Credit Corporation (Fiji) Ltd v Khan [2011] FJHC 138; Civil Action 415.2000 (3 March 2011)

IN THE HIGH COURT OF FIJI AT SUVA
CIVIL JURISDICTION

CIVIL ACTION NO: 415/2000

BETWEEN:

CREDIT CORPORATION (FIJI) LIMITED
a limited liability company having its registered office at Credit House, Gordon Street, Suva
PLAINTIFF

AND:

BASHIR KHAN f/n Puran Singh and SHAMIMA BI KHAN f/n unknown both of Waicamucamu Road, Rualago, Vunimoli, Proprietor and Domestic Duties respectively
DEFENDANT

Counsel: Ms N. Sharma for the Plaintiff
Mr F.Vosarogo for the Defendants
Hearing: Written Submissions of the Defendants filed on 11 October, 2002
Written Submissions in Reply of the Plaintiff filed on 11 October, 2002
Date of Judgment: 03 March, 2011

Judgment of: JUSTICE A.L.B.BRITO-MUTUNAYAGAM

JUDGMENT OF THE COURT

1. The Defendants apply by Notice of Motion dated 24th January, 2002, to set aside a default judgment entered in favor of the Plaintiff on 7th November, 2001, on a Summons for summary judgment. The application is made under Order 14, Rule 11 of the High Court Rules 1988.
   
2. The facts of this case are as follows:
   

i. On 25th September, 2000, the Plaintiff had filed Writ of Summons and Statement of Claim claiming a sum of $327,421.14 against the Defendants, as guarantors of S.B. Holdings Limited. The Plaintiff had entered into an Asset Purchase Agreement with S.B. Holdings Limited to hire machinery and the Defendants had guaranteed payment of the hiring charges.

ii. On 23rdOctober, 2000, the Defendants had filed Statement of Defence.

iii. On 25th May, 2001, the Plaintiff filed Summons for Summary Judgment under Order 14 against the Defendants, together with an Affidavit in Support of Summary Judgment. The said Affidavit states inter alia that:

1. the first named Defendant had admitted in his Affidavit in Opposition in High Court Winding Up case No.HBE 2 of 1999 that the hirer, S.B.Holdings Limited(of which he was Managing Director) owed the Plaintiff the sum of $157,310.00 under the Asset Purchase Agreement,
   
2. by Court Order dated 6th October,1999,the said winding up proceedings were stayed pending appeal on the condition that the hirer pay to Court the sum of $157,310.00.The sum was not paid and the Order for stay was set aside. A copy of the Affidavit in Opposition filed in High Court Winding up case No.HBE 2 of 1999 and the Court Order dated 6th October,1999, were annexed to the Affidavit.
   

100. The Plaintiff seeks the admitted sum of $157,310.00.
     

iv. On 9th October, 2001, the Solicitors of the Defendants withdrew as Solicitors .

v. On 7th November, 2001,Judge Fatiaki upon reading the Summons for Summary judgment ordered that the First Defendant pay the Plaintiff the sum of $157,310.00.
It has been noted in the Judge's minutes of 7th November, 2001 ,that the First Defendant does not have a genuine arguable defence to the claim of $157,310.00, and that the First Defendant had admitted on oath that the said sum was owing to the Plaintiff.

3. The Defendant's case
   

The First named Defendant in his Affidavit dated 17th January, 2002,(in support of the Notice of Motion to set aside the default judgment) states that;

1. The Defendants were served with Summons for Summary Judgment under Order 14 of the High Court Rules and instructed Messrs Sherani & Co to oppose the Summons.
   
2. Judgment was entered against the Defendants in default of appearance by the Solicitors.
   

100. Messrs Sherani & Co. had written to him withdrawing as Solicitors, but due to overseas travels and his business commitments, the letters were not brought to his attention.
     

4. S.B. Holdings Limited did owe the Plaintiff a sum of $157,310.00. However, the Plaintiff had seized various chattels for which credit had not been given, and this was not taken into consideration when the Court entered judgment against the First Defendant.
   

On 12 April, 2002, the First Defendant filed his Response to Affidavit in Reply of the Plaintiff .

4. The Plaintiff's case

The Plaintiff Company by an Affidavit in reply dated 13 March, 2002, of Uday Raj Sen, its Development Manager, states that Judgment was entered against the First named Defendant after Order 14 application was heard and not because there was no appearance by the Defendants' Solicitor. With respect to the First Defendant's contention that the Plaintiff had repossessed various chattels, it is stated that the hirer's account was duly credited with the proceeds of the sale of repossessed goods as set out in the Statements of Account annexed to the Affidavit.

5. The Law

Order 14, Rule 11 of the High Court Rules states that any "judgment given against a party who does not appear may be set aside or varied by the Court on such terms as it thinks just".

The Fiji Court of Appeal in Fiji Sugar Corporation Ltd v Ismail (1988) 34 F.L.R.75, at page 80 stated "(an) affidavit disclosing of prima facie defence " is required to set aside a default judgment. The Court of Appeal cited the case of Evans v Bartlam (1937) 2 All E.R. p.646 at p.650 where Lord Atkins said:

"The discretion (to set aside a default judgment) 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 application must produce to the court evidence that he has a prima facie defence." (my emphasis)

The Fiji Court of Appeal in Wearsmart Textiles Ltd v General Machinery Hire Ltd [1998] FJCA 26 stated:

"it is an (almost) inflexible rule that there must be an affidavit of merits, i.e. an affidavit stating facts showing defence on the merits. ......... ... the Court of Appeal judgment in Alpine Bulk Transport Co. Inc. v Saudi Eagle Shipping Co. Inc.. [1986] 2 Lloyd's Rep. 221 as authority for the following prepositions:

"It is not sufficient to show a merely "arguable" defence that would justify leave to defend 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.

........ we subscribe to the White Book's preferred view that 'unless potentially credible affidavit evidence demonstrates a real likelihood that a defendant will succeed on fact no "real prospect of success" is shown and relief should be refused'. (my emphasis)

The First Defendant's Affidavit does not in my view, raise a prima facie defence on the merits or triable issues. Summary Judgment was entered against the First Defendant on the admission of the First Defendant made on oath that he owes the Plaintiff the sum of $157,310.00. The statement of the First Defendant put forward by way of defence that credit had not been given by the Plaintiff for the sale of repossessed goods has been controverted by the Statements of Account annexed to the Affidavit in reply of the Plaintiff.

6. For the aforesaid reasons, I dismiss the Defendants motion to set aside the Judgment dated 7th November, 2001with costs summarily assessed at $500.
   

A.L.B.Brito-Mutunayagam
JUDGE

03 March 2011