May 2024, over 13 months before the earliest of these dates. Proof that the appellant had cleared his arrears at 22nd May 2024, even if it be the case, does not establish an absence of arrears in the second half of 2025 or early 2026.
38. Secondly, and in any event, the appellant’s own material indicated that he had previously (on 23 September 2024) been served with a Notice of Demand from the Bank. That Notice indicated that the total for principal and interest secured by the Mortgage was then VT14,200,875 and that the appellant was in arrears by VT2,475,780. It also asserted that the appellant had been in arrears for 813 days. Plainly, this contradicts Mr Molbaleh’s claims that the payment on 24 May 2024 had cleared the arrears and that the appellant had been consistent with his payments thereafter.
39. Thirdly, it is not at all clear that the payment of VT 2,094,931 on 22nd May 2024 had cleared the arrears at the time. That is because there is evidence suggesting that that payment had been made in reduction of the principal then outstanding, and not in payment of the arrears of interest then due.
40. Fourthly, the Appellant did not provide statements of account for the appellant’s loan and, for that matter, neither did the Bank.
41. Fifthly, the appellant did provide statements of his current account with the Bank. These do show a number of transfers by way of payment of principal and interest on the appellant’s home loan. However, if (and there was no evidence about this) the current account was the sole source of the funds used for the home loan repayments, it is obvious that payments were made only irregularly and not “consistently”, as the appellant claims.
42. Lastly, the current account statements reveal that the total amount transferred from it in reduction of the home loan (for both principal and interest) in the period 23rd September 2024 to 12 February 2026 totalled VT2,015, 620. This was not even sufficient to clear the amount claimed by the Bank in its notice of demand of 23rd September 2024, let alone to meet the arrears that must have been accumulated since that date.
43. For these reasons, even if we did admit the fresh evidence, it would fall well short of establishing that the appellant was not in arrears on 30 June 2025 or thereafter. That circumstance, together with the fact that all of the evidence could have been obtained with reasonable diligence by the time of the hearing on 25th February 2026, indicates that the application for this Court to receive the fresh evidence must be refused. In saying that , we are not to be understood as deprecating the statements by the appellant’s parents of a willingness to support him. While their support of their son is commendable, their statements do not bear on the question of whether the appellant was in arrears at relevant times.
44. Ground 2 fails.
Ground 3: The quality of the Bank’s Evidence
45. By Ground 3, the appellant said, in effect, that even if regard is had only to the evidence adduced by the Bank before the Judge, that evidence had been insufficient to establish the default on which it relied. Mr Molbaleh drew attention in particular to the circumstance that the Bank had not brought loan statements into evidence even though they would be part of the Bank’s own records.
46. We say immediately that the provision of loan account statements at relevant times is highly desirable in applications under s.59. It will almost always be the best evidence of the default on which the mortgagee relies.
47. In order to discharge its onus of proof, the Bank relied on the statement of Ms Bolenga. She deposed to the making of the loan, the grant of the Mortgage and annexed a copy of it. Ms Bolenga then deposed (relevantly):
[10] Default occurred in repayment of the money secured by the Mortgage and as a result the Applicant issued a demand on 30 June 2025 demanding repayment in full of the monies owing to it by the Respondent secured by the Mortgage within [7] days [the Demand Notice].
48. Ms Bolenga continued:
[12] Notwithstanding service of the Demand Notice, the Respondent failed to satisfy the Demand Notice and to pay the amount owing to the Applicant under the facilities granted to the Borrower which are secured by the Mortgage.
49. As is apparent, Ms Bolenga’s sworn statement did not descend into detail. In [10], she asserted, using the passive voice and in conclusionary terms, only that “default occurred in repayment”. Ms Bolenga did not by direct speech particularize the repayment obligations (ie, the due amounts and due dates for payment) so that the Court could assess for itself whether there had been default.
50. Paragraph [12] is also expressed in conclusionary language. Ms Bolenga does no more than assert that the appellant “failed to satisfy the Demand Notice and to pay the full amount owing” to the bank. She does not particularise what it is that the appellant did or did not do, to satisfy that demand notice. She thereby precluded the Judge from determining for himself, by reference to primary facts, whether the appellant had failed to comply with the demand.
51. Mr Blake, for the Bank, drew attention to cl.4.16 of the Mortgage. Under the heading “Mortgagee Certificate”, it provides:
That a certificate as to the amount of monies hereby secured signed by or on behalf of the Mortgagee shall be prima facie evidence of that amount as at the date of such certificate
52. Mr Blake submitted that cl.4.16 had the effect that the amount claimed in the Notice of Demand is prima facie evidence of the appellant’s indebtedness, so it became incumbent on the appellant to provide evidence that the loan liability had been discharged.
53. We respectfully disagree. The Notice of Demand does not purport at all to be a certificate to which cl.4.16 refers. It is what it describes itself to be, namely, a demand for payment of “all monies due or owing” to the Bank and secured by the Mortgage together with an assertion that those monies totalled VT14,074,264 with interest continuing to accrue. That assertion is not equivalent to a certification.
54. Had matters stood there, we may have considered that there was some substance in the appellant’s submission concerning the sufficiency of the evidence relied upon by the Bank at first instance. However, the appellant’s failure to file a defence in the Supreme Court cannot be overlooked. The Bank’s application included assertions that the appellant had failed to make monthly repayments on the due dates and that he was thereby in default [para G] and that the appellant had failed to comply with the notice of demand [para I]. Despite the order of the Judge on 18th December 2025, and despite Mr Molbaleh having filed a Notice of Beginning to Act on 20th February 2026, the appellant did not file a defence in the proceedings at all. In those circumstances, Rule 4.5(5) of the Civil Rules had the effect that the Appellant was deemed to agree with the facts asserted by the Bank.
55. Moreover, it does not appear that there was any objection by Mr Molbaleh to the admission of Ms Bolenga’s sworn statement into evidence.
56. In these circumstances, while we think there is some substance in the appellant’s critique of the sufficiency of the Bank’s evidence, we are unable to uphold Ground 3 in the notice of appeal.
Ground 4: Refusal of adjournment
57. By this ground the appellant contended that the Judge had erred by not acceding to Mr Molbaleh’s application on 25th February 2026 for a further adjournment of the hearing so as to give him time to prepare and file a defence and sworn statements.
58. This ground is unmeritorious. Decisions by judges at first instance about adjournments are discretionary judgments attracting the usual restraint by appellate courts. No basis for interference in accordance with those principles has been shown.
59. Quite apart from that, we consider that the refusal of the adjournment was the only proper decision to be made. Having been served with the Bank’s application on 17th November 2025, the appellant had in the circumstances which happened more than 3 months to prepare for hearing on 25 February 2026. He did not comply with the Judge’s order on 18th December 2025 concerning the filing of a defence and he had known for a full month that the Judge would conduct the “Formal Proof” hearing on 25 February 2026. The time for providing a defence and sworn statement did not commence to run only when Mr Molbaleh was instructed. Further, and in any event, Mr Molbaeh had all the time between beginning to act on 20th February 2026 and the hearing on 25 February 2026 to prepare and file documents. It was incumbent on both the appellant and Mr Molbaleh to act with alacrity if they wished to defend the Bank’s application and they did not.
The Form of the Order for Sale
60. On 12th May 2026, during the period in which judgment on the appeal was reserved, the Court asked the parties to attend to make oral submissions on an issue concerning the manner in which the Supreme Court order for sale and transfer had been expressed. The first Order made by the Judge is expressed as follows;
“The Applicant, as Mortgagee, be empowered to sell and transfer [the] property contained and described in Leasehold Title No.11/0F33/004 (the Property) by such means and such manner as it shall deem fit.”
[Emphasis Added]
61. The Court raised with the parties whether an order empowering the mortgagee to sell the mortgaged property “by such means and in such manner as it shall deem fit” is an order authorised by s.59(2)(a) of the Land Leases Act. That is because s.59(2)(a), set out earlier in these reasons, says that the Court may make an order “providing for the manner in which the sale is to be effected and the proceeds of the sale applied”.
62. The Court was concerned that an order leaving to the Bank the decision of how the property should be sold was not an order as to the “means and manner” of the sale. The Court heard submissions on this question on the afternoon of 13th May 2026. One of the points raised firmly by Mr Blake was that the issue had not been raised in the appellant’s notice of appeal and that there had been no application to amend.
63. Mr Molbaleh sought to contend that the issue was raised by the first ground in the appellant’s notice of appeal, ie, the ground which contended in an unparticularised way that the Judge had erred in making the order authorising sale. We have already concluded that this ground is not a proper ground of appeal and need not be addressed. And, in any event, Mr Molbaleh’s submission was surprising because, if the appellant had intended Ground One to raise this issue, it was so opaque that it had been completely overlooked by everyone, including the appellant and Mr Molbaleh himself, until the Court raised the issue on 13th May 2026.
64. Ultimately Mr Molbaleh applied to amend the Notice of Appeal to raise the point. It was obvious that he was drafting the ground while on his feet at the bar table and that he had not considered amendment before coming into Court.
65. Mr Blake opposed the amendment. He said that in the time since the Court had circulated its minute on 12th May 2026, he had had insufficient time to consider and research the issue in the manner he thought appropriate. He also submitted that the form of the orders made by the Judge in the present case is a common form order in Vanuatu, so that any decision by this Court at the present time could have implications for many other orders already made by the Supreme Court as well as for pending matters.
66. Mr Molbaleh sought to avoid Mr Blake’s difficulty by suggesting that the Court could adjourn the matter to the next session (in August) this year. That is not a practical suggestion given that the present Coram of the Court is seized of the matter. Quite apart from that, and in any event, we do not think it appropriate to adjourn to hear submissions on a matter which the appellant had not addressed at all until it was raised by the Court.
67. Accordingly, we refuse Mr Molballeh’s late oral application to amend. The form of the order for sale not being an issue in the appeal, there is no need for it to be addressed in these reasons.
68. The parties agreed that there should be no additional order for costs in respect of the hearing on 13th May 2026.
Conclusion
69. Before leaving the matter, we raise for the Bank’s consideration the desirability of mortgagors being given notice that it is contemplating invoking cl 5.7 to make all monies due under the mortgage immediately payable. We refer again to paragraphs [32] and [33] of these reasons. Perhaps it is unnecessary to say, but the Bank may also wish to give attention in future matters to the form of the order for sale it seeks, having regard to the matters the Court raised with the parties on 13th May 2026.
70. For the reasons set out above, the appeal is dismissed. The Appellant is to pay the Bank’s costs of and incidental to the appeal fixed in the sum of VT75,000.
DATED at Port Vila this 15th day of May 2026
BY THE COURT
Hon. Chief Justice, Vincent Lunabek