Australia and New Zealand Banking Group Ltd v Prasad [2002] FJHC 231; HBC0201d.2001s (31 October 2002)

IN THE HIGH COURT OF FIJI
AT SUVA
CIVIL JURISDICTION

CIVIL ACTION NO. HBC0201 OF 2001

Between:

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED
Plaintiff

and

1. VISHNU PRASAD
f/n Balessar Mishra and

2. RAJ LAKSHMI PRASAD
f/n Gowrie Pratap
Defendants

Ms. B. Narayan for the Plaintiff
Mr. G.P. Shankar for the Defendants

DECISION

By Summons dated 21st November 2001 the plaintiff is applying under Order 14 of the High Court Rules 1988 'that summary judgment be entered against the defendants herein for the sum of $1,516,389.81 jointly and severally plus agreed interest at the rates of $237.98 per day and $256.29 per day from 4th April 2001 respectively until judgment is obtained and costs of this action and that the Statement of Defence filed herein be struck out or dismissed upon the grounds contained in the Affidavit of Christopher Robin Griffiths filed herein.'

In support of its application the plaintiff relies on the Writ of Summons filed herein and affidavits of said Griffiths sworn 21 November 2001 and 19 March 2002.

From the defendants I have before me affidavits of Ashish Narayan sworn 3 December 2001 and a supplementary affidavit sworn 6 March 2002.

To assist the Court, both counsel have filed comprehensive written submissions.

The issue for the Court's determination is whether any bona fide defences have been raised in the Statement of Defence which necessitate a trial of the action rather than entry of summary judgment.

Plaintiff's submission

In support of the summons Christopher Robin Griffiths, the Head of Asset Management of the plaintiff Bank, deposed that the claim is pursuant to a cross-guarantee executed by the defendants on 16 June 1995 in favour of the plaintiff in consideration of the plaintiff advancing monies and providing credit facilities to Burgess (Fiji) Limited and Vivrass Development Limited, both companies in which the defendants are the Directors and principal shareholders.

The plaintiff denies that the cross-guarantee has been varied and/or discharged as alleged in paragraph 4 of the defence. There was no such arrangement between the parties whereby the plaintiff had to release all the securities. However, there was a settlement in the sum of $3,300,000.00 received from FNPF pursuant to which plaintiff had agreed to discharge only one of the securities of Vivrass being mortgage No. 378302 on CT No. 24128.

The plaintiff says that although the plaintiff holds securities on the said Burgess Ltd's debts, it does not bar it from instituting legal action for recovery of the debts.

The plaintiff says that it is a 'sham' defence filed by the defendants and it ought to be struck out.

Defendants' submission

The deponent Asish Narayan stated how the cross-guarantee was to have been released and discharged upon payment of $3,300,000.00, but the plaintiff just discharged one of the two properties, The defendants say that they have clearly acted under genuine mistake and/or understanding. They further stated that any balance of the debt was transferred to Laucala Beach Holdings Ltd and the plaintiff held security of mortgage over the two properties of that Company.

The deponent says that the defendants were made to understand that guarantee would only be enforced after mortgaged properties are properly sold and recovery action against the principal debtors has been exhausted. This has not been done. The second defendant who is the wife of the first defendant did not get independent advice and hence the guarantee is unenforceable. The first defendant states that the loan to him has been paid and that as far as both the defendants are concerned the consideration stated in the guarantee is not correct.

Consideration of the summons

I have before me for my consideration very comprehensive written submissions from both counsel on facts and law.

Order 14 of the High Court Rules 1988 sets out the procedure to obtain a summary judgment when, inter alia, 'the defendant has no defence to a claim included in writ'. In so far as it is relevant the said Order 14 provides:

"1. - (1) Where in an action to which this rule applies a statement of claim has been served on a defendant and that defendant has given notice of intention to defend the action, the plaintiff may, on the ground that that defendant has no defence to a claim included in the writ, or to a particular part of such a claim, or has no defence to such a claim or part except as to the amount of any damages claimed, apply to the Court for judgment against that defendant."

The purpose of the procedure has been clearly stated in Pemberton v. Chappel [1986] NZCA 112; (1987) 1 NZLR 1 (C.A.) by Somers J thus:

"It is to enable a Plaintiff to obtain judgment where there is really no defence to the claim made and so put an end to the spectacle of a worthless defence being raised and pursued for the purposes of delay."

The following extract from the judgment in Pemberton (supra) elaborates further on the purpose of the procedure:

"While the desirability of eliminating the frustration and delays which can be caused by unmeritorious or tendentious defence needs no emphasis, it is important to pay proper regard to the defendant's interest and to be wary of allowing the rule to become an instrument of oppression or injustice in the laudable interest of expediting litigation. It is true that 'justice delayed is justice denied', but not at the expense of a fair hearing for both parties, unless the Court is sure there is no real defence. It is unlikely to reach this conclusion if the affidavits disclose disputed questions of fact, the resolution of which depends on an assessment of credibility or reliability of witnesses".

Further, on the purpose of Order 14, the following passage from the judgment of Parker L.J. in Home and Overseas Insurance Co. Ltd v Mentor Insurance Co (UK) Ltd (in liq) (1989) 3 ALL E.R. 74 at 77 is pertinent:

"The purpose of Ord 14 is to enable a plaintiff to obtain a quick judgment where there is plainly no defence to the claim. If the defendant's only suggested defence is a point of law and the court can see at once that the point is misconceived the plaintiff is entitled to judgment. If at first sight the point appears to be arguable but with relatively short argument can be shown to be plainly unsustainable the plaintiff is also entitled to judgment. But Ord 14 proceedings should not in my view be allowed to become a means for obtaining, in effect, an immediate trial of an action, which will be the case if the court lends itself to determining on Ord 14 applications points of law which may take hours or even days and the citation of many authorities before the Court is in a position to arrive at a final decision."

On the affidavit evidence before me, I find that the defendants have raised triable issues both in their Statement of Defence filed herein and in the affidavit in opposition to this application. I have already outlined hereabove what their contention is. A perusal of the Statement of Defence does not appear to me to be a 'sham' defence as alleged. A number of defences have been raised by the defendants which cannot be resolved without the trial of the action.

It is my view that this is not a proper case to invoke Order 14.

The court is not at this stage required to go into the merits of this case or 'try' the case on affidavit evidence.

It is an important principle of the summary judgment procedure that the onus remains on the plaintiff throughout to establish that the defendant has no defence. If the court is not satisfied finally on this point, the application must be dismissed. The courts should not become embroiled in deciding the merits of the claim rather they should confine themselves to the pertinent issue whether there was an arguable defence. The defendants do not have to prove their case on a summary judgment application. If credible evidence is tendered by the defendants, there will have to be a particularly strong case for the plaintiff in order for the Court to be able to be satisfied that there is no defence.

As stated in Anglo-Italian Bank v. Wells (1878) 38 LT 201, per Jessel MR

"When the judge is satisfied not only there there is no defence but no fairly arguable point to be argued on behalf of the defendant it is his duty to give judgment for the Plaintiff".

And as stated under Ord 14 r3 the Court has to be satisfied "that there is an issue or question in dispute which ought to be tried ......".

As said earlier, on the pleadings, I find that there are triable issues and therefore subject to what I say hereafter summary judgment cannot be entered against the defendants. The following passage from the judgment in Powszechny Bank Zwiakowy W Polsce v Paros (1932) 2 K.B. 353 are worth noting in this regard. There at 359 Greer L.J. said:

"It has long been the rule that in proceedings under Order XIV, what the Court, whether this Court or the King's Bench Division, has to ascertain is whether there is a triable issue. If there is, no matter how strongly the Court may anticipate that it will be decided in the plaintiff's favour, it must order a trial."

He goes on to say that:

All the defendant need say is that he requires the plaintiff to prove his case, and the law puts upon the plaintiff the onus of proving it. When the defendant says he does not admit the claim he need not carry the case any further than to say: 'There is a triable issue and I want to have it tried'.

Great care should be exercised in granting summary judgment and should not be exercised unless there is no such question to be tried (Fancourt v. Mercantile Credits (1983) HCA 25; (1983) 154 CLR 87 at 99. Theseus Exploration N.Z. v. Foyster (1972) 125 CLR 507). In this case the defendants are being sued as guarantors and they have raised the issue that certain payments were made by Fiji National Provident Fund towards the reduction of the debt in question and the balance remaining was taken over by another company. When I make these observations, I am not unmindful of the rights and obligations of a surety or guarantor. The Privy Council case of China and South Sea Bank Ltd v Tan [1989] UKPC 38; [1989] 3 All E.R. 839 dealt with this aspect of the matter. The principles have been clearly stated there and I give below what was held in that case. It is as follows:

"Since the rights of a surety continued to depend on the principles of equity it followed that unless the security was surrendered, lost, rendered imperfect or altered in condition by reason of what had been done by the creditor the surety remained liable under his contract to pay the creditor if the debtor failed to do so, and the creditor was entitled to sue him instead of pursuing his claim against the debtor or selling the mortgaged securities. Moreover, the creditor was not obliged to do anything and was not under a duty to exercise his power of sale over the mortgaged securities at any particular time or at all and did not become a trustee of the mortgaged securities and the power of sale for the surety unless and until he was paid in full. It followed therefore that since the bank did not act injurious to the surety or inconsistent with his rights and did not omit any act which its duty enjoined it to do the surety was liable under the contract of guarantee to repay the bank the principal sum advanced with interest.

However, in the present case, the manner in which the securities herein have been alleged to have been dealt with by the creditor/plaintiff Bank in that, inter alia, it decided not to proceed to exercise its power of sale, the principles governing the grant of summary judgment will apply.

Therefore, the determination of the issue in this application cannot be made without the trial of the action.

On the affidavit evidence before me and after considering the very useful written submissions from both counsel I am left in the position that there ought not to be a summary judgment in this case and I adopt the following statements of Somers J in Australian Guarantee Corporation (NZ) Ltd v Wyness (1987) NZLR 326 at 330 in coming to the decision to which I have come:

"We do not consider this case lays down any general rule that where a defence is raised which invokes the discretion of the Court under some statutory provision the power to enter summary judgment should not be exercised. So to hold would we think add a gloss to the rules about summary judgment. Where, as in the two cases mentioned, the evidence before the Court shows that an inquiry is necessary, or there is insufficient evidence to enable the Court to be satisfied the defence must fail or that discretionary relief will not be given, the proper course will be to refuse to enter summary judgment. If, however, it is apparent that there is no further evidence available, and that the defence cannot succeed, then judgment should be entered."

Conclusion

In an application for summary judgment it is incumbent on the applicant to ensure that the case was a proper case for summary judgment (Barclays Bank plc v Piper TLR 1995 319): The following passage from the judgment of Roch L.J. at 320 is apt in this case:

"Order 14 proceedings were unlike applications for interlocutory injunctions in which liberty to the defendant to apply to set aside the order would be a standard term. An Order 14 judgment finally disposed of the action in a summary manner.

The purpose of the rules relating to the contents of the affidavit in support was to ensure that the plaintiffs had demonstrated that the case was a proper case for summary judgment."

To conclude, in deliberating on this aspect of the case I have noted the following passage from the judgment of Denman J in Manger and Another, Syndics under the Bankruptcy of N. Rodrigues Et CIE, v Cash (5 TLR at 271-272):

"The jurisdiction was one to be exercised with great care, so as not to preclude a party from raising any defence he may really have. The Judge was not to make the order if either he was satisfied that there was a defence, or that the defendant should be allowed to defend. There had been many cases decided on this Order, and especially two which appeared to support this view. One was, "Ray v. Barber," in the Court of Appeal in 1879, in which it was laid down that the Judge had a discretion if facts were shown on which he thought the defendant should be allowed to defend the action, conditionally or unconditionally, even though a defence was not clearly established. So in the case of, "Wallingford v. Mutual Assurance Company," in the House of Lords, in which a similar view was adopted. It was a hard thing to hamper a man who might probably have a defence by requiring him either to pay money into Court or find sureties for a large sum, which he might not be able to find. It was sufficient if facts were shown which made it very probable that there might be a defence, even though a defence was not clearly shown."

For these reasons on the affidavit evidence before me, on the submissions made by both counsel and bearing in mind the authorities and the principles governing the grant of summary judgment and in the exercise of my discretion on the facts and circumstances of this case, I have come to the conclusion that the plaintiff's application must fail.

I therefore refuse the application for summary judgment under Order 14 with costs against the plaintiff in the sum of $300.00.

D. Pathik
Acting Chief Justice

At Suva
31 October 2002