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High Court of Fiji |
IN THE HIGH COURT OF FIJI
WESTERN DIVISION
AT LAUTOKA
CIVIL JURISDICTION
CIVIL ACTION NO. HBC 133 of 2014
BETWEEN:
BOMBAY TRADING (INVESTMENT) LIMITED
a limited liability Company duly incorporated under the Companies Act (Cap 247) and having its registered office at Varoka, Ba, P.O. Box 88, Ba in the Republic of Fiji.
PLAINTIFF
AND:
SHREEDAR MOTORS LIMITED
a limited liability company duly incorporated under the Companies Act (Cap 247) and having its registered office at Karsanji Street, Vatuwaqa, Suva in the Republic of Fiji.
DEFENDANT
Mr. Samuel Kamlesh Ram with Mr. Niven Ram Padarath for the Plaintiff.
(Ms.)Bhavna Geeta Narayan for the Defendant.
Date of Hearing: 11th September 2015
Date of Ruling: 11th December 2015
RULING
(A) INTRODUCTION
(1) The matter before me stems from the "Summons" filed by the Defendant pursuant to Order 19, Rule 09 of the High Court Rules, 1988 seeking the grant of the following Orders;
Para A. That the Interlocutory Judgment by Default entered by the Plaintiff against the Defendant in this action filed on the 18th day of November 2014 and sealed on the 19th day of November 2014 be set aside;
B. That any steps taken by the Plaintiff to enforce the Interlocutory Judgment by Default be stayed pending determination of this application;
C. That leave be granted to the Defendant to file its Statement of Defence to the Plaintiff's Statement of Claim filed herein within 14 days from the date of setting aside of the Interlocutory Judgment by Default and to defend this action unconditionally;
D. That the costs of this application be costs in the cause.
(2) The Summons is supported by an Affidavit sworn by (Ms.) "Florence Kumar", a Law Clerk employed by the Defendant's Solicitor's Firm.
(3) The Summons is vigorously resistedby the Plaintiff. The Plaintiff filed an Affidavit in Opposition sworn by Mr."Manish Patel", the Managing Director of the Plaintiff's Company.
(4) The Defendant filed an Affidavit in Reply sworn by (Ms.) "Florence Kumar".
(5) The Plaintiff and the Defendant were heard on the Summons. They made oral submissions to Court. In addition to oral submissions, the Counsel for the Defendant filed a careful and comprehensive written submission for which I am most grateful.
(B) THE FACTUAL BACKGROUND
(1) What are the circumstances that give rise to the present application?
(2) To give the whole picture of the action, I can do no better than set out hereunder the averments/assertions of the pleadings.
(3) The Plaintiff in its Statement of Claim pleads inter alia;
Para 1. The Plaintiff is a limited liability public Company duly
incorporated under the Companies Act (Cap. 247, Laws of Fiji) and having its registered office at P O Box 88, Varoka, Ba, Fiji.
2. The Defendant is a limited liability company duly incorporated under the Companies Act (Cap. 247, Laws of Fiji) and having its registered office at Karsanji Street, Vatuwaqa, G P O Box 1169, Suva.
3. At all material times the Defendant carried out business of sale, purchase and service of vehicles of all types.
The Agreement
4. On or about the 21st of May 2012, the Plaintiff agreed to purchase motor vehicle registration number HA820 (referred to as the "motor vehicle" in this claim) from the Defendant for sum of $85,000.00 (Eighty Five Thousand Dollars) [referred to as "Purchase Sum" in this claim].
5. It was agreed that the purchaser sum will be paid in the following manner:-
6. Subsequently, the motor vehicle was transferred into the name of the Plaintiff.
Compliance with the Agreement
7. The parties in compliance with the agreement took the following steps:-
Breach of Agreement
8. On or about 14th December 2013, the motor vehicle started having problems with its gearbox. The Plaintiff took the vehicle to the Defendant's service yard and they accepted the vehicle to carry out services to repair the gearbox.
9. In breach of the agreement, the Defendant, on or about 24th December 2013 refused to release the motor vehicle to the Plaintiff claiming that a balance sum of $50,000.00 remained due and owing.
10. In further breach, the national manager of the Defendant, on or about 15th January 2014 sent an email to the Plaintiff claiming that there was no agreement for payment of the purchase price by trade-in.
11. The Defendants have punctured two of the tyres the motor vehicle and have caused damage to it.
12. The Defendants have further misrepresented to members of the public and people known to the Plaintiff that the Plaintiff has not paid the purchase price for the motor vehicle.
Loss and Damages as a result of breaches
13. As a result of the breaches mentioned above the Plaintiff has suffered loss and damages.
14. The Plaintiff is a hardware company that has several outlets all over Fiji.
15. The Plaintiff was using the motor vehicle for the business of the Company and as a result of the breaches; the Plaintiff suffers loss of use at the rate of $5,000.00 per month from 14th December 2014.
Injunction
16. The motor vehicle was purchased brand-new and the Defendants have parked it without taking due care and attention.
17. In addition, the Defendants have kept possession of the trade-in vehicle.
18. The motor vehicle is registered in the name of the Plaintiff and all the third-party policies have been taken out in its name.
19. Further, the Defendants have brought disrepute to the Plaintiff by seizing the vehicle and leading members of the public to believe the Plaintiff was unable to pay for the motor vehicle.
20. As a result of the above, the Plaintiff will suffer irreparable damages.
21. Unless this Honourable Court makes an Order for the release of the vehicle to the Plaintiff, the Defendants will refuse to do so.
Aggravated and Exemplary Damages
22. The Plaintiff is a well-known company and employs a large number of staff and has retail outlets all over Fiji.
23. The breach by the Defendant has become publicly known and has caused damage to the reputation and good will of the Plaintiff Company in Fiji.
24. The motor vehicle was purchased for the efficient running of the business and the peace of mind of the Plaintiff and its members.
25. The refusal by the Defendant is unreasonable.
26. On these basis and other matters pleaded herein the Plaintiff claims aggravated and punitive damages.
(4) Wherefore, the Plaintiff prays for the following Orders;
- An order requiring the Defendants and/or their servants and/or their agents to repair and/or replace the gearbox in the Motor Vehicle registration No. HA820, within 7 (seven) days of the order being made, so that it is in same running condition as it was when it was brought;
- An order requiring the Defendants and/or their servants and/or their agents to replace the four tyres in the Motor Vehicle registration No. HA820 with new ones within 7 (seven) days of the order being made;
- An order requiring the Defendants and/or their servants and/or their agents to provide in writing details of all the repairs done and provide a certificate that all the necessary repairs have been carried out including the replacement of the tyres within 7(seven) days of the order being made.
- An order requiring the Defendants and/or their servants and/or their agents to immediately upon compliance with the above orders to release the Motor Vehicle registration No. HA820 to the Plaintiff at no costs to the Plaintiff.
- An injunction restraining the Defendants and/or their servants and/or their agents from in any way interfering with the possession, use and enjoyment of the motor vehicle registration number HA420.
- Judgment for loss of uses of vehicle.
- General damages for breach of contract.
- Judgment for all loss of income and profits suffered as a result of the breach.
- In the alternative Judgment for the Plaintiff in the sum of $85,000.00 (Eighty Five Thousand Dollars) together with loss and damages as claimed under paragraphs (f), (g), (h) and (j).
- Exemplary and Punitive damages.
- Interest at the commercial rate of 13.5% per annum under the Law Reform (Miscellaneous Provisions) (Death and Interest) Act, Cap 29, Laws of Fiji on all sums awarded.
- Costs on an indemnity basis.
(C) THE CHRONOLOGY AND THE STATUS OF THE SUBSTANTIVE MATTER
(1) The action was instituted by the Plaintiff on 19th August 2014 by way of Writ of Summons and Statement of Claim.
(2) According to the Affidavit of Service filed by the Plaintiff on 20th August 2014, the Writ of Summons and the Statement of Claim was served on the Defendant on 15th August 2014.
(3) On 27th August 2014, the Defendant filed an Acknowledgement of Service.
(4) On 28th September 2014, the Plaintiff having searched and finding that the Defendant had failed to serve the Statement of Defence on the Plaintiff within the prescribed time entered "Interlocutory" Judgment against the Defendant on 18th November 2014. The interlocutory judgment was sealed on 19th November 2014.
(5) I note without comment that nearly 4 ½ months later, the Defendant issued Summons to set aside the Default Judgment.
(D) THE DEFENDANTS SUMMONS TO SET ASIDE DEFAULT JUDGMENT
(1) The Defendant's Summons to set aside the Default Judgment is supported by an Affidavit sworn by (Ms.) "Florence Kumar", a Law Clerk employed by the Defendant's Solicitor's Firm, which is substantially as follows;
Para 1. I am a Law Clerk in Lateef & Lateef Lawyers, Solicitors for the
Defendant and as such am duly authorized by the Defendant to swear this Affidavit on its behalf.
2. I depose to the facts herein as within my own knowledge and that acquired by me in the course of my duties save and except where stated to be on information and belief and where so stated, I verily believe to be true.
3. The Plaintiff's Writ of Summons and Statement of Claim were filed herein on 14 August 2014.
4. An Acknowledgement of Service was duly filed by our firm on behalf of the Defendant on 27 August 2014 stating therein the Defendant's intention to contest the proceedings. Annexed hereto and marked "A" is a copy of the Acknowledgement of Service.
5. On 26 March 2015 Mr Samuel K.Ram, the Principal of the Plaintiff's Solicitor's firm phone our Ms B Narayan informing that their firm was in the process of filing enforcement proceedings through a FIFA since they had obtained a Judgment by Default since the Defendant's Statement of Defence was not filed.
6. That upon making her enquiries to locate our file, it become apparent to our Ms B Narayan that this unfortunate turn of events was a result of a former lawyer, Ms Ema Lagilevu employed by our firm neglecting to file the Defendant's Statement of Defence. Ms Lagilevu (who ended her contract of employment with our firm in February 2015) has the personal care and carriage of this matter. Annexed hereto and marked "B" is a copy of an email correspondence by our Ms B Narayan to Mr S K Ram in this respect.
7. That unfortunately, Ms Lagilevu neither took appropriate steps to file a Statement of Defence to protect the Defendant's best interests and intention to defend the action nor did she attend to a proper handover of her files to the Partners of the firm and our file in this matter was only located when our Ms B Narayan searched for the same upon the said phone call by Mr S K Ram.
8. The delay in applying to set aside the Judgment by Default in unfortunate but is not intentional since our firm's file in this matter was in the custody of Ms Ema Lagilevu and whilst she has supposedly handed over all the files she had carriage of together with a Report on those files to the Partners of firm, the file in this matter was neither included in her Report of files for handover nor the file itself handed over and brought to the attention of the Partners or other lawyers of our firm to takeover.
9. That the Plaintiff's solicitors were however put on notice and were aware of the Defendant's intention to vigorously defend the Plaintiff's claim through our firm. Annexed hereto and collectively marked "C" are copies of the several correspondence that transpired between the Solicitors of both the parties prior to this action being filed by the Plaintiff's Solicitors. I am advised by our Ms B Narayan and verily believe the advice to be true that these correspondence are self-explanatory to show that the Defendant took active steps from the commencement to defend the Plaintiff's claim and paragraphs numbered 1 to 8 of the letter dated 12 February 2014 and paragraphs numbered 1 to 5 of the letter dated 25 April 2014 written by our firm to the Plaintiff's Solicitors show that the Defendant has a good defence on the merits of the case.
10. Further, no warning was provided by the Plaintiff's Solicitors prior to proceedings to enter a Judgment by Default which I am advised by our Ms B Narayan and verily believe to be true would have been the prudent course to take by the Plaintiff's Solicitors especially when the Plaintiff's Solicitors were aware that the matter was being vigorously defended from the outset by the Defendant through Solicitors.
11. However, I am further advised by our Ms B Narayan and verily believe that Mr S K Ram has advised our Ms B Narayan that in light of the circumstances as aforesaid, his firm will consent to this application to set aside the Judgment by Default and will also hold onto the execution of the Judgment by Default.
12. I therefore verily believe that the Defendants have a good defence on the merits of this case and should be allowed an opportunity to defend this action unconditionally.
13. For the reasons aforesaid, I pray for the Orders sought in the Summons filed herein.
(2) The Plaintiff filed an Affidavit in Opposition sworn byMr."Manish Patel", the Managing Director of the Plaintiff's Company which is substantially as follows;
Para 1. I am the Managing Director of the Plaintiff Company and I am.
duly authorized to make this affidavit.
2. I was also personally involved in the transaction complained of in these proceedings and as such the contents of this affidavit are within my personal knowledge.
3. The Affidavit of Florence Kumar sworn on 2nd April 2015 (referred to as "Affidavit of Florence Kumar") has been read by me and I have received advice on its contents from the solicitors for the Plaintiff Company.
4. I cannot comment on the internal issues that the law firm representing the Defendant has faced. My lawyers have advised me that they made a courtesy call to the Solicitors for the Defendant. This call did not mean that the judgment entered in my favour was not properly done. The call was simply made to save time and costs.
5. I am aware of the correspondence referred to in the Affidavit. However, my lawyers advise me and I believe that if the Defendants wanted to "vigorously" defend the claim, then they would have filed a Statement of Defence.
6. While the internal issues within the law firm of the Defendant's lawyers may have existed, there was a responsibility upon the Defendant themselves to follow up with their lawyers. There is no evidence that they did so.
7. I cannot comment on what the prudent course was and am also not sure whether a law clerk working in the firm representing the Defendant can give such an opinion. I am advised that my lawyers will be objecting to the use of paragraph 10 because the deponent is not qualified to give opinion on what a prudent course is amongst lawyers.
8. I also find it surprising that the Defendant can delay a matter simply by saying that they intend to "vigorously" defend a matter.
9. The brief facts are:-
9.1 On or about the 21st of May 2012, the Plaintiff Company agreed to purchase motor vehicle registration number HA820 ("The Vehicle") from the Defendant for a purchase price of $85,000.00.
9.2 It was agreed that the Plaintiff Company would trade in vehicle number FT068 ("Trade-in Vehicle") for a sum of $50,000.00 and pay the balance of $35,000.00 by cash or cheque.
9.3 When the gearbox in the vehicle started giving problems, the vehicle was given to the Defendant for servicing. They retained the vehicle and claimed money owed. They also punctured the tyres.
10. The Defendant has acted unreasonably and continues to do so. I say this on the following basis:-
10.1 The local purchase order issued by the Plaintiff dated 21st of November 2012 very clearly establishes that a trade-in value for vehicle number FT068 has been agreed to. A colour copy of the carbon copy of the order is exhibited hereto and marked with the letter "MP-1". The original of this was sent to the Defendant.
10.2 The Defendant had sent our lawyers a copy of an LPO which they claim does not have the words "Trade in FT068 $50,000" written on it. A copy of that LPO is exhibited hereto and marked with the letter "MP-2". The lawyers for the Plaintiff Company have requested the original of this but the Defendant was unable to provide this.
10.3 A delivery docket signed on behalf of the Defendant by Shailesh showing that a vehicle number FT068 has been delivered to the Defendant is exhibited hereto and marked with the letter "MP-3".
10.4 Invoice number 8555 dated 8th December 2012, which is exhibited hereto and marked with the letter "MP-4" shows that the trade-in vehicle is released to the Defendant upon an agreed value of $50,000.00
10.5 By a letter dated 5th August 2013 the Defendant confirmed that they have received a cheque for $35,000.00 and that the balance of $50,000.00 will be paid after the trade-in vehicle has been sold. Exhibited hereto and marked with the letter "MP-5" is a copy of the said letter.
10.6 Sometime on or about 14th December 2013, the vehicle started having mechanical problems with its gearbox. I handed the vehicle over to the Defendant to carry out repairs.
10.7 On 21st December 2013 I attended to the Defendant's premises to check on the status of the repair to the vehicle. The Defendant's staffs were having a party and could not tell me.
10.8 On 24th of December 2013, I was informed by the staff of the Defendant that the vehicle would not be released because a sum of $50,000.00 remained due and owing. They also said that they had "immobilized" the vehicle by puncturing two of its tyres.
10.9 On or about 7th January 2014, the Defendant had resolved the matter with me and had informed me that the vehicle would be released to me by 11th of January 2014.
10.10 On 15th January 2014, the national Manager of the Defendant, Jagdish Chand, sent me an email saying that any dealing in relation to the trade-in vehicle was between Shailesh Goundar and the Plaintiff Company. Exhibited hereto and marked with the "MP-6" is a copy of the said email. The Plaintiff Company did not have any personal dealings with Mr. Shailesh Goundar. The vehicle was owned by the Defendant and subsequently transferred to the Plaintiff Company. The trade-in vehicle was delivered to the Defendant and not
Mr. Shailesh Goundar.
In addition, Mr Shailesh Goundar was never the owner of the vehicle and as such it was difficult to understand how the Defendant claimed the dealing was between the Plaintiff Company and him.
10.11 Thereafter, I instructed lawyers and a notice was sent on behalf of the Plaintiff Company. The notice and replies are exhibited to the Affidavit of Florence Kumar.
10.12 Currently the vehicle and the trade-in vehicle are in possession of the Defendant. The condition and value of both have deteriorated over the last year and a half.
11. On the basis of the above, I do not believe the Defendants have any defence of the merits.
12. The Defendants claim that we have consented to setting aside Judgment is also false. My lawyers advised me that a courtesy call was made because execution would involve seizure of the assets of the Defendant. There was no promise ever made by the Plaintiff's lawyers that an application for setting aside would be consented to. It was very clearly communicated that any consent to set aside judgment will be subject to instructions from the Plaintiff Company. I have been advised of the following:-
12.1 After Mr. Samuel Ram spoke to the Solicitors for the Defendant, execution on the judgment sum was held.
12.2 The solicitors for the Defendant held the view that when Mr. Ram consented to stay of execution he had also consented to set aside the judgment entered by default. Exhibited hereto and marked with the letter "MP-7" is a copy of email from Ms. Bhavna Narayan to Samuel K Ram sent at 6.05 pm on 12th May 2015.
12.3 At about 6.26pm Mr. Ram sent an email confirming that there was no consent communicated for setting aside of Judgment by Default. Exhibited hereto and marked with the letter "MP-8" is a copy of email from S.K.Ram to Ms. Bhavna Narayan.
12.4 The above email was acknowledged by Ms Narayan at about 6.57am. Exhibited hereto and marked with the letter "MP-9" is a copy of email from Ms. Bhavna Narayan to Samuel K.Ram.
13. The Plaintiff Company has not given any instructions to consent to setting aside of the Judgment. This is because the Plaintiff Company is of the view that the Defendant does not have a defence.
14. The Defendant Company is simply delaying the matter when they have no defence to the claim filed on behalf of the Plaintiff Company.
15. The Plaintiff Company has been billed $4,861.21 so far for all the work done up to the stage of obtaining judgment and proceeding with execution. In addition, we have been advised that a sum of $2,500.00 plus VAT plus disbursements will be incurred in attending to this application for setting aside Default Judgment. In total, the Plaintiff Company is looking at legal costs in the sum of approximately $7,361.21. Exhibited hereto and marked with the letter "MP-10" are copies of bills issued to the Plaintiff Company.
(3) The Defendant filed an Affidavit in Reply sworn by (Ms.) "Florence Kumar" which is substantially as follows; (so far as relevant)
Para 4. I can neither confirm nor deny paragraphs 1, 2 and 3 of the Plaintiff's Affidavit as the content therein is not within my knowledge.
5. In response to paragraphs 4 and 5 of the Plaintiff's Affidavit, I say that my Affidavit filed on 8/4/15 outlines the reasons due to which no Statement of Defence was filed by the Defendant and the facts deposed therein show that the Defendant's Solicitors did not intentionally fail to defend the action and that had Ms Ema Lagilevu, the Defendant's Solicitor in the firm who was personally in carriage of this matter, done a handover of this file upon her resignation, the Defendant's Solicitors firm would have been aware of this matter and all necessary action would have been taken to promptly progress the matter and file a Statement of Defence.
6. I am further advised by the Defendant that the Defendant has at all times and for all intents and purposes vigorously defended the Plaintiff's claim and this is made clear from the Acknowledgment of Service that was filed by the Defendant on 27/8/14 and from all the correspondence exchanged between the Plaintiff and the Defendant and/or their Solicitors. Copies of correspondence between the parties have been annexed and marked "C" in my Affidavit filed on 8/4/15 showing that the Defendant has t all times defended the Plaintiff's claim from the outset when the Plaintiff's Demand notice was sent to the Defendant and the correspondence will further show that the Plaintiff and its Solicitors were fully aware that the Defendant disputed the Plaintiff's claim and that it will vigorously defend the Plaintiff's action.
7. In response to paragraph 6 of the Plaintiff's Affidavit, I say that the Defendant had instructed Solicitors to handle this matter on its behalf and in the normal course of events, there was no need for the Defendant to follow up with its Solicitors on the progress of this matter at the preliminary stages and for the reasons stated in my Affidavit filed on 8/4/15, the Defendant's Solicitors would have progressed this matter and taken all necessary actions had this file been handed over to the Partners of the firm by Ms Ema Lagilevu at the concluding period of her resignation.
8. In response to paragraph 7 of the Plaintiff Affidavit, I say that my statement at paragraph 10 of my Affidavit filed on 8/4/15 that it would have been prudent course for the Plaintiff's Solicitors to notify the Defendant's Solicitors that they will proceed to obtain Judgment by Default has been misread or misinterpreted by the Plaintiff's solicitors as I did not state that it was my opinion that it is a prudent course for Solicitors to advise each other prior to obtaining Judgment by Default. At paragraph 10 of my Affidavit I had expressly qualified my statement by stating that that was the advice given to me by our Ms B Narayan and which advice I verily believed to be true. Hence, the Plaintiff's objection to paragraph 10 of my Affidavit is frivolous.
9. In response to paragraph 8 of the Plaintiff's Affidavit, I say that whilst the delay in making the application to set aside the Judgment by Default is unfortunate, the genuine reasons for the delay has been well explained in my Affidavit filed on 8/4/15 and that upon eventually being brought to notice of the status of this proceedings by Mr Samuel K Ram at the stage of commencing enforcement proceedings, the Defendant's Solicitors have been proceeding with this matter and representing the Defendant's interests in a timely manner. In response to the deponent's comment at paragraph 8 of the Plaintiff's Affidavit that "I also find it surprising that the Defendant can delay a matter simply by saying that they intend to "vigorously" defend a matter." I repeat my comments at paragraph 6 hereinabove.
10. I am further advised by my principals that the content deposed in paragraphs 9 and 10 are irrelevant to this application before the Court. The merits of the case cannot simply be decided on the Affidavit evidence provided in paragraphs 9 and 10 as the veracity and authenticity of the evidence and witnesses is yet to be determined by a Court. This matter should be determined on their merits rather than be disposed off on a technicality.
11. In response to paragraph 11 of the Plaintiff's Affidavit, I say that based on the above, the Defendant has a very meritorious defence to the Plaintiff's claim and if Ms Ema Lagilevu had not had oversight concerning the handover of file, then a meritorious Statement of Defence would have been filed.
12. In response to paragraphs 12 and 13 of the Plaintiff's Affidavit, I say that it was not made clear during our Ms B Narayan's telecommunication with Mr Samuel K Ram that he was only consenting to the stay of execution of Judgment and not to the application to set aside the Judgment by Default. However, the same was only clarified later via the emails and replies received between Mr Samuel K Ram and Ms B Narayan as per the emails attached in the Plaintiff's Annexures marked "MP7," "MP8" and "MP9."
13. In response to paragraph 14 of the Plaintiff's Affidavit, I repeat my comments in paragraphs 9, 10 and 12 hereinabove.
14. In response to paragraph 15 of the Plaintiff's Affidavit, I say that the content therein is irrelevant and it does not relate to the merits or to the grounds of the application filed herein.
(E) THE LAW
- (1) Against this factual background, it is necessary to turn to the applicable law and judicial thinking in relation to the principles governing the exercise of the discretion to make the Order the Defendant now seeks.
- (2) Rather than refer in detail to the various authorities, I propose to set out, with important citations, what I take to be the principles of the play.
An application to set aside a default judgment is not the invocation of an appellate jurisdiction but of a specific rule enabling the court to set aside its own orders in certain circumstances where the action has never been heard on the merits.
A Defendant against whom judgment in default has been entered may apply for it to be set aside under Order 13, rule 10 or under Order 19, rule 9 of the High Court Rules.
In situations where the Defendant has failed to file in the first instance, notice of intention to defend, then Order 13 procedure is the correct process.
Order 19 is applicable only where, after notice of intention to defend is filed, no statement of defence had followed.
❖ THE PRINCIPLES OF SETTING ASIDE DEFAULT JUDGMENTS
A default judgment can be obtained regularly or irregularly and both of these forms of judgments can be set aside.
However, there is a distinction between setting aside a default judgment for irregularity and setting aside a judgment which was in fact regular.
Fry L J in Alaby –v- Praetorious [1888] UKLawRpKQB 55; [1888] 20 QBD 764 at 769 succinctly drew the distinction as follows:-
"There is a strong distinction between setting aside a default judgment forirregularity 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 obtainedthrough 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 Fiji Court of Appeal in "Subodh Kumar Mishra v Rent-a-car" (1985) 31 FLR 52. Thus, where an irregular default judgment is entered (for example time for acknowledging service or for serving a defence had not expired by the time the default judgment was entered) which irregularity cannot be cured the Defendant is entitled as of right to have the judgment set aside.
However, where the default judgment had been entered regularly, the Court has a wide discretion and neither Order 13, rule 10 nor Order 19, rule 9 of the High Court Rules impose any restriction in the manner in which the discretion is to be exercised.
The rationale for the unconditional discretion that allows the court to intervene is explained by Lord Atkin in "Evans v Bartlam", 1937 DC 473 as follows;
"The Principle obviously is that unless and until the Court has pronounced a judgment upon the merits or by consent, it is to have the power to revoke the expression of its coercive power where that has only been obtained by a failure to follow any of the rules of procedure."
Lord Atkins pronouncement was endorsed and followed by the Fiji Court of Appeal in The Fiji Sugar Corporation v Mohammed Ismail FLRVol 34, p75.
The Principles applicable for analysis of the merit of an application to set aside a default judgment are well known and settled. The leading authority is Evans –v- Bartlam [1937] 2 All E.R. 646. The following passage from the judgment of Lord Atkin in "Evans vBartlam" is pertinent in the subject of principles on which a court acts where it is sought to set aside a regular Default judgment;
"The primary consideration is whether he has merits to which the Court should pay heed; if merits are shown the court will not prima facie desire to let a judgment pass on which there has been no proper adjudication...........The Court might also have regard to the applicant's explanation why he neglected to appear after being served, though as a rule his fault (if any) in that respect can be sufficiently punished by the terms as to costs or otherwise which the Court in its discretion is empowered by the rule to impose."
The principles of that case have been widely adopted in Fiji, and by the Fiji Court of Appeal in Pankanji Bamola & Anor. –v- Moran Ali Civil Appeal No. 50/90 and Wearsmart Textiles Limited –v- General Machinery Hire & Anor Civil Appeal No. ABU0030/97S.
In "PankajBamola&Anor v Moran Ali" (supra) the Court of Appeal held;
It is not sufficient to show a merely "arguable" defence that would justifyleave to defend under Order 14; it must both have "a real prospect of success" and "carry some degree of conviction." Thus the court must form a provisional view of the probable outcome of the action.
In Russell v Cox 1983 NZLR 654, McCarthy J held;
"In approaching an application to set aside a judgment which complies with therule, the Court is not limited in the considerations to which it may have regard, but three have long been considered of dominant importance. They are;
1. That the defendant has a substantial ground of
defence;
2. That the delay is reasonably explained;
3. That the plaintiff will not suffer irreparable injury if thejudgment is set aside.
A useful summary of the factors to be taken into consideration is to be found under notes to Or. 13 r9/14 of THE SUPREME COURT PRACTICE 1995 Vol. I at p.142 and which is, inter alia, as follows:-
"The purpose of the discretionary power is to avoid the injustice which may be caused if judgment follows automatically on default.The primary consideration in exercising the discretion is whether thedefendant 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.
Therefore the judicially recognised "Tests" may be conveniently listed as follows;
(a) Whether the Defendant has a substantial ground of defence to the claim.
(b) Whether the Defendant has a satisfactory explanation for the default judgment.
(c) The promptness with which the application is made.
(d) Whether the setting aside would cause prejudice to the Plaintiff.
The same legal tests apply under the Magistrate Court rules.
❖ THE DEFENCE ON THE MERITS
The major consideration on an application to set aside a default judgment is whether there is a defence on the merits. The purpose is to avoid injustice. The Defendant is seeking to deprive the claimant of a regular judgment which the claimant has validly obtained in accordance with the rules; this is not something which the court will do lightly.
In Shocked v Goldsmith (1998) 1 All ER 372 at 379ff Legatt LJ said:
"These cases relating to default judgment are authority for the proposition that when considering whether to set aside a default judgment, the question of whether there is a defence on the merits is the dominant feature to be weighed against the applicant's explanation both for the default and any delays, as well as against prejudice to the other party."
The leading case is Evans v Bartlam [1937] 2 All 646, [1937] AC 473. In this case, the defendant had suffered judgment to be entered against him in default of appearance. The Court of Appeal ([1936] 1 KB 202) allowed an appeal from the judge's order setting aside the judgment. But the House of Lords reversed the decision of the Court of Appeal and restored the Judge's order.
Lord Wright ([1937] 2 All ER 646 at 656, [1937] AC 473 at 489) expressed the conclusion;
"In a case like the present, there is a judgment, which, though by default, is a regular judgment, and the applicant must show grounds why the discretion to set aside should be exercised in his favour. The primary consideration is whether he has merits to which the court should pay heed; if merits are shown, the court will not prima facie desire to let a judgment pass on which there has been no proper adjudication... The court might also have regard to the applicant's explanation why he neglected to appear after being served, though as a rule his fault (if any) in that respect can be sufficiently punished by the terms, as to costs, or otherwise, which the court, in its discretion, is empowered by the rule to impose."
In Vann V Awford (1986) 130 SJ 682, the judge declined to set aside a judgment given against the second defendant in default of appearance, and also a judgment given against him when damages were assessed in his absence. The Defendant had lied when he said on oath that he had no knowledge of the proceedings. On appeal Dillon LJ considered that, despite the prejudice to the plaintiffs, as there were ample arguable defences the award should be set aside and there should be a fresh hearing. He added: "Even for lying and attempting to deceive the court, a judgment for £53,000 plus is an excessive penalty if there are arguable defences on the merits."
This case was followed two weeks later by The Saudi Eagle [1986] 2 Lloyd's Rep 221. After reviewing Evans v Bartlam and Vann v Awford, Sir Roger Ormrod came to the conclusion that the defendants in the case before the court had failed to show that their defence enjoyed a real prospect of success.
These cases relating to default judgments are authority for the proposition that when considering whether to set aside a default judgment, the question of whether there is a defence on the merits is the dominant feature to be weighed against the applicant's explanation both for the default and for any delay, as well as against prejudice to the other party.
❖ THE YARDSTICK THAT HAS TO BE APPLIED IN DETERMINING THE MERITS OF THE DEFENCE
The Defendant must have a case with a real prospect of success, and it is not enough to show a merely arguable defence. (Alpine Bulk Transport Company v Saudi Eagle Shipping Company, 1986 2 Lloyds Report, P 221).
It must both have "a real prospect of success" and "carry some decree of conviction". Thus the court must form a provisional view of the probable outcome of the action. Unless potentially credible affidavit evidence demonstrates a real likelihood that a Defendant will succeed on fact, no real prospect of success is shown and relief should be refused. (Wearsmart Textiles Ltd v General Machinery Hire Ltd, (1998) FJCA 26.)
A person, who holds a regular judgment even a default judgment, has something of value, and in order to avoid injustice he should not be deprived of it without good reason. Something more than merely arguable case is needed to tip the balance of justice to set the judgment aside. (Moore-Bick J in International Finance Corporation, (2001) CLC 1361).
The real prospect of success means that the prospects must be better than merely arguable. The word "real" directs the court to the need to see whether there is a realistic as opposed to a fanciful prospect of success. It saves expense, achieves expedition, avoids the courts resources being used up in cases where that serves no purpose and is in the interest of justice.
There is no room for speculative defences and potentially credible affidavit evidence must demonstrate a real likelihood that a defendant will succeed. Otherwise no real prospect of success is shown and relief should be refused (Allen v Taylor) [1992] PLQR 255)
The test was considered in detail in Swain v Hilman (2001) (1), All E.R. 91 and the court confirmed that;
"The test is the same as the test for summary judgment. The only significant difference is that in a summary judgment application the burden of proof rests on the claimant to show that the defendant has no real prospect of success whereas in an application to set aside a default judgment it is for the defendant to show that his defence has a real prospect of success.
❖ DELAY
An application to set aside default judgment must be made "promptly" and without "delay".
In "Pankaj Bamolc and Another v Moran Ali" FCA 50/1999, a party seeking to set aside an Order had delayed for nearly 08 months. The Court took the view that no adequate explanation had been provided for that and concluded that the application should be refused because it had not been made promptly and without delay.
Promptness will always be a factor of considerable significance and, if there has been a marked failure to make the application promptly, a court may well be justified in refusing relief, notwithstanding the possibility that the Defendant may well succeed at the trial.
Whether or not there is a defence on the merits may be, the dominant feature to be considered but that does not mean that it cannot be swamped by other features such as unexplained delay in bringing the application to set aside the judgment.
Although the fact that damages have been assessed and a final judgment entered does not deprive the court of jurisdiction to set aside a default judgment; it is highly relevant to the exercise of discretion. It is an aspect of, but separate from, the question of delay. The Saudi Eagle case(supra) is clear authority for the proposition that an application to set aside a default judgment can be made notwithstanding that final judgment has been entered.
In Alpine Bulk Transport Co. Inc v Saudi Eagle Shipping Co. Inc (The Saudi Eagle) [1986] 2 Lloyd's Repthe defendants, believing that they had no assets, deliberately allowed an interlocutory judgment for damages to be assessed to be entered against them by default, and only after damages had been assessed and final judgment entered, realising that they had given security, applied initially to the judge and then on appeal to the Court of Appeal, unsuccessfully at both hearings, to set aside the judgment and for leave to defend. The application was refused on the merits; but it was not suggested that the judge would not have had jurisdiction to set aside the judgment had it been appropriate to do so. Therefore, it cannot be said that a judgment (by default) for damages to be assessed is spent once damages are assessed; it remains the source of the plaintiff's right to damages. Nor can it be said that in such a case the interlocutory judgment is overtaken or superseded by the final judgment for a liquidated sum; it would be more accurate to say that it is completed and made effective by the assessment.
It cannot be safely assumed in every case that any prejudice to the plaintiff can be met by putting the defendant on terms to pay the costs thrown away by the assessment hearing. There can be no rigid rule either way; it depends on the facts of the particular case.
❖ PROCEDURE
An application to set aside a default judgment which has not been entered wrongly must be supported by evidence. Commonly, a draft defence is attached to the affidavit in support of the application.
A draft defence is not necessary, what is required is the affidavit of merits. (The Fiji Sugar Corporation Ltd. v Mohammed Civil Appeal No. 28/87.)
If the Defendant does not have an affidavit of merits, no setting aside order sought to be granted except for some very sufficient reason. (Wearsmart Textiles Ltd v General Machinery Hire Ltd, (1998) FJCA 26.)
In Wearsmart Textiles Ltd v General Machinery Hire Ltd [1998] FJCA 26; Abu0030u.97s (29 May 1998) the Fiji Court of Appeal cited the following passage from the Supreme Court Practice 1997 (Volume 1) at p.143.
"Regular judgment – if the judgment is regular, then it is an inflexible rule that there must be an affidavit of merits, i.e. an affidavit stating facts showing a defence on the merits (Farden v. Richter [1889] UKLawRpKQB 79; (1889) 23 Q.B.D. 124. "At any rate where such an application is not thus supported, it ought not to be granted except for some very sufficient reason." per Huddleston, B., ibid. p.129, approving Hopton v. Robertson [1884] W.N. 77, reprinted 23 Q.B.D. p. 126 n.; and see Richardson v. Howell (1883) 8 T.L.R. 445; and Watt v Barnett [1878] UKLawRpKQB 21; (1878) 3 Q.B.D. 183, p.363).
(My emphasis)
"it is an (almost) inflexible rule that there must be an affidavit of merit i.e. and affidavit stating facts showing a defence on the merits (FARDEN v RICHTER [1889] UKLawRpKQB 79; (1989) 23 Q.B.D. 124)" The Supreme Court Practice 1993 Or 13 r.9 p.137).
"At any rate where such an application is not thus supported, it ought not to be granted except for some very sufficient reason" HUDDLESTON, Bin FARDEN ibid p.129).
❖ SETTING ASIDE ON CONDITIONS
In the exercise of Court's discretion, the court may attach conditions to an order to set aside judgment. In some cases the defaulting defendant will be ordered to pay the claimant's costs thrown away. In appropriate cases, the court may also require the defendant to pay money into court to await the final disposal of the claim. Such a condition is commonly imposed where,
1. The defendant has satisfied the court that it has a defence with a real prospect of success.
2. The Defendant has an explanation why he neglected to appear after being served.
3. The truth of which is indeed denied by the Plaintiff.
4. The court seeks no reason why the Defendant should be disbelieved in what appears to be a mere conflict on affidavits.
The conditions imposed on setting aside a default judgment are not intended to punish the defendant but to ensure that justice is achieved between the parties (VIJAY PRASAD v DAYA RAM CIV APP 61/90 FCA; SUBODH KUMAR MISHRA s/o Ramendra Mishra v CAR RENTALS (PACIFIC) LTD CIV APP 35/85 FCA). The said judgments do not lay down any basis upon which the discretion is to be exercised.
In GARDNER v JAY (1885) 29 Ch.D 52 at p.58 BOWEN L.J. said on this aspect that:
"... when a tribunal is invested by Act of Parliament or by Rules with a discretion, without any indication in the Act or Rules of the grounds upon which the discretion is to be exercised, it is a mistake to lay down any rules with a view to indicating the particular grooves in which the discretion should run, for if the Actor the Rules did not fetter the discretion of the Judge why should the Court do so?"
(F) ANALYSIS
(1) Before passing to the substance of the application, let me record that the Counsel for the Defendant in her written submissions has done a fairly exhaustive study of the judicial decisions and other authorities which she considered to be applicable.
I interpose to mention that I have given my mind to the oral submissions made by the Counsel for both parties as well as to the written submissions and the judicial authorities referred to therein.
(2) At the oral hearing of the matter, the Defendant sought to read and rely on the following Affidavits;
* Affidavit in Support sworn by (Ms) Florence Kumar (A Law
Clerk employed by the Defendant's Solicitor's Firm).
* Affidavit in reply sworn by (Ms) Florence Kumar
(3) At the hearing in this Court, the Plaintiff (Respondent to the application) objected to the aforesaid Affidavits on the following grounds;
* The Defendant's Summons to set aside the Default Judgment is a contested hearing and therefore it is not appropriate for a Law Clerk to depose on behalf of the Defendant.
* The Affidavits are in breach of Section 40 of the Companies Act (Cap 247) as they produced no authority or resolution from the Defendant Company authorizing the deponent to swear the Affidavits on behalf of the Defendant Company.
(4) Before I pass to consideration of the counter submissions of the Defendant, let me make this preliminary comment.
I note that the Plaintiff has failed to file any application to set aside the Defendant's Affidavit in support for "irregularity" under Order 2, rule (2) of the High Court Rules and has taken further steps in the proceedings without raising the issue of irregularity by filing an Affidavit in Opposition.
I am at a substantial loss to understand why the Plaintiff chose to offer response to the Defendant's Affidavit in support if there is any defect or irregularity in the Affidavit.
If the Plaintiff has considered that the Defendant's Affidavit in support is irregular and defective, it could have moved under Order 02, rule (2) of the High Court Rules. The Plaintiff did not do so.
For the sake of completeness, Order 2, rule (2) of the High Court Rules, is reproduced below in full.
Application to set aside for irregularity (O.2, r.2)
2.(1) An application to set aside for irregularity any proceedings, any step taken in any proceedings or any documents, judgment or order therein 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.
(2) An application under this rule may be made by summons or motion and the grounds of objection must be stated in the summons or notice of motion.
(Emphasis Added)
Reading those words in their natural and ordinary sense, it seems to me reasonably plain that, Order 2, rule (2) provides that an application to set aside any proceedings 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. The requirements are cumulative. Since the application in the case before me is not made within a reasonable time, the application will not be allowed.If the Plaintiff had considered that the affidavit in support of the Summons to set aside default Judgment was in an irregularity, it could have moved under Order 2, rule (2)before it took another step. If any proceedings are to be set aside on the ground of an irregularity, Order 2, rule (2) is applicable. An application under this rule may be made by Summons or Motion and the grounds of objection must be stated in the Summons or Notice of Motion. The Plaintiffon its own volition chose not to follow the High Court Rules. I am curious to know as to why the Plaintiff chose not to follow the High Court Rules. It seems to me perfectly plain that the Plaintiff slept on the matter and did not wake up at all from its slumber. It is now too late to raise such an argument even if it had any validity.
Now let me consider what authority there is on this point.
In "Ashwin Prasad v Carpenters (Fiji) Limited", Fiji Court of Appeal decision No; ABU 0004 of 2004S, "Penlington, J A said as follows;
"The affidavit was in substantial compliance with O.41 rr.4 and 5. The Appellant did not raise any objection to the affidavit in his affidavit of 24 December 2003. If he had considered that the affidavit was in an irregularity he could have moved under Order 2 r.2 before he took another step. Instead he did not do so. On 31 December 2003 he filed the statement of defence and the two affidavits referred to previously. It is now too late to raise such an argument even if it had any validity which we think it did not have."
(Emphasis added)
On the strength of the authority in the above case, I hold that the Plaintiff's preliminary point must fail because of the delay involved.
In these circumstances, it will be at best a matter of academic interest only or at worst an exercise in futility to discuss the merits of the Plaintiff's argument relating to the Defendant's Affidavits.
(5) Leave all that aside for a moment and let me proceed to examine the substance of the Defendant's application to set aside the Default judgment bearing all the legal principles mentioned above uppermost in my mind.
(6) The Counsel for the Defendant does not raise any "irregularity" in the entry of the Default Judgment.
The action was instituted by the Plaintiff on 19th August 2014 by way of Writ of Summons and Statement of Claim.
According to the Affidavit of Service filed by the Plaintiff on 20th August 2014, the Writ of Summons and the Statement of Claim was served on the Defendant on 15th August 2014.
On 27th August 2014, the Defendant filed an Acknowledgement of Service.
On 28th September 2014, the Plaintiff having searched and finding that the Defendant had failed to serve the Statement of Defence on the Plaintiff within the prescribed time entered "Interlocutory" Judgment against the Defendant on 18th November 2014.
The cumulative time from service of an Originating process to delivery of a Defence is 28 days. In the case before me, the time for filing of the Defence has expired and the entry of Judgment in Default of Defence entered about one month after time.
In the result, I hold that the Plaintiff's Interlocutory Judgment in Default of Defence was regularly entered.
The Counsel for the Defendant submits that it has bona fide and good defence on the merits of the claim. Moreover, the Counsel submits that the application to set aside the Default Judgment is made on grounds that the Solicitor in carriage of the matter in the Defendant's Solicitors firm did not file a Statement of Defence and the matter was not brought to the attention of the firm itself due to lack of proper handover by the Solicitor in carriage at the time of her resignation.
The Counsel for the Defendant in both her oral and written submissions contended that the Defendant has a bona fide and good defence on the merits of the claim and should be allowed to come in and defend the action.
In adverso, the Plaintiff's Counsel submitted that there is no ground to set aside the Judgment which had been regularly obtained. Moreover, the Counsel submitted thatthe Defendant has failed to show that it has a meritorious defence as it has failed to annex a proposed Statement of Defence and the application to set aside was not made promptly.
(7) Counter to this submissions the Defendant submitted that there is no underlying requirement that a defence on the merits must be shown by proposed Statement of Defence.
In support of this proposition, the Counsel for the Defendant cited "Dutt v Dutt, (2015) FJHC 459.
I have given my mind to the rule of law enunciated in the aforementioned judicial decision.
I concur with the Counsel for the Defendant.
It is true that a draft Statement of Defence is not necessary, what is required is an Affidavit sworn by the Defendantdeposing to the proposed defence.
What authority there is on this point?
See; * Wearsmart Textiles Ltd v General Machinery Hire Ltd(1998)
FJCA 26
* Farden v Ritcher [1889] UKLawRpKQB 79; (1889) 23 QBD 124
* Hopten v Robertson (884) W.N.77
* Richardson v Howell (1883) 8 T.L.R. 445
* Watt v Barnett [1878] UKLawRpKQB 21; (1878) 3 Q.B.D. 183
(8) As I have mentioned earlier, the major consideration in an application to set aside a Default judgment is whether there is a defence on the merits. It is a dominant feature to be weighed against the Defendant's explanation both for the default and the delay as well as against prejudice to the Plaintiff. The purpose is to avoid injustice. A default judgment binds the Defendant just as much as if it had been entered after a contested trial. The Defendant is seeking to deprive the Plaintiff of a regular Judgment which the Plaintiff has validly obtained in accordance with the rules; this is not something which the Court will do lightly.
What concerns me is whether the Defendant has a defence on the merits? Whether the Defendant should be allowed to come in and defend the action?
The Court is here to administer justice. It is essential to bear in mind that the concept of justice is not confined to the interests of particular litigants; it embraces and extends to the protection of the public weal. The crucial point is that the Court should arrive at a just result.
(9) Before I proceed to examine whether the Defendant has a defence on the merits, let me consider what is the rule of conduct of a Defendant in an application such as this?
The Supreme Court Practice, 1999, Volume 1, states at Page 157 ;
"At any rate where such an application is not thus supported, it ought not to be granted except for some very sufficient reason," per Huddleston, B.,ibd, p129 approving Hopton v. Robertson [1884] W.N. 77, reprinted 23 Q.B.D. 126 n; and see Richardson v Howell (1883) 8 T.L.R. 445; and Watt v Barnett (1878) 2 Q.B.D. 183 at 363).
For the purpose of setting aside a default judgment, the Defendant must show that he has a meritorious defence. For the meaning of this expression see Alpine Bulk Transport Co. Inc. v Saudi Eagle Shipping Co. Inc.; The Saudi Eagle [1986] 2 Lloyd's Rep. 221 GA and note 13/9/18, "Discretionary powers of the court" below.
On the application to set aside a default judgment the major consideration is whether the defendant has disclosed a defence on the merits, and this transcends any reasons given by him for the delay in making the application even if the explanation given by him is false (Vann v. Awford (1986) 83 L.S..Gaz 1725; (1986) The Times, April 23 CA). The fact that he has told lies in seeking to explain the delay, however, may affect his credibility, and may therefore be relevant to the credibility of his defence and the way in which the Court should exercise its discretion (see para 13/9/18. below).
In "Wearsmart Textiles Ltd v General Machinery Hire Ltd", (1988) FJCA 26, the Fiji Court of Appeal held;
"The learned trial Judge had totally failed to consider whether the 2nd Respondent had any defence on the merits. And yet as we have already noted under the heading Principles on which Courts Act, it is an (almost) inflexible rule that there must be an Affidavit of merits, i.e. an affidavit stating facts showing defence on the merits.
Dealing with the discretionary powers of the Courts under English Order 13 r.9 sub-rule 14 the Supreme Court Practice 1997 (the White Book) (Vo. 1 p145) cites the Court of Appeal's judgment in Alpine Bulk Transport Co. Inc v Saudi Eagle Shipping Co. Inc. The Saudi Eagle [1986] 2 Lloyd's Rep. 221 as authority for following prepositions:
"(a) It is not sufficient to show a merely "arguable" defence that would justify leave to defend under Order 14; it must both have "a real prospect of success" and "carry some degree of conviction". Thus the Court must form a provisional view of the probable outcome of the action.
(b) If proceedings are deliberately ignored this conduct, although not amounting to an estoppels at law, must be considered "in justice" before exercising the Court's discretion to set aside."
Notwithstanding the Court of Appeal's later decision in Allen v Taylor [1992] P.I.Q.R. 255 which purports to dilute the principles emerging from Saudi Eagle, we subscribe to the White Book's preferred view that 'unless potentially credible affidavit evidence demonstrates a real likelihood that a defendant will succeed on fact no "real prospect of success" is shown and relief should be refused."
(Emphasis Added)
(10) The law, as I understand from the aforesaid passage and the judicial decision is this;
* There should be an Affidavit sworn by the Defendant deposing to the proposed defence.
* The Defendant mustprecisely demonstrate that the proposed defence advanced has"a real prospect of success" and"it carries some degree of conviction".
* A merely "arguable defence" is not sufficient. The arguable defence must carry some degree of conviction.
* To arrive at a reasoned assessment of the justice of the case, the Court must form a provisional view of the probable outcome of setting aside the Default judgment.
(11) Now let me return to the present case to consider the issue of whether the Defendant has a defence on the merits bearing those legal principles uppermost in my mind.
I traversed the Affidavit sworn in these proceedings on behalf of the Defendant by (Ms) Florence Kumar, the Law Clerk of the Defendant's Solicitors firm. Reference is made to paragraph (09) of the Affidavit of (Ms) Florence Kumar.
Para 9. That the Plaintiff's solicitors were however put on notice and
were aware of the Defendant's intention to vigorously defend the Plaintiff's claim through our firm. Annexed hereto and collectively marked "C" are copies of the several correspondence that transpired between the Solicitors of both the parties prior to this action being filed by the Plaintiff's Solicitors. I am advised by our Ms B Narayan and verily believe the advice to be true that these correspondence are self-explanatory to show that the Defendant took active steps from the commencement to defend the Plaintiff's claim and paragraphs numbered 1 to 8 of the letter dated 12 February 2014 and paragraphs numbered 1 to 5 of the letter dated 25 April 2014 written by our firm to the Plaintiff's Solicitors show that the Defendant has a good defence on the merits of the case.
It seems to me perfectly plain that, (Ms) Florence Kumar, being a Law Clerk of the Defendant's Solicitor's firm merely highlights various correspondences exchanged between the Plaintiff's Solicitors and the Defendant's solicitors relating to each party's respective position with regard to the claim.
It is worth remarking that there is no Statement made on Oath by the Defendant (in the nature of an Affidavit) deposingto "the proposed Defence" and precisely demonstrating that the proposed defence advanced has a "real prospect of success" and it "carriessome degree of conviction".
Thus the Court is unable to form a provisional view of the probable outcome of setting aside the Default judgment to arrive at a reasoned assessment of the justice of the case.
In "Smith v Dubbins" 37 L.T. (N.S) 777, the Master of the Rolls stated that it was "an inflexible rule" that a regular judgment properly entered could not be set aside without an Affidavit of merits.
(12) No attempt has been made by the Defendant who is asking the court to exercise its discretion in its favour, to swear an Affidavit deposing to the"proposed Defence" and precisely demonstrating that the proposed defence advanced has a "real prospect of success" and it "carries some degree of conviction".
I must confess that this does not leave a good impression.
The conduct of the Defendant in this respect and in deliberately deciding not to swear an Affidavit (in the nature of pleadings) is a matter to be taken into account in assessing the justice of the case.
I must confess that I am not persuaded by the Affidavit of the Law Clerk of the Defendant's Law firm highlighting various correspondences exchanged between the Plaintiff's Solicitors and the Defendant's Solicitors relating to each party's respective position with regard to the claim. Thus, I give it no weight whatsoever.
(13) In these circumstances, I am justified in saying that it would be highly ridiculous for me to penalise the Plaintiff for this unsatisfactory episode by setting the judgment aside and making it run up costs by making the Plaintiff starts again.
(14) In the absence of an Affidavit sworn by the Defendant deposing to the"proposed Defence" and precisely demonstrating that the proposed defence advanced has a "real prospect of success" and it "carries some degree of conviction",i am justified in reaching the conclusion that the judgment against the Defendant should not be set aside. I remind myself that aperson, who holds a regular judgment even a Default judgment, has something of value, and in order to avoid injustice he should not be deprived of it without good reasons. In the case before me, the Defendant is seeking to deprive the Plaintiff of a regular judgment which the Plaintiff has validly obtained in accordance with the High Court Rules; this is not something which the Court will do lightly.
I cannot help thinking that the object of the Defendant's application to set aside the judgment is to set up some mere technical case.
I could see nothing to change my opinion even on the basis of exhaustive work contained in "A practical approach to Civil Procedure", by "Stuart Sime", 13th Edition.
In these circumstances, it will be at best a matter of academic interest only or at worst an exercise in futility to discuss the Defendant's explanation for the default and the delay as well as against prejudice to the Plaintiff.
Essentially that is all I have to say!!
(15) Before I take leave of the matter, let me make this comment.As i mentioned earlier, in Alpine Bulk Transport Co. Inc v Saudi Eagle Shipping Co Inc [1986] 2 Lloyd's Rep 221, it was held that in order to set aside the default judgment, the proposed defence advanced "must carry some degree of conviction" and this principle was further advanced in judgment of Moore-Bick J in International Finance Corporation Utexafrica S.p.r.1 (2001) CLC 1361 at p 1363. It was held;
"A person who holds a regular judgment even a default judgment, has something of value, and in order to avoid injustice he should not be deprived of it without good reason. Something more than merely arguable case is needed to tip the balance of justice to set the judgment aside. In my view, therefore Mr. Howard is right in saying the expression "realistic prospect of success" in this context means a case which carries a real conviction."
(Emphasis added)
In E.D. and F.Man Liquid Products Ltd v Patel (2003) EWCA Civ 472, [2003] CPLR 384, the Court of Appeal confirmed that the test is the same as the test for Summary judgment. The only significant difference is that in a summary judgment application the burden of proof rests on the claimant to show that the defendant has no real prospect of success whereas in an application to set aside a default judgment it is for the defendant to show that his defence has a real prospect of success. For this reason it might be harder for a defendant to succeed in an application to set aside than to resist an application for Summary judgment. The test was considered in detail in Swain v Hillman [2001] 1 All ER 91.
On the strength of the rule of law enunciated in the above mentioned judicial decisions, I venture to say beyond a per adventure that the Affidavit of the Law Clerk of the Defendant's Solicitor's firm highlighting various correspondences exchanged between the Plaintiff's Solicitors and the Defendant's Solicitors' relating to each party's respective position with regard to the claim is not sufficient at all for this Court to form a provisional view of the probable outcome of setting aside the judgmentin order to arrive at a reasoned assessment of justice.
(G) FINAL ORDERS
(1) The Defendant's Summons to set aside the Interlocutory Judgment is dismissed.
(2) The Defendant is ordered to pay costs of $1000.00 (summarily assessed) to the Plaintiff which is to be paid within 14 days from the date thereof.
.......................................
Jude Nanayakkara
Master of the High Court
At Lautoka
11th December 2015
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