Kayuken Pacific Ltd v Harper [1987] SBHC 10; [1987] SILR 54 (25 February 1987)

[1987] SILR 54

IN THE HIGH COURT OF SOLOMON ISLANDS

Civil Case No. 18 of 1986

KAYUKEN PACIFIC LIMITED

v

HARPER

High Court of Solomon Islands
(Ward C.J.)
Civil Case No. 18 of 1986

Hearing: 27 January 1987
Judgment: 25 February 1987

Civil procedure - jurisdiction of Registrar - application to set aside default judgment - exercise of discretion if viable defence disclosed - approach when default result of failure by lawyer - circumstances in which court will review decision of Registrar.

Facts:

A writ was issued on 3 February 1986, and appearance entered by the Defendant’s advocate on 17 February. Thereafter the advocate took no steps and failed to advise the Defendants, the Plaintiff’s solicitor or the court that under the Leadership Code he could no longer act. Judgment in default of defence was entered on 4 September 1986. The Registrar declined to set that judgment aside. The Defendants appealed, arguing that the Registrar had no jurisdiction and alternatively that he had erred in a number of ways in his approach to the application.

Held:

1. The Registrar had jurisdiction by virtue of the High Court (Civil Procedure) Rules 1964 O.57 r. 14(8): "Such other matters as the court may think fit to dispose of in chambers".

2. If there is a viable defence, the considerations upon which the court should exercise its discretion include the reasons for the failure to appear, whether there has been undue delay in proceedings for a new trial, and whether the other party would be prejudiced by an order for a new trial.

3. While the court will not normally interfere with the exercise of a discretion except on grounds of law, it will do so if the decision will result in injustice being done. While the court is reluctant to take any step that appears to save a lawyer from the consequences of his own negligence, there was a serious chance of injustice in this case.

Appeal allowed; Defendant given leave to defend on condition of payment of whole sum into court within seven days to abide the event; no further extensions of time to be permitted.

Cases referred to:

Evans v. Bartlam [1937] 2 All E.R. 646 Grimshaw v. Dunbar [1953] 1 All E.R. 350
Allen v. Sir Alfred MacAlpine and Sons [1968] 1 All E.R. 543

Mr. Young for the Appellant
Waleilia for the Respondent

Ward CJ: This is an appeal from the Registrar’s refusal to set aside a judgment in default of defence.

There are two grounds of appeal -

"1. The Registrar of the High Court had no jurisdiction to consider the Application to set aside Judgment;

In the alternative to (1)

2. (a) The Registrar erred in refusing to admit into evidence further Affidavits sworn by a Director of the Defendant/Appellant and a further Affidavit by an employee of the Defendant/Appellant.
   

(b) The Registrar has erred in failing to take into account the steps taken by the Defendant/Appellant to defend the Plaintiff/Respondent’s action.

(c) The Registrar has erred in failing to take into account the prejudice to the Defendant/Appellant in the event of it failing to set aside the Judgment given in this action on the 4th of September, 1986.

(d) The Registrar has erred in taking into account any future action the Defendant/Appellant may have against its previous legal adviser.

(e) The Registrar has erred in failing to consider the merit of the Defence and Counterclaim of the Defendant/Appellant.

(f) The Registrar has erred in his consideration of and the weight to be given to the prejudice to be suffered by the Plaintiff/Respondent if the Judgment should be set aside.

(g) The Registrar has erred and/or misdirected himself in respect of the law pertaining to an Application to set aside Judgment."

Dealing with the first ground, the Registrar is given the powers of the judge or court in chambers by O.57 r.1A which was added by the High Court (Civil Procedure) Rules 1964 (Amendment) (No.2) Rules 1980. The business to be disposed of in chambers is largely set out in O.57 r .14 including three additional paragraphs and a proviso added by the 1980 amendment.

O.57 r.14(8) includes "Such other matters as the court may think fit to dispose of in chambers".

O.29 deals with default of pleading and it is O.29 r.12 which provides for setting aside. O.29 follows closely the wording of O.27 of the Rules of the Supreme Court that were in force in 1964 and in particular, O.29 r.12 follows RSC O.27 r.15.

The proceedings under O.27 were all heard by a Master and it seems clear that the intention of the 1980 Amendment was to give to the Registrar here the powers exercised by a Master in England.

The result has been that matters arising under O.29 have been dealt with by the Registrar since the 1980 amendment. I am satisfied that is correct and he has the power to set aside judgment.

The second ground of appeal traverses a number of points of which (a) and (b) impinge directly on the exercise of the Registrar’s discretion. I would not interfere with his decision on such grounds unless they were very much more compelling than here.

The remaining matters in ground two may conveniently be covered by considering the basis on which a court should decide an application to set aside a default judgment.

The background to the application to set aside may be taken from the Registrar’s judgment.

"The writ in this case was issued on 3rd February 1986. A Memorandum of Appearance was entered on 17 February 1986 by "A. Nori, Advocate for the Defendant". A. H. Nori was an admitted and practising Solicitor of the High Court of Solomon Islands at that time.

On 4th September 1986 judgment in default of defence was entered against the Defendants with damages to be assessed. The Defendants applied to set aside the judgment on 13th November. The Plaintiff meanwhile had asked for final judgment in the sum of $8,833.93.

The main ground on which the defendants sought to set aside judgment was that their lawyer had failed to act properly or at all on their behalf. An affidavit of the Defendants’ advocate was lodged in support of the Defendants’ application. In that affidavit he stated in paragraph 2 that he was no longer permitted to carry on business as a Solicitor by virtue of the Leadership Code.

The Defendants also lodged what they claimed to be a viable defence".

Leave was given to cross-examine the Defendant’s advocate and, having referred to that, the Registrar continued:

"The fact is that at no time did the Defendants’ advocate inform the Defendants in writing that he could no longer act for them. Nor did he inform the Plaintiff’s solicitor or the court at all. Thus up until the date of signing of the judgment he was on record as the Defendants’ advocate. Indeed he is still on record today, although since the receipt of his affidavit it has been clear he cannot act.

In these circumstances I must find that the Defendants’ have shown no grounds on which the judgment could be set aside. They may well have an action against their advocate in view of the way he has acted in this case. However what has transpired between them is not a matter which can or should prejudice the Plaintiff’s pursuit of his claim. Accordingly I refuse to set aside the judgment entered on 4th September 1986".

In all cases where judgment has been entered following a failure to comply with the rules of procedure, it has long been held that it should not necessarily debar a defendant from seeking judgment on the merits.

In Evans v. Bartlam [1937] 2 All E.R. 646, Lord Atkins at 650 formulated the classic statement of the basic principle of procedural law.

"The principle obviously is that, unless and until the court has pronounced a judgment upon the merits or by consent, it is to have the power to revoke the expression of its coercive power where that has been obtained only by a failure to follow any of the rules of procedure."

The position was stated by Jenkins LJ in Grimshaw v. Dunbar [1953] 1 All E.R. 350 at 355:

"A party to an action is prima facie entitled to have it heard in his presence. He is entitled to dispute his opponents’ case and cross examine his opponents’ witnesses, and he is entitled to call his own witnesses and give his own evidence before the court. If, by some mischance or accident, a party is shut out from the right and an order is made in his absence, the common justice demands, so far as it can be given effect to without injustice to other parties, that the litigant who is accidentally absent should be allowed to come to court and present his case, no doubt on suitable terms as to costs."

When making application to set aside, there must be an affidavit of merit showing that the defendant has a prima facie, defence to the action. Such was the case here. It is not necessary for the court to consider at that stage whether the defence would be successful but simply whether a triable issue is disclosed. If there is not the exercise would be pointless.

Where, however, the court finds there is a viable defence it is clear O.29 r.12 gives it an unfettered discretion to set aside any default judgment.

How that discretion is exercised is bound by no hard and fast rules but in practice a number of considerations have been suggested as a basis on which the court can decide.

They can be summarised –

1. What was the reason for the failure by the absent party to appear?

2. Has there been undue delay by the absent party in launching his proceedings for a new trial?

3. Will the other party be prejudiced by an order for a new trial?

Whilst this court would not normally interfere with the exercise of a discretion except on grounds of law, if it sees that, on other grounds, the decision will result in injustice being done, it has both the power and the duty to remedy it.

It is clear from his judgment that the Registrar based his refusal on the reasons for the Defendant’s failure. Having done so he did not need to consider the remaining matters but I think it is right to say that, had he done so, it is unlikely he would have felt there had been undue delay in applying to set aside or that an order for a new trial would prejudice the Plaintiff’s claim save for the question of costs.

It is accepted by the Registrar that the lawyer failed to act properly on their behalf. The purpose of the rules is to ensure some expedition in such claims and to set some time limit on actions. Such an aim is thwarted if lawyers fail to observe the rules. Recently the courts have been taking a much stricter view in cases where the default was the result of failure by the lawyer.

Following judgments of the Court of Appeal in England in 1967 striking out cases where there was unjustified delay by the plaintiffs, a note in the Supreme Court Practice 1967 and quoted Denning MR in Allen v. Sir Alfred McAlpine and Sons [1968] 1 All E.R. 543 at 546 said:

"These emphatic decisions of the Court of Appeal, which lay down a more stringent practice than was formerly followed, have injected a new element of expedition in the conduct and preparation of cases before trial .... Plaintiff’s solicitors who do not "get on" with their cases, will be at risk of having the Plaintiff’s action dismissed for want of prosecution and themselves rendered liable for negligence".

That refers specifically to delay by the Plaintiff’s lawyers but the principle is the same in any case where the lawyers’ failure or incompetence has resulted in a default judgment.

In this case, the conduct of the lawyer first instructed by the Defendant appears to have been negligent and totally unjustified. The effect was that, not only did the Plaintiff obtain judgment but, at the application to set aside, the Defendant appeared in person.

I am reluctant to take any step that appears to save a lawyer from the consequences of his own negligence but I fear there is a serious chance of injustice here. The Defendant has delivered a viable defence, the delay since judgment is not inordinate especially when, as here, the litigant had to appear in person and the facts of the case are such that a trial at this stage will not prejudice the Plaintiff’s case.

The appeal is allowed and the Registrar’s Order of 19th December 1986 is set aside.

I order that the default judgment of 4th September 1980 is also set aside and I give the Defendant leave to defend on condition that he pays the whole sum into court within seven days to abide the event.

No further extensions of time for any proceedings to be permitted.

All costs of the Plaintiff in the default proceedings to be borne by the Defendant. I have not received the submissions on the costs of this appeal. I understand they were filed in time but have not reached me. I shall rule on costs at a date to be notified.