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Keil v Chieh Chu Yang [1999] FJHC 153; HBA0024.1998 (13 August 1999)

IN THE HIGH COURT OF FIJI
AT SUVA
CIVIL APPEAL JURISDICTION

CIVIL APPEAL NO. HBA 0024 of 1998

BETWEEN:

LITIANA BALE KEIL
Appellant

AND:

MRS IRIS CHIEH CHU YANG
Respondent

Counsel: Mr N. Shivam for the Appellant
Mr G. Keil for the Respondent

Hearing: 10th August 1999
Decision: 13th August 1999

JUDGMENT

This is an appeal from a decision of the Resident Magistrate Suva refusing to set aside judgment in default.

The facts of the matter are as follows.

The Plaintiff, on 17th July 1997 filed a writ of summons against the Defendants claiming the sum of $10,096.50. The particulars of claim state that the Defendants had been given $10,000.00 by the Plaintiff to pay to the Immigration Department as Immigration bond for the Plaintiff. On 29th November 1996, the Defendants were refunded this sum of money, by the Immigration Department. The Plaintiff demanded this sum from the Defendants who did not pay. The Plaintiff claimed the sum of $10,000.00 interest at 13.5% from 29th November 1996 and costs.

The writ of summons was served on both Defendants on 17th July 1997. The matter was called in the Suva Magistrates Court on 28th August 1997. There was no appearance by either Defendant. Judgment in default was entered in the sum of $10,000.00.

On 13th May 1998 the court considered Notice of Motion to set aside judgment in default filed by the Defendant. The court found that the notice was irregular and ordered amendment and service.

The Plaintiff then filed an affidavit in reply. The affidavit of Robert Peter Gregory Campbell was filed on 26th May 1998.

The motion was eventually struck out on 13th May 1998 due to non-appearance of counsel for the Defendants. The matter was re-instated on 29th July 1998. Hearing was on 14th August 1998.

Having heard submissions from counsel, the learned Magistrate delivered her ruling dated 27th August 1998. She refused to set aside judgment on the grounds that there was no explanation for the delay by the Defendant, and that her affidavit failed to raise a meritorious defence. In the exercise of her discretion, the learned magistrate considered whether the defendant had a defence on the merits disclosed by an affidavit.

In dealing with the proposed defence she said at page 5 of her ruling:-

“Whilst the Application has traversed the gist of the Plaintiff’s claim, admitting receipt of funds, albeit as a refund of a bond sum of $10,000.00 paid to the Immigration Department by an entity in which she appears to have held an interest, there is no evidence before me that the said funds are not payable by the Applicant to the Plaintiff. The fact that the bond/moneys may have been paid by a third party and subsequently refunded to the Defendants, does not on its own establish any claim of right to the same in the Applicant. There are no facts raised in rebuttal of the Plaintiff’s claim that the said funds/bond was held by the Immigration Department for and on behalf of the Plaintiff. There is no evidence of a defence to the allegation that the said moneys were received by the Defendants for the use of the Plaintiff”.

The learned Magistrate refused to set aside judgment.

Notice of Intention to Appeal was filed by the 2nd Defendant (the Appellant) on 4th September 1998. The grounds of appeal which I have paraphrased for the sake of brevity, are as follows;

1. The learned Magistrate was wrong in dismissing the Appellant’s application because an earlier application was struck out.
   
2. The learned Magistrate erred in dismissing the application on the ground that the Appellant did not offer an explanation for the delay.
   
3. The learned Magistrate erred in considering the 10 month delay.
   
4. The learned Magistrate erred in considering the correct principles of payment by a third party of a debt or liability, and erred in finding that the affidavit did not disclose a reasonably arguable defence.
   
5. The learned Magistrate erred in failing to consider who would suffer the greater injustice if judgment were not set aside.
   
6. The learned Magistrate erred in the exercise of her discretion.
   
7. The learned Magistrate erred in failing to take into account the payment to the Official Receiver by the Appellant.
   
8. The learned Magistrate based her findings on hearsay and on oral submissions of the Respondent.
   

The appeal was heard on 10th August 1999. Mr N. Shivam for the Appellant, and Mr G. Keil for the Respondent made both oral and written submissions. Mr Shivam conceded that no explanation had been given by the Appellant for the delay but argued that the real issue was whether there was a meritorious defence. He submitted that the affidavit of Litiana Bale Keil dated 21st July 1998, did disclose a good defence and that the learned Magistrate erred in the exercise of her discretion. He did not argue Ground 1. Indeed, it is not clear what error is alleged in Ground 1.

Mr Keil submitted that the defence was purported to be disclosed in the affidavit of Litiana Keil, failed to show whose money had in fact been paid to the Immigration Department, and on whose behalf the payment had been made. He submitted that the Magistrates Court Rules were relevant to the question of setting aside default judgment, and argued that the affidavit filed by the Appellant in the Magistrates Court had failed to satisfy the test under Order 32 Rule 11 of the Magistrates Court Rules. He submitted that the learned Magistrate was correct in finding that there was no merit in the proposed defence and asked that the appeal be dismissed with costs.

Order XXX11 Rule 11 of the Magistrates Courts Rules Cap 14 provides:

“Any judgment by default may be set aside by the court or a Magistrate upon such terms as to costs or otherwise as the court or Magistrate may think fit”

Order XXX Rule 5 of the Magistrates Court Rules Cap 14 provides;

“Any judgment obtained against any party in the absence of such party may, on sufficient cause shown, be set aside by the court upon such terms as may seem fit”.

In comparison, Order 13 Rule 10 of the High Court Rules 1988 provides;

“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”.

The principles governing the exercise of the High Court’s discretion to set aside default judgment, are well-settled. The Supreme Court Practice (1995) states at p 139;

“The discretionary power to set aside a default judgment is unconditional, and the court should not lay down rigid rules which deprive it of jurisdiction. The purpose of the discretionary power is to avoid the injustice which may 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 has no defence, and because 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”.

The grounds of appeal filed in this appeal allege that the learned Magistrate erred in refusing to set aside judgment in principle and on the facts. The matters relied on by the learned Magistrate on her ruling, make it clear that the approach she adopted was the approach adopted by the High Court in considering similar applications.

The wording of Order XXX11 Rule 11, of Order XXX Rule 5 of the Magistrates Court Rules and of Order 13 Rule 11 of the High Court Rules clearly create a discretion in considering setting aside judgments. In applying the same principles to the application before her to set aside judgment, I find that the learned Magistrate approached the matter correctly.

Turning to the Grounds of Appeal, I do not find any basis for the ground that the learned Magistrate gave overwhelming weight to the question of lack of explanation for the delay. In fact, at page 4 of the Ruling the learned Magistrate states:-

“It has been held that on an application to set aside judgment, the principal matter that must be shown by the applicant is that she had a defence on the merits”.

The delay, and reasons given for the delay are relevant matters in the exercise of the discretion Evans -v- Barttans (1937) AC 437 p 48.

The learned Magistrate certainly considered the issue of lack of explanation, but the ruling shows that the paramount question was whether a defence existed on the merits. I therefore dismiss Ground 2 and Ground 3.

Ground 4 states, in effect, that the learned Magistrate was wrong to find insufficient evidence of a meritorious defence. On the material filed in the Magistrates Court, it is, with respect, difficult to see how she could have made any other finding. The Plaintiff does not dispute that the Defendant paid the Immigration Department $10,000. The question is, was it the Plaintiff’s money that the Defendant had paid, or the Defendant’s money?

The proposed defence annexed to the affidavit of Litiana Keil does not explain how the money came into the Defendant’s possession. All that was before the court was a bald statement at paragraph 1 of the affidavit sworn on 6th May 1998, that “I do not owe any monies to the Plaintiff therein”.

In the affidavit sworn on 21st July 1998, she deposed at paragraph 2:

“That the monies claimed by the Plaintiff was bond paid by my then company

Ms Cecelia and Litiana Real Estate which was refunded back to us by the Immigration Department”.

The counter-claim claims the sum of $16,600.00 for repair and maintenance of the Plaintiff’s bond in Pacific Harbour. The affidavits and the proposed defence fail to raise a meritorious defence. The Plaintiff does not dispute the facts in paragraph 2 at all. The Plaintiff’s claim is that the Defendant’s company had paid the Immigration Department on her behalf.

In the circumstances the learned Magistrate was quite correct in finding that there was no defence of merit on evidence. I dismiss Ground 4 accordingly.

Ground 5 suggests that the learned Magistrate should have considered the balance of convenience in setting aside the judgment. I can find no authority for this proposition. As the learned Magistrate correctly found, the main principle is whether there is an arguable case or a triable issue. The reason for delay in filing defence is also relevant. Prejudice to the Plaintiff when coupled with delay may be a reason to refuse to set aside judgment Harley -v- Simpson (1914) 30 TLR 450.

The purpose of the discretion is to prevent injustice, and the discretion may be exercised on condition that the Defendant pay the judgment sum, or part of it, into court. A sum of $5,000.00 was certainly paid to the Official Receiver in this case, but the paramount consideration continued to be whether there was a meritorious defence on the facts.

I cannot find any grounds for finding that the learned Magistrate erred either in law and fact. I dismiss the appeal accordingly. The Appellant is to pay the Respondent’s costs to be taxed if not agreed.

[Nazhat Shameem ]
JUDGE

At Suva
12th August 1999