BP South West Pacific Ltd v Pillay [1996] FJHC 169; Hbc0167d.93s (23 December 1996)

IN THE HIGH COURT OF FIJI
AT SUVA
CIVIL JURISDICTION

CIVIL ACTION NO. 167 OF 1993

Between:

B.P. SOUTH WEST PACIFIC LIMITED
Plaintiff

and

GOPAL PILLAY
s/o Permal Sami Pillay
Defendant

Mr. V. Maharaj for the Plaintiff
Mr. S. Parshotam for the Defendant

DECISION

This is the defendant's Summons for an order that (a) the judgment by default entered against the defendant in this action on 30 June 1993 by the Plaintiff and all proceedings thereunder may be set aside and (b) that the defendant be at liberty to defend the claim unconditionally.

Affidavits in support of the application have been filed by the defendant and by his solicitor Mr. Satish Parshotam both sworn 19 July 1996; and an affidavit in Reply has been filed by Rudra Nand, Mr. Maharaj's law clerk sworn 1 November 1996.

The hearing of Summons took place on 4 December 1996. Mr. Parshotam elaborated on his written submissions (which he tendered to Court) and Mr. Maharaj made oral submissions.

The affidavit of the defendant sets out in detail the history of pleadings and the reasons for not filing Statement of Defence which resulted in judgment by default having been obtained against him. Subsequently bankruptcy notices were served on him.

I do not propose to outline the full facts and circumstances which led to this application for they are all contained in the affidavits referred to hereabove except to put in a nutshell each party's argument before I deal with the legal principles involved in an application of this nature.

The Plaintiff has claimed the sum of $20,668.27 for fuel allegedly sold and delivered by the Plaintiff to the Defendant. The Plaintiff obtained judgment in default on 30 June 1993 although the defendant gave intention to defend on 27 April 1993. But before judgment there was correspondence between solicitors. A Bankruptcy Notice was taken out on 31 March 1994 and another Notice on 14 February 1996 but a Bankruptcy Petition has not been served on the defendant. There was further correspondence between solicitors. Police investigations were being carried out on the defendant's complaint as he alleged that some of the Plaintiff's employees were involved in delivery of fuel to another source but the defendant was billed for the supply. Then on 28 May 1996 Mr. Parshotam was informed by the Police Department that investigations in the matter which directly concerned the Plaintiff's claim against the defendant had been completed and the police file closed "due to insufficient evidence".

The defendant has now drawn up his Statement of Defence and has attached it to his affidavit for Court to consider in this application.

The defendant has given reasons for not filing Statement of Defence. They were that police investigations were in progress, discussions were continuing between the solicitors which is borne out by the fact that no form of enforcement proceedings were taken out against him until 31 March 1994 and then on 14 February 1996 and that Mr. Parshotam who was handling the matter took ill and had to receive medical treatment overseas.

The defendant says that, with due respect, the delay is not undue or unreasonable and will not prejudice the Plaintiff in any way if his application is granted.

Mr. Maharaj opposes the application and states that the debt is 8 years old and the defendant could have put in "some defence" and "police investigation is something different".

Consideration of the issue

I have carefully considered the application before me. The authorities referred to by Mr. Parshotam have been of great assistance.

The principles whereby default judgments are set aside are well-known and I shall be referring to them later.

On a regular judgment it is not a right of the defendant to have it set aside but is a matter for the exercise of discretion by the Court. Under Or. 19 r.9 of the High Court Rules 1988 it is provided:

"The Court may, on such terms as it thinks just, set aside or vary any judgment entered in pursuance of this Order."

Also it is stated in EVANS v BARTLAM 1937 AC 437 at 480:

"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."

A useful summary of the factors to be taken into consideration is to be found under notes to Or.13 r.9 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 the defendant 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. The foregoing general indications of the way in which the court exercises discretion are derived from the judgment of the Court of Appeal in Alpine Bulk Transport Co. Inc. v. Saudi Eagle Shipping Co. Inc., The Saudi Eagle [1986] 2 Lloyd's Rep. 221, C.A., at p.223, where the earlier cases are summarised. From that case the following propositions may be derived:

(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 estoppel, at law, must be considered "in justice" before exercising the court's discretion to set aside."

Again in RUSSEL v COX (1983) NZLR 654 at 659 HARDIE BOYS J stated the principles to be applied thus:

"The Court has a discretion, the test being whether it is just in all the circumstances to set the judgment aside, and if so, whether terms should be imposed. The justice of the case is generally to be measured against three factors, although they are not exclusive and the relative weight to be given to each will vary according to the circumstances. These factors are: whether the delay has been reasonably explained; secondly, whether a substantial ground of defence has been disclosed; and thirdly whether the Plaintiffs will suffer irreparable injury if the judgment is set aside."

In this case the defendant has explained how the default occurred although there is no rigid rule that the applicant must satisfy the Court in that regard. However, the reason for default is one of the factors the Court will have regard to in exercising its discretion. I have considered the reasons given and consider this to be a proper case in which lapse of time could be disregarded by accepting the explanation. (BEALE v MacGREGOR 1886, 2 TLR 311).

On the question of 'delay' LORD WRIGHT in EVANS (supra) at p.489 had this to say:

"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 emphasised in Watt v Barnett QBD 363 ... He has been guilty of no laches in making the application to set aside the default judgment, though as Atwood v. Chicester [1878] UKLawRpKQB 4; 3 QBD 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 of affidavits."

The question is whether there are merits in the proposed defence annexed to the Defendant's affidavit in this case. As stated in SUPREME COURT PRACTICE (ibid) at p.140:

"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) (1883) 83 L.S. Gaz.1725; The Times, April 23, 1986, C.A.)."

Having considered the affidavit of the defendant and the proposed Statement of Defence I find that there are merits. This does not mean, as LORD DENNING has said in BURNS v KONDEL (1971) 1 Lloyd's Rep 554 at p.555, "that the defendant must show a good defence on the merits. He need only show a defence which discloses an arguable or triable issue." The defendant should therefore be let in to defend the action.

On a proper consideration of the facts and circumstances of this case, I consider this to be a case where in the interests of justice the defendant ought to be given the opportunity to defend. I conclude with the following passage from the judgment of the Full Court of the Federal Court of Australia in DAVIES v PAGETT (1986) 10 FLR p.226 at p.232 which is pertinent:

"The fundamental duty of the court is to do justice between the parties. It is, in turn, fundamental to that duty that the parties should each be allowed a proper opportunity to put their cases upon the merits of the matter. Any limitation upon that opportunity will generally be justified only by the necessity to avoid prejudice to the interests of some other party, occasioned by misconduct, in the case, of the party upon whom the limitation is sought to be imposed. The temptation to impose a limitation through motives of professional discipline or general deterrence is readily understandable; but, in our opinion it is an erroneous exercise of the relevant discretion to yield to that temptation. The problem of delays in the courts, egregious as it is, must be dealt with in other ways: for example, by disciplinary actions against offending practitioners and by a comprehensive system of directions hearings or other pretrial procedures which enable the court to supervise progress - and, more pertinently, non-progress - in all actions."

Now that the defendant has raised some arguable defence, belated though it is, in the circumstances of this case, applying the principles stated above including no "irrepairable injury" to the Plaintiff will be caused and exercising the Court's discretion I let the defendant in to defend this action.

In the outcome, the judgment by default is set aside including all proceedings thereunder. The defendant is ordered to file Statement of Defence within 21 days and thereafter the action is to take its normal course. The costs are ordered to be paid by the defendant to be taxed if not agreed.

(D. Pathik)
Judge

At Suva
23 December 1996

HBC0167D.93S