Newton v Bank of Western Samoa [1994] WSCA 8; 20 1993 (28 March 1994)

IN THE COURT OF APPEAL OF WESTERN SAMOA
HELD AT APIA

C. A. 20/93
BETWEEN:

KEN NEWTON

of Ululoloa, Company Director and

DESMOND HERMAN KRUSE

of Apia, Solicitor/ Company Director
Appellants
AND:

THE BANK OF WESTERN SAMOA

a statutory corporation pursuant to the Bank of Western Samoa Ordinance 1959
First Respondent
AND:

TERRENCE VICTOR BOURKE

c/- Agricultural Supplies Ltd, Lalovaea, Company Managing Director,

SUISALA SAAGA FAU

of Sinamoga, Company Director and

TAUILIILI WILLIAM MEREDITH

c/- Malifa, Company Director/ University Pro-Chancellor
Second Respondents

Coram: The Rt. Hon. Sir Gordon Bisson, President
The Hon. Sir John Jeffries
The Hon. Mr Justice Lussick

Hearing: 28 March 1994

Counsel: P. Fepuleai for Appellants
Mrs R. Drake for First Respondent

Judgment: 28 March 1994

JUDGMENT OF THE COURT DELIVERED BY SIR GORDON BISSON

The appellants seek special leave to appeal from part of the judgment delivered by Mr Justice Dillon in the Supreme Court at Apia on 18 June 1993. Notice of Motion for special leave was filed on 29 November 1993, some five months and 11 days after the judgment had been delivered. The time limit for appeal under Rule 18 of the Court of Appeal Rules in the First Schedule to the Judicature Ordinance 1961 is 30 days, but this Court has power under Rule 19 to extend the time for appealing on such terms as the Court shall think fit to ensure the determination on the merits of the real question in controversy between the parties. We must say at once putting aside the merits of the case for the moment, the delay in this case can only be described as inordinate. Some delay may be explained by a change of solicitor for the appellants at the end of June last year, but the delay in this case of four months beyond the time for appeal must be viewed seriously. This Court strongly disapproves of breaches of the Rules. The Rules are there to lead to the final resolution of the dispute between the parties and to avoid delays. But here it is not just a matter of the justice of the case as to the delay itself.

Rule 19 provides as follows:

"19. Court may extend time limit - The Court of Appeal shall have power to extend the time for appealing, or to amend the grounds of appeal, or to make any other order on such terms as the Court shall think fit to ensure the determination on the merits of the real question in controversy between the parties".

It can be seen from the wording of Rule 19 that this Court is charged with ensuring the determination on the merits of the real issue in controversy between the parties. Those are different words from those employed in the Court of Appeal Rules in New Zealand where that Court can extend time for appealing by way of granting special leave in such cases and on such terms as the justice of the case may required. The justice of the case will have regard to the reasons for the delay but Rule 19 spells out the determination of the real question in controversy as the compelling issue when the Court is considering an extension of time for appealing.

Having said that, I turn now to the facts of the case. In its statement of claim, the First Respondent sought judgment against Pacific Agricultural Consultancy Services Ltd as First Defendant and against five Second Defendants, all being directors of the First Defendant and who are now the two Appellants and the three Second Respondents in this Court. The statement of claim was very brief alleging that the plaintiff granted the First Defendant an overdraft facility of $17,000 supported by the joint and several personal guarantees of all five directors dated 13 October 1987. A further overdraft facility of $74,000 supported by a further joint and several guarantee again to be signed by all five directors but in the event signed by only the three Second Respondents was dated 24 October 1988. The amount claimed inclusive of interest to 12 March 1990 against the First Defendant in the Court below was $95,895.26. Accrued interest was claimed at 19% per annum or $49.91 per day.

Mr Justice Dillon gave judgment in three ways. First against the company for $90,458.68 as at 20.11.89 together with certain interest. Secondly against the Second Respondents at $74,000 being their limit of liability under the 1988 guarantee together with certain interest. And thirdly against the appellants for $17,000 being their limit of liability under the 1987 guarantee together with certain interest. The appellants accept that all five directors were liable jointly and severally under the 1987 guarantee which they had all signed, and should therefore have judgment jointly and severally against them all under that guarantee but the appellants seek to have this Court expressly limit their individual liability to the Bank to the extent of 1/5 of their joint and several indebtedness. Both guarantees were in the same form and it was a standard form of the Bank. Clause 8 provides as follows:

"This guarantee shall be in addition to and independent of and shall not affect nor be affected by any security or any other or further guarantee now or hereafter held or taken by the Bank nor by any loss or release by the Bank of any security nor by the Bank failing or neglecting to recover by the realisation of any security or otherwise any of the moneys hereby guaranteed nor by other laches or mistakes on the part of the Bank".

The appellants had endeavoured to escape all liability by submitting that the Bank had substituted the 1988 guarantee for the 1987 guarantee but the judge did not accept that argument. He held at page 4:

"But the facts and the evidence show that the plaintiff bank's requirements even for the completion of the 1988 guarantee by all the directors was not complied with. In those circumstances, the argument for substitution of the 1987 guarantee by the 1988 guarantee must fail".

However so far as the three Second Respondents were concerned, the Judge said at page 6:

"The defendants Kruse and Newton sought to escape liability by claiming that the 1987 guarantee was substituted by the 1988 guarantee. I have rejected that submission. But the position of the defendants Bourke, Fau and Meredith is made the more precarious by their having signed both the 1987 and the 1988 guarantees. It is clear that if all the documentation called for in 1988 had been completed, then the 1987 guarantee would have been extinguished. So far as the defendants Bourke, Fau and Meredith are concerned they did all that was required of them in 1988 and they are entitled to have their obligations under the 1987 guarantee extinguished".

There appears to be some conflict in the above passages of the judgement as to substitution of one guarantee for another. In the view of this Court the appellants were entitled to rely on Clause 24 of the guarantee, which has already been set out, as against the other directors who were jointly and severally liable with them to the limit of $17,000 in terms of Clause 19 of the 1987 guarantee.

Counsel for the appellants has accepted that all five directors are jointly and severally liable under the 1987 guarantee and counsel for the Bank would not oppose the granting of an extension of time for appealing for the Court to give judgment to that effect. But to divide up the total indebtedness by a fifth and give judgment for those specific amounts against each director was not sought on the pleadings and would deny to the Bank its contractual rights under the guarantee for joint and several liability. It is for each surety who may meet more than a fifth share to look to any co-surety or co-sureties for contribution but that and the amount of any contribution are not matters before this Court. We are satisfied that the extension of time to appeal should be granted so that the judgment can be varied so far as it affects the two appellants to ensure the determination on the merits of the real question of controversy between the appellants and the Bank.

Accordingly the judgment is hereby varied as follows: The words, "Judgment against Defendants Kruse and Newton are deleted and the following words substituted "Judgment against Defendants Kruse, Newton, Bourke, Fau and Meredith jointly and severally will be".

The appellants have been granted an indulgence. There will be an order for costs against the appellants in favour of the First Respondent of $500 together with any reasonable disbursements to be approved by the Registrar.

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