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Chase Corporation Ltd v Minister for Works and Energy [2010] FJHC 48; Civil Action 285.2005 (19 February 2010)

IN THE HIGH COURT OF FIJI
AT LAUTOKA
CIVIL JURISDICTION

CIVIL ACTION NO. 285 OF 2005

BETWEEN:

CHASE CORPORATION LIMITED
PLAINTIFF

AND:

MINISTER FOR WORKS AND ENERGY
FIRST DEFENDANT

AND:

THE ATTORNEY GENERAL OF FIJI
SECOND DEFENDANT

Before: Master Anare Tuilevuka

Counsels: Mishra Prakash & Associates.
Office of the Attorney-General - Lautoka

Date of Ruling: Friday 19th February 2010.

RULING

BACKGROUND

(1) The Ministry for Works & Energy ("Ministry") had hired a large excavator belonging to Chase Corporation Limited ("CCL") in October 1998 at the rate of $60-00 per hour.

(2) The excavator was to be used for work on Morou Island in the Yasawas. In June 2000, the excavator was returned to CCL. The Ministry has paid some $28,560-00 to CCL for the hire of the excavator. CCL claims the sum of $192, 780 – 00 which it alleges remains outstanding from the Ministry. CCL also claims for damages on the excavator’s electronic system, hydraulic piping, rollers, chains, panels, boom and seals and oil cooler. These are alleged to have been caused by the negligence of the defendants’ servants.

(3) Paragraphs 15 and 16 of the Statement of Claim plead that:

"THAT the 1st Defendant had since offered to the plaintiffs the sum of $17,500 to settle the plaintiffs’ loss and the plaintiff has agreed.

THAT the 1st Defendant has been demanding the payment of the agreed sum of $17,500 but to no avail and has its only option now to come to Court."

(4) The 3rd cause of action relates to loss of income suffered by CCL for the time when the excavator is left in a state of disrepair and could not be used by CCL. The total claim is $757, 360-00 plus interest at 13.5% and costs.

(5) The defence was filed on the 30th October 2007. It confirms the offer of $17,500 was made but that it was a payment for the hours that CCL was engaged by the government rather than an admission of negligence on government’s part. The defence also admits in paragraphs 6 and 7 certain other payments made with an explanation that was materially different from that which the Plaintiff offers.

PROCEDURAL HISTORY

(6) The statement of claim was filed on 30th September 2005. On 9th December 2005, default judgement was entered against the defendants by the Deputy Registrar. On 4th April 2007, the Office of the Attorney-General in Lautoka filed an application to set aside the default judgement on the ground that it was entered irregularly.

(7) Then on the 3rd September 2007, CCL filed a Summons seeking an Order that the default judgement entered by the Deputy Registrar be "treated as confirmed and valid" and that the failure to comply with Order 77 Rule 6 be treated as an irregularity that does not nullify the proceedings or orders. The application also includes a prayer that CCL be granted leave to enter default judgement against the defendants as of 9th day of December 2005.

(8) That application was stated to be made under Order 20 Rule 10, Order 2 Rule 1 and under Order 77 Rule 6 of the High Court Rules, 1998 and under the inherent jurisdiction of the Court.

(9) On 2nd April 2008, CCL filed a Notice of Assessment of Damages pursuant to Order 37 Rule 1.

(10) On the 26th day of October 2007, Master Udit made the following Orders:

IT IS HEREBY ORDERED BY CONSENT AS FOLLOWS:

1. That the Default Judgement dated the 8th day of December 2005 be set aside on condition.

2. The Defendant to pay the sum of $17,5000 (Seventeen Thousand Five Hundred Dollars) into the Trust Account of Mishra Prakash & Associates within 14 days. Any extension to payment must be made in Court in writing copied to the Plaintiffs Solicitor.

3. Mishra Prakash & Associates to hold half of the $17,500 (Seventeen Thousand Five Hundred Dollars) in their Trust Account except for $8,750-00 (Eight Thousand Seven Hundred & Fifty Dollars) which is to be paid to the Plaintiff.

4. The Defendant to file and serve Statement of Defence by the 29th day of November 2007.

5. The matter is to take its normal course.

(11) On 7th October 2008, another Summons for Assessment of Damages was filed by CCL pursuant to Order 37 of the High Court Rules. It appears from the supporting Affidavit of Vijayantimala sworn on 29th September 2008 that the Summons was filed because of the failure on the part of the defendants to pay the sum of $17,500 into Mishra Prakash’s Trust Account as ordered by Master Udit. The Reply to the Statement of Defence was then filed on 16th December 2008, Summons for Directions was filed on 17th December 2008. Orders on Summons for Directions were sealed on 22nd May 2009.

(12) Then on 23rd September 2009, CCL filed a Summons for Payment of Monies under Order 29 Rules 1, 2 and 9.

THE SUMMONS FOR PAYMENT OF MONIES

(13) The application is supported by the Affidavit of Vijayantimala sworn on 21st September 2009. She is a Director of CCL. She refers to the Consent Orders of Master Udit sealed on the 26th day of October 2007 (see paragraph 17 above). She deposes that the Office of the Attorney-General, through their letter dated 22nd day of September 2004, had admitted that the damage done to the machinery was in the sum of $17,500.00 (Seventeen Thousand Five Hundred Dollars) and the same was offered. She annexes a copy of a letter dated the 22nd day of September 2004 by Ms Suliana Tabaiwalu (then Principal Legal Officer at the Office of the Attorney General):

"The Managing Director

Chase Corporation Limited

P O Box 3916

LAUTOKA

Dear Sir,

Re: CHASE CORPORATION LIMITED – CLAIM FOR COMPENSATION

We refer to your letter dated September 08th, 2004.

We acknowledge that the sum of $28,560.00 has been paid for unpaid hours.

We are still in the process of calculating the category of "lost hours".

We have also had meetings in our office in regards to the unpaid amount of the damage to the machine of which you have verbally indicated that the sum of $17,500.00 as the amount of damage is acceptable to you.

In regards to the damage, the sum of $17,500.00 is hereby offered as the total sum for damage to the machine.

We await your response in the matter.

Yours faithfully,

Sgd: Suliana Tabaiwalu

PRINCIPAL LEGAL OFFICER"

(14) Notably, the Tabaiwalu-letter was written a year before the Writ and statement of Claim were filed on 30th September 2005. I also note that Ms. Tabaiwalu’s letter was not headed "Without Prejudice".

ORDERS SOUGHT BY VIJAYANTIMALA

(15) She requests that the sum of $8,750.00 (Eight Thousand Seven Hundred Fifty Dollars) held in the Trust Account of Mishra Prakash & Associates be paid out of the Trust Account of Mishra Prakash & Associates as directed by the Plaintiff or its Director Ms Vijayantimala.

AFFIDAVIT IN OPPOSITION & SUBMISSIONS

(16) The Affidavit and submissions in opposition filed by the Office of the Attorney-General in Lautoka raise various points. The gist of their submission is that there is no justification for the payment of the $8,500.00 because the matter is at pre-trial stages only.

(17) They also argue that "there was no deed of settlement" and that "as a matter of procedure to safeguard government finances" written approval from the Ministry of Finance through its Permanent Secretary must be obtained first before any settlement can be entertained. In this case, there was no such approval.

THE REPLY

(18) The Affidavit in Reply of Vijayantimala sworn on 10th November 2009 deposes inter-alia as follows:

"My legal advice is that government executive procedures and are not able to over rule the legal principles regarding settlement. If the rule of law to be maintained and the Government Departments must comply with the rule of law. There was a settlement here as is disclosed in the Defendant’s own documents. They did not disclose this. They are also not consenting to their own documents going in as agreed documents. Annexed hereto and marked with the letter "A" is a copy of their letter asking that their own documents be removed from the agreed list.

(19) She appears to be of the view that the defendants’ counsel ought not to dictate to Court when a settlement is binding or when a Deed of Settlement is needed.

COMMENTS

(20) Clearly, the default judgement entered against the defendants was irregular in the first place. CCL’s lawyers had even conceded to that judging from the tone of their application dated 3rd September (see paragraph 7 above).

(21) Now returning to the question: should I grant the Orders sought in this application - i.e. to order that the sum of $8,500 held in Mishra Prakash’s trust Account be released forthwith?

(22) My short-answer to the above is "No". I cannot grant such an Order for the following reasons.

(23) Firstly, the application is made pursuant to Order 29 Rules 1, 2 and 9. Rule 1 deals with injunctions. I do not see how it is relevant at all in the application. Rule 2 deals with the detention, preservation of the subject matter of cause or matter. Again, I do not see the relevance of any of the rub-rules under Order 29 Rule 2.

(24) Order 29 Rule 9 deals with interim payments on account of any damages, debt or other sum (excluding costs) which the defendant may be held liable to pay to or for the benefit of the plaintiff. I cannot grant the order sought under Order 29 Rule 9 as it would pre-suppose that Master Udit had made a finding that the defendants had acceded to liability on that amount. Clearly – this was not the case! Nor had Master Udit conceded that the defendants had settled on any amount.

(25) Secondly, the defendants have filed a defence raising some triable issues about the amount being claimed.

(26) Thirdly, in essence, in seeking payment of the sum of $8,500-00 out of Mishra Prakash’s trust account to the CCL, the plaintiff essentially relies on what it argues is a concession in the Tabaiwalu letter. But the Tabaiwalu letter cannot be the basis to order the payment of $8,500 to CCL for two reasons (i) that letter was a without prejudice offer (ii) using it as a basis for granting the order sought would be tantamount to making a summary judgement to the same amount under Order 14 –which cannot be made against the State as per Order 14 Rule 12.

WITHOUT PREJUDICE OFFER

(27) The Tabaiwalu letter, in my view, was a without prejudice offer from the defendants. It was made a year before the Writ was even issued. Even though the letter did not contain such a heading, I say it was without prejudice nonetheless because it was essentially an attempt at settlement.

(28) As a rule, negotiations with a view to settlement are conducted on a without prejudice basis.

(29) Because of that, parties who negotiate settlement are rest assured that nothing they say or do in the course of negotiations will be admissible in evidence should the matter come to trial - unless parties consent. The underlying principle is that parties will negotiate freely if they know that they can do so without the risk of damaging the presentation of their case. Otherwise, they simply shy away from negotiations.

(30) The fact that a party had made or replied to, or indeed ignored a "without prejudice" offer or compromise, cannot be used as an admission prejudicial to his or her case. Again, the protection applies only to negotiations made in an attempt to settle a dispute.

(31) Hence, a letter written with settlement in mind – even if it omits the words "without prejudice" – is without prejudice nonetheless (see John O’Hare & Robert N Hill: CIVIL LITIGATION – 5th Edition, 1990 pp 36-37) and cannot be adduced in evidence.

(32) In this case, the Tabaiwalu letter was clearly a without prejudice offer to settle the case. The act of adducing that letter to Vijayantimala’s affidavit was grossly unethical in my view. I say that because its effect – intended or not – is to curtail and undermine the defendants case. And even pleading it in paragraphs 15 and 16 (see paragraph 3 above) was totally inappropriate and uncalled for.

ORDER 14 – SUMMARY JUDGMENT

(33) Finally – I cannot grant the Orders sought by the Plaintiff because it would be akin to entering a summary judgement against the State to the amount sought. That would offend Order 14 Rule 12 of the High Court Rules:

"No summary judgement against the State (O. 14 r. 12)

Nothing in the foregoing provisions of this Order shall apply or be construed in derogation of, or in any way affect, the provisions contained in Order 77 in so far as they apply in relation to proceedings against the State"

CONCLUSION

(34) I refuse to grant the orders sought. Had I done so, I would just be allowing the Plaintiff to commit yet another breach of Order 77 of the High Court Rules. I dismiss the application. Nor order as to costs.

(35) This case is adjourned to Friday 26th February 2010 for mention.

Anare Tuilevuka
Master

At Lautoka.
19th February 2009.