Home | Databases | WorldLII | Search | Feedback High Court of Fiji

Yang v Fiji Development Bank [2010] FJHC 447; HBC407.2000L (30 September 2010)

IN THE HIGH COURT OF FIJI
AT LAUTOKA
CIVIL JURISDICTION

Civil Action No: HBC 407 of 2000L

BETWEEN:

ROBERT YANG and ALFRED YANG
1st Plaintiffs

AND:

CROWN CORK (FIJI) LTD
2nd Plaintiff

AND:

FIJI DEVELOPMENT BANK
1st Defendant

AND:

HASMUKH BHAI PATEL and H.D’s GARMENT WORKSHOP LIMITED
2nd Defendant

INTERLOCUTORY JUDGMENT

Judgment of: Inoke J.

Counsel Appearing: Mr S Nacolawa for the Plaintiffs
Mr F Khan for the 1st Defendant

Solicitors: Nacolawa & Co for the Plaintiffs
R. Patel Lawyers for the 1st Defendant

Date of Hearing: 30 April 2010
Date of Judgment: 30 September 2010

INTRODUCTION

[1] On 15 October 2008, Master Udit made what is commonly known as a “guillotine order” against the Plaintiffs. On 30 April 2010 I heard the Plaintiffs’ application for leave to appeal the Master’s order out of time. This is my judgment.

THE BACKGROUND

[2] The Plaintiffs original solicitor, who is now deceased, filed this claim on 12 December 2000. The claim relates to a housing loan given by the First Defendant, Fiji Development Bank (“FDB”), to the First Plaintiffs in 1983 for them to build a building on their land. The loan was secured by a registered mortgage over the land and improvements. The First Plaintiffs were the directors and shareholders of the Second Plaintiff Company, (“Crown Cork”). The FDB also gave an industrial loan to Crown Cork secured by a second mortgage over the First Plaintiffs’ land and a debenture over the company’s assets and undertaking. The Plaintiffs leased their land and building to the Second Defendant. With the agreement of FDB, rental income was assigned to the bank in repayment of the loans. The two loans were subsequently merged by FDB, according to the Plaintiffs, without their knowledge. Crown Cork defaulted on the loans and FDB exercised its rights as debenture holder and appointed a receiver who sold the company’s assets and undertaking including the First Plaintiffs’ land to the Second Defendant. The Plaintiffs alleged that such sale was negligent, fraudulent and at gross undervalue. They sued the Defendants for certain declarations, accounts and damages.

[3] The FDB filed its Defence on 9 January 2001. The bank denied that the accounts were merged. The loans were to construct a commercial building. The loan to the company was secured by a second third party mortgage over the First Plaintiff’s land. The company defaulted and the bank acted lawfully in exercising its power of sale under the mortgage. The company was never denied its right of redemption but failed to exercise it before the land was sold.

[4] The Second Defendant filed its Defence on 18 January 2001. It admitted paying the rental income to the FDB from 1995 but was not aware of the arrangements between the Plaintiffs and the bank. The property was transferred to it in October 2000 and the Second Defendant denied any wrong doing on its part.

[5] The Summons for Directions was filed on 28 June 2001 and the Order was made on 26 September 2001. The matter lay dormant until 17 October 2006 when the solicitors for FDB filed a Notice of Intention to Proceed and served it on the Plaintiffs on 25 October 2006. The Plaintiffs engaged their current solicitors on 26 October 2006. The case did not progress any further until the Court issued an Order 25 rule 9 notice for 7 November 2007 for the parties to show cause why the action should not be struck out for want of prosecution or abuse of process. The parties appeared by counsel and the Master adjourned the matter to 28 February 2008 subject to the Plaintiffs taking further steps by 24 January 2008 failing which the matter would be struck out. On 16 November 2007, the Plaintiffs solicitors filed an application for leave to amend their statement of claim and to consolidate this action with two other actions HBC 96 of 2001 and HBC 68 of 2000 involving the same transactions and parties. The application was called on 11 December 2007 before Master Udit who adjourned it to 26 February 2008. The application was further adjourned for hearing on 13 March 2008. The hearing was adjourned to 10 April. The Plaintiffs filed their amended Statement of Claim on 3 April 2008. The new amendments were essentially further particulars of alleged fraud and bad faith on the part of the bank. On 10 April 2008, the Master gave leave for the Defendants to file their Defences to the Amended Claim. The First Defendant filed its Defence on 2 May 2008. The matter was further adjourned to 27 May 2008. Another adjournment to 12 June 2008 followed for the parties to appear before the Master for Pre-trial conference. The Master gave further directions on 12 June 2008 and adjourned the matter to the Deputy Registrar for mention on 2 July. The Deputy Registrar after hearing counsel for the Plaintiffs gave him more time to complete the Pre-trial steps and remitted the matter back to the Master for mention on 13 August 2008. On the Plaintiff’s further summons for directions heard on 23 July 2008 further orders were made for completion of the Pre-trial steps and the matter adjourned to 7 October 2008 for review and directions by the Master. On 13 August 2008, the Master ordered the Defendants for file and serve their lists of documents and adjourned the matter to 10 September 2008. The Master then further adjourned the matter to 13 October 2008, then to 15 October on which date counsel for the Plaintiffs did not appear. The Master was not impressed by counsel’s failure to appear and made the guillotine order that is the subject of this application.

THE MASTER’S ORDER OF 15 OCTOBER 2008

[6] Master Udit’s order of 15 October 2008 was:

1. The Plaintiffs do pay a sum of $1200.00 to the First Defendant as costs for today’s wasted fixture and such payment is to be made by 30th October 2008.
   
2. The Plaintiffs Solicitor do file Pre-Trial Minutes by 3rd November 2008. However, the Plaintiffs Solicitor will not be entitled to file the Minutes unless the costs of $1200.00 as ordered above is paid by 30th October 2008. It is further ordered that unless the Plaintiffs Solicitor files the Pre-Trial Conference Minutes by 3rd November 2008 this case is to be struck out with further costs against the Plaintiff in the sum of $3000.00.
   
3. In the event that this case is struck out for non compliance by the Plaintiffs Solicitor of the orders made above the Registry is ordered not to accept any application for reinstatement unless the total costs have been paid by the Plaintiffs.
   

[7] The Master gave written reasons in his own handwriting but unfortunately it is near impossible to decipher them accurately.

APPLICATION TO SET ASIDE THE MASTER’S ORDER

[8] The Plaintiffs then filed an application on 4 December 2008 for the following orders:

1. That the orders made by the Master on the 15th day of October 2008, be set aside and vacated.
   
2. That this Action No HBC 407 of 2000 be re-instated as it is almost ready for hearing;
   

100. That this Action No HBC 407 of 2000 be heard first instead of the related action No. HBC 096 of 2001.
     

4. Costs shall be in the cause.
   

[9] Mr Robert Young’s affidavit in support explained that his counsel failed to appear on the 15 October 2008 because counsel thought it was 16 October 2008 when the related matter HBC 96 of 2001 was to be called. It was a genuine mistake.

[10] Despite non compliance with his Orders of 15 October 2008, Master Udit made further orders on 19 February 2009 and adjourned the matter to 17 April 2009. Because of the closure of the Courts on 10 April, the matter did not get called again until 31 July 2009. Only counsel for the Plaintiffs appeared so I adjourned the matter for mention on 28 August 2009. Four more mentions followed and on 11 September 2009 I gave leave to the Plaintiffs to file an application to set aside Master Udit’s order.

APPLICATION FOR LEAVE TO APPEAL

[11] Instead of an application to set aside, the Plaintiffs filed on 29 September 2009 an inter-partes Summons for leave to appeal out of time and for stay of execution of Master Udit’s order. The Summons was first called on 2 October 2009 and I gave directions for filing affidavits and set the application down for hearing on 19 November 2009. The hearing could not proceed on that date because of my Court of Appeal commitments so on 7 December 2009 I set it down for hearing on 30 April 2010.

HEARING OF 30 APRIL 2010

[12] Both counsel filed written submissions for which I am grateful. Counsel for the First Defendant submitted that there had been a delay of about year between the Master’s Order and the filing of the Plaintiffs’ application for leave and that alone disentitled the Plaintiffs to appeal.

[13] I took the view however, that if the Master did not have the power to make “guillotine orders” then the question of delay was a non issue. I therefore asked counsel to file further submission on the question, which they have done and for which I am also grateful.

HAS THE MASTER POWER TO MAKE “GUILLOTINE” ORDERS?

[14] Counsel for the Plaintiffs referred me to several cases in which the Master had made guillotine orders in which the party in breach was given more time to comply. He contrasted them with the present case where no such leniency was shown at all. He conceded that the Master has power to make such orders but argued that the Master acted unfairly and unduly harsh not only in not giving any leniency but also in directing the Registry not to accept any further applications from the Plaintiffs.

[15] Counsel for the First Defendant also submitted that the Master had such powers. He further submitted that the defaulting party can either (i) ask for an extension of time under O 45 r 5, (ii) seek leave to appeal under O 59 rr 9(b) and 11 or (iii) seek leave for an extension of time to appeal under O 59 r 10.

[16] I think they are both correct in saying that the Master has such powers.

[17] The powers, authority and jurisdiction of the Master are found in Order 59. Order 59 r 1 provides that the jurisdiction conferred on the Registrar under the High Court Rules 1988 may be exercised by the Master. Order 32 r 9 vests the Registrar with the powers, authority and jurisdiction of a judge in chambers with respect to the matters listed in paragraphs (a) to (n). Under paragraph (a), the Registrar, and hence the Master, has the powers, authority and jurisdiction with respect to the place, time for setting down for trial, and mode of trial, and other matters usually arising on a summons for directions. Further powers are given to the Registrar by O 32 r 12.

[18] Thus, if the judge in chambers can make a guillotine order in a summons for directions hearing, then the Registrar and the Master have the powers, authority or jurisdiction to do the same.

[19] Order 59 r 2 further extends to the Master “all the power, authority and jurisdiction which may be exercised by a judge” in “chamber applications” except in certain cases of which this case is not one.

[20] Clearly, the Master has the necessary power to make guillotine orders. But what is not clear are the circumstances under which such orders could and should be made? The effect of such orders is to summarily dismiss an action or application. I therefore move on to consider the principles applicable to summary dismissal cases.

PRINCIPLES ON SUMMARY DISMISSAL

[21] Both counsel cited several cases: WM Angus (Fiji) Ltd v Karan [2008] FJHC 165; HBC426.1986 (30 July 2008); Madhvi v Public Works Department [2009] FJHC 273; HBC194.2003L (8 December 2009); Jih Tsuan v Malarao [2010] FJHC 30; HBC353.2003L (5 February 2010); Firman v Ellis [1978] 1 QB 886. The latter case dealt with the exercise of discretion to extend the statute of limitations time period and is not of great assistance.

[22] In WM Angus (Fiji) Ltd v Karan [2008] FJHC 165; HBC426.1986 (30 July 2008) Scutt J found that there was no application or order striking out the matter so Her Ladyship held that it was unnecessary for the plaintiff to file an application for re-instatement. The action remained extant.

[23] In Madhvi v Public Works Department [2009] FJHC 273; HBC194.2003L (8 December 2009) I dismissed an application to re-instate a matter that had been struck out by the Master because of:

... the intentional and contumelious behaviour of the Plaintiff in not complying with the Master’s court order. The delay is inordinate, over 6 years, and explanation given by the Plaintiffs solicitors’ litigation clerk is mischievous. The delay is inexcusable. The application is therefore dismissed according to the principles in Pratap v Christian Mission Fellowship and Abdul Kadeer Kuddus Hussein v. Pacific Forum Line.

[24] Jih Tsuan v Malarao [2010] FJHC 30; HBC353.2003L (5 February 2010) was my decision on an application for dismissal for want of prosecution under O 25 r 9. I think some of the comments made in it are worth repeating because they seem to be one of the bases on which the Master made his order in this case:

[11] In respect of the last passage in Pratap ([2006] FJCA 41; ABU0093J.2005 (14 July 2006)), Mr Nandan referred me to the Fiji Court of Appeal[2] (decision) in Singh v Singh [2008] FJCA 27; ABU0044.2006S (8 July 2008) where the Court said:

27. There is also developing a new line of authority which is not utterly critical to the decision of the learned Judge in this case. Nevertheless, it would be inappropriate to fail to refer to this development. The proposition is that regard should also be had to the impact of a case on the resources of the court. Those resources are not infinite and for every case which takes up time, another case is potentially delayed. If the case which takes up time and delays another case is, on any view, an utter waste of time and resources and stands in the way of other more deserving cases being heard at an earlier time, then that is a factor which the courts cannot ignore. Indeed, the learned Judge in this case at paragraph 20 of his judgment sets this out with admirable clarity:

There has been a sea change in the approach to delay in most if not all common law jurisdictions. Further, a new and important factor has entered the equation. That factor is the use of the court's time and resources. The more time that is spent upon actions which are pursued sporadically, the less time and resources there are for genuine litigants who pursue their cases with reasonable diligence and expedition, and want their cases to be heard within a reasonable time.

[12] I would also like to reproduce their Lordships’ observations in Singh, as a timely reminder, where they said:

A pattern becomes immediately obvious from this chronology. It is to be seen that in the first 3 months after the happening of the event which gave rise to this litigation that there is a flurry of litigious action. That represents a model of the expedition that is expected of litigants and legal practitioners who conduct litigation before the courts of Fiji.

[25] The Court of Appeal in Pratap stated the principles to be applied in summary dismissal cases as follows:

[20] In Dey v. Victorian Railways Commissioners [1949] HCA 1; (1949) 78 CLR 62, 91 Dixon J said:

"A case must be very clear indeed to justify the summary intervention of the court ... once it appears that there is a real question to be determined whether of fact or of law and that the rights of the parties depend upon it, then it is not competent for the court to dismiss the action as frivolous and vexatious and an abuse of process".

[21] More recently, in Agar v. Hyde [2001] HCA 41; (2000) 201 CLR 552 at 575 the High Court of Australia observed that:

"It is of course well accepted that a court ... should not decide the issues raised in those proceedings in a summary way except in the clearest of cases. Ordinarily, a party is not to be denied the opportunity to place his or her case before the court in the ordinary way and after taking advantage of the usual interlocutory processes."

[26] I should also refer to Trade Air Engineering (West) Ltd v Taga [2007] FJCA 9; ABU0062J.2006 (9 March 2007) where the Court of Appeal said in respect of the High Court's power to summarily dismiss a case under O 25 r 9:

16] In our view the only fresh power given to the High Court under Order 25 rule 9 is the power to strike out or to give directions of its own motion. While this power may very valuably be employed to agitate sluggish litigation it does not in our opinion confer any additional or wider jurisdiction on the Court to dismiss or strike out on grounds which differ from those already established by past authority.

IS THIS A CLEAR CASE FOR SUMMARY DISMISSAL?

[27] I note from the court file that Mr Nacolawa had appeared either in person or by other counsel on all other mention dates except for the 15 October 2008. His absence has been explained as a genuine mistake. I accept the explanation. It was not deliberate.

[28] The Defendants were not entirely free of blame. As is the usual case, the parties counsel struggled with the Pre-trial steps, particularly with the PTC Minutes. It is not the sole responsibility of the solicitor or counsel for the Plaintiff but of all of them. Order 34 r 2 makes that clear. To do otherwise would leave the PTC process open to abuse. They are reminded of the comments of the Court of Appeal in Pratap v Christian Mission Fellowship [2006] FJCA 41; ABU0093J.2005 (14 July 2006):

9] We pause here to observe (not for the first time) that the practice of exchanging so called "minutes of a pre-trial conference" when no conference had in fact taken place and therefore no minutes had actually been taken is not compliance with the mandatory requirements of RHC O 34 rule 2. It is a practice which should be discontinued.

[29] Further, the Plaintiffs complained that the FDB had not disclosed the records of repayments of the loans. The bank's affidavit in reply avoided the issue altogether and instead said that because the Plaintiffs had not paid the costs ordered by the Master, they are not entitled to be heard or any further orders of the Court. It is true that an order had been made and prima facie it should be complied with first. But that is not entirely a hard and fast rule. It does not apply where the order is defective: Singh v Kiran [2002] FJCA 80; ABU0018U.2001S (29November 20002)

[30] I do not think the Plaintiffs claim is a frivolous one with no hope of success. As was said in Pratap, at the end one must always stand back and have regards to the interests of justice. I think the Plaintiffs should be allowed to contest their claim.

[31] Further, I have grave doubts as to the justification and validity of the terms of the order in this case. I think the award of costs of $1,200 was excessive for attendance at a Pre-trial conference which would not have taken half a day. It may be true that counsel had to come all the way from Suva but that did not necessarily mean that he was entitled to solicitor-client costs or the costs of travel. Secondly, the Master did not give the Plaintiffs an opportunity to explain why they did not pay the costs as ordered. There may be good and compelling reasons for not doing so. They should be afforded due process. Thirdly, the second order for costs does not appear to be based on principle. It seems arbitrary and excessive too. Fourthly, the order made the Plaintiffs' solicitor solely responsible for the PTC Minutes when under the Rules all the parties' solicitors are equally responsible. Fifthly, the direction for the Registrar not to accept any further applications is in breach of due process, in my view. A litigant must be able to challenge an order made against him summarily and in his absence.

[32] Finally, it is clear that in making guillotine orders, the Master must take sufficient care to ensure that the terms of the order are not arbitrary and does not deny the affected party due process before the order becomes effective.

WHAT ORDERS TO MAKE?

[33] For the reasons given above, I find the Master's Order of 15 October 2008 defective at law. I therefore grant the application to extend time to appeal. I would have granted leave to appeal and the appeal had there been such applications before me.

[34] The Plaintiffs filed an application to re-instate the matter way back in 2008. That application was neither heard nor withdrawn. It is not clear from the file notes what happened to it. Had the application been brought before me I would have granted it also. I do not think it is an application which I am precluded from hearing, a procedure disapproved by the Court of Appeal in Trade Air Engineering (West) Ltd v Taga [2007] FJCA 9; ABU0062J.2006 (9 March 2007), because it had not been heard by me at any time.

[35] From a case management point and in the interests of justice to both parties I should not delay the hearing of this action any further and therefore order that the Master's Order of 15 October 2008 is vacated and the action re-instated.

COSTS

[36] The need for this application was not due to the fault of either party. I therefore make no order as to costs.

ORDERS

[37] The Orders are:

1. The Master's Order of 15 October 2008 is vacated.
   
2. This action is re-instated and adjourned to the Master for compliance with Pre-trial steps.
   

100. There is no order as to costs.
     

Sosefo Inoke
Judge