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ANZ Banking Group Ltd v Buckley [2004] FJHC 317; HBC0272J.2000L (14 October 2004)

IN THE HIGH COURT OF FIJI
AT LAUTOKA
CIVIL JURISDICTION

Civil Action HBC0272.2000L

ANZ BANKING GROUP LTD
Appellant

-v-

BUCKLEY
Respondent

Fiji High Court, Lautoka
14 February, 5 October 2001
14 October 2004
Gates J

JUDGMENT

Summary judgment Ord. 14; claim arising out of default on personal guarantee of bank loan; burden on defendant to satisfy court of genuine issue which ought to be tried Ord. 14 r.3(1); leave granted to defendant to file affidavit in opposition; no affidavit filed; rare for court to find burden discharged without affidavit; sufficient facts and particulars to be provided; genuine defence; need to consider statement of defence, albeit absence of affidavit; adequate particulars and only occasionally corroborative evidence required; varying circumstances; is there a fair or reasonable probability of the defendant having a real or bona fide defence?

Mr Ronald Gordon for Plaintiff
Mr K.F. Muaror for the Defendant

[1] The plaintiff, the ANZ Bank, lent money to a company which then defaulted. The defendant stood as one of the guarantors of the loan to a limit of $70,000 exclusive of interest. After failing to respond to a Notice of Demand, the defendant was sued by the bank on the guarantee. The bank now proceeds by summons for summary judgment under Order 14 of the High Court Rules.

[2] Such an application has to be made by summons supported by an affidavit verifying the facts on which the claim is based. The deponent must state his belief that there is no defence to the claim [Order 14 r.2]. Bharat Kumar, who was acting Manager Asset Management for the bank has done all of this in his affidavit.

[3] Mr Kumar deposed that on 19 March 1997 the defendant executed a guarantee to secure the credit facilities for the company. The company went by the ill-fated name of Enormous Investments Ltd. On 10 May 2000 by letter solicitors for the bank provided details of the amount owing by the company to the bank after sale of a property held as security. A Notice of Demand was served on the defendant on 13 June 2000 which totalled $79,100, and comprised the guarantee limit of $70,000 plus one year's interest at the rate of 13% per annum amounting to $9,100. The guarantee document, the solicitor's letter, and the demand notice, were all exhibited to the affidavit.

[4] The statement of claim which accompanied the writ was originally filed against the defendant and one other guarantor. Proceedings were subsequently discontinued against the other guarantor.

[5] The defendant by solicitor acknowledged service. This summons was filed on 24 October 2000 and a defence was filed on 16 November 2000. The next day the court gave leave to the defendant to file an affidavit in opposition. No affidavit was filed for the defendant. The plaintiff's counsel filed a written submission, but after several indulgences granted to the defendant's counsel, no submission was forthcoming in reply on behalf of the defendant.

[6] The burden is cast upon the defendant to satisfy the court that there is an issue or question in dispute which ought to be tried [Order 14 r.3 (1)]. This can be achieved by affidavit "or otherwise to the satisfaction of the court" [Order 14. r4 (1)]. Leave may be given unconditionally or conditionally.

The lack of a defence affidavit

[7] In Maganlal Brothers Ltd v L.B. Narayan & Company (unreported) Fiji Court of Appeal Civil Appeal No. 31 of 1984, 15th November 1984, the Fiji Court of Appeal referred to the summary on this point in Halsbury's Laws of England (4th edit.) Vol. 37 at paras 413-415. In Note 4 to para 413 it was stated:

" The normal everyday practice is for the defendant to show cause by affidavit, and except in a clear case, it is rare for the court to allow a defendant to show cause otherwise than by affidavit."

[8] In providing evidence of a defence the defendant "must condescend upon particulars, and in all cases, sufficient facts and particulars must be given to show that there is a genuine defence." [Halsbury para 413]. In Liyakat Ali v Shafiq Ali (unreported) Lautoka High Court Civil Action No. 513 of 1986, 29 September 1987, a case where the defendant had filed an affidavit, Dyke J found there was a lack of accurate details set out therein. The judge found the deponent should have been more explicit in his challenge to the demand notice and that a mere blank denial did not discharge the onus.

[9] In Chandra Latchmaiya Naidu v Carpenters Fiji Ltd (unreported) Fiji Court of Appeal Civil Appeal No. 48 of 1999, 27 November 1992 the Court of Appeal accepted the judge's criticism of a lack of an affidavit but said the judge had fallen into error by not considering the defence. The court said:

"A statement of defence may be a sufficient mode of showing cause."

[10] In that case the statement of defence alleged that the guarantee had been revoked by notice in writing in accordance with clause 4 of the memorandum of guarantee. The guarantee was said to have been revoked in 1989 whilst the goods had been supplied in 1990 and 1991. If correct, this was clearly a substantial answer to liability and the court considered that an issue of such substance ought to be heard at trial, never mind the lack of an affidavit.

[11] But sometimes the court needs something more than mere assertion. It requires a sufficiency of information or detail in order to find that there is a genuine and substantial issue to be heard. In Venkat Sami Naidu v D. Chand Brothers (unreported) Fiji Court of Appeal Civil Appeal No. 9 of 1989, 23 March 1992 the court found there was a lack of basic facts provided in the appellant's (defendant's) affidavit. The court said (at p.5):

"Without any evidence of that kind there was nothing to inform the Court that this was a genuine issue to be tried. The mere assertion of the Appellant was far from sufficient."

[12] The Supreme Court Practice for 1997 sets out the requirements of the defendant's affidavit. Besides particulars, the affidavit must "deal specifically with the plaintiff's claim and affidavit, and state clearly and concisely what the defence is, and what facts are relied upon to support it." (para 14/3-4/4). General denials are not sufficient: Wallingford v Mutual Society (1880) 5 App. Cas. 685 at p.704.

[13] The defendant must go further. He "must satisfy the court that he has a fair or reasonable probability of showing a real bona fide defence, i.e.: that his evidence is reasonably capable of belief (per Ackner L.J. in Banque de Paris et des Pays-Bas (Suisse) S.A. v de Naray [1984] 1 Lloyd's Rep. 21, 28. See also per Bingham L.J. in Bhogal v Punjab National Bank [1988] 2 All E.R. 296, 303; Standard Chartered Bank v Yaacoub [1990], C.A. Transcript No. 699 per Lloyd L.J."

The Statement of Defence

[14] The defendant pleads that there were four guarantors in all, though he admits that each guaranteed the monies "individually". He states the monies were the joint responsibility of the guarantors. From this he concludes and asserts that the defendant is responsible for one-fourth only of the monies now owing by the company. No facts are given, no evidence advanced, to support such a claim. Without more however, clause 8 of the guarantee document exhibited by the plaintiff's deponent seems to dispose of any suggestion that the guarantors were not jointly and severally liable to the bank.

[15] The defendant admits he received the demand notice, but says he has justifiable cause to withhold payment. One of the reasons given is that "the plaintiff as mortgagee, owed the 1st defendant as mortgagor, a duty to account to the 1st defendant..." for the sale of the property NL 24345. No facts or evidence are given of this vague claim. The defendant provides no evidence that he was the mortgagor. The plaintiff submits it was the company who was the mortgagor. The solicitor's letter exhibited by the plaintiff of 15 May 2000 gives details of the loan balance after deduction of the proceeds of sale. There is no evidence of any letter from the defendant seeking any further particulars of such sale, had they been required.

[16] Such allegations at the Order 14 stage were aptly dealt with by Vice-Chancellor Megarry in The Lady Anne Tennant v Associated Newspapers Group Ltd [1979] FSR 298 when his lordship said:

"A desire to investigate alleged obscurities and a hope that something will turn up on the investigation cannot, separately or together, amount to sufficient reason for refusing to enter judgment for the plaintiff. You do not get leave to defend by putting forward a case that is all surmise and Micawberism".

[17] That comment was cited by the Court of Appeal in Waterhouse and Waterhouse v Waterhouse Group (unreported) Court of Appeal Fiji, Civil Appeal No. ABU0047.2002S, 30 May 2003 at p.13, and the court went on to say:

"It is not sufficient for a defendant to make an allegation of an impropriety or a deficiency without any evidence and then seek a taking of accounts in the hope that something favourable to the defendant might turn up."

[18] The defendant gives two further reasons for justifying the withholding of payment. First he states the debt "should have been largely, if not completely extinguished through the sale of ... NL 24345". This is another vague assertion without essential detail. The pleading does not join issue merely by hinting a miscalculation of the reduced balance after the sale.

[19] Second it is said the sale was made at a below market price. Again, no basis for this claim is given, nor any details of the sale price reached or a contrary valuation exhibited in evidence.

[20] The defendant denies that his liability under the guarantee document was limited to $70,000 and denies interest is chargeable. There being no evidential contradiction, clause 13 of the exhibited document clearly disposes of that denial.

[21] Finally the statement of defence says the defendant does not owe the plaintiff the monies claimed and "puts the plaintiff to strict proof thereof." This paragraph does not add any credibility to the defence, nor set up any other basis for a line of defence.

Conclusion

[22] Further details of the mortgagee sale were divulged in the plaintiff's counsel's submission. However I have to disregard them, since they should have been verified in affidavit form and not left to the submission. No doubt this was done in order to answer the statement of defence, since there was no affidavit in opposition filed to which a reply by further affidavit could be made. In such circumstances, it would have been proper to have permitted the plaintiff to file an additional affidavit to address issues raised in the defence to correct misstatements of fact.

[23] The situation here is far less convincing of the existence of an arguable defence than that of Natawawa and Sadole v National Bank of Fiji (unreported) Court of Appeal Civil Appeal No. ABU0057.1999S, 17 May 2002. In that case the two appellants had guaranteed advances to a company. The guarantors resisted summary judgment proceedings by filing an affidavit. The affidavit raised sufficiently credible facts of the existence of a trade practice concerning the ordering of chemicals and the issuance of letters of credit to an overseas seller. The Court of Appeal found that the affidavit had raised "a trade practice coupled with a fiduciary relationship between the respondent and the company which could be raised as a defence by the appellants as guarantors." (p.3) In that sense, the appellants had discharged the onus.

[24] Usually it is particulars that are required, not corroborative evidence. The Court of Appeal continued (at p.4-5):

"No doubt the provision of particulars is important in identifying an argument and delineating its scope and there may well be occasions when some kind of corroboration is required of the assertions even when set out in such detail as to amount of particulars.

In the end however, the proposition for which Lord Blackburn may be cited is that the Judge must be satisfied that there is a reasonable ground for the defence raised. There may be circumstances where this only can be established by providing corroborative evidence. But there may also be occasions when an assertion by a defendant is in context sufficient to make it plain to a Judge that there are reasonable grounds for a defence being explored in the ordinary way through an action."

[25] In Banque de Paris (supra at p.23) Ackner LJ said:

"the Court must look at the whole situation and ask itself whether the defendant has satisfied the Court that there is a fair or reasonable probability of the defendants 'having a real or bona fide defence.'"

From amongst other variations and tests discussed this was the preferred test: National Westminster Bank plc v Daniel [1994] 1 All ER 156 at p.159.

[26] Looking at the whole situation, I am not satisfied the defendant has discharged the onus placed on him in these proceedings. I therefore order summary judgment for the plaintiff as prayed in the sum of $79,100 with costs summarily assessed at $1,500.

A.H.C.T. GATES
JUDGE

Solicitors for the Plaintiff: Messrs Gordon & Co., Lautoka
Solicitors for the Defendant: Messrs Muaror & Co., Suva