McConnell Dowell Constructors Ltd v Standard Concrete Industries Pte Ltd [2024] FJHC 776; HBC95.2021 (29 April 2024)

IN THE HIGH COURT OF FIJI
AT SUVA
CIVIL JURISDICTION
CIVIL ACTION NO.: HBC 95 of 2021

BETWEEN : MCCONNELL DOWELL CONSTRUCTORS

LIMITED
FIRST PLAINTIFF

: MCCONNELL DOWELL CONSTRUCTORS

(AUST) PTY LIMITED
SECOND PLAINTIFF

AND : STANDARD CONCRETE INDUSTRIES PTE

LIMITED

FIRST DEFENDANT

: BASIC INDUSTRIES PTE LIMITED

SECOND DEFENDANT

APPEARANCES/REPRESENTATION
PLAINTIFFS : Mr R Singh with Mr T Low [Munro Leys]
DEFENDANTS : Mr R Gordon [Gordon & Co]
RULING BY : Master Ms Vandhana Lal
DELIVERED ON : 29 April 2024

INTERLOCUTORY RULING

Objections Raised by the Plaintiff

1. This ruling deals with the Plaintiffs objections to several paragraphs in the affidavit in support filed by the Defendant to set aside the default judgment entered, on the grounds that they refer to without prejudice communications; facts not within the knowledge of the deponent and matters of law.
   
2. The objections as outlined in their written submission are:
   

“Without Prejudice Communications”

Paragraph 3 – several parts of the affidavits are without prejudice and/or submissions (not facts);

Paragraph 29 – the relevant “correspondences” (including the teams meeting of 18 March 2021) were without prejudice;

Paragraph 30 – paragraph 30 refers to and relies on the content of communications/discussions between the parties (referenced in paragraph 29 of the Kumar affidavit) which were without prejudice;

Paragraphs 31, 32, 36 and 37 – the Suspension Agreement (annexure UK-5) and subsequent amendment (annexure UK-6) were products of without prejudice discussions between the parties;

Paragraphs 40, 45, and 46 – these paragraphs refer to contents of the Suspension Agreement which was a result of without prejudice discussions between the parties;

Paragraphs 42 to 44 – these paragraphs not only refer to the Suspension Agreement (and subsequent amendment agreement), but also further without prejudice communications between the parties (particularly annexures UK-7, UK-8 and UK-9).

Statements not within the knowledge of the Deponent

Paragraph 36 – this paragraph does not comprise of facts that Mr

Kumar is able of his own knowledge to prove.

It is unclear what specific correspondence or other communications the Defendants are referring to when they say they were “informed”. Without further details, any such communications were almost certainly without prejudice, and therefore cannot be relied upon.

Nevertheless, this paragraph does not appear to make sense.

Paragraphs 60, these paragraphs do not comprise facts that Mr

62, 64, 66, 68, - Kumar is able of his own knowledge to prove.

70, 78, 81 to 93 They instead contain legal submissions and/or

opinion in breach of Order 41 of the High Court Rules 1988.

“Without Prejudice Communications”

3. The Supreme Court Practice 1999 Edition, on paragraph 24/5/45 (as cited by the Plaintiff and adopted by the Defendant in their written submissions) states without prejudice communications are inadmissible in evidence as follows:
   

“Without Prejudice Communication - the “without prejudice” rule governs the admissibility of evidence and is founded upon the public policy of encouraging litigants to settle their differences rather than litigate them to a finish (Cutts v. Head [1983] EWCA Civ 8; [1984] Ch. 290; [1984] 1 ALL ER 597 CA). The rule applies to exclude all negotiations genuinely aimed at a settlement, whether oral or in writing, from being given in evidence. The purpose of the rule is to protect a litigant from being embarrassed by any admission made purely in an attempt to achieve settlement. “Without prejudice” material will be admissible if the issue is whether or not negotiations resulted in an agreed settlement (Walker v. Wilsher (1889) 23 Q.B.D. 355), but in relation to any other issue an admission made in order to achieve a compromise should not be held against the maker of the admission or received in evidence....... The right to discovery and production of documents does not necessarily depend upon the admissibility of documents in evidence (O’Rourke v. Darbishire [1920] A.C. 581, HL), but the general public policy that applies to protect genuine negotiations from being admissible in evidence is also extended by the Court to protect those negotiations from being discoverable to third parties (Rush & Tompkins Ltd v. Greater London Council [1988] UKHL 7; [1988] 3 W.L.R. 939; [1988] 3 ALL ER 737 HL). Any discussion between the parties for the purpose of resolving the dispute between them are not admissible, even if the words @without prejudice” or their equivalent are not expressly used (Cocoladefabriken Lindt &Sprungli A.G. v. Nestle Co. Ltd [1978] R.P.C. 287). It follows that documents containing such material are themselves privileged from production ..........................”

4. Scutt J in Naigulevu v National Bank of Fiji Civil Action 598 of 2007 delivered on 15 February 2007 (as cited by both parties) said:
   

“There is a rule of evidence that communications between parties which are genuinely aimed at settlement of a dispute between them cannot be put in evidence without the consent of both parties in the event that the dispute is not settled. This rule is called ‘without prejudice privilege’.

In order for the privilege to operate, it is essential that there must be some person in dispute or negotiation with another person, and the statement which it is sought to exclude from evidence must have some bearing on negotiations for a settlement of that dispute.

The mere use of the words ‘without prejudice’ in the communication ... does not operate to attract the rule, or privilege. The court is required to consider the statement in its context and decide for itself whether the privilege applies. Thus, a letter marked ‘without prejudice’ which is not in fact a genuine attempt to settle a dispute will not be privileged from production in evidence, and a letter which is so aimed will be privileged even it if it is not marked ‘without prejudice’.”

5. In the case of Sable Offshore Energy Inc. v. Ameron International Corp. 2013 SCC 37 as cited by the Defendant Abella J at para 2 said:
   

“[2] The purpose of settlement privilege is to promote settlement. The privilege wraps a protective veil around the efforts parties make to settle their disputes by ensuring that communications made in the course of these negotiations are inadmissible.”

6. In Bidesi v Bidesi, Suva High Court Probate Action HPP 11 of 2020 (delivered on 04 October 2021) whilst citing Naigulevu (supra), Seneviratne J found that:
   

[17] It appears from the decision in Slaveski v Econamakis (supra) that, to apply the without prejudice privilege the communication between the parties must be genuinely aimed at a settlement.

Seneviratne J further stated that the burden is on the party seeking to have relevant paragraphs expunged “to establish that there was a genuine attempt between the parties to settle this matter. Without showing the court that he took reasonable steps to pursue a settlement he cannot rely on the principles in Slaveski v Econamakis (supra) decision. For that all communications between the plaintiff and the defendant or between their respective solicitors as to the settlement should be made available to the court.” [emphasis mine]

7. I will now deal with the impugned paragraphs in the affidavit in support.
   
8. Paragraph 3 is the customary opening paragraph of an affidavit.
   
9. Paragraphs 29 provides that “the parties on a without prejudice basis engaged in progressing the arbitration process and exchanged numerous correspondences”.
   
10. Paragraph 31 states that “the parties on without prejudice basis agreed to suspend arbitration”. It refers to annexure “UK-5” which is a copy of the agreement.
    
11. Paragraph 32 states that “the agreement made no mention of the Plaintiffs having issued these proceedings or serving the same on the Defendants”.
    
12. Paragraph 36 states that “Despite service of the Writ the Plaintiffs informed the Defendants that they wished to proceed with arbitration and parties continued to suspend arbitration and by agreement no party took any further steps in progressing the proceedings”.
    
13. Paragraph 37 states that “On or about 22 September 2022 the parties on a without prejudice basis agreed to further suspend arbitration”. It refers to annexure “UK-6” which is a copy of that agreement.
    
14. Paragraph 42 refers to annexure “UK-7” which “copy of a letter dated 27 February 2023 from the Plaintiffs to the Defendants asking for arbitration and these proceedings to be suspended till 23 September 2023”.
    
15. Paragraph 43 refers to annexure “UK-8” which is “a copy of a letter dated 10 March 2023 from the Defendants to Plaintiffs in reply”.
    
16. Paragraph 44 refers to annexure “UK-9” which “is a copy of a letter dated 5 April 2023 from the Plaintiffs to Defendants in further reply”.
    
17. The contents of paragraphs 29, 31, 32, 36 and 37 of the affidavit are not concerned with the settlement of the dispute between the parties, but rather as quite correctly submitted by the Defendants, with the efforts to resolve the dispute by arbitration. They deal further with the arbitration process and agreements to suspend arbitration.
    
18. I need hardly add that arbitration is a dispute resolution procedure and not settlement negotiations.
    
19. Paragraphs 42, 43 and 44 refer to correspondence between the parties commencing with the letter marked “UK7” from the Plaintiffs asking for the arbitration proceedings to be suspended followed by the Defendant’s reply and Plaintiff’s further reply.
    
20. In my view, clearly, the paragraphs referred to above are not without prejudice communications. There is no reference therein to an admission by either party “in an attempt to achieve a settlement” or a “compromise” nor to a “communication in course of negotiations” or a “discussion” in that regard, to quote the authorities cited above.
    
21. The Plaintiffs submit that the words ‘without prejudice’ are stated in paragraph 31 of the affidavit in support.
    
22. As Scutt J said in Naigulevu v National Bank of Fiji, (supra) the mere use of the words “‘without prejudice’ does not operate to attract the rule or privilege”.
    
23. Clearly, the following paragraphs, (as also objected to) are not without prejudice communications:
    

Paragraph 30 reads “The Plaintiff never informed or advises the Defendant that they have issued these proceedings”.

Paragraph 40 reads “The Plaintiffs had agreed to give the Defendants one month notice before proceeding with this proceeding.

Paragraph 45 reads “The parties acted as if the arbitration and these proceedings were suspended and held in abeyance till at least 23 September 2023”.

Paragraph 46 reads “Given that the parties had agreed to suspend and hold in abeyance these proceedings till at least 23 September 2023, the Defendant did not see the need or the necessity to engage solicitors in the proceedings until such time as one was needed”.

24. The above paragraphs deal with the contentions of the Defendants with respect to the alleged suspension of these proceedings to which the Plaintiffs can respond.
    

Facts not within the knowledge of the deponent and matters of law.

25. Order 41, Rule 5(1) of the High Court Rules provides that subject to exception to Order 14, Rules 2(2) and 4(2) and Order 86, Rules 2(1) and paragraph 2 of Order 41, Rule 5 “....an affidavit may contain only such facts as the deponent is able of his own knowledge to prove”
    

Whilst Order 41, Rule 5(2) states that “An affidavit sworn for the purpose of being used in interlocutory proceedings may contain statements of information or belief with the sources and grounds thereof”.

26. Calanchini J (as he then was) in Dawasamu Transport Ltd v Tebara Transport Ltd, Court of Appeal Civil Appeal No ABU 24 of 2014 (delivered on 20 March 2015) stated that:
    

“[14] ...........................Under Order 41 Rule 5(2) an affidavit sworn by the deponent for use in interlocutory proceedings may contain statements of information or belief provided that the sources of information or the grounds of the belief are stated. Failure to comply with that requirement will usually affect the question of weight rather than admissibility. Under Order 41 Rule 6 a court may order to be struck out of any affidavit material which is scandalous, irrelevant or otherwise oppressive.” [emphasis mine]

27. Devi v Pacific Transport Limited a Lautoka High Court Civil Action HBC 130 of 2016 (Delivered on 07 July 2017) also discussed the provisions of Order 41 Rule 5:
    

It is obvious from r.5 (2) itself that it operates as an exception from the primary rule of evidence stated expressly in Order 41, r.5 (1) that a person may only give evidence as the “facts” which he ‘is able of his own knowledge to prove’. r.5 (2), by including Statements of information or belief plainly allows the adduction of hearsay. But such Statements will have no ‘probative value’ unless the sources and grounds of the information and belief are revealed. The purpose of r.5 (2) is to enable a deponent to put before the Court in interlocutory proceedings, frequently in circumstances of great urgency, facts which he/she is not able of his/her own knowledge to provide but which, the deponent is informed and believes, can be provided by means which the deponent identifies by specifying the original sources and grounds of his/her information and belief. By having to reveal original source (not the immediate source), the deponent affords a proper opportunity to another party to challenge and counter such evidence, as well as enabling the Court to assess the weight to be attributed to such evidence.

...............................................................................................

As noted above, r. 5 (2) provides for an exception in interlocutory proceedings, permitting the inclusion of hearsay and secondary evidence in Affidavits filed in such proceedings. The relaxation is allowed only if the deponent discloses ‘the original source’ of his/her information and ‘the grounds’ of his/her belief.

28. In Singh v Lautoka Lautoka High Court Civil Action HBC 260 of 2006 (delivered on 05 June 2020), Master Azhar in paragraphs 17 and 18 respectively discussed the provisions of Order 41 Rule 5 and what applications are considered interlocutory proceedings:
    
    17. The paragraph (2) of the Order 41 rule 5 operates as the third exception to the primary rule of evidence stated expressly in Ord 41, r 5(1) that a person may only give evidence as to 'facts', which he 'is able of his own knowledge to prove'. This paragraph provides that, an affidavit sworn for the purpose of being used in interlocutory proceedings may contain statements of information or belief with the sources and grounds thereof. The difference between this exception and the second exception under Order 38 rule 3 is that, the deponent, under this third exception, must state the source of information and grounds of belief as he or she deposes the said affidavit on behalf of others and that affidavit to be used in interlocutory proceedings. This exception plainly allows the deponent to adduce facts he heard from others in the interlocutory proceedings and also allows a statement of belief, that is to say an opinion. However, that belief must be that of the deponent, and such statements will have no probative value unless the sources and grounds of the information and belief are revealed. In Savings and Investment Bank Ltd v Gasco Investments (Netherlands) BV and Others [1984] 1 WLR 271, [1984] 1 All ER 296, Peter Gibson J explained the nature, operation and effect of paragraph 2 of rule 5 of Order 41 and held at page 305 that:

“It is obvious from r 5(2) itself that it operates as an exception from the primary rule of evidence stated expressly in Ord 41, r 5(1) that a person may only give evidence as to 'facts', which he 'is able of his own knowledge to prove'. Rule 5(2), by including statements of information or belief, plainly allows the adduction of hearsay. It also allows a statement of belief, that is to say an opinion but in its context that belief must be that of the deponent, and such statements will have no probative value unless the sources and grounds of the information and belief are revealed. To my mind the purpose of r 5(2) is to enable a deponent to put before the court in interlocutory proceedings, frequently in circumstances of great urgency, facts which he is not able of his own knowledge to prove but which, the deponent is informed and believes, can be proved by means which the deponent identifies by specifying the sources and grounds of his information and belief. What r 5(2) allows the deponent to state that he has obtained from another must, in my judgment, be limited to what is admissible as evidence.”

18. The question is what applications are to be considered as interlocutory proceedings for the purpose of this exception and how the source of information and ground of belief to be averred? It must be emphasized that, all the interlocutory proceedings are not falling within the ambit of this rule. The English Court of Appeal construed this rule in a way which draws a distinction between the general interlocutory proceedings and the interlocutory proceeding where a right of a party to be determined. Accordingly, the proceedings such as the one that is made for the purpose of maintaining status quo till the rights are decided or for the purpose of obtaining some directions from the court are considered as interlocutory proceedings for the purpose of this rule. However, the interlocutory proceedings which decide the rights of the parties are not falling into this category, even though they are interlocutory proceedings per se. The authority for this proposition is found in the judgment of Lord Justice Cotton in Gilbert v. Endean [1878] UKLawRpCh 219; [1878] UKLawRpCh 219; (1878), 9 Ch.D. 259. Cotton L.J held at page 268 that:

“...for the purpose of this rule those applications only are considered interlocutory which do not decide the rights of parties, but are made for the purpose of keeping things in status quo till the rights can be decided, or for the purpose of obtaining some direction of the court as to how the cause is to be conducted, as to what is to be done in the progress of the cause for the purpose of enabling the court ultimately to decide upon the rights of the parties. Now many of the cases which are brought before the court on motions and on petitions, and which are therefore interlocutory in form, are not interlocutory within the meaning of that rule as regards evidence. They are to decide the rights of the parties and whatever the form may be in which such questions are brought before the court, in my opinion the evidence must be regulated by the ordinary rules, and must be such as would be admissible at the hearing of the cause.””

29. The Plaintiffs objects to paragraph 31 of the affidavit in support as it contains facts which the deponent, Kumar is not able to prove of his own knowledge.
    
30. The deponent has given his source in paragraph 31, viz, document “UK-5”.
    
31. The Plaintiffs submits that paragraphs 60,62, 64, 66, 68,70, 78, 81 to 93 of the affidavit in support contain facts which the deponent is not able to prove of his own knowledge and legal submissions without stating the source.
    
32. In the aforesaid paragraphs, the deponent as General Manager of the Second Defendant states that the First and Second Plaintiffs are separate and distinct companies incorporated in different countries. There is no contractual relationship between the First Plaintiff and the First Defendant. The relationship between the First Plaintiff and First Defendant proceeded on the basis of purchase orders. There is no privity of contract.
    
33. In my view, the averments in paragraphs 60,62, 64, 66, 68,70, 78, 81 to 93 would be considered together with the response of the opposing party for the limited purpose of considering whether the default judgment should be set aside and if the Defendant has presented a meritorious defence. It is not determinative of the matter.
    
34. In the recent case of Pacific Islands Air Pte Ltd v Simon, [2024] FJCA 30; ABU040.2021 (29 February 2024) Jameel, JA stated :
    

[32] The inherent discretion of the court requires the court to bring its mind to bear on all matters that are reflected in the record and make an independent decision on whether there is a meritorious defence. In my view, the mere fact that an Affidavit in support sets out defences which are claimed to be meritorious would not by itself, be determinative of the matter.

[33] Therefore, it was incumbent on the court to consider the totality of the circumstances under which the Default Judgment was entered, and view the application of setting aside default, in a holistic and realistic manner, always bearing in mind that the interest of justice requires that a party is not deprived of its right to either prosecute its claim or defend a claim against itself.

(emphasis mine)

35. As stated in Dawasamu Transport Ltd (supra) and Singh (supra) the probative value of the affidavit will be considered in the light of the failure to state the sources of information or belief.
    
36. I dismiss the application to expunge the stated paragraphs in the affidavit of Kumar.
    

Orders

37. The objections of the Plaintiffs to the Defendant’s affidavit are dismissed with costs summarily assessed at $1,500 and to be paid within 07 days of this ruling.
    

............................
Vandhana Lal [Ms]
Master of the High Court
At Suva.

29 April 2024.

TO:

1. Suva High Court Civil File No. HBC 95 0f 2021;
2. Munro Leys, Solicitors for the Plaintiff;
3. Gordon & Co, Solicitors for the Defendants.