BP (South Sea) Company Ltd v Low [1998] FJHC 123; Hbc0577j.96s (17 August 1998)

Fiji Islands - BP (South Sea) Company Ltd v Low - Pacific Law Materials

AT SUVA

CIVIL JURISDICTION

CIVIL ACTION NO. 577 OF 1996

p class=MsoNormal alal align=center style="text-align: center; margin-top: 0; margin-bottom: 0"> BETWEEN:

BP (SOUTH SEA) COMPANY LTD/p>

PLAINTIFF

AND:

JOHN THOMAS LOW

MICHAEL LOW

VASITI NAIKELEKELEVESI LOW

DEFENDANTS

Mr. M. Young for the Plaintiff

Mr. A. Tikaram for the Defendants

DECISION

ass=MsoN=MsoNormal style="margin-top: 0; margin-bottom: 0"> This is the defendants' Summons dated 22 Decem997 to set aside default judgment entered against them on 4 on 4 December 1997. Other orders sought by the Summons are (a) that the defendants be granted leave to file a statement of defence and counter-claim (b) that proceedings under the consolidated Action No.591 of 1996 be stayed until the determination of this application and (c) that the execution of default judgment be stayed until the determination of this application. The application is made on the ground that the default judgment is irregular and that the defendants have a defence on merit.

The defendants' argument

It is the defendanontention as contained in the affidavit of MICHAEL LOW sworn 19 December 1997 that they reqy requested further and better particulars from the Plaintiffs in December 1996 and received reply from them in October 1997.

The defendants also contend that their solicias away overseas during the month of October 1997.

ass=MsoNormal stal style="margin-top: 0; margin-bottom: 0"> They further say that it has taken them a lot of time to respond to the plaint further and better particurticulars due to the complex nature of the case.

The plaintiff's reply

The defendants owed some monies and defaulted in payment to the plaintiffs. They signed a guarantee but deny legal liability because they state that they signed under inducement and misrepresentation.

Consideration of the issue

It is the defendants' contention that the plaintiff's claim is nquidated and it is not enti entitled to default judgment. This fact as contended by the defendants renders the default judgment irregular as it is not entered in accordance with the rules of the Court. For this reason the defendants state that the default judgment may be set aside as of right regardless of whether there is a defence on merit.

(Alexander v Ajax Insurance Company Limite [1956] VicLawRp 5; [1956] V.L.R 436; Hinghes v Justin [1894] 1QB 667; 667; Alliance Acceptance Co. Ltd v Silley [1960] VicRp 57; [1960] V.R. 353.

Whereas taintiff submitted that the Fiji Court of Appeal has interpreted 'liquidated amount' to mean mean "the amount ascertained or ascertainable as a mere matter of an arithmetic": (Subodh Mishra v Car Rentals Limited 85/438 F.C.A).

The particulars of owing were quantified and were supplied to the defendants as standing in the Statement of C of Claim paragraph 10 and various other means outlined by the plaintiff. The same is for the particulars of interest.

As regards the issue of delay in filing the defence, not at all impressed with Mr. Tikaram's submission which dich does not outline the reason for the delay and failure of the defendant to file the statement of defence in time.

The affidavit filed herein does not disclose the reason for not filing the defence aftrther and better particularculars were received in October 1997. Judgment in default was not entered until the expiration of 51 days. The plaintiff has been very accommodating by allowing such a huge extension of time to file defence. Since it was not forthcoming it went ahead and obtained judgment by default.

ass=MsoNormal stal style="margin-top: 0; margin-bottom: 0"> The sole issue for my determination is whether in the circumstances, I ought t aside the regularly enterentered default judgment and grant leave to the defendants to defend the action.

The judgment entered on 4 Der 1997 is a regularly entered judgment of the Court. The defendants were given enough time time and warning to file a defence.

The se aside of a regular judgment is in the discretion of the Court. Order 19, Rule 9 of the Hige High Court Rules 1988 states:

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

This rule was applied by me in the case of Bank of Hawaii v Maxwell John Reynolds (1977) Action No. 559 of 1996 in which on 14 November, 1997 at p5 of the judgment I said that 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.

/b>

To enable the Court to set aside a regular judgment, there must be an affidavit on merits, i.e. an affidavit stating facts showing a defence on the merits [Farden v Richter [1889] UKLawRpKQB 79; (1889) 23 QBD 124].

In Evans v Bartlam [1937] at 480, Lord Atkin stated:

The principle obviously is that unless and until the Court has prond judgment upon merits or b or by consent, it is to have the power to revoke the expression of its coercive power where that has been obtained by a failure to follow any of the rules of procedure.

The Court of Appeal in the case of Wearsmart Textiles Limited v General Machinery Hire Limited and Shareen Kumar Sharma [Civ.App. No.ABU0030/97S FCA Unreported, judgment on 29 May 1998] sets out the general principles on which Courts act on an application to set aside a regularly entered judgment and refer to the Supreme Court Practice 1997 (Volume 1) and there at p 143 it is stated, inter alia, as follows:

"For the purpose of setting aside a default judgment, the defenmust show that he has a mera meritorious defence.....

On the appion to set aside a default judgment the major considerationation 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 [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..."

In Bv Kondel [1971] 1 Lloyd's Rep. 554 at 555, Lord Denning MR said:

We all know that in the ordinary he court does not set aside a judgment in default unless thss 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.

Likewise in Fiji the case of The Fiji Sugar Corporation Ltd v Mohammed Ismail Civ. App. No. 28/87 FCA at p.9 states that the defendants are only required to "establish a prima facie defence." It seems the Court of Appeal case of Wearsmart (supra) now requires the defendant to show that he has a meritorious defence. For the meaning of this expression I refer to the case of Alpine Bulk Transport Co. Inc. v Saudi Eagle Shipping Co. Inc., The Saudi Eagle [1986] 2 Lloyd's Rep. 221, C.A. which is authority, inter alia, for the following proposition:

"(a) It is not sufnt to show a merely "arguable" defence that wouldwould 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."

The Court of Appeal upheld the White Book's view that 'unless potent credible affidavit evidencidence demonstrates a real likelihood that a defendant will succeed on fact no real prospect of success is shown and relief should be refused." (Wearsmart at p 16)

The defendants have annexed a proposed statement of defence in whiey have raised defences such as inducement and misrepresentesentation and also a counter-claim. It is not for me at this stage to resolve these issues between the parties but merely to satisfy myself that the defendants have shown a meritorious defence which they have only done by raising triable issues.

The defendants have delayed making the application to file a defence. In the case ofiji Development Bank v Swan Swani Kumar and Others Civil Action No. 358 of 1995, HC judgment on 6 March 1997, I discussed Evans v Bartlam on the subject of 'delay'. It was stated in Evans at p.656 that the:

The primarsideration is whether he has merits to which the Court shou 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 Barnett [1878] UKLawRpKQB 28; 3 Q.B.D. 363 ......, 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 the case of ank of Hawaii (supra), I was not impressed with the defendant's arguments in support ofrt of his application to set aside the regular judgment due to the failure of the defendant to file the statement of defence in time. However, in the exercise of my discretion and despite my comments on the defences raised in that case, I let the defendant in to defend and set aside the judgment but on terms under order 13 Rule 10 of the High Court Rules.

The provisions under Order 13 Rule 10 and Order 19 Rule 9 have the safect. With respect to the bthe basis upon which to exercise discretion, I adopted Bowen L.J's view from Gardner v Jay [1885] 29 Ch. D 52 at p.58, namely:

"When a tribunal is invested by Act of Parliament or by Rules discretion, without any indy 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?"

To conclude I would like to adoptfollowing passage from Davies v Pagett [1986] 10 FLR 226

The fundamental duty of the court is tjustice between the parties. It is, in turn, fundamental toal 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.

For these reasons, bearing in mind the guiding principles on the subject of settiide of a default judgment Ient I make the following orders:

p class=MsoNormal stal style="margin-left: 36.0pt; margin-top: 0; margin-bottom: 0"> (a) The default judgment entered herein on 4 December be set aside on condition tion that the defendants either deposit the sum of $200,000.00 (about half the judgment amount) in Court or give security for that amount to the satisfaction of the plaintiff within 21 days of this decision failing which the said default judgment shall remain and be of full force and effect and that if deposited the said sum of $200,000.00 shall be placed on interest bearing term deposit by the Chief Registrar;

(b) the defendants file Statement fence and Counterclaim, if any, within 21 days from the date date of this decision;

(c) the tiff be allowed 14 days thereafter to file a Defence to the defendants' Counterclaim; and

p class=MsoNormaNormal style="margin-left: 36.0pt; margin-top: 0; margin-bottom: 0"> (d) I award costs of this application against the defendants in the sum of $200.00 to00 to be paid within 7 days.

ass=MsoNormal alal align=center style="text-align: center; margin-top: 0; margin-bottom: 0"> D Pathik

Judge

At Suva

17 August 1998

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