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Orix Holdings Ltd v Pyramid Pacific Investments (Fiji) Ltd [2016] FJHC 710; HBC262.2013 (8 August 2016)

IN THE HIGH COURT OF FIJI
AT SUVA
CIVIL JURISDICTION

Civil Action No. HBC 262 of 2013

BETWEEN : ORIX HOLDINGS LIMITED a company incorporated in the Fiji Islands and having its registered office at Suva, Fiji Islands.

PLAINTIFF

AND : PYRAMID PACIFIC INVESTMENTS (FIJI) LIMITED a company incorporated in the Fiji Islands and having its registered office at Suite 2, 1^st Floor 37 Bau Street, Flagstaff, Suva, P O Box 2435, Government Buildings, Suva. 1^ST DEFENDANT

AND : PYRAMID IN VESTMENTS LIMITED a company incorporated in the Fiji Islands and having its registered office at Suite A10-A12 Grantham Plaza, Grantham Road, P O Box 117, Suva. 2^ND DEFENDANT

AND : JAGDISH NARAYAN of 1^st Floor, Bau Street, Flagstaff, Suva, Fiji Islands, Businessman. 3^RD DEFENDANT

BEFORE : Master Vishwa Datt Sharma

COUNSEL : Mr. Vinit Singh for the Plaintiff

Mr. A. K. Narayan for the Defendant

Date of Hearing: 01^st June, 2016

Date of Ruling : 8^th August, 2016

RULING

[Summons seeking Setting Aside of Default Judgment by the 2^nd and
3^rd Defendants pursuant to Order 13 Rule 10 of the High Court Rules,
1988 and the inherent jurisdiction of the Honourable Court.]

1. INTRODUCTION
   

1. The 2^nd and 3^rd Defendant filed a Summons on 24^th August, 2015 and sought for the following orders-
   

(a) That the judgment in default entered herein on 23^rd October, 2013 adjudging specific performance of the Agreement between the Plaintiff and the First Defendant for the sale by the Defendants to the Plaintiff of the said Defendants freehold property comprised and described in Certificates of Title No’s 40478 and 40479 being Lots 3 and 4 on Deposited Plan No. 9801 and injunction restraining the defendants from dealing with the same land with costs on breach of contract and damages for injurious falsehood to be assessed be set aside on the grounds contained in the affidavit of Jagdish Narayan filed in support hereof.

(b) That leave be granted to file a Defence to the Statement of Claim dated 27^th September, 2013.

(iii) That costs of the Application be costs in the cause.

2. This Summons was filed together with an Affidavit in Support of Jagdish Narayan, the 3^rd Defendant in this proceeding.
   
3. The Application was made pursuant to Order 13 Rule 10 of the High Court Rules, 1988 and the inherent jurisdiction of the Honourable Court.
   
4. Both counsels representing the parties to this proceeding filed their written submissions and accordingly argued their respective cases.
   

2. BACKGROUND FACTS

The 2^nd and 3^rd Defendant’s case

5. The 2^nd and 3^rd Defendants’ contentions are as follows-
   
   • (i) Due to the failure of the Defendants to file an Acknowledgment of Service, the Plaintiffs Solicitors on 27^th September, 2013 filed their Statement of Claim and moved the Court on 23^rd October, 2013 by an Ex-parte Motion to obtain default judgment against all the defendants.
     
   • (ii) The Defendants became aware sometime on or about 21st November 2013 of the Ex-parte orders obtained by the Plaintiff (through a search of the Court Record) and instructed A K Lawyers to file an application to discharge the ex-parte orders for Injunction and to set aside the default orders made against the three defendants.
   • (iii) Thereafter, on 26^th November, 2013 an application was filed to set aside the default judgment against the three defendants. Upon filing of the application we became aware that the Plaintiff by its own Ex-parte Summons dated 6^th November, 2013 with a supporting Affidavit of Praveen Prakash had also filed an application to set aside the default judgment entered against the three defendants.
   • (iv) The court on 9^th December, 2013 dealt with both applications at the same time ordering a hearing and stay on the execution of the default judgment pending the determination of the setting aside application. The hearing was adjourned to 5^th March, 2014.
   • (v) On 5^th March, 2014 Mutunayagam J heard the application to set aside. In his written ruling of 17^th June, 2014 His Lordship said that the application was to set aside default judgment entered against the First Defendant and proceeded to set aside the default judgment against the First Defendant.
   • (vi) Subsequently, the Plaintiff again filed an application relating to the default judgment and amendment of orders made on 17^th June 2014. This was by way of Summons dated 1^st December 2014 seeking, inter alia, an order that the default judgment entered against the three defendants be set aside. The application was called on 6^th March, 2015 to which we consented. However the Summons was dismissed.
   • (vii) The Plaintiff later filed the Summons for Direction in this matter. The Court on 23^rd April, 2015 whilst dealing with the Summons for Directions, granted order in terms and our agents advised that the Court stated that the Second and Third Defendant were at liberty to make application to set aside default judgment.
   • (viii) We then filed an application to set aside the default judgment against the Second and Third Defendants on 24^th August, 2015. This was called on 5^th October, 2015 wherein the court granted 14 days to the Plaintiff to file a response, and gave 7 days to the Defendants to file a reply. The court then adjourned the matter to 18^th November, 2015.
   • (ix) Our agents advised that when the matter was called on 18^th November, 2015 the Plaintiff’s solicitors raised preliminary objection that the Second and Third Defendant’s first application was struck out and that it should have appealed the decision, instead of refilling a fresh application. The Second and Third Defendant’s position.
   • (x) On 8^th December, 2015 the court gave directions on the preliminary objection that the present application cannot be sustained and should have come by way of an appeal of the decision of Mutunayagam J of 5^th March 2014.
   • (xi) We submit that the Second and Third Defendants are entitled to file a fresh application to set aside to deal with the position of those defendants which have not been dealt with on merits or otherwise.
   • (xii) The Defendants submit that their second application should be allowed to be heard in view of the above authorities and circumstances.
     

The Plaintiffs’ Case

6. The Plaintiff’s submission can be summarised as follows-
   
   • (i) By Summons filed on 24th August, 2015 the Second and Third Defendants applied to have set aside the default judgment that was entered by this court on 23rd October 2013 and sought other orders.
   • (ii) By Summons dated 26th November 2013 the Defendants had applied for setting aside of the default judgment that was entered by the court on 23rd October 2013.
   • (iii) This application was heard before Justice Mutunayagam who decided on 5th March 2014 to set aside the default judgment against the First Defendant only.
   • (iv) The Plaintiff had then applied under the slip rule before his Lordship as the Plaintiff was under the impression that there may have been an error. This application was by way of Summons dated 1^st December, 2014.
   • (v) On 6^th March, 2015 Justice Mutunayagam clarified that he had not made a slip and that if the Second and Third Defendants were aggrieved by his ruling, they could have appealed.
   • (vi) The Second and Third Defendants have now applied a second time to have the default judgment entered against them set-aside.
   • (vii) The Plaintiff submits that the High Court is now functus offcio in light of Justice Mutunayagam’s ruling on 5^th March, 2014 and in light of his Lordship’s comments on 6^th March 2015 when the applications by the Plaintiff under the slip rule was disallowed.
   • (viii) The Plaintiff also submits that if the Second and Third Defendants believe that Justice Mutunayagam had made an error, then they should have appealed within the time allowed under the Court of Appeal rules. They have failed to do so.
   • (ix) The Second and Third Defendants have made much of the fact that there was a prior application to set aside in explaining the delay. However, this explanation in itself shows that the current application is an abuse of court process. There has been no reasonable explanation provided for the inordinate delay.
   • (x) The proposed Defence annexed by the Second and Third Defendants is a bare denial of the claim only and does not contain merits.
   • (xi) The Plaintiff submits that the application should be dismissed with costs.
     

100. PRINCIPLES ON SETTING ASIDE A DEFAULT JUDGMENT
     

7. Order 13 Rule 10 of the High Court Rule, 1988 states as follows;-

‘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.’

8. Under Or.13 r.10 the Court may set aside or vary ‘any judgment’ unconditionally or on terms.
   
9. The Court has a very wide discretion in an application of this nature but it is also guided by certain well known principles.
   
   One of the principles 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". (Per Lord Atkin in Evans v Bartlam [1937] A.C. 473).

10. The basic principles applicable to setting aside judgments in the exercise of Court’s discretion are set out in Halsburys Laws of England Vol 37 4th Ed. para 403, inter alia, thus:

"In the case of a regular judgment, it is an almost inflexible rule that the application must be supported by an affidavit of merits stating the facts showing that the defendant has a defence on the merits ... For this purpose it is enough to show that there is an arguable case or a triable issue"

13. It is further stated therein:

"There is no rigid rule requiring the applicant to explain why he allowed judgment to go by default, but nevertheless, at least in the case of a regular judgment, such explanation is obviously desirable to enable the court to exercise its discretion, especially as to any and if so what terms should be imposed".

14. A useful summary of the factors to be taken into consideration in setting aside is to be found under Notes to Or.13 r.9 of The Supreme Court Practice 1995 Vol 1 at 142 which inter alia states 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 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."

It goes on to further state as follows;-:

"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."

15. Also on the subject of setting asefault judgment, in Davies v Pagett (1986) 10 FCR 226 at 232 a Full Court of the Federal Court of Australia said;-

16. In (HBC 3/98 March 2003), 03), His Lordship Justice Gates set out the principles applicable to ;setting adefault judgmeudgment , refe to&#16o 0;Burns v. Koni> [1971] 1 Lloyp 554; >Evans v. Bartlam&#16> [19C 473 <160i>Vann v. Awford <160; (1986) LS Gaz 1725; The Times LR (23 April 1986); and Fational Prnt Fund v nd v Datt [1988] FJHC 4; (1988) 34 FLR 67 (22 Jul2 July 1988). So, too, His Lordship Justice Pathik in South Pacific Recordings Ltd v. l& [1994] FJHC 134; Hbc059s (30 Sept September 1994) and also in PrPravin Industriestries Ltd v. The New India Assurance Company Ltd ase">[2003] FJHC 298; HBC0250d.2002s (4 February 2003), referring to (FCA 5, amongst others.hers. In v. Singh&# [2008] FJHC 1>; ApCase 61 of 2008 008 (5 August 2008) the athe authorities were also explored.
15. In [1998] FJH] FJHC 26; Abu0030u.97s (29 May 1998) the Court of Appeal similarlylarly addressed the question of setting aside judgment, by reference to the authorities including Farden v. Richter [1889] UKLawRpKQB 79; (1889) 23 QBD 124; Hopton v. RoberRobertson [1884] WN 7, repd 23 QBD 126n; Richardson v. Howell (1883) 8 TLR 445; v. Barn Barnett&#ett&#16t [1878] UKLawRpKQB 21; (1878) 3 QBD 183; Alpine Bulk Tran Transport Co Inc v. Saudi Eagle Shipping Co Inc, The Saudi Eagle ] 2 Lloyd’s R7;s Rep 331 (CA); and Vann v. Awford&#1i>(1986) 83 LS Gaz 1725; The Times LR (23 April 1986).
16. The principles therein distilled and a number of other authorities that provide:
    • Defendant does not need to show a good defence on the merits – ‘ ... need only show a defence which discloses an arguable or triable issue’: Burns v. Kondel [1971] 1ds Rep 554.
    • Applicant must produce to the court ‘evidence that he has a prima facie case’: [1937] AC 473C 473, at 651;-

‘The defendant’s application is brought pursuant to Order 13 Rule 10 which confers on the court a discretion to set aside or vary any default judgment on such terms as it thinks just. The discretion is prescribed in wide terms limited only by the justice of the case and although various "rules" or "tests" have been formulated as prudent considerations in the determination of the justice of a case, none [has] been or can be elevated to the status of a rule of law or condition precedent to the exercise of the court’s unfettered discretion. These judicially recognised "tests" may be conveniently listed as follows: