Cooper v Public Trustee Corporation Ltd [2004] FJHC 250; HBC0082d.2000s (13 October 2004)

IN THE HIGH COURT OF FIJI
AT SUVA
CIVIL JURISDICTION

CIVIL ACTION NO. 82 OF 2000

Between:

ANTHONY WILLIAM COOPER
a.k.a. Tony Cooper
Plaintiff

and

1. PUBLIC TRUSTEE CORPORATION LIMITED

2. PERMANENT SECRETARY FOR THE DEPARTMENT
OF PUBLIC ENTERPRISES

3. ATTORNEY-GENERAL OF FIJI
Defendants

Mr. K. Muaror for the Plaintiff
Mr. J. Udit for the Defendants

DECISION
(On a preliminary issue)

This is the defendants’ summons dated 27 February 2003 seeking an order that this action be dismissed on the following grounds pursuant to Orders 18, 33(4) and 34(3) of the High Court Rules 1988:

(i) That it discloses no reasonable cause of action as an agreed issue in the Pre-Trial Conference;

(ii) It is an abuse of process of the Court to continue with this proceeding.

Alternatively

(i) The preliminary legal issues raised in the Amended Statement of Defence be determined first based upon the agreed facts and issues in the Pre-Trial Conference Minutes.

Background facts

On 1st March 2000 the plaintiff instituted this action against the 1st defendant the Public Trustee Corporation Limited (the ‘PTCL’), 2nd defendant Permanent Secretary for the Department of Public Enterprises (the ‘PSDPE’) and the 3rd defendant the Attorney-General of Fiji (the ‘AG’).

The plaintiff was an employee of PTCL and held the position of Chief Executive Officer. On 21 January 1999 he began his employment with PTCL for a period of three years with effect from 1st January 1999 as per the employment contract. The terms and conditions of employment are set out in the contract.

On 4 November 1999, the PSDPE and another as shareholders passed, inter-alia, a resolution “that employees contract be terminated and compensation be established by Government”.

The plaintiff states in his Statement of Claim that:

“... in or about 14th October 1999 the second defendant’s office formally confirmed the Government’s undertaking to pay all the debts of the company as a result of the liquidation process on the company pursuant to Government directive.”

He further states that:

“In or about 28 December 1999, the Plaintiff received from the second Defendant a letter of termination of employment with the company which stated amongst other things, that the Plaintiff’s employment be terminated with effect from 31st December 1999 as a result of change in Government policy.”

This he says was a clear breach of the relevant provisions of the employment contract. The plaintiff says that through the second defendant’s actions due to the premature termination of his employment he has suffered loss of security of tenure and it has caused the plaintiff great prejudice in finding suitable employment.

The plaintiff therefore claims the sum of $214,300.00 being for salary, allowances and bonus for the remainder of the period of his contract viz. 24 months together with interest at 6.5% per annum from 1st January 2000 and costs.

A liquidator was appointed to wind up PTCL (the company) as a result of the Policy of Government to reverse the reorganization of PTCL. The company was wound up and dissolved on 4 December 2001.

The defendants say that as a result of reorganization the plaintiff lost his job as CEO in the Company but was to resume work in the Public Trustee’s Office in the Ministry of Justice.

The date for hearing of this action was given for 1st and 2nd October 2002 but the defendants sought further adjournment to file Amended Defence. Eventually on 23 January 2003 Pre-trial Conference Minutes were filed and on 21 October 2003 a hearing date was given for 13 and 14 February 2003.

Then on 30 January 2003 the defendants filed the present summons.

Applicants’ (Defendants’) submission

Very briefly, the second defendant states that:

“By this application the Defendants are not raising the issue of whether the contract was breached or lawfully terminated and if any compensation is payable, which is the subject matter of the substantive trial (if it becomes necessary, which the Defendants submit will not be the case). As such, it is not intended in this application to canvass matters pertaining to the merits or demerits of that claim”.

The defendants submit that PTCL has closed operation, wound up and dissolved. The issues for trial in the Pre-trial Conference Minutes is centred around the employment contract only which was between the plaintiff and PTCL.

They submit that because of the winding up this action is currently pending against a non-existing entity in law and fact. They submit that to continue with the proceeding in its present form against PTCL is as abuse of process. The counsel is therefore facing difficulty in representing a non-existing entity but at the time the action was instituted the PTCL was still existing. Also the Court will be required to make final orders against an entity which does not exist.

Because the PTCL does not exist anymore, counsel submits that the plaintiff has no reasonable cause of action for adjudication by this court, as the principal party to the employment contract (which is the foundation of his claim), is no longer in existence.

Counsel further submits that the action was improperly instituted as no leave of the court was sought under section 229 of the Companies Act before commencing proceedings. Not obtaining leave cannot belatedly be cured or overlooked and the only course open is to strike off the claim against PTCL, and that is what the second defendant is seeking.

He further submits that the proper forum was the liquidation and proof of debt should have been filed under section 319 of the Act.

Counsel further submits that the action against PSDPE is ambiguous and misconceived, as he cannot be owed as the shareholder of PTCL, which is in law a separate legal entity. Counsel says that the action against the PSDPE should be dismissed.

On Government’s undertaking to which reference was made in the Statement of Claim, the defendants’ counsel submits, inter-alia, that the undertaking to pay all debts of the Company (PTCL) referred to ‘all debts which the liquidator established and allowed including his loss and charges when liquidating the company leading to its final meeting and returns in Form 93 on 4.12.01’.

Counsel says that the ‘liquidator in his final winding up report has also tendered the amount which he allowed and no debts or liabilities of the company were left unpaid or any contingent payment. This alone is evidence of the fact that the government fulfilled its undertaking’.

He further argued that, ‘at any event, if there is any hint in the claim, (which is denied) of the exercise of any powers by the Minister or Permanent Secretary, then on the face of it, these powers are exercised in performance of public duties, which is in the arena of public law matters’.

For the reasons given in his written submission at item 11.0 counsel seeks, inter-alia, the striking off of the matter against the defendants. There are further reasons advanced for striking off in the Defendants’/Applicants’ response to Plaintiff’s submissions filed on 2 April 2003.

Plaintiff’s/Respondent’s submission

The plaintiff has replied, inter-alia, to the defendants’ submission namely that since there is no reply to the amended Statement of Defence, this be allowed as evidence and the failure to reply is deemed to be admitted.

Counsel submits that the plaintiff’s right to claim damages under his employment contract is not extinguished upon the resolution voluntarily to wind up the first defendant’s company (the PTCL).

As for failure to obtain leave as required under the Companies Act, he says that this is not an impediment from proceeding against the second and third defendants. Further, he says, that the dissolution of the company has no relevance to any claim otherwise subsisting against the second and third defendants.

He says that at the material time when the second defendant wrote on 28 December 1999 terminating employment the PTCL was still in existence and this was wrongful and the Permanent Secretary must be responsible and vicariously the Attorney-General.

Counsel says that the PTCL is still liable for damages for breach of contract where a director has a contract for a specified period. Therefore, the plaintiff submits that the second defendant wrongly procured breach and must accept liability.

Counsel further submits that the letter dated 15 December 1999 from the Liquidator to Plaintiff (to be tendered) stated that ‘he would proceed with the liquidation as the Government had given a letter of undertaking to fund all debts of PTCL including the Plaintiff’s severance pay’.

Mr. Muaror also argues that the dissolution and removal from the register do bring an end to a company’s existence but this was not done until 5 March 2002 and by that time the plaintiff’s fixed term contract would have expired in accordance with its terms. He then refers to section 295(4) of the Companies Act Cap 24 in this regard which states:

“The registrar on receiving the account and, in respect of each such meeting, either of the returns hereinbefore mentioned, shall forthwith register them and, on the expiration of three months from the registration thereof, the company shall be deemed to be dissolved.”

Counsel sums up the position by saying that ‘either the commencement of winding up breached the contract, the Permanent Secretary being liable for such breach as having induced the same, or that the contract would have continued until dissolution. On either basis, a wrongful act by the Permanent Secretary (Second Defendant) is clearly shown’.

For these reasons Mr. Muaror submits that the motion to strike out be dismissed and that the matter proceed to full trial allowing the parties to tender documentary and oral evidence for consideration by the Court.

Consideration of the issues

I have before me for my consideration written submissions from both counsels as ordered. I shall now deal with the two issues.

First Issue

Is there a reasonable cause of action?

I have stated hereabove in considerable detail the issues raised by both counsels.

Considerable amount of law is involved particularly in relation to the effect of the proposed winding up of the company (PTCL) and the procedure and effect of liquidation vis-à-vis the plaintiff’s contract of employment. Also there is the issue of the role of the second defendant in relation to the employment contract of the plaintiff. Even the so-called ‘Government undertaking’ needs to be ventilated through oral evidence in Open Court.

Having heard both counsel on their submissions at considerable length, I have come to the conclusion that there is no merit in the defendants’ submission that there is no cause of action and that it should be struck out bearing in mind the principles relating to striking out.

Principles of law in striking out

There are certain principles of law on the aspect of striking out as stated below which I have taken into consideration.

The following statement of Megarry V. C. in Gleeson v J. Wippell & Co. [1977] 1 W.L.R. 510 at 518 is apt:

“First, there is the well-settled requirement that the jurisdiction to strike out an endorsement or pleading, whether under the rules or under the inherent jurisdiction, should be exercised with great caution, only in plain and obvious cases that are clear beyond doubt. Second, Zeiss No. 3 [1970] Ch. 506 established that, as had previously been assumed, the jurisdiction under the rules is discretionary; even if the matter is or may be res judicata, it may be better not to strike out the pleadings but to leave the matter to be resolved at the trial”.

The applicants say that there is no reasonable cause of action but on the evidence before me I hold there is; and in coming to this conclusion I have borne in mind the following Notes to Or. 18 r. 19/11 in the Supreme Court Practice (U.K.) 1979 Vol. 1 where it is stated:

“..... A reasonable cause of action means a cause with some chance of success when only the allegations in the pleadings are considered (per Lord Pearson in Drummond Jackson v. British Medical Association [1970] 1 ALL E.R. 1094, C.A.). So long as the statement of claim or the particulars (Davey v. Bentinck [1892] UKLawRpKQB 216; [1893] 1 Q.B. 185) disclose some cause of action, or raise some question fit to be decided by a Judge or a jury, the mere fact that the case is weak, and not likely to succeed is no ground for striking it out (Moore v. Lawson) (1915) 31 T.L.R. 418, C.A.; Wenlock v. Moloney [1965] 1 W.L.R. 1238 [1965] 2 All E.R. 871, C.A.). .....”

Similarly, Lindley M.R. in Hubbuck & Sons, Ltd v. Wilkinson, Heywood & Clark Limited [1898] UKLawRpKQB 176; [1899] 1 Q.B. 86 at page 91 said:

“..... summary procedure is only appropriate to cases which are plain and obvious, so that any master or judge can say at once that the statement of claim as it stands is insufficient, even if proved, to entitle the plaintiff to what he asks. The use of the expression ‘reasonable cause of action’ in rule 4 shows that the summary procedure there introduced is only intended to be had recourse to in plain and obvious cases.”

In Attorney General v. Shiu Prasad Halka (1972) 18 FLR 210 Marsack J.A. said of the predecessor to order 18, r.18 of High Court Rules at page 215:

“..... I think it is definitely established that the jurisdiction to strike out proceedings under Order 18 rule 19 should be very sparingly exercised where legal questions of importance and difficulty are raised.”

The Fiji Court of Appeal in its decision in National MBf Finance (Fiji) Limited v. Nemani Buli, (Civil Appeal No. ABU 0057 of 1998) very clearly enunciated and determined the principles for striking out. At page 2 of the judgment their Lordships said:

“The law with regard to striking out pleadings is not in dispute. Apart from truly exceptional cases the approach to such applications is to assume that the factual basis on which the allegations contained in the pleadings are raised will be provided. If a legal issue can be raised on the facts as pleaded then the courts will not strike out a pleading and will certainly not to do so on a contention that the facts cannot be proved unless the situation is so strong that judicial notice can be taken of the falsity of a factual contention .....”

Second Issue

Is it an abuse of process?

The second issue raised by the defendants’ counsel is that to continue with this proceeding is an abuse of the process of the Court.

As to what is an abuse of process the following passage from Halsbury’s Laws of England 4th Ed. Vol. 37 para 434 is apt:

“An abuse of the process of the court arises where its process is used, not in good faith and for proper purposes, but as a means of vexation or oppression or for ulterior purposes, or more simply, where the process is misused. In such a case, even if the pleading or endorsement does not offend any of the other specified grounds for striking out, the facts may show that it constitutes an abuse of the process of the court, and on this ground the court may be justified in striking out the whole pleading or endorsement or any offending part of it. Even where a party strictly complies with the literal terms of the rules of court, yet if he acts with an ulterior motive to the prejudice of the opposite party, he may be guilty of abuse of process, and where subsequent events render what was originally a maintainable action one which becomes inevitably doomed to failure, the action may be dismissed as an abuse of the process of the court.”

On this aspect of abuse of process the defendants’ counsel in his written submission raised a point, inter-alia, that this is a ‘public law’ matter and hence the plaintiff should have proceeded by way of judicial review.

In considering this aspect I have to look at the whole of the facts of this case including issues raised in regard to the status of the PTCL. It appears that although in some respects the matter has a semblance of ‘public law’, there is a very subtle line to be drawn between ‘private’ and ‘public’ law to constitute it a ‘public law’ matter.

On the arguments put forward I do not find that either on ground of ‘public law’ or any other ground this is an ‘abuse of process’.

On the facts and circumstances of this case I apply the principle that “it is not the practice in the civil administration of our Courts to have a preliminary hearing, as it is in crime”(per Sellers L.J. in Wenlock v. Moloney [1965] 1 W.L.R. at p.1242). As stated in the Notes to Or. 18 r. 19 in The Supreme Court Practice 1979 Vol. 1 p.312 that: ‘It is only in plain and obvious cases that recourse should be had to the summary process under this Rule’ and that ‘it can only be adopted when it can be clearly seen that a claim or answer is on the fact of it obviously unsustainable’ (A.G. of Duchy of Lancaster v. L. & N.W. Ry. Co. [1982].

Conclusion

For these reasons I do not consider that this action is one which ought to be struck out under the said Orders or is in some way an abuse of process.

On the authorities and in the exercise of Court’s discretion I refuse the defendants’ application.

The summons is therefore dismissed with costs in the sum of $500.00 (five hundred dollars) to be paid to plaintiff’s solicitors.

D. Pathik
Judge

At Suva
13 October 2004