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Reef Pacific (Sydney) Pty Ltd v Reef Pacific Trading Ltd [1992] SBHC 8; HC-CC 246 of 1991 (23 April 1992)

HIGH COURT OF SOLOMON ISLANDS

Civil Case No. 246 of 1991

REEF PACIFIC (SYDNEY) PTY LTD

-v-

REEF PACIFIC TRADING LTD & OTHERS

High Court of Solomon Islands
(Muira, ACJ.)

Hearing:
Judgment: 23rd April 1992

P. Tegavota for Appellant
T. Kama for the Respondent

MURIA ACJ: This is an application by way of Motion for Judgement brought by the plaintiff against the 1st, 2nd and 3rd defendants.

The action was commenced by a Writ of Summons filed in this Court on 11 November 1991 by the plaintiffs claiming $503,311.14 against the defendants. The sum comprises of $209,311.14 as the balance of monies due and owing by the defendants to the plaintiffs in respect of advances made to the defendants by the plaintiffs and $294,000.00 as monies due and owing a payable to the plaintiffs by the defendants in damages for breach contract. The plaintiffs further claim for damages for continuing breach of contract for the supply of 18 tonne of seafood product every six weeks for a period of 5 years.

On the 28 November 1991, Mr Teutao who was then acting as Advocate for the defendants filed a Defence on behalf of the 1st, 2nd and 3rd defendants. The defence is simply a denial of each and every allegation contained in the Statement of Claim. Mr Teutao also file a request for further and better particulars on the same day and reserved his clients' rights to deliver an amended Defence after the particulars requested were received.

On 2 December 1991 Mr Teutao for the Defendants filed a Summons requesting the Court to order the plaintiff to lodge security for costs within 14 days. The Summons was set down for hearing on 5 December 1991. Mr Kama for the plaintiffs filed this Motion for Judgement on 5 December 1991 and requested that it be heard at the same time as defendants' summons. Both matters came before Chief Justice Ward on 5 December 1991 during which the Court ordered that the plaintiffs were to provide security for cost in the sum of SI$10,000.00 within 14 days or the action would be stayed. The Notice of Motion was to be re-listed on 21 days notice. On 19 December 1991, the Registrar of the High Court received a Bank Guarantee from the National Australia Bank Limited in Sydney in the sum of AUD4,600.00 (equivalent to $10,000.00) as security for costs as ordered.

Meanwhile on 14 January 1992 the plaintiffs filed an Amended Statement of Claim in which the claim of $209,311.14 was reduced to $108,038.14. The other claims remain the same. Further and Better Particulars of the Statement of Claim was filed on 21 February 1992. The Amended Statement of Claim together with the Further and Better Particulars were faxed to Lee, Turnbull & Co, Solicitors who are also Solicitors for the defendants in Townsville on 24 February 1992. On 25 February, Lee, Turnbull & Co, Solicitors requested further particulars which Mr Kama supplied on 10 March 1992. On 12 March 1992, Lee, Turnbull & Co., Solicitors requested particulars on the plaintiffs' alternative claim. Mr Kama, again by fax, provided further details as requested. On his faxed-reply, Mr Kama disputes the suggestion that his clients' alternative claim is bad and reiterated that he was proceeding with the motion for Judgement.

At the hearing of this Motion on Monday 16 March, 1992 Mr Kama submitted that the defence filed on 28 November 1991 be struck out, there being no other proper defence filed by the defendants, and that the plaintiffs be entitled to judgement in respect of the liquidated claim and damages.

Mr Nori now appears for the 1st, 2nd and 3rd defendants and objects to the plaintiffs' application. Mr Nori argues the defence filed on 28 November 1991 was a "holding" defence, reserving the right to file an amended defence. In this case, Mr Nori says, the defendants have a proper defence and should be allowed to defend the plaintiffs' claim. Mr Nori says that on that basis he filed an Amended Defence on 6 April 1992 and so this application should be dismissed.

When this motion for judgement came before this Court on 5 December 1991, the only defence filed by the defendants was a mere denial expressed as:

"The 1st, 2nd and 3rd Defendants deny each and every allegation contained in the Statement of Claim."

When the motion came before the Court on 16 March 1992, there was no amended defence filed. The application was adjourned to 2 April 1992 and at that hearing, still no amended defence had been filed. The application was further adjourned to 9 April 1992. On 6 April 1992, Mr Nori filed an amended defence on behalf of the 1st, 2nd and 3rd defendants.

The first question which the Court needs to consider is whether or not the defence filed on 29 November 1991 should b struck out. The plaintiffs' claim in this case for a debt owing of $108,038.14, a liquidated damages for breach of contract in the sum of $294,000.00 and damages for continuing breach of contract. The plaintiffs also claim interests and costs. The nature of the defence required to be filed by the defendants in such a case is provided for under Order 23 of the High Court (Civil Procedure) Rules, 1964. Rule 1 of Order 23 provides that:-

"1. In actions for a debt or liquidated demand in money comprised in Order 3, Rule 5, a mere denial of the debt shall be inadmissible".

The plaintiffs, relying under that Rule ask the Court to strike out the defendants' defence and enter judgement for the plaintiffs on the liquidated amount as well as damages. It will be observed under that Rule that a mere denial such as that filed by the defendants on 28 November 1991 is inadmissible as against the plaintiffs' claim in the sum of $108,038.14 for debt owing and the liquidated demand of $294,000.00. The Rule is mandatory and so the defence which is an mere denial field on 28 November 1991 cannot be a admissible as defence to the two sums claimed by the plaintiffs.

Further, the plaintiffs' claim is also based on an Agreement signed between the parties. As such a mere denial by the defendants is insufficient as a defence. The defendants are required by the rules to plead matters of facts which are in dispute. Rule 3 of Order 23 thus provides that:

"3. In actions comprised in Order 3, Rule 5, classes (a) and (b), a defence in denial must deny such matters of facts, from which the liability of the defendant is alleged to arise, as are disputed; e.g., in actions for goods bargained and sold, or sold and delivered, the defence must deny the order or contract, the delivery, or the amount claimed; in an action for money had and received, it must deny the receipt of the money, or the existence of those facts which are alleged to make such receipt by the defendant a receipt to the use of the plaintiff."

That Rule reiterates the requirements of Rules 4, 16, 18, 20 and 21 of Order 21 that a defendant cannot simply deny generally the plaintiff's claim but that he must be specific and not evasive. There must be a statement of the material facts on which the party relies for his claim or defence (Rule 4.) The defence in this case certainly does not fall within that, nor does it fall within Rule 16 which requires "the defendant ... must raise by his pleading all matters which show the action ......... not to be maintainable or that the transaction is either void or voidable in point of law."

The penalty for non-compliance with the rules on pleadings is obvious. The Court has been invested with the discretionary power to strike out a defence which is general and amounting only to a mere denial of liability. As well as under its inherent jurisdiction, the Court can exercise its powers under Order 21 Rule 29 and Order 27 Rule 4 and strike out a defence which is only a general denial of liability. Such a course of action was taken in Copley -v- Jackson [1884] W.N. 39 where a general denial of liability was struck out.

In this case the defence filed on 28 November 1991 is a general denial of liability. The argument that it is a "holding defence" does not appeal to the Court as a good ground for not striking it out.

The Court will therefore exercise its discretion and strike out the defendants' defence filed on 28 November 1991.

The matter, however, does not end there. After the plaintiffs had already presented their case on the application and before the application on 9 April 1992, the defendants delivered an amended defence on 6 April 1992. In other words, the amended defence was delivered well after the notice of motion for judgement had already been served on the defendants. The position, in so far as the defence is concerned, therefore, is that having struck out the defence filed on 28 November 1991, there was no other defence in existence to the plaintiffs' claim up until 6 April 1992 at which time the Amended Defence was delivered. The Court must therefore consider the legal position of the amended defence.

There is nothing in the orders which says that a defence filed after the time has expired should be disregarded as being of no effect. When one looks at Order 29, Rule 8, one sees the wordings of that Rule as being permissive. It is not the intention of that Rule to exclude a defence which has been filed after the expiration of the time allowed. It simply provides that when the defendant makes default in putting in a defence the plaintiff may set down the action on motion for judgement, and then follows what I perceive to be the permissive language of the Rule:-

"......... and such judgement shall be given as upon the statement of claim the Court shall consider the plaintiff to be entitled."

Those wordings clearly must mean that the Court must exercise some judgement in the matter and not simply to grant the plaintiff the orders he asks for in his motion. The Court will, however, give the plaintiff judgement to which, on the allegations in his statement of claim, the Court considers him to be entitled. Should a defence has been put in, even if after the notice of motion for judgement has been given to the defendant, the Court will still be entitled to consider it and to see if it contains any substance, by way of defence to the plaintiff's claim. If the defence is found to disclose no substance in it, the court would simply disregard it, but if it discloses a substantial ground of defence, the Court will be very slow to disregard it and will have to ensure that the case is properly tried on the merits. In the event the Court, having found the defence to have contained good defence, but nevertheless proceeds to give judgement for the plaintiff, the defendant undoubtedly will be obliged to apply under Rule 12 of Order 29 to have the judgement set aside.

The legal effect of a defence delivered after default had long been clearly established in Gill -v- Woodfin [1884] UKLawRpCh 28; 25 Ch. D. 707 where it was held that a defence put in after the proper time could not be treated as a nullity even though the defence was not delivered until after the plaintiff had served a notice of motion for judgement. In Gibbings -v- Strong [1884] UKLawRpCh 46; 26 Ch. D 66, it was held that on a motion for judgement for want of defence, if a defence has been put in, though irregularly, the Court will not disregard it but will see whether it sets up grounds of defence which, if proved, will be material, and if so, will deal with the case in such manner that justice can be done. Those cases are clearly in point and as such the Court cannot ignore the defence filed by the defendants on 6 April 1992 in this case. In the words of Earl of Selborne, LC:-

"......... if a defence has been put in, though irregularly, I think the Court would do right in attending to what it contains."

In considering this motion and the allegations as contained in plaintiffs' Statement of Claim, I shall also have regard to the amended defence now put in by the defendants. Rule 8 of Order 29 would appear to limit the Court's power to receive any evidence but only to give judgement according to the pleadings before the court. However affidavit evidence may also be considered by the Court in a motion for judgement. See Fitzerwater -v- Waterhouse 32 LJ Ch. 83. Thus I shall consider this case on the pleadings together with the Affidavit evidence now before the Court.

The plaintiffs' claim is for a debt owing, a liquidated demand and damages. As to the claim of a debt of $108,038.14 owing to the plaintiffs by the 1st defendant, the amended defence filed by the defendants merely denies owing such amount. Paragraphs 7 and 8 of the amended defence merely states:

"7. Deny paragraph 12 of the Statement of Claim and state that no money is owing from them to the plaintiffs"

"8. As to the particulars the 1st, 2nd and 3rd Defendants repeat paragraph 3 and 4 of this Defence."

Such a denial is insufficient and offends against Rule 1 of Order 23 and it is inadmissible. I consider it relevant also to note that the 2nd defendant deposed in his Affidavit of 2/5/91 in CC58/91 that he obtained on behalf of 1st defendant the sum of approximately A$200,000.00 from Mr Price who is one of the plaintiffs.

As to the plaintiffs' liquidated demand of $249,000.00 the defence is again a general denial. It is apparent from the amended defence that the defendants do not deny entering into the Agreement of 24 January 1991 although the defendants sought to dispute the plaintiffs' claims based on the Agreement by challenging the legality of the said Agreement. I fee such a form of defence shows that the defence is not specific, and tha tit amounts to evasiveness (see Rule 20 of Ord. 21).

I find that the whole of the amended defence to be general, not specific in nature and insufficient. Consequently the whole of the amended defence, in my judgement, contains no reasonable answer to the plaintiffs' claim.

The plaintiffs will therefore be entitled to their claim on the debt owing in the sum of $108,038.14 and the liquidated demand in the sum of $294,000.00.

As to the claim for continuing breach by the defendants of the Agreement to supply 18 tonne of seafood product every six weeks for five years, the materials before the Court do not show that it has been sufficiently established. The Court can draw inferences of fact in order to determine that claim but in the light of the pleadings now before the Court, I am not prepared to draw any such inferences. That part of the claim by the plaintiffs must therefore be refused.

The application is therefore granted. There will be a judgement for the plaintiffs in the sum of $108,038.14 being for debt owing and $294,000.00 being for liquidated demand for breach of contract together with interest at the rate of 5% from the date of the issue of the Writ to the date of judgement.

I shall hear counsel on the question of costs.

(GJB Muria)
ACTING CHIEF JUSTICE