DAVID ANTHONY HENSHAW v. GOOD EARTH MACHINERY LIMITED AND ANOTHER

Headnote

R.S.C. O.32 r.3 (service of summons) - r.4 (adjournment of hearing - r.5 (proceeding in the absence of party failing to attend).

Irregularities R.S.C. O.2 r.1(1)

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J U D G M E N T

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Yang, V.-P.:

1. This is the judement of the Court.

2. The plaintiff appellant's claim against the defendant company is for personal injuries suffered, and loss and expenses incurred as the result of an accident on 29th June, 1981, during the course of his employment with the defendant company, and allegedly arising out of the defendant company's negligence or breach of statutory duty.

3. The defendant company issued a third party notice against the Sovereign Marine and General Insurance Co. Ltd., from whom the defendant company had taken out an insurance policy. By this policy, the insurance company undertook to cover the defendant company against the risk of injury to its employees subject to certain terms and conditions.

4. The defendant company denies the plaintiff's claim, the issues between them being liability as well as quantum of damages. The insurance company as third party repudiated its liability to indemnify the defendant company under the insurance policy, upon the ground that the defendant company was in breach of certain conditions stipulated in the policy.

5. On the 5th November, 1987, the third party filed a summons under O. 33, r. 3 of the Rules of the Supreme Court asking for the issue between them and the defendant company be tried as a preliminary issue before the trial of the main action between the plaintiff and the defendant company and a stay of the action meanwhile. The matter came before Master O'Donnell on the 12th November. Though properly served, the defendant company did not appear on that occasion. Master O'Donnell in the absence of the defendant company, adjourned the matter to a judge in chambers for argument.

6. The third party's application for trial of a preliminary issue and for stay of proceedings was heard by Macdougall, J. on 22nd December, 1987. After hearing counsel, the learned judge ordered that the main action between the plaintiff and the defendant company be stayed pending the determination of the third party proceedings. There had been no service upon the defendant company of the proceeding and they were not aware of` it.

7. The defendant company was not notified of the order of Master O'Donnell dated 12th November nor of Macdougall, J.'s order of the 22nd December.

8. This is the plaintiff's appeal against the order of Macdougall, J.

9. One of the main questions canvassed in the court below related to the arrangements made on behalf of the plaintiff for the taking of evidence in London of witnesses as to facts as well as expert witnesses. Relying on the plaintiff's alleged acceptance (which is disputed on appeal) that there was no certainty that all these witnesses would be available to give evidence in late. March as envisaged and that there was only a greater likelihood of these witnesses being available then than at any other time, the judge ordered a stay of the action and a speedy trial of the preliminary issue.

10. The two major grounds of the plaintiff's appeal argued before us are that the judge erred (a) in finding he had jurisdiction to grant a stay merely to meet the convenience or to save costs for one party, and (b) in entertaining an application for a stay of proceedings when the proper course was for the third party to seek an adjournment or a declaration.

11. A number of authorities were cited by Mr. Graham acting for the plaintiff appellant, notably Post Office v. Norwich Union Fire Insurance Society Ltd. (1967) 2 Q.B. 363, which Macdougall, J. sought to distinguish at page 7 of his judgment.

12. Much argument was heard on these two grounds of appeal, but in the light of another question that came up in the course of the hearing of this appeal, it was not necessary for us to deal with them, nor with a number of other grounds.

13. The question may he shortly disposed of, and it is this. Clearly there was in this case a breach of O. 32, r. 3 (dealing with service of summons), r. 4 (adjournment of hearing) and r. 5 (proceeding in the absence of party failing to attend) in respect of both the summons adjourned by Master O'Donnell on the 12th November: and of the hearing before Macdougall, J.; there being no proper seivice of these proceedings upon the defendant company. These breaches are to be treated as irregularities, R.S.C. O.2 r.1(1). In the circumstances and in the exercise of our discretion, the order of Master. O'Donnell made on the 12th November and all the proceedings subsequent thereto are set aside pursuant to O. 2 r. 1(2). Liberty to apply.

14. On the question of costs, having heard counsel we order that the plaintiff appellant shall have his costs before the Master and Macdougall, J. We make no order as to the costs of the appeal today. The matter is then adjourned to allow the third party's solicitors to show cause why they should not be ordered to pay the costs of the proceedings before the Master and Macdougall, J.