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Total Fiji Ltd v Kasanawaqa [2014] FJHC 555; HBC234.2013 (29 July 2014)

IN THE HIGH COURT OF FIJI
AT SUVA
CIVIL JURISDICTION

Civil Action No: HBC 234 of 2013

BETWEEN:

TOTAL FIJI LTD
of Rona St,Walu Bay,Suva.
PLAINTIFF

AND:

VILIAME KASANAWAQA
of Lot 4, Naganivatu Road,Wailoku, Tamavua.
DEFENDANT

BEFORE: Master Thushara Rajasinghe
COUNSEL: Ms. M. Rakai for the Plaintiff
Mr. A. Vakaloloma for the Defendant

Date of Hearing: 3rd of April, 2014.
Date of Ruling: 29th of July, 2014

RULING

1. INTRODUCTION:
   

1. This is a notice of motion filed by the Defendant seeking following orders inter alia;
   
   1. That the Default judgment entered herein against the Defendant on the 27th of September 2013 be wholly and unconditionally set aside,
      
   2. That the Summons for assessment of Damages failed on 8th of November 2013 be struck out and dismissed,
      
   3. That Defendant be granted leave to file its statement of Defence within 21 days,
      
   4. That the cost be in the cause of the application,
      
2. Subsequent to the filing of respective affidavits of the Defendant and the Plaintiff, this Notice of Motion was set down for hearing on the 3rd of April 2014. The learned counsel for the Plaintiff and the Defendant made their respective oral arguments and submissions during the cause of the hearing. Both counsel tendered their respective written submissions at the hearing. Having considered the respective affidavits and the submissions, I now proceed to pronounce my ruling as follows.
   

2. BACKGROUND,
   

3. The Plaintiff instituted this action against the Defendant by way of a writ of summons seeking special and general damages. The Plaintiff’s claim is founded on the allegation that the Defendant has breached the confidentiality agreement during and after the employment without prior written consent of the Plaintiff and has caused special and general damages.
   
4. The Plaintiff served the writ of summons to the Defendant on 26th of August 2013 and then filed the affidavit of service on the 3rd of September 2013. According to the case record, the Defendant has filed an acknowledgement of service on the 30th of August 2013; however, it was not properly served to the Plaintiff. The Plaintiff also denies of serving of any acknowledgment of service by the Defendant. The Plaintiff then entered a default judgment against the Defendant on 27th of September 2013 and filed Summons for assessment of damages on the 8th of November 2013. Consequently, the Defendant filed this motion to set aside the said default judgment.
   

B.I Defendant’s Case,

5. The Defendant acknowledges that he failed to file his statement of defence within the time specified in the rules. He stated in his supplementary affidavit that he was not aware of those requirements and was busy with his studies. He then stated that he has a defence with merit and denied the allegation claimed by the Plaintiff. The Defendant tendered a copy of his proposed statement of defence as an annexure to his affidavit. The learned counsel for the Defendant contended in his written submissions that awarding of special damages of $ 4,666.66 in the default judgment is an irregularity, wherefore; the Defendant is entitled to set aside this default judgment unconditionally.
   

B.II Plaintiff’s Case,

6. The Plaintiff objected the admissibility of the affidavit of Elena Ratukalou. This objection is founded on three grounds. The first is that she was not authorised to file this affidavit and secondly she is only a legal clerk of the Defendant’s solicitors. The third ground is that she has no knowledge of material facts of this case. Beside of this preliminary objection, the Plaintiff urged that the Defendant has failed to satisfy the court that he has a meritorious defence. The learned counsel for the Plaintiff pointed out that the Defendant has not provided any substantial affidavit evidence to satisfy the court that he has a defence with a prospect of success or some degree of conviction other than a mere denial of the claim. Moreover, the Plaintiff submitted that the Defendant is an educated person and such an excuse of unawareness of the court proceedings could not be acceptable from a person of his calibre.
   

C.THE LAW AND ANALYSIS,

7. The Plaintiff has entered this default judgment on default of notice of intention to defend pursuant to Order 13 of the High Court Rules as they were not properly served the notice of acknowledgment of service, though it was filed with the registry within the stipulated time limit by the Defendant.
   
8. Order 13 rule 10 empowers the court to set aside the judgment entered on default of notice of intention to defend, where it states that;
   

“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”.

9. The founding principle of the jurisdiction of setting aside a default judgment has been precisely expounded by Lord Atkin in his widely acclaimed passage in Evans v Bartlam( 1937) A.C.437) where his lordship outlined that “ 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 only been obtained by a failure to follow any of the rules of procedure”.
   
10. Sir Thomas Bingham MR in Costellow v Somerset County Council (1993) 1 All ER 952, at 959) has discussed the applicable approaches to deal with the procedural default of the parties, which I find relevant to this instance case, though the focus of Cosellow ( supra) were on the issue of want of prosecution. Sir Thomas Bingham MR in Costellow found that;
    

““This problem arises at the intersection of two principles, each in itself salutary. The first principle is that the rules of court and the associated rules of practice, devised in the public interest to promote the expeditious dispatch of litigation, must be observed. The prescribed time limits are not targets to be aimed at or expressions of pious hope but requirements to be met. This principle is reflected in a series of rules giving the court a discretion to dismiss on failure to comply with a time limit ...this principle is also reflected in the court’s inherent jurisdiction to dismiss for want of prosecution. ...

The second principle is that a plaintiff should not in the ordinary way be denied an adjudication of his claim on its merits because of procedural default, unless the default causes prejudice to his opponent for which an award of costs cannot compensate. This principle is reflected in the general discretion to extend time conferred by O 3 r 5, discretion to be exercised in accordance with the requirements of justice in the particular case........................

Neither of these principles is absolute if the first principle were rigidly enforced, procedural default would lead to dismissal of action without any consideration of whether the plaintiff’s default had caused prejudice to the defendant. But the court’s practice had been to treat the existence of such prejudice as a crucial and often a decisive matter. If the second principle were followed without exception, a well to do plaintiff willing and able to meet orders for costs made against him could flout the rules with impunity, confident that he would suffer no penalty unless or until the defendant could demonstrate prejudice....................

11. In view of the observations of Lord Atkin in Evans v Bartlam( Supra) and Sir Thomas Bingham MR in Costellow v Somerset County Council (Supra) it appears that the court is required to approach its discretionary power of setting aside of default judgment, giving proper consideration to two contrasting requirements of procedural adherence and the right of a proper and inclusive trial to conclusively determine the substantive dispute of the parties.
    
12. Bearing in mind the founding principle and applicable approach of the jurisdiction of setting aside of default judgments, I now turn to review the scope of this discretionary power of setting aside of default judgments.
    
13. Fry L.J in Anlaby and Others v Peatorious (1888) Q.B.D.765 has outlined two distinctive domains of default judgments. The first is default judgment entered regularly, and the second is default judgment entered irregularly. Having classified these two groups, Fry LJ further discussed the applicable approaches to deal with these two sets of default judgments, , where his lordship held in Anlaby ( supra) that;
    

“there is a strong distinction between setting aside a judgment for irregularity in which case the court has no discretion to refuse to set aside, and setting it aside where the judgment though regular, has been obtained through some slip or error on the part of the defendant in which case the court has a discretion to impose terms as a condition of granting the defendant relief”.

14. Accordingly, the court has no discretion to refuse to set aside a default judgment, if it has been obtained irregularly. The learned counsel for the Defendant in this instance case submitted in his written submissions that the awarding of special damages of $ 4,666.66 is irregular as the claim of special damages does not fall within the definition of a liquidated claim.
    
15. I now draw my attention to determine whether the special damages of $ 4,666.66 sought by the Plaintiff falls within the definition of a liquidated claim. The learned counsel for the Defendant contended that a liquidated claim is in the nature of a debt i.e. a specific some of money due and payable under a contract. Its amount must be ascertained or ascertainable as a mere matter of arithmetic. While submitting such, the learned counsel urged that claim of the special damages is based on the allegation of breach of confidentiality under the employment, hence it needs investigation beyond mere calculation.
    
16. However in Phillips & Co (a firm) v Bath Housing Co-operative Ltd ([2013] 2 All ER 475) the Court of Appeal ( Civil Division) has expanded the scope of liquidated claim from its conventional limits to include certain forms of damages within the meaning of liquidated claim, where Lloyd LJ held that;
    

“There is therefore some scope for debate as to the width of the word 'debt' in this context. As for the word 'liquidated', I would take it that, in ordinary legal usage, this requires that the liability should be for an ascertained amount. Most liquidated claims would be for a debt. Obvious examples include the outstanding principal and unpaid interest (at a contractual rate) on a loan, and sums due by way of rent or hire, and the price of goods (if specified in the contract). Conventionally, unliquidated claims are normally in damages. Some damages claims, however, may be liquidated. A good example is a building contract which has a liquidated damages clause defining the builder's liability if the work is not complete by the stipulated finishing date”

17. The threshold test of ascertaining of a liquidated claim does not necessarily depend on the nature of the claim, but it mainly based on the nature of the assessment of the claim. As per Lloyd LJ‘s observation, this claim of special damages is founded on the claim of one month salary paid to the Defendant upon his resignation. The amount of the monthly salary is precise and needs only a mere calculation of the amount. Hence, I am satisfied that the special damages sought in the statement of claim is a liquidated claim. In view of these findings, I hold that the granting of special damages of $ 4666.66 in this default judgment is not an irregularity.
    
18. Having satisfied this default judgment has not entered irregularly, I now turn to review the laws pertaining to set aside of default judgment entered regularly.
    
19. The Fiji Court of Appeal in Wearsmart Textiles Limited v General Machinery Hire limited and Shareen Kumar Sharma ( 1998) FJCA26; Abu 0030u.97s (29 May 1998) has broadly deliberated the applicable principles for setting aside a default judgment entered regularly, where it was held that;
    

“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 White Book, i.e. The Supreme Court Practice 1997 (Volume 1) at p.143. They are as follows:-

"Regular judgment -If the judgment is regular, then it is an (almost) 13/9/5 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) 23 Q.124. "At a"At any rate where such an application is not thus supported, it ought not to be granted except for some very sufnt reason," per Huddleston, B., ibid. p.129, approving Hopton v. Robertson [1884] W.N. 77, 77, reprinted 23 Q.B.D. p. 126 n.; and see Richardson v. Howell (1883) 8 . 445; and Watt v.tt 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 expressie Alpine Bulk Transport Co. Inc. v. Saudi Eagle Shipping Cong 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)."

20. In view of the Wearsmart Textiles Limited (supra), the essential requirement is to provide an affidavit stating facts showing a defence on the merits. The meritorious defence transcends other requirements such as the delay of making the application, reasons for the default ect.
    
21. Wearsmart Textile Limited ( supra) has further discussed the scope of meritorious defence by adopting the principles outlined in Alpine Bulk Transport Co,Inc v Saudi Eagle Shipping Co.Inc (1986) 2 Lloyd's Rep 221, where it held that;
    

"Dealing with the discretionary powers of the Courts under English Order 13 r.9 sub-rule 14 the Supreme Court Practi97&#160 (the White Book) (Vol. 15) 145) cites the Court of Appeal's judgment in Alpine Bulk Tran Co. Inc. vnc. v Saudi Eagle Shipping Co. Inc., The Saudi Eagle [1986] 2 Lloyd's Rep. 221 as authority for following pition>