Bank of Hawaii v Reynolds [1997] FJHC 173; Hbc0559d.96s (14 November 1997)

Fiji Islands - Bank of Hawaii v Reynolds - Pacific Law Materials

IN THE HIGH COF FIJI

AT SUVA

CIVIL JURISDICTION

CIVIL ACTION NO. 559 OF 1996

BETWEEN:

BANK OF HAWAII

Plaintiff/Respondent

AND:

ass=MsoNormal alal align=center style="text-align: center; margin-top: 0; margin-bottom: 0"> MAXWELL JOHN REYNOLDS

Defendant/Applicant

Mr. G. Leung for the Respondent

DECISION

There are two applications before me. First, a summons dated 31 July 1997 whereindefendant is seeking an ordn order that judgment entered herein on 10 March 1997 in default of defence ordering him to pay the Plaintiff the sum of $422,139.58 and interest at the daily rate of $134.03 from 2 November, 1996 and costs on a solicitor/client basis be set aside on the ground that the defendant has a good defence to this action and that he be at liberty to fend. Second, a summons dated 12 August 1997 in which the defendant is seeking an order that the execution of the said judgment be stayed pending the disposal of the said summons to set aside judgment.

Applicant's ground for application

The grounds for application onlf of the Defendant are set out in the affidavit of Moses Zarah a law clerk in the defendanendant's solicitor's firm. In short, he is deposing that his firm Cromptons took instructions from instructing solicitors in Queensland in filing defence after acknowledging service of Writ of Summons herein. The solicitors had difficulty in taking instructions from the defendant stating that the defendant, to use his own words, "was extremely busy and that further instructions to set aside judgment could be delayed". It was not until 29 July 1997 that the solicitors instructed Cromptons to apply to set aside default judgment. The Plaintiff was quite accommodating and allowed Cromptons time to file Defence but by the time they were ready to file one it was very late.

Mr. Muaror says that the defendant has a good defence.

The Statement of Defence which he intended to file states, inter aliafollows:

"2. the Defendant denies teat he guaranteed the payment of the respective debt as stipulated in paragraph 3 of the claim.

3. &nnbsp; "tfendant dant deniesenies the contents of paragraph 4 of the claim and further states that he received no prior notice of the claim by tainti allentil omment of action.&qon.">

<

the Defendant further states that:

(a) & &nsp; He did not fully ullyrstanrstand the nature of the document he signed with the Plaintiff and was not given the opportunity to obtain independent legal advice with respect to its full effect anding as furtold by the Bank Bank staffstaff that that it was a standard normal document for him to sign.

(b) &&nsp;; Tsp Plaentlaintiff tiff has failed to mitigate or reduce its loss in taking or claim assets to the debtor company which would have been sufficient to the respective debt."

In relation to the stay application Mr. Muaror deposed in his avit sworn 11 August 1997 that the "Plaintiff is pris pressing for the default judgment to be registered in Australia and executed against the defendant" and that "if the execution of the said default judgment proceeds, the Defendant's said application to set aside judgment will be rendered redundant."

The Affidavit of Mr. Jonathan Paul Lancaster, the inting Solicitor, filed on 19 August 1997 sets out fully what what the defence is and it also refers to a letter of 6 January 1997 to Cromptons to file a defence based on the contents of that letter. Mr. Lancaster says that due to a communication breakdown defence was not filed in time and for that reason the defendant should not suffer particularly when assets sufficient to meet the alleged debt have already been seized by the Plaintiff.

A detailed Affidavit comprising seven pages was also filed on 19 August 1997 e defendant explaining his his position and I do not propose to set out what is contained in it except to say that he said that he was a guarantor and that he signed the document without reading it and was not advised to get an independent advice. He further complains that "to date I have received no accounting from either the receiver or the Plaintiff as to how the assets of myself, Maxwell Trading, ACL or the associated companies have been dealt with nor how the original amount outstanding to the Plaintiff by ACL has altered".

Plaintiff's reply

p class=MsoNormal stal style="margin-top: 0; margin-bottom: 0"> An Affidavit in Reply was filed on 2 September 1997 by GREGORY AYAU, the Mr of the Plaintiff Bank, Suk, Suva Branch. He sets out in detail the circumstances leading to the various loans culminating in the defendant and one Michael McAuliffe entering into a written "Guarantee Agreement" with the Plaintiff. There was default in repayment and demands were made. On 17 September 1996 a Demand Notice was served on the defendant demanding from him the sum of $416.233.71 and daily interest accruing at the rate of $29.94 on the respective accounts. On 23 September 1996 the defendant's Company the Atmospherus Corporation Ltd was wound up. The defendant naturally knew that he was signing a Guarantee document and also knew its legal effect.

The deponent states that the defendant's allegations regarding the circumstances leading to igning of the document are are untrue. He is highly educated and "spoke good English" and he knew what he was signing.

Consideration of the issue

I have given due consideration to submissions by counsel.

<0"> I am not at all impressed with Mr. Muaror's ants in support of his application to set aside this regulargular default judgment due to the failure of the defendant to file the Statement of Defence in time.

It is abundantly clear from the affidavits filed herein that the overseas instructing solicitors and Cromptons had great difficulty in obtaining proper instructions from the defendant in time to enable the Fiji solicitors to file a Defence on his behalf in time. The defendant evidently had not taken his case seriously enough. The impression I get is that the solicitors had to chase after the defendant to obtain further instructions to enable them to file documents in time for him. In fact the Plaintiff has been very accommodating by allowing an extension of time to file defence. Since it was not forthcoming it went ahead and obtained judgment by default.

The law

lang=EN-AU style="font-famt-family: Times New Roman"> In the case of a regular judgment, the defendant does not have a right to ha set aside but it is a matt matter for the exercise of discretion of the Court. This discretion will be exercised according to the guidelines set out in ALPINE BULK OF TRANSPORT COMPANY INCORPORATED v SAUDI EAGLE SHIPPING COMPANY INCORPORATED (The Saudi Eagle) (1986) 2 Lloyd's Rep 2 (CA).

To enable the Court to set aside a regular judgment:

"it is an (almost) inflexible rule that thust be an affidavit of merits i.e. an affidavit stating facg facts showing a defence on the merits (FARDEN v RICHTER [1889] UKLawRpKQB 79; (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" per HUDDLESTON, B, (ibid) at p. 129.

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

"... the major consideration is whether the defendant has discla defence on the merits, and this transcends any reasons gins 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, and may therefore be relevant to the credibility of his defence and the way in which the Court should exercise its discretion."

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

"We all know thathe ordinary way the Court does not set aside a judgment in default unless there is an affi 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 Defende 1 of that Order gives thes the power to sign judgment where the claim is for a liquidated demand. Rule 10 of the said Order 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."

In this case the defendant raised a number of defences but it is not for me at this stage to resthe issues between the part parties but merely to satisfy myself that the defendant has shown a bona fide defence involving triable issue. This I find that the defendant has not done. In fact I cannot see any defence bearing in mind, inter alia, the fact that the defendant is an educated person and that he knew or ought to have known the nature of the document which he executed.

The defe has also raised the defence of 'non est factum'. The circumstances in which this plis plea is available is set out in Halsbury Vo. 12 4th Ed. at 544 para 1365 as follows:

"The plea of non est factum, or nient son fait, is that by which a man sought tcharged in some action or p or proceeding upon a writing alleged to have been sealed and delivered by him avers that it is not his deed. This plea is only available where the party sued can show either that there never has been, or that there is not existing at the time of the plea, any valid execution of the deed on his part. If a man, taking reasonable care has nevertheless been induced by the machinations of some other person (whether a party or a stranger to the deed) to execute a deed under a substantial mistake (not merely as to the legal effect of known contents of the deed) such that he believed it to be fundamentally different in substance or in kind from what it was, so that when he executed it his mind did not accompany his outward act, he may plead that for this reason the deed is not his deed, and if this plea is established by the evidence, the deed will be altogether void from the beginning. A deed so procured is no more the deed of the person who was thus induced to execute it than is a forged deed."

On the facts I hold that neither is this plea available to the defendant nor does he enjoy the prospects of success. He is an educated person and he could have taken reasonable precaution before executing the Guarantee document. The following passage from Hals. (ibid) at para. 1366 is pertinent:

ass=MsoNormal stal style="margin: 0 36.0pt"> "A person raising a plea must have taken such precautions as he reasonably could, ust prove that he took reas reasonable care as well as proving all the other circumstances necessary to found the relief. Normally, a blind or illiterate person must have had the deed read over or fully explained to him before execution, and a person of full capacity can only establish the plea in very exceptional circumstances." (underlining mine for emphasis).

Conclusion

In the circumstances, bearing in mind the facts of this case guiding principles in a case of this nature and in the exee exercise of my discretion I consider that despite my comments on the defences raised I ought to let defendant in to defend and set aside the judgment but on terms under the said Or. 13 r.10 of the High Court Rules. In a proper case in the exercise of the Court's discretion the defendant can be ordered to deposit the amount owing into Court (VIJAY PRASAD and DAYA RAM CIV APP 61/90 FCA; SUBODH KUMAR MISHRA s/o Ramendra Mishra and CAR RENTALS (PACIFIC) LTD CIV APP 35/85 FCA). The said Order 13 does not lay down any basis upon which the discretion is to be exercised. In GARDNER v JAY (1885) 29 Ch.D. 52 at p.58 BOWEN L.J said on the aspect of discretion that:

"... when a tribunal is invested by Act of Parliament or by Rules with a discretion, without any indication in the Act or Rules of the grounds

upon which the discretion is to be exercised, it is a mistake to lay down any rules with a view to indicating the particular grooves in which the discretion should run, for if the Act or the Rules did not fetter the discretion of the Judge why should the Court do so?"

In the outcome in view of what I have stated above I order that the said default judgmenset aside conditional upon upon the defendant paying into Court the sum of $200,000.00 being about half the principal sum claimed or giving a security for that amount to the satisfaction of the Plaintiff within 30 days from the date of this decision. In the event that such amount is not so paid or the said security is not given this application to set aside the said judgment shall stand dismissed. I also order costs against the defendant on this application to be taxed if not agreed.

D. Pathik

Judge

At Suva

14 November 1997

Hbc0559d.96s