Long Sheng (China & Solomons) Group Corporation Ltd v Xu Qiang [2013] SBHC 137; HCSI-CC 141 of 2013 & 142 of 2013 (14 October 2013)

IN THE HIGH COURT OF SOLOMON ISLANDS.
(Faukona J).

Civil Case Numbers: 141 of 2013 and 142 of 2013.

BETWEEN:

LONG SHENG (CHINA AND SOLOMON) GROUP CORPORATION LIMITED
1st Claimant

AND:

JERRY HONG SUN
2nd Claimant

AND:

CHANG CHENG LIU
3rd Claimant

AND:

XU QIANG
Defendant.

Date of Hearing: 12th September, 2013.
Date of Ruling: 14th October, 2013.

Mr. B. Hiele for the Claimants.
Mr. J. Keniapisia for the Defendant.

RULING ON APPLICATION TO SET ASIDE DEFAULT JUDGMENT AND TO STAY ENFORCEMENT ORDERS.

Faukona J: This application is basically to set aside two default judgments entered against the Defendant and to stay two enforcement orders.

2. In Civil Case No. 141 of 2013, the default judgment was perfected on 5th August, 2013, and in Civil Case No. 142 of 2013, the default judgment was perfected on 31st July, 2013.

3. Consequent to those default judgment orders, were enforcement orders issued on 26th August 2013, and 11th September 2013, respectively, and were at a stage to be executed upon the Defendant.

4. Upon realising that the Defendant would succumb to legal consequences, Counsel filed two applications to set aside the default judgment orders and to stay proceedings until trial of the substantive matter. Both were filed on 13th August, 2013. By Rule 9.53 (b) the applications to set aside were filed within three months. It was filed in full compliance with Rule 9.53 (a) – (d). Further to that, I have noted my obligations under Rule 9.54 (a) – (c) of which any determination reach must have taken cognizance of the considerations manifested therein.

Reason for delay in not filing defence:

5. Submissions comprising excuses or explanations for not filing defence within required period are consolidated in two cases equitably. The first and foremost is that the Defendant lacks knowledge in English or even pidgin English. He is a Chinese national and citizen and finds it difficult to understand documents written in English. Quite difficult as well to instruct solicitor. So the only assistance he could obtain is from the Chinese Association to do translation which it did, see exhibit XQ 2 attached to the Defendants sworn statement filed on 10th September, 2013.

6. Mr Hiele objects that the Defendant did not do enough to consult a translator, in a circumstance where communication between himself and his solicitor were in full fledge miscommunicated.

7. It ought to be understood that dealing with a client who does not understand common communication mode is at time painstaking, frustrating and annoying. And then the task of finding someone to translate, and if that someone is out of office, is another hurdle to accept. It's not easy and simple, as one could think, but I accept this is not the sole reason but a contributing factor to the delay.

Irregularity in the application to set aside:

8. Mr Hiele submits that the form and structure of the application to set aside do not comply with the requirements of the rules, in particular Rule 9.53 (a) – (d). Mr Keniapisia argues otherwise and relies on Rules 1.16 and 1.17 in particular Rule 1.16, which clearly expresses any non-compliance with the rules, does not make a proceeding, a nullity.

9. I have the privilege to read the application and how it was structured. I seem to agree with the Counsel for the Claimant that the application did not include detail defence to the claim. In fact the concern paragraph (paragraph 6) vaguely point out that the Defendant has very strong or arguable defence on its merits. The strength of the defence case was not fully verified and to the extent that there are evidence to substantiate. Despite that short fall, the sworn statement in support of the application also provides very limited and minimal description of the value of its strength and the extent of its merit.

10. In any event, that may perhaps one weakness found in favour of the Claimant. Even so, as the rule has lain down; non-compliance of the rule does not make a proceeding, nullity. I find the irregularity litigated does not hold substantive argument to rely on.

Negligence of lawyer to file defence

11. In almost all applications for default judgment, negligent of a lawyer representing the defaulter is one of the main focus of delay or for non-filing of defence. In this jurisdiction, lawyer's failure to perform by serving his Client is not unusual. Professional negligent is common. Either a lawyer is lazy and could not able to manage his time, or indulge in other activities placing their clients in an awkward and vulnerable position.

12. Where clients suffer legal consequences because of negligent and unprofessional action by his lawyer, the lawyer ought to recompense for the loss, and be blamed for irregular situation a client has gone through. A client cannot be allowed to suffer a situation, which he is not directly being blamed for, but cause, by his lawyer.

13. In this cause, a defence was filed out of time, a clear indication that the claim and the documents were given to a lawyer. In defence the lawyer explained in a mildly manner that he was fully committed in his work and could not able to manage to file a defence in time. On the other hand, the new advocate has blamed the previous lawyer for negligently not doing his work. And describes him for indulging too much of travelling home to Auki.

14. Whatever the reason may be a client relies on his lawyer to perform his duties to serve him. A client would not engage another lawyer without communicating his intention to his lawyer and a conscious reached before he moves on engaging another Counsel. In any event, I would not allow the Defendant to suffer legal consequences because his lawyer is one of the contributors for failing to file a defence in time as required. At some stage, the documents were given to him but could not able to file a defence in time. I find it hard to accept arguments by Mr Hiele. Documents had been given to his lawyer but it was the lawyer who delayed in filing defence.

Illness by the Defendant and wife:

15. Another reason contributed to delay is the illness of the Defendant and his wife who was pregnant at that time. I noted there are three medical reports in exhibit XQ 03 attached to Defendants sworn statement filed on 29th August, 2013. The reports reflected through an X-ray which shows there was a radio opague, selerotic leison sitting at the centre of the skull with well define edges. Another report describes it as small hypo dense of .5mm x .5mm at the parietal region. The cause of the radio opaque structure was a fall by the Defendant during family gathering in 2006. The medical reports were taken during the month of June 2013. One on 8th June and the other on 22nd June, 2013.

16. The reports concluded that since 2006 the Defendant had suffered left headache radiating to the side of his face.

17. Despite being ill the Defendant continue attending his criminal proceedings right up to 2nd August when the charge was finally withdrawn. In fact, the criminal proceedings were started way back in 2012. Whist the criminal proceeding continues, these two claims were filed on 10th May, 2013. The representative responsibility was upon the one and the same lawyer. Mr Hiele seems not to understand the fact that being indulge in three cases at the same time caused problem to health and mentality, and I accept it as a real fact.

18. Looking from outside, I could able to perceive that the Defendant is indeed fighting two wars at the same time. The complaints are coming from the same source. I accept it is a legal requirement the Defendant has to attend all proceedings. And with the hurdles of illness and language barrier, the Defendant coupled with some strength endures to attend Court, give instructions, attended to appointments etc. Is it not a mind bogging activity to indulge in three legal proceedings at the same time? I accept the circumstance that all these had affected the Defendant both physically and psychologically. Even a human with normal health conditions would experience mental and physical constraint in such an abnormal situation.

19. Combination of all the hiccups upon the Defendant surely will retardate his ability and capacity to progress in a timely manner to ensure his Solicitor file his defence in time. It did not work out that way. He did give the claim to his solicitor and expect him to do his part. Nothing seems to work that way. As a result, he suffered legal consequence, that a default judgment was entered against him. I find the Defendant's grounds for delay in filing defence are reasonable and the weight should tilt towards him.

Meritorious defence:

20. Submissions in relation to whether the defence has merit or not, are in two folds. This is necessary because there are two cases with distinctive factual situations. In Civil Case No. 141 of 2013, the claim is for liquidated amount of $150,000.00 plus 20% interest. The claim in Civil Case No. 142 of 2013 is for conversion of entitled money, amounted to $6,469, 763.91 and $3,405,138.90 respectively.

Merit in CC No. 141 of 2013:

21. In Civil Case No. 141of 2013, the Defendant has denied the claim. He denies borrowing $150,000.00 from the Claimant. And denies signing any receipt that relates to the borrowing of the money. The Claimant has evidence; a written brief receipt, which he claims was signed by the Defendant. The Defendant denies the signature that appears on the receipt is not his and the date of signing (15/8/2011) he was not in Solomon Islands but out overseas.

22. In respect of signatures, though not an expert, have compared the signatures on the receipt document to that of Defendant on his sworn statement and I find there is great variable and distinctiveness in the signatures. They are not the same.

23. In respect to the claim for alibi the Defendant refers to Exh. XQ 01 attached to his sworn statement filed on 18th September, 2013. Those exhibits are immigration entries from various countries the Defendant travelled to or through on transit. However, the entries are not clear as they are not in orderly sequence and or arrangement. For that reason, I could not able to identify any date of departure prior to 22nd June, 2011 and 15th August, 2011. Had it been so, it would have assisted in proving the Defendant's claim of alibi. There are entries, which are not clear and are unreadable. All I note is departure on 28th June, 2011 and arrival in Solomon Islands on 5th December, 2011. Alibi would operate well concerning the date of the second borrowing but not the first one on 22 June, 2011, as the Defendant would probably be in the Solomon Islands by then.

24. Apparently, though there being hazy evidence; on the balance, it would be proper to conclude in the interest of justice that there is merit in the defence. This will allow pleadings to run so that issues are identified and trial proper to resume

Merit in CC No. 142 of 2013:

25. In relation to Civil Case No. 142 of 2913, the Defendant denies being involved in the sales agreement between SI Government and Four Oceans Sea Products Trading Company. Despite that, there is evidence to implicate his involvement in signing the inspection certificate with Jerry Sun the (2nd Claimant). The first Claimant is a Company incorporated in Solomon Islands and was owned by Second and third Claimant including the Defendant together with others. On 13th September, 2012, the Ministry of Fisheries and Marine Resources seized and confiscated beche-de-mer products valued at US$1,812,471.58. As crystal from the agreement signed on 11th October, 2012 between SI Government and Four Oceans Sea Products Trading Co, the value of products was fixed at the above amount and equivalent to SI$12,506,053.90.

26. There is also material evidence that the second Claimant was formally appointed as an agent for Four Oceans Sea products Trading Co., which was based in China. The appointment did not state that the first Claimant Company was the agent. By signing the agreement for sale and purchases, on behalf of his foreign principal, which he did in his capacity as an agent, not representing the first Claimant Company, but as an individual. The first Claimant is a company incorporated in Solomon Islands has nothing to do with the agreement for sale and purchase of the confiscated beche-de-mer. It is a different entity, and if it operates business in respect of buying and exporting of sea products then it has right so to do.

27. So the deal to sell and buy the confiscated beche-de-mer is between SI Government and Four Oceans Sea Products Trading Co. in China. Eventually a total of 35,558.90 kilograms of beche-de-mer was exported to Four Oceans Sea Products Trading Co. as buyer, by SI Government under the guiding hands of the second Claimant as the agent.

28. After the consignment was shipped that the claimants alleged that the Defendant flew to Hong Kong and obtain all the proceeds, paid others, but failed to pay the 2nd and 3rd Claimants according to their share of ownership of the first Claimant Company. That indeed is a misconceived assertion. The Defendant has nothing to do with the sale and purchases agreement. At the same time, the first Claimant Company and the third Claimant have nothing to do with the agreement and the export of the beche-de-mers as well.

29. What ought to have been transpired is that Four Oceans Sea Products Trading Co. could have received the 35,553.90 kilograms of beche-de-mer. It should pay SI Government via Ministry of Fisheries SI$12,506,053.90. The 2nd Claimant should only be entitled to be paid commission for agency function he performed. It is absolutely misconceived to think that he should be paid 19% because he owns 19% of first Claimant Company. Apparently, the first Claimant and the third Claimant has nothing to do with the agreement signed between SI Government and Four Oceans Sea Products Trading Co., which the Second Defendant signed on behalf of Four Oceans Sea Products Trading Co. as its agent. Both Claimants 1 and 3, and the Defendant ought not to be paid at all. They are not eligible for anything out from the agreement that was executed, for they are not a party to that agreement.

30. This boils down to the very fact that the only person who would know about payment of money from Four Oceans Sea Products Trading Co. and caused to be paid to SI Government is the second Claimant. As an agent, he should know from his principal. He is only entitled for his commission to be paid by Four Oceans Sea Products Trading Co, and not in any way calculated through his share in the first Claimant Company, which has nothing to do with the agreement. It is a separate entity and does not involve in the agreement between the foreign buyer and Solomon Islands government.

31. To allege that the Defendant was the person who received the proceeds from the sale of beche-de-mer in the sum of $34,051,389.00, after deduction, is an absolute deception of the entire truth. How would he got the money, there must be evidence. If not the foreign buyer will has to answer for it.

32. In all that I say and perceive there is merit in the defence which this Court must allow defence be filed so that pleadings will reflect issues to be contested.

Orders.

1. That the default judgments made on 31st July, 2013 and 5th August 2013 is set aside.

2. That the enforcement orders made on 26th August and 11th September, 2013, be stayed.

3. The Defendant is hereby granted leave to file defence in both cases within 14 days.

4. Cost is paid to the Defendant.

The Court.