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Australia and New Zealand Banking Group Ltd v Prasad [2005] FJHC 415; HBC0059.2005 (8 November 2005)

IN THE HIGH COURT OF FIJI
AT SUVA
CIVIL JURISDICTION

CIVIL ACTION NO.: HBC0059 OF 2005

BETWEEN:

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED
Plaintiff

AND:

TRIBHUWAN PRASAD
1st Defendant

WESTERN WRECKERS LIMITED
2nd Defendant

Counsel: Mr. Parshotam – for Plaintiff
Mr. S. Krishna – for 1st Defendant
Mr. O’Driscoll – for 2nd Defendant

Date of Hearing & Judgment: 8th November, 2005

JUDGMENT

Background

The first defendant is in the Transport Industry. He approached the second Defendant Company and sought to buy some trucks. They settled on a price of $40,000.00.

The second defendant assisted the first defendant to make an application to finance this purchase through Credit Corporation. At that stage these two parties were getting along well and so it was that the second defendant handed possession of the trucks over to the first defendant while the Credit Corporation application was being processed. As security for this the second defendant kept the first defendant’s cheque for some $40,000.00 made out against his account of the plaintiff bank ANZ.

Credit Corporation declined the loan. The first defendant kept the trucks. The second defendant deposited the first defendant’s cheque with the plaintiff bank and it was honoured. There was no formal overdraft arrangement and there were insufficient funds in the account to clear the $40,000.00.

A little later the first defendant and second defendant entered into a further arrangement. The first defendant was to return the trucks to the second defendant who would then reimburse the first defendant for his $40,000.00. The parties would then walk away from the original agreement for the sale and purchase of the trucks.

Sadly, the first defendant not only kept the trucks and didn’t return them he also kept an original Habib Bank Cheque and a subsequent replacement Westpac Cheque given to him by way of a refund of the $40,000.00 he originally paid for the trucks.

Curial History

The plaintiff filed proceedings on the 11^th of February. Thereafter a Statement of Claim on the 8^th of March was followed by judgment on the 21^st of March, 2005.

The first defendant advised appointment of solicitors on the 30^th of June. Some three months later they moved to set aside the default judgment on the 4^th of July 2005. It is that application they bring to court this morning.

Jurisdiction

The issue for the Court on an application to set aside the default judgment is succinctly stated in Wearsmart Textiles Limited v General Machinery Hire Limited; FCA No. 30/97. This conservative approach to the general principles requires me to consider the following:

(1) Whether there has been a delay in making the application for setting aside.

(2) If there has been then whether the defendant has given a satisfactory explanation for his failure to appear.

(3) If the judgement is irregular then there must be an affidavit of merits i.e. an affidavit stating facts showing a defence on the merits.

There is no room for speculative defences and potentially credible affidavit evidence must demonstrate a real likelihood that a defendant will succeed. Otherwise no real prospect of success is shown and relief should be refused (Allen v Taylor [1992] PLQR 255).

That further along a plaintiff has gone to execute judgment in the absence of a stay then the less likely it is court will grant a late stay application: Fiji National Provident Fund v Shri Datt [1988] SPLR 138 per Fatiaki J.

Delay

I find there is a prima facie delay in the making of this application. Judgment was entered on the 21^st of March, 2005. The summons to set aside was not received until the 4^th of July, 2005 some three months later.

I do not accept the first defendant’s application that he can excuse this delay by reason of his separate discussions with the second defendant. The second defendant’s assurances, if any were given, are irrelevant to the plaintiff’s case against the first defendant. The first defendant had ample warning that the plaintiff intended to recover its money from him. Rather then engage counsel and adopt a prudent course of filing a pro forma defence he did nothing and judgment was entered. I find there is no satisfactory explanation for his failure to appear.

A writ of FIFA was issued on the 18^th of April, 2005. A copy of the order made on the 22^nd of April, 2005 was served on the first defendant on the 4^th of May, 2005. A further copy of an order made on the 20^th of May, 2005 was served on him on the 28^th of May, 2005. Yet no application for setting aside was made until the 4^th of July, 2005.

I keep in mind the dicta of Fatiaki J in the National Provident Fund Case (supra).

I find the delay inexcusable.

Defence on the Merits

Although my first finding may dispose of the matter I also comment on the proposed defence by the first defendant.

I firstly keep in mind that the first defendant had an opportunity to settle this matter by returning the vehicles to the second defendant and receiving a refund for the money that he paid.

Rather than return the trucks he deposited the replacement Westpac Cheque from the second defendant. This inevitably led to the second defendant to stop payment on that cheque as it hadn’t received a simultaneous return of the vehicles in exchange for that cheque.

I keep in mind and accept the decision of Metropolitan Police Commissioner v Charles [1976] 3 ALL ER 112, that if a cheque is presented to a bank for payment on a account which has insufficient funds to meet it and there is no pre-arrangement or overdraft facilities to cover the cheque then that presentation is to be regarded as a request for a loan by way of overdraft and the banker is free to grant the overdraft or to refuse it and dishonour the cheque.

The first defendant gave the cheque to the second defendant. The first defendant made these arrangements knowing that he had insufficient funds in his account. It is, in my view, an unmeritorious defence to blame the bank for processing the cheque in those circumstances. The prudent course when Credit Corporation refused the loan would have been to return the trucks to the second defendant.

The prudent course once the $40,000.00 cheque had been cleared by the ANZ would have been to return the trucks and re-deposit the second defendant’s Westpac Cheque bringing the matter to an amicable conclusion. The first defendant did not do this.

I find there is no potentially credible affidavit evidence demonstrating a real likelihood that the first defendant will succeed on these facts. He has no real prospect of success and accordingly I find the proposed defence unmeritorious and quite independent of my finding an inexcusable delay. Relief should be refused.

Conclusion

The application is refused. No cost to either party.

Gerard Winter
JUDGE

At Suva
8^th November, 2005