Khan v Turaga [2005] FJHC 721; HBC334.1998L (25 February 2005)

IN THE HIGH COURT OF FIJI
AT LAUTOKA
CIVIL JURISDICTION

CIVIL ACTION NO. HBC334 OF 1998L

WASAL KHAN and OTHERS

V

EPARAMA TURAGA and ANOR

Gates J

Mr Ronald Gordon for the Plaintiffs [Respondents]

Mr H. Sharma for the Defendants [Applicants]

17 February 2000
25 February 2005

RULING

Judgment entered in default of defence Ord. 19 r.3, Ord.18 r.2; where judgment regular, court’s powers to set aside discretionary Ord. 19 r.9; unfettered discretion based on relevant grounds; court to seek to avoid injustice; whether defendant’s failure excusable; need for affidavit of merits; unless "very sufficient reason"; whether ground of substance shown; whether irreparable harm to plaintiffs in allowing defendants back into litigation.

[1] The issue here is whether the defendants should be allowed to have judgment set aside.

[2] With their summons to set aside, the defendants filed the affidavit of their legal practitioner, Mr Roopesh Singh. To the affidavit was exhibited a proposed defence. Mr Gordon for the plaintiffs had some criticisms of this procedure which I shall return to later.

[3] The plaintiffs filed two affidavits in reply for Wasal Khan and one for Bara Khan, the 1st and 3rd named plaintiffs respectively. These dealt with issues to do with the consequences of seizure of the disputed caterpillar rather than the setting aside matter.

[4] The defendants were served with the writ and statement of claim on 23 November 1998. They were represented by counsel before a judge on 16 December 1998. Judgment was signed and entered on 8 February 1999.

[5] In his affidavit Mr Singh does not suggest that this was an irregular judgment, giving a right to a setting aside remedy. Nor did Mr Sharma argue so at the hearing. A regular judgment having been entered, the court’s powers are discretionary in such cases.

[6] The matter is to be decided following the classic statement of the law in Evans v Bartlam [1937] AC 473, where Lord Atkin said (at p.480):

"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."

[7] That discretion is an unfettered one, but must be based on relevant grounds: Evans (supra at pp.481, 486). In deciding the matter the courts are exhorted to seek to avoid injustice (per Lord Atkin at p.481).

Was the defendant’s failure excusable?

[8] It would appear that as soon as the plaintiffs’ solicitors served Notice of Assessment of Damages and Costs upon the defendant’s solicitors, the defendants’ solicitors prepared this application. It was filed within a month. There was no delay in bringing the matter to court: Russell v Cox [1983] NZLR 654 at p.659.

[9] Mr Singh deposed to there having been a consent order of the court on 23 December 1998. Mr Singh explained:

"THAT as the main issues had been agreed upon in the said order I thought that the other issues could also be resolved without the need to file a defence."

[10] For this reason his firm did not file a defence and hence judgment was entered against the defendants.

[11] Clearly it would have been wiser to have obtained a written assurance from the plaintiffs’ solicitors that they would forego entering judgment till a fixed date and would allow for a period when negotiations might resolve all of the issues to the dispute.

Need for an affidavit

[12] Though the defence solicitor exhibited a proposed defence to his affidavit, it is said none of the plaintiffs or a witness swore to the facts of that defence. Admissible evidence of the defence is therefore lacking. The facts would have been better deposed to by an officer of the 2nd defendant company. An affidavit of merits is considered generally necessary in order for such applications to carry conviction. In Farden v Richter [1889] UKLawRpKQB 79; [1889] 23 QBD 124 at p.129 it was said:

"At any rate, when such an application is not thus supported, it ought not to be granted except for some very sufficient reason."

But see Day v RAC Ltd [1999] 1 All ER 1007 at p.1009j.

[13] However, there was an affidavit which could qualify as an affidavit of merits and which was filed for the defendants. It had been filed with a Third Party notice. This affidavit by Sanjay Chand, an employee of the 2nd defendant company, dealt with a sufficiency of facts to provide for a defence of substance.

Whether substantial ground of defence

[14] Though some of Mr Gordon’s criticisms are valid, I believe a credible defence has been shown which was a reasonable prospect of success: Alpine Bulk Transport Co Inc. v Saudi Eagle Shipping Co Inc., The Saudi Eagle [1986] 2 Lloyds Rep. 221; and which is a defence which carries some degree of conviction, Day v RAC Ltd (supra at p. 1013j).

[15] There are issues here related to ownership, transfer and the third party. The plaintiffs claim ownership of the caterpillar was with the 3rd plaintiff who allowed the two other plaintiffs custody, possession and use of the machine in their business. They claim the caterpillar was wrongfully seized by the 2nd defendant company, and they seek damages for consequential losses to their business as well as to the caterpillar thereby.

[16] In their defence, the defendants state that the owner of the caterpillar is someone else, now joined as a third party. They refer to the purchase by this third party in his own name, with a bill of sale also in his name. The bill was exhibited. They claim there was no legal transfer to the 3rd plaintiff, of whose and the other 2 plaintiffs’ involvement with the ownership of the caterpillar the defendants were excusably unaware. Alternatively the defence alleges misrepresentation over the ownership.

[17] In his first affidavit Wasal Khan (1st named plaintiff) explained why the original purchase and bill of sale were in the name of the 3rd party. Sanjay Chand for the defendants in his affidavit says the defendants acted in compliance with the terms of an Asset Purchase Agreement.

[18] It is just that this matter should be tried. The caterpillar was returned to the plaintiffs. Though there has been delay in the handling of this case by the judicial system at Lautoka and by myself, I do not consider there would be irreparable harm to the plaintiffs in letting the defendants back into the litigation.

[19] I order that the judgment entered be set aside. The defence is to be filed and served within 7 days, and the matter is to proceed in the normal way thereafter. Costs for the plaintiffs in the sum of $300.

A.H.C.T. GATES
JUDGE

Solicitors for the Plaintiffs: Messrs Gordon & Co., Lautoka
Solicitors for the Defendants: Messrs Patel & Sharma, Nadi