CIVIL ACTION NO. 67 of 1998
Mr. M. Young for tfor the Plaintiff
Mr. S. Chandra for the Defendant
DECISION
This is the Defendant's application for an order for stay and setting aside the default judgment entered on 17 February 1998.
Background facts
Manohan Aluminium Glass (Fiji) Limited (the "Defendant") held an account No. 1260146902 with Westpac Banking Corporation
(the "Plaintiff") in the name "Manohan Aluminium". It is alleged that on 2 June, 1997, the Plaintiff Bank incorrectly
credited to the Defendant Company's account the sum of $42,032.20. In August 1997 the Plaintiff discovered the discrepancy in the
account and carried out an internal investigation into it. On 26 August, 1997 the Plaintiff reversed the incorrectly credited sum
which led to the account being overdrawn.
The Writ of Summons was issued on 29 January 1998 and in default of Notice of Intention to Defend a default judgment for the sum of
$42,032.20 was entered against the Defendant.
Defendant's/Applicant's contention
It is the Defendant's contention that it did not come to know of the default judgment until it was served with it and then it promptly
took steps to have it set aside as stated in the affidavit in support filed herein. It says that it was not served with the Writ
of Summons on which judgment was obtained.
The main reason for not filing defence was that it did not know that the writ was served as alleged at the former Registered Office
of the Company at No. 3 Mandir Street.
The Defendant states that it has a defence on the merits and has annexed a proposed Defence and Counterclaim to the affidavit. The
Defendant further alleges that the Plaintiff was negligent in handling its accounts to its detriment as a result whereof it has suffered
loss of reputation and business.
The Defendant asks that judgment be set aside and that it be granted liberty to file Statement of Defence and Counterclaim.
Plaintiff's/Respondent's contention
While opposing the motion Mr. Young for the Plaintiff argues that this was a regularly obtained judgment with proper service at the
registered office of the Defendant Company according to the records kept at the office of the Registrar of Companies.
He argues that the Defendant has failed to satisfy the Court that there is a defence on the merits. As for counterclaim he submits
that it is a separate matter and can be pursued independently.
Consideration of the issue
It is the Plaintiff's argument that because the writ was served at the Registered Office of the Defendant Company (although it has
left it for years and had not filed the change of address) it was good service and therefore the judgment obtained on the basis of
such service was regularly obtained. But the affidavit served shows that the Plaintiffs were aware of the changed address as it served
the default judgment at three different addresses. As soon as the Defendant came to know of the default judgment its solicitors contacted
the Plaintiff's solicitors about the matter and brought to their notice as to why no intention to defend was filed and requested
if the judgment could be set aside by consent. Although I am not required to decide on the issue of whether it was proper service
or not, nevertheless doubts have been thrown on this aspect of the matter.
I have the benefit of written legal submissions from both counsel and have found them to be very useful.
The Court has a discretion under O.13 r.10 of The High Court Rules, 1988 to set aside or vary any judgment entered in default of notice
of intention to defend.
The general principles upon which a Court should act on an application to set aside a judgment that has been regularly entered, are
set out in The Supreme Court Practice 1997 (Volume I) at p.143 which states that:
"On the 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 the application ....."
This principle has been followed in many cases. In BURNS v KONDEL (1971) 1 Lloyd's L. Rep. 554 at p.555 Lord Denning said:
"We all know that in the ordinary way the Court does not set aside a judgment in default unless there is an affidavit showing
a defence on the merits. That does not mean that the defendant must show a good defence on the merits. He need only show a defence
which discloses an arguable or triable issue."
Also in a more recent case of THE FIJI SUGAR CORPORATION LIMITED AND MOHAMMED ISMAIL (Civ. App. No. 28/87 F.C.A. at p.9) it was stated that the Defendants only have to "establish a prima facie defence" and
that a "draft defence is not necessary, what is required is the affidavit disclosing a prima facie defence".
These cases clearly illustrate that in order for judgment in default to be set aside, the Court has to be satisfied that the defendant
has shown a bona fide defence involving triable issues.
The Defendant has annexed a Statement of Defence and Counterclaim in which it has raised defences, and at this stage although the
Court is not required to resolve these issues between the parties, I consider that the Defendant has been able to show a bona fide
defence involving triable issues.
There is no doubt that the Defendant has delayed in making the application. However, Evans v Bartlam (1937) 2 All E.R. 656 at p.656 states that the court while considering delay, have been "lenient in excluding applicants on that ground" and
further stated that:
"The primary consideration is whether he had merits to which the court should pay heed; if merits are shown the Court will not
prima facie desire to let a judgment pass on which there has been no proper adjudication".
Also as Atwood v Chichester [1878] UKLawRpKQB 4; 3 Q.B.D 722 and other cases show:
"the Court while considering delay, have been lenient in excluding applicants on that ground. The Court might also have regard
to the applicant's explanation why he neglected to appear after being served, though as a rule his fault (if any) in that respect
can be sufficiently punished by the terms as to costs or otherwise which the Court in its discretion is empowered by the rule to
impose. The appellant here has an explanation, the truth of which is indeed denied by the respondent, but at this stage I see no
reason why he should be disbelieved on what appears to me to be a mere conflict on affidavits."
The cases clearly show that the Defendant should not be prejudiced on grounds of delay. If the Defendant has disclosed a defence on
the merits he should be allowed an opportunity to be heard by the Court.
The following passage from Davies v Pagett (1986) 10 FLR 226 quoted in the judgment of Miles C.J. in Ryan v Adams (1993) 112 FLR 474 at 477 further highlights the duty of the Court in cases such as this:
"The fundamental duty of the Court is to do justice between the parties. It is, in turn, fundamental to that duty that the parties
should each be allowed a proper opportunity to put their cases upon the merits of the matter. Any limitation upon that opportunity
will generally be justified only by necessity to avoid prejudice to the interests of some other party, occasioned by misconduct,
in this case, of the party upon whom the limitation is sought to be imposed."
In the outcome, bearing in mind the above principles and the fact that the Plaintiff will not be prejudiced if the application was
granted, the Defendant should be provided an opportunity to defend this action.
For these reasons the default judgment entered herein is set aside with costs against the Defendant to be taxed if not agreed. The
Statement of Defence and Counterclaim is ordered to be filed within 14 days from the date of this decision.
D. Pathik
Judge
At Suva
29 June 1998
Hbc0067d.98s
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