| Fiji Islands - Waterlife Exporters (Fiji) Ltd v South Seas Export (Fiji) Ltd - Pacific Law Materials |
IN THE HIGH COURT OF FIJI
AT SUVA
CIVIL JURISDICTION
CIVIL ACTION NO. 184 OF 1999
EN:
:
1. WATERLIFE EXPORTERS (FIJI) LIMITED
2. PETER SAVONA
Plaintiffs
AND:
SOUTH SEAS EXPORT (FIJI) LIMITED
Defendant
<
Mr.C.C. Savou fvou for the Plaintiffs
Mr. W. Clarke for the Defendant
DECISION
This is the defendant's Summons dated 11 May 1995 seeking the following orders:
1. Execution of all further proceedings to enforce the said Order be stayed pending the determination of the Application herein to
set aside Judgment in Default which was issued by this Court on the 6th day of May, 1999.
2. Pending the hearing of this application a stay of execution be granted.
3. That Judgment in Default issued by this Court on 6th day of May 1999 in the sum of $143,400.00 be set aside.
4. The costs of this application be costs in the cause.
The defendant filed affidavits in support sworn 11 May 1999 by Virgil Elwyn Segrest Jnr and Ratu Epenisa Seru Cakobau. A further affidavit by Ratu Epenisa sworn 13 May 1999 was also filed. An affidavit in reply was sworn on 21 May 1999 by Peter Savona for the plaintiff and filed herein.
On an ex parte application an interim order for stay etc. was made by me on 12 May 1999 and the Summons was returnable for 24 May
when I heard the application inter partes.
Both counsel made verbal submissions and I have given due consideration to them.
Background facts
By writ of summons dated 14 April 1999 the plaintiffs claimed against the defendant the sum of $143,400 for loss in business in regard
to their shipments between October 1998 and March 1999 details whereof are set out in the Amended Statement of Claim.
No defence having been filed the plaintiffs obtained judgment by default on 6 May 1999. On 7 May Writ of Fieri Facias was issued and
execution levied on 10 May and an Inventory was taken.
Immediately after becoming aware of the execution the defendant took out the present application for stay of execution and the setting
aside of the default judgment.
Determination of the issues
The law
The principles governing the setting aside of a default judgment are well-known.
This was a regular judgment. Setting aside is a matter of discretion by the Court. The principles governing the exercise of this discretion
are set out in the judgment of the Court of Appeal in ALPINE BULK TRANSPORT COMPANY INCORPORATED v SAUDI EAGLE SHIPPING COMPANY INCORPORATED (the Saudi Eagle (1986) 2 Lloyd's Rep. (CA) p.221 at p.223.
A useful summary of the factors to be taken into consideration is to be found under notes to Or. 13 r9/14 of THE SUPREME COURT PRACTICE 1995 Vol. I at p.142 and which is, inter alia, as follows:-
"The purpose of the discretionary power is to avoid the injustice which may be caused if judgment follows automatically on default.
The primary consideration in exercising the discretion is whether the defendant has merits to which the court should pay heed, not
as a rule of law but as a matter of common sense, since there is no point in setting aside a judgment if the defendant has no defence,
and because, if the defendant can show merits, the court will not prima facie desire to let a judgment pass on which there has been
no proper adjudication. Also as a matter of common sense the court will take into account the explanation of the defendant as to
how the default occurred. The foregoing general indications of the way in which the court exercises discretion are derived from the
judgment of the Court of Appeal in Alpine Bulk Transport Co. Inc. v. Saudi Eagle Shipping Co. Inc., The Saudi Eagle [1986] 2 Lloyd's Rep. 221, C.A., at p.223, where the earlier cases are summarised. From that case the following propositions may be derived:
(a) It is not sufficient to show a merely "arguable" defence that would justify leave to defend under Order 14; it must
both have "a real prospect of success" and "carry some degree of conviction". Thus the court must form a provisional
view of the probable outcome of the action.
(b) If proceedings are deliberately ignored this conduct, although not amounting to an estoppel at law, must be considered "in
justice" before exercising the court's discretion to set aside."
Also on the subject of default judgment in DAVIES v PAGETT (1986) 10 FCR p.226 at p.232 a Full Court of the Federal Court of Australia said as follows and this I have borne in mind in considering
this matter.
"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 the necessity to avoid prejudice to the interests of some other party, occasioned by misconduct,
in the case, of the party upon whom the limitation is sought to be imposed. The temptation to impose a limitation through motives
of professional discipline or general deterrence is readily understandable; but, in our opinion it is an erroneous exercise of the
relevant discretion to yield to that temptation. The problem of delays in the courts, egregious as it is, must be dealt with in other
ways; for example, by disciplinary actions against offending practitioners and by a comprehensive system of directions hearings or
other pretrial procedures which enable the court to supervise progress - and, more pertinently, non-progress - in all actions."
Application of law to facts
The defendant says that although the Writ herein was served at its registered office which is the office of Messrs. G.P. Lala &
Associates and some document on Mr. Narsey, (the Company Secretary), neither of them communicated this fact to the defendant. Hence
it was completely in the dark as to what was happening and therefore unable to file a Statement of Defence.
The defendant disputes the claim altogether and has now annexed a proposed defence with the affidavit in support filed by it.
The plaintiffs have a similar business as the defendant and it appears from the affidavit evidence and from counsels' submissions
that the parties are at each other's throats in regard to the business that they run.
Although it was a regular judgment, I find that there are triable issues and the defendant ought to be given the opportunity to defend
bearing in mind that through no fault on its part it did not become aware of the service of documents until execution was levied.
The day after obtaining the default judgment the plaintiffs levied execution. Had the plaintiffs not been so fast it could be that
the defendant would have come to know from Mr. Lala or Mr. Narsey of the service of documents on them. The defendant's business partner
the said Virgil Elwyn Segrest Jnr says that he owns bulk of the plant and machinery in the factory of the defendant and that execution
should not be levied on his machinery etc.
The defendant has disclosed a proposed defence and I consider that there is a defence on the merits bearing in mind the principles
involved.
It is stated in The Supreme Court Practice 1995 Or. 13/9/6 at p.140 that:
"... 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 even if the explanation given by him is false (VANN v AWFORD (1986) 83 L.S. Gaz. 1725, THE TIMES, April 23, 1986 C.A.). The fact that he has told lies in seeking to explain the delay, however, may affect his credibility,
and may therefore be relevant to the credibility of his defence and the way in which the Court should exercise its discretion."
On the subject of affidavit stating facts showing a defence on the merits LORD DENNING MR in BURNS v KONDEL (1971) 1 Lloyd's Rep. 554 at p.555 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."
The defendant only has 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" (THE FIJI SUGAR CORPORATION LIMITED and MOHAMMED ISMAIL Civ. App. No. 28/87 F.C.A. at p.9 Cyclostyled judgment). The following passage from the judgment of LORD ATKIN in EVANS BARTLAM (1937) 2 All E.R. p.646 at p.650 is pertinent on the subject of the principle on which a Court acts where it is sought to set aside
a judgment arising out of a failure to comply with the rules:-
"I agree that both R.S.C. Ord. 13, r.10, and R.S.C., Ord. 27, r.15, gives 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 been obtained only by a failure to follow any of the rules of procedure."
For these reasons applying the principles stated above the default judgment of 6 May 1999 is ordered to be set aside and as a result
there is no need to make any order in regard to the stay of execution as execution is automatically extinguished. The defendant is
ordered to file Statement of Defence within 14 days from the date of this decision. In view of the nature of the claim and in the
circumstances of this case, the plaintiffs having no objection, it is ordered by consent that the defendant will not remove any plant
or machinery either belonging to the defendant or its business partner which are in the factory until the determination of this action
or until further order of this Court with liberty reserved to parties to apply generally. The defendant is ordered to pay the costs
of this application which I fix at $200.00.
D. Pathik
JUDGE
At Suva
4 June 1999
Hbco184d.99s
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