Hetherington v Owners of the Vessel "Kontiki 1" [1996] FJHC 9; HBG0003d.1995s (10 May 1996)

Fiji Islands - Hetherington v The Owners of the Vessel "Kontiki 1" - Pacific Law Materials

IN THE HIGH COURT OF FIJI

AT SUVA

CIVIL JURISDICTION

ADMIRALTY ACTION NO. 3 OF 1995

ass=MsoNormal amal align=center style=text-align:center>BETWEEN:

1. PETER HETHERINGTON
2. TIMOTHY HETHERINGTON
Plaintiffs

AND:

THE OWNERS OF THE VESSEL "KONTIKI 1"
Defendants

Ms. Vasantika Patel for the Plaintiffs
Mr. P. Knight for the Defendants

DECISION

This is the defendants' summons for an order that judgment in default of defence entered on 23 August 1995 be set aside and that the defendants be granted leave to defend the claim herein. Although they sought a further order in the Summons for the release of the vessel "Kontiki" from arrest it was abandoned during the hearing of this application.

In support of the Summons ANTHONY CLIVE HOSKINS a director of Kontiki Marine Limited (the owner of the vessel Kontiki I), relies on his affidavit sworn 14 November 1995.

The said Hoskins denies that his company owes the sum of $82,747.36 to the Plaintiffs or any sum at all. He sets out the circumstances under which the Plaintiffs came into the picture. He has annexed to the said affidavit the defendants' (Company's) draft Defence and Counterclaim.

Mr. Knight submitted that after the default judgment on 23 August 1995 his firm Cromptons was instructed in late August to set aside the arrest of the vessel and it was then discovered that judgment had already been obtained. Then on 30 October 1995 Notice of Change of Solicitors was filed. He said that it was after the transfer of the case from Lautoka to Suva that judgment was obtained and the defendants were not aware of it until it was found out later and brought to their notice. Mr. Krishna, a Solicitor of Lautoka acted for the defendants before the transfer of the case.

This Summons is dated 20 November 1995 and the reason which Mr. Knight gave for the delay in making this application is that the defendants were not aware of the judgment. Mr. Knight further submits that there is an arguable defence and that there is a Counterclaim. He says that it would be unconscionable if the defendants are deprived of the opportunity to defend the action.

In reply to the said affidavit the second Plaintiff TIMOTHY HETHERINGTON swore an affidavit on 10 January 1996 on behalf of himself and the first plaintiff. He states, inter alia, that it has taken the defendants some three months to make this application and that the delay is causing the Plaintiffs hardship.

The said HETHERINGTON denies the defendants' allegations and states that their defence and Counterclaim are a sham and they ought not to be allowed to defend this action and that the vessel remain under arrest.

Ms Patel submits that the defendants have not advanced any reasons for delay in instructing solicitors to make this application. She says that if the Court in the exercise of its discretion is minded to grant the application then she asks that it be on terms in that the whole amount of the claim be deposited in Court.

I have carefully considered the oral submissions of both counsel.

The principles whereby default judgment will be set aside are well-known.

This was a regular judgment. The defendants do not have a right to have it set aside but it is a matter for the exercise of discretion by the Court. The principles governing the exercise of this discretion are set out in the judgment of the Court of Appeal in ALPINE BULK TRANSPORT COMPANY INCORPORATED v SAUDI EAGLE SHIPPING COMPANY INCORPORATED (The Saudi Eagle) (1986) 2 Lloyd's Rep. (CA) p.221 at p.223.

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."

Also on the subject of default judgment in DAVIES v PAGETT (1986) 10 FCR p.226 at p.232 a Full Court of the Federal Court of Australia said as follows and which I have borne in mind in considering this matter:

"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."

In the case before me the defendants have given an explanation as to how the default occurred although there is no rigid rule that the applicant must satisfy the court that there is a reasonable explanation why judgment was allowed to go by default. In the exercise of my discretion I consider this to be a fit case to disregard the lapse of time and accept the explanation (BEALE v MACGREGOR (1880) 2 TLR 311).

The main question is whether the defendants have merits. There is an affidavit showing a defence on the merits. As stated in the 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.).

I have considered the Affidavit filed by the defendants and also the proposed Statement of Defence and Counterclaim and, in the light of the authorities, I find that there are merits and the defendants ought to be let in to defend the action.

As stated already, the giving of leave to come in and defend the action is discretionary and the court can impose terms (COCKLE v JOYCE [1877] UKLawRpCh 278; (1878) 7 Ch.D. 56) such as ordering the money to be brought into court (RICHARDSON v HOWELL (1892 T.L.R. 445). Here there has been a breach of procedural rules by the defendants and in the circumstances of this case I would require as a condition of setting aside judgment a payment into Court.

The amount required to be paid is worked out as follows just as a basis for ordering payment into Court: the Plaintiffs' claim is for $82,747.36; the defendants' counterclaim totals $64,812.00 (made up of $12,542.00, $34,300.00 and $17,970 as per (counterclaim); the difference between the claims is $17,935.36. In round figures I require the defendants to deposit the sum of $18,000 into Court to abide the outcome of the action.

It is therefore ordered that the defendants pay into Court the sum of $18,000 within 28 days from the date of this decision to be held in Court until the hearing and determination of this action or until further order and failure to comply with this order will mean that the default judgment shall stand. Upon payment into court of the said sum the default judgment will be set aside and the defendants are ordered to file and serve Statement of Defence within 14 days from the date of such payment in. The defendants are further ordered to pay the costs of this application which is to be taxed unless agreed.

D. Pathik
Judge

At Suva
10 May 1996

Hbg0003d.95s