Kou Fung Chi v Dodo Trading Ltd [2024] SBCA 3; SICOA-CAC 10 of 2024 (31 May 2024)

IN THE SOLOMON ISLANDS COURT OF APPEAL

Case name:	Kou Fung Chi v Dodo Trading Ltd
Citation:
Decision date:	31 May 2024
Nature of Jurisdiction	Appeal from The High Court of Solomon Islands (Faukona J)
Court File Number(s):	10 of 2024
Parties:	Kou Fung Chi v Dodo Trading Limited
Hearing date(s):	24 May 2024
Place of delivery:
Judge(s):	Muria P Gavara-Nanu JA Lawry JA
Representation:	B Etomea for Appellant C Fakarii for Respondent
Catchwords:
Words and phrases:
Legislation cited:	Solomon Island Courts (Civil procedure) Rule 2007, r9.52, r 9.54, r 9.55
Cases cited:	Evans v Bartlam [1937] AC 473
ExTempore/Reserved:	Reserved
Allowed/Dismissed:	Allowed
Pages:	1-6

JUDGMENT OF THE COURT

1. This is an application by the applicant for leave to extend time to apply for leave to appeal and for stay of judgment. The application is opposed by the respondent.

Brief background

2. The respondent and Claimant filed its Claim against the applicant/defendant in the High Court on 27/7/2. The Claim was served on the applicant on 1/8/22. On 23/8/2022, the respondent filed an application on for default judgment. That was 22 days after the claim was served on the applicant.
3. The application for default judgment was listed before the High Court on 1/9/22 for the first hearing. The hearing date for the application for default judgment was fixed for 20/9/22.
4. In the meantime, the application filed her defence on 31/8/22. Calculating from the date of service of the Claim on her, that was 30 days.
5. The respondent’s application for default judgment was heard on 20/9/22 and the learned Faukona DCJ delivered his decision on 27/3/23 granting judgment in default against the applicant. The order on the default judgment was perfected and signed on 14/4/23.

Classic failure to follow the rules

6. The problem facing the applicant in this case stems from her failure or the failure by her lawyers to take the necessary actions under the rules to challenge the default judgment. Which is a judgment obtained for failure to follow some procedural rules. In this case the default judgment was obtained for the alleged failure by the applicant/defendant to file a defence within time.
7. The law provides under rule 9.52 of the Solomon Islands Court (civil Procedure)Rule 2007 for the first step that must be taken by a party (usually, a defendant) who is not happy with a default judgment. Rule 9.52 provides:
   • “9.52. A defendant against whom default judgment has been entered may apply to the Court to have the judgment set aside.”
8. The present rules do not make a distinction between a default judgment obtained where one party appears or does not appear for the rule on setting aside a default judgment to apply, unlike in the old High Court (Civil Procedure) Rules. Under the present Rules, rule 9.52, “a defendant against whom default judgment has been entered” may apply to have the judgment set aside. That is the first and the proper step for the defendant /applicant to take in this case. His Lordship Palmer CJ pointed it out very clearly in Kuo Fung Chi v Emily Guo Feng Li – Ors [2023], (29/11/23) High Court Civil Case 177 of 2003, judgment given on 29/11/23, that the proper course for the applicant/defendant to take in respect of the default judgment in High Court civil case 307/22 was to apply to have the judgment set aside.
9. The Judgment in default obtained against the applicant and defendant in High Court Civil Case 307/22 cannot be said to be a final judgment. It is a default judgment obtained for failure to comply with a procedural requirement only, namely failure to file defence within time. As such the court still retains the power to set aside the default judgment should the applicant/defendant seeks to do so. The leading authority on his point is Evans v Bartlam [1937] AC 473 which has been applied in this jurisdiction on numerous accassions. The Court said in that case that:
   • “Unless and until the Court has pronounced a judgment on the merits or by consent, it is to have the power to revoke the expression of its coercive power where that has only been obtained by a failure to follow any of the rules of procure.”
10. The Defendant must, however, take the first step of applying to set aside the default judgment. It is only where the judge refuses to set aside the default judgment that a defendant may bring an appeal to the Court of Appeal, against the default judgment.
11. In the present case, the applicant did not do what rules 9.52, instructs. Instead the applicant proceeded to file a new case, High Court Case no. 177 of 2023 on the basis that the default judgment did not deal with the merits of the claim. The consequence of that was that the default judgment was left open to the respondent to enforce. Not surprisingly the respondent took steps to enforce the default judgment as soon as High Court Case No. 177 was struck out.
12. The failure by the applicant to follow the correct procedure of applying to set aside the default judgment together with filing a new action (High Court Case no.177 of 2023) compounded the applicant’s problems in challenging the default judgment. Seeking leave to extend time to apply for leave to appeal out of time has no basis at all since the applicant has failed to apply to have the default judgment set aside first. Only after an application to set aside the default judgment has failed can an appeal be brought against a default judgment.
13. We note that the applicant’s former Solicitor advised to file an application for extension of time to file an application to set aside the default judgment following the remarks by Palmer CJ in paragraph 7 of His Lordship’s ruling in High Court Civil Case no. 177/2023. That was the correct step for the applicant to take.
14. The applicant did file the application for leave to apply out of time to set aside the default judgment. Unfortunately that application was refused to be accepted as filed by the Registrar as being “out of proceedings” because there was no appeal. The Registrar’s refusal to accept the applicant’s application to extend time to apply for setting aside the default judgment contributed to the applicant taking the wrong procedure of challenging the default judgment. We find the Registrar’s refusal to accept the applicant’s application for extension of time to apply for setting aside the default judgment erroneous.
15. We note also that the Registrar’s refusal to accept the applicant’s application was based on the learned Judge’s (DCJ) instructions that “the application is unnecessary, default judgment granted after inter-parte hearing. The application is out of proceedings, there was no appeal. The judgment is final.” We regret to add that His Lordship’ instructions are erroneous for the following reasons. First the application before His Lordship was an application for “default judgment” for failure to file defence within the time permitted by the rules. Secondly the fact that it was heard inter-partes did not convert the judgment into a final judgment on the merits. It was and still is a judgment in default for failing to follow a procedural rule and being a “default judgment” rule 9.52 applies.
16. Thirdly, Palmer CJ had correctly pointed out in paragraph 7 of his ruling in High Court Case 177/2023 that the ruling of the Court on 27 March 2023 granting default judgment to the claimant in High Court Civil 307 of 2022 was not a final judgment on the merits and that the proper cause of action to take was to apply to set it aside so that the Court can exercise its powers under rr.9.54 and 9.55.
17. We feel that the learned, DCJ’s instructions to the Registrar had exacerbated the applicant’s problems of not complying with the rules in this matter.
18. We reiterate the procedure for challenging a default judgment is first, to apply to set aside judgment. A party who is aggrieved by the decision of the High Court in the setting aside application may appeal to the Court of Appeal.
19. For the above reason, the application by the applicant for leave to appeal lacks basis and it is unnecessary for us to consider the arguments for or against the grounds of the application and we simply strike out the application.
20. We feel, however, that as the correct procedure in this matter is provided under rule 9.52 of Solomon Islands Courts (Civil Procedure) Rules 2007, and the applicant had taken steps (though late) to set aside the default judgment but she was prevented, we feel that the applicant should be given the chance to have her application to set aside the default judgment brought before the High Court. In the circumstances, we direct that the applicant’s application to set aside the default judgment filed in the High Court on 27/3/23 be restored as filed on 20/2/24. There is clearly good reasons shown why the application for leave to apply out of time to set aside the default judgment should be accepted as filed.
21. We grant the applicant leave to apply out of time to set aside the default judgment. The application for setting aside, if already file, should be listed before the High Court for its consideration and determination. If the application to set aside has not yet been filed, the applicant shall have 14 days to file the said application for the High Court to hear and determine it.
22. Although the applicant’s application for extension of time to apply for leave to appeal is struck out, we do not feel that costs should be awarded against her. If her application for leave to apply out of time to set aside the default judgment was not prevented, her application now before this court might not have been made. We therefore feel that each party should bear its own costs in this application.
23. Order:
    1. Applicant’s application for leave to extend time to apply for leave to appeal is struck out.
    2. Applicant is granted leave to apply out of time to set aside the default judgment made by the Court below on 27 March 2023.
    3. Each party to bear it own costs.

Muria P
Gavara-Nanu J
Lawry JA