Engineer Procure Construct (Fiji) Ltd v Sigatoka Electric Ltd [2022] FJCA 15; ABU105.2016 (4 March 2022)

IN THE COURT OF APPEAL, FIJI
ON APPEAL FROM THE HIGH COURT

CIVIL APPEAL NO. ABU 105 OF 2016
[High Court Civil Action No. 031 of 2013]

BETWEEN:

ENGINEER PROCURE CONSTRUCT (FIJI) LTD
Appellant

AND:

SIGATOKA ELECTRIC LTD
Respondent

Coram: Basnayake, JA

Lecamwasam, JA

Jameel, JA

Counsel: Mr. D. Sharma and Ms. F. Gul for the Appellant

Mr. S. K. Ram for the Respondent

Date of Hearing: 08 February 2022

Date of Judgment: 04 March 2022

JUDGMENT

Basnayake, JA

[1] I agree with the reasoning and conclusions arrived at by Lecamwasam JA.

Lecamwasam, JA

[2] This is an appeal filed against the judgment of the Learned High Court Judge at Lautoka dated 29 August 2016. A brief history of the case as per the affidavit of the plaintiff (appellant in this appeal) is, the respondent submitted a tender dated 05 May 2005 for the electrical high voltage and low voltage infrastructure installation for the “Momi Bay project” (a development project) and nominated the appellant as its sub-contractor for the “Inground HV Cable Installation”. The parties were awarded the contract and commenced work of the project, performing the relevant parts of their contract. The Momi Bay project was halted around December 2006 due to financial difficulties.

[3] It is alleged that the appellant had supplied One Hundred percent of the material by the time the project was halted and had carried out approximately Seventy percent of the work it had undertaken. The appellant had also submitted invoices for payment to the respondent. The respondent had made certain partial payments but had not honoured all of the payments, the remainder of which the appellant now claims. The respondent had, however deducted (1).A commission and (2).retention fees from the amount due to the appellant.

[4] The respondent, through its affidavit, admitted to the majority of the facts stated by the appellant, except the nature of the relationship between the two entities. The position of the respondent is that the relationship between them was a joint venture and not that of a principal contractor and sub-contractor. Hence, the respondent states that the action is misconceived, against itself and should have been filed against Matapo Limited and Temo Consulting Limited, the developers, and the consulting engineers and project manager respectively. The respondent further states that the claim of the appellant is fraudulent as the appellant removed various items from the project and disposed of the same without furnishing the credit notes or informing the respondents.

[5] The appellant having filed action under summary procedure, the learned Master made the following order:

1. Enter summary judgment against the Defendant in the sum of $623,512.50 with post judgment interest of 4% per annum until the date of full payment;
2. The Plaintiff is entitled to summarily assessed cost of $1,650.00; and
3. The remainder of the claim is to take its normal course.
   

[6] The respondent appealed to the High Court against the above order. The learned High Court judge by his judgment dated 29 August 2016 allowed the respondent’s appeal and made the following orders:

1. The course must now be listed before the Master Lautoka High Court for necessary directions for it to be finalized.
2. The costs of this application shall be costs in cause.
   

[7] Being aggrieved by the above order of the learned High Court Judge, the plaintiff appellant preferred an appeal to this court, i.e. the Court of Appeal on the following grounds of appeal:-

GROUNDS OF APPEAL

1. That the Learned Judge erred in law in setting aside the summary Judgment entered on 13^th November 2013 on the ground of non-service of the Writ of Summons on the Respondent’s registered Office since he failed to take into account the Honourable Mr. Justice Inoke’s Order granted on 25^th August 2011.
   
2. That the Learned Judge erred in fact and in law in setting aside the Summary Judgment entered on 13^th November 2013 on the ground of non-service of the Writ of Summons on the Respondent’s registered Office since he failed to take into consideration that on 25^th August 2011, when Justice Inoke set the new Action for an expedited hearing on 5^th, 6^th, and 9^th December 2011, Pillai Naidu &Associates communicated that it would continue to represent the Respondent.
3. That the Learned Judge erred in fact and in law in setting aside the Summary Judgment entered on 13^th November 2013 on the ground of non-service of the Writ of Summons on the Respondent’s registered Office since he failed to give adequate weight to Order 2 Rule 2(1) of the High Court Rules 1988 in that the Respondent had not made its setting aside application within a reasonable time and before the Respondent had taken any fresh step after becoming aware of the irregularity.
   
   4. That the Learned Judge erred in fact and in law in setting aside the Summary Judgment entered on 13^th November 2013 on the ground of non-service of the Writ of Summons on the Respondent’s Office since he failed to give adequate weight to Order 2 Rule 2(2) of the High Court Rules 1988 in that the Respondent had not made its setting aside application by summons or motion with the grounds of objection stated in the summons or notice of motion.
      
   5. That the Learned Judge erred in fact and in law in setting aside the summary judgment entered on 13^th November 2013 on the ground of non-service of the Writ of Summons on the Respondent’s registered Office since he failed to give adequate weight to Order 10 Rule 1(4) of the High Court Rules 1988 that on 26^th September 2011, the Respondent’s Solicitors, Pillai Naidu & Associates.
      
   6. That the Learned Judge erred in fact and in law in setting aside the Summary Judgment entered on 13^th November 2013 on the ground of non-service of the Write of Summons on the Respondents registered Office since he failed to give adequate weight to Order 10 Rule 1(5) of the High Court Rules 1988 that the Respondent’s Solicitors, Pillai Naidu & Associates, had filed an Acknowledgement of Service on 05 October 2011.
      
   7. That the Learned Judge erred in fact and in law in setting aside the Summary Judgment entered on 13^th November 2013 on the ground of non-service of the Writ of Summons on the Respondent’s registered Office since he failed to take into consideration that the Respondent had not raised the issue of non-service of the Writ of Summons on its registered office, in its Notice and Grounds of Appeal.
      
   8. That the Learned Judge erred in fact and in law in setting aside the Summary Judgment granted on 13^th November 2013 on the ground of non-service of the Writ of Summons on the Respondent’s registered Office since he failed to take into consideration that the Respondent had not raised the issue of non-service of the Writ of Summons on its registered office, in its opposition to the Appellant’s Summary Judgment application.
      
   9. That the Learned Judge erred in fact and in law in setting aside the summary Judgment granted on 13^th November 2013 on the ground of non-service of the Writ of Summons on the Respondent’s registered Office since he failed to take into consideration that the Respondent had opposed the Summary Judgment entered on 13^th November 2011 by filing Affidavits and Written Submissions in opposition; and made oral submissions at the hearing on 08^th October 2011 on whether it had any defence to the substantive claim raised by the Appellant.
      

[8] The appellant seeks the following reliefs based on the above grounds of appeal:-

1. That the relief that the Appellant seeks in this Appeal is that Order made by the High Court on 29^th August 2016 to set aside the Summary Judgment entered on 13^th November 2013, be wholly set aside.
2. That for the sake of completeness, the consequential Orders made by the Court on 29^th August 2016 should also be set aside.
3. Costs of the Appeal to be paid by the Respondent.
   

[9] On perusal of the learned High Court judge’s judgment, especially paragraph 27 of the judgment, it is abundantly clear that the learned judge based his decision to set aside the summary judgment on the ground that there had been no proper service of writ of summons.

[10] In the instant case summons had been served on the city agents for Pillai Naidu Associates, solicitors for the appellants on 26 September 2011. However, at a very late stage of the proceedings, the respondent took up the position that it was not served summons in the manner prescribed in Section 391(1) of the Companies Act of 1984 which is titled “Service of documents” and reads:

“A document may be served on a Company by sending it by post to the registered postal address of the Company in Fiji, or by leaving it at the registered office of the Company.”

[11] The word ‘may’ generally connotes a possibility rather than a mandatory obligation. However, whether the language in legislation is mandatory or directory in nature hinges on the intent of the legislature, which could only be gleaned by a careful analysis of the entirety of the legislation and the consequences flowing from construing a provision in a particular way. Accordingly, Section 2 of the Act interprets ‘document’ to include “summons, notice, order and other legal process, and registers”. Together with Section 391(1), this may be construed to mean the only provision in relation to the service of summons to a company is Section 391(1), which therefore requires summons to be served in the manner prescribed in Section 391(1) and in such manner alone.

[12] However, the Companies Act contains other provisions which deal with summons and specifically the service of summons. Section 18 of the Act permits “All notices, summonses and other documents, other than those of which personal service is required, may be served by post”. Section 11 sets out the procedure for the issue of summons which reads “Every summons in proceedings in court shall be prepared by the applicant or his barrister and solicitor and issued from the office of the registrar; a summons, when sealed, shall be deemed to be issued; and the person taking out the summons shall file in the office of the registrar a duplicate thereof.” The juxtaposition of the mandatory language used in the latter provision with the language used in the former provision undeniably highlights the directory or permissive nature of the use of the word “may” in Section 18. Extending this analysis of the general use of language in the Act, I find that Section 391(1) does not restrict service of a document to the method stated therein. It permits serving a document (any document) on a company in the manner provided for therein as well as by other methods.

[13] Also relevant is the fact that Section 391(1) of the Companies Act prescribes the mode of service of any document (emphasis added) and is not confined to the service of writs of summons. Thus, it is a general provision, making it imperative to advert our attention to other legal and procedural provisions specifically applicable to the service of summons which have a direct bearing on the present matter before this court. Order 10 Rule 1 (4) of the High Court Rules is pertinent in this regard. The rule reads as follows:

“Where a defendant’s Solicitor indorses on the writ a statement that he accepts service of the writ on behalf of that defendant, the writ shall (the emphasis is mine) be deemed to have been duly served on that defendant and to have been so served on the date on which the indorsement was made”

[14] On a careful perusal of above rule it is obvious that the above provision regulates the service of writ of summons specifically. As per the High Court Rule, an indorsement by the defendant’s solicitor that he accepts the service of the writ on behalf of the defendant suffices to fulfil the statutory requirement. This rule is not in conflict with Section 391(1) of the Companies Act. The permissive language of the legislative provision leaves it open to make recourse to special procedures for the service of summons. As the High Court Rules are specifically applicable to adjudicatory procedures, of which writs of summons are an important procedural aspect, following the procedure stipulated therein suffices to constitute a valid service of summons. Therefore, the indorsement of the solicitor, i.e. City Agent for Pillai Naidu Associates can be treated as sufficient and proper service of summons on the respondent in the present case. Hence, failing to take steps under Section 391(1) of the Companies Act is not fatal to the action as the appellant has complied with Order 10 Rule 1(4) of the High Court Rules.

[15] It is pertinent to note that this question of the mode of service of summons does not appear to have had any impact on the respondent as he had not complained of any irregularity at the outset. The service of the writ of summons has been acknowledged on behalf of the respondent on 04 October 2011 (page 75 of the HCR), subsequent to which, the respondent had taken other relevant steps in pursuance of the action. However, no objection has been intimated in relation to any illegality in the service of the writ. Had there been non-service on the respondent, in that summons had not been served at all on the solicitors or the company as envisaged in Section 391(1) of the Companies Act, such issue should have been raised at the outset and not after a lapse of more than three years. Therefore, I am convinced that the mode of service of summons, which was within the confines of the law, has had no impact on the respondent contrary to its protestations at a much later stage of the proceedings.

[16] The Learned High Court Judge in his judgment raises a germane issue in relation to the serving of summons. That relates to the basis on which the respondent (appellant in this case) decided Pillai Naidu and Associates to be the solicitors for the appellant (respondent in this case) prior to the service of summons. The incredulity of the learned High Court Judge is expressed in paragraph 23 as follows:-

“23. The other dilemma is as to how the Respondent identified and decided that the Appellant Solicitors should be Pillai Naidu and Associates even before the Writ was duly served on the Appellant Company”.

[17] The learned Judge’s observation is reasonable on the face of it. However, he appears not to have considered Judge Inoke’s Order (which was referred to by both parties) in regard to the appearance coupled with the acknowledgement of summons filed by Pillai Naidu and Associates on 4^th October 2011 on behalf of the respondent, which together is sufficient evidence that the appellant has not erred in serving summons on the above solicitors. Therefore, the observation in paragraph 23 of the judgment of the learned High Court Judge carries no weight. One cannot also forget the provisions of Order 10 Rule 5 in this regard, which states “where a Writ is not duly served on a defendant but he acknowledges the service of writ, the writ shall be deemed, unless the contrary is shown, to have been duly served on him and to have been so served on the date on which he acknowledges service”. Hence, having acknowledged the writ of summons the respondent cannot go back on it.

[18] In addition to the above, Order 2 rule 2 (i) is also pertinent in this regard. It states, “an application to set aside for irregularity any proceedings, any step taken in any proceeding or any document, judgment or order therein shall not be allowed unless it is made within a reasonable time.” Irregularities in the service of writs of summons too fall within the ambit of this provision. The failure to raise the issue of non-service of summons for more than three years in itself debars the respondent from seeking any relief in that regard.

[19] Having considered all the relevant facts, I am satisfied that the appellant had complied with the requirements of Order 10 Rule 1(4) of the High Court Rules and thereby satisfied the necessary threshold requirements for the service of summons. While it is imperative to comply with Order 10 Rule 1(4) in the service of writs of summons, parties are not precluded from complying with both Section 391(1) and Order 10 Rule 1(4) through an abundance of caution if they so wish.

[20] Therefore, I am more than satisfied that there had been proper service of Writ of Summons in compliance with Order 10 rule 1(4) of the High Court Rules, to the existence of which the Learned High Court Judge had been oblivious. I am sufficiently convinced that the Learned High Court Judge had erred in coming to the conclusion that the requirement of a valid service of summons has not been satisfied. Accordingly, I set aside the judgment of the Learned High Court Judge dated 29 August 2016.

[21] In view of the above reasoning, I answer the grounds of appeal, all based on the singular fact of non-service of summons, cumulatively in favour of the appellant and set aside the judgment of the Learned High Court Judge dated 29 August 2016.

[22] Although I have answered the grounds of appeal urged by the appellant I am also mindful of the notice filed by the Respondent (Defendant) on 07 March 2017 which states thus:-

1. THE Learned Judge of the High Court was correct in setting aside the Order 14 Summary Judgment upon consideration of the admitted fact that the Writ of Summons with the statement of claim was not served on the Respondent as prescribed by the Rules of the Court and the statutory prescription for service under the Companies Act 1983, notwithstanding that the same was not specifically pleaded as a ground of Appeal before the Learned Judge in the High Court.
   
2. THE Learned Judge of the High Court was correct in setting aside the Order 14 Summary Judgment on the grounds of non-service of the Writ of Summons and statement of claim on the Respondent when the issue of service was fully ventilated at the Appeal Hearing by both parties and the Appellant did not at any stage submit to His Lordship in the High Court that the issue of service could not be addressed upon because the same was not itemized as a ground of appeal in the High Court. Ergo, the Appellant is now estopped from raising it as a ground of Appeal in this Honourable Court.
   
3. THAT it was open to His Lordship in the High Court to set aside the Order 14 Judgment on the following grounds in addition to the non-service issue.
   
   • (a) Substantive matter in the High Court not suitable for Summary adjudication by way of affidavit. Numerous issues raised by the pleadings. See Justice Inoke’s directions for pre-trial, discovery and related matters to be completed before hearing. The Appellant attempted to take a shortcut by the Order 14 Application.
   • (b) Wrong exercise of legal principles in awarding 65% to the Appellant thereby creating a obstacle to the Respondent to lead evidence on the remaining 35%. Thus, factoring in an element of prejudice and injustice to the Respondent.
   • (c) The Master uncertainty in splitting the 65% - 35% award.
   • (d) The Master’s failure to address his mind on the discrepancy between the amount claimed in the principal relief as in the prayers of the statement of claim and the figures in the Order 14 application.
   • (e) That the Appellant’s claim was inherently bad in law in that it had not pleaded its own contractual sum with the Respondent and as such an Order 14 application was not suitable.
     

[23] In its notice of appeal, the respondent urges that the substantive matter in the High Court is not suitable for summary adjudication by way of Affidavit and therefore moves that the matters be fixed for a hearing. Interestingly, despite the many references to the summary proceedings in its notice as well as in the submissions made by Counsel for the respondent, the appellant has not filed any objection against the said notice of the respondent. The circumstances as a whole compel me to consider the position of the Respondent (Defendant in the magistrate’s court) against the summary judgment delivered by the learned Master.

[24] The position of the respondent in short is that, this matter is not a case for summary judgment and further as it is a joint venture between the respondent and the appellant the respondent is not liable for various other transactions between the parties. An element of prejudice and injustice towards the respondent is also pleaded in relation to the findings of the Learned Master, specifically with regard to the division of the award of claim between the appellant and respondent in Sixty Five percent and Thirty Five percent proportions respectively.

[25] We cannot be unmindful of the number of transactions and invoices involved in this matter and the number of tenders put forward by the respondent and the appellant during the entirety of the project. Mere assertions in an affidavit will not suffice for the court to arrive at a conclusion as to the nature of the relationship between the two litigating entities i.e. whether it was a joint venture as asserted by the respondent or whether the appellant was only a sub-contractor. A large volume of documentation relating to the alleged transactions requires perusal before a conclusion could be reached. The learned

Master in his judgment (paragraphs 23-32) engaged in an extensive discussion of the nature of a joint venture. Referring to Justice Inoke’s observation that there would be need to call oral evidence to determine whether it was a joint venture or not, the learned Master disagrees with the said observation in paragraph 30 of his judgment. However, as this transaction involves significant sums of money amounting to millions of dollars, it would not be prudent nor is it advisable to decide on the relationship between the parties relying only on a handful of documents despite the existence of voluminous documentation, all of which may be pertinent to the issue in question.

[26] Notwithstanding the substantial monetary aspects involved, the Learned Judge has concluded that it would be just to grant 65% of the claim by way of summary judgment. Although the judgment alludes that the learned judge has considered all material placed before him, he has not specified the basis on which he had decided to award 65% of the claim. Nowhere in the judgment has he explained the calculation or the basis on which he arrived at the figure of $623,512.50. Further, although the learned Master has not manifested that the remainder of the claim should be agitated by way of regular procedure a strong inference could be made thus. As part of the claim was disposed by way of summary judgment, it stands to reason that the evidence pertaining to the summary procedure will have to be taken into consideration when deliberating on the remainder of the claim by way of regular procedure. If that is the case, I fail to perceive any reason preventing the parties from agitating the whole claim by way of summary procedure. However, in the absence of the rationale for the award of Sixty Five percent of the claim by way of summary procedure and on consideration of the material before us, I hold that it is ill-advised to uphold the conclusion of the learned Master that the said percentage of the claim is to be recoverable by way of summary procedure and the remainder of the claim is to take its normal course. Therefore, considering all aspects of the matter, the parties must be afforded the opportunity to produce relevant documents subject to oral examination of the witnesses before making a finding.

[27] I am reluctant to order summary trial in respect of part of the claim which cannot be ascertained with much accuracy. Hence I order the entirety of the claim, disregarding the earlier split of Sixty Five percent and Thirty Five percent, to be tried by way of regular procedure. Parties will then be at liberty to produce all relevant documents for the court to arrive at an informed, justifiable decision after ascertaining the veracity of the documents and the liability of the parties.

[28] In view of the above reasons, I answer the issues raised in the Respondent’s notice thus:-

Issues 1 and 2 have been dealt with under grounds of appeal of the appellant.

Issues 3 (a) - (c) and (e) are answered in the affirmative.

Issue 3(d) is to be decided on further evidence.

[29] In view of the foregoing, the plaintiff-appellant’s appeal is allowed. However, acting on the Respondent’s notice, I find that this is a matter that should have been dealt with by way of regular procedure, allowing the parties to lead oral evidence, produce documents, subject the witnesses to cross examination, and finally to arrive at a decision. On that premise, I allow the Respondent’s notice and order the parties to follow the regular procedure. The case is remitted to the High Court for necessary steps.

Jameel, JA

[30] I have read the draft judgment of Lecamwasam JA and agree with his reasoning, findings and proposed orders.

The Orders of the Court:

1. Remit the case back to the High Court for necessary action.
2. Parties to bear their own costs.

Hon. Justice E. Basnayake

Justice of Appeal

Hon. Justice S. Lecamwasam

Justice of Appeal

Hon. Justice F. Jameel

Justice of Appeal