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Remuera v ANZ Bank (Kiribati) Ltd [2025] KIHC 96; Miscellaneous Application 51 of 2022 (19 December 2025)

IN THE HIGH COURT OF KIRIBATI
Civil Jurisdiction
(South Tarawa)


MISCELLANEOUS APPLICATION # 51 of 2022
(Arising out of HCCiv. Case # 18 of 2021)


In the matter between:


Hon. Koraubati Remuera and Tamaroa Remuera
(as Administrators of Tateraka Enterprises) Applicants


And


ANZ Bank (Kiribati) Ltd Respondent


Counsel: Mr. Banuera Berina for the Applicants
Ms. Elsie Karakaua for the Respondent


Delivered by: Hon. Aomoro T. Amten
Date:


DECISION ON APPLICATION TO SET ASIDE DEFAULT JUDGMENT

I. Introduction

  1. This is an application by the Applicants to set aside a default judgment entered against them on 27 October 2021 in the sum of $1,297,448.38, together with continuing interest, general damages to be assessed, and costs.
  2. The Applicants seek further orders staying execution and preventing further dealings with mortgaged lands pending final determination of the claim.

II. Legal Framework

  1. This application is governed by Order 13 rule 8 and Order 29 of the High Court (Civil Procedure) Rules 1964 (herein the Rules).
  2. Order 13 rule 8 of the Rules provides:

“Where judgment is entered pursuant to any of the preceding Rules of this Order, it shall be lawful for the Court to set aside or vary such judgment upon such terms as may be just.”

  1. Order 29 governs the procedure for default judgments generally. It provides the proper mechanism for entering judgment where a defendant fails to file a defence or appear, and it distinguishes between claims for liquidated sums and those involving unliquidated damages or discretionary relief. Specifically:
  2. The procedural architecture of Order 29 ensures that default judgments are only entered in accordance with the nature of the claim. Where the claim includes general damages, interest to be assessed, or discretionary costs, the Court must exercise judgment and cannot simply endorse the claim summarily.
  3. In exercising discretion under these provisions, the Court of Appeal in Waysang Kum Kee v Abamakoro Trading Ltd [2001] KICA 9 identified three dominant considerations:
  4. In addition, as reaffirmed in Kwong v Burataake [2025] KIHC 03162, the Court must address a fourth and non-discretionary threshold: whether the judgment was entered procedurally regularly, since an irregular judgment is void ab initio and must be set aside ex debito justitiae.
  5. These four considerations, together with the governing Rules, form the doctrinal framework for the Court’s analysis.

III. Submissions and Affidavits

A. Applicants

  1. The Applicants, Hon. Koraubati Remuera and Tamaroa Remuera, submit that while they admit owing the sum of $1,200,278.41 to the Respondent Bank, they contest the inclusion of an additional $97,169.97 which they allege constitutes a double charge.
  2. This discrepancy forms the initial basis of their application to set aside the default judgment.
  3. However, their affidavits go further, alleging that the Bank engaged in unconscionable conduct during the restructuring of their loans in 2019.
  4. They assert that the Bank pressured them into selling two plots of land, Koroa in Bikenibeu and Tewintaake in Ambo, which were not subject to any mortgage, under the promise of financial assistance that never materialized.
  5. The Applicants claim that the restructuring absorbed unsecured trade loans and overdrafts into the mortgage security without independent advice, thereby placing their residential lands at risk of sale.
  6. In support of these claims, Hon. Koraubati Remuera’s affidavit details the Bank’s role in encouraging the use of trade loans, its failure to provide the promised assistance, and its conduct in securing additional lands through restructuring. He invokes the doctrine of unconscionable conduct, citing the Australian High Court decision in Stubbings v Jeruzalski, and argues that the Applicants were in a position of special disadvantage which the Bank knowingly exploited.
  7. Tamaroa Remuera’s affidavit corroborates the admission of debt but emphasizes that the additional $97,169.97 was erroneously included. He confirms that the Applicants initially refrained from filing a defence because they believed they had no legal grounds to contest the claim. It was only upon further legal consultation that they discovered the alleged double charge and the broader implications of the Bank’s conduct.

B. Respondent

  1. The Respondent, ANZ Bank (Kiribati) Ltd, represented by Jonathan Stevens, concedes the $97,169.97 duplication and accepts that the correct amount owed is $1,200,278.41. However, the Bank argues that this sum remains substantial and that the Applicants have failed to make any payments since the judgment was served.
  2. The Respondent denies all allegations of undue influence or unconscionable conduct and asserts that no documentary evidence has been provided to substantiate the Applicants’ claims.
  3. The Bank further submits that the Applicants were legally represented, filed a Memorandum of Appearance, and yet failed to file a defence or seek injunctive relief to prevent execution. As a result, the Bank proceeded to enforce the judgment, including advertising and transferring mortgaged properties.
  4. The Respondent maintains that the delay of eight months in filing the application is unjustified and prejudicial, and that the Applicants’ affidavits do not disclose a defence of sufficient substance to warrant setting aside the judgment.

IV. Analysis

A. Substantial Ground of Defence

  1. The first and most critical question is whether the Applicants have demonstrated a “substantial ground of defence” to the Respondent’s claim. This threshold, as clarified in Kwong v Burataake [2025] KIHC 03162, requires more than a merely arguable issue. It demands a defence that:
  2. These elements correspond directly to the first of the three dominant considerations outlined in the Legal Framework, as articulated in Waysang Kum Kee v Abamakoro Trading Ltd [2001] KICA 9. By linking the present analysis back to that framework, the Court ensures doctrinal transparency and pedagogical clarity. It is designed to filter out speculative defences while preserving access to justice where a plausible and evidentially grounded challenge exists.

Factual Context

  1. The Applicants’ affidavits admit liability for $1,200,278.41 but identify a duplication of $97,169.97. This factual concession, corroborated by the Respondent, demonstrates error in the judgment sum and satisfies the requirement that a defence challenge a material element of the claim.
  2. More significantly, the affidavits allege unconscionable conduct in the 2019 restructuring. Hon. Koraubati Remuera details the Bank’s inducement to sell unmortgaged lands; Tamaroa Remuera confirms the absorption of unsecured loans into mortgage security. These sworn accounts provide coherent evidential support, meeting the second doctrinal requirement that a defence be grounded in affidavit evidence.
  3. Finally, the allegations, if proven, would defeat or materially alter the Bank’s entitlement to enforce its security. This satisfies the third doctrinal element: that the defence, if successful, would significantly alter the outcome.
  4. These allegations are supported by detailed affidavits from Hon. Koraubati Remuera and Tamaroa Remuera, which describe the sequence of events, the assurances given by Bank officers, and the financial distress that prompted the Applicants to act as they did.

Doctrinal Consideration: Unconscionable Conduct

  1. The Applicants invoke the doctrine of unconscionable conduct, relying on the High Court of Australia’s decision in Stubbings v Jeruzalski, which held that a lender’s knowledge of a borrower’s special disadvantage, combined with a failure to make reasonable inquiries, may render the transaction unconscionable.
  2. The elements of unconscionable conduct, as distilled from Stubbings, are:
    1. A relationship that places one party at a special disadvantage;
    2. Knowledge of that disadvantage by the stronger party;
    3. Exploitation of the disadvantage in a manner that is unconscientious.
  3. “Special disadvantage” includes poverty, financial distress, lack of education, or dependence on the stronger party. In this case, the Applicants were in severe financial difficulty, reliant on the Bank for assistance, and induced to restructure their loans and sell unmortgaged lands without advice or protection.
  4. The restructuring resulted in their residential lands being mortgaged to cover not only the original business loan but also trade loans and overdrafts that were previously unsecured. The Applicants assert that this outcome was not only commercially unreasonable but also contrary to the assurances they received.

Application to the Facts

  1. Applying the Kwong threshold, the Court finds that the Applicants’ defence is not speculative. It is grounded in affidavit evidence, challenges the enforceability of the loan restructuring, and, if proven, would significantly alter the outcome of the claim.
  2. The Respondent’s denial of the allegations is noted, but it does not displace the Applicants’ evidentiary burden at this stage. The Court is not required to determine the truth of the allegations now; it must assess whether they raise a triable issue of sufficient substance to warrant judicial consideration.
  3. The defence goes to the heart of the Bank’s entitlement to enforce the mortgage and recover the full sum claimed. If the restructuring is found to be unconscionable, the scope of the Bank’s security and the quantum of recoverable debt may be materially reduced.
  4. Accordingly, the Court is satisfied that the Applicants have demonstrated a substantial ground of defence within the meaning of Waysang Kum Kee and Kwong. This justifies setting aside the default judgment, subject to consideration of delay and prejudice.

B. Excusability of Delay

  1. The second consideration, excusability of delay, likewise tracks the framework set out in the Legal Framework. As emphasized in Waysang Kum Kee, delay must be assessed contextually, and in Kwong the High Court reaffirmed that even significant delay may yield where a substantial defence exists. This explicit linkage reinforces that the Court is applying the same threefold test introduced at the outset.

Factual Context

  1. The default judgment was entered on 27 October 2021 and served on 2 December 2021. The Applicants filed their application to set it aside on 23 August 2022, a delay of approximately eight months. They were legally represented, yet no defence was filed. On its face, such delay is significant.
  2. The Applicants explain that their failure to act sooner stemmed from a genuine belief that they had no defence, a belief only dispelled when subsequent legal advice revealed both the duplication in the judgment sum and the broader implications of the Bank’s restructuring.

Doctrinal Considerations

  1. Jurisprudence makes clear that delay, however substantial, cannot validate a void judgment. As held in Anlaby v Praetorius [1888] UKLawRpKQB 55; (1888) 20 QBD 764 and reaffirmed in Kwong v Burataake [2025] KIHC 03162, procedural defects are not cured by acquiescence or passage of time. The inquiry therefore shifts from mere chronology to whether fairness and the merits demand adjudication.
  2. In Evans v Bartlam [1937] AC 473, Lord Atkin emphasized that “the primary consideration is whether the defendant has a defence on the merits,” cautioning against procedural default barring relief.

Application to the Facts

  1. The Court holds that delay cannot validate a void judgment, but it must still be marked with discipline. The Applicants’ explanation is coherent: they initially believed they had no defence, accepted liability for the debt, and only later, through legal consultation, discovered the duplication in the claimed sum and the broader implications of the Bank’s restructuring. The Applicants’ failure to file a defence stemmed from reliance on counsel’s advice; it would be unjust to penalize them for that reliance, though costs are warranted to mark the lapse. This reflects disadvantaged reliance rather than tactical neglect. The delay is therefore contextual, not wilful.
  2. The Court further notes Lord Atkin’s dictum in Evans v Bartlam that the primary consideration is whether a defence exists on the merits. Here, the Applicants have demonstrated a substantial defence. Justice requires that it be heard.
  3. Accordingly, while the delay is procedurally unjustified, it is excusable in the broader context. To mark the lapse and preserve procedural discipline, the Court imposes a modest costs order. This balances fairness to the Applicants with recognition of the Respondent’s enforcement steps.

C. Prejudice to the Plaintiff

  1. The equities favour adjudication on the merits unless the Respondent can demonstrate irreparable harm that outweighs the Applicants’ right to be heard.
  2. This inquiry corresponds to the third dominant consideration identified in the Legal Framework, whether the plaintiff will suffer irreparable harm if the judgment is set aside, as articulated in Waysang Kum Kee v Abamakoro Trading Ltd [2001] KICA 9 and reaffirmed in Kwong v Burataake [2025] KIHC 03162.

Factual Context

  1. The Respondent obtained default judgment on 27 October 2021, served it on 2 December 2021, and during the ensuing eight months advertised four mortgaged properties for sale, transferring title to one plot, Nawerewere 6500/2e, (see the affidavit of Jonathan Stevens).
  2. The Respondent argues that setting aside the judgment would disrupt these transactions and expose it to financial and reputational risk. It notes that the Applicants did not seek injunctive relief and have made no payments toward the debt.

Doctrinal Considerations

  1. As clarified in Kwong, prejudice must be substantive, not merely inconvenience, cost, or delay. Comparative authorities such as Evans v Bartlam [1937] AC 473 and O’Shannessy v Dasun Hair Designers Ltd [1980] 2 NZLR 762 emphasize that prejudice must impair the plaintiff’s ability to recover or defend, not simply complicate enforcement. In Kiribati Ports Authority v SOAK [2019] KICA 4, the Court of Appeal cautioned against conflating enforcement steps with prejudice, noting that execution does not immunize a judgment from challenge where procedural irregularity or substantive defence exists.

Application to the Facts

  1. The Respondent has taken steps to enforce the judgment, including sale and transfer of mortgaged property. However, these steps were taken under a judgment that was procedurally irregular, entered under Order 27 rule 6 rather than Order 29, and included unliquidated components without judicial assessment. As held in Kwong, such a judgment is void ab initio and cannot form the basis of irreversible prejudice.
  2. Moreover, the Respondent has not demonstrated that setting aside the judgment would result in loss of evidence, compromised witness availability, or procedural disadvantage that cannot be remedied by costs or directions. The sale of one property may be inconvenient, but it does not preclude the Bank from reasserting its claim through proper proceedings. The remaining properties have not yet been transferred, and any prejudice can be mitigated through protective orders.
  3. The Applicants, by contrast, stand to lose their residential lands and family homes if the restructuring is upheld without scrutiny.
  4. Accordingly, the Court finds that while the Respondent may suffer inconvenience, it has not established irreparable harm or undue prejudice sufficient to defeat the application. This satisfies the third limb of the framework introduced at the outset and reinforces that the equities favour adjudication on the merits.

D. Procedural Irregularity in Entry of Default Judgment

  1. The fourth and final consideration is not discretionary: if the judgment was entered irregularly, the Court is bound to set it aside ex debito justitiae.
  2. This inquiry corresponds to the structural framework introduced in the Legal Framework. Alongside substantial defence and excusability of delay, Waysang Kum Kee v Abamakoro Trading Ltd [2001] KICA 9 identifies procedural regularity as a threshold requirement. As reaffirmed in Kwong v Burataake [2025] KIHC 03162, irregular judgments cannot stand, regardless of delay or prejudice.

Factual Context

  1. The judgment of 27 October 2021 was entered under Order 27 rule 6 of the High Court (Civil Procedure) Rules 1964. That provision governs demurrer proceedings, not default judgments. The claim itself included both liquidated and unliquidated components:
  2. The inclusion of unliquidated damages and continuing interest required judicial assessment under Order 29 rules 6 and 8. In particular, entry under Order 27 rule 6 was procedurally defective.

Doctrinal Considerations

  1. Comparative jurisprudence underscores that default judgment may only be entered for liquidated sums. In George Moundreas v Navimpex Centrala Navala [1983] EWCAV JO317-5, the English Court of Appeal held that unassessed damages cannot be summarily awarded. The same principle has been consistently applied across common law jurisdictions, including New Zealand, where the High Court declared void a default judgment that purported to award unliquidated damages without assessment (see O’Shannessy v Dasun Hair Designers Ltd [1980] 2 NZLR 762 – reinforcing that default judgment for unliquidated damages without assessment is void.).
  2. This Court applied the same principle in Kwong, holding that a judgment entered under the wrong rule and purporting to award unliquidated components is void ab initio. The defect is not technical but substantive: it undermines the fairness of the process and the validity of the judgment.

Application to the Facts

  1. The Respondent’s judgment suffers from identical defects. It was entered under a rule that does not authorize default judgment and purported to award unliquidated components without judicial assessment. No corrective application or praecipe has been filed to regularize the judgment. The defect remains uncured.
  2. Accordingly, the Court finds that the default judgment was procedurally irregular and void ab initio. Consistent with Anlaby v Praetorius [1888] UKLawRpKQB 55; (1888) 20 QBD 764 and Kwong v Burataake [2025] KIHC 03162, the Court has no discretion to uphold such a judgment. It must be set aside as of right.

V. Finding

  1. Having considered the submissions, affidavits, and applicable legal principles, the Court finds that all four considerations favour setting aside the judgment:
    1. Substantial Ground of Defence
      • The Applicants have demonstrated a substantial ground of defence. Their affidavits raise serious and coherent allegations of unconscionable conduct by the Respondent Bank in the restructuring of loans and the induced sale of unmortgaged lands. These allegations, if proven, would materially affect the enforceability of the loan agreements and the scope of the Bank’s security. The defence is not speculative; it is supported by affidavit evidence and challenges the legal and equitable basis of the Respondent’s claim. It meets the threshold articulated in Kwong v Burataake and Waysang Kum Kee v Abamakoro Trading Ltd.
    2. Excusability of Delay
      • The delay of approximately eight months in filing the application is procedurally unjustified but excusable in the broader context. The Applicants’ explanation, that they initially believed they had no defence and only later discovered the duplication and potential unconscionability upon receiving legal advice, is plausible and consistent with the evidence. The failure to file a defence stemmed from reliance on counsel’s advice; it would be unjust to penalize the Applicants for that reliance, though costs are warranted to mark the lapse. In light of the substantial defence raised, delay does not bar relief, though it warrants a modest costs order to mark procedural discipline.
    3. Prejudice to the Plaintiff
      • The Respondent has not established irreparable harm or undue prejudice sufficient to defeat the application. While enforcement steps have been taken, including the sale of one property, these were under a judgment that is procedurally irregular and void ab initio. Inconvenience and delay do not rise to the level of substantive prejudice. The equities favour adjudication on the merits.
    4. Procedural Irregularity
      • The default judgment was entered under Order 27 rule 6, which governs demurrer proceedings and does not authorize default judgment. Moreover, it purported to award unliquidated components, general damages and continuing interest, without judicial assessment, contrary to Order 29. This renders the judgment procedurally irregular and void ab initio. The Court has no discretion to uphold such a judgment; it must be set aside ex debito justitiae.

VI. Orders

  1. For the reasons set out above, the Court makes the following orders:
    1. Default Judgment Vacated: The default judgment dated 27 October 2021 is set aside in its entirety.
    2. Defence to be Filed: The Applicants shall file and serve a formal defence within twenty-one (21) days from the date of this order.
    3. Stay of Execution: Execution of the judgment is stayed pending final determination of the claim.
    4. Respondent’s Liberty: The Respondent is at liberty to re-plead or amend its claim, and the matter shall proceed to trial on the merits.
    5. Costs: Costs are imposed to mark procedural discipline, consistent with Waysang Kum Kee, not to penalize reliance on counsel. Hence, the Applicants shall pay the Respondent costs in the sum of AUD $1,500.00, to be paid within sixty (60) days, apportioned as follows:
      • $500 for enforcement steps;
      • $700 for opposition preparation;
      • $300 as discretionary penalty to mark procedural delay without barring relief.
    6. Liberty to Apply: Liberty to apply is reserved.
  2. These orders mark the Court’s determination of the application and restore the matter to be tried on its merits.

Dated this 19th December 2025


HON. AOMORO T. AMTEN

Judge of the High Court


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