IN THE HIGH COURT OF FIJI
(AT SUVA)

CIVIL ACTION NO.7 OF 1993

BETWEEN:

COMTECH INDUSTRIAL HOLDINGS PTE LIMITED
1st Plaintiff

- and -

CARBON INDUSTRIES (FIJI) LIMITED
2nd Plaintiff

- and -

PETER HOWARD
Defendant

M. Narsey for the Plaintiffs
M. Raza for the Defendant

DECISION

This is an Application by the Defendant who seeks to set aside a Judgment entered against him in Default of Defence on 25 March 1993.

The essence of the Plaintiffs' claim against the Defendant (see Amended Statement of Claim filed 26 February 1993) is that the Defendant dishonestly received the sum of F$271,527.15 which was part of a sum of F$579,365 sent by the 1st Plaintiff to a firm of Solicitors in the Cook Islands for the purpose of purchasing the 2nd Defendant.

The matter first came before me on 22 November 1993. In support of his application the Defendant relied on an affidavit filed on 26 April 1993 which exhibited a Draft Defence and Counter-Claim. In paragraph 6 of the affidavit the Defendant says "I strongly deny the Charges made against me" but does not specifically deny receiving any part of the F$579,365. There is however a bare denial in paragraph 7 of the Draft Defence. The essence of the Defence appears to be the claim that the Defendant was not acting for the Plaintiffs at all but for one Garry Donaghue, that it was at Mr. Donaghue's request that the F$579,365 was sent to the Cook Islands and that it was at Mr. Donaghue's request that the Defendant disbursed various sum (the total amount is not clear) now claimed by the Plaintiffs. The Draft Defence was followed by a Counter-Claim which I am unable to understand.

The Defendant's affidavit was answered by Mr. Donaghue in an affidavit filed on 11 August 1993. Mr. Donaghue totally rejects the Defence and in particular denies ever retaining the Defendant to act for him, ever arranging for the funds to be sent to the Cook Islands and ever operating the Cook Islands Trust Account.

The Defendant's affidavit was also answered by Chung Sy Piin, a director of the Plaintiffs in a lengthy affidavit filed on 25 August 1994. Mr. Piin rejects the Defendant's defence and says that the Defendant was retained to act for the Plaintiffs. He avers that the Defendant, acting in concert with Donaghue, attempted to conceal the fact that the 2nd Plaintiff had been purchased for only F$152,000 as opposed to the sum of F$579,000, which Mr. Pin had been advised by the Defendant would be the purchase price. Mr. Piin relates in detail dealings had by him with the Defendant and describes how the Defendant first told him that the price had been reduced for VAT purposes and then asked him to treat the sum received by the Defendant as a long term loan. The offer was refused. The Defendant had frequently been asked to account for the sums which he had received but had failed to do so.

On 22 November I gave a preliminary decision and adjourned the matter for continuation. I indicated that I was concerned that the Draft Defence was not a Defence on the merits (see paragraph 7 in particular RHC O.18 r12(3)) and that the Defendant had not given an account of where the missing funds had gone. I gave leave to the Defendant to file a supplementary affidavit dealing with the points which were of concern to me and indicated that if a satisfactory affidavit was not filed then leave to defend would be refused.

On 20 January 1994 the Defendant duly filed a second affidavit. In my view it is but a small improvement on the material already filed. The Defendant repeats that the funds claimed by the Plaintiffs were disbursed on the instructions of Donaghue. He says that US$103,000 out of the total approximately US$255,000 was paid to the receiver but the location of the balance is not revealed. No written instructions from Donaghue to the Defendant are exhibited.

The question now is whether I am satisfied that the Defendant has advanced a bona fide defence raising triable issues. If so then the Judgement in Default should be set aside, if necessary on terms (see Evans v. Bartlam [1937] AC 473 and Wallersteiner v. Moir [1974] 3 All ER 217).

As I indicated in the first sentence of my interim decision on 22 November 1993 the affidavits disclose very substantial issues of fact not only between the Parties but also the Defendant and Donaghue. These issues tend to support the view that the Defendant should be given leave to defend. On the other hand the Defendant has continued to evade a number of central questions, questions which he is in a simple position to answer. In his written submissions filed on 20 March 1994, Mr. Raza states:

"The Defendant.... has detailed exactly what he has received".

He has not. Neither has he set out the precise circumstances under which the money was disbursed. On my calculations derived from paragraph 4 of the Defendant's affidavit the sum of approximately US147,000 is unaccounted for. The Defendant says:

"The remainder of disbursement (2) and disbursement (3) were paid out at the request of Donaghue".

The questions which remain unanswered almost 18 months after the Judgement was entered in default of defence are to whom? when? why?. What about the balance of disbursement (1)?

It is quite evident from annexure (A) to the Defendant's second affidavit that Donaghue was of the view that having managed to purchase the 2nd Plaintiff on behalf of the 1st Plaintiff for approximately half of what the 1st Plaintiff had expected to pay, he was entitled to the balance. Whether the Defendant shared that view I do not know. But as appears from annexure (L) to the Defendant's first affidavit at some stage F$118,000 was received by the Defendant from Donaghue as part of the whole transaction and being stated to be "a loan to you so you may complete your house renovations etc".

Whether the Defendant was entitled to receive the amounts paid to him I do not know. It seems to me that that question can only be answered having heard the evidence. Where the truth lies as between the Defendant and Donaghue I again do not know. But the matter would have been much more straightforward had the Defendant fairly disclosed what sums he received when and how. As it is, on the papers before me it appears that the Plaintiffs have lost a large sum of money some of which has come into the hands of the Defendant. In view of the substantial conflicts of evidence I am satisfied that there are triable issues and accordingly will give leave to defend but in all the circumstances that leave will be conditional upon payment into Court by the Defendant of the sum of F$118,000 within 14 days.

M.D. SCOTT
JUDGE

3 August, 1994
HBC0007.93S