IN THE HIGH COURT OF FIJI
AT SUVA
CIVIL JURISDICTION

CIVIL ACTION NO. HBC0500R OF 2004S

BETWEEN:

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED
PLAINTIFF

AND:

FREDERICK WILLIAM CAINE
DEFENDANT

Counsel for the Plaintiff: Ms S. Bale: Lateef & Lateef
Counsel for the Defendant: N. Nawaikula: Nawaikula Esq.

Date of Ruling: 03.02.06
Time of Ruling: 9.30 a.m.

RULING

Introduction

This is an application by the Defendant. Frederick William Caine to set aside a judgment entered in default of a defence on 13th of January. 2005. By a Summons filed in Court on 17th May 2005, the Defendant inter-alia seeks the following relief:-

[a]	the execution of the default judgment entered against the Defendant be stayed;

[b]	the default judgment entered against the Defendant be set aside;

[c]	the Defendant be at liberty to defend the claim unconditionally;

[d]	costs.

Background facts

A writ of summons indorsed with ‘particulars of claim’ and a prayer for relief was issued on 5th November, 2004 by ANZ Banking Group Limited, the Plaintiff/Respondent (here-in-after referred to as ‘the plaintiff’) against the Defendant. The cause of action relied upon by the Plaintiff is one of a guarantee executed by the Defendant in its favour for the advances made to Lincoln Farms (Fiji) Limited. The Defendant is one of shareholders and directors of the said company. The total sum claimed by the Plaintiff is $114,384.55 together with interest accruing at a rate of 17.5% or $54.84 per day. An ‘Acknowledgment of Service’ was filed by the Defendant’s only solicitors on record, namely Nawaikula Esquire on 6th December, 2005. Next, solicitors for the Plaintiff conducted a search in the High Court Registry to ascertain whether a statement of defence was filed. The search did not reveal any such statement of defence on record. This lead the Plaintiff’s solicitors to enter and seal a judgment in default of a defence on 11th January, 2005.

Thereafter the action lay in abeyance until 18th April, 2005 when a Bankruptcy Notice was issued against and served on the Defendant. Naturally, this prompted the Defendant to make due inquiries with his solicitors as to the status of the proceedings. It was not until this juncture when he came to know that a default judgment was entered because no defence was filed. Hence this application.

The Summons is supported by an Affidavit of the Defendant sworn and filed on 17th May, 2005. An Affidavit in reply on behalf of the Plaintiff was deposed by one of its employees, namely Jai Chand, Manager Asset Management. Both the Plaintiff and Defendant duly filed written submissions and their respective Counsel appeared before me for a hearing.

Principles of setting aside default judgment

A default judgment can be entered at two different stages of a civil action. The first is under O.13, when a Defendant fails to “give a notice of intention to defend” and the second is under O.19, for “default of pleadings”. However, under both the Orders, the basic principles for setting aside default judgments, if any entered, remains the same.

Principles upon which default judgments are set aside fall into two distinct categories, which are ‘regular’ and ‘irregular’. Fry L J in Anlaby -v- Praetorious [1888] 20 QBD 764 at 769 succinctly drew the distinction as follows:-

“There is a strong distinction between setting aside a default 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 of granting the Defendant relief.” (emphasis added).

This principle was adopted and applied by the Court of Appeal in Subodh Kumar Mishra –v- Rent-a-Car [1985] 31 FLR 41 at 52. Thus, where an irregular default judgment is entered, which irregularity cannot be cured, the Defendant is entitled as of right to have the judgment set aside.

On the other hand setting aside a regular default judgment vests the court with a very wide discretion. Neither Order 13 rule 10, nor Order 19 rule 9, impose any restriction in the manner in which the discretion is to be exercised. However, over a period of time as common law developed, the courts have recognised some basic guidelines when considering an application to set aside a default judgment. As a rule, the Courts will consider whether there is prima facie a defence on merits; the reasons for the default judgment; the promptness with which the application to set aside is made; and whether the setting aside would cause prejudice to the Plaintiff which could not be adequately compensated for by a suitable award of costs; Evans –v- Bartlam [1937] AC 473; Adams –v- Kennick Trading (International) Ltd. & Ors. [1986] 4 NSWLR 503.

These primary factors time and again have been cited with approval in many judgments in this country, of which I only refer to Pakaj Bamola & Anr. –v- Moral Ali Court of Appeal Civil Appeal No. 050/1990, and F.N.P.F. –v- Shri Datt [1988] 34 FLR 67 at 69. These factors are further buttressed by the underlying rationale, that it is a fundamental duty of the court to do justice between the parties. Central to this duty is that the court should accord opportunity to the parties to put their cases on merits where it so warrants, without prejudicing any other parties to the action.

Is the default judgment “regular” or “irregular”? Having stated the broad applicable principles, the first issue that needs to be considered is whether the entry of default judgment was “regular” or “irregular”.

This action was begun by a writ of summons. General provisions relating to issuing of writ of summons is governed by Order 6 of the High Court Rules 1988. Order 6 rule 2 (1) (a) requires that “Before a Writ is issued it must be indorsed with a Statement of Claim or if the Statement of Claim is not indorsed on the Writ, with a concise Statement of the nature of the Claim made or the relief or remedy requires in an action.”

Once a writ is served, a Defendant is required to file an ‘Acknowledgement of Service’ (Order 12, Rule 1 (3)). The form of the acknowledgement of service must be in conformity with Form No. 2 contained in the Schedule (Appendix 1) of the High Court Rules 1988; Order 12 Rule 12. If a Defendant fails to acknowledge service or give a notice of intention to defend and the claim is for a liquidated demand, the Plaintiff may there upon proceed to enter a final judgment against the Defendant ‘for a sum not exceeding’ the amount indorsed on the writ (Order 13 Rule 1). However, once a Defendant acknowledges service and gives a notice of intention to defend, the procedural rule for entering default judgment alters. Where a writ includes the Statement of Claim and if the Defendant fails to file a statement of defence, a Plaintiff may proceed to enter a default judgment upon expiry of 14 days of such acknowledgment. On the other hand, where a writ is indorsed with a ‘concise statement of the nature of the claim’ the Plaintiff in that case must serve a Statement of Claim to the Defendant within 14 days of the service of the acknowledgment. This is a mandatory requirement under Order 18, Rule 1. It states:-

“Unless the Court gives leave to the contrary or a Statement of Claim is indorsed on the writ, the Plaintiff must serve a Statement of Claim on the Defendant or, if there are two or more Defendants, on each Defendant, and must do so either when the writ is served on that Defendant or at any time after service of the writ but before the expiration, of 14 days after that Defendant gives notice of intention to defend.”

After service of Statement of Claim, the Defendant thereafter must serve a defence on the Plaintiff before the expiration of 14 days from the date of such service. For sake of completeness, Order 18, Rule 2 which prescribes this prerequisite states:-

“Service of defence

“Subject to paragraph (2), a Defendant who gives notice of intention to defend an action must, unless the Court gives leave to the contrary, serve a defence on the Plaintiff before the expiration of 14 days after the time limited for acknowledging service of the writ or after the Statement of Claim is served on him, whichever is the later.” (emphasis added).

Relief for ‘default of pleadings’ by parties for an action is provided for in Order 19 of the High Court Rules 1988. The relevant applicable rules are Order 19 Rule 1 and Order 19 Rule 2. Order 19 Rule 1 which relates to Plaintiff failing to file a Statement of Claim, states:-

“Where the Plaintiff is required by these Rules to serve a Statement of Claim on a Defendant and he fails to serve it on him, the Defendant may, after the expiration of the period fixed by or under these Rules for service of the Statement of Claim, apply to the Court for an order to dismiss the action, and the Court may by order dismiss the action or make such other order on such terms as it thinks just.”

Order 19, Rule 2 which relates to the consequences of timely filing of the statement of defence states:-

“Where the Plaintiff’s claim against a Defendant is for a liquidated demand only, then, if that Defendant fails to serve a defence on the Plaintiff, the Plaintiff may, after the expiration of the period fixed by or under these Rules for service of the defence, enter final judgment against that Defendant for a sum not exceeding that claimed by the writ in respect of the demand and for costs, and proceed with the action against the other Defendants, if any.”

Now turning to the application before me, it is not in contention that the Plaintiff filed a writ of summons indorsed with ‘a concise statement of the nature of the claim’ as opposed to a ‘Statement of Claim’ relying upon a guarantee executed by the Defendant in favour of the Plaintiff. No issue has been taken as to whether the claim is liquidated or unliquidated. It is also accepted that the Defendant acknowledged service as required by the rules. I may add that the Plaintiff does not challenge regularity of the acknowledgment of service. In any event it could not do so. It is in conformity with the prescribed form provided in the Schedule (Appendix I) to the High Court Rules 1988.

As required by Order 18, Rule 1, after that, the Plaintiff should then have filed and served a Statement of Claim on Defendant with 14 days of the receipt of acknowledgment of service. No such Statement of Claim appears to have been filed; otherwise a copy would have been in the court rile. In addition, neither counsel referred to it in their written or oral submissions. Mr Nawaikula, in his written submissions only made reference to the claim being indorsed. By this, I take it that Mr Nawaikula was implying that a Statement of Claim was not filed. The Plaintiff did not respond to this submission of the Defendant but in the written submission it somewhat supports this by relying on the indorsement of a ‘concise statement of the nature of the claim’ captioned ‘Particulars of Claim’ in the writ.

I have reviewed the “Statement of the nature of case” indorsed on the writ. It is not a Statement of Claim both by its form and content. There is a clear distinction between the two.

“A Statement of Claim is the first pleading in actions begun by writ and constitutes the document in which the Plaintiff formulates the factual grounds on which he bases his claim or the relief or remedy which he seeks against the Defendant, and not merely, as the general indorsement of writ is required to do, a concise statement of the nature of the claim made or the relief or remedy required in the action.” {see Bullen & Leake and Jacobs “Precedents of Pleadings” 12 edition at page 51).

As the first pleading in any action, a Statement of Claim is a very vital document. It plays a pivotal role in ensuring the advancement of a trial by defining and limiting the issues to their bare necessities. A Statement of Claim must state a summary of material facts of the Plaintiff’s cause of action entitling him/her a relief or remedy. It is also crucial as it enables the Defendant to know the case that she/he has to encounter.

The summons before me is filed pursuant to Order 18, rule 9 which refers to setting aside of judgment in “default of pleadings” as opposed to an application under Order 13 Rule 10 which relates to judgment, entered in ‘default of a notice of intention to defend’. Since the Statement of Claim is mandatory, unless it is filed no further pleadings including a statement of defence can be filed. It brings a halt to further proceedings unless application is made to strike-out the generally indorsed writ for want of prosecution.

For the sake of clarity, a generally indorsed writ of summons is not a pleading. See: Murray –v- Stephens (1887) 19 QBD 60. After filing the acknowledgment of service with an unequivocal statement of an intention to defend, the Plaintiff ought to have known that the proceeding had advanced to pleadings stage. Just having filed a generally indorsed writ, it should have filed the Statement of Claim within the prescribed time frame. Whilst it is always open to parties to litigation to try and utilise the rules of the court to improve their position and optimize any advantage accruing to them, they must ensure that their own actions are not subjected to any criticisms. Without criticizing the actions of the Plaintiff in expeditiously moving to entering the default judgment, in my view it should have checked its own compliance with rules. This lack of verification resulted in the default judgment being entered prematurely.

In my view, once the Defendant had given a notice of intention to defend, it is incumbent upon the Plaintiff to file or seek leave of the Court to dispense with a Statement of Claim before proceeding to seal a default judgment. Compliance with Order 18 Rule 1 was mandatory for the Plaintiff is to take advantage of the Defendant’s laxity. A statement of defence could only have been filed as required under Order 18 rule 2 if a Statement of Claim was filed or dispensed with by the Court. Since neither a Statement of Claim was filed nor any prior dispensation was sought or granted by the Court, the entry of default judgment was irregular. That being the case, the Defendant is entitled to have the judgment set aside ex debito justitiae. I therefore conclude that the judgment is irregular and it cannot be allowed to stand.

In light of the above finding I do not have to deal with other issues raised by the parties in their submissions. However, there is one issue which I would like to bring to the attention of the parties. From the documents filed none of the parties adduced any cogent evidence of the outstanding account. In his affidavit, the Defendant has raised a number of issues to which the Plaintiff has not responded. The Plaintiff should make an effort to provide the Defendant with a full and detailed breakdown of the debt. No doubt this will also is useful for the future conduct of this action.

Orders

Accordingly, I order that the default judgment entered on the 13th day of January, 2005 against the Defendant be set aside unconditionally. Leave is also granted to the Plaintiff to file a Statement of Claim within 14 days hereof. I further order that cost of this application be costs in cause.

F. Jitoko
JUDGE