Shell Fiji Ltd v Dominion General Motor Spares Company Ltd [2001] FJHC 243; HBC51.2000 (23 October 2001)

IN THE HIGH COURT OF FIJI
AT LABASA
CIVIL JURISDICTION

CIVIL ACTION NO. 51 OF 2000

Between:

SHELL FIJI LIMITED
Plaintiff

And

DOMINION GENERAL MOTOR SPARES
COMPANY LIMITED

MOHAMMED SATTAR s/o Mohammed Lateef

JAINUL NISHA d/o Karim Buksh
Defendants

Mr. V.P. Ram for the Plaintiff
Mr. A. Sen for the Defendants

DECISION

This is the defendants’ summons dated 12 December 2000 for orders that the judgment by default entered against them in this action by the plaintiff and all proceedings thereunder be set aside until final determination of this action; and that the defendants be at liberty to defend this action unconditionally. The application is made under Order 19 rule 9 of The High Court Rules and the inherent jurisdiction

of this Court which provides that: ‘The Court may, on such terms as it thinks just, set aside or vary any judgment in pursuance of this Order’.

Background facts

According to the Statement of Claim in the Writ of Summons dated 14 July 2000 and filed herein the plaintiff claims against the first and second defendants the sum of $310,042.97.00 being the sum ‘due and owing for petroleum products sold and delivered and other services provided to the first and second defendants’. The second and third defendants guaranteed ‘the payment of the above sums pursuant to guarantees signed by them on 2nd July 1998'.

No acknowledgment of service of the writ having been filed by the defendants, judgment by default was entered against them in the said sum together with costs in the sum of $222.00 on 16 August 2000. Messrs. Maqbool & Company were appointed solicitors for the defendants on 12 December 2000 when the present application was made.

Applicants’ contention

In the affidavit in support of the summons sworn by the second defendant on behalf of the defendants, inter alia, he denies owing the amount claimed and also denies having any interest in the Service Stations referred to in the Writ. He asked for documents pertaining to the delivery of goods, but despite undertaking to do so by the plaintiff nothing was done. Instead the plaintiff entered default judgment in the said sum.

The defendants say that without particulars of claim they are in no position to file Statement of Defence. The issues that will be raised are: no cause of action, fraud, breaches of the provisions of Sale of Goods Act and Fair Trading Decree.

The defendants submit that there are triable issues and that they have a defence on merits; and unless they are allowed to defend this action, it will cause them enormous hardship.

They seek an Order that the said judgment be set aside and that they be allowed to defend this action unconditionally.

The plaintiff’s/Respondent’s contention

In the affidavit of Virendra Singh, Working Capital Manager of the plaintiff company, is set out, inter alia, the history of the dealings between the plaintiff and the defendants. It also sets out the payments made and cheques that were presented and dishonoured. The second defendant was to give a mortgage as security for the debt but he did not register it. The fact that there was to be this mortgage and dealings for providing security, they were not disclosed by the defendants in their application to set aside. The first defendant (D1) and its solicitors are withholding the executed mortgage and are not forwarding the document to the plaintiff nor providing a copy to this Court. The defendants gave cheques which were dishonoured, post-dated cheques were given but the defendants did not authorise their presentation, there was agreement to pay but the defendants did not sign the agreement.

The plaintiff says that there are no triable issues in this action. It says that either the first defendant purchased the products or it did not; either it owes the debt or it does not. The plaintiff says that the defendants do not wish to pay the debt and this application is a means of further delaying payment.

For these reasons the plaintiff is opposing the setting aside of the judgment.

Consideration of the application

Some four months after judgment was entered the defendants applied to set it aside. No explanation is given why no acknowledgment of service of writ was filed by them and hence the judgment. The defendants have not complied with the Rules of the High Court in this action. No explanation was given why Statement of Defence was not filed, and merely to say that particulars were lacking is not a good enough excuse for not doing so.

No doubt the Statement of Claim in the writ could have been fuller. Nevertheless that did not prevent the defendants from complying with the requirements of the law pertaining to the filing of defence. Nothing was done apart from writing letters.

Evidently the defendants did not take the claim seriously. The affidavit evidence clearly shows that they had business dealings for some time and payments have been made for goods supplied; cheques were dishonoured and post-dated cheques were given.

Now, the defendants come up and say that without particulars they cannot file defence. They have not even shown what their defence is apart from making generalised statements.

I have set out hereabove the circumstances in which the default judgment was obtained. The reasons for setting aside and the grounds of opposition are also stated.

The setting aside of a judgment is a discretionary matter for the Judge. In The Supreme Court Practice 1995 Volume I under Order 13 r.9 are set out the principles which are to be applied.

This was a default judgment obtained as a result of failure on the part of the defendants to file Acknowledgment of Service of the Writ herein. The action was not heard on merits. The White Book (supra) states:

"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 only been obtained by a failure to follow any of the rules of procedure". (per Lord Atkin in Evans v Bartlam [1937] A.C. 473, 480).

This was a regular judgment, and in such a case it is:

"an almost inflexible rule that there must be an affidavit stating facts showing a defence on the merits" [Farden v Richter [1889] UKLawRpKQB 79; (1889) 23 Q.B.D. 124].

The defendants have put forward defences in their affidavit and this will transcend the reasons by them for the delay in making the application. The White Book (ibid) states:

"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."

Applying the principles in an application to set aside a default judgment, bearing in mind the nature of the claim and giving the defendants the benefit of doubt in not having in their possession particulars of over $300,000.00 claim, I consider that in the exercise of the Court’s discretion the judgment ought to be set aside but on terms. In this application it is not so much an exercise of resolving credibility, as assessing whether or not there was a substantial ground of defence.

I conclude with the following Headnote (in part) to the Court of Appeal case of Russell v Cox [1983] NZLR 654 which I consider apt and I have considered the principles stated there in the present application:

The discretion given to the Court or a Judge by R 265 of the Code of Civil Procedure to set aside a judgment that has been obtained by default is unrestricted, apart from the time limit stated in the Rule within which the application must be brought. The test against which an application should be considered is whether it is just in all the circumstances to set aside the judgment. Considerations such as whether the defendant’s failure to appear was excusable, whether the defendant had a substantial ground of defence, whether the plaintiff would suffer irreparable injury if the judgment was set aside, should be treated as tests by which the justice of the case is to be measured. Such considerations should not be treated as rules of law.

For these reasons the default judgment herein is set aside on condition that the defendants deposit about half the amount claimed, namely $150,000.00 into Court within 14 days from this decision. Failure to do so will mean that the judgment will stand. The defendants are ordered to file Statement of Defence within 28 days of this decision after further and better particulars of the claim is supplied to the defendants which I order to be furnished within 21 days of this decision. Thereafter the action to take its normal course.

The defendants are ordered to pay costs to the plaintiff’s solicitors in the sum of $300.00 within 14 days.

D. Pathik
Judge

At Labasa
23 October 2001