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National MBF Finance (Fiji) Ltd v Singh [1999] FJHC 151; HBC0546D.1996S (28 July 1999)

IN THE HIGH COURT OF FIJI
AT SUVA
CIVIL JURISDICTION

CIVIL ACTION NO. HBC 0546 OF 1996

BETWEEN:

NATIONAL MBF FINANCE (FIJI) LIMITED
Plaintiff

AND:

BHAGWAN SINGH & MANJULA SINGH
Defendants

Counsel: Mr H. Lateef for Plaintiff
Mr D. Sharma for Defendants

Hearing: 15th July 1999
Decision: 28th July 1999

DECISION

This is an application to set aside judgment in default entered on 25th February 1999. The application is by motion supported by the affidavit of Bhagwan Singh, the 1st Defendant in the matter.

This action commenced by writ, filed on 6th November 1996. The statement of claim endorsed on the writ alleges that a Hire Purchase Agreement existed between the Defendants and the Plaintiff for the purchase of an Excavator. It is claimed that the Defendants defaulted on the payments and that they are indebted to the Plaintiff in the sum of $23,795.83.

No defence was filed and judgment in default was entered on 23rd December 1996. The Defendants then applied to set aside judgment on 5th February 1998, after bankruptcy proceedings were taken against them in the Suva Magistrates Court. The application to set aside was adjourned on several occasions until the matter was struck out on 10th July 1998. The Defendant, filed a subsequent affidavit on 28th February 1999. The Plaintiff responded by filing an affidavit of Taniela Matakibau, on 20th April 1999. The application was heard on 15th July 1999.

Mr D. Sharma for the Defendants submitted firstly that the judgment entered was irregular, secondly that if it was regular the Plaintiff was not prejudiced by the delay, and that the Defendants draft defence raised a meritorious case. In response, Mr H. Lateef for the Plaintiff conceded that the writ was wrongly issued in Suva, but argued that this did not in itself render the default judgment irregular. He also conceded that judgment in respect of the 1st Defendant should be set aside because the pleadings did not show that a demand notice in respect of the debt had been served on the 1st Defendant. However he argued that judgment should not be set aside for the 2nd Defendant because in an affidavit filed by him in the Magistrates Court in the course of the bankruptcy proceedings, he had admitted the debt.

He therefore submitted that there was no meritorious defence shown, and that the court should therefore refuse the application in respect of the 2nd Defendant.

There is no doubt that the writ in this matter was filed in the wrong court. Order 4 Rule 1 of the High Court Rules provides that;

“Proceedings must ordinarily be commenced in the High Court registry located in the Division in which the cause of action arises.”

Order 4 Rule 1(4) gives the court a discretion to transfer an action from one High Court registry to another.

Order 2 Rule 1 of the Rules provides;

“where in beginning or purporting to begin any proceedings or at any stage in the court of or in connection with any proceedings, there has, by reason of anything done or left undone, been a failure to comply with the requirements of these Rules, whether in respect of time, place, manner, form or content or in any other respect, the failure shall be treated as an irregularity and shall not nullify the proceedings, any step taken in the proceedings or any document, judgment or order therein”.

Order 2 Rule 1(2) provides that the court may set aside proceedings on the ground of irregularity. Order 2 Rule 2 provides that an application to set aside for irregularity “shall not be allowed unless it is made within a reasonable time and before the party applying has taken any fresh step after becoming aware of the irregularity.”

Order 2 Rule 2(2) provides that an application to set aside for irregularity may be made by summons or motion, and the grounds of objection must be particularised.

In this case, whilst the writ was filed on 7th November 1996, motion to transfer the action and for judgment to set aside was not filed until 5th February 1998, almost a year after bankruptcy proceedings in the Magistrates court had been commenced. In Singh -v- Atombrook Ltd. (1989) 1WLR 810 a delay of 3 months after the Defendant had become aware of the irregularity was held to be too late to have a default judgment set aside as of right.

It is clear from the motion filed by the Defendants on 13th February 1998, that they were aware of the jurisdictional error. That motion was struck out on 10th July 1998. It was not until the 26th of February 1999, that the application was reinstated.

I am of the view that for these reasons the Defendants may not now ask for judgment to be set aside on the ground of irregularity. As such, the Court must consider whether judgment should be set aside as a matter of discretion. In the exercise of that discretion the Court may consider the Defendant’s explanation for the default in the filing of the defence, and whether his affidavit shows a meritorious defence.

The Defendant’s affidavit shows that a defence was not filed due to the negligence of his solicitors. The proposed statement of defence annexed to the affidavit denies liability and claims that the Defendants were up to date with their payments. It states that there were defects in the excavator, and that parts had to be flown in from Australia for the repair of the machine. When it was discovered by the Defendants that the excavator had latent defects which could not be repaired, they could not earn any further income from its use, and could not make any further payments to the Plaintiff. The Defence claims that the Plaintiff failed to repossess the excavator and by way of counter-claim, that the Plaintiff was also negligent and that any judgment ought to be offset against the Plaintiff’s negligence.

The Defendants also denied the debt, and the way the sum claimed had been computed.

Taniela Matakibau, in his affidavit annexed the 2nd Defendant’s affidavit filed in the course of bankruptcy proceedings in the Magistrates court in which the 2nd Defendant admitted the debt.

At paragraph two of that affidavit, the 2nd Defendant had deposed as follows;

“That I purchased the said secondhand Excavator Kato 4009 for the sum of $45,000.00. I paid a deposit of $12,000.00 leaving a balance of $33,000.00 which was reduced by instalment payments totalling $10,000 thus reducing the final balance of $23,558.33.”

At paragraph four of that affidavit, the 2nd Defendant asked for the sum of $13,000 spent on repairs to be set off against the judgment debt.

At paragraph eight of the affidavit filed in support of this present application, the 2nd Defendant disputes that he owes the Plaintiff $23,795.83 and deposes that the Plaintiff failed to deduct all previous payments, failed to repossess the tractor, and failed to allow for discount for the acceleration of payment.

Whilst the 2nd Defendant has clearly taken an inconsistent position in relation to the affidavit filed in the Magistrates court, I find that he has been consistent in his claim that the Plaintiff was negligent in reducing its losses, and that the cost of repair was due to latent defects rather than ordinary wear and tear. Furthermore although Clause 6 (2)(1) of the Hire Purchase Agreement purports to exclude the Plaintiff’s liability if the goods are not reasonably fit for the purpose they are used for, I am of the view that the Defendants are entitled to a proper adjudication on the issue of the defence and counter-claim.

I therefore allow the application to set aside default judgment in respect of both defendants. I also order that this action be transferred to Lautoka forthwith. Costs are to be in the cause

[Nazhat Shameem] Ms
JUDGE

At Suva
19th July 1999