Makin v IAC Pacific Ltd [2001] VUCA 17; Civil Appeal Case 14 of 2001 (1 November 2001)

IN THE COURT OF APPEAL

OF THE REPUBLIC OF VANUATU

(Civil Jurisdiction)

class="MsoNoMsoNormal" align="center" style="text-align: center; margin-top: 1; margin-bottom: 1"> Civil Appeal Case No.14 of 2001

BETWEEN:

CAPTAIN PAUL A. KIN
Appellant

AND:

I.A.C. PACIFIC LIMITEDn>
Respondent

p>

ass="MsoNoMsoNormal" style="text-align: justify; margin-top: 1; margin-bottom: 1"> Coram: Hon. Justice John von Doussa

Hon. Justice Bruce Robertson

Hon. Justice Daniel Fatiaki

Counsels: atrick Finnigan and Mr. John Malcolm for Appellant

Mr. Nigel Morrison for the Respondent

Hearing date: 30th October 2001. Judgment date: 1st November 2001.

class="MsoNoMsoNormal" align="center" style="text-align: center; margin-top: 1; margin-bottom: 1"> REASONS FOR JUDGMENT

p class="MsoBoMsoBodyText" style="margin-top: 1; margin-bottom: 1"> This is an appeal brought by leave against an order of a single judgthe Supreme Court who refusrefused leave to file an Amended Statement of Claim, referred to in the papers as the First Amended Statement of Claim (FASC).

This case is complex and has a considerable background of interlocutory applics. Only the briefest summary of the principle issues involved is necessary for the purpose of resolving this appeal. The Appellant, who it is convenient to refer to as the Plaintiff, issued his Writ and Statement of Claim on 11^th November 1998. As pleaded his claim was for under payment of remuneration allegedly due to him under a contract of employment with the Respondent (the Defendant) dated 25^th November 1996, as amended on about 30^th February 1998. The Plaintiff was employed as a pilot.

On 24^th February 1999 the Defendant fileefence denying the claim, and pleading a Counterclaimclaim which alleges that on 10^th February 1999 the Plaintiff defamed the Defendant in an advertisement. On 18^th July 2000 the Defendant filed a further document entitled “Addendum Amending Counterclaim” making another counterclaim for damages for defamations allegedly published by the Plaintiff in letters written in March and April 2000.

The Defendant in its counterclaims alleges, amonther things, that the publications in their natural aral and ordinary meaning wrongfully asserted that the Defendant, which is duly incorporated in Vanuatu as an international company, does not comply with the laws of the Republic of Vanuatu. In its defence to this counterclaim the Plaintiff denies the defamations on grounds that include justification. One of the grounds pleaded in support of this plea is that the Defendant has been carrying on the business of an “employment agency” as defined by s. 65 (3) of the Employment Act [CAP. 160] without having observed statutory conditions and restriction imposed by s. 65 (2) of that Act. Another ground pleaded is that the Defendant as an international company in Vanuatu, carrying on business in Vanuatu and carrying on company management, contrary to the provision of s. 10(1)(a) and (f) of the International Companies Act No. 32 of 1992.

On 3^rd December 2000 laintiff filed a Notice of Motion seeking to amend the Stat Statement of Claim in terms of the FASC.

ass="MsoBoMsoBodyText" style="margin-top: 1; margin-bottom: 1"> The FASC pleadee causes of action. The first cause of action includes the claims in the original al Statement of Claim, and expands the number of matters said to be the subject of underpayment. An amendment to a Statement of Claim to include additional items of the nature alleged would be the common subject matter of an amendment. We do not understand the Defendant to take the issue about this aspect of the proposed amendment.

The second cause of action is a claim that tfendant is entitled only to a reasonable commission, suggested at 6 % across the board, to be deducted from monthly universal charges payments which the Defendant receives from Korean Airlines Limited (KAL), to which company the defendant (or an associated company) makes the Plaintiff’s pilot services available. There is a claim for additional remuneration on the basis that s. 65 of the Employment Act would impose a statutory prohibition upon the Defendant collecting any fees or expenses from the monthly universal charges payments. The Plaintiff alleges that for this reason the whole of the monthly universal charges should be passed on to him, but he is prepared to concede that the Defendant should receive a reasonable commission.

The third cause of action is in the alternative to the second cause of actiondoes not make the con concession about commission charges of 6 %. It alleges that if the Court finds that the Defendant is an “employment agency” in terms of s. 65 of the Employment Act and is not licensed as required, the Defendant is not entitled to charge any commission with the consequence that the whole of the monthly universal charges payments should be paid to the Plaintiff.

As the second and the third of these causes of action are alterns, and raise the same subjesubject matter, they should be treated as raising the same new issues in the Plaintiff’s claim. The second and third causes of action squarely raise the same issues about s. 65 of the Employment Act which are already raised in the case by the Plaintiff’s Defence to the Counterclaim.

p class="MsoBoMsoBodyText" style="margin-top: 1; margin-bottom: 1"> It appears from the reasons publishethe primary judge for his decision giving leave to appeal teal that he refused the application for leave to amend the FASC because it introduced causes of action that he considered had arisen after the commencement of the proceedings on 11^th November 1998. He considered that for this reason the causes of action should be the subject of fresh proceedings, and added the observation that it would then be open to the Appellant to apply to consolidate the new proceedings with the existing action.

It is common ground that none of the Plaintiff’s so called new causes of action areof time. No issue ari arises under the principle in Weldon –v- Neil [1887] UKLawRpKQB 161; (1887) 19 Q.B.D. 394. There is however an issue whether the new causes of action in fact arose, or should be treated as arising, after the issue of the Writ. In reality the same legal issues existed between the parties before the issue of the Writ, and the only events which have occurred since the issue of the Writ are that month by month the Plaintiff says that there have been additional payments to him which have been wrongly calculated. It is doubtful whether events of this kind fall within the alleged principle that causes of action which arise after the issue of the Writ should not be added by amendment to the pleadings. It is frequently the case that losses running up to the date of judgment are included in a judgment even though part of those losses accumulated after the issue of the Writ. However, for present purposes we shall accept the Defendant’s assertion that the second and third causes of action sought to be added by the amendment arose after the issue of the Writ.

class="MsoBoMsoBodyText" style="margin-top: 1; margin-bottom: 1"> There is reason to question whether the second and third claims raised in the FASC which alleges the contraventions of s. 65 of the Employment Act and s. 10 of the International Companies Act are claims that can be maintained. It is questionable whether these sections are intended to create private right of action in the event of breach. Moreover, even if s. 65 of the Employment Act does so, it is difficult to see how the Plaintiff could have any claim for fees and expenses improperly charged by the Defendant. The limited factual information before this Court suggest that whatever fees and expenses the Defendant levies on the monthly universal charges payments are charges which the Defendant imposes on KAL, and are not fees and expenses paid by or on behalf of the Plaintiff.

In other circumss if leave to amend in the terms of the FASC were granted these questions could sensibly give rise to an application to strike out the relevant pleadings relating to s. 65 of the Employment Act and s. 10 of the International Companies Act, and that situation in turn could be a reason for arguing that leave to amend to include those claims should not be granted. However, in this case, even if the second and third claims were not included in the FASC, the very same issues raised by the second and third claims would have to be considered and decided by the Court in dealing with Defence to the Cross claims. Accordingly the questionable aspects of the merits of the second and third claims provide no sensible basis to refuse leave to amend in the terms sought (or if leave is given, to entertain a strike out application made in relation to the FASC).

Where new claims are not out of time, generally speaking there is nothing to bned by not allowing e existing proceedings to be amended to enable all matters in dispute between the parties to be litigated in the one action. To do so is in accordance with present concepts of case management. Procedural cases decided in England in the Nineteenth Century which suggest that in some situations this should not be done must be understood in the knowledge that the management of litigation by Courts has greatly changed in the meantime. The practice direction on Interim Case Management issued by the Supreme Court of the Republic of Vanuatu on 15^th December 2000 summarizes the present objectives of case management systems. It expresses the overriding objective of procedural rules in the following ways:-

“A. The overriding objective

(1)&nbsp &nbssp; The overriding objective is to enable the court to deal with cases justly.

(2) Dealing wicase justly includes, so far as is practicable -

(a) style="font:7.0pt "Times New Roman""> &nbsp &nbssp;&nnbp; &nsp; &nbbp;&nnbsp; ensuring that that the parties are on an equal footing;

&nt"> >

(b) ;&nbssp; &nsp; &nsp;  p; &nnsp;& sp; saan>saving expense;

(c) &nnsp;&&nsp;;&nspp;&nssp;&nsp; an>dpaling with the cahe case in ways which are proportionate –

(i) &nbs; &nbbsp;  p;&nsp; p; e athunt ount of money involved;

(ii) &nnbsp;

(iii) ;&nbssp; sp; to the complexity of the issues; and

(iv) &nbssp;&n sp; tpan>to the financial position of each party;

p> <

(d) & p;&nssp;&nsp; &nsp; ;&nbpp; / epan>ensuring that that it is dealt with expeditiously and fairly; and

0pt">&nbsp

(e)ot;"> &nnsp;&&nsp;;&nspp;&nssp; sp; allotting to it an appropriate share of the court’s resources, while taking into account the need to allot resources to casepan>””

There may however still be cases where some of the new causes of actions which a plaintiff wishes to incorporate by amendment in the action are so unrelated to, and different from, the presently pleaded causes of action that it is not sensible to allow them to proceed together. Sometimes the causes of action so plainly raise entirely different and unrelated issues that it is best to allow them to be the subject to separate proceedings and trial. However in this case all the issues raised in the FASC are in one form or another interrelated with the original claim or with the counterclaims and the defences thereto. We think that the issues proposed to be raised by the FASC should sensibly be joined in the action so that all the issues between the parties are resolved in one trial.

Thnciple which the primary judge appears to have applied, namely that a cause of actionction arising after the date of the issue of the Writ should not be added by amendment to the Statement of Claim, has its origins in Eshelby –v- Federated European Bank Limited [1932] 1 KB 254, a decision of the Divisional Court in England. That case held that a cause of action arising after the issue of the Writ could not be included in the Statement of Claim unless the Writ itself was amended (in which event the amended writ would date from the time of the amendment). That decision was based on an English Rule of the Supreme Court similar to Order 30 Rule 1 of the High Court (Civil Procedure) Rules 1964 which still apply in the Supreme Court of the Republic of Vanuatu. An analysis of the reasons for decision discloses two matters of particular importance in the present case. The first is that the Divisional Court at 261-262 dealt with another rule which is the equivalent of Order 26 Rules 1 and 2 of the High Court (Civil Procedures) Rules 1964, and held that the rule also prevented a defendant from pleading a counterclaim which arose after the date of the plaintiff’s writ. The application of that principle would indicate that both the counterclaims filed by the Defendant in this case are brought contrary to the rules. If a strict application of the rules prevents the Plaintiff amending in terms of FASC, the two counterclaims should also be struck out (although the Defendant could then initiate a separate action for defamation against the Plaintiff).

The other important matter is that the English Supreme Court Rules under which Esh–v- Federated Europearopean Bank Limited was decided, did not include a provision similar to Order 22 Rule 2 of the High Court (Civil Procedure) Rules 1964 which reads:-

“Whenever a Statement of Cls delivered the plaintiff may therein alter, modify, or extr extend his claim without any amendment of the endorsement of the writ.”

class="MsoBoMsoBodyText" style="margin-top: 1; margin-bottom: 1"> In our opinion Order 22 Rule 2 is designed to overrule the principle established in Eshelby –v- Federated European Bank Limited, and to allow an amendment to a Statement of Claim which includes a cause of action which has arisen after the issue of the Writ without the need to make a separate application to also amend the Writ. In our opinion, as none of the new claims sought to be introduced by the FASC are out of time, and as they concern issues already raised in the proceedings, there was no good reason for refusing leave to amend, and that leave should have been granted. Leave to amend given at this time will also make regular the counterclaims that arose after 11^th November 1998.

It seems that both parties to these proceedings are intent on taking every technical and tactical point. This is regrettable as the issues between them will ultimately come before the Court anyway. The tactics which both parties are adopting, presumably in an effort to complicate and frustrate the aims of the other will serve merely to delay the inevitable, and cause each party additional expense in the meantime. Case Management procedures are intended to avoid conduct of this kind, and to avoid the unnecessary utilization of scarce Court resources which must be directed to deciding real and substantive issues between litigants. If parties do not observe the overriding objectives of the Practice Direction on Interim Case Management they can expect that the Court will impose on them costs sanctions, and adopt an interventionist approach to the litigation which discourages interlocutory applications, and forces the substantive issues on for early trial.

The Court indicated to the parties at the conclusion of oral arguthat the Appeal would be albe allowed, and leave would be granted to the Plaintiff to amend in terms not more extensive than the FASC. The Court then discussed with the parties procedural directions which should now be put in place to hasten the trial of the issues between them. The Court urged the Plaintiff to reconsider the merits of the claims based on s. 65 of the Employment Act and s. 10 of the International Companies Act. In this regard the parties should consider the reasons for Judgment published by this Court contemporaneously with this Judgment in the matter of Spooner –v- The Government of Vanuatu, Appeal Case No. 4 of 2001. The Court indicated to the Plaintiff that pursuant to the leave to amend the Plaintiff was at liberty to delete or restrict the scope of any of the causes of action presently included in the FASC.

lass="MsoBoMsoBodyText" style="margin-top: 1; margin-bottom: 1"> Following discussions with counsel, the Court indicated it would make orders and directions are set out below in paragraph 1 – 6, and should reserve its consideration on the question of costs. On the question of costs, a party who amends a pleading is ordinarily ordered to pay the other party’s costs occasioned by the amendment. We take that into account, but as the Defendant has chosen to oppose the FASC, and has lost this appeal it must pay a modest sum for costs to the Plaintiff which we fix at a gross sum.

For the reasons given, the Orders of the Court areollows:-

class="MsoBoMsoBodyText" style="text-indent: -18.0pt; margin-left: 54.0pt; margin-top: 1; margin-bottom: 1"> 1. &nnbsp;; Apan>Appeal allowed;

2. / Lpane tavthe ppellppellant to file the First Amended Statement of Claim within 21 days in terms not more extensive than the draft which accompanied its Notice of Motion of 3rd

p>

3.

4. Direct ehe Danendant within 28 days of rece theg the First Amended Statement of Claim to file a new comprehensive Defence and Counterclaim i suutionhose ntly e filpan>

5. &bsp; ;&nbssp; p; Dpan>Direct the Plaintiff within 21 days of receiving the Amended Defence and Counterclaim to file its Reply and Defence to Counterclaim;

6. D rectPlhe tifintiff, or in default of action by the Plaintiff the Defendant, within 7 days of the reply being filed to arrange an early dions hg bef Judgh the to final directionctions beis being ng m made pade prior to trial;

7. &bsp; ; p Order that that the Plaintiff recover from the Defendant costs fixed at a total sum of VT200,000 in respect of the Notice of Motion dated 3

Justice J.on Doussa J.
Justice Bruce Robertson
Just Justice Daniel Fatiaki