Nand v Chute [1991] FJHC 45; Hbc0139d.91s (26 July 1991)

IN THE HIGH COURT OF FIJI
At Suva
Civil Jurisdiction

Civil Action No. 139 of 1991

Between:

SHARDA NAND
s/o Mani Ram
Plaintiff

and

IAN RODERICK CAMPBELL CHUTE
Defendant

Mr. J. Singh for the Plaintiff
Mr. D. Jamnadas for the Defendant

RULING

In this application the defendant seeks to set aside a default judgment sealed by the plaintiff's solicitors on the 4th of April 1991 for a sum of $27,060 together with interest calculated up to the date of payment.

The action was first begun by a Writ of Summons and Statement of Claim filed on the 28th of February 1991 and served on the defendant on the 5th of March 1991. By an Acknowledgment of Service dated the 12th of March 1991 the defendant's solicitors clearly advised that the action would be defended. It further advised that the defendant intended: "... to apply for a stay of execution against any judgment entered by the plaintiff."

On the 3rd of April barely 3 weeks after the acknowledgment of service was filed the plaintiff's solicitors searched for a defence and there being none entered by the defendant default judgment was obtained.

A further 3 weeks expired before the defendant's solicitor filed this present application together with an affidavit annexing various correspondence in the matter and a proposed Statement of Defence and Counterclaim.

In reply the plaintiff has sworn and filed an affidavit dated the 16th of May in which he has attempted to 'answer and/or explain' each paragraph of the defendant solicitor's affidavit and proposed Statement of Defence and Counterclaim.

From the affidavits it is clear that this action is based on 2 agreements entered into between the parties in 1988 and 1989 in which the plaintiff was employed in the defendant's company initially as 'general manager' and then as 'management consultant' on various terms and conditions.

These agreements dated the 28th of March 1988 and 26th of March 1989 respectively, form Annexures B'I' and B'II' to the plaintiff's affidavits of the 16th of May.

So far as relevant for present purposes Clause 6 of the 'principal agreement'- B'I' (to adopt the plaintiff's expression) provided for a fixed monthly payment to the plaintiff of $2,255 per month by way of remuneration. Then Clause 6 of the 'supplementary agreement'- B'II' (again to adopt the plaintiff's expression) added a 'termination clause' which provided that the agreement between the parties:

"..... may be terminated,

(a) at any time by Chute giving notice to Nand and paying in full the balance of the remuneration due under the said agreement and the debt due to Flour Mills (South Pacific) Limited standing at $8,017 as at this day .... OR

(b) at any time by mutual consent on terms and conditions mutually acceptable and agreed to in writing. "

It is noteworthy that there was no similar (or indeed any) 'termination clause' in Agreement B'I' however the plaintiff's claim is based primarily on an alleged breach of the above Clause 6(a), in particular, that aspect of the clause which required payment in full of the balance of remuneration due to the plaintiff under clause 6 of Agreement B'I' upon the defendant giving the plaintiff notice of termination.

Learned Counsel for the plaintiff submitted that Clause 6(a) governed the present circumstances of the case and hence the defendant was contractually obliged to pay the balance of the remuneration due under Agreement B'I'. Counsel boldly argued that Clause 6(a) governed any termination of the agreement between the parties. In particular, the clause envisages both a unilateral termination of the agreement by the defendant and termination by mutual agreement.

Indeed plaintiff's counsel went so far as to suggest that there was no other way in which the agreement could be terminated by the defendant and even where the plaintiff was in breach of the agreement the defendant was contractually obliged under Clause 6(a) to pay the sums enumerated should he wish to terminate the agreement.

Counsel for the defendant not unnaturally disagrees. The Clause counsel submits uses the word "may" and not "shall" and in any event the obligation upon the defendant is " ... to pay in full the balance of the remuneration due ... " (my emphasis). Counsel submits this being an 'employment contract' if the plaintiff is in breach of its terms then remuneration is neither "payable" nor "due" and accordingly there is nothing to be paid to the plaintiff (see: paras 5 and 6 of the proposed Statement of Defence).

To the court learned counsel for the plaintiff was obliged to concede that Clause 6(a) did not appear to cover the situation where the defendant was in breach of the agreement. In the event counsel submitted that whatever the cause and however justified the termination of the plaintiff's employment might be, the defendant had voluntarily contracted to 'pay first and sue later' for breach of contract.

Counsel for the defendant submits however that the plaintiff's appointment was terminated prior to the end of the 2 year period anticipated by Agreement B'I' and in any event the term of the plaintiff's tenure under Agreement B'I' had been superseded by Agreement B'II' which had no specific term of tenure.

In light of the order I propose to make it is inappropriate for me to determine that issue at this stage save to observe that the marked differences of interpretation between the parties gives rise to 'triable issues' upon which viva voce evidence must be taken.

The principle on which the Courts act on an application of this nature 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 been obtained only by a failure to follow any of the rules of procedure."

[per Atkins L.J. in Evans v. Bartlam (1973) 2 All E.R. 646 at 650]

Furthermore in Bula Limited v. Geelong Holdings Limited Suva Civil Action No: 173 of 1977. The present Chief Justice in setting aside the default judgment in that case mentioned with approval:

"... a practice (that) appears to have developed at the bar in this country whereby counsel for one party would as a matter of good conscience give notice to the other side of any intended step to enter judgment by default and calling upon the other side to move in the matter if he desires to defend the action."

(See: para 5 of the defendant's solicitor's affidavit.)

Having carefully considered the various opposing affidavits and mindful of the guiding principle in the exercise of the court's unfettered discretion, I order that the default judgment entered against the defendant on 4th April 1991 be wholly set aside.

By way of further directions I order that the defendant file and serve a Statement of Defence within 14 days of the date hereof and the action to follow its normal course there-after.

The defendant is to pay the plaintiff's costs and disbursements lost as a result of this order.

(D.V. Fatiaki)
JUDGE

At Suva,
26th July, 1991.

HBC0139.91S