Home | Databases | WorldLII | Search | Feedback High Court of Fiji

Dominion Finance Ltd v Chan [2011] FJHC 43; HBC231.2010 (10 February 2011)

IN THE HIGH COURT OF FIJI
AT SUVA
CIVIL JURISDICTION

Civil Action No. HBC 231 of 2010

BETWEEN

DOMINION FINANCE LIMITED
a Limited Liability Company having its registered office at Suva in Fiji.
Plaintiff

AND

RONALD PAUL CHAN
of 33 Ragg Avenue, Tamavua, Suva.
Company Director.
1^st Defendant

AND

TIKIKO TUWAI DRIU
of Nakavu Village, Nadi in Fiji, Company Director
and Pilot as Executor and Trustee of the Estate of
Nemani late of Nadi, retired Fire Officer.
2^nd Defendant

BEFORE : Master Deepthi Amaratunga

COUNSELS : R PATEL Lawyers for the Plaintiff
M CHANDRA for the Defendant

Date of Hearing: 24th January, 2011
Date of Ruling: 10th February, 2011

RULING

1. INTRODUCTION
   

1. This is an application to set aside a default judgment made, pursuant to Order 19 rule 9 of the High Court Rules. The Defendants allege inter alia that their acknowledgement of service was not accepted by the High Court Registry that resulted in default judgment being entered against them.
   

2. FACTS AND ANALYSIS
   

2. Writ of summons and statement of claim was filed on the 29th July, 2010 and the 2nd Defendant was served with the writ and the statement of claim on 9th August, 2010. No acknowledgement of service was filed within the stipulated 14 days time and the plaintiff filed an affidavit of service on 12th August, 2010 and followed it with an application to enter default judgment on 31st August, 2010 and the default judgment was entered on 1st September, 2010 against the 2nd Defendant.
   
3. There was no acknowledgement of service filed on or before 31st August 2010 when the default judgment was filed and accordingly it was entered on 1st September, 2010. Since the 2nd Defendant did not file an acknowledgment of service within the stipulated 14 days time default judgment was entered and the acknowledgement on 6th September.2010 was done clearly out of time and there is no failure on the part of the High Court Registry in rejecting it. So the default judgment against the 2nd Defendant was entered by the registry correctly, after the lapse of the stipulated 14 day time.
   
4. On the 6th of September,2010 the 1st and 2nd Defendants filed a joint acknowledge of service in the High Court Registry, but the registry correctly rejected it as the 2nd Defendant was served the writ on 9th August,2010 and it was clearly out of time as regards to the 2nd Defendant.
   
5. On 9th September,2010 the Plaintiff served the writ and the statement of claim to the 1st Defendant and any acknowledgement of service prior to this date is clearly premature and has already being rejected by the court on 6th September,2010. So, when 1st Defendant received the summons on 9th September,2010 there was no doubt that already its premature application filed together with the delayed acknowledgement of service of the 2nd Defendant has already being rejected and should have filed a fresh acknowledgement of service only for the 1st Defendant. 1st Defendant did not do so, but kept on arguing with the Registry on the legality of their earlier application that was already rejected by the High Court Registry. This resulted another default judgment being entered against the 1st Defendant, as there was no acknowledgment of service filed after the writ was served on 9th September, 2010. So, a default judgment was entered against the 1st Defendant on 4th October, 2010 as there was no acknowledgement of service filed within 14 from the service. The acknowledgment of service that was filed on behalf of 1st and 2nd Defendants on 6th September, 2010 was already rejected by the Registry and that cannot be relied on by the 1st Defendant who was not served the Writ by 6th September, 2010. When 1st Defendant was served with the writ on 9th September, 2010 he opted not to file an acknowledgement with in 14 days of service of the writ and cannot rely on already rejected acknowledgement. It is clear that form the date of service the 1st Defendant was granted 14 days and he did not exercise the opportunity granted to him to file an acknowledgment with in 14 days form the 9th September, 2010. The 1st Defendant, who was already under instructions from his lawyers, cannot rely on a rejected joint acknowledgment of service by both defendants. The rejected acknowledgement is clearly out of time as regard to the 2nd Defendant and premature as regard to the 1st Defendant as he was not served with the writ by 6th September, 2010. It is clear that no acknowledgement can be done before the service of the writ as the party is unaware of the documents that will be served till it is served. It is also noteworthy that by adding a party who was yet to be served with the writ cannot obtain the legality of the belated acknowledgement of the 2nd Defendant and with a clear indication of rejection of the acknowledgment shows it. 1st Defendant would have filed an acknowledgment if he was mindful of his rights. Since 1st Defendant did not file an acknowledgment within 14 day period from 9th September, 2010 a default judgment was entered against the 1st Defendant and that cannot be considered as an irregular act of the High Court Registry.
   
6. The Defendants have also taken the objection that the default judgment is irregular as it does not contain the indemnity cost claim in the default judgment. It is clear that indemnity cost cannot be quantified in a default judgment and the Plaintiff is at liberty to seek anything less than what was claimed in the Statement of Claim and that cannot be considered an irregular thing. Considering all the facts and arguments I decide that the judgment was regularly entered.
   
7. Apart from the above objections the Defendants have stated the interest included in the judgment is unjust, but Law Reform Miscellaneous Provisions (Death and interest) Act (chapter 27) Section 3(b) states that where any interest is granted as of right or by virtue of an agreement that will supersede the legal interest that is granted by a court. The interest that was indicated was the interest that was agreed between the parties and guarantors are bound by that.
   

7. In Fiji National Provident Fund V Shri Datt (1988) 34 FLR 67 Justice Fatiaki held that in setting aside of the default judgment following tests has to be applied:

a. Whether the defendant has substantial ground of defence to the claim

b. Whether the Defendant has satisfactory explanation for his failure to enter an appearance to the writ.

c. Whether the plaintiff will suffer irreparable harm is the judgment is set aside.

100. SUBSTANTIAL GROUND OF DEFENCE
     

8. The 1st and 2nd Defendants have annexed their proposed statement of defence in this application to set aside the default judgment and it is marked 'c' to the affidavit in support and the defences are:

i) The Plaintiff failed to obtain proper market price of the 3 properties it sold by exercising its powers of sale.

ii) The mortgagee sale procedures have not been fully complied with

iii) 1st Defendant do not remember signing of third party mortgage or guarantee on behalf of the Waya Development Limited.

iv) Plaintiff have not made any effort to claim its debts against the rightful debtor

v) The interest was never agreed by them and in any event it is unjust.

9. The Plaintiff has failed to adduce any materials to show that the mortgagee sale were done improperly. While accepting that Waya Development, borrowed the sum of $300,000 defendants do not admit giving security for advance loan and if so what action has it taken when a demand notice marked 'SB 4' marked in the affidavit of opposition filed by the plaintiff, was served to them as well as to Waya Development. It is interesting to note that Waya Development is only having two directors and two shareholders and they are the 1st and 2nd Defendants. The demand notice was dated 2nd Deccember, 2009 and this action was filled only on 29th July, 2010 and it is strange that none of the Defendants took any notice of this demand notice if they did not sign a guarantee. It is also noted that the Defendants did not file an answering affidavit to the affidavit in opposition where this document marked 'SB4' demand letters were annexed.

10. The allegation of Plaintiff not making any effort to claim its debts against the debtor namely Waya Development cannot be a defence as they are the sole shareholders and directors of the company and if they wish an if the company is liquid money can be paid easily to the Plaintiff without much effort . It is also noteworthy the liability of the Defendant is not contingent on the failure of the recovery of the debtor, but upon the failure of the Debtor to repay the debt. Defendants' admit Waya Development obtaining the loan of $300,000 and the default of it by the debtor company where they are the sole shareholders and the only directors on board of the company. The liability of the Defendants arise from the default and there is no obligation to go after the debtor first in terms of the contract of guarantee that was entered by plaintiff and the defendants which is marked as 'SB 10".

11. It is clear that the defences in the proposed statement of defence cannot be accepted as arguable or having any merit.

Whether the Defendant has satisfactory explanation for his failure to enter an appearance to the writ.

12. As I have explained in the first part of my ruling dealing with the irregularity alleged by the Defendants it is clear that what the Defendants have tried was to include 1st Defendant who was yet to serve the writ on 6th September 2010 together with already out of time 2nd Defendant and to file the acknowledgment of service for both defendants on 6th of September, 2010. This was prevented by the High Court Registry and it was a correct decision. This cannot be used as an excuse as it was clearly out of time for the 2nd Defendant and as regards to the 1st Defendant there was no acknowledgment possible on 6th September, 2010 as he was served only on 9th September, 2010. 2nd Defendant knew clearly that the acknowledgement that was filed on the 6th September, 2010 was rejected. So the explanation given by the1st and 2nd Defendant is clearly not acceptable.

Whether the Plaintiff will suffer irreparable harm is the judgment is set aside.

13. It is clear that if the judgment is set aside plaintiff would incur unnecessary cost of prosecuting this action and also will be in danger of recovering what ever the amount that is possible. It is also noted without a defence that has any merits on it, if default judgment is set aside it will be seriously prejudiced and it would also delay in the recovery of money.

4. CONCLUSION
   

14. The application to set-aside the default judgment is struck out with cost assessed summarily at $ 750. The cost to be paid by Defendants jointly or severally with in 21 days.

Dated at Suva this 10th day of February, 2011

.................................................
Mr. Deepthi Amaratunga
Acting Master of the High Court
Suva