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Toyota Isusho (South Sea) Ltd v Shameem [2003] FJHC 257; HBC0082D.1999B (23 June 2003)

IN THE HIGH COURT OF FIJI
AT LABASA
CIVIL JURISDICTION

ACTION NO. HBC0082D OF 1999B

BETWEEN:

TOYOTA ISUSHO (SOUTH SEA) LTD.
a duly incorporated Company having its
registered Office in Suva.
PLAINTIFF

AND:

MOHAMMED SHAMEEM
(f/n Mohd. Hanif) and
MOHAMMED SAIYEED
(f/n Mohd. Shameem) both of Vunimoli Labasa Truck
Operators.
1ST DEFENDANTS

AND:

AKBAR BEGG
(f/n Jahoor Begg) of Waiqele, Labasa, Company Director.
2ND DEFENDANT

Counsel for the Plaintiff: V.P. Ram, Gibson & Co.
Counsel for the Defendants: A. Kohli, Kohli & Singh

Date of Delivery: 23.06.03
Time of Delivery: 10.00 a.m.

DECISION

This is an application to set aside final judgment entered against the defendants for failure to give Notice of Intention to Defend.

Briefly the facts of the matter are as follows. On 5 October 1999, the Plaintiff in a Writ of Summons sought judgment for the sum of $16,207.90 representing the balance of outstanding payments due from the two first defendants for the purchase of a second-hand “Hino” truck, and, interest at 15 per cent from 24 January 1998 (date of demand) to 31 August 1999 of $6,327.74. The second defendant who had guaranteed the repayment of the purchase price of the truck by the first defendant was also sued. No acknowledgement of service of the Writ was returned, although affidavits of services on all defendants effected on 13 November 1999, was sworn before a Commissioner for Oaths by one Karan Singh f/n Chandrika Prasad, bailiff of Labasa, and filed on 15 November, 1999.

There being no acknowledgement of service of the Writ by the defendants, the plaintiff entered final judgment on 29 December 1999.

On 29 July 2002 the Solicitors for the Defendants filed the Notice of their appointment and as well as a Motion to Set Aside the Default Judgment.

LAW ON SETTING ASIDE

Under O.13 r.10, setting aside of a judgment may be ordered by the Court on a number of grounds including, if it is satisfied that the judgment had been irregularly obtained; that there is merits on the defence, and that there has not been any delay in making the application.

Irregular Judgment

The law on setting judgment aside for irregularity is well established. Where for example, it is clear that the judgment has been entered prematurely before the defence is filed in accordance with the rules, the defendant is entitled to have it set aside. As Fry LJ said in Anlaby v. Praetorius [1888] UKLawRpKQB 55; (1888) 20 QBD 764, at p.768:

“The Court acts upon an obligation; the order to set aside the judgment is made ex debito justistiae, and there are good grounds why that should be so, because the entry of judgment is a serious matter, leading to the issue of execution, and possibly to an action of trespass.”

Fry LJ added (at p.769):

“There is a strong distinction between setting aside a judgment for irregularity in which case the Court has no discretion to refuse to set it aside, and setting it aside where the judgment, though regular, has been obtained through some slip or error on the part of the defendant, in which case the Court has a discretion to impose terms as a condition for granting the defendant relief.”

The procedural requirement if a defendant seeks to set aside irregular judgment, is that the irregularity must be specified in the Summons or notice of motion as well as in the affidavits in support.

Merit of the Defence

Even in a situation where the judgment is regular, the Court may still set aside a judgment if there is merit in the defence. To prove so, the defence needs to file an affidavit of merits showing that there is an arguable or trialable issue which the Court should allow to go to trial. In its absence however the Court may still grant the relief sought but only for some very special reason: see Farden v. Richter [1889] UKLawRpKQB 79; (1889) 23 QBD 124, 129. In Watt v. Barnett [1878] UKLawRpKQB 21; (1878) 3 QBD 183, the Court exercised its discretion in favour of the defendant on the ground the defendant’s claim that the substituted service as ordered by the Court, was never received. The Court however ordered the defendant to give security and costs.

Delay in the Application

An application to set aside must be made within a reasonable time as required under the Rules (O.2 r.2). What constitutes “a reasonable time” will depend on the facts of each case. For example a defect in a Writ that was not cured with the statutory period of limitation in an action for negligence, and took a little over four (4) months afterwards for the defendant to file his summary, w as ruled not to be made “within a reasonable time”: Partin v. Wood [1962] 1 QB 595. Similarly Reynolds v. Coleman [1887] UKLawRpCh 173; (1887) 36 Ch.D. 453 said that after a lapse of one (1) year the defendant could not apply to discharge an order of service on the ground that there was incorrect statements in the affidavit in which the order was obtained.

Whether a delay in unreasonable or not can also be measured from the plaintiff’s standpoint namely, whether the plaintiff will suffer irreparable injury if the judgment is set aside. One would envisage a more flexible approach by the Court is unjustice to the plaintiff would be minimal and such inconvenience may be compensated by way of payment of costs. Where however, granting relief would result in irreparable injury to the plaintiff, then the Court will not interfere by setting aside the judgment.

The underlining principle that guides the Court in deciding in an application to set aside is as stated by Lord Atkin in Evans v. Bartlam {1937) AC 480. But not only is the exercise a measure to curb the perception of expression of its coercive power to make a final ruling for one’s failure to follow any of the rules of procedure, it also recognises the inherent right of a party to have one’s say before the Court makes its ruling. In Hayman v. Rowlands (1957) 1 WLR 317 Hodson LJ, quoting from the earlier decision of Grimshaw v. Dunbar (1952) 1 QB 408, expressed it this way (at p.320):

“.... it is essential that a party to an action should, if possible, have the action heard in his presence, and if by some mischance or accidence, a party is shut out from that right an order is made in his absence, justice demands, so far as it can be given effect to without injustice to the other parties, that the party who was accidentally absent should be allowed to come and present his case.”

DEFENDANTS’ SUBMISSIONS

The Defendants advance two (2) grounds in support of their application to set aside. Firstly, they claim that they had not been served with the Writ of Summons and secondly, that they have a good and meritorious defence.

In their affidavit in support, the first defendants categorically denied that the service of the Writ had been effected on them on 13 November 1999, contrary to the affidavit of Karan Singh, the process server. Instead, according to the first defendants, the first time they became aware of the Writ was when they were served with the Bankruptcy Notice on 17 November 2001. In the case of the 2^nd defendant and who is the guarantor, he has not denied the service of the Writ on him, nor the Bankruptcy Notice and Petition served on him afterwards.

The merit in the defence, according to the first defendants, is based on the claim for misrepresentation by the plaintiff as to the suitability of the truck for the purposes of carting sugar cane and general goods. The first defendants allege that the truck after purchase from the plaintiff, had only been used for a few months from November 1995 when it began to breakdown with mechanical problems. It finally in July 1996, could not be repaired due to unavailability of spare parts and while in the possession of the plaintiff, was sold for $15,000.00. The defendants now demand compensation by way of counterclaim for losses and damages.

PLAINTIFF’S SUBMISSIONS

The plaintiff agree that the 1^st defendants had purchased a second-hand Hino truck (CI 307) on or about 31 October 1995. A Bill of Sale was subsequently executed (No. 95/3753) by the 1^st defendants and registered on 22 November 1995, to secure the repayment of the balance of the purchase price of the truck. As to the issue of misrepresentation alleged by the defendants the plaintiff in its affidavit confirm that the 1^st defendants had taken the truck out for test drives on two (2) occasions and only after being satisfied with the condition of the vehicle, did they agree to its purchase. That at any rate, the conditions under the Bill of Sale and specifically paragraph 21 thereof, legally binds the defendants. Paragraph 21 declares:

“21. That the Mortgagors hereby confirm and covenant that a chattel of a vehicle had been inspected by the Mortgagors and is fully satisfied as to the condition in which the same is being sold AND no condition or warranty that the said vehicle is roadworthy or as to the age condition or fitness of the vehicle for any purpose is given by the Mortgagee or implied herein.”

The vehicle/truck was subsequently repossessed by the plaintiff on 10 August 1996 after the first defendants had continuously failed to meet their repayment schedule and had fallen behind in arrears.

COURT’S CONSIDERATION

The question of whether the Writ had been served on the 1^st defendants at all is of paramount importance in the Court’s consideration whether to grant the relief sought. In the first defendants’ two affidavits, they allege that the process server, Karan Singh, had not on 13^th of November 1999, nor at any other time, served the Writ on either of them.

On the other hand the affidavit of Karan Singh, the process server makes clear that, not only were the 1^st defendants served but there additionally were exchanges between them with Mr Singh advising the 1^st defendants what they could do. More important, 2 days after serving the Writ on the 1^st defendants, Mr Singh duly swore affidavits of service in both the case of the 1^st defendants and the 2^nd defendant such affidavits forming part of the Writ Action No. 82 of 1999 filed into Court.

The Court under the circumstances and in the light of the affidavit evidence submitted by the 1^st defendants and as well as that of the plaintiff’s, is firmly of the belief that the Writ had in fact been served on the 1^st defendants on 13 November 1999. The fact that the 2^nd defendant and Guarantor had not stated anything to the contrary, lends support to this view. It is also relevant that Mr Singh had recalled particulars of conversations he had with all the defendants, when serving the documents on them. In the Court’s view, the nature and the details of the exchange would have been difficult to invent. This lends further credibility to the evidence of the plaintiff’s Karan Singh.

The Court therefore finds that the plaintiff had complied with O.10 r.1 of the Rules, in that the Writ had been served personally on each of the defendants.

Having found that the judgment obtained by the plaintiff on 29 December 1999 was regular, the defendant may nevertheless proceed to show through affidavit, that there is merit in the defence. How the Court approaches this is discussed earlier, but it is sufficient for the defendant to show that there is an arguable case to go to trial. In this, the 1^st defendants, say that there had been misrepresentation by the plaintiff as to the suitability of the truck for the purpose which the defendants intended for its use. The plaintiff, according to the defence, had further represented to them that the truck’s spare parts were available locally in case they were required for the repairs of the vehicle.

The plaintiff’s answer is that the defendants were well aware that the Hino truck was second-hand. From 25 October 1999 to day of purchase, they had viewed it, test driven it twice, and freely entered into an agreement for sale in the form of a “Proforma Invoice” a condition of which stipulates that, “I have received the above item(s) complete and in good order.” In addition, Clause 21 of the Bill of Sale, and cited above, clearly binds the defendants. According to the plaintiff, there was no misrepresentation. It refuted the allegation that the term of the Bill of Sale was not explained or at least made known to them.

In the Court’s view, it is difficult from the evidence, to conclude that the plaintiff had by its action attempted to misrepresent the fact that it was selling a second-hand Hino truck. It, through its sales representative, gave every opportunity to the 1^st defendants to inspect and test-drive the vehicle to their satisfaction. Being a second-hand vehicle it is not usual for a seller to give a blanket warranty on the performance of a vehicle over time. Even the promise of spare parts which the defendants' claim was made by the plaintiff is denied by the latter.

The defendants then argued that the plaintiff failed to explain the terms of the Bill of Sale to them, especially Clause 21 which excludes warranty. However, the presumption in law is that a party is taken to fully understand the contents and effect of a document he is signing. The position is set out by Kermode J in Fiji Development Bank v. Navitalai Raqona [1977] FamCA 81; (1984) 30 FLR 151 (at p.153):

“The general rule is that a party of full age and understanding is normally bound by his signature to a document whether he reads or understands it or not.”

There is no conceivable ground for finding any merit of the defence offered by the defendants.

Finally on the issue of delay in making the application. Here there can be no good enough excuse offered by the defendants or their Counsel as to why they had left it until over two (2) years later to move to set aside the judgment. But even if this Court was to accept that the Writ had not been served (which it does not) the defendants waited around for another 7 months after they were served with the Bankruptcy Notice, before they acted.

Surely the defendants interest would have been better protected had they acted straightaway to set aside the judgment upon receipt of the Bankruptcy Notice, rather than waiting for the Petition to be served on them 4 months later. To deliberately await the Petition after Notice, which seems to have been suggested by the 1^st defendants in their affidavit, does appear to fall foul of the requirement of the second limb of O.2 r.2.

The chronology of the events and actions taken from 5 October 1999 when the Writ was filed to 29 August 2002 when the defendants finally moved to set aside the judgment of 29 December 1999, illustrates very clearly to the Court that the defendants had not acted in any haste or concern over the rules governing litigation, let alone their own position. This is quite apart from the merit or otherwise of the defence.

The defendants application to set aside is dismissed.

I award costs to the Plaintiff to be taxed if not agreed.

F. Jitoko
JUDGE

At Labasa