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Airtrade (Vanuatu) Ltd v Center Garage Ltd [2001] VUSC 17; Civil Case 025 of 1999 (8 March 2001)

IN THE SUPREME COURT OF

THE REPUBLIC OF VANUATU

Civil Jurisdiction
CIVIL CASE No. 25 of 1999

BETWEEN:

AIRTRADE (Vanuatu) LIMITED
Plaintiff

AND:

CENTER GARAGE LIMITED
Defendant

AND:

UAP ASSURANCE
an insurance company by its agent Caillard Kaddour (Vanuatu ) Limited
of P.O.Box 112, Port-Vila
Third Party

Coram:f Justice Vincent Lunabek

Mr. Mark Hurley, G. Vasaris & Co, Advocate for the plaintiff
Mr. John Malcolm, Geoffrey Gee & Partners, Advocate for the defendant
Mr. Juris Ozols, Ozols & Associates, advocate for the third party

JUDGMENT

This is a Summons dated 10 July 2000 filed by the advocate for the third party. The Summons seeks, among other matters, that the Default Judgment entered in this matter against the third party on 27 June 2000, be struck out.

The question for the Court is that of the exercise of the Court’s discretion to set aside a default judgment regularly obtained.

The third party filed no material evidence/affidavit in support of the Summons.

The Summons seeks to “strike out” the judgment entered by the Court against the third party on 27 June 2000.

It is apparent from the High Court (Civil Procedure) Rules, 1964 that the “striking out” procedure is fundamentally distinct and separate from that of the procedure on “setting aside”. The “setting aside” procedure deals with procedural defects arising out of non-compliance with the Rules of Court and which may result in proceedings being null and void or being irregular. [See O.12 r.17; O.13 r.8; O.29, r.12 and O.38, r.7. The “striking out” procedure deals with the Court’s power, including its inherent power, to summarily stay or dismiss actions or to strike out pleadings which disclose no reasonable cause of action or which are vexatious or frivolous, or scandalous, or in any way an abuse of the Court’s process. It can also be used where an Order of the Court has not been complied with. [See O.17, r.11; O.21, r.29; O.27, r.4; O.33, r.21 and O.40, r.11].

[See further Muria CJ in the case of Christopher Columbus ABE v. Minister of Finance and Attorney General, Civil Case No. 197 of 1994 (judgment of the H.C.S.I. of 12 August, 1994)].

The Summons which seeks to set aside a regular judgment is not properly brought. However, I bear in mind that it is not for the Court to show to the parties how they should frame their case.

This is not an application in accordance with O.69, rr.1-3 of the High Court Rules 1964 to set aside a default judgment irregularly entered. In the present case, the judgment was regularly obtained. O.13, r.8 of the High Court Rules 1964 constitutes the basis of the exercise of the Court’s discretion. O.13, r.8 states:

“Where judgment is entered pursuant to any of the proceeding 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.”

It follows then that the Court has a wide discretionary power to set aside judgments regularly obtained.

The judgment of the English Court of Appeal in Re Alpine Bulk Transport Co INC. v. Saudi Eagle Shipping Co INC (“the Saudi Eagle”) (1986) 2 LLOYD’s LR 221: provides a helpful summary of indicators which the Court considers in exercising its discretion to set aside a default judgment. I intend to adopt them as guidelines, which are as follows:

(a) A judgment signed in default is a regular judgment from which, subject to (b) below, the plaintiff derives rights of property;

(b) The rules of Court give to the Judge a discretionary power to set aside the default judgment which is in terms “unconditional” and the Court should not “lay down rigid rules which deprive it of jurisdiction” (per Lord Atkins at p.486);

(c) The purpose of the Court’s discretionary power is to avoid the injustice which might be caused if judgment followed automatically on default;

(d) The primary consideration in exercising discretion is whether the defendant “has merits to which the Court should pay heed” (per Lord Wright at p.489), 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 has no defence, and because, if he can show ‘merits”,

The Court will not, prima facie, desire to let a judgment pass on which there has been no proper adjudication [per Lord Russell of Killowen p.482].

(e) Also as a matter of common sense, though not making it a condition precedent, the court will take into account the explanation as to how the default occurred and the defendant-

found himself bound by a judgment regularly obtained to which he could have set up some serious defence [per Lord Russell of Killowen p.482].

[See also Evens v. Bartlam (1973) ac 473 (H.L)].

In the present case, the Writ was issued and served on the defendant on or about March 1999. The defendant filed his appearance and the Third Party Notice in May 1999. The statement of claim was subsequently amended and filed on January 2000. The defence was filed in February 2000. In March 2000, the Third Party and her counsel were served with the claim, the Orders of 2 September 1999, the Third Party Notice and the defence. The Third Party did not respond to the September Orders. On or about 20 June 2000, the defendant issued, filed and served on all parties, the Notice of Motion for judgment. The Third Party did not respond to it. The judgment was issued on 27 June 2000.

On 10 July 2000, the Third Party has filed the Summons to set aside the judgment. It transpired that the Third Party has delayed for in excess of 8 months in responding to various documents and Orders served. No reasonable ground for the above delay has been provided. Further, there is no material evidence/affidavit in support of the application (Summons). The Third Party failed to provide the basis of a defence let alone a good defence. The Summons to set aside the default judgment of 27 June 2000 should be refused.

However, in the circumstances of this case, because in an insurance dispute, it was to be expected that there would be great many items in dispute and that arguable defences as to liabilities and quantum existed, the discretion will be exercised in favour of the Summons by setting aside the default judgment of 27 June 2000 but stringent financial conditions must be imposed.

Decision

The judgment on Motion dated 27 June 2000 is set aside on the basis of the following conditions:

1. That the Third party pay into Court on interest-bearing deposit a bond of VT2 million to await the outcome of the trial out of which the plaintiff can satisfy part or all of any judgment. If it succeeds, the defendant does not suffer any financial harm. The Third Party needs to demonstrate that it is serious in its defence of liability and to ameliorate the loss of time.

2. That the Third Party pays the costs of the defendant in respect to this application and the work associated with the preparation for the hearing of the Motion for judgment. The costs are estimated at VT 200,000 based on the Hurley’s case principle.

3. That the Third party must comply with orders 1 and 2 within 21 days of this judgment and/or be de-barred defending the matter except as to quantum.

4. That the following timetable is imposed:

(a) The Third Party shall file a defence to the statement of claim within 7 days of this judgment;

(b) The plaintiff and the defendant and The Third Party give discovery within 21 days thereafter;

(c) The plaintiff, the defendant and the Third Party file signed briefs of evidence and set out:

(i) a list of agreed facts;

(ii) a list of disputed facts;

(iii) a summary of issues of law and facts.

5. That the matter in Civil Case No. 25 of 1999 is re-listed for conference on 20^th April 2001 at 9.00 am o’clock.

DATED at PORT-VILA, this 8^th DAY of MARCH, 2001

BY THE COURT

Vincent Lunabek
Chief Justice

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