Carpenters Motors v Horeb Engineering Company Ltd [2009] FJMC 32; Civil Action 276.2006 (16 October 2009)

IN THE RESIDENT MAGISTRATES COURT
CENTRAL DIVISION
SUVA

Civil Action No. 276 of 2006

BETWEEN:

CARPENTERS MOTORS a division of CARPENTERS FIJI LIMITED
PLAINTIFF

AND:

HOREB ENGINEERING COMPANY LIMITED
DEFENDANT

AND:

KADAVU HOLDINGS LIMITED and KADAVU SHIPPING COMPANY LIMITED
THIRD PARTY

Counsel for Plaintiff Mr Yaqona, Lateef & Lateef
Counsel for Defendant Mr Saneem, Sherani & Co
Counsel for Third Party Mr S R Valenitabua, Esq.

Date of Hearing: 04 September 2009
Date of Ruling: 16 October 2009

RULING ON LEAVE TO APPEAL OUT OF TIME

[1] This is the Third Party’s Application for Leave to file Notice and Grounds of Appeal out of time.

[2] The Third Party seeks to appeal against an Order by Consent dated 02 September 2008 entered in default of its appearance on 22nd August 2008.

[3] The Third Party had previously applied for reinstatement of the Plaintiffs cause of action by Notice of Motion dated 29th September 2008, which application was denied.

The Fundamental Legal Issue

[4] There is a fundamental legal issue to be resolved, that is, whether this Court can extend the time for filing Notice of Intention to Appeal.

[5] The Plaintiff and the Defendant say that this Court cannot enlarge the time for filing Notice of Intention to Appeal, relying on the High Court’s decision in Crest Chicken Ltd v Central Enterprises Ltd, High Court of Fiji Civil Appeal No. HBA 13 of 2003S (19 April 2005).

[6] There is also a prior ruling of the Magistrates Court, Mayotri v Director of Lands, Ba Magistrates Court, Workmen’s Compensation Action No. 01 of 2005 (7July 2008), in which former Magistrate Mr M S Khan held that he did not have powers to extend the period for filing notice of intention to appeal.

[7] While the decision of the High Court is binding upon this Court, that of my brother magistrate is not, although this Court should not depart from the decision of another magistrate without good cause unless the case is distinguishable.

[8] This Court has studied the Crest Chicken case and the Magistrates Court rules very carefully.

[9] Neither the Crest Chicken decision nor the decision in Mayotri v Director of Lands have considered whether either or both Order II rule 2 and Order III rule 9 of the Magistrates Court Rules apply to Order 37 rule 1 to give this Court discretion to enlarge time for filing Notice of Intention to Appeal.

Order XXXVII of the Magistrate Court Rules

[10] Order XXXVII rule 1 of the Magistrates Courts Rules states as follows:

"1. Every appellant shall within seven days after the day on which the decision appealed against was given, give to the respondent and to the court by which such decision was given (hereinafter in this Order called "the court below") notice in writing of his intention to appeal:

Provided that such notice may be given verbally to the court in the presence of the opposite party immediately after judgment is pronounced."

[11] Rule 3 of that Order reads as follows:

"3.-(1) The appellant shall within one month from the date of the decision appealed from, including the day of such date, file in the court below the grounds of his appeal, and shall cause a copy of such grounds of appeal to be served on the respondent.

(2) At the time the appellant files the grounds of his appeal he shall deposit with the clerk of the court below such sum as the clerk shall consider sufficient to cover the fees prescribed in Appendix B for the preparation, certification and copying of the record."

[12] Rule 4 provides as follows:

"Effect of failure to file grounds of appeal

4. 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."

Rules allowing Enlargement or Extension of Time

[13] The Magistrates Court Rules provide two general rules allowing enlargement of time.

[14] Order II rule 2 provides for extension of time by consent of the parties, and where one party refuses consent, by order of the Court, as follows:

"Enlargement or abridgement of time

2. Parties may, by consent, enlarge or abridge any of the times fixed for taking any step, or filing any document, or giving any notice, in any suit. Where such consent cannot be obtained, either party may apply to the court for an order to effect the object sought to have been obtained with the consent of the other party, and such order may be made although the application for the order is not made until after the expiration of the time allowed or appointed."

[the emphasis is ours]

[15] There is a further provision found in Order III rule 9 as follows:

"Power to enlarge or abridge time

9. A court or a judge shall have power to enlarge or abridge the time appointed by these Rules, or fixed by any order enlarging time, for doing any act or taking any proceedings, upon such terms (if any) as the justice of the case may require, and any such enlargement may be ordered although the application for the same is not made until after the expiration of the time appointed or allowed:

Provided that when the time for delivering any pleading or document or filing any affidavit, answer or document, or doing any act is or has been fixed or limited by any of these Rules or by any direction or order of the court or a judge the costs of any application to extend such time and of any order made thereon shall be borne by the party making such application unless the court or a judge shall otherwise order."

[the emphasis is ours]

The Crest Chicken Case

[16] The Plaintiff and the Defendant both rely on the High Court’s decision in the Crest Chicken case to say that the Magistrates Court has no power to extend or enlarge time for filing Notice of Intention to Appeal, and thus the Third Party, having missed the seven day deadline of Order XXXVII rule 1, is forever barred from appealing.

[17] The Crest Chicken case was an appeal to the High Court from the Magistrates Court. It was the appeal of the substantive judgment, which was opposed by the respondent on the grounds that the appeal was filed out of time. It was not an appeal of an order allowing extension of time to file Notice of Intention to Appeal.

[18] Further, the ruling in the Crest Chicken case does not actually address the question of whether the Court can enlarge time for filing Notice of Intention to Appeal, as no such application had been made in that case. Order II rule 2 and Order III rule 9, both of which allow enlargement of time, are never mentioned by the Honourable Justice Pathik in his ruling.

[19] What is before this Court is an application for extension of time to file Notice and Grounds of Appeal, which is a different situation on the facts from that in the Crest Chicken case.

[20] In opposing the said application, the Defendant relies on the following discussion of Order XXXVII rule 1 from the Crest Chicken case [page 4 of 6]:

"This is a mandatory Rule and it does not give the Magistrate the power to extend time. Even if he had, no application was made by the appellant for extension for it was already late in filing or giving Notice of Intention to appeal within the seven days after judgment was pronounced.

Had the legislature intended it could have specifically provided for application to extend time. It did not do so in Or. 37 R.1 but Or. 37 R.4 which provides as follows, gave the Magistrate’s Court power to extend time to file grounds of appeal."

[21] The High Court is correct in stating that Order XXXVII rule 1 does not provide for enlargement of time. It is Order II rule 2 and Order III rule 9 that so provide. Parliament has provided for application to extend time in those rules which are of general application to all the Magistrates Court rules.

[22] The Honourable Justice Pathik was at some pains to point out that there was no application filed to extend time in the appeal before him, stating as follows [page 5 of 6]:

"In the light of the statutory provisions particularly Or 37, since no extension of time has been applied for or granted to the giving of Notice of Appeal or the Grounds of Appeal, the steps taken by the appellant to obtain the stay are irregular and cannot be cured. Hence, it was ultra vires the Magistrate to hear the application for stay."

[the emphasis is ours]

[23] In the Conclusion to his judgment, the Honourable Justice Pathik again refers to the absence of an application for extension of time to give Notice of Intention to Appeal out of time.

[24] If, as the Defendant contends, there can be no extension of time to file Notice of Intention to Appeal even if application is made therefore, then all those references to the lack of an application for extension to appeal in the Crest Chicken case would become so much unnecessary verbiage. This Court does not agree with that view of the case.

[25] Order XXXVII rule 1 does not anywhere preclude the application of Order II rule 2 and Order III rule 9 to enlarge time for filing Notice of Intention to Appeal. Neither does it prohibit the extension of time to file Notice of Intention to Appeal.

[26] The Defendant points to Order XXXVII rule 4 as support for its position that there can be no extension of time to file Notice of Intention to Appeal because rule 1 does not contain any provision for the same.

[27] That argument has superficial appeal because rule 4 does specifically allow for extension of time to file grounds of appeal.

[28] However, a closer inspection of the actual language of rule 4 is enlightening.

[29] Rule 4 states that the appeal will be deemed abandoned if the appellant does not timely file grounds of appeal, unless the court sees fit to extend the time.

[30] Rule 4 must be read as a whole. It is not a stand alone provision for extension of time to file grounds of appeal. It is primarily about deeming the appeal abandoned.

[31] There is no need to include a provision for extension of time to file Notice of Intention to Appeal in rule 4, because there is no statement that the appeal is deemed abandoned if Notice of Appeal is not timely filed in that rule or any other rule.

[32] This Court concludes, after carefully considering the language of the Magistrates Court rules as well as the reasoning of the Crest Chicken case, that it does have authority to grant an enlargement or extension of time to file Notice of Intention to Appeal under Order II rule 2 and/or Order III rule 9 of the Magistrates Court rules.

[33] This Court respectfully disagrees with the ruling in Mayotri v Director of Lands, [supra].

The Merits of the Application and Proposed Appeal

[34] Having decided that this Court does have discretion to extend time for filing Notice of Intention to Appeal as well as Grounds of Appeal, the Court must now consider the merits of the application before it.

[35] The following factors to be considered in granting leave to appeal out of time are well settled in law [Safari Lodge Fiji Limited v Rosedale Limited & Anor, High Court of Fiji Civil Action No. 319 of 1999 (5 February 2008)]:

(a) the length of the delay

(b) the reasons for the delay

(c) the merits of the proposed appeal

(d) the degree of prejudice to the respondent

The Delay in Bringing This Application

[36] The Plaintiff and the Defendant submit that there has been too much delay by the Third Parties in this matter. The order the Third Parties seek to appeal was made by the Court on 22 August 2008 and sealed on 02 September 2008.

[37] This delay has been, to some extent, due to the Third Parties’ misguided application to reinstate the Plaintiffs action filed by the Third Parties’ former solicitors on 01 October 2008, which was dismissed with costs on 9 December 2008.

[38] The Third Parties were required to pay those costs prior to filing any further application, which they did not attend to until 13 March 2009. As a result, their application dated 6 February 2009 was not issued until 5 May 2009.

[39] Although the delay is the Third Parties’ own doing, as they must accept responsibility as the principals for the actions of their former solicitors in filing application to reinstate on their behalf, that prior application was itself timely filed and it did put the Plaintiff and Defendant on notice of the Third Parties’ intentions with respect to the default judgment/consent order.

Prejudice to the Plaintiff and Defendant

[40] It is clear from the Judges Notes that the Defendant allowed order by consent to be made against it in favour of the Plaintiff at the same time that the Defendant obtained default judgment against the Third Parties for the same amount. There was also stay of execution granted in favour of the Defendant as part of that order by consent.

[41] This Court has granted interim stay of execution until the date of this ruling upon the application of the Third Parties.

[42] The Plaintiff submits that the stay of execution it agreed to with the Defendant makes any appeal of that order by consent prejudicial to it. The Plaintiff also points to the several years that have passed since the Plaintiff filed its Writ of Summons and submits that it has waited too long to recover the monies due to it, and any further delay would be unfairly prejudicial to it.

[43] However the Plaintiffs claim is against the Defendant. It is the Defendant that will suffer prejudice, if any, as it is the Defendant’s default judgment against the Third Parties that is being appealed.

[44] Any payment made by the Defendant to the Plaintiff has been made relatively recently pursuant to the Consent Order. The Defendant wants to be indemnified for most but not all of that amount from the Third Parties.

[45] The Defendant has itself benefited from delaying payment to the Plaintiff of an amount only part of which is covered by its claim against the Third Parties. It is no position to complain of what is a much shorter delay in indemnity from the Third Parties.

[46] The Court is not persuaded that the Defendant will be significantly prejudiced by allowing the Third Parties’ appeal against the default judgment in the Defendant’s favour.

The Grounds in Support of Leave to Appeal

[47] The grounds of appeal cited by the Third Party in its application is that judgment was given in its absence, it was never properly served with the Third Party Notice, and one of the Third Party companies is in winding up and therefore no proceedings can be brought against it without leave of the Court.

[48] The Court finds merit in some of these grounds.

Winding Up Order against Kadavu Shipping

[49] Although the Third Party has overlooked to provide a copy of the Winding Up Order against Kadavu Shipping Company Limited, it is deposed that the winding up order is dated 2nd December 2005. It was made before the Defendant’s application for leave to issue Third Party Notice was filed with this Court.

[50] The Defendant argues that it obtained leave from this Court to file Third Party Notice against Kadavu Shipping.

[51] The Defendant did get leave from this Court to join the Third Parties, including Kadavu Shipping. However, there is absolutely no mention in the Notice of Motion or Affidavit in Support filed by the Defendant that Kadavu Shipping is in winding up. The address given for that company is its registered office, not the Official Receiver’s Office. The Court apparently was never made aware that Kadavu Shipping was in winding up and its grant of leave was not made under s 229 of the Companies Act as it ought to have been.

[52] Further, the Defendant did not serve Third Party Notice on Kadavu Shipping at the Official Receiver’s Office. That company being in winding up, notice should have been served on the office of the Official Receiver’s Office as liquidator of the company, not its registered office.

[53] For that matter, notice was not served on the registered office either. It was served on Q B Bale as solicitors for the Third Party.

Service on Solicitors Not Registered Office

[54] The Defendant served the Third Parties by serving Q B Bale & Associates, rather than the registered office of the companies as required by the Companies Act and the Magistrates Court Rules.

[55] The Third Parties now contend that the same did not constitute service on the Third Parties.

[56] The Defendant argues that any objection to service was waived by the Third Parties when their solicitors filed Statement of Defence and appeared before the Court.

[57] The Magistrates Court Rules do not contain any provision dealing with service on solicitors, but Order III rule 8 states that the Court shall be guided by any relevant provision contained in the High Court Rules.

[58] Order 10 rule 4 of the High Court Rules states 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 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."

[59] Order 16 of the High Court Rules deals with third party proceedings, and rule 3 (3) (b) treats the defendant issuing the third party notice as a plaintiff and the third party as a defendant in respect of the third party notice.

[60] It is not clear to this Court that Q B Bale & Associates were the solicitors for Kadavu Shipping as of the date of service, as the Official Receiver had been appointed liquidator of that company some time before. But there is no reason to doubt that they were solicitors for Kadavu Holdings at that time.

[61] Kadavu Holdings’ solicitors having accepted service on behalf of that company as Third Party, the Third Party is deemed duly served.

[62] Order 12 rule 7 of the High Court Rules requires a defendant disputing the jurisdiction of the Court by reason of irregularity in the writ or service thereof to apply to the Court for an order setting aside the writ or declaring that the writ has not been duly served on him within the time limited for service of a defence. In the absence of such an application the acknowledgement of service is treated as a submission to the jurisdiction of the Court by the defendant.

[63] Both Third Parties have filed Statement of Defence herein by Q B Bale & Associates, solicitors.

[64] No issue of lack of proper service was raised at that time.

[65] The Third Parties cannot challenge service of the Third Party Notice at this late date. Any such objection was waived by both Third Parties when the Third Parties’ Statement of Defence was filed with this Court.

The Consent Order

[66] The Judges Notes for 22nd August 2008 disclose that Ms Prakash appeared for the Plaintiff and Mr Kapadia appeared for the Defendant on that date. There was no appearance for the Third Parties. The Third Parties had not appeared before the Court on the preceding four Court dates.

[67] The matter was set for hearing that day. The notes record that the Defendant consented to judgment for $2,431.41. The balance was disputed.

[68] The Judges Notes further reflect that neither the Third Parties nor their solicitors appeared on that day. The Defendant requested judgment against the Third Parties, and the Court gave judgment by default for $10,057.91 against the Third Parties for the Defendant.

[69] The matter was then stood down and called again at 2:15 pm, at which time the solicitors for the Plaintiff and Defendant had agreed to final orders of judgment for Plaintiff against Defendant by consent for $12,469.42 with execution stayed until Nov. 30th, 2008, judgment by default against the Third Parties in favour of Defendant for $10,037.91, and the earlier judgment of $2431.41 for Plaintiff against Defendant was set aside. There was also stay of execution granted to the Defendant for a certain period of time.

[70] The Order sealed by the Plaintiffs solicitors states that "It is ordered by consent as follows: - . . . (iv) That there be Judgment for the Defendant against the Third Party in the sum of $10,037.91;"

[71] The Consent Order as sealed does not agree with the Judges Notes, which records that judgment against the Third Parties was by default in their absence.

[72] Order XXX rule 3 of the Magistrates Court Rules provides as follows:

"If the plaintiff appears, and the defendant does not appear or sufficiently excuse his absence, or neglects to answer when duly called, the court may, upon proof of service of the summons proceed to hear the cause and give judgment on the evidence adduced by the plaintiff, . . ."

[the emphasis is ours]

[73] The Defendant was in the position of a plaintiff with respect to the Third Parties. There being Third Party Statement of Defence on file, the Defendant was required to formally prove its claim against the Third Parties by Order XXX rule 3.

[74] There are no references whatsoever in the Judges Notes to any evidence being adduced by the Defendant with respect to its claim against the Third Parties. There is no reference at all to the Third Parties’ Statement of Defence.

[75] The only reference in the Judges Notes is to the non-appearance of the Third Parties and their solicitors. Then the matter was stood down, and when it was called again the solicitors for the Plaintiff and Defendant had agreed on final orders, including the judgment against the Third Parties.

[76] The Judgment against the Third Parties is therefore prima facie irregular as not complying with Order XXX rule 3.

[77] The requirement that evidence be adduced in order to give judgment in the absence of one party was addressed in the case of Kaur v Singh, High Court of Fiji Civil Appeal No. 61 of 2008 (5 August 2008).

[78] In that case default judgment was granted after the defendants’ solicitors withdrew for lack of instructions at the hearing. Notice of Intention to Defend and Statement of Defence were on file for the Defendants.

[79] The plaintiffs solicitors relied upon the pleadings as constituting evidence to support the default judgment.

[80] The High Court stated as follows in paragraph 7.16 of its judgment:

"However, Order XXX, Rule 3 can apply so as to make the default judgment regular only if it is accepted that the Court entered judgment on the basis of evidence consistent with the claim and the nature of the defence. The Plaintiff/Respondent relies upon Order XVI for this purpose."

[81] The High Court then turned to the issue of the pleadings, stating as follows in paragraph 7.23:

"That is, the Statement of Defence would have to admit whole of the Statement of Claim, or at least the key aspects of it, for default judgment to be entered in the whole of the terms or amount claimed in the Statement of Claim."

[82] The High Court said further at paragraph 9.10:

"Evidence’ does not mean solely evidence given on oath or affirmation in person from the witness box. It can (as Order XVI provides) include admissions in the pleadings. It can include Affidavit evidence. But it must be there for judgment to be entered: otherwise, judgment cannot be entered – whether in favour of a Plaintiff or a Defendant, or against a Plaintiff or a Defendant. If the evidence is not there, or not there to sustain the judgment in full, then a judgment is entered irregularly."

[83] At paragraph 10.5 of its judgment the High Court said as follows:

"Further, the Court did not ‘proceed to hear the cause’. The Court ‘heard’ only the evidence that could be seen to count as ‘admissions’. (And even those admissions were countered by the contention of the sum admitted being lower than the sum claimed, and the contention of its having been paid.) The Court did not ‘hear the cause’. Hearing the cause would, in this case, have required adverting not only to the pleadings and any admissions therein which the Court could fairly consider as ‘admissions’ for the purpose of judgment in default of appearance, but hearing evidence from the Plaintiff as to the matters not admitted and indeed being contested.

10.6 It was up to the Plaintiff to prove his case. This he did not do – the Court in not requiring evidence over and above any ‘admissions’ – did not apparently require it. In not requiring it, the requirements of the Magistrates Court Rules as to entering judgment in default of the Defendants’ appearance were not complied with."

[84] There were no admissions in the pleadings to support judgment against the Third Parties. The only affidavit evidence in the Court’s file is the Affidavit in Support sworn by one Netani Sukanaivalu on 2nd October, 2006 with respect to the application for leave to join the Third Parties. Paragraph 4 of the said Affidavit deposes as follows:

"To protect its interest the Defendant has filed the Defence herein denying the Plaintiffs claim. The Defendant is not liable to pay the said sum due to the representations made by the representative of Carptrac and Kadavu Holdings Limited. On the 14th day of February, 2006 it was agreed that goods and services supplied to the Third Parties by the Plaintiff in respect of the Invoice Nos. C103602 and C103664 to the Third Parties motor vessel, Bulou Ni Ceva would be paid by the Third Parties."

[85] The Judges Notes from the date of hearing do not refer to that Affidavit in Support or the other pleadings. Everything stated in Paragraph 4 is disputed by the pleadings filed by the Plaintiff and the Third Parties.

[86] The Affidavit in Support lacks the necessary details to prove the Defendant’s claim against the Third Parties given the denials contained in their Statement of Defence. There is only a reference to certain representations, without giving any details of what was said, who said it, whether and how the Defendant relied upon the same to its detriment or whether there was consideration for the same. The only material fact provided by the Defendant is the date of the alleged agreement. That is simply not sufficient evidence to prove its claim.

[87] At the hearing Counsel for the Defendant referred to Annexure "B" to the Affidavit in Response of Ritesh Chandra Singh sworn on 2nd September, 2009. He said that letter dated 7th April 2006 was shown to the Learned Magistrate on 22nd August 2008 in order to obtain judgment against the Third Parties.

[88] With respect, there are no entries in the Judges Notes relating to this letter. If it had been shown to the Learned Magistrate he should have at least recorded sighting it. It was not attached to the Affidavit in Support referred to above, and this Court does not accept that the said letter was in evidence before the Learned Magistrate Mr Ajmal Khan on 22nd August 2008.

[89] The Court finds that the judgment in default granted against the Third Parties by the Court on 22nd August 2008, and the Order by Consent perfecting that judgment is irregular, and the Court would not hesitate to grant setting aside as of right pursuant to Order XXX rule 5 if the Third Parties had applied for setting aside.

[90] The Third Parties have not applied for setting aside. They have instead applied for leave to appeal out of time.

The Merits of the Third Parties’ Defence

[91] The Third Parties’ Statement of Defence reveals that Kadavu Shipping has a dispute with the Defendant over the repairs to its vessel. The Defendant’s claim against Kadavu Shipping is with respect to goods ordered from the Plaintiff in connection with that repair contract, while Kadavu Shipping alleges that the Defendant did not carry out the repairs in a satisfactory manner and it had to hire someone else to finish the job.

[92] Kadavu Shipping is a company in winding up, with the Official Receiver appointed as liquidator. This Court is not aware of whether the Defendant has filed its proof of claim with the Official Receiver.

[93] The Defendant is also claiming against Kadavu Holdings, which is a separate company. It says a representative of Kadavu Holdings agreed to have that company pay the debt of Kadavu Shipping, on the basis that Kadavu Holdings had an account with the Plaintiff and Kadavu Shipping did not. It has annexed its letter confirming such an agreement to its affidavit in opposition.

[94] While using the second company’s account might have had superficial appeal as convenient to the parties, it begs the question as to whether the second company actually intended to assume, guarantee or accept assignment of the first company’s debt.

[95] It raises issues of whether the particular representative had the necessary authority to make such an undertaking, as well as whether the same offends the bailment, guaranty and indemnity act.

[96] The Court considers that there is a defence on the merits with respect to the Defendant’s claim against the Third Parties.

In Conclusion

[97] We refer to the case of Covec (Fiji) Limited v Singh, Fiji Court of Appeal Civil Appeal No. ABU 0083 of 2007S, [2008] FJCA 81 (7 November 2008), in which the Court of Appeal allowed appeal out of time from default judgment despite a delay of approximately one year while assessment of damages was pending. The Court of Appeal allowed the appeal against the default judgment as well as the assessment of damages so that the real question in controversy between the parties could be determined on the merits.

[98] In our humble opinion the dispute between the Defendant and the Third Parties needs to be resolved on the merits.

[99] This Court hereby grants the Third Parties leave to file Notice of Intention to Appeal and Grounds of Appeal out of time, in order that the real question in controversy between the Defendant and the Third Parties may be determined on the merits.

[100] The Court grants stay of execution of the judgment by default in favour of the Defendant against the Third Parties pending appeal.

[101] The Court awards costs summarily assessed in the amount of $200.00 each in favour of the Plaintiff and the Defendant and against the Third Parties, as this application would not have been necessary had the Third Parties acted timely with respect to their appeal.

DATED this 13th day of October, 2009

Mary L Muir
RESIDENT MAGISTRATE
SUVA