Loks Crane and Contractors Ltd v Clutch Systems (Fiji) Ltd [2002] FJHC 306; HBM0031.1999L (17 July 2002)

IN THE HIGH COURT OF FIJI
AT LAUTOKA
CIVIL APPEAL JURISDICTION

ACTION NO. HBM0031 OF 1999

BETWEEN:

LOKS CRANE AND CONTRACTORS LIMITED
a limited liability Company having its registered office at 11 Maharaja Place, Lautoka
APPELLANT

AND:

CLUTCH SYSTEMS (FIJI) LIMITED
a limited liability Company having its registered office at Asby and Company,
Chartered Accountants, Ground Floor, Fletcher Building, Wailadi, Lami
RESPONDENT

Mr. G.P. Shankar for the Appellant
Mr. D.S. Naidu for the Respondent

Date of Hearing: 26 April 2000
Date of Ruling : 17 July 2002

RULING
[On application to enlarge time within which to appeal.]

The Defendant [proposed Appellant] was sued in the Lautoka Magistrate’s Court by the Plaintiff [Respondent] for default in payment of $7,161.87 for a clutch assembly ordered by the Defendant for a mobile crane. The order had originally been paid for by cheque. This cheque was returned by the receiving bank at the request of the

Defendant’s Managing Director who said the cheque was issued on the wrong account. However he never returned with another cheque as he had promised, hence the institution of proceedings in the Magistrate’s Court.

The Defendant seeks an enlargement of time within which to appeal the decision of the Magistrate of 14 April 1998, who refused the Defendant’s application for an adjournment of the trial, heard evidence from the Plaintiff’s witnesses, and found for the Plaintiff.

The Summons of 2 September 1999 was filed in the High Court. It seeks the exercise of inherent powers. Jurisdiction is found too in Section 39 of the Magistrate’s Court Act Cap. 14 which provides for the exercise of discretionary powers of the court where conditions of appeal as prescribed by the rules have not been fulfilled:

“Discretionary power of High Court

Notwithstanding anything hereinbefore contained, the High Court may entertain any appeal from a magistrates’ court, on any terms which it thinks just.”

The application comes to this court pursuant to Order XXXVII Rule 4 of the Magistrate’s Court Rules:

“On the appellant failing to file the grounds of appeal within the prescribed time, he shall be deemed to have abandoned the appeal, unless the court below or the appellate court shall see fit to extend the time.”

The Defendant elected to seek enlargement of time from the Appellate Court, the High Court, rather than from the lower court. The rule permits the application for enlargement in civil appeals to be made straight to the High Court upon the applicant’s election, as was done here; Shiu Narayan v Bhajan [1963] 9 Fiji LR 139 at p140. This rule is more generous than Rule 26 (3) of the Court of Appeal Rules Cap.12 where the first application for leave must be made to the court below. The High Court could still have been approached subsequently to exercise a concurrent jurisdiction if the applicant had elected to apply first to the Magistrate’s Court and had been refused; A-G v Yee Noon [1964] 10 Fiji LR 249 at p251.

In support of the summons, the appellant filed the affidavit of Chandar Lok sworn and filed on 2 September 1999. He was the Managing Director of the appellant company. On 3 October 1999 the Respondent filed an affidavit in opposition of Sada Siwan [sworn on 14 October 1999] a clutch technician employed by the Respondent company. On 12 April 2000 the Appellant filed a second affidavit of Chandar Lok sworn the same day. Mr. Lok said the Appellant was “most definitely not insolvent”. He contended that liability was disputed, that judgment had been granted by default of appearance, although a defence had been filed. Application to set aside had been refused, against which decision appeal was now being made. He concluded “if the appeal is unsuccessful Loks Crane and Contractors Ltd is able to deposit the money in court within the time fixed by the court and bring a cross claim against the Petitioner for defective work done”. (emphasis added) Compare Hayman v Rowlands [1957] 1 WLR 317 at p319 where the applicant paid the claimed rent into court prior to making application to set aside judgment after trial, a factor which the English Court of Appeal took into account in allowing a fresh trial.

Finally the Appellant filed the affidavit of Bhas Karan, a clutch re-builder, sworn and filed on 13 April 2000. He says he was employed by the Respondent company. Mr. Lok asked him for a written guarantee that the clutch for his 40 ton crane was fixed up properly. Bhas Karan supports the evidence of Mr. Lok and admits that a malfunctioning machine of the Respondent’s may have damaged a flywheel, and further said that his employer did not have the necessary spares. He did not confirm the allegation that only secondhand spares had been used.

Sada Siwan replied to these allegations in a further affidavit for the Respondent [sworn on 25 April and filed on 26 April 2000]. He says Bhas Karan’s employment was terminated by the Respondent “due to accounts discrepancy and leaking confidential information about the company’s operations to its competitors”. This termination was not disclosed by Bhas Karan. A completely different story is given by Sada Siwan as to what had been supplied to the Appellant, namely that the Respondent had imported a complete Leyland 680 clutch assembly system on the Appellant’s instructions. He exhibited the importation documentation and said he did not understand what Bhas Karan was on about in referring to written guarantees for fixing the clutch, the defective flywheel machine, or to not having the necessary spares. He says Lok was unco-operative in that he did not allow the Respondent to check the alleged problems and that the Appellant’s men had threatened their employees with violence. He related through an exhibited solicitor’s letter the request for the return of the cheque to Lok, and that no cheque was brought back to the bank to replace it as promised. No explanation was given by the Appellant as to why the cheque was not replaced.

The onus of satisfying the court of the need for enlargement of time is on the Applicant: Avery v Public Service Appeal Board (No.2) (1973) 2 NZLR 86 at p91; A-G & Ano. v Paul Praveen Sharma (unreported) Fiji Court of Appeal, Civil App. No. ABU0041/93S 17 May 1995 [Decision on Application for leave to enlarge time within which to appeal to the Supreme Court]. In the latter case five factors were identified for consideration in such applications. They were said to be broadly:

(i) The reason for the failure to comply.

(ii) The length of the delay.

(iii) Is there a question which justifies serious consideration?

(iv) If there has been substantial delay, have any of the grounds such merit that they will probably succeed?

(v) The degree of prejudice to the Respondent in enlarging time.

I shall deal with each in turn.

1. Reasons for the Failure to Comply
   

Chandar Lok for the Appellant deposed in his affidavit of the 2nd of September 1999 that: “.... due to non appearance of my counsel, I am informed, due to inadvertence I was not notified of the hearing the Respondent/Plaintiff obtained judgment.”

In an earlier affidavit in proceedings before the Magistrate to have judgment set aside, the deponent had said that Mr. Anand Singh, counsel for the Appellant had gone to New Zealand on a business trip arriving back in Fiji early in the morning of the hearing. He says he was advised by Mr. Singh’s office “that because of lack of sleep and jet leg Mr. Singh will instruct a solicitor to either have this matter adjourned to another date, or have it stood down for hearing later in the morning of the 14th of April 1998.” Though Mr. Singh was already in the country, Mr. Shah was instructed to appear in his place and to ask for an adjournment. In view of an earlier indulgence to the Appellant to allow adjournment of a previous hearing date, and the opposition of Plaintiff’s counsel, not surprisingly this was refused. The case was put back for formal proof mid morning. Mr. Lok admits he was on stand by to attend (if the adjournment application were unsuccessful). He says he was awaiting such advice from his solicitors to attend. Mr. Sada Siwan had deposed in the setting aside proceedings that the respective solicitors offices had been in touch and that his solicitors were assured that Mr. Singh would be present for the hearing fixed for the 14th of April 1998. The Respondent’s witnesses had all been subpoenaed for the hearing.

Where is the explanation as to why Mr. Lok was not notified (if that was the case, for we are only to infer it) by his counsel to come to court? Why was he not present at the court anyway, for this was not an application to be made by consent, nor was there any certainty that the Magistrate would accede to the request? More particularly where is the explanation now as to why the decision to refuse an adjournment was not then appealed?

Two months after the formal proof the Appellant’s same solicitors filed a summons [10th of June 1998] to set aside judgment. Whilst accepting there was no delay in bringing this summons, the Magistrate found there were conflicts between what had been said in court and the explanation given subsequently in the Defendant’s affidavit. He found there was no valid explanation for the Defendant’s absence and no facts deposed showing a prima facie defence on the merits. The Magistrate’s record of proceedings is illuminating:

H.A. Shah : Mr. Singh out of the country. Seek adjournment.

D.S. Naidu : Defendant is not here. No counsel. Not informed.

The Magistrate refused to set aside judgment. In effect, the burden of the Appellant had not been discharged.

It is common ground that the Respondent commenced winding up proceedings on the 11th of August 1999 based upon this judgment. The Respondent says the winding up provoked a change of solicitors without the filing of a Notice of Change, and also provoked the filing of this application for enlargement of time within which to appeal and for stay of execution of all proceedings. Why was the refusal not the subject of an immediate appeal? The Appellant says: “That my application to set aside was filed and probably heard and dismissed. I changed solicitors and filed application to set aside, not knowing whether the application previously filed had been dealt with on its merits because my solicitor was appointed Attorney-General.” No inquiry appears to have been made of the Magistrate’s Court by the Appellant independently of his solicitor (if he were dissatisfied) on the status of any part of the Appellant’s case. Did he not inquire from his solicitors the outcome of his application to set aside? He does not say. His representative was again Mr. Shah. He does not explain how he did not know of the result. A litigant has a duty to inquire from his solicitor of the progress of his litigation. The reasons for failure to comply therefore are unsatisfactory: see similar comments of Pathik J sitting as a single Justice of Appeal in Ist Deo Maharaj v Burns Philp (SS) Co Ltd (unreported) Court of Appeal Civil Appeal ABU0051 of 1995S 8 November 1995 at p2.

2. Length of the Delay
   

Unfortunately the Summons filed by the Appellant does not set out clearly what decision the Appellant seeks to appeal, nor the date of such decision or decisions. No dates are given either for these decisions in a (proposed) Notice and Grounds of Appeal, the Notice being attached to the first affidavit of Chandar Lok but without exhibit number in the body of the affidavit.

It appears the appeal is against the refusal of the Magistrate to adjourn the hearing, when application was made by counsel for the Appellant on 14 April 1998. The appeal is also against the refusal to set aside the judgment after formal proof, such refusal being given in a ruling of 11 June 1999. The application for enlargement of time therefore is made nearly 3 months after the refusal to set aside, and nearly 17 months after the judgment following trial in the absence of the Appellant. It is accepted now that where the delay is slight, it is generally unnecessary to go into the merits, see Palata Investments v Burt & Sinfield (1985) 2 All ER 517 at 521 where the delay was 3 days. In C M Stillevoldt B V v E L Carriers (1983) 1 WLR 207 the court allowed an extension where the applicant’s solicitors were 2 weeks late in setting down an appeal. In R v Rhodes (1910) 5 Cr App R 35 a month was considered a substantial interval of time, and in R v Marsh (1935) 25 Cr. App. R 49, 2 months was referred to as a considerable extension. In both cases the applications were refused. In Rawashdeh v Lane (1988) EG 109 6 weeks delay was referred to as lengthy. Lord Donaldson MR in Norwich and Peterborough BS v Steed [1991] 2 ALL ER 880 at p886f commented:

“In Palata’s case the delay was as short as could be and was wholly excusable. The merits therefore played littled part. In Rawashdeh’s case the delay was very much longer - it was six weeks in fact - and was not wholly excusable. Much more merit was required to overcome it.”

In the Magistrate’s Court, an Appellant should give a notice of intention to appeal either by giving notice verbally to the court in the presence of the opposite party immediately after judgment is announced, or within 7 days by notice in writing served on the court and the Respondent Order XXXVII r.1.1 MC Rules. The grounds are to be filed in court and served on the Respondent within 1 month of the decision. Order XXXVII r.1 3 (1). Surprisingly, the rule providing for enlargement of time only speaks of extending time within which to file grounds and does not deal with extensions for appeals which are not already on foot and where no notice of intention to appeal has been given (as here). However Section 39 of the Magistrates Court Act may in an appropriate and just case provide the necessary jurisdiction for the High Court to entertain a civil appeal from the Magistrate’s Court notwithstanding that no notice of intention to appeal has been given, filed, or served. In both appeals in the instant case the length of time since the decision appealed against is substantial, and in the case of the original decision refusing an adjournment, very substantial.

3. Is there a question which justifies serious consideration?
   

The 5 grounds of appeal are in effect 2. The first is that the Magistrate failed fully and properly to evaluate and assess the explanations offered by the Appellant regarding absence on the hearing date, and was wrong to hold that the explanations were unsatisfactory, and that the court should have granted an adjournment. The second is that the Magistrate should have held that the defence filed had merit, and had pleaded a substantial counter-claim, and therefore the judgment should have been set aside.

Strictly speaking a trial had been conducted by the Magistrate, and this was not a judgment by default as deposed to by Mr. Lok in his affidavit of 12 April 2000. It was a trial however conducted in the absence of the Defendant. In the High Court judgments after trials in such circumstances may be set aside on such terms as the court thinks just. But application must be made within 7 days after the trial [Order 35 r.2 (2)]. In the Magistrate’s Court similarly, judgment, on sufficient cause shown may be set aside though this need not be done within the limitation period of 7 days [Order XXX r.5]. It is well settled that different considerations apply when seeking to set aside judgment after trial from judgment after default of appearance or pleadings or discovery. Shocked and another v Goldschmidt & others [1998] 1 ALL ER 372 p377-8 cited with approval by Scott J in Southern Transport Limited v Tebara Transport Limited (unreported) Suva High Court, Civil Action No. HBC 229 of 1998S 7 August 2000. In defining the nature of the discretion to be exercised in Shocked Leggatt LJ at p382c said:

“To equate judgments by default with judgments given after a trial is heretical. If it were correct, a party who chose not to be present at trial could afterwards change his mind, and provided he was prepared to pay the costs thrown away could always procure a rehearing of the matter, however much time of the court had been wasted by his decision, whatever the inconvenience to his opponent, and however little his own conduct merited indulgence. That is not the law. Because it is not, this court must exercise the discretion anew.”

His lordship had earlier summarised the relevant factors (at p381e):

“These authorities about setting aside judgment after a trial indicate that each case depends on its own facts and that the weight to be accorded to the relevant factors will alter accordingly. But from them I derive the following propositions or ‘general indications’ as Lord Wright might have called them. (1) Where a party with notice of proceedings has disregarded the opportunity of appearing at and participating in the trial, he will normally be bound by the decision. (2) Where judgment has been given after a trial it is the explanation for the absence of the absent party that is most important unless the absence was not deliberate but was due to accident or mistake, the court will be unlikely to allow a rehearing. (3) Where the setting aside of judgment would entail a complete retrial on matters of fact which have already been investigated by the court the application will not be granted unless there are very strong reasons for doing so. (4) The court will not consider setting aside judgment regularly obtained unless the party applying enjoys real prospects of success. (5) Delay in applying to set aside is relevant, particularly if during the period of delay the successful party has acted on the judgment, or third parties have acquired rights by reference to it. (6) In considering justice between parties, the conduct of the person applying to set aside the judgment has to be considered: where he has failed to comply with orders of the court, the court will be less ready to exercise its discretion in his favour. (7) A material consideration is whether the successful party would be prejudiced by the judgment being set aside, especially if he cannot be protected against the financial consequences. (8) There is a public interest in there being an end to litigation and in not having the time of the court occupied by two trials, particularly if neither is short.”

In distinguishing the differing approaches to setting aside, with or without trial, his lordship concluded that after trial, the predominant consideration was the reason why the party against whom judgment was given absented himself (p381j).

It was not true as was deposed to by Mr. Lok that “due to non-appearance of my counsel, due to inadvertence I was not notified of the hearing”. He did have counsel, Mr. Shah, to represent him. He himself did know of the date of the hearing but elected not to appear with his counsel to hear the outcome of the adjournment application. No one has testified either that they overlooked telephoning Mr. Lok to come to court, but if they had, I should have regarded that arrangement as inadequate for his responsibilities for the uncertain litigation then facing his company. He himself should have attended as the representative of his company to instruct counsel and to give evidence on the trial issues. There was no evidence to counter that of Mr. Siwan in his affidavit in reply of the 23rd July 1998 [filed in the setting aside application before the Magistrate] that the Respondent’s solicitors were never told at court that Mr. Singh was now back in the country, nor was it disputed that the Appellant’s solicitors had confirmed on the 11th of April 1998 that Mr. Singh would be present to conduct the Appellant’s case at the hearing on the 14th of April 1998. What had happened meanwhile causing Mr. Singh to extend his overseas trip, if it had been extended, or was it simply expected that an adjournment was a two-a-penny thing for the asking?

In applying the criteria, I find the Respondent would be prejudiced now in having judgment set aside. Delay in making application for appeal against the adjournment refusal is of significance here. There is also the public interest factor in not having two trials unnecessarily, albeit that the first had been a short one. Finality to litigation is important. On the material presented to the Magistrate on the setting aside application it was obvious the application was bound to fail. The Appellant through its Managing Director disregarded the opportunity to appear and to participate in the trial. Mr. Lok knew of the hearing and should have attended. His decision not to do so was deliberate, not accidental as in Hayman (supra). At this stage nothing in the papers encourages me to a view that the Appellant “enjoys real prospects of success”.

4. If there has been substantial delay, have any of the grounds such merit that they will probably succeed?
   

The answer to this question must be “No”. This is an appeal claiming a wrongful exercise by the trial Magistrate of his powers to adjourn the hearing and subsequently to set aside judgment after trial. The material presented to him was inadequate and uncompelling, and the proposed grounds do not amount to grounds of merit such that it would be likely the Magistrate would be reversed in either of his decisions.

5. The degree of prejudice to the Respondent in enlarging time
   

I have already said I believe now that it would be to the Respondent’s prejudice to re-open the trial issues after such delay. In the defence filed it was admitted the Appellant had ordered in May 1995 certain spare parts. The Respondent demonstrated by evidence that these parts were in fact a complete clutch assembly kit imported from Christchurch. The assembly was taken away by the Appellant’s men and was fitted to the crane by the Appellant, not by the Respondent. Though not stated the defence appears to be claiming a right to rescind the contract, but without returning the clutch to the Plaintiff. Weak as it was, such a defence, much earlier in the proceedings, may have been allowed to proceed. At this stage its weakness is just a further factor militating against the exercise of a discretion in the Appellant’s favour.

I therefore decline to enlarge time for an appeal in this case. I note that the papers and issues were somewhat involved. Accordingly the Appellant/Defendant is to pay the Respondent/Plaintiff’s costs of this application which I assess summarily inclusive of disbursements at $600.00.

A.H.C.T. GATES
JUDGE

Solicitors for the Appellant : Messrs G.P. Shankar & Co
Solicitors for the Respondent : Messrs Pillai Naidu & Associates