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CJ Patel and Company Ltd v Queensland Insurance (Fiji) Ltd [2004] FJHC 297; HBC0385J.2000S (19 May 2004)

IN THE HIGH COURT OF FIJI
AT SUVA
CIVIL JURISDICTION

CIVIL ACTION NO. 385 OF 2000

Between:

C. J. PATEL & COMPANY LIMITED
JAYSUN PROPRIETORY LIMITED
C. J. TECHNOLOGY LIMITED
Plaintiffs

and

QUEENSLAND INSURANCE (FIJI) LIMITED
Defendant

Mr. B. C. Patel with Mr. S. P. Sharma for the Plaintiffs
Mr. F. Haniff for the Defendant

JUDGMENT

By summons dated 20 June 2002 the plaintiffs are applying for summary judgment pursuant to Order 14 Rule 2 of The High Court Rules 1988 seeking the following orders:

(i) That final judgment be entered in this action against the Defendant for the amount claimed in the Amended Statement of Claim, namely: $990,00.00.

(ii) Alternatively, that judgment be entered for the Plaintiffs in this action against the Defendant for such part of the claim, as may seem to this Honourable Court, that there is no defence.

(iii) That the Defendant pay to the Plaintiffs interest on the judgment sum at 12.5% per annum calculated from 25 May, 2000 to the date of payment.

(iv) That the Defendant pay to the Plaintiffs costs of this application on a full Solicitor/Client (on) indemnity basis.

The grounds on which the plaintiffs rely are set out in the affidavit in support of the application of Ajith Kodagoda, the Group Finance Controller for the plaintiffs; the affidavit was sworn on 19 June 2002.

The Summons is vigorously opposed by the defendant. There was a lengthy hearing. As ordered, both counsel made useful written submissions to which I have given due consideration.

Before the Courts are the said affidavit of Ajith Kodagoda, affidavit in Reply of Peter Fimone, the Claims Manager of defendant company, sworn 10 July 2002 and Affidavit in Reply of Ajith Kodagoda sworn 31 July 2002.

State of Pleadings before application

Before considering the application I consider that I ought to set out the state of pleadings in this action at the time when the application was made.

It was by writ of summons that the plaintiffs commenced this action on 8 September 2000.

The plaintiffs are claiming, as in the Amended Statement of Claim, the sum of F990,000.00 for loss and damage arising out of a fire on 19 May 2000 while the insurance policies were current which destroyed the plaintiff’s plant, buildings, equipment and goods together with business interest the subject matter of the said policies.

The Statement of Defence was filed on 3 October 2000 and a Reply to Defence was filed on 14 November 2000. Order on Summons for Direction was made on 6 December 2000. Application for Pre-trial Conference was made on 26 April 2001. On 2 January 2002 there was change of solicitors for the plaintiffs.

An order to file Amended Statement of Claim was made by the Deputy Registrar on 23 January 2002 and this was done. Defence to Amended Statement of Claim was filed on 7 May 2002 and a Reply thereto on 20 February 2002.

Background

Because the defendant refused to pay the insurance claims made by the plaintiffs this action commenced.

The defendant denied liability for the two claims made under two different contracts of insurance.

However, following the filing of an Amended Statement of Claim and Defence and Reply, the present application is made by the plaintiffs for summary judgment.

It was on 10 February 1998 that the plaintiffs and the defendant entered into a contract of insurance. The insurance contract comprised Policy No. 0039077, which is a material damage/consequential Loss and Business Interruption policy. The period of cover of this policy was expressed to be for a period expiring on 31 December 1998 “or any other period for which the Company and the insured agreed to renew the policy”.

The plaintiff’s claim

The plaintiffs now claim $741,600.00 under the application for summary judgment.

They state (as per written submissions page 2):

The Summons seeks summary judgment, for the two claims under the two claims under the two contracts of insurance, for $990,000 or alternatively seeks judgment for such part of the claims to which there is no defence. However, the Plaintiffs are now asking for judgment only in respect of the claim under the material damage/business interruption cover and not under the electronic equipment cover. The amount presently claimed is $741,660.

The original Statement of Claim filed herein claimed $1,123,000 for the two claims under the two contracts. That quantum of claim was subsequently agreed by the parties at $990,000 (para.10, Amended Statement of Claim). In order to determine the undisputed amount, for the purposes of this application, the Plaintiffs suggest that the entire sum of $248,340 (being the amount of the original claim under the electronic equipment cover) be deducted from $990,000. That will leave $741,660 in respect of the claim under the material damage/business interruption cover, to which there is no defence, and for which the Plaintiffs seek judgment, and interest thereon.

Grounds of application

The application is made on the following grounds (as stated in Kodagoda affidavit):

(i) The contract of insurance for the all risk cover was made on 30 December, 1999 by the issue of a placing slip of that date (“the placing slip”).

(ii) The placing slip was signed by Queensland (65%); Fai (5%) and New India (30%) as insurers.

(iii) The insurance cover was for 12 months from 31 December, 1999.

(iv) No policy document has been issued following the signing of the placing slip.

(v) The properties and sums insured by the placing slip are different from that under an earlier policy no. 0039077.

(vi) Policy 0039077 was issued by Queensland alone and was for the period from 1 July, 1997 to 31 December, 1998.

(vii) There is no express or implied reference in the placing slip that it is in renewal of policy 0039077.

(viii) The placing slip does not expressly or impliedly contain or incorporate the exclusion clause 1(a) in policy 0039077 on which the Defendant is relying to deny the claim.

(ix) There is no legal defence pleaded.

Defendant’s submission

Counsel for the defendant Mr. Haniff disagrees with the arguments put forward by Mr. Patel. He says in short that the ‘placing slip’ does not comprise the contracts or the Policy document but represented the renewal of Policy 0039077 until 31 December 2000.

Mr. Haniff’s further argument is (as per his submissions):

The Defendant says that the document titled the “placing slip” (“Placing Slip”), in Annexure “A” of Kodagoda’s affidavit, is the renewal of Policy No. 0039077, a document prepared by the Plaintiffs brokers Marsh & McLennan (“Marsh”). According to the Defendant, the placing slip does not comprise the contract of insurance or the Policy document but represented the renewal of Policy 0039077 until 31 December 2000.

The Defendant further says that its position is confirmed by the Plaintiffs’ Brokers, Marsh. On 29 December 1999, Marsh wrote to the Defendant confirming the renewal of various policies. The Defendant says that the renewals included the renewal of Policy No. 0039077 – See annexure 1 of Mr. Peter Fimone’s affidavit sworn and filed herein on 11 July 2002. In addition to renewing Policy No. 0039077, the placing slip only modified the extent of the properties covered and the sums insured under Policy No. 0039077.

The Defendants say that the letter by Marsh clearly intends the renewal of Policy No. 0039077 as well as other policies held by the Plaintiffs. The letter of 29 December 1999 from Marsh to the Defendant says as follows:

(i) Subject : CJ Patel Group – Renewal

(ii) We have pleasure in confirming renewal of all policies for the CJ Patel Group for a further year and the following amendments

General

(a)

(b)

Material Damage/Consequential Loss

(a) Please extend policy to include.....

(b)

(c)

(d)

(e)

(f)

Meanwhile please sign and return the attached placing slip in respect of this policy

Mr. Haniff further submits that because of conflict in evidence whether there is a contract of insurance it must mean that there is a “triable issue” and the defendant’s assertion should not be rejected but it be given leave to defend the action.

He says that leave to defend should be given as only the plaintiffs’ agents will be able to explain the effect and meaning of the letter it wrote to the defendant on 29 December 1999.

Further, he submits that the parties differ on affidavit evidence as to what the general insurance industry practice in Fiji is regarding ‘renewals’ and ‘placing slips’. It is the defendant’s contention that the broker’s ‘placing ship’ is not a formal insurance policy wording whereas the plaintiffs’ argument is to the contrary in that it is the insurance industry practice throughout the world including Fiji that the ‘placing slip’ is the contract of insurance.

Counsel for the defendant submits that the parties differ so much on the practice in Fiji on the effect of ‘placing slip’ that it is a question of fact to be decided on oral evidence in the trial of the action.

In the matter of claim for $990,000.00 by the plaintiffs the defendant argues that it agreed to indemnify the plaintiffs for specified loss subject to the exclusion set out in the policy and that the loss suffered by the plaintiffs in Policy No. 0039077 was caused either directly or indirectly from one or more of the causes set out in exclusion 1(a) of the Policy and accordingly such loss was covered under the terms of the policy.

Finally, counsel submits that while the defendant has agreed that the quantum of the loss under both policies is $900,000.00 but it says that the loss suffered by the plaintiffs was excluded under the exclusion clause of both policies.

Consideration of the application
Why application under Order 14?

The learned counsel for the plaintiffs says that the need for application under Order 14 arose as a result of amendment to the Statement of Claim and the defendant’s reply to the amended claim.

In view of the stage that the pleadings have reached as stated hereabove one would have thought that it would have been proper and more expeditious to have proceeded with the action in the normal way and have the action set down for hearing quickly so that all the issues between the parties could have been decided once and for all in the hearing of the action.

In this case Mr. Patel is asking the Court to have ‘two goes’ so to say at this case judging from his submission when he said that (at page 18) ‘the plaintiffs seek judgment against the defendant for that sum of $741,660 and interest thereon’ and then (on page 19) says in the last item of his submission that ‘the claim for the balance of $248,340 can proceed in the normal way pursuant to Order 14 r8 of the High Court Rules, 1988.’

In deference to Mr. Patel’s very lucid and convincing submission as to why judgment should be entered under Order 14, I would like to say this that after looking at the argument in opposition put by Mr. Haniff I consider bearing in mind the law and the principles involved, that I ought to allow the defendant its day in Court by hearing the action rather than giving a summary judgment on part of the claim.

It was said by Greig J in the Court of Appeal case of Australian Guarantee Corporation (NZ) Ltd v McBeth [1992] NZLR 54 at 58-9:

The summary judgment procedure is a simple expeditious way to enable a plaintiff to obtain judgment where there is no real defence to the claim made: see Pemberton v Chappell [1986] NZCA 112; [1987] 1 NZLR 1 at p 2. The essence of the procedure is the plaintiff’s own verification by affidavit of his own statement of claim and the allegations made in it: Harry Smith Car Sales Pty Ltd v Claycom Vegetable Supply Co Pty Ltd (1978) 29 ACTR 21. There has to be a balancing between the right of the defendant to have his day in Court and to have his proper defences explored and the appropriate robust and realistic approach called for by the particular facts of the case: see Bibly Dimock Corporation Ltd v Patel (1987) 1 PR Z 84 and Cegami Investments Ltd v AMP Financial Corporation (NZ) Ltd (11990) 2 NZLR 308 at p 313. Although the onus is upon the plaintiff there is upon the defendant a need to provide some evidential foundation for the defences which are raised. If not, the plaintiff’s verification stands unchallenged and ought to be accepted unless it is patently wrong.

Is this a proper case for application of Order 14 r2

On the affidavit evidence before me and on the pleadings, I find that there are triable issues in this case for which the summary judgment procedure under Order 14 is not suitable.

Mr. Patel himself has raised the point that the amended pleadings raise ‘questions of law’ which is of some general importance, namely: “what is the legal status of the ‘placing slip’ dated 30 December 1999? Does it constitute a new contract of insurance or is it a renewal of an earlier Q1 Policy 0039077?”

Mr. Patel then argues the point about “placing slip” at some length with clarity.

Similarly, Mr. Haniff goes into some detail on this aspect and differs from Mr. Patel’s views.

If I were to decide on the status of the “placing slip” I would be severing this aspect of the action from the rest of the case and then hereafter hear evidence on the balance of the claim.

Although from my reading of Mr. Patel’s submission it is possible to sever and decide independently, with all due respect to his arguments quite lucidly put. I am strongly of the view that the whole action should be dealt with ‘one go’ so to say at the hearing of the action with all the relevant evidence put before the Court. This would be a neater way of dealing with the issues.

When I say this I should not be understood as having decided on Mr. Patel’s submissions or that I have accepted Mr. Haniff’s submissions on ‘placing slip’.

At best I should be understood as meaning that I prefer to hear full argument on the issues at the hearing of the action when the defendant will have the full opportunity of adducing evidence on, inter alia, ‘placing slip’. What other evidence the defendant adduces is entirely upto it.

The law (on Order 14)

In the light of my observations and comments on the pleadings and affidavit evidence, the authorities that I refer to hereunder are pertinent and are to be borne in mind.

In Express Newspapers Plc v News (UK) Ltd and Others [1990] 3 All E.R. 376 at 379 Browne-Wilkinson V-C said:

“Summary judgment under Order 14 is a judgment given in the clearest cases before an ordinary trial has taken place. Summary judgment is only given where it is clear that there is no arguable defence to the claim. If there is an arguable issue to be tried, in particular where there are matters of fact to be resolved which can only be resolved at trial, the court gives leave to defend and the case goes to trial to be heard out. Summary judgment is a means of short-circuiting that system in the clear case where it is shown that, even if it went to trial, the defence could not succeed”.

In summary judgment procedure, as was held in Maclean v Stewart unreported, 20 August 1997, CA 288/96, the Court of Appeal confirmed an important principle of the summary judgment procedure that the onus remains on the plaintiff throughout to establish that the defendant has no defence. In the present case in view of my observations I am not finally satisfied on this point and therefore the application has to be dismissed for to do otherwise, in my view, the Court will be embroiling itself in deciding the merits of the claim rather than confining itself to the pertinent issue whether there was an arguable defence.

Since I have found that there are triable issues the following passages from the judgment of Greer L.J in Powszechny Bank Zwiakony W Polsch v Paros (1932) 2 K.B. 353 are worth noting in this regard:

There at p.359 Greer L.J. said

“It has long been the rule that in proceedings under Order XIV, what the Court, whether this Court or the King’s Bench Division, has to ascertain is whether there is a triable issue. If there is, no matter how strongly the Court may anticipate that it will be decided in the plaintiff’s favour, it must order a trial.” (emphasis mine).

He goes on to say that:

“All the defendant need say is that he requires the plaintiff to prove his case, and the law puts upon the plaintiff the onus of proving it. When the defendant says he does not admit the claim he need not carry the case any further than to say: ‘There is a triable issue and I want to have it tried’.

Conclusion

In the outcome, for the reasons given and on the authorities I cannot accede to the application for summary judgment.

There is no doubt that the plaintiffs are entitled to apply under Order 14 rules 1 & 2 of the High Court Rules 1988.

I am not unmindful that issues of this nature can be considered in the Order 14 context and in this regard the following statement from the judgment of Kerr L.J in S.L. Sethia Liners Ltd v State Trading Corporation of India (1986) 1 Lloyds Rep. 31 at 38 is borne in mind:

“if a point of law is raised on behalf of the defendants, which the Court feels able to consider without reference to contested facts simply on the submissions of the parties, then it is now settled law that in applications for summary judgment under Order 14 the Court will do so in order to see whether there is any substance in the proposed defence. If it concludes that, although arguable, the point is bad, then it will give judgment for the plaintiffs.”

To conclude, to tackle the issue in this application I have found a good guide, which I have applied, in the following passage from the judgment of Parker L.J. in Home and Overseas Insurance Co. Ltd v Mentor Insurance Co. (UK) Ltd (in Liq) (1989) 3 All E.R. 74 at 77:

“The purpose of Ord 14 is to enable a plaintiff to obtain a quick judgment where there is plainly no defence to the claim. If the defendant’s only suggested defence is a point of law and the court can see at once that the point is misconceived the plaintiff is entitled to judgment . If at first sight the point appears to be arguable but with relatively short argument can be shown to be plainly unsustainable the plaintiff is also entitled to judgment. But Ord 14 proceedings should not in my view be allowed to become a means for obtaining, in effect, an immediate trial of an action, which will be the case if the court lends itself to determining on Ord 14 applications points of law which may take hours or even days and the citation of many authorities before the court is in a position to arrive at a final decision.”

In the light of all the evidence before me, it could not be shown to my satisfaction that there was no defence. After a careful review of all the evidence and the very helpful submissions of both counsel it is ordered that there be a full hearing of the action.

Both counsel are directed to apply for hearing of the writ action within 14 days and for directions. No doubt counsel will be able to use the written legal submissions already before the court as this will shorten the hearing.

Therefore the summons for summary judgment is dismissed.

The costs are reserved until the hearing and determination of the action.

D. Pathik
Judge

At Suva
19 May 2004