Bale v National Bank of Fiji [2005] FJHC 744; HBC216.1997 (6 June 2005)

IN THE HIGH COURT OF FIJI
AT SUVA
CIVIL JURISDICTION

CIVIL ACTION NO. 216 OF 1997

Between:

SAMISONI BALE aka TUIMASI LUTU Trading as GENERAL FOOD MARKETING FIJI LIMITED
Plaintiff

And

NATIONAL BANK OF FIJI
Defendant

Mr. I. Tuberi for the Plaintiff
Mr. R. Naidu for the Defendant

DECISION

This is the defendant’s motion dated 26 April 2004 for orders (a) that the default judgment entered against the defendant on 24 February 2004 be set aside and the defendant be given unconditional leave to defend this action and (b) that there be an interim stay of execution of the judgment until the hearing and determination of this application.

The application is supported by an affidavit and the grounds are as follows (as stated in the motion):

(a) The Defendant is not in default of pleadings. The Defendant has filed a statement of defence and counterclaim on 5th November, 1998.

(b) The order of 31st October, 2003 did not direct the Defendant to file an amended statement of defence although the Defendant was at liberty to do so if it saw it necessary.

(c) The default judgment entered against the Defendant on the 24th day of February, 2004 is irregular and therefore must be set aside ex debito justitiae for the following reasons:

(i) The judgment has been drawn up as a final judgment when the Plaintiff’s claim is unliquidated and calls for proof.

(ii) The judgment has been entered before the expiry of the time given to the Defendant for filing an amended statement of defence.

(d) The Defendant has a defence on the merits.

I have before me for my consideration an affidavit in reply of the plaintiff filed 7 June 2004 and an affidavit in reply thereto of defendant filed 25 June 2004. Both counsel filed written submissions, the last being on 30 July 2004.

Consideration of the application

Default judgment

On 24 February 2004 the plaintiff obtained a default judgment against the defendant in the following terms:-

"No amended defence having been filed by the abovenamed Defendant to the Amended Writ and Amended Statement of Claim filed herein, it is this day adjudged that the abovenamed defendant do pay the Plaintiff damage as follows:

(1)	Special Damages	$ 528,488.82
(2)	General Damages	$5,930,824.00
(3)	Interest at the rate of 10% for 10 years	$ 450,000.00
(4)	Costs to be assessed"

Is the judgment irregular?

Upon reading the affidavits filed and the written submissions it is quite clear that the judgment has been irregularly obtained.

The background facts are that on 21 July 1997 the defendant filed a Statement of Defence to the plaintiff’s claims. A Statement of Defence and counterclaim was filed on 5 November 1998. The order of 31 October 2003 did not direct the defendant to file an amended Statement of Defence although the Defendant was at liberty to do so if it saw it necessary. Therefore judgment in default of pleadings cannot be obtained. I agree with the defendant that only for a liquidated claim can a final judgment be entered where no defence has been filed [Or. 19 r.2(1) of the High Court Rules].

I agree with the defendant’s counsel that by the plaintiff proceeding to obtain judgment in the above circumstances amounts to an abuse of the process of the Court.

This indeed was a judgment irregularly obtained which cannot be cured for it was entered before the expiry of the time given to the defendant for filing an amended Statement of Defence.

As stated in Hals. Vol 37 4th Ed. para 403 at p297:

"In the case of an irregular judgment, the Defendant is entitled to have it set aside ex debito justitiae and the Court should not impose any terms whatever upon the defendant".

Although the plaintiff’s amended Statement of Claim pleads specific amount for loss and damages they are in some cases unliquidated sums subject to assessment of damages.

Learned counsel for the defendant has sighted a number of useful authorities on what is meant by the words ‘liquidated’ and ‘unliquidated’ and in the absence of any definition of these terms in the High Court Rules, I refer to these authorities and they are as follows:

In Knight v Abbot (1882) 10 QB 11 it was held that:

"A liquidated demand is in the nature of a debt i.e. a specific sum of money due and payable under a contract. Its amount must be ascertained or ascertainable as a mere matter of arithmetic."

And to like effect is a dictum in Workman Clark & Co. Limited v.
Lloyd Brazileno [1908] UKLawRpKQB 42; (1908) 1 K.B. 968 (C.A.):

"A claim is unliquidated, where even though specified or named as a definite figure, its ascertainment requires investigation beyond mere calculation".

In Mohammed Rafiq v Deo Raj and Another (unreported) Fiji Court of Appeal Civil Appeal No. 44 of 1933, 28 March 1984, Speight JA speaking for the Court said:

"In the amended Statement of Claim various items of loss were claimed under the head of "Special Damages". Examination shows that these items were really unliquidated claims.

They would require proof of such matters as the need for and extent of travelling expenses incurred, the need to employ labour to replace his own efforts as a farmer, and similar matters.

That being so these items would be matters calling for proof, and should not have been the subject of a judgment signed across the Court counter".

In Subodh Kumar Mishra v. Car Rentals (Pacific) Ltd [1985] 31 FLR 49, the Fiji Court of Appeal said at p.52 para F-G:

"The Respondent’s action is in tort and the damages he claims are special damages – all matters which, in the absence of consent or a clear statutory or regulatory mandate to the contrary, have to be proved before a judgment can go. We accordingly hold that both courts below were in error in holding the claim to be one for a liquidated amount."

Halsburys Laws of England, Volume 37: Practice and Procedure, 4th Edn. Para 397 reads:

"A liquidated demand is a debt or other specific sum due and payable by the Defendant to the Plaintiff. It must be ascertained or capable of being ascertained as a mere matter of arithmetic. It does not extend to unliquidated damages, whether in contract or tort, and such a claim does not become liquidated merely because it is expressed as a definite or specific figure..."

Bearing the above authorities in mind, I agree wish Mr. Naidu in his argument as to the judgment obtained in regard to the various heads of damages and interest.

Principles on setting aside judgment

Under Or.13 r.10 the Court may set aside or vary ‘any judgment’ unconditionally or on terms.

The Court has a very wide discretion in an application of this nature but it is also guided by certain well known principles.

One of the principles 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).

The basic principles applicable to setting aside judgments in the exercise of Court’s discretion are set out in Halsburys Laws of England Vol 37 4th Ed. para 403, inter alia, thus:

"In the case of a regular judgment, it is an almost inflexible rule that the application must be supported by an affidavit of merits stating the facts showing that the defendant has a defence on the merits,... For this purpose it is enough to show that there is an arguable case or a triable issue".

There it is further stated:

"There is no rigid rule requiring the applicant to explain why he allowed judgment to go by default, but nevertheless, at least in the case of a regular judgment, such explanation is obviously desirable to enable the court to exercise its discretion, especially as to any and if so what terms should be imposed".

A useful summary of the factors to be taken into consideration in setting aside is to be found under Notes to Or.13 r.9 of The Supreme Court Practice 1995 Vol 1 at 142 which I have considered and which is, inter alia, as follows:

"The 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 can show merits, the court will not prima facie desire to let a judgment pass on 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."

There it is further stated:

"The foregoing general indications of the way in which the court exercises discretion are derived from the judgment of the Court of Appeal in Alpine Bulk Transport Co. Inc. v. Saudi Eagle Shipping Co. Inc., The Saudi Eagle [1986] 2 Lloyd’s Rep. 221, C.A., 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 "arguable" defence that would justify leave to defend under Order 14; it must both have "a real prospect of success" and "carry 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 "in justice" before exercising the court’s discretion to set aside."

Also on the subject of setting aside default judgment, in Davies v Pagett (1986) 10 FCR 226 at 232 a Full Court of the Federal Court of Australia said as follows and I concur and which I have borne in mind in considering this matter:

"The fundamental duty of the court is to do justice between the parties. It is, in turn, fundamental to that duty that the parties should each be allowed a proper opportunity to put their cases upon the merits of the matter. Any limitation upon that opportunity will generally be justified only by the necessity to avoid prejudice to the interests of some other party, occasioned by misconduct, in the case, of the party upon whom the limitation is sought to be imposed. The temptation to impose a limitation through motives of professional discipline or general deterrence is readily understandable; but, in our opinion it is an erroneous exercise of the relevant discretion to yield to that temptation. The problem of delays in the courts, egregious as it is, must be dealt with in other ways; for example, by disciplinary actions against offending practitioners and by a comprehensive system of directions, hearings or other pretrial procedures which enable the court to supervise progress – and, more pertinently non-progress – in all actions".

Consideration of the application

In considering this application to set aside I have borne in mind the background facts of the case and have applied the principles applicable to it.

In exercising its discretion the Court finds that the defendant has fulfilled certain basic preconditions namely, (i) reasons why judgment was allowed to be entered by default, (ii) application must be made promptly and without delay and (iii) an affidavit deposing to facts that show that the defendant has a defence on the merits. (Pankaj Bamola & Anor v Moran Ali FCA 59/90).

As already stated, the major consideration is whether the ‘defendant has disclosed a defence on the merits, and this transcends any reasons given by him on the delay in making the application even if the explanation given by him is false’. And as Lord Denning M.R. said in Burns v Kondel (1971) 1 Lloyd’s Rep. 554 at 555:

"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."

I find on the affidavit evidence before me and on a consideration of all the material put to Court, that there is a substantial and meritorious defence disclosed.

Conclusion

In the outcome, in the exercise of my discretion and applying the principles and authorities stated above within which the defendant has brought itself, the judgment ought to be set aside. The plaintiff will not be prejudiced in any way and it will be able to recover payment of any judgment as it cannot be said that the defendant is not able to meet its obligations if judgment goes against it.

The default judgment is therefore ordered to be set aside with costs in the cause. The defendant is at liberty to file an Amended Statement of Defence within 14 days and thereafter the action is to take its normal course.

D. Pathik
Judge

At Suva
6 June 2005