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National Bank of Fiji v Rova [1992] FJHC 11; Hbc0169d.91s (5 February 1992)

IN THE HIGH COURT OF FIJI
(AT SUVA)
CIVIL JURISDICTION

ACTION NO. 169 OF 1991

BETWEEN:

NATIONAL BANK OF FIJI
a body corporate duly constituted under the National
Bank of Fiji Act, 1973 and having its
principal office at Suva in Fiji
Plaintiff

AND

EREMASI ROVA & MERE MAKITA ROVA
both of Makita Street, Muanikau, Suva in
Fiji, Businessman and Domestic Duties respectively
Defendants

Mr. H.K. Nagin: For the Plaintiff
Mr. V. Maharaj: For the Defendants

Date of Hearing: 31st October 1991
Date of Ruling: 5th February 1992

RULING ON APPLICATION TO SET ASIDE DEFAULT JUDGMENT

The Defendants apply to set aside a Judgment by Default in the sum of $172,178.83 together with interest thereon at the rate of 16 percent per annum from the 9th of May 1990 which was entered on the 2nd of June 1991. The amount is said to be due under a guarantee dated the 19th of July 1988 under which the Defendants guaranteed payment to the Plaintiff of all monies advanced by the Plaintiff to a company named 21C GARDEN ISLAND DEVELOPMENT CO. LIMITED. It is said by counsel for the Defendants, but denied by counsel for the Plaintiff, that this action is inter-related to action No. 116 of 1990 in which the company said to be guaranteed by the Defendants in this action is the Second Plaintiff in action No. 116 of 1990, the First Defendant Eremasi Rova in this action is the Fifth Plaintiff in Action No. 116 of 1990 and the present Plaintiff in this action is the First Defendant in the earlier action.

In support of the Defendants' application to set aside the default judgment the First Defendant Eremasi Rova has sworn an affidavit on 1st of July 1991 in which he gives reasons for the failure by the Defendants to enter any defence to the present action. These are that shortly after he was served with the Writ herein he handed it to his present solicitors with the request that it be forwarded to his overseas counsel Mr. Stephen Stanton of Sydney, Australia for advice and the preparation of a Statement of Defence. Mr. Rova states that because of Mr. Stanton's heavy commitments at the time he was unable to prepare the Statement of Defence in time. His solicitors sought an extension of twenty-one days from the 7th of June 1991 but the Plaintiff's solicitors declined to grant the extension on instructions from their client but took no action to enter the judgment until the 21st of June. The latter day was the very date on which Mr. Rova's solicitors received a Statement of Defence by fascimile from Mr. Stanton.

Mr. Rova then deposes that his solicitors engrossed the Statement of Defence on Monday, 24th of June and tried to file it in the Court Registry when they were advised that a default judgment had already been entered on 21st of June. Mr. Rova's solicitors then wrote to the Plaintiff's solicitors on the same day seeking the Plaintiff's consent to allow Mr. Rova's solicitors to file the Statment of Defence out of time but their request was declined. Accordingly his solicitors issued the present Summons on the 2nd of July 1991.

The Defendants annex a copy of the proposed Statement of Defence to Mr. Rova's affidavit of 1st of July 1991 and I shall make some comment on this shortly. Having received the present Summons Mr. Hamendra Kumar Nagin a partner in the legal firm of Sherani & Co., the solicitors for the Plaintiff in this action swore an Affidavit in Reply to that of the Defendants on the 24th of July 1991. Mr. Nagin states that a Writ of Summons was served on both the Defendants on the 13th of March 1991; an Acknowledgement of Service was filed and served on the Defendants by their solicitors on the 15th of March 1991. Mr. Nagin says the Plaintiff was not aware of the Defendants' requests to forward the Writ to Mr. Stephen Stanton. Mr. Nagin states that Mr. Stephen Stanton was in Fiji on many occasions between 15th of March and the 21st of June 1991 and could have easily attended to the drawing of the Defence. He alleges that the Defendants had from the 15th of March to 21st of June 1991 to file their Statement of Defence and this was more than a reasonable amount of time. Mr. Nagin then disputes the Defendants' claim that they have a good defence because he says the Plaintiff's claim is under the guarantee. He also says that on the 26th day of April 1991 a Receiving Order was made against the First Defendant and that the Defendant has failed to disclose this in his affidavit. He further believes that the Defendants have several other debts outstanding to various other creditors one of them being a debt by the First Defendant to the Plaintiff in the sum of $192,594.42 together with interest thereon at the rate of 16 percent per annum from the 8th day of May 1990 in respect of the First Defendant's firm PAGAI FISHING ENTERPRISE. I interpolate here that PAGAI FISHING ENTERPRISE is mentioned in action No. 116 of 1990 where it is claimed by the Fourth and Fifth Defendants to that action that the First Defendant in this action received the sum of US$50,000.00 from the Fourth and Fifth Defendants in respect of PAGAI FISHING ENTERPRISE. It is alleged by the Fourth and Fifth Defendants in the earlier action that the First Defendant in this action misused the $50,000.00.

Mr. Nagin also deposes that the Plaintiff has instructed him that the First Defendant in this action is further indebted to the Plaintiff in the sum of $26,728.95 together with interest thereon at the rate of 16 percent per annum from the 8th of May 1990 under the First Defendant's account styled GARDEN ISLAND RESORT. This latter resort is also mentioned in action No. 116 of 1990 as being one of the projects which the Fourth and Fifth Defendants in that action claim the Fifth Plaintiff and they were to operate as a joint venture.

It was said in Vann v. Awford (1986) 83 L.S. Gaz. 1725 that on an application to set aside a default judgment the major consideration is whether the Defendant has disclosed a defence on the merits, and this transcends any reasons given by him for the delay in making an application even if the explanation given by him is false.

In my interlocutory judgment on an application for security for costs by the Defendants in action No. 116 of 1990 delivered today I remarked that the Statement of Claim in that action was well drawn. I regret that I am unable to make a similar comment about the proposed defence in this action which in several ways is vague when one might expect more clarity and particulars and which is also in my view almost incomprehensible in certain parts. I now give some examples: Paragraph 2 states that the Defendants did not admit that the Plaintiff advanced money to 21C GARDEN ISLAND DEVELOPMENT LIMITED nor do they admit the validity or efficacy of the alleged deed of guarantee pleaded by the Plaintiff. No reason for this latter statement is given although one might be expected if the defence were eventually to be believed. Likewise I find paragraph 6 even as amended at my suggestion to be very difficult to understand. Similarly I find paragraphs 7 and 8 of the proposed defence well nigh impossible to understand.

All that said, however, I deduce by the references in the proposed defence to Civil Action No. 116 of 1990 that the Defendants are alleging against the Plaintiffs that had it not been for the false and misleading representations made by the First Defendant herein to the Plaintiffs in Action No. 116 of 1990 as to the willingness of the Plaintiff herein to advance $539.000.00 to the Plaintiffs in Action No. 116 so as to enable them to purchase the Castaway Taveuni Hotel the Defendants to the present Action would not have entered into the guarantee pleaded by the Plaintiff. It is alleged in action No. 116 that as a result of these mis-representations the Plaintiffs in that action were denied a fair opportunity to develop the business of the Castaway Taveuni Hotel Resort which I note is also known as GARDEN ISLAND RESORT. Whether or not there is any merit in this claim of course remains to be seen but in my view that should not debar the Defendants from at least making such a claim at the trial of this action.

The principle stressed in the cases as to whether a Defendant should be given leave to defend is only that he must be able to establish a prima facie defence at this stage. Here I will quote from the speech of Lord Atkin in the House of Lords case Evans v. Bartlam (1937) A.C. 473 at pp. 479 to 480:

"I agree that both rules, Order XIII., r.10, and Order XXVII., r.15, give a discretionary power to the judge in Chambers to set aside a default judgment. The discretion is in terms unconditional. The Courts, however, have laid down for themselves rules to guide them in the normal exercise of their discretion. One is that where the judgment was obtained regularly there must be an affidavit of merits, meaning that the applicant must produce to the Court evidence that he has a prima facie defence. It was suggested in argument that there is another rule that the applicant must satisfy the Court that there is a reasonable explanation why judgment was allowed to go by default, such as mistake, accident, fraud or the like. I do not think that any such rule exists, though obviously the reason, if any, for allowing judgment and thereafter applying to set it aside is one of the matters to which the Court will have regard in exercising its discretion. If there were a rigid rule that no one could have a default judgment set aside who knew at the time and intended that there should be a judgment signed, the two rules would be deprived of most of their efficacy. The principle obviously is that unless and until the Court has pronounced a judgment upon the merits or by consent, it is to have the power to revoke the expression of its coercive power where that has only been obtained by a failure to follow any of the rules of procedure."

This passage is often quoted in applications of this nature and was so quoted in a decision of the Court of Appeal here in The Fiji Sugar Corporation Limited v. Mohammed Ismail, C.A. 1987 in a judgment delivered by the Court on the 8th of July 1988.

The result is that although I have distinct reservations about the merits of the proposed defence here I believe at least at this stage the Defendants should not be shut out from defending the action. Obviously if they are to succeed in it they will have to develop satisfactorily and credibly the theme which appears to be their real defence namely that false inducements and representations which are described at length in action No. 116 of 1990 were the reasons which led them to enter into the guarantee relied on by the Plaintiff in this action. I therefore give the Defendants leave to defend herein and set aside the default judgment entered on the 24th of June 1991. However the Defendants are given this leave only on condition that they pay the Plaintiff's costs to be taxed if not agreed.

John E. Byrne
J U D G E

HBC0169D.91S