Before:
F.O. KABUI, J
Civil
Case No. 174 of 2000
Hearing: 5th
Judgmentup>th March 2001
<
B.
Titiulu for the Plaintiff
C.
Ashley for the Defendants
<
JUDGMENT
(Kabui,
J):
By a
specially Indorsed Writ of Summons filed on 1st June, 2000, the
Plaintiff claimed the sums of $24,375.85, $2,782.37 and $225,767.58 as owing
to it by 1st Defendants. The 2nd Defendant is now dead
and plays no further role in this case. The Plaintiff also sought leave to
sell Fixed Term Estates in Parcel Nos.
191-007-40, 191-007-41, 191-007-42
and 191-019-79 in satisfaction of the loan amounts specified in the
Plaintiff’s Statement
of claim. The 1st Defendants were
personally served with true copies of the Writ of Summons on 2nd
June, 2000 by Mr. Ilala. The 1st Defendants failed to enter
appearance within 14 days. A default judgment was therefore against the 1st
Defendants on 10th July, 2000 for the sums claimed by the
Plaintiff in its Writ of Summons. By Notice of Motion filed on 1st
August, 2000, the Plaintiff sought leave to sell the Fixed Term Estates
specified in the Plaintiff’s Writ of Summons.
I granted the orders sought by
the Plaintiff on 25th October, 2000. By Summons filed on 5th
December,2000, the Plaintiff sought an order to effect the sale of Fixed
Term Estate, in Parcel Number 191-007-40 to
Mrs. Grace Fekau being the
highest bidder and other consequential orders to effect that sale.
At the
hearing of the Plaintiff’s Summons on 15th January, 2001, Counsel
for the 1st Defendant, Mr. Ashley, sought an adjournment to
enable him to file papers on behalf of his clients. I adjourned the hearing
to 2pm the following day being 16th January 2001. Solicitor for
the 1st Defendant Mr. Ashley, had also filed a Memorandum of
Appearance on behalf of the 1st Defendants on 15th
January, 2001.
In the
meantime, Solicitor for the 1 Defendant Mr. AshleAshley, filed on
16th January, 2001 a Summons together with an affidavit sworn by
Mr. Lam. I adjourned the hearing to allow the Plaintiff to be able
to file
within 7 days an affidavit in reply to Mr. Lam’s affidavit filed on 16th
January, 2000. I heard Mr. Lam’s Summons on 5th March, 2001 at
9:30am.
Mr.
Lam’s Summons
Mr.
Lam’s Summons filed on 16th January, 2001 sought the following
orders-
<
. &nbbsp;& &nsp; &nsp;
Tharethe abridgeridgement of time for the Court to hear the 1st
Defendants application.
2. p;&nssp; That the Judgment in DefauDefault entered against the First Defendants
on 10th July 2000 and thement ered Octo000
be set aside or in the alternative stayed.
>
3. &nbbsp;&&nsp;;&bsp;&bsp;&nbp; That the Firstndants file file their defence within 7 days.
4.& &nbp; Cost be red until trial ofal of the matter.
5. &nnsp;&&nsp;; Asp fAny furt further order the Court deems fit to just to make.
&nbs>
At the
hearing of this Summons, Counsel for the 1st Defendants did not
press for abridgement of time as sought in the 1st Defendants’
Summons. However, in terms of Order 13, rule 8 of the High Court (Civil
Procedure) Rules 1964 (the High Court
Rules), the Court does have the power
to set aside a judgment entered in default of appearance.
Tsup>st
Defendants ‘ Case
>
lass="Mso="MsoNormal" style="margin-top: 1; margin-bottom: 1">
Counsel
for the >st Defendants advanced the argument that the affidavfidavit
filed by Mr. Lam on 16th January, 2001 in support of his Summons
did disclose a prima facie defence on the record. Counsel for the Defendants
argued that the allegation by the 1st Defendant that there was an
oral agreement regarding the repayment of Loans 1 and 2 being priority over
Loan No. 3 created
an estoppel situation in favour of the 1st
Defendants. In other words, the Plaintiff cannot now retract that
understanding against the 1st Defendants in order to force the 1st
Defendants to pay up Loan No. 3 which is biggest of the three loans obtained
from the Plaintiff. The other argument advanced
by Counsel for the 1st
Defendants was that the Plaintiff charged interest on the sum of $250,000 in
breach of Loan No. 3 Agreement whilst Loan
No.3 was drawn down by 6
instalments.
The
Plaintiff’s Case
Counsel
fo Plaintiff argued that the Plaintiff’s claim in the Indorsedorsed Writ of
Summons was for liquidated sums of
money being $24,375.85, $2,782.37 and
$225,767.58 respectively. The default judgment entered on 10th
July, 2000, he argued, could not have been irregular so as to attract an
application by the 1st Defendants to set it aside. Also, Counsel
argued that the 1st Defendants had all the time to defend the
action but chose not to. The 1st Defendants made it very clear to
the 1st Defendants that the Plaintiff wanted all its money repaid
plus interest on the three Loans. There was no exceptions.
: 1">
ass="Mso="MsoNormal" style="margin-top: 1; margin-bottom: 1">
In this
case, the Plaintiff acted under Order 13, 3 of the High Court Rules ules and
obtained a final judgment for the
sums specified in the default judgment
entered on 10th July 2000 plus interest. This judgment may
however be set aside by the Court under rule 8 of Order 13 above. This can
only be done however if the sum claimed by the Plaintiff is not a liquidated
sum, or if the sum adjudged is larger than the
sum the Plaintiff claims. In
this case, there is not evidence of the judgment being signed too soon or
the sums claimed
by the Plaintiff being unliquidated or larger that what the
Plaintiff claimed in its Indorsed Writ of Summons. The Plaintiff
did not
either by design or default apply under Order 14(1)(a) of the High Court
Rules for liberty to enter judgment
against the 1st Defendants.
Order 29, rule 2 of the High Court Rules would have had the same result in
this case as if the 1st Defendants had entered appearance but
failed to file a defence in time. A judgment in default of defence may also
be
set aside. This case had not reached that stage because the 1st
Defendants had not entered appearance in the first place. There is no
dispute however about the regularity of the default
judgment entered on 10th
July, 2000 against the 1st Defendants.
The
effect of the 1st Defendants’ Summons is that the default
judgment entered on 10th July, 2000 should be set aside because
the 1st Defendants had a prima facie defence on the record. The
first aspect of the 1st Defendant’s alleged defence is the
estoppel effect of the alleged variation of the repayments schedule of the
loans obtained
from the Plaintiff. This is stated in paragraphs 7-10 of Mr.
Lam’s affidavit file on 16th January, 2001. They are in these
terms-
7. nbsp; p;&nbbp; &nbp; During the year, the PlainPlaintiff verbally agreed with the
First Defendants that the
latter should make loan repayments lly r
y draan nu 1&2 as prioritiority. Iny. In reliance upon this verbal
agre agreementement,
the, the First Defendants made the following payments to the Plaintiff
during the year 2000:-
a. span/ Fully drawn loan number 1 &r 1 &nbbsp;& =     ;&nbpp; &n$sp; 3.,143.11>
b. p;
Fully drawn loan number 2 & p; =s    &nbnpp;& $20,000.00<
b> langUS" style="font-size0pt; r-spacing: -.1pt">&pt"> nbsp;>>
8. &nbssp; In breachhe vere verbal agal agreement between the Plaintiff and the
First Defendants, the Plaintiff commenced
High Court proceedings against the
First Defendants.
l
9. &nIsp; li ree uncn tho verb verbal agreement between the Plaintiff and
the First Defendants, the latter agreed
wit Plai to psp; ast
10,00each from November 2000 onwards so s so that:that:-
>
(a) by January 2001, furly d
wn
loan no. 2 would
have been fully repaid; and
(bp; &bsp; the Firse Defts would only only have to pay the
amount of
$10,000.00 each month towards fully drawn loan no. 3 from February 2001
onwards.
10. &nbssp; The First Defendantndants say that the Plaintiff is estopped from
prosecuting its case against the First
Defendants.
In
considering the 1st Defendant’s evidence, I notice that he failed
to say who by name in the employ of the Plaintiff authorized the variation
of the priority of the loans obtained from the Plaintiff. There is no
evidence to say that Loan No.;3 was of low priority
and that it could
continue to accumulate interest in the meantime as long as Loan No.1 and
No.2 were current and being paid.
That would not be in the interest of both
the 1st Defendants and the Plaintiff because for the 1st
Defendants, it meant interest would build up in the meantime and for the
Plaintiff, Loan No.3 was not being paid. There
is no evidence that the
payment of Loan No.3 was suspended. The only commercial and legal way out
was for the repayment
of Loan No.3 to be rescheduled by mutual agreement by
the 1st Defendants and the Plaintiff. It would have meant the
duration of Loan No.3 being extended beyond 7 years with agreed
corresponding repayment instalments. If not, the 1st Defendants
are bound to default as is already the case. By concentrating on Loans No.1
and No.2 as alleged by the 1st Defendants whilst allowing Loan
No.3 to accumulate interest would not make sense for the Plaintiff would
demand the payment
of Loan No.3 all the same. I think the truth is that the
1st Defendants’ financial resources are not currently sufficient
to meet the repayment of these loans. The defence raised by the
1st
Defendants does not make sense as much as it is attractive on the face of
it. The letter of demand sent to the 1st Defendants on 30th
September, 1999 demanded payment of all the loans then outstanding. The
second letter of demand on 19th May, 2000 repeated the same. The
defence based upon the principle of estoppel does not apply as much as it is
misconceived.
class="Mso="MsoNormal" style="margin-top: 1; margin-bottom: 1">
The
second aspect of the al prima facie defence is the correct basis for
the chae charging of interest on Loan No.3. The
1st Defendants alleged
the Plaintiff was charging interest in the total sum of $250,000 in breach
of the loan agreement. There is no evidence of this. Also, there is no
evidence
of that relevant part of the loan agreement breached by the
Plaintiff . A bare allegation of breach is not sufficient to raise
a prima
facie defence. Evidence is lacking here on this point. I therefore find no
evidence of a prima facie defence
as alleged by the 1st
Defendants both on the estoppel issue and the charging of interest issue.
This case can be distinguished from National Provident Fund Board v Fred
Maetoloa (Civil Case No. 171/97) cited by Counsel for the 1st
Defendants. In that case, the increase of repayment instalment to $1000 had
been accepted by the Plaintiff. Furthermore,
the amount of arrears owing was
disputed by the Defendant. This is not the case here where rescheduling of
Loan No.3
had not been agreed by the Plaintiff. Furthermore, there is no
evidence of incorrect charging of interest, contrary to a relevant
provision
of the Loan Agreement No.3. In the alternative, the 1st
Defendants would request that the default judgment and the judgment on 25th
October 2000 be stayed. I do not think this is a correct request in an
application to set aside a default judgment. I
reject it.
st the Writ of Summons. They did nothing until 15th
January,2001 when their Solicitor, Mr. Ashley, filed a Memorandum of
Appearance in Court. This was done a little over
6 months after a default
judgment was entered against them on 10th July, 2000. By 15th
January,2001, their house on Parcel No. 191-007-40 had been advertised for
sale and bids had been received by the Plaintiff.
Their coming to Court is
an attempt to forestall the sale of his property. They know what to do. They
can save their
property by repaying their loans immediately. They mortgaged
the property as a security for their loans. The Plaintiff has
now come to
take it from them. The 1st Defendants failed to explain their
delay in coming to Court this late. They have not produced any evidence to
that effect.
The 1st Defendants’ debt is a liquidated sum
unchallenged by them. It is very difficult to wriggle out of it by delaying
the Court proceedings to buy time. There are two ways to come out of the
Plaintiff’s grip. First,
is to pay off the loans plus interest immediately.
Second, is to negotiate a rescheduling of the loans so that repayment can
be
stretched a bit to give breathing space. Short of these two options, fate is
grim indeed. I do sympathise with the
1st Defendants but there is
nothing I can do to help him wriggle out of the Plaintiff’s grip. In the
result, I must refuse the 1st Defendants’ Application. The
Application is therefore dismissed.
F.O. Kabui<
Judge
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