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National Bank of Fiji v Senirauvula [2003] FJHC 286; HBC0260d.1996s (27 June 2003)

IN THE HIGH COURT OF FIJI
AT SUVA
CIVIL JURISDICTION

CIVIL ACTION NO. HBC0260 OF 1996

Between:

NATIONAL BANK OF FIJI
Plaintiff

and

1. SEINI SENIRAUVULA
2. ASESELA SADOLE
Defendants

Mr. S. Valenitabua for the Defendants
Mr. H. Nagin for the Plaintiff

DECISION

This is the defendant’s motion seeking relief as follows under Order 13 Rule 10 of the High Court Rules 1988:

1. That the Judgment In Default of Defence entered against the Defendants on the 2^nd day of August, 2002 in this Action be Set Aside.
   
2. That the Defendants be given leave to defend this action and file their Counterclaim.
   
3. That the Plaintiffs pay to their Defendants and their Counsel costs of $750.00, and disbursements of $247.80, as ordered by the Fiji Court of Appeal on 17 May, 2002 within 5 days.
   
4. That UNLESS the Plaintiffs pay the ordered costs and disbursements as aforesaid within 5 days, the Plaintiff’s claim in this Action be struck out with costs to the Defendants.
   
5. That the Plaintiffs pay costs of $500.00 for this Application.
   

Background facts:

The background facts are as follows: (as stated in Mr. Valenitabua’s written submission herein):

A Summary Judgment was ordered in this Action on 21 October, 1999. The Applicants appealed against that Summary Judgment by Notice of Appeal dated and filed on 23 November, 1999. The Applicants’ appeal was heard in the Fiji Court of Appeal on 13 May, 2002. The appeal was allowed and the Summary Judgment set aside with a subsequent order that this Action was to take its normal course and that the Plaintiffs paid the Applicants’ costs for the appeal, a sum of $750.00, and disbursements to be assessed if not agreed.

After the summary judgment was set aside the plaintiff went ahead and obtained judgment by default after about three months.

Defendants’ contention

It is the defendants’ contention that the plaintiff failed to pay costs and disbursement as ordered amounting to $1,770.00. It went ahead and obtained judgment by default. They say that no document regarding the judgment has been served on them to-date.

They say that they have a good ‘defence and counterclaim’ against the plaintiff and for this reason the summary judgment was set aside by the Fiji Court of Appeal.

Consideration of the application

This application is made under Or. 13 r. 10 of The High Court Rules 1988 which provides:

Without prejudice to rule 8(3) and (4), the Court may, on such terms as it thinks just, set aside or vary any judgment entered in pursuance of this Order.

The chronology of events leading to default judgment are that judgment of Fiji Court of Appeal was delivered on 17 May 2002 when the defendants were given leave to defend. Default judgment was entered on 2 August 2002. Application to set aside the said judgment was made on 16 August 2002.

This was a claim for $75,199.74 against the defendants as guarantors for Inies Allied Chemicals Limited to whom an advance of the said sum was made. This is not denied by the defendants.

On 2 August 2002 after search the plaintiff entered default judgment.

The plaintiff says that the defendants had almost three months within which to file Statement of Defence.

The defendants on the other hand say that because the plaintiff did not pay costs and disbursements as ordered by Court of Appeal, the judgment is irregular and it ought to be set aside. They say that it is also a contempt of Court.

I see no merit on this ground to set aside judgment. There was nothing to prevent them from filing their Statement of Defence in good time after the Court of Appeal judgment. Three months was indeed a long time for the defendants to be sleeping on the matter.

The defendants’ assertion that they should have been informed of the plaintiff’s intention to proceed to obtain default judgment is also without merit and has no legal basis at all.

On this argument of Mr. Valenitabua, that he should have been informed of plaintiff’s intention to proceed to judgment, he relied on Tuivaga J’s judgment in Bula Timber v Geelong Holding Limited (C.A. No. 173 of 1977 – unreported) – on the subject of setting aside a default judgment where His Lordship said:

“I think it is fair to record that a practice appears to have developed at the bar in this country whereby counsel for one party would as a matter of good conscience give notice to the other side of any intended step to enter judgment by default and calling upon the other side to move in the matter if it desires to defend the action.

This practice seems particularly desirable where it appears that the other side has not for one reason or another had sufficient time to organize itself into a position where it could take appropriate steps in the matter or where from the nature of the case it seems likely that the other side would want to contest the action on the merits.”

The above statements do not apply to the facts of this case as the defendants had ample time within which to organize themselves and file Statement of Defence subsequent to the Court of Appeal judgment.

Having considered the defendants’ submission all arguments why judgment should be set aside fail except the fact that the proposed ‘Defence and Counterclaim’ has now been put before the Court, due consideration ought to be given to it in this application.

Evidently, there was merit in the defendants’ appeal to Court of Appeal as in setting aside the summary judgment the Court said:

“the appellants (the defendants herein) were entitled to raise by way of counterclaim or set off the allegations which they sought to maintain in opposition to summary judgment.”

The Law

The principles governing the setting aside of default judgments are well-known and have been stated many a time.

No doubt this was a regular judgment but not a judgment on merits.

The Supreme Court Practice 1997 Volume I at 143 states the principles very clearly and I ought to set them out hereunder as I have borne these in mind in considering this application. It states:

“Regular judgment – If the judgment is regular, then it is an (almost) inflexible rule that there must be an affidavit of merits, i.e. an affidavit stating facts showing a defence on the merits (Farden v. Richter [1889] UKLawRpKQB 79; (1889) 23 Q.B.D. 124. “At any rate where such an application is not thus supported, it ought not to be granted except for some very sufficient reason,” per Huddleston, B., ibid. p.129, approving Hopton v. Robertson [1884] W.N. 77, reprinted 23 Q.B.D. p.126 n.; and see Richardson v. Howell (1883) 8 T.L.R. 445; and Watt v. Barnett [1878] UKLawRpKQB 21; (1878) 3 Q.B.D. 183, p.363).

For the purpose of setting aside a default judgment, the defendant must show that he has a meritorious defence. For the meaning of this expression see Alpine Bulk Transport Co. Inc. v. Saudi Eagle Shipping Co. Inc., The Saudi Eagle [1986] 2 Lloyd’s Rep. 221, C.A., and note 13/9/14, “Discretionary powers of the court,” below.

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 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 (see para. 13/9/14, below).”

In considering the application there are other authorities and statements of principles which I have considered and these are stated hereunder.

On facts showing a defence the following statement of Lord Denning M.R. in Burns v Kondel (1971) 1 Lloyd’s Rep. 554 at 555 is apt:

“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.”

On ‘delay’ the reasons advanced by the defendants are not acceptable at all and failure to act within a reasonable time in the circumstances of this case is something which the Court will take into consideration in exercising its discretion. In this regard I refer to what Lord Atikin in Evans v Bartlam (1937) 2 All E.R. 646 at 650 said and it is apt:

“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.”

Further, in deciding on the issue before this court on this question of ‘delay’ the following extract from the judgment of Lord Wright in Evans (supra) at 489 after stating that the “Court, while considering delay, have been lenient in excluding applicants on that ground” further said as follows:-

“The primary consideration is whether he has 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. This point was emphasized in Watt v. Barnett [1878] UKLawRpKQB 28; 3 Q.B.D. 363 .......................................... He has been guilty of no laches in making the application to set aside the default judgment, though 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.”

Conclusion

After considering the affidavit evidence before me and the useful submissions from both counsel I find that the defendants have shown defence on merits. They ought to be let in to defend and that the judgment in default ought to be set aside.

In the outcome, bearing in mind the guiding principles in an application of this nature and in the exercise of Court’s discretion, I order that the said default judgment entered against the defendants on 2 August 2002 be set aside on condition that the defendants pay the sum of $500.00 costs to plaintiff’s solicitors within 14 days of this decision failure to do so will mean that the judgment will stand. Once the costs are paid the defendants are ordered to file and serve a ‘Statement of Defence and Counterclaim’ within 21 days of this decision.

D. Pathik
Judge

At Suva
27 June 2003