Sonaisali Island Resort Ltd v Fortune 8 Ltd [2014] FJHC 798; HBC46.2013 (3 November 2014)

IN THE HIGH COURT OF THE REPUBLIC OF FIJI
WESTERN DIVISION
AT LAUTOKA

CIVIL JURISDICTION

CIVIL ACTION NO. HBC 46 OF 2013

BETWEEN:

SONAISALI ISLAND RESORT LIMITED
Plaintiff

AND:

FORTUNE 8 LIMITED
Defendant

Counsel:
Mr J Connors for the plaintiff
Mr O' Driscol for the defendant

Date of Hearing: 21 October 2014
Date of Ruling: 03 November 2014

RULING

Introduction

[1] This ruling concerns with a preliminary issue.

[2] Mr Connors, counsel for the plaintiff has taken a preliminary objection to the application filed by Fortune 8 Limited, the defendant. The preliminary issue raised is that the application be struck out as it is filed out of time.

[3] On 29 August 2014 the defendant filed a summons to set aside default order (the application) and sought orders that the default order dated 13 August 2014 be set aside, that time be extended under Order 3 Rule 4 of the High Court Rules 1988 (HCR) and that the matter be listed for hearing with no order as to costs.

[4] The application is supported by an affidavit of Tracy MacIver (Company Director) sworn on 28 August 2014.

[5] The plaintiff filed affidavit of Aaron James McGrath (Managing Director) in opposition.

[6] The defendant filed affidavit of Tracy MacIver in reply to affidavit of Aaron James McGrath.

[7] Hearing on the application was set down for 21 October 2014. When the matter came on for hearing on that day, counsel for the plaintiff raised the preliminary issue as stated above. At hearing both counsel made oral submission but only counsel for the plaintiff tendered written submission. Counsel for the defendant did not tender written submission. Nor did he seek to file one later.

Background
[8] The substantive matter was set down for hearing before Hon. Judge Tuilevuka on 6 August 2014. As there was no appearance for or by the defendant, the hearing proceeded without the presence of the defendant and judgment was given in favour of the plaintiff. In doing so, Hon. Judge Tuilevuka found that the defence has no merit. In the present application the defendant seeks to set aside that judgment.

The Law
[9] The application has been filed pursuant to Order 35 r.2 read with Order 3 r.4 of HCR.

[10] Order 35 r.2 provides that:

'2.-(1) Any judgment, order or verdict obtained where one party does not appear at the trial maybe set aside by the Court, on the application of that party, on such terms as it thinks just.

(2) An application under this rule must be made within 7 days after the trial.'[Emphasis provided].

[11] Order 3 r. 4 of HCR states that:

'4.-(1) The Court may, on such terms as it thinks just, by order extend or abridge the period within which a person is required or authorised by these rules, or by any judgment, order or direction, to do any act in any proceedings. [Emphasis provided].

(2) The Court may extend any such period as is referred to in paragraph (1) although the application for extension is not made until after the expiration of that period.

(3) The period within which a person is required by these Rules, or by any order or direction to serve, file or amend any pleading or other document may be extended by consent (given in writing) without an order of the Court being made for that purpose.'

Determination
[12] The preliminary issue that is to be determined by me is that whether the application is to be struck out on the ground that it is filed out of time. In this ruling I will only decide the preliminary issue raised by the plaintiff. I will not decide the merit of the application.

[13] Through this application the defendant seeks to set aside the judgment given by the judge in the absence of the defendant at the trial.

[14] Mr Connors, learned counsel for the plaintiff argued that,Order 35 r. 2 provides a mandatory requirement that an application to set aside be made within 7 days of the trial by the use of the word "must". He cited two case law authorities namely Fiji Development Bank V Crown Cork Fiji Ltd, Alfred Young and Ors [2012] HBC 96/01L and Shocked and Another v Goldschmidt and Others [1990] 1 ALL E.R 372.

[15] Learned counsel for the defendant argued that the court has discretion to set aside a judgment obtained in default of appearance of a party. We have good defence to the claim. The judgment was given without considering the merits of the case and we are seeking extension of time to file the application pursuant to Order 3 r 4.

[16] In Fiji Development Bank v Crown Cork Fiji Ltd, Alfred Young andOrs [supra] the issue was considered by Wickramasinghe J where it was said:

'[19] I have carefully considered the legislative intention of the Rules. It appears on a plain reading of O.35 of the High Court Rules that it intended to give a second opportunity to a defaulting party to have his day in court in line with the well-settled principles that all parties must be heard on their cause. However, in doing so I do not think the legislative intended a defaulting party(s) to come before court at their leisure and pleasure.

[20] The word "must" stated in Order 35 r.2 has the same meaning as "shall". The word "shall" denotes and has been construed as meaning mandatory compliance. In my mind strict procedural compliance is therefore required if a party wishes to enjoy the benefits of O.35. The Court could use its inherent powers only if the aggrieved party demonstrates some exceptional circumstances to expand the time. If not, it is my considered view that the courts cannot expand the statutory limitation of time in every case disposed ex parte while exercising inherent jurisdiction of the court or under O.2 r 3.

[21] Order 35 r 1 provides discretion in the court to set aside "any" judgment, order or verdict.

[22] In the absence of a party on a date of hearing, the courts are empowered to either dismiss the case if the plaintiff is not present or hear the case ex parte if the defendant is not available. In the latter situation, the plaintiff must still prove its case on a balance of probability.

[23] I have considered in detail all the above cited judgments and fully agree with the dicta and the findings. However, I find that all of them were dismissed for want of appearance and prosecution and the matters were considered in those circumstances. The causes in those cases were not considered on merit. Therefore in my mind the above cases are clearly distinguishable from the instant case.

[24] The final judgment delivered by me was subsequent to a full hearing and after due consideration of all evidence. I even considered the defence, in the interest of justice, to ensure that the defendants were "not denied their day in Court". I was satisfied that the plaintiff proved its case on a balance of probability before I delivered my judgment.

[25] When a case is heard inter parties an aggrieved party must appeal against such judgment as set out in the law. In my mind, same rule applies to cases concluded ex parte. Therefore it is my considered view that the words "any" stipulated in the case does not refer to actions that are heard on the substantive merits, after careful consideration of the evidence by a Court. If a defendant is aggrieved by the decision then in my mind the proper procedure would be to appeal against the decision and set out the errors in the appeal.

[17] The issues for consideration by the court on an application to set aside the judgment entered after trial are set forth in Shocked and Another v Goldschmidt and Others [1990] 1 ALL E.R 372. The leadings judgment of the court was given by Legatt LJ who said at page 377;-

"The cases about setting aside judgments fall into two main categories

(a) Those in which judgment is given in default of appearance or pleadings or discovery and:

(b) Those in which judgment is given after a trial, albeit in the absence of the party who later applies to set aside.

Different considerations apply to these two categories because in the second unless deprived of the opportunity my mistake or accident or without fault on his part, the absent party has deliberately elected not to appear, and an adjudication on the merits has thereupon followed"

Jenkins LJ in Grimshaw v Dunbar [1953] ALL ER 350 at 355 said:"...a party to an action is prima facie entitled to have it heard in his presence. He is entitled to dispute his opponent's case and cross examine his opponent's witnesses and he is entitled to call his own witnesses and give his own evidence before the court. If my mischance or accident a party is shut out from that right and an order is made in his absence then common justice demand so far as it can be given effect to without injustice to other parties, that the litigant who is accidentally absent should be allowed to come to the court and present his case no doubt on suitable terms as to costs..."

Leggatt LJ in Shocked after considering the authorities then set out at p.381 a series of propositions or "general indications" which are:-

"(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.

[18] Returning to the present case. The judgment against the defendant, albeit in absence of the defendant was made by the trial judge at the trial after considering evidence adduced on behalf of the plaintiff. When delivering the judgment the trial judge also determined that the defence has no merit.

[19] The defendant had notice of the trial. Even though, it has disregarded the opportunity of appearing at and participating in the trial. This is the second time the defendant had defaulted. Previously, on 28 April 2013 default judgment was entered against the defendant, for failing to file defence to statement of claim. That default judgment was set aside by consent.

[20] This time the judgment against the defendant was made at the trial after considering the evidence adduced in the absence of the defendant. The judgment has been made by the trial judge pursuant to Order 35 r 2. That rule provides that, if, when the trial of an action is called on, one party does not appear; the judge may proceed with the trial of the action or any counterclaim in the absence of that party. However, any judgmentgiven in absence of a party may be set aside on application of that party (O.35, r.2). But that application must be made within 7 day days after trial, see O.35, r.2 (2).

[21] The judgment against the defendant was given pursuant to O.35, r.2 hence the defendant cannot argue that the judgment given was irregular. It is a regular judgment entered under O.35, r.2.

[22] Obviously, the application to set aside the judgment given pursuant to O.35, r.2 is filed out of time. The judgment was given against the defendant on 6 August 2014,whereas the application to set asideis filed on 29 August 2014. The defendant should have filed its application to set aside by 13 August 2014. Order 35, r. 2 (2) requires that such application must be made within 7 days after trial. The defendant's application is filed 16 days after the prescribed time limit.

[23] The defendant had opportunity to file its application seeking extension of time before expiration of the 7 day time limit, if it had felt that it would be impossible for it to file within 7 days for one reason or the other, because O.3, r. 4 (2) states that, the Court may extend any such period although the application for extension is not made until after the expiration of that period. However, the defendant did not mind to do so.

[24] In this case the defendant seeks extension of time to file its application to set aside after expiration of the 7 day time limit set by O.35, r.2 (2) in the application to set aside the default judgment itself. In other words, the defendant seeks extension of time after filing the application to set aside out of time.

[25] In ANZ Banking Group Limited v Niyaz Mohammed [2011] ABU 28/06 (apf HBC 337/98L) 20 May 2011 at [8] and [33], Marshall, Khan and Calanchini, JJA thought that:

'The rule allows a Court to extend the period within which a person is required to do any act in any proceedings although application for extension is not made until after expiration of a period. By its very nature, application must be made ex parte as there is at that point no other party to proceedings.' [Emphasis added]

[26] In Mitchell v News Group Newspapers Ltd [2014] 2 All ER 430; [2013] EWCA Civ 1537 (CA), Lord Dyson MR, Richards and Elias LLJ held:

'The obligation in CPR 3.9 to consider the need for litigation to be conducted efficiently and at proportionate cost, and to enforce compliance with rules, practice directions and court orders, reflected a deliberate shift in emphasis from the previous wording of CPR 3.9. Those considerations were to be regarded as of paramount importance and given great weight. In practice, in applying the new approach, it would usually be appropriate to start by considering the nature of the non-compliance with the relevant rule, practice direction or court order. If that could properly be regarded as trivial, the court would usually grant relief provided that an application was made promptly. If the non-compliance could not be characterised as trivial, then the burden was on the defaulting party to persuade the court to grant relief. The court would want to consider why the default occurred. If there were a good reason for it, the court would be likely to decide that relief should be granted. Compliance with rules, practice directions and court orders was essential if litigation was to be conducted in an efficient manner; if departures were tolerated, then the relaxed approach to civil litigation, which the reforms had been intended to change, would continue. In the instant case, the master had not misdirected herself in any material respect, nor did she reach a conclusion that had not been open to her. The decision had been robust, but the master had been right to focus on the essential elements of the new regime. The defaults by the claimant had not been minor or trivial and there had been no good excuse for them. They had resulted in an abortive costs budgeting hearing and an adjournment which had serious consequences for other litigants. Accordingly, the appeal would be dismissed (see [36], [39]–[41], [59], below).'

[27] In the case before, the defendant had failed to comply with the mandatory requirement of O.35, r.2 (2) in that it should have its application to set aside the judgment given after trial, albeit in the absence of the defendant, within 7 days of the trial date. Seven days deadline is set by the statute. If so, no one is entitled to challenge the deadline is unreasonable. We must presume that the deadline is set with a purpose, perhaps finality and case management in mind. Rules are there to comply with and not to ignore. The need to comply with rules, practice directions and court orders is essential if litigation is to be conducted in an efficient manner. If departures are tolerated, then the relaxed approach to civil litigation which the Jackson reforms were intended to change will continue.

Conclusion
[28] For the foregoing reasons, I would uphold the preliminary point raise by the plaintiff that the application is filed out of time and should be struck out. The application for extension of time, in my opinion, should have been made, ex parte, before filing the application to set aside the judgment. I am fortified, to say this, with the decision of Fiji Court of Appeal in ANZ Banking Group Limited v Niyaz Mohammed(supra). The defendant in the present case failed to seek extension of time before filing the application to set aside the judgment under O. 35, r. 2 of HCR. The application to set aside the judgment given after trial is filed out of time. I accordingly dismiss and struck out it. I make no order as to cost.

Final result
[29] The application filed on 29 August 2014 by the defendant to have set aside the judgment given after trial on 6 August 2014 is time barred. Accordingly the application is dismissed and struck out. No order as to costs. Order accordingly.

M H Mohamed Ajmeer
Master of the High Court

At Lautoka

03/11/14

Messrs Krishna & Co, Barrister & Solicitors for the plaintiff
Messrs O' Driscoll & Co, Barrister & Solicitors for the defendant