Westpac Banking Corporation v Jione [2003] FJHC 309; HBC0215d.2003s (17 November 2003)

IN THE HIGH COURT OF FIJI
AT SUVA
CIVIL JURISDICTION

CIVIL ACTION NO. HBC0215 OF 2003

Between:

WESTPAC BANKING CORPORATION
Plaintiff

and

FORAETE EPINISI JIONE
Defendant

Mr. A. Bale for the Plaintiff
Mr. M. Raza for the Defendant

DECISION

This is the defendant’s motion dated 21 July 2003 to set aside default judgment entered against him on 1 July 2003 on the ground of irregularity. The application is made pursuant to Order 2 Rule 2 and Order 13 Rule 10 of the High Court Rules, 1988.

The defendant filed an affidavit in support. A reply thereto was filed by Sakimi Samuels, Manager Legal on behalf of the plaintiff opposing the application.

As ordered both counsel filed written submissions.

In this case a Writ of Summons was issued on 27 May 2003 wherein the plaintiff claimed the sum of $149,845.56 against the defendant which he allegedly misappropriated while he was in the employment of the plaintiff.

The Acknowledgment of Service of the writ was filed on 12 June 2003 by the defendant in person and Judgment by Default was filed on 27 June 2003, the judgment is dated 1 July 2003.

The judgment was obtained in default of defence. Although the amount claimed is a huge amount and appeared to be a liquidated sum, nevertheless it is my view that in the light of what the defendant has stated that the claim should have been proved. I agree with counsel that no dates for alleged misappropriation are stated to eliminate the defence of statute of limitation.

Bearing in mind these circumstances, although the application is made out of time, the circumstances in my view require judgment to be set aside (Beale v Macgregor, 2 T.L.R. 311). Although the judgment was regular but not on merits, there is an affidavit of merits i.e. an affidavit stating facts showing a substantial ground of defence [Farden v Richter [1889] UKLawRpKQB 79; (1889), 23 Q.B.D. 124].

The principles governing the setting aside of default judgments are well-known. The Supreme Court Practice 1997 Volume I at 143 states the principles very clearly and I ought to set them out hereunder as I have borne these in mind in considering this application. It states:

“Regular judgment – If the judgment is regular, then it is an (almost) inflexible rule that there must be an affidavit of merits, i.e. an affidavit stating facts showing a defence on the merits (Farden v. Richter [1889] UKLawRpKQB 79; (1889) 23 Q.B.D. 124). “At any rate where such an application is not thus supported, it ought not to be granted except for some very sufficient reason,” per Huddleston, B., ibid. p.129, approving Hopton v Robertson [1884] W.N. 77, reprinted 23 Q.B.D. p.126 n.; and see Richardson v. Howell (1883) 8 T.L.R. 445; and Watt v. Barnett [1878] UKLawRpKQB 21; (1878) 3 Q.B.D. 183, p.363).

For the purpose of setting aside a default judgment, the defendant must show that he has a meritorious defence. For the meaning of this expression see Alpine Bulk Transport Co. Inc. v. Saudi Eagle Shipping Co. Inc., The Saudi Eagle [1962] 2 Lloyd’s Rep. 221, C.A., and note 13/9/14, “Discretionary powers of the court,” below.

On the application to set aside a default judgment the major consideration 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 (see para. 13/9/14, below).”

On facts showing a defence the following statement of Lord Denning M.R. in Burns v Kondel (1971) 1 Lloyd’s Rep. 554 at 555 is apt:

“We all know that in the ordinary way the Court does not set aside a judgment in default unless 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.”

In the matter of ‘delay’ which was not too long at all, I accept the explanation given by the defendant and I have borne in mind the following passage from the judgment of Lord Atkin in Evans v Bartlam (1937) 2 All E.R. 646 at 650 which is apt:

“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.”

Further, in deciding on the issue before this court on the question of ‘delay’ the following extract from the judgment of Lord Wright in Evans (supra) at 489 after stating that the “Court, while considering delay, have been lenient in excluding applicants on that ground’ further said as follows:-

“The primary consideration is whether he has merits to which the Court 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 emphasized in Watt v. Barnett [1878] UKLawRpKQB 28; 3 Q.B.D. 363 .............................. He has been guilty of no laches in making the application to set aside the default judgment, though as Atwood v. Chichester, Q.B.D. 722 and other cases show, 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.”

Conclusion

In all the circumstances of this case I adopt the following ‘headnote’ to Maclaurin v Little [1907] NZGazLawRp 21; (1906) 9 G.L.R. 348:

Where judgment by default was entered by the plaintiffs, and it appeared that a slip had been made as to the time within which a defence ought to have been filed, and the affidavit filed by the defendant showed a good defence to the action, the judgment was set aside at defendant’s cost, defendant to have liberty to file a defence within four days, failing which the judgment was to stand.

After considering the affidavit evidence before me and the useful submissions from both counsel I find that the defendant has shown defence on merits. He ought in the exercise of Court’s discretion be let in to defend and that the judgment in default ought to be set aside.

As Hardie Boys J said in Russell v Cox (1983) NZLA 654 at 659:

“The Court has a discretion, the test being whether it is just in all circumstances to set the judgment aside, and if so, whether terms should be imposed. The justice of the case is generally to be measured against three factors, although they are not exclusive and the relative weight to be given to each will vary according to the circumstances. These factors are: whether the delay has been reasonably explained; secondly substantial ground of defence has been disclosed; and thirdly the Plaintiff will suffer irreparable injury if the judgment is set aside.”

For these reasons, the judgment in default is ordered to be set aside. The defendant is at liberty to file a statement of defence within 21 days from the date of this order failing which the judgment will stand. I fix the costs of this summons against the defendant in the sum of $300.00 to be paid within 14 days.

D. Pathik
Judge

At Suva
17 November 2003