HIGH COURT OF SOLOMON ISLANDS

Civil Case No. 286 of 2002

NATIONAL BANK OF SOLOMON ISLANDS LIMITED, JOHN SULLIVAN AS TRUSTEE OF THE NBSI HEALTH AND WELFARE TRUST, JOHN GEORGE KATAHANAS AS TRUSTEE OF THE NBSI EDUCATION TRUST, DENNIS JAMES McGUIRE AS TRUSTEE OF THE NBSI EMPLOYEES TRUST and SOLOMON ISLANDS NATIONAL PROVIDENT FUND BOARD

–V-

CENTRAL BANK OF SOLOMON ISLANDS

High Court of Solomon Islands
(Muria, CJ)

Date of Hearing: 29 November 2002 
Date of Judgment: 17 December 2002

Mr J Katahanas and D McGuire for the 1st – 4th Plaintiffs
Mr A Radclyffe for the Defendant

MURIA CJ On 19 November 2002, upon ex parte application made by the plaintiffs, this Court made an order against the defendant, staying the implementation of the additional conditions imposed by the defendant on the first plaintiff’s licence held pursuant to the Financial Institutions Act 1998, and further staying the implementation of the defendant’s direction issued on 15 November, 2002 to the plaintiff that certain restructuring bonds be revalued to 28% of the face value, and that the first plaintiff’s shareholders further capitalize the first plaintiff immediately. This order was subsequently amended the following day, 20 November 2002, by adding the word “Limited” to the name of the first plaintiff. The substance of the order remained the same. By a summons filed on 25 November 2002, pursuant to O.69, r.1 of the High Court (Civil Procedure) Rules 1964 (“the High Court Rules”) the defendant now seeks to have the amended writ of summons and amended order made on 20 November set aside for irregularity, which principally consisted of breaches of the Legal Practitioners Act.

Brief background

I set out here the brief background of the case. The plaintiff is a commercial bank established under the National Bank of Solomon Islands Act Limited (“NBSI”). The second, third and fourth plaintiffs are trustees, each of them being a trustee, respectively of the NBSI Health and Welfare Trust, the NBSI Education Trust and the NBSI Employees Trust. The fifth plaintiff (now withdrawn from the action) is the Solomon Islands National Provident Fund established under the Solomon Islands National Provident Fund Act. The defendant is the Central Bank of Solomon Islands established under the Central Bank of Solomon Islands Act, and having supervisory role over the banking system in Solomon Islands. 

In or about September 2002, the defendant had contemplated imposing additional conditions on the plaintiff’s licence, and by a resolution dated 15 November 2002, the defendant decided that it would impose additional conditions on the first plaintiff’s banking licence. The defendant also directed that the first plaintiff revalue its restructuring bonds to 28% of the face value. The first plaintiff was, obviously, not happy with the defendant’s actions and despite exchanges correspondence on the matters, no settlement had been reached. Consequently, a writ of summons had been issued on 19 November 2002, on behalf of the plaintiffs by Messrs Sol-Law, Barristers, solicitors and Notaries, as “Town Agents” for Messrs Freehills Solicitors, a Brisbane firm of solicitors. They had sought and were granted an ex parte interim order staying the implementation of the defendant’s planned actions toward the first plaintiff’s banking operation. The defendant now seeks to set aside that writ of summons and ex parte order.

The defendant’s case

The defendant’s summons seeks to set aside the amended writ of summons and the amended order made on 20 November 2002. The basis for the defendant’s case is that the issue of the writ was irregular, in that it constitutes a breach of sections 14 and 18(1)(a), (b) and (c) of the Legal Practitioners Act. That breach is said to be in the fact that Sol-Law was acting as “Town Agents” for Freehills Solicitors of Brisbane who are not “legal practitioners” as defined in section 2 of the Legal Practitioners Act. Mr. Radclyffe argues that Sol-Law are prohibited by the Act from so acting, and when they issued the writ, acting as “Town Agent” for Freehils Solicitors, they were in breach of the Act. A breach of the Act as such, says counsel, is a matter of substance and constitutes an irregularity, which renders the issue of the writ, a nullity and ought to be set aside. Counsel cites the case of Poloso v Honiara Consumers Co-operative Society Limited in support of the proposition he now relies upon.

The plaintiffs’ case

The case for the plaintiffs, as put by Mr. Katahanas, is that there has been no breach of sections 14 and 18 of the Legal Practitioners Act in this case. The reference to Messrs Sol-Law as “Town Agents” for Freehills Solicitors on the amended writ of summons was a mere inadvertent error, and as such it can be remedied by an order of the court to amend the writ. Principally, with regard to the alleged breaches of the provisions of the Act, Mr. Katahanas argues that there simply, is no evidence to show that the referred provisions of the Act have been breached. Counsel made reference to a number of cases, including Re Two Solicitors and An Unqualified Person, ex parte The Incorporated Law Society  and Re A Solicitor, ex parte The Incorporated Law Society.  These cases were concerned with proceedings directed against solicitors for professional misconduct (willfully and knowingly permitting their names to be used by unqualified persons) with a view to taking disciplinary actions against them.

Counsel, on the other hand accepts that, even if the court finds that there has been no breach of the Act, there still remains the writ containing the error which the defendant is complaining about. That, counsel suggests, can simply be cured by amendment under O.30, r.1 of the High Court Rules.

The issue

In so far as the court is concerned, there is only one principal issue that is of substance for its consideration in this case. That issue is whether or not there has been any irregularity, such that the court ought to set aside the amended writ and amended order made thereof. In this regard, the nature of the irregularity (if any) is of vital importance to the exercise by the court of its power under O.69, r.1 of the High Court Rules.

The Law

The starting point here is O.69, r.1 of the High Court Rules which provides as follows:

“Non-compliance with any of these Rules, or with any rule of practice for the time being in force, shall not render any proceedings void unless the Court shall so direct, but such proceedings may be set aside either wholly or in part as irregular, or amended, or otherwise dealt with in such manner and upon such terms as the Court shall think fit.”

Mr. Katahanas argued that for the defendant to succeed in relying upon O.69, r.1, it had to contend that there has been a breach of a “rule of practice for the time being in force.” With respect, that argument would only be correct if the defendant relies on a breach of the rules. But breaches of the rules are not the only reasons for invoking the court’s power under O.69, r.1 which grants the court wide power, not depending on there having been a failure to comply with the rules of court. An instance of this is the case of Anlaby v Praetorius  which has been applied in this jurisdiction in Samson Poloso v Honiara Consumers Cooperative Society Ltd.  In the former case, judgment in default of defence had been entered against the defendant prematurely. The court held that the entry of the judgment was irregular and the defendant was entitled to have it set aside ex debito justitiae. As to the argument that O.70, r.1 (R.S.C.), equivalent to our O.69, r.1 of the High Court Rules, gave the court discretion not to interfere with the judgment, Fry, L.J. had this to say:

“We are pressed with the argument that Order LXX., r.1, gives a discretion to the court which applies here. Rule 1 provides that ‘non-compliance with any of these rules, or with any rule of practice for the time being in force, shall not render any proceedings void unless the court or a judge shall so direct, but such proceedings may be set aside either wholly or in part as irregular, or amended, or otherwise dealt with in such manner and upon such terms as the court or a judge shall think fit.’ But in the present case we are not concerned with an instance of non-compliance with a rule, nor with an irregularity in acting under any rule. The irregular entry of judgment was made independently of any of the rules; the plaintiff had no right to obtain any judgment at all. I do not think, therefore, that the case comes within r.1, and we must consider what is the right practice without reference to that rule.”

Another instance where the court set aside a writ and all subsequent proceedings for breaches, other than non-compliance with the rules of practice, is the case of Finnegan v Cementations Co., Ltd.  In that case, the widow of the deceased workman, obtained a grant of letters of administration in Ireland of the deceased’s estate, but she did not obtain such a grant of administration in England. She commenced an action against the defendants on behalf of her husband’s dependants in England under the Fatal Accidents Act 1846. The court held that her grant of letters of administration in Ireland did not entitle her to issue proceedings in England under the Act. She was not the administratrix of the deceased estate for the purpose of section 2 of the Fatal Accidents Act. She was not entitled to issue the proceedings and so they were set aside for failure to comply with a statutory requirement. In the present case now before the court, the defendant’s contention is that, although the proceedings appear to be duly issued, the plaintiffs have commenced the proceedings in breach of sections 14 and 18 of the Legal Practitioners Act. If that were so, then we are not dealing with mere non-compliance with the rules of procedure, but a fundamental defect in issuing the proceedings. In fact the crux of Mr. Radclyffe’s submission is that the issuance of the writ in the first place was a nullity and consequently, there is no right to obtaining any order that follows therefrom. In such a case, O.69, r.1 provides that “such proceedings may be set aside either wholly or in part as irregular … or otherwise dealt with in such manner and upon such terms as the court or a judge shall think fit.” Thus, the question may be asked: was the breach complained of, a mere irregularity arising out of a non-compliance of the rules, or was it a fundamental failure to comply with the requirement of a statute relating to the issue of the proceedings? To answer this question, I now turn to consider the nature of the breach complained of in this case.

The alleged breaches of sections 14 and 18 of the Legal Practitioners Act

The allegation relied on by the defendant consists of the breaches of sections 14 and 18(1) (a), (b) and (c) of the Legal Practitioners Act. Section 14(1) provides as follows:

“No unqualified person shall act as a legal practitioner or as such sue out any writ or process, or commence, carry on or defend any action, suit or other proceedings, in the name of any other person, in any court of civil or criminal jurisdiction or act as a legal practitioner in any cause or matter, civil or criminal, to be heard or determined before any court.”

That provision clearly prohibits any unqualified person from acting as a legal practitioner and suing out any process as a legal practitioner: Samson Poloso v Honiara Consumers Cooperative Society Ltd.  The writ was issued on behalf of the plaintiffs in this case on 19 November 2002, by Messrs Sol-Law as “Town Agents” for Messrs Freehills, Solicitors of 345 Queen Street, Brisbane, Australia 4000, “advocates for the plaintiffs” whose address for service is c/- Sol-Law, Barristers and Solicitors, 5th Floor, Anthony Saru Building, Coronation Avenue, Honiara. The side notes and back page of the writ contain similar stipulations of agency. The ex parte summons issued on 19 November 2002, also contained similar stipulations, describing Messrs Freehills as “Solicitors for the Plaintiff” in this action. The ex parte Order made on the same day was also drawn up, naming Sol-Law as “Town Agents” for Messrs Freehills Solicitors. On 20 November 2002, the writ was amended by leave of the Registrar of the High Court, resulting in the amendment of the Order as well. The Amended Writ continued to stipulate that the writ was issued by Sol-Law as “Town Agents” for Messrs Freehills, Solicitors of 345 Queen Street, Brisbane, Australia 4000, “advocates for the Plaintiffs.” The Amended Order also continues to show that Messrs Sol-Law, Barristers and Solicitors are “Town Agents” of Messrs Freehills, Solicitors. It does not take much effort, when observing the writ (both the original and the Amended one), to form the conclusion that Messrs Freehills, Solicitors were the “advocates” or “solicitors” for the plaintiffs, and that Messrs Sol-Law were their “town agents” in the present action. In fact, it has never been seriously denied by Counsel for the plaintiffs that Messrs Freehills Solicitors were described as such in the writ, except that it was said to be a mere inadvertence or typographical error. But the references of Messrs Freehills as advocates or solicitors of the plaintiffs, together with their addresses and other contact details, were too good to be allowed to remain on the writs as mere typographical error or inadvertence. If these were inadvertent errors or mistakes, they were undoubtedly fatal to the commencement of the proceedings in this case. In my judgment, the references of Messrs Sol-Law as “Town Agents” for Messrs Freehills Solicitors who were “advocates” for the plaintiffs were purposely inserted after the indorsement on the writ. It was done in the hope that special counsel, Mr. Greg Rogers, from Freehills would be admitted in Solomon Islands. That has not yet been done. In the meantime the amended writ, like the original, had remained as issued in the manner described above. The Orders, made on 19th and amended on 20th November 2002, were granted in consequences of the issue of those writs.

Legal Practitioner

A “legal practitioner” for the purpose of the Legal Practitioners Act is “a person who has been admitted as a legal practitioner of the Court.” The Act also defines an “unqualified person” as “a person who is not admitted as legal practitioner pursuant to the Act.” As at the date of issue of the writ, whether original or amended, no solicitors or counsel from Messrs Freehills firm of solicitors has ever been admitted as a “legal practitioner” in Solomon Islands. This is confirmed by the Registrar of the High Court in Annexure “A” to Mr. Radclyffe’s affidavit, sworn and filed on 25 November 2002. Therefore the issue of the writ by the “Town Agents” for Messrs Freehills Solicitors who were described as “Advocates” for the plaintiffs in this case is clearly an act done contrary to section 14(1) of the Legal Practitioners Act. I have read the affidavits by John Sullivan, John George Katahanas and Dennis James McGuire, partners in Messrs Sol-Law, and I have to say that they each knew of the need to ensure that a partner or senior counsel from Messrs Freehills ought to have been admitted in Solomon Islands before they could act as “Town Agents” for such foreign lawyers. I understand steps have been taken to have counsel from Freehills admitted in Solomon Islands. But until that is done, he remains an “unqualified person” for the purpose of the Act in this country. In addition, by their actions, Messrs So-Law have conducted these proceedings as agents for foreign lawyers who were not admitted as legal practitioners in Solomon Islands. Such a practice is prohibited by section 18(1) (a) of the Act.

Mr. Katahanas sought to rely on the two cases against solicitors, cited earlier, to advance the contention that the elements of “willfully and knowingly” in section 18(1) (a) must be proved. In both Re A Solicitor, Ex parte Incorporated Law Society  and Re Two Solicitors, Ex parte Incorporated Law Society, the courts were concerned with the disciplinary charges laid against the solicitors by the Law Society with a view to striking them off the Roll. In those cases the solicitors were liable to punishment by way of being struck off the Roll, if found guilty. Quiet properly, the elements of “willfully and knowingly” had to be proved in such a case. In the present case, Messrs Sol-Law are not on trial on disciplinary charges laid against them for breaches of sections 14 and 18 of the Act. The cases relied upon by counsel are therefore of little help to his contention in this case. The allegations of breaches of the Act in this case were directed at the issuing of the writ against the defendant, the consequences of which were the Order made on 19th and amended on 20th November 2002. This is where the seriousness of the present matter lies, not in the determination of whether or not Messrs Sol-Law acted willfully or knowingly. It is serious since the entry of judgment or order leads to enforcement processes against the defendant: Anlaby v Praetorius. It must, therefore, have legal basis. In the absence of such legal basis, the plaintiffs have no right to obtain any judgment. 

Can the defect be cured?

As a general rule, the party who comes to court seeking an exercise of its curative powers, bears the onus of persuading the court to exercise its discretion in his favour: Hubbard Association of Scientologists International v Anderson & Just (No. 2). This rule would only apply in cases where the irregularities can be cured, as the approach taken by the court is to “cure that which is capable of cure, … saving rather than destroying.” Pontin v Wood. But, of course, each case must be considered on its own merits. In cases, however, where the irregularities are such that a party is entitled to have the proceedings set aside ex debito justitiae, the court has no choice but to grant the relief sought by that party. In my judgment, the present case is such a case. The error found by the court in the present case is one that is not capable of being cured. The failure to comply with a statutory requirement under the Legal Practitioners Act is an error which in my judgment renders the issuing of the proceedings in this case, null and void, although, nowadays, it is regarded more of an irregularity which a party is entitled to have set aside ex debito justitiae on application: Re Pritchard, deceased.  

For the reasons set out in this judgment, the defendant’s application must succeed and I grant the orders sought therein. 

Order: 	1.	Judgment for the defendant on its summons

2.	The Writ of Summons and Amended Writ of Summons issued on 19 and 20 November 2002, respectively, are set aside ex debito justitiae.

3.	The Order and Amended Order made on 19 and 20 November 2002, respectively, are set aside ex debito justitiae.

As to costs, there is discretion in the court to order costs in such a case as this. I shall not deal with the question of costs today, but I shall do so at a later date to be fixed by the Registrar of the High Court.

(Sir John Muria)
Chief Justice