National MBf Finance (Fiji) Ltd v Kumar [1997] FJHC 221; Hbc0345d.95s (18 July 1997)

IN THE HIGH COURT OF FIJI
AT SUVA
CIVIL JURISDICTION

CIVIL ACTION NO. 345 OF 1995

Between:

NATIONAL MBf FINANCE (FIJI) LIMITED
Plaintiff

and

1. RAMESH KUMAR
t/a Quality Security Services

2. ANITA DEVI d/o Ram Prasad
Defendants

Mr. Ramesh Patel for the Plaintiff
Mr. A. Kohli for the Defendants

DECISION

This is the defendants' motion dated 21 June 1996 to set aside default judgment entered against them on 4 September 1995 in the sum of $24,370.73 and costs $137.00.

It is the first defendant's submission that he was not served with the Writ of Summons herein although the Plaintiff says that it was. He said that it was only when the Bankruptcy Petition was served on him that he came to know of the Plaintiff's claim and he handed the Petition to Mr. M.B. Patel who was his solicitor to respond, but Mr. Patel migrated without taking any action. The defendants have enclosed with their Affidavit in Support of this application a proposed Statement of Defence in that they deny the claim and allege, inter alia, that the documents in question were not explained to them before execution.

On these grounds they are applying to set aside the said judgment.

In reply to defendants' allegation of non-service, the Plaintiff has through its bailiff JOSAIA TAWAKE filed an affidavit sworn 13 September 1996 in which he explains how, when and where the Summonses were served. He also obtained acknowledgment of service and a copy whereof he annexed to his affidavit.

Mr. Patel for the Plaintiff in his written submissions raised a number of points in opposition to the application. I agree with most of his arguments. He said that there has been a considerable delay in making the application and that there is no arguable or triable defence disclosed in the proposed Statement of Defence.

I have considered the various affidavits filed herein and the written submissions of counsel.

On the affidavit evidence before me I accept the evidence on oath of the process server that the Writ of Summons herein was duly served and that he obtained acknowledgment of it to which there is no response from the defendants. I do not believe the first defendant in this regard.

The defendants have also, I find, taken an unduly long time to make the present application. The chronology of events are: Writs of Summons served 27.7.95, default judgment entered 4.9.95, Bankruptcy Notice issued 27.10.95 and served 9.11.95, Creditors Petition in Bankruptcy issued 8.1.96 and served on defendants 7.2.96. This application to set aside judgment is made 21 June 1996.

I cannot see any excuse for not taking steps between 9.11.95 till 21.6.96 to set aside the default judgment. To blame their solicitor for not taking any action is not acceptable. The defendants should themselves have been in touch with their solicitor to ascertain the progress in the matter. There is no evidence that that was done.

The defendants' proposed Defence boils down to this that the plaintiff 'negligently' made certain 'representations' to them before they executed the documents in question. They say that the 'nature and purport of the document were not read over and explained' to them prior to the execution.

The sole issue for the Court's determination is whether in the circumstances of this case I ought to set aside the default judgment and grant leave to the defendants to defend the action.

The setting aside is a discretionary matter. There must be an affidavit on merits, that is, an affidavit stating fact showing a defence on the merits (FARDEN v RITCHER (1889) 23 Q.B.D. 1247. See also SUPREME COURT PRACTICE 1993 Or 13 r9 p.137-138) where it is stated:

"... the major consideration is whether 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, and may therefore be relevant to the credibility of his defence and the way in which the Court should exercise its discretion."

Also as LORD DENNING M.R. 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."

It is not for me at this stage to resolve the issues raised on the proposed Statement of Defence but merely to satisfy myself that the defendants have shown a bona fide defence involving triable issues.

The defendants only have 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 All E.R. 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."

The defendants no doubt have delayed making the application. However, on the subject of delay EVANS v BARTLAM (supra) at p.656 states that the "Court, while considering delay, have been lenient in excluding applicants on that ground" and further stated 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."

In all the circumstances of this case and bearing in mind that the Plaintiff will not be prejudiced if the application was granted, and in the exercise of my discretion I consider that I ought to let the defendants in to defend this action conditionally. This is a case in which I would like to adopt the following passage from DAVIES v PAGETT (1986) 10 FCR 226 quoted in the judgment of MILES C.J. in RYAN v ADAMS (1993) 112 FLR 474 at 477:

"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 necessity to avoid prejudice to the interests of some other party, occasioned by misconduct, in this case, of the party upon whom the limitation is sought to be imposed."

In the outcome, bearing in mind the principle of law applicable here I set aside the default judgment herein of 4 September 1995 and let the defendants in to defend the action conditional upon the defendants depositing the sum of $10,000.00 into Court within 21 days of the date of this decision. The defendants are ordered to file and serve Statement of Defence within 28 days of this decision. In the event the defendants fail to comply with the Order for payment into Court, the order setting aside the said default judgment shall stand dismissed and the default judgment shall remain and be of full force and effect.

It is also ordered that the defendants pay the costs of this application to the plaintiff to be taxed if not agreed.

D. Pathik
Judge

At Suva
18 July 1997

HBC0345D.95S