NBF Asset Management Bank v Sivo [2002] FJHC 260; HBC0517d.2000s (31 October 2002)

IN THE HIGH COURT OF FIJI
AT SUVA
CIVIL JURISDICTION

CIVIL ACTION NO. HBC0517 OF 2000

Between:

NBF ASSET MANAGEMENT BANK
Plaintiff

and

AISAKE NAIRAI SIVO
Defendant

Mr. T. W. Seeto for the Plaintiff
Mr. A. Herman for the Defendant

DECISION

This is the defendant=s summons filed 19 April 2002 to set aside a default judgment in the sum of $67,364.94 plus interests at the rate of 12% and costs of $126.00 entered against him on 11 December 2000 for failing to file Notice of Intention to Defend.

In support of his application the defendant filed an application in which he stated, inter alia, that pursuant to the said judgment a Receiving Order in bankruptcy was made. He said that he had now been advised that he has a good and valid defence. He stated at length how the bank advanced the loan. He relied on $16,000 which was to be paid by the Fiji National Provident Fund (FNPF); but FNPF rejected the application as it did not finance agricultural lots. The Bank unilaterally increased the repayment. He argues that the Bank was negligent, lacked due diligence, did not exercise prudence which resulted in loss to the defendant.

The defendant says that there are triable issues showing a prima facie defence on merits and that the application is neither frivolous nor vexatious.

It is submitted on behalf of the defendant that the failure to enter appearance to the Writ of Summons was >not intentional, but, attributable to financial constraints in instructing a solicitor=.

The plaintiff=s contention is that the parties entered into a loan agreement on 15 September 1988. Security to be obtained was a first registered mortgage over NLTB Lease No. 09884. The defendant later applied for a loan of $19,000.00 and at the same time confirmed that the entitlement with FNPF would be used to reduce the sum loaned. The defendant says that he has misplaced a copy of the approval letter which, the plaintiff says shows that the defendant appears to be confused over the terms of the loan he obtained in 1998 which contain none of the terms he has suggested.

Consideration of the issues

The plaintiff obtained judgment pursuant to Order 13 Rule 1(1) of the High Court Rules 1988 which provides:

AWhere a writ is indorsed with a claim against a defendant for a liquidated demand only, then, if that defendant fails to give notice of intention to defend, the plaintiff may, after the prescribed time enter final judgement against that defendant for a sum not exceeding that claimed by the writ in respect of the demand and for costs, and proceed with the action against the other defendants, if any@

The application to set aside judgment is made under Order 13 Rule 10 which states:

AWithout prejudice to rule 8(3) and (4), the Court may, on such terms as it thinks just, set aside or vary any judgment entered in pursuance of this Order.@

Under the said Order 13 court has certain discretionary powers to set aside a judgment. The following notes from The Supreme Court Practice 1997 Volume I at p139 sets out quite fully matters which ought to be taken into account in an application of this nature:

AThe purpose of the discretionary power is to avoid the injustice which may be caused if judgment follows automatically 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 defendant can show merits, the court will not prima facie desire to let a judgment pass on in which there has been no proper adjudication. Also as a matter of common sense the court will take into account the explanation of the defendant as to how the default occurred. The foregoing general indications of the way in which the court exercises its discretion are derived from the judgment of the Court of Appeal in Alpine Bulk Transport Co. Inv v. Saudi Eagle Shipping Co. Inc, The Saudi Eagle (1986) 2 Lloyd=s Rep 221, CA at p.223, where the earlier cases are summarised. From that case the following propositions may be derived:

(a) It is not sufficient to show a merely Aarguable@ defence would justify leave to defend under Order 14; it must both have Aa real prospect of success@ and Acarry some degree of conviction@. Thus the court must form a provisional view of the probable outcome of the action.

(b) If proceedings are deliberately ignored this conduct, although not amounting to an estoppel at law, must be considered Ain justice@ before exercising the court=s discretion to set aside.@

Factors which ought to be considered on an application to set aside a default judgment has also been well put in Russell v Cox ([1983] NZLR C.A. 654) which I consider are pertinent. The headnote (inter alia) reads:

AThe 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. Here the High Court Judge was entitled to find that the defendant=s default in not appearing to contest the case was inexcusable@.

On the affidavit evidence before me it is clear that the defendant entered into the loan agreement with his eyes open. When he was unable to meet his commitment to the Bank he blames the lender for putting him in the dire situation he is in. The terms and conditions of the agreement were reduced to writing. It was a written contract and to attempt to incorporate evidence into the agreement is inadmissible as stated in Bank of Australia v Palmer [1897] UKLawRpAC 44; (1897) AC 540 by Lord Morris at 545 thus:

AParol testimony cannot be received to contradict, vary, add to or subtract from the terms of a written contract or the terms in which the parties have deliberately agreed to record any part of their contract.@

The defendant was well aware of FNPF=s policy towards >agriculture lease= and he is estopped from denying this. He knew full well the ramifications of using Native lease 09884 as security and failed to disclose this to the plaintiff but proceeded to execute the offer and acceptance letter of 16 September 1998. He is bound by its terms. On estoppel Blackstone states:

AAn estoppel happens where a man hath done some act or executed some deed which estops on precludes him from averring anything to the contrary more specifically. Furthermore, a person who by his words or conduct wilfully accuses another person to believe in the existence of a certain state of things and induces him to act on that belief so as to alter his position for the worst is estopped from setting up against the latter person a different state of things as existing at the time in question.

The affidavit evidence reveals that the defendant did not make any loan repayments to his account and therefore it is not surprising that the debt had increased to such a vast amount. He never was in a position to make repayments nor did he make any efforts to do so.

This was a regular judgment. Default judgment was awarded on 11 December 2000 and application was made to set it aside on 19 April 2002. The excuse that he gives for not taking any steps earlier is far from convincing. In any case financial constraint to instruct counsel is no excuse for such a long delay in applying to let the matter proceed to the stage leading to the making of a Receiving Order against him. He made no response to Writs and Notices served on him. In any case on the facts before me the defendant has no prospect of success in his allegations against the plaintiff Bank. The defendant has not established a prima defence which he was required to do when applying for setting aside.

In coming to the conclusion to which I have come, I have apart from the authorities referred to hereafter, borne in mind the following principles in setting aside a judgment resulting from a failure to comply with the Rules as stated by Lord Atkin, in the case of Evans v. Bartlam (1937) 2 All E.R. 646 at 650 which I consider is apt:

AI 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.@

In conclusion, in the exercise of my discretion, applying the principles in setting aside judgment, on the facts before me, I find there is no substance in the defendant=s application. It is therefore dismissed with costs in the sum of $250.00.

D. Pathik
Acting Chief Justice

At Suva
31 October 2002