SAINT LUCIA FURNISHINGS LIMITED
and
Appellant
[1] SAINT LUCIA CO-OPERATIVE BANK LIMITED
[2] FRANK MYERS OF KPMG
Respondents
Before:
The Hon. Sir Dennis Byron Chief Justice
The Hon. Mr. Albert Redhead Justice of
Appeal
The Hon. Mr. Brian Alleyne, SC Justice of Appeal
Appearances:
Mr. Kenneth Foster, Q.C. for the Appellant
Mrs. Brenda Flossaic-Flemming; Ms. Shan Greer with her for the first
Respondent Mr. Kenneth Monplaisir, Q.C. for the second Respondent
———————————————
2003: October 21;
November 24.
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JUDGMENT
[1] BYRON, C.J.: This is an appeal
against an order by the Master dated 6th day of May 2003 striking out
the statement of case and dismissing the Claim of the Appellant, St.
Lucia Furnishings, for non compliance with the rule requiring the
attendance of the litigant and its legal representative at Case
Management Conference, and ordering that judgment be entered in the
amount of $394,043.56 together with interest, in favour of the St.
Lucia Co-operative Bank [the Co-op Bank] on its counterclaim for
failing to file and serve a defence to the counterclaim.
The Pleadings
[2] On 12th September 2002, St. Lucia Furnishings filed proceedings
claiming compensation for trespass committed by Mr. Myers, acting as
Receiver appointed by the Co-op Bank. It alleged that Mr. Myers entered
its premises and took possession of its assets to enforce collection of
moneys alleged to be owing on a mortgage debt. It alleged that the loan
had been repaid, that the actions of the Co-op Bank and Mr. Myers were
wrongful and had caused substantial losses. Both Myers and the Co-op
Bank filed defences denying liability.
[3] The Co-op Bank counterclaimed for the sum of $394,043.56 and
interest, owing on a loan it made to St. Lucia Furnishings secured by a
Second Hypothecary Obligation (Mortgage Debenture and Floating Charge)
executed and registered in the Land Registry on 13th May 1999. It
alleged that St. Lucia Furnishings neglected to make repayments despite
demands. It asserted that it appointed Mr. Myers pursuant to the powers
contained in the Hypothecary Obligation. It specifically denied that
the loan was repaid. This counterclaim was filed and served on 15th
November 2002
[4] Since that date St. Lucia Furnishings did not file any other
documents in the case.
There was absolutely no rebuttal of the allegations in the defences of
the Co-op Bank and Mr. Myers and no denial of liability for the amount
claimed in the counterclaim.
The Hearings
[5] The Court summoned a Case Management Conference for the 9th day of
April 2003. Neither St. Lucia Furnishings nor its legal representative
attended. The Court adjourned the matter to the 6th May 2003. There was
no appearance by and on behalf of St. Lucia Furnishings this second
occasion.
[6] The Master exercised the powers conferred by CPR Part 26.3 (1)(a)
of the Rules of Procedure to strike out the statement of case filed by
St. Lucia Furnishings. He dismissed its actions and ordered that
judgment be entered on the counterclaim brought by the Bank.
Procedural Problems
[7] Counsel for the Co-op Bank rightly submitted that an appeal was not
the appropriate process for the Appellant to obtain relief in these
circumstances. The proper recourse was to apply to the High Court to
set aside the judgment. The application must be made promptly and be
accompanied by affidavit containing proof of reasons for the absent
party’s failure to attend the Case Management Conference
1
. Counsel pointed out that the position with the default judgment is
similar. The rules require the defaulting party to apply to the High
Court to set aside the default judgment. The defaulting party is
required to satisfy the Court by affidavit that there is a good
explanation for his failure to file the defence and that he has a real
prospect of successfully defending the claim or counterclaim.
2
[8] The parties were already before us and we decided to consider the
appeal. In the event that the Master had applied wrong principles or
made errors of law it would have been appropriate to adjudicate. There
was the risk of being affected by the handicap that the appeal process
permits the defaulting party to circumvent the requirement to file
affidavit evidence of the reason for the default, which is an important
factor to be considered in the exercise of discretion to set aside the
orders. In this case that did not prove to be the determining factor.
The Opportunity to attend Court
[9] Counsel for the Appellant made a passionate oration on the rights
of the litigant.
He submitted that his clients were prejudiced by not having an
opportunity to have
their matter heard in their presence and that dealing with matters in
their absence was a serious injustice. Despite the passion, when it was
time to consider the substance of the matter there was no evidence to
establish that the proceedings were heard without appropriate notice
having been given nor that there was a reason for non attendance.
[10] One of the important aspects of the new culture of litigation in
the new civil procedure rules is the provision that litigants should
attend all proceedings with their legal representatives. Their
attendance is a duty imposed by CPR Part 27.4. This rule is for the
benefit of litigants. It is intended to respond to the complaint that
litigants do not get information about their cases, and are not
sufficiently involved in the conduct of their litigation. I would think
that it would have been more accurate to say that St. Lucia Furnishings
did not avail themselves of the opportunity to be heard rather than
that they did not have an opportunity to be heard. The sanction is
intended to remedy another complaint of litigants; delay in the
completion of litigation. Repeated adjournments, caused by
non-compliance of one side with the Rules of Court, is denial of
justice to the other side. The adage is still true that justice delayed
is justice denied.
The Exercise of Discretion
[11] The main concept in the overriding objective of the new rules set
out in CPR Part 1.1, is the mandate to deal with cases justly. Shutting
a litigant out through a technical breach of the rules will not always
be consistent with this, because the Civil Courts are established
primarily for deciding cases on their merits, not in rejecting them
through procedural default. The flexible approach that should be
adopted by the Court was discussed in the case of B iguzzi v Rank Leisure
3
. The Court has wide powers for imposing appropriate sanctions. It is
therefore possible to formulate suitable sanctions for breach of rules
and directions without immediately resorting to draconian responses
such as striking out. I particularly
mention the provisions relating to “unless orders” which are intended
to be used as a preliminary step to the imposition of sanctions.
4
[12] There will be situations, however, where striking out without the
intermediate step is an appropriate order. There are two relevant
concepts in the overriding objective. One is saving the litigant’s
expense and the other allotting an appropriate share of the Court’s
resources. The ultimate solution would, therefore, be a proper exercise
of discretion where failure to strike out would cause a waste of
expenses and resources. This means that repeated non-compliance with a
rule or non-compliance combined with a weak case would justify the
striking out of the case. Counsel for the Co-op Bank submitted that
consideration of the merits was irrelevant to this exercise because the
jurisdiction being exercised by the Court was based on non-compliance
with the rules and was not a decision based on the merits. This is only
partially true, because in determining the remedy that suits the
breach, the merits of the case could influence the exercise of the
discretion of the Court.
Dealing Justly
[13] Counsel for St. Lucia Furnishings contended that there was merit
in its case because the debt had been paid. It was therefore wrong for
Co-op Bank to appoint a receiver to enforce outstanding liabilities
under the mortgage. It had thereby wrongfully damaged or destroyed the
claimant’s business. In addition it had obtained judgment on the
counterclaim for money it was not owed. If that was true his
impassioned arguments on justice would have had a sound basis.
[14] The record of appeal filed by St. Lucia Furnishings contained a
copy of a cheque issued by the St. Lucia Development Bank for
$222,000.00 drawn in favour of the Co-op Bank and a copy of the audited
accounts of St. Lucia Furnishings. Counsel for the Co-op Bank had filed
an application for the removal of these documents
from the record on the ground that their insertion was in breach of the
rules. However, Counsel did not press the application. Ironically,
these documents gave the lie to the impassioned arguments on justice.
The cheque bore date 12th November 1998. The Hypothecary obligation was
executed on the 6th May 1999, six months later. This indicated that the
cheque had no relationship to the obligations which the Co-op Bank was
enforcing. The matter was further clarified by the audited accounts
filed by St. Lucia Furnishings which showed that at close of business
on 31st December 1999 it was indebted to the Co-op Bank in the sum of
$344,539.00. This seemed to confirm the allegations in the defences and
the counterclaim and to disprove the basis on which the entire claim of
St. Lucia Furnishings was based. In these circumstances it would seem
that any order which permitted the continuation of the case would
result in purposeless delay, cause the litigants to incur unnecessary
expenses and waste the resources of the Court. That would not serve the
ends of justice.
The Dismissal of the Action
[15] The dismissal was not irregular. At a case management conference
the High Court has power to strike out a Claimant’s statement of case
and dismiss the action if it appears to the Court that the Claimant has
failed to comply with a rule of Court.
5
It is a rule of Court that a Claimant and his legal practitioner are
each under a duty to attend the Case Management Conference
6
. Consequently unless the High Court grants leave the failure to attend
is a failure to comply with a rule of Court. Striking out the Claim and
dismissing the action where the non attendance is plural and without
explanation could be a proper exercise of the power conferred by the
rules.
7
The review of the exercise of the discretion, did not reveal any good
reason to set it aside.
7 Pryer v Smith (1977) 1 A.E.R. 218. per Megaw LJ at 225(g to j) and
226 (e to f).
The Judgment on the Counterclaim
[16] A counterclaimant is entitled to a default judgment against a
claimant for a specified sum of money if the claimant fails to file a
defence to the counterclaim within 28 days after the service of the
counterclaim on the claimant.
8
In this case the default exceeded six (6) months. It was clear from the
documents supplied by St. Lucia Furnishings that the money was in fact
due. There could be no good reason for setting aside this judgment.
Costs
[a] The Master ordered costs as follows: to the Co-op Bank $25,000.00
and to Mr. Myers $5,000.00. No reasons were given for the award, and no
indication was given of the basis on which the award was made. This has
become a practice which I must deplore.
Costs on the Dismissal of the Claim for Non-attendance at Case
Management – the Myers Order
[18] Costs in these circumstances are governed by part 65.5 which makes
provision for prescribed costs. The claim was for an unspecified amount
of damages so that the value of the claim is $50,000.00. The scales of
cost in appendices B and C of part 65 apply. These scales indicate that
the full costs awardable to a defendant would be $14,000.00. The scales
indicate that where a claim concludes prior to trial, a percentage
should be allowed. The prescribed percentage is “(2) after defence and
up to and including the case management conference – 55%.” Accordingly
the prescribed costs would be $7,700.00. Costs are in the discretion of
the Court. Part 65.5 (4) (a) specifically empowers a Court to award a
proportion of the prescribed sum having taken into account the matters
set out in the rule. Although the Master did not indicate which
circumstance justified reducing the prescribed
costs, it is apparent from the record that neither St. Lucia
Furnishings nor Mr. Myers took any steps in pursuit of the case after
the defence was filed. It was the Court that acted in summoning the
case management conference and making the orders terminating the case
on its own initiative. The manner in which the issues were pursued is a
basis for the exercise of discretion. I would affirm the order he made
on the basis of the rationalization I have just undertaken
Costs on Judgment in Default – the Order in Favour of the Bank
[19] Part 12.12(1) prescribes that a default judgment must include
fixed costs under rule 65.4 unless the Court assesses the costs. It is
clear that no assessment was made. There was no application for such an
assessment in accordance with part 65.4(2). The quantification of fixed
costs is set out in Appendix A to Part 65. It prescribes that where
there is a claim exceeding $100,000.00 but not exceeding
$500,000.00 the fixed costs should be $2,000.00. To this figure should
be added the Court costs and $100.00 for personal service of the claim
form and additional costs of $350.00.
[20] It is true that this judgment was entered at a case management
conference, and it may have been considered that the costs should be
55% of the prescribed costs for judgment on the counterclaim as in the
case of the defence. But the Co-op Bank had been entitled to enter
judgment in default of defence once 28 days had elapsed from the
service of its counterclaim. I would think that it would be
inconsistent with the overriding objective for the costs to be awarded
on the basis that it was judgment was entered at a case management
conference. A litigant should not get costs on the higher basis by
failing to take the step of applying for the entry of a default
judgment. I would think therefore that the costs awarded to the Co-op
Bank should include the fixed costs for the default judgment and the
costs for the dismissal of the claim at the case management conference.
In the circumstances I would order that the costs to the Co-op Bank in
the sum of
$5,000.00 together with $2,450.00 totaling $7,450.00.
Costs on Appeal
[21] CPR part 65.13 stipulates that in general the costs on appeal
should be calculated in accordance with the provisions regulating costs
for the trial but must be limited to two thirds of the amount that
would otherwise be allowed. In this case, I should comment that Counsel
for the Co-op Bank carried the rebuttal of the appeal. In the
circumstances I would order therefore costs to the Co-op Bank in the
sum of
$4,966.66 (two thirds of $7,450.00) and to Mr. Myers the sum of
$3,333.33 (two thirds of $5,000).
Guidelines on Costs
[22] In accordance with a decision being delivered in
Rochemel v Construction Limited v National Insurance Corporation
, I would like to reiterate the importance of dealing with costs in
accordance with the new culture and make some simple requirements.
[a] Whenever a costs order is being made the learned trial judge or
master should identify the rule that is being applied and if discretion
is being exercised give the reason.
[b] Legal practitioners should be encouraged to assist the court in the
making of costs orders by providing information and or submissions as
early as possible.
Order
[23] I order that:
[b] the order of the learned Master be varied to the extent that the
order for costs to be paid by St. Lucia Furnishings to the Co-op Bank
be $7,450.00
[c] the appeal stand dismissed
[d] St. Lucia Furnishings pay the costs of appeal:
[i] to the Co-op Bank in the sum of $4,966.66; [ii] to Mr. Myers in the sum
of $3,333.33.
Sir Dennis Byron
Chief Justice
I concur. Albert Redhead
Justice of Appeal
I concur. Brian Alleyne, SC
Justice of Appeal