Prasad v Colonial Mutual Life Assurance Society Ltd [1995] FJHC 17; Hbc0031j.94b (19 January 1995)

IN THE HIGH COURT OF FIJI
AT LABASA
CIVIL JURISDICTION

CIVIL ACTION NO. 31 OF 1994

Between:

VINOD PRASAD
s/o Kampta Prasad
Plaintiff

- and -

THE COLONIAL MUTUAL LIFE ASSURANCE
SOCIETY LIMITED
Defendant

Mr. A. Sen for Original Plaintiff/Respondent
Mr. A. Kohli for Mr. S. Parshotam for Original Defendant/Applicant

JUDGMENT

This is the Defendant's application by Summons dated 9 September 1994 inter alia to set aside a default judgment obtained against it on 18 July 1994 for failing to file a defence in this action.

For the defendant Mr. Mosese Taga, the Customer Benefit Officer swore a comprehensive Affidavit in Support of the Summons setting out the various grounds on which the judgment ought to be set aside.

The defendant had also on 29 November 1994 filed a lengthy Affidavit in Reply to the Respondent's affidavit.

There was an oral argument before me at Labasa on 12 December 1994. Mr. Kohli had argued along the lines of his written submission.

The following is background to the case:

(a) In this action the Respondent seeks judgment for $191,180.00 being the proceeds of a life policy, bonuses and costs

(b) The Writ of Summons was served on 18 June 1994

(c) Acknowledgment of Service giving its intention to defend was filed by Applicant on 1 July 1994

(d) The Respondent obtained judgment against the applicant on 18 July 1994.

(e) By summons dated 9 September 1994 the applicant applies to set aside this judgment

At the hearing of this summons to set aside the applicant applied to Court to add the following ground 'E':

"The Judgment was sealed before the expiration of the time within which the Defendant was required to file its Statement of Defence."

In this case the Statement of Defence ought to have been filed by 18 July 1994. Solicitors for the Respondent were not prepared to consent to the setting aside of the judgment. However, the Applicant submits that the delay was not unreasonable with which I agree. In EVANS v BARTLAM (1937) 2 AER p. 646 at p. 656 on the aspect of 'delay' it is stated that the "Court, while considering delay, have been lenient in excluding applicants on that ground" and further states as follows:-

"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. This point was emphasized in Watt v Barnett [1878] UKLawRpKQB 28; 3 Q.B.D. 363 ........................................... He has been guilty of no laches in making the application to set aside the default judgment, though as Atwood v. Chichester, [1878] UKLawRpKQB 4; 3 Q.B.D. 722 and other cases show, the Court, while considering delay, have been lenient in excluding applicants on that ground. 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 appellant here has an explanation, the truth of which is indeed denied by the respondent, but at this stage I see no reason why he should be disbelieved on what appears to me to be a mere conflict on affidavits."

I find that this was a regular judgment obtained in default of defence.

It is clear that the Writ of Summons was served on the Applicant on 18 June 1994 and not 20 June 1994. I therefore find there is no merit in its argument in this regard.

In the case of a regular judgment, the defendant does not have a right to have it set aside but it is a matter for the exercise of discretion of the court. This discretion will be exercised according to the guidelines set out in ALPINE BOOK OF TRANSPORT COMPANY INCORPORATED v SAUDI EAGLE SHIPPING COMPANY INCORPORATED (The Saudi Eagle) (1986) 2 Lloyds Rep. 2 (C.A.).

Further in the case of a regular judgment to enable it to be set aside:

"it is an (almost) inflexible rule that there must be an affidavit of merit i.e. an affidavit stating facts showing a defence on the merits (FARDEN v. RICHTER (1889) 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, B in FARDEN ibid p. 129.

It is further stated in the Supreme Court Practice (ibid) p. 137-138 that:

"... the major consideration is where the defendant has disclosed a defence on the merits, and this transcends any reasons given by him on the delay in making the application even if the explanation given by him is false (VANN v AWFORD (1986) 83 L.S. Gaz. 1725, THE TIMES, April 23, 1986 C.A.). The fact that he has told lies in seeking to explain the delay, however, may affect his credibility of his defence and the way in which the Court should exercise its discretion."

On the subject of affidavit stating facts showing a Defence on the merits LORD DENNING MR in BURNS v KONDEL (1971) 1 Lloyd's Rep. 554 at p. 555 said:-

"We all know that in the ordinary way the Court does not set aside a judgment in default unless there is an affidavit showing a defence on the merits. That does not mean that the defendant must show a good defence on the merits. He need only show a defence which discloses an arguable or triable issue."

Order 13 of the High Court Rules deals with Failure to Give Notice of Intention to Defend. Rule 1 of that order gives the power to sign judgment where the claim is for a liquidated demand; Rule 10 states:

"Without prejudice to rule 8(3) and (4), the Court may, on such terms as it thinks just, set aside or vary any judgment entered in pursuance of this Order."

I have carefully considered Mr. Kohli's submissions and I find that the Applicant has shown defence on merits and not merely raised triable issues on the affidavits filed by it. The defendant only has to "establish a prima facie defence" and that a "draft defence is not necessary, what is required is the affidavit disclosing a prima facie defence" (THE FIJI SUGAR CORPORATION LIMITED and MOHAMMED ISMAIL Civ. App. No. 28/87 F.C.A. at p.9 Cyclostyled judgment). The following passage from the judgment of LORD ATKIN in EVANS BARTLAM (1937) 2 AER p. 646 at p.650 is pertinent on the subject of the principle on which a Court acts where it is sought to set aside a judgment arising out of a failure to comply with the rules:-

"I agree that both R.S.C. Ord. 13, r. 10, and R.S.C., Ord. 27, r. 15, gives a discretionary power to the judge in chambers to set aside a default judgment. The discretion is in terms unconditional. The courts, however, have laid down for themselves rules to guide them in the normal exercise of their discretion. One is that, where the judgment was obtained regularly, there must be an affidavit of merits, meaning that the applicant must produce to the court evidence that he has a prima facie defence. It was suggested in argument that there is another rule, that the applicant must satisfy the court that there is a reasonable explanation why judgment was allowed to go by default, such as mistake, accident, fraud or the like. I do not think that any such rule exists, though obviously the reason, if any, for allowing judgment and thereafter applying to set it aside is one of the matters to which the court will have regard in exercising its discretion. If there were a rigid rule that no one could have a default judgment set aside who knew at the time and intended that there should be a judgment signed, the two rules would be deprived of most of their efficacy. 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 been obtained only by a failure to follow any of the rules of procedure."

To conclude in the circumstances of this case, having considered the submission made by both counsel and the authorities referred to by them, I consider that I ought to let the Applicant in to defend and to set aside the judgment as prayed for in the Summons. I find that there is a good defence on the merits and reject the Respondent's argument outright that the defence put forward is a mere sham. The Applicant has raised triable issues and these can quite rightly be raised by them.

In the outcome, bearing in mind the guiding principles in a case of this nature and in the exercise of Court's discretion, I order that the said default judgment entered against the Defendant on 18 July 1994 be set aside. It is further ordered that the Defendant file and serve a Statement of Defence within 14 days of the date of this judgment and thereafter the action to take its normal course.

The Defendant is ordered to pay the Plaintiff's costs of this application which is to be taxed unless agreed.

D. Pathik
Judge

Suva
19 January, 1995

HBC0031J.94B