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Mae v Sanau [2010] SBHC 48; HCSI-CC 388 of 2009 (3 August 2010)

IN THE HIGH COURT OF SOLOMON ISLANDS
Civil Jurisdiction

BETWEEN:

PETER MAE AND JOSEPH MAEWEWE
(representing the Suluoaoa landowners, South Malaita)
Claimants

AND:

ALICK SANAU
(trading as Ramo Holdings)
First Defendant

AND:

SI RESOURCES LIMITED
Second Defendant

Date of Hearing: 25 May 2010
Date of Decision: 3 August 2010

Mr. Tegavota for claimant
Mr. Pitakaka for first and second defendants

DECISION ON APPLICATION
TO SET ASIDE DEFAULT JUDGMENT

Cameron PJ:

1 The defendants apply to set aside a default judgment entered against them jointly and severally on 16 February 2010. The amount of the judgment was $797,844.51, and it was the Acting Registrar of the High Court who entered the judgment.

2 That was followed by an enforcement order made by the Acting Registrar on 3 March 2010, under which it was ordered that Westpac Banking Corporation was to deduct the amount of the judgment sum from the bank account on the second defendant SI Resources Ltd, and pay it to the claimants. Pursuant to that order a deduction from the second defendant's bank account in the sum SBD $129,000 was made on 4 March 2010, and paid to the claimants. This brought the defendants to life, they promptly instructing their current solicitor to apply for a restraining order preventing further deductions. By agreement, the enforcement order has been suspended pending the outcome of this application.

3 A brief history of the claim is that it commenced by an application by the claimant on 7 October 2009, for orders restraining the defendants from continuing logging on land owned by the claimants, and seeking an accounting from the defendants for logs already felled on the land. That application was served on the defendants, along with supporting sworn statement, and Presley Watts of Watts and Associates on 28 October 2009 filed a response on behalf of both the first and second defendants Mr. Watts then filed nothing further on behalf of the defendants, but the application for restraining orders was not pursued to a hearing.

4 Significantly, the category C claim itself had not been served on the defendants as at 3 December. As Watts and Associates had taken no steps in the matter except filing the initial response, the court ordered on 3 December (it seems wrongly noted on the court file as 7 December) that the claim itself be served on the defendants personally. The next day, on 4 December, the claimant Peter Mae purported to serve both the first and second defendants with the claim. In his sworn statement as to service, he described serving both the defendants 'at their office at Panatina Plaza, Honiara'.

5 Then on 22 December 2009 Mr. Etomea of Bets Legal Services filed a notice of change of advocate on behalf of the first defendant, which was to the effect that he was authorised to accept service of documents on behalf of the first defendant. Significantly, the notice of change of advocate also states "The advocate will file Response and Defence once the original claim is served".

6 One may have thought that such a qualification would have alerted the solicitor for the claimants to the fact that there was a problem with the service of the claim on the first defendant, said to have been effected on 4 December 2009. Apparently it did not, for from that point the claimants then concentrated their efforts on endeavouring to obtain a default judgment from the court without any reference back to Mr. Etomea or the defendants. They filed documents in the court pointing out that the 14 day time limit for filing a response to the claim (said to have been served on 4 December) had expired on 17 December. In a further sworn statement from the claimant Peter Mae filed in Court, he quantified the amount of the damages claimed at SBD$797,844.51 (para 7, sworn statement filed 8 January 2010).

7 There was nothing in any of the previous documentation quantifying the claimants' alleged loss. The first time this was quantified by them was in the sworn statement of Peter Mae filed on 8 January 2010. Despite this, that sworn statement was not served on either Mr. Etomea or any of the defendants personally. Neither was the draft default judgment, subsequently granted by the Acting Registrar. It is common ground, then, that none of the documentation pertaining to the application for default judgment was served on the defendants or their lawyers. While there is no requirement in the Rules for service of a default judgment application unless ordered by the court, where there is no quantification in the original claim then not to serve the application which has accompanying material quantifying the claim is prima facie unfair to a defendant.

8 I return to the alleged service of the claim on the first and second defendant's on 4 December 2009. It is common ground that the second defendant's registered office was not and never has been Panatina Plaza, but was in fact at a location on Panatina Ridge. When this was pointed out by the defendants in a sworn statement in support of their application to set aside the default judgment, a further sworn statement by Peter Mae dated 16 March 2010 was filed. In that sworn statement he stated that he in fact had served the claim at the second defendant's office on Panatina Ridge, and that the reference in his earlier sworn statement to Panatina Plaza was as a result of a misunderstanding with his solicitor (who had prepared the sworn statement as to service). This was confirmed by a sworn statement made by the solicitor Mr. Tegavota, and I accept that the documents were left at the second defendant's registered office at Panatina Ridge. Thus I accept that the second defendant was validly served with the claim.

9 However, leaving the documents with Mr. James Wong cannot constitute personal service on the first defendant. I repeat that this was flagged by Mr. Etomea in his notice of change of advocate on behalf of the first defendant filed on 12 December 2009, where he stated: "The advocate will file Response and Defence once the original claim is served". The claimants solicitor paid no heed to that, though. Predictably, the first defendant now denies being served with the claim.

10 Thus I find that the second defendant was served with the claim on 4 December 2009, whereas the first defendant was not. In respect of both defendants, I consider that their was a unfairness in not serving them or their legal representatives with the further substantive sworn statement of Peter Mae filed on 8 January 2010, which quantified for the first time the loss and formed the basis for the default judgment which then followed. I do note that the filing of that document on 8 January 2010 during the court vacation and its non-service (even on Mr. Etomea who filed a notice of change of advocate on 22 December 2009) points to an attempt (successful, at least until now) to go behind the backs of the defendants, and to seize an advantage on a unilateral basis during a Court vacation.

11 I accept from the sworn statements filed on behalf of the defendants that, at least in respect of the amount for which judgment was entered, there is an arguable defence. I also accept that their former solicitors Watts and Associates could have been more diligent in looking after their interests.

12 I set aside the default judgment of 16 February 2010. Thus the enforcement order automatically lapses. I decline to order a refund of the SBD$129,000 paid to the claimants from the second defendant's bank account. I am influenced in so doing by my assessment that the dispute between the parties is really about quantum rather than liability. The fact that the SBD$129,000 was paid will of course be relevant to the issue of what, if any, further amounts may be due to the claimants. I decline to order costs in favour of any party.

BY THE COURT

__________________________
Justice IDR Cameron
Puisne Judge