Government of the Republic of Vanuatu v Carlot [2003] VUCA 23; Civil Appeal Case 19 of 2003 (7 November 2003)

IN THE COURT OF APPEAL OF
THE REPUBLIC OF VANUATU
HELD AT PORT VILA
(Appellate Jurisdiction)

CIVIL CASE NO. 19 of 2003

BETWEEN:

GOVERNMENT OF THE REPUBLIC OF VANUATU
Applicant

AND:

ALFRED CARLOT
Respondent

Coram: Chief Justice V. Lunabek
Justice J. B. Robertson
Justice J. von Doussa
Justice D. Fatiaki
Justice O. Saksak
Justice P.I. Treston

Counsels: Attorney General Mr. Sampson Endehipa and
Frederick Gilu for the Appellant
Mr. John Malcolm for the Respondent

Hearing Date: 5th November 2003
Judgement Date: 7th November 2003

DECISION

This is an appeal filed by the Government of Vanuatu against the making of an order in the Supreme Court at Port Vila on the 3^rd of June 2003 which states:-

“JUDGMENT AND ENFORCEMENT ORDER”

1. The defence is struck out for failure to comply with Court Orders.
   
2. Judgment is entered for the claimant in the sum of US$71,567 together with costs on the standard basis.
   
3. The judgment sum is to be paid by 3 p.m. on 3^rd July 2003. Costs are to be paid within 28 days of agreement of a figure or as directed by the Court if a determination is made.”
   

The Orders have been stayed pending the hearing of an appeal, which was advanced on the basis that:-

1. “His Honour Justice Coventry erred in striking out the appellant’s defence and ordering the judgment in favour of the respondent in the amount of US$71,567.
   
2. His Honour erred in holding that the failure of the Appellant to comply with the Court orders relating to disclosure was such as to justify the dismissal of the appellants’ defence.
   
3. His Lordship did not give sufficient or proper weight to reasons delivered by counsel for the appellant for failure to comply with his Lordships’ order.
   
4. The Court had other alternative orders which were appropriate in the circumstances.
   

4.(sic) The defendant has a good defence on the merits which warrants that the matter be given full hearing.

5. His Honour erred in making the ruling as there had not been an application by the respondent under rule 18.11 of the Civil Procedure Rules”.
   

The Appeal raises a short but important point about the new Civil Procedure Rules 2002. The entire argument was directed to the strike out of the defence. The subsequent entry of judgment for part of the claim and without any reference to the rest of it has not been addressed. We are unable to see compliance with Part 9 of the Rules but it is only academic as we have no doubt that in all the circumstances of the case the strike out cannot be sustained.

In any dispute about the application of the rules regard must be had to Rule 1.2 and 1.3

“Overriding objective

1.2 (1) The overriding objective of these Rules is to enable the courts to deal with case justly,

(2) Dealing with cases justly includes, so far as is practicable:

• (a) ensuring that all parties are on an equal footing; and
  
• (b) saving expenses; and
  
• (c) dealing with the case in ways that are proportionate:
  
  • (i) to the importance of the case; and
  • (ii) to the complexity of the issues; and
  • (iii) to the amount of money involved; and
  • (iv) to the financial position of each party; and
    
• (d) ensuring that the case is dealt with speedily and fairly; and
  
• (e) allotting to it an appropriate share of the court’s resources, while taking into account the need to allot resources to other cases.
  

Courts to apply overriding objective

1.3 The courts must give effect to the overriding objective when they:

• (a) do any act under these Rules; or
  
• (b) interpret these Rules
  

Although these rules are an example of judicial case management, which means a greater degree of initiative by Judges and Magistrates will occur, litigant autonomy must not be overlooked. As the outcome of this appeal demonstrates, if a court makes orders that seriously impact on the future of litigation without the concurrence of the party which benefits from the court’s intervention, that action is unlikely to be consistent with dealing with the case justly.

Mr. Carlot commenced proceedings against the Government in August 2002. He had held a diplomatic position in the service of the Republic of Vanuatu in New York, first as Ambassador Plenipotentiary and Permanent Representative to the United Nations and subsequently, following a change of Government, as Charge d’Affaires.

Mr. Carlot pleaded the details of the contractual arrangement, made various complaints about the unilateral variation of its terms, the failure to pay entitlements under the contractual arrangement and the unjustified and unlawful termination of his position while he was on leave in Port Vila in January 2002.

To remedy these complaints he identified by way of special damages some US$71,567 which he sought under the writ together with aggravated damages in sum of US$ 300.000 in respect of damage to his reputation. The respondent’s affidavit dated the 26^th of September 2002 provided a proper evidential basis to support this claim including correspondence and other relevant documents.

There was a statement of defence which admitted some minor matters but placed in contention the majority of the issues which would entitle Mr. Carlot to substantial relief.

On the 24^th of February Orders were made in the following terms: -

“1. The following are to take place by 3 p.m. on the date stated:-

(a) Completion of disclosure – 10^th March
(b) Inspection –17^th March
(c) Any further affidavits of the plaintiff – 24^th March
(d) Affidavits of defendants – 7^th April
(e) Any affidavits of plaintiff in reply – 14^th April

2. No witness may be called at the trial without leave of the Court unless his/her evidence has been filed and served in accordance with this or any other order. No witness may give evidence in chief beyond the content of their (sic) affidavit without leave of the Court.
   
3. There will be a further conference on 24^th April at 8.a.m. to fix a trial date.
   
4. Costs in the cause.”
   

The Respondent, at that 24 February conference was represented by Mr. Kalsakau (who at that stage had the carriage of the proceeding) but counsel for the appellant was not present.

The same position existed on the 24^th of April. When orders were made on that date, they note that the State Law Office was not represented. The orders made were;

“The defendants must give disclosure by 3 p.m. on 26^th May.

1. There will be inspection by 3 p.m. on 2^nd June.
   
2. WARNING – if the defendants fail to comply with paragraph 1 and 2 the defence will be struck out and judgment entered for the plaintiff.
   
3. There will be a further conference on 5^th June at 8.30 a.m.
   
4. The defendant will pay the plaintiff’s wasted costs of today and 24^th April assessed on an indemnity basis at Vt10,000 and Vt10,000 by 3 p.m. on 26^th May”.
   

For the hearing which had been anticipated for the 12^th May 2003 Mr. Kalsakau was present for the Plaintiff and Mr. Edwards represented the Government. Orders on this occasion were:

(a) “The defendants must give disclosure by 3 p.m. on 26^th May.

(b) There will be inspection by 3 p.m. on 2^nd June.

(c) WARNING – if the defendants fail to comply with paragraph 1 and 2 the defence will be struck out and judgment entered for the plaintiff.

(d) There will be a further conference on 5^th June at 8.30 a.m.

(e) The defendant will pay the plaintiff’s wasted costs of today and 24^th April assessed on an indemnity basis at Vt10,000 and Vt10,000 by 3 p.m. on 26^th May”.

It was on the 5^th of June in the presence of both counsel that Orders were made which are the subject of this appeal.

The Appellant filed in this Court a notice of appeal and an application for stay of the execution of judgment pending the hearing of that appeal.

These were accompanied by a substantial sworn statement from Mr. Edwards, the senior litigation advisor to the State Law Office of Vanuatu, which set out the circumstances relating to the complained of omissions of the Government legal advisers during the period from the service of the writ on the 3^rd of September 2002. Much of this relates to substantial staff recruiting problems within the State Law Office, the termination of the tenure of people who had been acting under the Australian Youth Ambassador for Development Programme, the illness of an officer who required treatment in New Zealand, the arrival of a new Attorney General and various other staff problems.

On the basis of all that, while the appellant accepted the disclosures ordered were not made, it contended that there were reasonable excuses for the failures which ought to have been weighed and taken into account before the judge exercised the power in Rule 6.8. This provides:

Effect of non-compliance with orders made at conferences

6.8 (1) if:

(a) a party does not comply with an order made at a conference by the time fixed for complying; and

(b) another party incurs expense because of this;

the judge may order costs against the non-complying party or his or her lawyer.

(2) If a party or is or her lawyer has failed to comply with an order made at a conference without reasonable excuse, the judge may order that the party’s claim or defence be struck out.

(3) A judge may set the proceeding down for trial although some orders made at a conference have not been complied with.

The main ground of Appeal is that in what he did, the Judge failed to have regard to all the provisions of Rule 6.8 (2) on the basis that, prior to the time provided for in the order for disclosure, the Judge could not turn his mind to whether there were reasonable excuses for the failure to comply, which is a necessary component of the exercise of the discretion and he had not done so adequately after the time had expired. Counsel submitted that there was no indication that at any point the judge had seriously addressed the requirement in Rule 6.8 (2) that he assess whether there was a reasonable excuse for non-compliance.

He also submitted that Rules 6.8 cannot be read in isolation and must be read consistent with other relevant provisions which include Rule 18.11 which states:-

“Failure to comply with an order.

18.11 (1) This rule applies if a party fails to comply with an order made in a proceeding dealing with the progress of the proceedings or steps to be taken in the proceeding.

(2) A party who is entitled to the benefit of the order may require the non-complying party to show cause why an order should not be made against him or her.

(3) The application:

• (a) must set out details of the failure to comply with the order; and
• (b) must have with it a sworn statement in support of the application; and
• (c) must be filed and served, with the sworn statement, on the non-complying party at lease 3 business days before the hearing date for the application.
  

(4) The court may:

• (a) give judgment against the non-complying party; or
• (b) extend the time for complying with the order, or
• (c) give directions; or
• (d) make another order
  

(5) This rule does not limit the court’s powers to punish for contempt of court.”

The introduction of the Civil Procedure Rules No. 49 of 2002 has been of great benefit in the delivering of justice in the Republic. This Court will not be seen to do anything which interferes with their smooth and sensible operation. The potential for doing better, more consistent and more timely justice is to be fully exploited. However, rules of Court are only a means of getting to a just conclusion in a case, and they must operate in a way which is consistent with fundamental principles and with proper adherence to their total requirements.

Rule 6.8 refers to failures which have occurred without reasonable excuse. It is not possible for any Court to be satisfied ahead of time that a failure has been without reasonable excuse.

A Court cannot make an order which has the effect of striking out a proceeding under the rule, without providing an opportunity for the parties to address all fundamental issues. An order which is self executing at a subsequent date without any further enquiry or assessment of the reasons for the failure to comply, cannot be valid and must be scrutinised with utmost care.

The fact that warnings have been given will be important evidential material. They will increase the obligation on the party against whom they are directed to meet the timetable. They will mean that there will have to be reasons of real substance which in the interest of justice satisfy the Judge that the failure to meet the terms of the order were without reasonable excuse. But always there needs to be an inquiry. The Court cannot, and must not, make an order which is simply sudden death to the proceeding without further inquiry at some future date.

The provision of rule 18.11 will also come into play when there is a failure to meet a timetable. Adherence to this will ensure that before the Court exercises this grave and significant power of denying a party the right to maintain and pursue a defence, it has before it all relevant information. We are unable to accept the intriguing submission of Mr. Malcolm that the requirements of Rule 18 are to be treated differently depending on whether the possible strike out is initiated by a party or initiated by the Judge. His contention was that Rule 18 has no application to action taken under Rule 6.8 on the basis that Rule 6.8 is a power given to the judge which is exercised without a request by a party. That approach is difficult to reconcile with the clear words of Rules 18.10 and 18.11. Any strike out is a serious step and it is essential that a fair hearing and due process always attend it.

So that the provision of Rule 18.11 (3) (c) can be complied with, it would appear that any warnings ought to be for a date at least four or five days before the next hearing, so that if a default occurs an application can be made three business days prior to the hearing date, and thus avoid the necessity for a further adjournment.

This is an important case on its merits. It involves issues about the rights of a Government in dealing with those who are appointed to represent it abroad. Even after a proper strike out it was the type of case which would have necessitated proof about essential matters.

We now have explanations for the failures which could provide a reasonable excuse, but they were not property weighed and that issue determined with reasons provided. There must be vigilance to ensure that the Court does not fall into the trap of delivering justice on a knee jerk basis, with the danger that a fair outcome is not achieved.

The rules are to aid the Court and most importantly the litigants. The rules are to be observed. Cost orders should be imposed against those who fail to meet obligations. But the underpinning fundamental principles of our legal system must not be sacrificed to efficiency especially when there may be a reasonable excuse for an omission.

The appeal is accordingly allowed. Rule 18.11 (1) is clear and unambiguous. That rule will apply whenever a party fails to comply with an order in a proceeding unless there is a patent abrogation of that position, e.g. 18.14 (2) (a) However rule 6.8 is not in that category.

As the appellant was so seriously in breach of its timetable obligations prior to the making of the Order appealed from, we are satisfied we should take the unusual course of refusing costs to the Government which has succeeded in this appeal. Costs of this appeal will lie where they fall.

The Appellant must complete the disclosure, that was previously ordered, no later than the 19^th of November 2003. A further conference for this case in the Supreme Court should be allocated for the first available date thereafter, for further orders to be made about progressing this case to trial at the earliest possible opportunity.

Dated at Port Vila this 7^th day of November 2003

V. Lunabek CJ
J. B. Robertson J
J. von Doussa J
D. Fatiaki J
O.A. Saksak J
P.I. Treston J