Cychen & LC Trading Co. Ltd v Bisivotu Enterprises [2017] SBCA 11; SICOA-CAC 12 of 2017 (13 October 2017)

IN THE SOLOMON ISLANDS COURT OF APPEAL

NATURE OF JURISDICTION:	Appeal from Judgment of The High Court of Solomon Islands (Faukona J)
COURT FILE NUMBER:	Civil Appeal Case No.12 of 2017 (On Appeal from High Court Civil Case No. 249 of 2013)
DATE OF HEARING:	12 October 2017
DATE OF JUDGMENT:	13 October 2017
THE COURT:	Goldsbrough P Ward JA Hansen JA
PARTIES:	CYCHEN & LC TRADING CO. LTD – V- BISIVOTU ENTERPRISES & MARK TOVA
ADVOCATES: APPELLANT: RESPONDENT:	Ms. M. Bird Mr. D. Marahare
KEY WORDS:
EXTEMPORE/RESERVED:
ALLOWED/DISMISSED
PAGES	1- 7

JUDGMENT OF THE COURT

1. On 19 April 2017, following a hearing on 8 December 2016, Faukona PJ dismissed an application by the appellants to set aside the default judgment entered on the 21st of March 2014 and to stay enforcement and notice of seizure orders.
   
2. The grounds of appeal state:
   
   1. The learned Judge had erred when he stated the Court at first instance lacked jurisdiction to hear the appellant’s application.
      
   2. The learned Judge had erred when he did not discuss certain issues raised by the appellants in their submission on the aspect of non-payment of stamp duty on the alleged agreement which was in issue before the said Court.
      
3. Before turning to the appeal and submissions thereon, it is appropriate to set out a chronology of this matter.
   
   1. On 16 July 2013, the respondents filed a Category B claim seeking in the first instance for damages to be assessed. Alternatively, an order for specific performance relating to the transfer of a free room at the Tandai Plaza from the appellants to the respondent, an assessment of business losses and a charge over the whole Plaza protecting the respondents’ equitable interest. Finally, costs and interest to the date of judgment.
      
   2. The appellants did not file a defence within the 14 days allowed by the rules, but a notice of appearance was filed on 9 August 2013.
      
   100. On 30 October 2013, the appellants filed an interlocutory application for further and better particulars (which was not returned for service) and a supporting affidavit of Shi Wei Chan. That was filed at 10.30 a.m.
        
   4. On the same day, at 10.50 a.m., the respondents filed an application for default judgment supported by sworn statement of the second named respondent.
      
   5. That matter was opposed and heard on 21 November 2013, and 30 January 2014.
      
   6. On 21 March 2014, Faukona PJ handed down a decision entering default judgment in the sum of $1,378,800 as pleaded in paragraph 13 of the claim. It placed a charge over the Tandai Plaza and further ordered that the Court would assess damages and business loss to the claimant as pleaded in relief 1 of the clai16 July 2013. 013. The judgment was not appealed.
      
   7. Enforcement and seizure o were served on 19 and 21 December 2014, some nine months lths later.
      
   8. On 24 December 2014 the appellants applied to set aside the default judgment and to stay the enforcement and seizure order. This was supported by a sworn statement of SW Chen. This attached a draft defence.
      
   9. Allegations of fraud were made, denying a purported written agreement between the parties was signed by the first appellant.
      
   10. On 15 July two sworn statements were filed on behalf of the appellants. They were from a Mr Buga and Mr Hauwai. The latter’s sister was married to the second respondent. It appears both of those men worked for the first and second appellants. They had purportedly signed documents, in English, dated 18 April 2013 and 18 May 2013 respectively, effectively confirming the respondents’ case. Both men stated the typed documents were brought to them, and they signed them being completely unaware of the contents.
       
   11. The application to set aside the default judgment and to stay the enforcement and seizure orders was heard on 8 December 2016, the decision being handed down on 19 April 2017.
       

The judgment appealed

4. In the decision, Faukona J pointed out the failure of the appellants to comply timeously with the rules. At [14] he stated that the sworn statement on the application for further and better particulars was filed two months after the application for default judgment was filed, and three and a half months after service was effected. The Judge pointed out there was no appeal against the default judgment and that he lacked jurisdiction to consider setting aside his own judgment.
   
5. He stressed the delay in this case and stated that Courts must enforce their rules, and said in this case there was no injustice that would warrant setting aside the default judgment, or staying enforcement.
   

Submissions

6. The respondents rehearsed their submissions in the Court below and stressed the Judge’s decision was correct. They point to the dilatoriness and delay in this case and submitted they were such that it would be prejudiced to the respondents if the judgment was set aside.
   
7. The appellants point to the fact that there is a good defence, the statement of claim is lacking the particulars needed to properly plead, point to the alleged frauds mentioned above and the fact that all materials supplied by the respondents, according to the sworn statement of the first appellant, have been paid.
   

Discussion

8. It is clear in this case that the issues confronting the Court have undoubtedly been caused by the dilatoriness of the appellants. They failed to file a defence in time, they failed to appeal the default judgment entered, and to a large extent have only themselves to blame.
   
9. Having said that, however, it must be said that the original claim falls well short of what is required in a pleading that would enable a defendant to plead properly.
   
10. Before turning to those matters though, if a claim falls short of what is required, a defendant should file the defence within time, answering as far as possible those matters raised in the claim, and at the same time filing an interlocutory application for further and better particulars supported by a sworn statement. It is hard to understand why that process was not followed in this case, because undoubtedly a Judge would have ordered further and better particulars.
    
11. Mr SW Chen says he is not CY Chen, but nothing appears to turn on that matter, as he seems to concede in his sworn statement he and his company were the ones that dealt with the first and second respondent. We understand the second respondent to be a sole trader, and the first respondent is merely his business name.
    
12. The claim relies on a partly written and partly oral agreement. The oral agreement is now said to be a forgery, and it is un-stamped. It is dated 8 September and it must be said does not read as a contract. It is headed with the first appellant’s name, and presumably his address, and dated 8 September 2008. Rather than a contract, the document reads:
    

To whom it may concern

This to confirm that my company has made arrangement with Bisivotu Enterprises for purchases of sawn timber. The prises [sic] are as follows:

• 4x2x6m at $13/m (AKWA)
• 6x2x6m at $18/m (AKWA)
• 8x2x6m at $23/m (AKWA)
  

We further agree to purchase up to 6000 pieces of timber on the above prices and sizes

Do not hesitate to contact me should you require further information.

Thank you

[Signature]

Cy Chen

13. It does not appear anywhere in this documents the classic offer and acceptance. It is simply a confirmation by the first appellant that he had agreed with the first respondent to buy timber at a certain price. It states that Mr Chen had agreed to purchase up to 6000 pieces at the price and sizes stated. This, of course, could be any figure from one to 6000
    
14. Nowhere is it pleaded that this was accepted by the first respondent, and there is no signed acceptance document to make this a written agreement. It is not pleaded acceptance was oral. The document reads more like a document written by a developer for a contractor to assist the contractor to obtain finance.
    
15. Turning to the oral agreement, the pleading is grossly inadequate. It simply says it occurred in 2008. Much more specificity is required in relation to the time. It is unclear from the pleading if the oral agreement is between the first appellant and the first respondent, or the first appellant and the second respondent, or both. It is also unclear how LC Trading Company Limited, the second appellant, became party to the oral agreement. In such circumstances, it is necessary to plead on behalf of a corporate who was said to have carried out and agreed to the oral agreement.
    
16. The alleged oral agreement is also silent as to fundamental terms. It says that Mr Chen would give a room permanently to the second respondent, at paragraph 7, and appears to say that pursuant to that the second respondent supplied river gravel and timbers to Mr Chen.
    
17. It is unclear from the pleading how much river gravel was to be supplied, at what times, and at what grading. It is completely unclear what amount of gravel was to be delivered; even a minimum amount. The price for the gravel is not pleaded.
    
18. More fundamental is the pleading that “Under the second agreement Mr Chen would give away a free room permanently to Mr Tova of the 1^st Claimant at the Tandai Plaza” The Claim then continues by pleading evidence as to what the respondents intended to do with the room.
    
19. Leaving aside the problem that the Tandai Plaza appears to be owned by the 2^nd appellant this exceedingly vague pleading founds the claim for specific performance. No effort is made to plead the status of the “free room” The vagueness of the pleading raises a number of rhetorical questions.
    
20. Is what is being claimed simply a licence to occupy the room? If so for how long? The pleading says “permanently” and one could suppose it is in perpetuity. That raises its own problems. What is to happen if the Plaza was sold? There is no pleading of terms to cover matters of the room insurance, rates or land tax, or the provision of utilities such as water, electricity, telephone and broad band? Who is to be responsible for maintenance?
    
21. Alternatively, is it a claim of a lease? Is this in perpetuity? Can there be a lease in perpetuity or must it be for a term of years? What are the other terms of the lease including the matters raised in the previous paragraph?
    
22. Finally, was it to be some transfer of an estate in land? What estate? If so would it need to be in writing? Consideration would need to be shown and there was no pleading as to what this might be. Questions of Stamp Duty would arise. Is it possible in the Solomon Islands to transfer what would essentially be a unit title?
    
23. The proceeding paragraphs do not purport to be an exhaustive analysis of the pleadings. However, they clearly demonstrate the fundamental flaws in the pleading. They also show why further and better particulars are needed to comprehensively and coherently plead to this claim.
    
24. In the supporting sworn statement, the second respondent, at 37 of the appeal book, sets out timber supplied (which is much more than in the so-called written agreement), and the gravel supply. There is no detail of when and where they were supplied.
    
25. That is compounded by the fact that there is an allegation of forgery of the so-called written agreement, and Mr Buga and Mr Haywai have effectively withdrawn the letters attributed to them.
    
26. In relation to those letters, they seem to have been prepared in a professional office, and not by the persons concerned. The author is not specified.
    
27. We have considerable sympathy for the judge. Given the time defaults of the appellants and their failure to comply with the rules he was right to focus on those issues. In a normal case those defaults would have meant the appellants would have little basis to appeal. But the pleading flaws identified above remove this from the ordinary case.
    
28. We correct one matter. The judge at page 3 of his decision of 19 April 2017 said the application for further and better particulars was filed 2 months after the application for default judgment. In fact it was filed 20 minutes before. We have no idea whether this is coincidental or not.
    
29. However, given the state of the pleaded Claim we consider at the default judgment stage the judge needed to review the claim. The deficiencies were a pertinent matter to consider before entering default judgment. That, of course, does not excuse the appellants’ failure to timeously appeal the decision.
    
30. In relation to the application to set aside the default judgment and stay the enforcement and seizure provisions, we do not agree with the Judge that he could not hear such an application. That applies even in the case where there was an opposed hearing.
    
31. Rule 9.52 allows a defendant to apply to have the judgment set aside. The powers of the Court are set out in r 9.54, which says the Court may set aside the default judgment if it is satisfied that:
    

(a) the defendant has shown reasonable cause for the delay in defending the claim; and

(b) the defendant has a meritorious defence, either about his or her liability for the claim or about the amount of the claim; and

(c) there is no substantial prejudice to another party in setting aside the judgment that could not be rectified by a costs order.

32. While it is marginal that the appellants have shown reasonable cause for the delay, on balance we are satisfied they have. While a pro forma defence should have been filed, the state of the claim as pleaded was such it was almost impossible to properly and coherently respond to it. We also consider it relevant that a default judgment based on the pleadings could lead to a substantial injustice.
    
33. On the sworn statements, including the allegations of fraud, we consider there is a meritorious defence.
    
34. Ms Bird relied on the decision of this Court in Guo Fengli Chi v Guo Fengli.^[1]
    
35. In that case, we accept the delay was not as great, but again there were difficulties with pleading. However, they were certainly not as bad as the pleadings here.
    
36. Referring to 9.54 above, the Court, in that case, said:
    

[22] We take it that the reference to prejudice was to take up the consideration mentioned in Rule 9.54(c) that the court must be satisfied “that there is no substantial prejudice to another party that could not be rectified by a costs order”, and understand his Lordship to have concluded that the substantial prejudice suffered by the defendant would be the loss of her judgment. However, this would be the result of every setting aside of a default judgment and is not the prejudice to which the paragraph refers. The relevant prejudice is that which has resulted from the delay in litigating the case now proposed to be made, where the party’s ability to fairly litigate has been adversely affected to a significant degree or the party has otherwise acted to his or her detriment in reliance on the judgment. No such prejudice was, nor could be, alleged in this case.

37. We endorse that comment, and it applies equally in this case. There is nothing to suggest that there is anything to prevent this matter being litigated fairly from the respondents’ position, and nothing has been put before us to suggest otherwise.
    
38. We are satisfied the appeal should be allowed. The default judgment in the Court below is set aside, as are the enforcement and seizure orders. This case is unique to its own set of facts and the state of the pleaded claim. It should not be taken by practitioners as any general licence to fail to comply with the Solomon Islands Court (Civil Procedure) Rules and the time limits therein.
    
39. The respondents are to supply the further and better particulars sought in the appellants’ application of 30 October 2013 within 20 working days of the handing down of this decision. Within the same time they are to file an Amended Claim that incorporates those matters and addresses the pleading issues we have set out above. The appellants are to file their Statement of Defence within 20 working days of being served with the further and better particulars and Amended Claim. Unless the appellants comply with that order, judgment may be entered against the appellants in the terms of the default judgment of Faukona J dated 19 April 2017. Counsel for the Appellants needs to fully understand that this is a very last chance in the special circumstances of this case.
    
40. There will be costs on the appeal and below to the appellants on the normal basis.
    

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Goldsbrough P

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Ward JA

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Hansen JA

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^[1] Guo Fengli Chi v Guo Fengli [2012] SBCA 11; CA-CAC 30 of 2011 (26 March 20 12).