Australia and New Zealand Banking Group Ltd v Mohammed [2011] FJCA 31; ABU0028.06 (20 May 2011)

IN THE COURT OF APPEAL
ON APPEAL FROM THE HIGH COURT OF FIJI
CIVIL APPEAL No: ABU 0028 OF 2006

(High Court Action No: HBC 337 of 1998 at Lautoka)

BETWEEN:

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED
Appellant

AND:

NIYAZ MOHAMMED
Respondent

Coram: Hon. Justice William Marshall, Justice of Appeal
Hon. Justice Izaz Khan, Justice of Appeal
Hon. Justice William Calanchini, Justice of Appeal

Counsel : Mr K Kumar for the Appellant
Ms A Lata for the Respondent

Date of Hearing : 3 May 2011
Date of Judgment : 20 May 2011

JUDGMENT

William Marshall JA

[1] I agree with judgment and reasons of William Calanchini JA and also in respect of the orders proposed by him.

Izaz Khan JA

[2] I also agree with judgment, reasoning and proposed orders of William Calanchini JA.

Calanchini JA

[3] This is an appeal against a decision of the High Court (Connors J) at Lautoka handed down on 22 March 2006. The learned Judge ordered that the Appellant's action be struck out with costs awarded to the Respondent to be agreed or taxed.

[4] The background facts are not in dispute and may be stated briefly. By Writ of Summons issued on 16 November 1998 (the Writ) the Appellant commenced proceedings against the Respondent in the High Court at Lautoka. The Writ was not served on the Respondent within the period of twelve months after the date of issue as was required by Order 6 Rule 7 (1) of the High Court Rules.

[5] Pursuant to Order 6 Rule 7 (2) the Appellant made an application dated 11 February 2003 for the Writ to be renewed. By its nature such an application is made ex parte. On 17 February 2003 Byrne J ordered that the indorsement of Claim be renewed for 12 months from 17 February 2003 until 16 February 2004. The learned Judge also ordered that the Appellant file and serve its Statement of Claim in accordance with the rules.

[6] There does not appear to be any dispute that the Writ was subsequently served on the Respondent on 27 August 2003. An acknowledgment of service was then filed on 29 August 2003 by the Respondent.

[7] By Notice of Motion dated 1 October 2003 the Respondent applied for the following orders:

"(1) That the Order for Renewal of the Writ of Summons dated 16 November 1998 made on 17 February 2003 be set aside.

(2) _ _ _ that the Writ of Summons dated 16 November 1998 be struck out with costs."

[8] The application was supported by an affidavit sworn by the Respondent. The application was made pursuant to Orders 6 and 18 of the High Court Rules. The application was opposed. The hearing of the application took place on 23 September 2004 before Singh J who delivered his decision on 28 October 2004. His Lordship considered Order 3 Rule 4 which allows the Court to extend the period within which a person is required to do any act in any proceedings although the application for extension is not made until after the expiration of the period. The learned Judge also considered the effect of Order 6 Rule 7 and Order 12 Rules 6 and 7. Order 6 Rule 7 deals with the validity of a writ. Order 12 Rule 6 states that an acknowledgment of service is not to be treated as a waiver by a defendant who wishes to dispute service of a writ. Order 12 Rule 7 provides the procedure to be followed by a defendant who having filed an acknowledgment of service, disputes the jurisdiction of the Court by reason of an irregularity in the service of a writ.

[9] His Lordship found on the facts that the Respondent had not made his application within the time prescribed by Order 12 Rule 7 and dismissed the application with costs. His Lordship did not decide the application under Order 6 or Order 18. He concluded that they did not assist the Respondent. The Respondent was ordered to file a Defence within 14 days. The Orders were sealed by the Court on 3 November 2004. It was not in dispute that there was no appeal by the Respondent against the Orders made by Singh J.

[10] The Respondent filed his Defence on 10 November 2004. A summons for Directions dated 22 April 2005 was returnable before the Deputy Registrar on 29 April 2005. On that day orders was made in terms.

[11] The action came on for hearing on 21 March 2006 before Connors J at Lautoka. At the commencement of the hearing Counsel for the Respondent, apparently from the bar table, raised, as a preliminary issue, an application pursuant to Order 18 Rule 18 (i) (d) to strike out the action on the basis that it was an abuse of the process of the Court. The basis of that application was that there was no writ of summons or statement of claim before the Court for determination.

[12] His Lordship heard submissions from the parties on 21 March and delivered a written decision on 22 March 2006.

[13] The learned judge stated in paragraph 8 that, pursuant to Order 6 Rule 7 (l), a Writ, if not served within 12 months expires. After that time it is no longer valid. He concluded that the Writ in these proceedings, having been issued on 16 November 1998 expired on 15 November 1999.

[14] The learned Judge concluded in paragraph 21:

"_ _ _ I am of the view that there is in fact no Writ or Statement of Claim before the Court by virtue of the provisions of Order 6 Rule 7, the Writ expired on 15 November 1999 and nothing has been done since that time that has the effect of reviving it. The limitation period had long since expired by 2003. I make an Order pursuant to Order 18 Rule 18 to strike out the Plaintiff's claim."

[15] One of the issues that were raised in the application before Connors J concerned the principle of "res judicata". The Appellant submitted that the application that was before Connors J had already been litigated and determined by Singh J in his ruling on 28 October 2004. His Lordship considered that the application before him did not raise the same issues as the application determined by Singh J. Connors J noted that the application before him was for striking out pursuant to Order 18 Rule 18 on the basis that the Writ expired on 15 November 1999 and had not been renewed. He noted that the application before Singh J was for an Order to set aside the Order of Byrne J (as he then was) for renewal of the Writ. Singh J had dealt with the application on the basis that the Respondent had not made his application under Order 12 Rule 7 within the required time and nor had the Respondent applied for an extension of time to do so pursuant to Order 3 Rule 4. Connors J concluded that the renewal of the Writ had not previously been litigated. He considered that the only issue previously litigated was the Order made by Byrne J dated 17 February 2003.

[16] The Appellant now appeals the decision and seeks orders from this Court that the decision of Connors J be wholly set-aside and that the Appellant's substantive action be re-instated and remitted in the High Court in Lautoka for trial. The grounds relied upon by the Appellant are:

"(1) The Judge erred in law and in fact in holding that the Writ was an invalid Writ as the Appellant's application to renew the Writ in addition to Order 6 Rule 7 (l) was also made pursuant to Order 3 Rule 4 of the High Court Rules.

(2) The Judge erred in law and in fact in holding that the Writ was invalid when Justice Singh had previously ruled that the Respondent had submitted to the jurisdiction of the Court.

(3) The Judge erred in law and in fact in holding that the Writ was invalid as the Respondent had waived any antecedent irregularities in the Writ and had chosen to defend the action on its merits.

(4) The Judge erred in law and in fact in striking out the Writ under Order 18 rule 18 (d).

(5) Alternatively, the Appellant says that the Judge was wrong in holding that the Writ was invalid when it was only irregular and the Defendant's subsequent act of filing a Statement of Defence waived such irregularity."

[17] The principal issue raised by the grounds of appeal concerns the decision by the learned Judge to strike out the Appellant's action as an abuse of the process of the Court under Order 18 Rule 18 (i) (d) and the inherent jurisdiction of the Court.

[18] So far as is relevant Order 18 Rule 18 (i) (d) states:

"The Court may at any stage of the proceedings order to be struck out _ _ _ any pleadings or indorsement of any Writ in the action on the ground that:

(a) _ _ _
(b) _ _ _
(c) _ _ _
(d) it is otherwise an abuse of the process of the Court;

and may order the action to be _ _ _dismissed

_ _ _."

[19] An important issue raised by the Appeal concerns the timing of the Respondent's application to the trial Judge. The application was made at the commencement of the trial as a preliminary issue. Although the rule expressly states that the Court may make an order "at any stage of the proceedings" such an application should be made promptly and in a case such as the present before the close of pleadings. In my judgment the application should have been made as soon as possible after service of the Writ on the Respondent. Under the circumstances it is necessary to first of all consider whether the application to strike out the action should have been entertained by the learned trial Judge as a preliminary issue at the start of the trial. In Halliday –v- Shoesmith and Another [1993] 1 WLR 1 Beldam LJ observed at page 5 that:

"It seems to me that where a party to litigation delays making an application of this kind until the opposite party has incurred all the costs of preparing for trial and has indicated that he is himself intending to exercise his right to proceed to trial, he has conducted himself in a way which has induced the opposite party to incur costs and expense and, if his contentions be right, has unwarrantably increased the potential liability of his opposite party to pay his costs. It seems to me that such an application should, in the ordinary way, be made at the earliest opportunity and that a Court should not embark on hearing such an application at the eleventh hour, save in the most exceptional cases and on receiving a valid explanation for the lateness of the application."

[20] The application in Halliday (supra) was made under the then equivalent rule of the English Rules of the Supreme Court to strike out certain of the allegations in the defence and counterclaim on the grounds that they disclosed no reasonable cause of action or were vexatious and frivolous. In that case the Respondent did not establish a most exceptional case nor was there a valid reason provided for the lateness of the application.

[21] There is no material in the Record to indicate whether the learned trial Judge in the present case had considered whether it was appropriate to exercise his discretion to entertain the application at so late a stage.

[22] In my judgment the application was made too late and in the absence of clear consent should not have been entertained at that stage. That conclusion alone would be sufficient to dispose of the appeal.

[23] However, I now propose to consider the proceedings that have taken place since the Writ was initially issued. The Writ was issued on 16 November 1998. Pursuant to Order 6 Rule 7 (i), for the purpose of service, the Writ remained valid for a period of 12 months up to 15 November 1999.

[24] It is not disputed that the Writ was not served on or before 15 November 1999. The status of such a writ after that date was discussed by the Court of Appeal in Sheldon –v- Brown Bayley's Steel Works LD [1953] 2 QB 393. In that decision Singleton LJ said at page 400:

"I do not regard it as strictly accurate to describe a Writ which has not been served within 12 months as a nullity. It is not as though it had never been issued. It is something which can be renewed. You cannot renew a nullity. The Court can grant an application which results in making it just as effective as it was before the 12 months period had elapsed."

[25] The Writ remained invalid (but not a nullity) for the purpose of service for some years. Although the Writ could not be effectively served in the years following 15 November 1999, it remained effective for other purposes such as for the purpose of an application for renewal.

[26] Pursuant to an ex-parte application dated 11 February 2003 the Appellant sought an order for leave to renew the indorsement of claim that was indorsed on the Writ. This has been treated, without apparent objection, as amounting to an application to renew the Writ. On 17 February 2003 Byrne J (as he then was) ordered renewal for a further 12 months period from 17 February 2003 until 16 February 2004. The learned Judge also ordered that a Statement of Claim be filed and served in accordance with the Rules.

[27] There is no material in the record to indicate whether a copy of this Order was served on the Respondent. It would appear that the renewed Writ was served on the Respondent on 27 August 2003 with a Statement of Claim which appears to have been filed on 21 August 2003. It is apparent from the Record that the renewed Writ that was served on 27 August 2003 purported to comply with Order 6 Rule 7 (3). This Rule provides that before it is served a renewed Writ must be marked with an official stamp showing the period for which the validity of the Writ has been so extended. I say purported to comply because it appears that the renewed Writ was indorsed with the notation typed at the top of the first page that:

"Renewed Pursuant to the Order made by the Honourable Mr Justice Byrne on 17 February 2003".

[28] The Respondent filed an acknowledgment of service on 29 August 2003. The Respondent then filed on 1 October 2003 a Notice of Motion seeking two orders. The first order sought was to set aside the Order made on 17 February 2003 by Byrne J renewing the expired Writ for 12 months.

[29] The application by the Respondent to set aside the Order made by Byrne J was the only challenge to the Order renewing the Writ for 12 months from 17 February 2003 to 16 February 2004. However it should be noted that neither Order 6 nor Order 18 contemplates such an application. It was not service of the Writ that the Respondent sought to have set aside.

[30] There is in Order 2 Rule 2 provision for an application to be made to set aside for an irregularity. However, in my judgment, this Rule is not intended to be used as a means of challenging an ex parte order made by a judge. Whether the order made by Byrne J was a proper exercise of a discretion given by Order 3 Rule 4 and Order 6 Rule 7 (2) should not be the subject of a setting aside application under Order 2 Rule 2.

[31] There is provision in Order 32 Rule 6 for the Court to set aside an order made ex parte. The use of this Rule was discussed by the Court of Appeal in WEA Records Ltd –v- Visions Channel 4 Ltd and Others [1983] 3 All ER 589 Donaldson MR observed at page 593:

"In terms of jurisdiction, there can be no doubt that this court can hear an appeal made by the High Court on an ex parte application. _ _ _ Equally there is no doubt that the High Court has power to review and discharge or vary any order which has been made ex parte. This jurisdiction is inherent in the provisional nature of any order made ex parte and is reflected in Order 32 Rule 6 _ _ _:

As I have said, ex parte orders are essentially provisional in nature. They are made by the judge on the basis of evidence and submissions emanating from one side only. Despite the fact that the applicant is under a duty to make full disclosure of all relevant information in his possession, whether or not it assists his application, this is no basis for making a definitive order and every judge knows this. He expects at a later stage to be given an opportunity to review his provisional order in the light of evidence and argument adduced by the other side, and in so doing, he is not hearing an appeal from himself and in no way feels inhibited from discharging or varying his original order.

This being the case it is difficult, if not impossible, to think of circumstances in which it would be proper to appeal to this court against an ex parte order without first giving the judge who made it or, if he was not available, another High Court judge an opportunity of reviewing it in the light of argument from the defendant and reaching a decision."

[32] The Court of Appeal concluded that the proper course for an applicant seeking to challenge an ex parte order was to apply to the judge who made the order or to another High Court judge to discharge or vary it, and to appeal to the Court of Appeal only after the application had been heard and determined.

[33] In the present case, a situation arose where a writ had not been served within 12 months. The writ expired but was not a nullity. Order 6 Rule 7 (2) permits an application to be made for the writ to be extended. The application may be made after the expiration of the 12 months. It may not be necessary for the Plaintiff to rely on Order 3 Rule 4 to make the application after the expiration of 12 months. The application by its very nature must be made ex parte as there is at that point no other party to the proceedings.

[34] At the hearing of the application the judge considers the affidavit material and submissions. If he considers it appropriate an order extending the validity of the writ may be made.

[35] It seems to me that, if service is effected within the period of extended validity, the Defendant may immediately apply under Order 32 Rule 6 to discharge the ex parte order by which the writ's validity had been extended.

[36] Alternatively, the Defendant may file an acknowledgment of service and then proceed to challenge the jurisdiction of the court on account of an irregularity in the service of the writ or in any order extending the validity of the writ for the purpose of service

[37] Although Singh J discussed in some detail the material that was before Byrne J, he did not decide whether he could or should set aside the Order made by Byrne J.

[38] Not surprisingly, particularly in view of the fact that the Respondent had filed an acknowledgment of service, Singh J dealt with the application as if it were an application under Order 12 Rules 6 and 7.

[39] Order 12 Rule 6 states:

"The acknowledgment by a defendant of service of a writ shall not be treated as a waiver by him of any irregularity in the writ or service hereof or in any order _ _ _extending the validity of the writ for the purpose of service."

[40] Order 12 Rule 7 states:

"(1) A defendant who wishes to dispute the jurisdiction of the Court in the proceedings by reason of any such irregularity as is mentioned in Rule 6 shall _ _ _ within the time limited for service of a defence apply to the Court for:

(a) an order setting aside the writ or service of the writ on him, or

(b)- (c) _ _ _, or

(d) the discharge of any order extending the validity of the writ for the purpose of service."

[41] Under Order 12 Rule 7 (2) the application is to by Summons or Notice of Motion stating the grounds of the application. Rule 7 (3) provides that the application must be supported by an affidavit.

[42] Order 12 Rule 7 (6) provides that except where the defendant makes an application under Rule 7 (1) the acknowledgment of service filed by a defendant, unless withdrawn by leave of the Court, shall be treated as a submission to the jurisdiction of the Court.

[43] In treating the application as one made under Order 12 Rule 7 Singh J was able to determine whether the Order made by Byrne J should be discharged on account of an irregularity in the Order extending the validity of the writ for the purpose of service.

[44] However, in my judgment the use of the word "irregularity" does not extend to the exercise of a discretion. The Respondent did not set out the nature of the irregularity which he was required to do. On the other hand, if the Respondent was alleging that Byrne J had wrongfully exercised his discretion then the Respondent should have proceeded under Order 32 Rule 6.

[45] Singh J, however, did not find it necessary to consider any substantive issue since he concluded that the Respondent's application had not been made within the time presented by Order 12 Rule 7 (1). Consequently, the Respondent, having failed to apply under Order 3 Rule 4 for an extension of the time in which to make such an application, had submitted to the jurisdiction of the Court as a result of having filed his acknowledgment of service. For that reason Singh J refused to make an Order setting aside the earlier order of Byrne J. Furthermore Singh J also refused the application to strike out the Writ. The Respondent did not seek to appeal the decision of Singh J.

[46] The effect of the order made by Singh J was that the order made by Byrne J remained undisturbed. Whilst that order remained undisturbed the Writ's validity for the period 17 February 2003 to 16 February 2004 remained intact and since service had been effected in that period, there was no basis for disputing the Court's jurisdiction. In my judgment, when the trial of the action was called on for hearing before Connors J it did not constitute an abuse of the process of the Court.

[47] For the above reasons, I would allow the appeal. The action should be remitted to the High Court in Lautoka for trial. I propose that the Appellant is entitled to the costs of the Appeal in the sum of $4,000.00. I also propose that the costs of the application before Connors J are to be costs in the cause.

William Marshall JA

Orders of the Court

[48] The orders of the Court are:

(1) That the appeal of Australian and New Zealand Banking Group Limited in the matter of Connors J striking out its action against Niyaz Mohammed be allowed.

(2) That the orders in the Court below be vacated.

(3) That the action be remitted to the High Court in Lautoka for trial.

(4) That the costs of the appellant Australian and New Zealand Banking Group Limited of the appeal assessed at $4,000.00 be paid to the Appellant by the Respondent Niyaz Mohammed.

(5) That the costs of the application before Connors J handed down on 22nd March 2006 be costs in the cause.

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Hon. Justice William Marshall
Justice of Appeal

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Hon. Justice Izaz M. Khan
Justice of Appeal

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Hon. Justice William Calanchini
Justice of Appea