National MPF Finance (Fiji) Ltd v Pickering [1999] FJHC 150; HBC0341D.1997 (20 July 1999)

IN THE HIGH COURT OF FIJI
AT SUVA
CIVIL JURISDICTION

CIVIL ACTION NO. HBC 0341 OF 1997

BETWEEN:

NATIONAL MBF FINANCE (FIJI) LIMITED
Plaintiff

AND:

DONALD PICKERING AND EILEEN PICKERING
Defendants

Counsel: Ms A.P. Narayan for Plaintiff
Mr Ratuvili for Defendants

Hearing: 8th July 1999

Decision: 20th July 1999

DECISION

On 15th August 1997 the Plaintiff filed a writ of summons against the Defendants. The Plaintiff claimed that the Defendants had guaranteed the performance and repayment of two Lease Agreements between the Plaintiff and Donald Pickering and Sons Enterprises Limited T/A United Engineers. The claim was in the amount of $31,549.18 with interest at 24% per annum.

Acknowledgment of Service was filed on 3rd September 1997 but no Defence was filed thereafter.

Judgment in Default was entered on 4th August 1998 followed by a writ of fieri facias to enforce judgment, on 25th November 1998.

The Defendants now make an application to set aside the writ of fieri facias and judgment in default. The Plaintiff opposes both applications.

Counsel were heard on 8th July 1999. Mr Ratuvili for the Defendants relied on his written submissions. He submitted that the Defendants had a good reason for failure to file defence, and that judgment should now be set aside because they had a meritorious defence. He relied on the affidavit of Donald Thomas Pickering. The reason for the delay as deposed by this affidavit, was that there had been an exchange of correspondence between the solicitors for the Plaintiff, and the solicitors for the Defendants had asked for particulars of the lease and guarantee agreement.

At paragraph 10 of the affidavit, Donald Pickering deposes that on 27th February 1998 his solicitors wrote to the solicitors for the Plaintiff requesting until 15th March 1998 to file defence. However on 18th January 1999 the Defendants became aware that writ of fieri facias had been issued against them. The defendant deposes that the Judgment entered was irregular as there had been no agreement under the guarantee for interest. He further deposes that the payments relating to the lease agreement for two vehicles had been regular until KPMG Peat Marwick had taken over the affairs of the company as receivers.

The affidavit further states that the vehicles had been sold at well below market value and that the Defendants had a valid defence and counter-claim against the Plaintiff.

Counsel relied on the affidavit of Taniela Matakibau, Legal Executive to the Plaintiff. She also made written and oral submissions. She argued that the Defendants had failed to show a meritorious defence. She submitted that the Lease Agreement account for both vehicles had been in arrears by 9th November 1997 and that several notices annexed to the affidavit of
Taniela Matakibau, had been sent to the company.

The affidavit of Taniela Matakibau deposes that the Receiver had indicated to the Plaintiff that he did not wish to continue the Lease Agreements in respect of the two vehicles and they were repossessed on or about 3rd September 1996. The affidavit shows that the vehicles were advertised and sold to the highest bidder. On the issue of interest, the affidavit shows that the lease agreement between the Company and the Plaintiff was for 2% interest per month, which is 24% per annum.

Ms Narayan submitted that the defence had no merit, and that the applications should be dismissed with costs.

Order 13 Rule 1(1) of the High Court Rules gives the court the discretion “on such terms as it thinks just”, to set aside judgment in default. Where the judgment was regular the application must be supported by an affidavit showing a meritorious defence. The reasons given for delay in filing a defence, is transcended by the nature of the defence proposed.

In Alpine Bulk Transport Co. Inc -v- Saudi Eagle Shipping Co. Inc. The Saudi Eagle (1986) 2 Lloyd’s Rep 22, the Court of Appeal said that the main consideration in the exercise of the discretion to set aside was to avoid the injustice which may be caused if judgment follows 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 Defendants 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 Defendants as to how the default occurred” (Supreme Court Practice 1995 13/9/14).

The explanation given by the Defendants for the delay in this case is far from satisfactory. Even after requesting until the 15th of March 1998 to file a defence, they continued to fail to file defence until the 4th of August 1998, when judgment was entered. The affidavit of Donald Pickering fails to explain this delay.

On the issue of the defence, I find that I am not satisfied that there is a meritorious defence on the material before me. The Guarantee and Indemnity of Lease Agreement between each Defendant and the Plaintiff, are prima facie binding on the Defendants. The claim that the receiver appointed mismanaged the affairs of the company does not, (and this was conceded by counsel for the Defendants), affect the contractual obligation between the Defendants personally, and the Plaintiff. Nor can I agree, in the absence of evidence of fraud or bad faith or collusion, that the Defendants can now claim that the Plaintiff failed to obtain a proper value for the vehicles. This is particularly so in the light of Taniela Matakibau’s assertion that the vehicles were advertised and sold to the highest tenderer.

Nor am I satisfied that the default judgment was irregular in respect of the interest payable. The Guarantee signed by each Defendant contains the following clause;

“4. We will jointly and severally on written demand indemnify you against all loss or damage you may sustain under the said Lease Agreement whether or not such loss or damage results from the commission of any breach by the Lessee and whether or not you have any legal right to claim against the Lessee for any loss or damage . . . . .”

Clearly such loss includes the loss on interest due. Clause 3 of the Agreement provides;

“We further jointly and severally agree that our liability under this Guarantee and Indemnity shall be a principal debtors and not merely as sureties and shall be a continuing security and shall not in any way be discharged, diminished or affected by . . . .

(v) the impairment of any security taken from the Lessee or the failure to realise or enforce such security”.

It is clear that the Defendants’ purported defence has no prospects of success. They further have not provided a satisfactory explanation for the failure to file a defence. Nor have they shown the court that the default judgment was irregular. As such I dismiss both applications and order that the Defendants pay the Plaintiff costs for this application, to be taxed if not agreed

[Nazhat Shameem] Ms
JUDGE

At Suva
12th July 1999