Reef Pacific Trading Ltd v Island Enterprises Ltd [1995] SBCA 1; CA-CAC 001 of 1992 (31 August 1995)

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NATURE OF JURISDICTION	Appeal from order of The High Court of Solomon Islands (WARD CJ)
COURT FILE NO:	Civil Appeal No. 1 of 1992
DATE OF HEARING:	28 August 1995
DATE OF JUDGMENT:	31 August 1995
THE COURT:	KIRBY P. SAVAGE JA
PARTIES:	REEF PACIFIC TRADING LIMITED V. ISLAND ENTERPRISES LIMITED
ADVOCATES:
Appellant	M. RAFTER/P. TEGAVOTA
Respondent	J. C. CORRIN
KEYWORDS:	PRACTICE & PROCEDURE - extension of time-power of High Court following completion of self executing order-held: Power to extend time remains under O 64 r 5 - discretion of High Court miscarried - but judgment would not be disturbed for discretionary reasons.
EX TEMPORE/RESERVED:	Reserved
ALLOWED/DISMISSED:	Dismissed
PAGES:	18

PRACTICE & PROCEDURE - time - extension of time-power of High Court-self executing order. Order 64, rule 5 - whether may be invoked after self executing order has taken effect and resulted in the termination of defence by striking out of defence and counterclaim - whether default judgment should then have been entered - held (by the Court) (1) The High Court retains a discretion to extend time under Order 64 rule 5 notwithstanding the completion of a self-executing order and it may refrain from entering or, if entered, set aside a default judgment if the justice of the case so requires. Samuels v Linzi Dresses Ltd [1981] 1 QB 115 (CA); Champtaloup v Northern District Acro Club Inc [1980] NZLR 678 (CA) and FAI General Insurance Company Limited & Ors v Southern Cross Exploration NL and Ors [1988] HCA 13; (1988) 165 CLR 268 followed; Whistler v Hancock [1878] UKLawRpKQB 3; (1878) 3: QBD 83 King v Davenport [1879] UKLawRpKQB 60; (1879) 4 QBD 409 not followed; (2) Accordingly, Ward CJ erred in deciding otherwise; (3) But, in considering the re-exercise of the discretion which had thus miscarried, no different order would be made by the Court of Appeal having regard to the appellant’s conduct of the case.

THE COURT: The appeal before the Court raises a short but important question of procedural law. It is whether, after a self-executing order has taken effect and even resulted in judgment, a Judge of The High Court of Solomon Islands nevertheless has power, retrospectively, to extend time, to cure the default and to withhold or set aside judgment in consequence.

The relevant rule is Order 64 rule 5 of the High Court (Civil Procedure) Rules which is in the following terms:

5. The Court shall have power to enlarge or abridge the time appointed by the Rules or fixed by an order enlarging time for doing any act or taking any proceeding, upon such terms 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.

In the High Court, Ward CJ on 2 July 1991 held that he did not have the power to extend time once the self executing order had taken effect

“In such a case the action is complete and no application to extend can be considered.”

His Lordship applied the approach to the analogous problem under the English rule, as stated more than a century ago in Whistler v Hancock [1878] UKLawRpKQB 3; (1878) 3 QBD 83. See also King v Davenport [1879] UKLawRpKQB 60; (1879) 4 QBD 409 to the sale effect. The appellant challenges this ruling. In a later judgment on 12 December l991 Ward CJ went on to observe that, even if he were wrong in applying the foregoing principle as binding on the Court:

“ ..... I should have exercised my discretion to refuse the application to extend time because of the history [of the litigation]”

(1) Did Ward CJ err in holding that he had no power to extend time in the circumstances?

(2) If so, having regard to the history of the litigation and other relevant discretionary considerations, should this Court, in the exercise of its discretion, provide the extension of time now which Ward CJ refused In July 1991?

It is necessary to sketch the background of the case between the parties, in order to understand the problem before the Court. We shall do so briefly as it is not necessary to explore every event in the discouraging saga of the proceedings. It suffices to mention only the main points.

Between March and May 1990, Island Enterprises Limited (the respondent) did certain electrical work for, and supplied certain equipment to, Reef Pacific Trading Limited (the appellant). A dispute arose upon the non payment of certain invoices and the exclusion of the respondent’s workmen from the appellant’s premises. The appellant’s case was that the respondent’s work was poorly performed and even unsafe. The appellant contended that it was obliged to get other contractors to complete the task, resulting in expensive repair work and in a substantial counterclaim. The respondent disputed the appellant’s claims.

On 14 June 1990 the respondent issued process out of the High Court claiming from the appellant $52,305.52 plus interest and costs. The process was served on the same day. No defence being filed within time - and no extension being sought or granted - the respondent, on 4 July 1990, obtained a default judgment in its favour. It then obtained a writ of execution (fieri facias) in respect of the appellant’s goods, issued by the High Court on 6 August 1990.

On 28 August 1990, the appellant, by summons, applied for an order setting aside the judgment to allow it in to defend. In support of this application it sought to show a defence on the merits by filing an affidavit to which was annexed a statement by TPI Electrical Services Pty Ltd. in Sydney, Australia. This stated that an inspection had shown that the electrical wiring was not performed correctly and this installment work was “totally inadequate”. The report concluded

“In 13 years of operation covering all types of refrigeration this company has not been exposed to such poor workman-ship and lack of design expertise as had been witnessed on arrival on site.”

The affidavit of the General Manager of the respondent disputed this criticism. He contested the opinion of TPI as unlicensed in Solomon Islands, contended that the materials used reached international standards and added

“The [respondent] has been operating in Solomon Islands for ten years and has never received a complaint of this nature before. I am confident that the work would have passed ... [the] test [of the Solomon Islands Electricity Authority.”]

On 17 September 1990 a Registrar set aside the default judgment apparently concluding, on the foregoing, that there was a matter suitable for trial on the merits. A defence was duly filed on 27 September 1990. It included the counterclaim which had been foreshadowed, to cover the cost of repairing and re-installing the allegedly defective work of the respondent. However, the defence was not served in accordance with the rules. As a consequence, the respondent obtained a second default judgment. This led, in turn, to a fresh summons to set the judgment aside. This was ordered by consent on 29 November 1990.

The respondent filed its reply to the defence and counterclaim on 6 December 1990. A summons for directions was taken out on 20 December of that year. This resulted in an order being made on 31 January 1991 that the appellant answer interrogatories. It was at that time, by order of the High Court of 25 March 1991, that a receiver and manager was appointed for the appellant. Although this receivership was terminated on 27 June 1991, the appointment complicated for a time the legal representation of the appellant. A notice was filed on 10 May 1990 signifying that the receiver’s solicitor was replacing the solicitor for the appellant in respect of property of the company. For a time, both solicitors appeared in their clients’ respective interests.

We now reach 9 May 1990, on which day Ward CJ in the High Court ordered the appellant, which had been dilatory to answer the interrogatories earlier ordered and to do so within 14 days. The appellant failed to do this. There is a little confusion about the exact terms of Ward CJ’s order. On its face·- and on the record of the proceedings - no mention is made of a default provision. However, in his judgment of 2 July 1991, his Lordship clearly states:-

“... a summons to strike out the defence was filed on 3 May. It was heard on 9 May. .... I stated there that I was not sure that [appointment of a receiver] had caused this delays but felt there was a risk it had. As a result, I refused the application and ordered answers be filed within 14 days or the defence and counterclaim would be struck out. That part of the 0rder is not in the written record but both counsel agree it was made on 9 May.”(emphasis added)

Counsel referred to are shown by the record to be the advocates respectively of the respondent and of the receiver on behalf of the appellant. The personal solicitor of the appellant was not party to the agreement.

Before this Court the statement of Ward CJ was contested by the advocate for the appellant. However, for a number of reasons, this Court did not permit the matter to be re-opened. Ward CJ, after all, was simply stating his recollection of an order made by him then only 2 months earlier. The correctness of his statement is confirmed before this Court by the respondent’s advocate. If the statement were to be contested, it should have been contested long before the hearing of this appeal. It must be accepted that Ward CJ, as he said, made an order with a self-executing consequence, that if it were not complied with, the defence and counterclaim would stand struck out by force of this order - exposing the appellant once again to the risk of a default judgment. This is the order which his Lordship made on 2 July 1991. He directed that judgment be entered for the respondent with costs. Unless now set aside, that is the final judgment between the parties in these proceedings.

Instead of appealing immediately from that order, the appellant once again diverted itself into tangential proceedings. On 23 August 1991, it applied for a stay of execution of the judgment. On 18 November 1991, the Registrar provided a stay upon the basis that the only order for execution (fieri facias) was that issued on 6 August 1990, in turn based upon the first default judgment which had been earlier set aside. Meanwhile, on 5 December 1991, the appellant caused a summons to be issued seeking an order out of this Court providing an extension of time to the appellant within which to appeal from the order of 2 July 1991. The order of 6 May 1991 was also specified in this summons. But, as was agreed when the appeal came on for hearing, that this latter reference was a mistake. In so far as it referred to the judgment or ruling of 9 May 1991, this had been in favour the appellant. It was a judgment by which Ward CJ had refused the respondent’s earlier request to strike out the appellant’s defence and counterclaim at that stage. The reference to it is an illustration of the lack of precision and clear thinking in the appellant’s camp at that time.

The summons of 5 December 1991 was returned before Ward CJ on 12 December 1991. His Lordship was on this occasion referred, for the first time, to the decision of the English Court of Appeal in Samuels v Linzi Dresses Ltd [1981] 1 QB 115 (CA). The headnote to that decision suggests that the Court of Appeal there overruled Whistler and King and other earlier decisions. Whether this is technically so was canvassed in argument for the respondent. But it matters not. The holding in Samuels clearly shows a different approach to the power of extension than that which Ward CJ had earlier taken without benefit of the decision. His Lordship accepted the “importance of the procedural point.” He therefore accepted that the appellant should “have the opportunity”, if it wished, to “take the matter before a higher Court”, i.e this Court. He therefore ordered that the time for appealing against his order of 2 July 1991 be extended to 31 January 1992. However, he refused a fresh application for a stay of execution of the judgment.

The appellant duly filed a notice of appeal on the last day so appointed. However, meanwhile, in default of the refusal to stay execution, a second writ of fieri facias was issued out of the High Court on 14 February 1992. It authorized the recovery from the appellant’s goods of $52,305, being the original judgment debt. The appellant continued to protest the invalidity of the execution. However execution was duly levied. The debt was discharged. The appellant continues to challenge the validity of the writ of execution. But instead of taking urgent steps to secure an early hearing of the appeal on the important procedural point, by letters and alternately in a hearing before Muria ACJ, it continued to challenge the validity of the writ of execution. On 19 March 1992, Muria ACJ dismissed this challenge. His Lordship held, in effect that, if the appellant had wished to challenge the validity of the writ of execution, it was obliged to do so, at the latest, in the proceedings before Ward CJ on 12 December 1991. Not having done so, it could not belatedly raise the matter by separate, collateral proceedings. See Port of Melbourne Authority vAshon Proprietary Limited [1981] HCA 45; (1981) 147 CLR 589,598.

The notice of appeal, pursuant to the extension of time granted by Ward CJ, was not brought on for an early hearing in this Court. On the contrary, it was allowed to dawdle to its hearing on 28 August 1995. Four general sittings of this Court were allowed to come and go - but no endeavour was made to bring the hearing before the Court. No application for expedition was made by the appellant, despite the obvious importance of the appeal to its interests. No application was made by the respondent for the obvious reason that it had recovered its judgment debt by execution. The matter was simply permitted to drift. Various excuses were offered but no affidavit evidence was tendered to explain the delay. It was left to inference that it arose from the difficulty of getting the funds and proper representation to advance the point in the appeal. We shall return to this delay for it is important to the outcome of the appeal.

It is now necessary to return to the first point in the appeal, namely the correctness, in law, of Ward CJ’s holding that once the self-executing order which he made took effect, there was nothing left upon which to apply Order 64 rule 5. With respect to his Lordship, we consider that in so holding he erred in his construction of the rule.

The starting point for the explanation of our view in this regard is the plain terms of the rule itself. The power is conferred in the most ample terms. It is made clear by express language that the facility in the rule may be availed of both before and after the expiration of the time in question. There is no express limitation to exclude application to a case of a perfected order pursuant to a self-executing direction. The words themselves are wide enough to apply to such a case.

Rules such as Order 64 rule 5 should not be given a narrow construction. This is because the basic function of courts is, within rules obliging proper procedures to be followed, to ensure that the parties have a just outcome to their dispute, according to law. It was said long ago, that procedural rules must be the servants of the courts not their masters. They must be interpreted and applied to facilitate the attainment of justice, not to frustrate that objective.

Additionally, there has been a marked change in the jurisprudence of Commonwealth courts upon procedural questions of this kind in the past 20 years or so. Such courts have tended to revise the rigid approaches to procedural rules sometimes evidenced in earlier decisions. Instances of these changes can be seen in a series of decisions in which the equivalent to Order 64 rule 5 of the Local court rules have been the subject of judicial consideration.

In Samuels, above, the English Court of Appeal affirmed that the English courts had the power to extend time under the rule notwithstanding has an “unless” order had been made and not complied with. The Court declared that the “modern practice” was not to treat the action as “dead”. Although orders were made to be complied with and not ignored, and the provision of relief was always a matter for the exercise of discretion, where the justice of the case required an extension of time, the court might retrospectively grant it. See ibid, 126. Expressly, the English Court of Appeal held that Whistler should no longer be followed.

Without knowing of this development in England, and at about the same time. Moller J in the Supreme Court of New Zealand took a similar view. His Honour also relied on the additional, inherent jurisdiction of that court to provide an extension where justice required it. See Champtaloup v Northern Districts Aero Club Inc [1980] NZLR 673 (SC). By the time the appeal from Moller J’s decision came to the New Zealand Court of Appeal, Samuels was decided. Of that decision, Woodhouse J said (at, 679) “with respect, we accepted the conclusion of that Court upon the point.” His Honour also referred to the width of the inherent jurisdiction, in addition to the power provided by the rules of court.

The same approach has been adopted to the equivalent rules of court in Australia. In FAI General Insurance Company Limited and Ors v Southern Cross Exporatia NL and Ors [1988] HCA 13; (1989 165 CLR 268, the High Court of Australia concluded that Pt 2 rule 3 of the Rules of the Supreme Court of New South Wales, equivalent to order 64 rule 5, was wide enough to support an application for an extension of time even though time for complying with a self-executing order had passed and even though, on the record, the proceedings were no longer pending. In this, the High Court of Australia affirmed the decision of the New South Wales Court of Appeal. See (1986) 7 NSWLR 319 (CA).

The point is thus reached that in three Commonwealth jurisdictions, the same approach to the power of the judge is now taken. Whistler must now be accepted as no longer stating the law. It is, as it appears, a relic of an earlier era of procedural rigidity. We have no hesitation in saying that this Court should adopt the same approach as in Samuels, thereby bringing the law and practice of Solomon Islands into conformity with that of all other Commonwealth jurisdictions to which we were referred.

The respondent sought to defend the approach adopted by Ward CJ. No point of distinction in the terms of the local court rule was relied upon. Instead, it was said that Ward CJ had been correct to apply Whistler as it stated the law of England at the time this was received into the law of Solomon Islands. See Constitution, Schedule 3. para 2. Cheung v Tanda [1983] SILR 108 (CA). But English law was changing prior to the reception date under the Constitution. So much was made clear by the authorities which Moller J referred Champtaloup, 675. See eg. R v Bloomsbury and Marylebone County; Ex parte Villerwest Ltd [1976] 1 WLR 362 (CA). The antecedents to a reconsideration of Whistler could even be traced back to Keymer v Reddy [1912] 1KB 215 (CA) 221. All that Samuels did was to make entirely clear the trend which was already emerging. Nothing in Cheung restrains this Court from correcting the error which has been shown in the conclusion of Ward CJ that he did not have power to extend time in the circumstances. By Order 64 rule 5, he did. To the extent that his Lordship held otherwise, he erred in law. His discretion miscarried. Prima facie this entitles the appellant to relief.

Having come to the foregoing conclusion, it is unnecessary for the Court to consider the alternative arguments which the appellant advanced, namely:

1. That Ward CJ erred in failing to exercise the inherent jurisdiction of the High Court to cure the default; and

2. That Ward CJ erred in failing, before directing the entry of default judgment to afford the appellant an opportunity to be heard again prior to taking that drastic step.

In fairness to Ward CJ, we repeat that his Lordship was not favoured with a reference to Samuels until after he had given the judgment which is now challenged in this appeal. We are not convinced that proper diligence at the time the matter was before Ward CJ on 2 July 1991 would not have discovered the rich seam of Commonwealth jurisprudence which was available to help the appellant’s cause.

What follows? Ward CJ’s obiter remarks on 12 December 1991, that he would, in any case, have dismissed the application on discretionary grounds, clearly do not bind this Court. It should consider the exercise of discretion afresh, applying accurately the approach to the High Court’s powers as now stated in Samuels, Champtaloup and FAI. It must do so exercising its own powers. If that exercise brings the Court to a different conclusion, it is clearly empowered to give effect to it. By s12 of the Court of Appeal Act 1978, this Court, for all the purposes incidental to the determination of any appeal, has the power and jurisdiction of the High Court. By Part II rule 23 of the Court of Appeal Rules, 1983 it is provided, relevantly:

(b) allow the appeal and make such further or other order as the court below was authorized by law to make or as the case may require; (emphasis added)

It follows from what has already been said that, contrary to his own understanding, Ward CJ was authorized by law to provide to the appellant to extension of time which it was seeking. Yet, although this Court “may” provide such an extension, ought it in all the circumstances to so order? In particular, is doing so now what “the case may require?”

We have not found this an easy point to resolve. In favour of affording relief to the appellant are the following principal considerations:

(1) The appellant has succeeded in demonstrating in the appeal that Ward CJ made a legal error in viewing too narrowly the scope of his jurisdiction to afford relief. Its victory will be Phyrric if that success produces no relief in fact;

(2) The appellant was, it is true, out of time within the order for the provision of its answers to interrogatories. Some of the answers given might have been unsatisfactory or incomplete. But the Court could easily infer from contemporaneous records, and its own common sense, that part of the difficulty facing the appellant in answering interrogatories arose from the fact that the Company was in receivership at the time. The necessary documents, or some of them, were said to be with the receiver and unavailable to the appellant or to its solicitor. This practical problem would be taken into account in considering the justice of curing, even yet again, the time default of the appellant in complying with the order for answering interrogatories;

(3) Cases should ordinarily be heard on the merits and not defeated by technical errors - many of which typically arise in the conduct of legal practitioners rather than of the litigants themselves. To say that the litigant may sue a lawyer for negligence is all too often an empty statement, given the practical difficulties which obstruct such a course·, and

(4) As shown by the affidavit annexing the opinion of TPI Electrical Service Pty Ltd, the appellant, at least in 1990, had available to it an opinion that the workmanship of the respondent was shoddy and dangerous, warranting the trial on the merits which will never occur unless the appellant is now, belatedly, allowed in to defend.

For the appellant it was put with considerable force, that the judge, properly exercising a discretion within the wider ambit that this Court now holds was available to Ward CJ on 2 July 1991 would have provided the modest extension sought, excused the default under the order for the provision of answers to interrogatories, treat the answers given on 20 June 1990 nunc pro tunc as being within time and, very belatedly, now send this protracted litigation to trial on its merits.

Whilst acknowledging that this would be an available course, in the end the Court has decided not to take it. Relevant to its conclusion, is a reflection on what the case required, not only at the time that the discretion miscarried before Ward CJ but now that it would fall to be re-exercised by this Court.

(1)The litigation between the parties concerns events which occurred as long ago as on May 1990, i.e. more than 5 years ago. Memories fade. Witnesses became unavailable. The principle of finality of litigation must be given weight. Whilst the respondent did not seek to prove any actual prejudice in such a gross delay, some prejudice is inevitable in requiring witnesses to give evidence about events in the distant past;

(2) If the delay was already present when Ward CJ decided the point in July 1991, it was doubtedly so when the appeal was eventually lodged in January 1992. But then there is an unexplained failure of the appellant to prosecute the appeal for 3½ years more, despite 4 general sittings of this Court in the interim. Why the appellant pursued instead, the challenge to the execution of the judgment rather than attacking the judgment itself was never satisfactorily explained;

(3) The judgment debt has long since been paid by the appellant to the respondent. It does not lie in Court to abide the outcome of the litigation. It has been discharged by execution. To re-open the case now would be to contemplate the provision of orders disentangling the steps taken in the execution pursuant to the High Court’s orders. Whilst this could certainty be done, it is not an attractive course when it is sought more than 4 years after the order under challenge;

(4) The order made by Ward CJ for answering interrogatories was a discretionary one. Notwithstanding Samuels, Champtaloup an FAI, orders cannot simply be ignored. They have ordinarily to be complied with. In the present case, the appellant was clearly on notice that the respondent was insisting on strict compliance with time. Already, two default judgments had been obtained and a third was looming. Ordinary prudence would have encouraged the appellant to do its best to comply with Ward CJ order or to secure an extension of it. Instead, the appellant just permitted the time to pass and default to occur which it must have known would lead to the response which indeed quickly occurred;

(5) Unless Courts of Appeal show restraint in disturbing interlocutory and procedural orders, litigants which “long pockets” or with determination to delay the vindication of legal rights, will take advantage of the Court’s leniency. Whilst the rigidity of the past in the application of procedural orders must be avoided, so too must the indiscipline of indifference to procedural rules and orders; and

(6) Unfortunately, a review of the entire history of this litigation shows, for whatever cause, a lack of attention to procedural norms on the part of the appellant. If sometimes the respondent appears to have been overly rigid and precipitate in claiming judgment and other relief, the conduct of the appellant’s case can only be described as ill directed, spasmodic and poorly focussed. None of this is criticism of the present advocates for the appellant, who did their best with unpromising material. They succeed in the point of law argued. But to no avail.

The consequence is that, although in a technical sense Ward CJ’s discretion has been shown to have miscarried, the respondent is entitled to succeed in the notice tendered at the hearing under Part II rule 15 of the Court of Appeal Rules. This Court, were it to exercise the discretion which the primary Judge enjoyed , would for the reasons stated above, come to the same conclusion as Ward CJ did, although for quite different reasons. The judgment which Ward CJ proceeded to enter should be confirmed. That being the case, there is no point to allow the appeal. Appeals are not allowed to correct the reasons of judges as first instance. They are only allowed to correct orders or to provide different relief.

The penultimate question is costs. Each party to the appeal has succeed in part. The appellant has made good the legal error which it asserted so long ago on the part of Ward CJ. The respondent has succeeded in holding its judgment, although upon different grounds. The result is, both parties having partly succeeded and failed, no order should be made for the costs of the appeal which should be borne by each party where they fall.

It remains finally to record that, on the return of the appeal, the appellant sought leave to amend the notice of appeal to add two additional grounds of appeal not pleaded in the original notice. The second concerned a contention that, no leave of the Court having been obtained, the levying of execution against the appellant, whilst it was in receivership, was contrary to law and a contempt of the High Court. See Companies Act s 219. The Court refused to allow these points to be argued. They were very considerably out of time and no earlier extension had been sought or given. In the case of the challenge to the writ of execution, no leave was sought belatedly to appeal from the ruling of Muria ACJ of 19 March 1992 which stood in the way of that challenge. In any case, the proper way to challenge the writ for execution was by attacking its foundation, the judgment entered on 2 July 1991. Yet this was not done for 4 years, despite leave been given to do so out of time.

As to the need to leave to execute against a company in receivership, it is true that leave should have been obtained. But no point was taken on this score by the receiver/manager. Had it been taken, it may be assumed that leave would have been granted. At all times the High Court judge and registrar knew of the receivership. The Court retained control of the proceedings. There is no merit in the belated objection based on the Companies Act. That Provision invoked is designed to prevent creditors of companies under receivership stealing a match on other creditors, without leave of the Court. That did not occur here. The appellant, having failed to raise the point at the time, should not so belatedly be allowed to do so now.

Court of Appeal of Solomon Islands

Reef Pacific Trading Ltd v Island Enterprises Ltd [1995] SBCA 1; CA-CAC 001 of 1992 (31 August 1995)