JK Builders Ltd v Raniga [2011] FJHC 301; HBC307.2006L (26 May 2011)

IN THE HIGH COURT OF FIJI
AT LAUTOKA
CIVIL JURISDICTION

Civil Action No: HBC 307 of 2006L

BETWEEN:

JK BUILDERS LTD
Plaintiff

AND:

AJAY RANIGA & KAVITA RANIGA
Defendants

AND:

SHARMA ARCHITECTS DESIGN GROUP LTD
Third Party

INTERLOCUTORY JUDGMENT

Judgment of: Inoke J.

Counsel Appearing: Ms N Khan for the Defendants
Mr F Khan for the Third Party

Solicitors: Natasha Khan Assocs for the Defendants
Diven Prasad Lawyers for the Third Party

Date of Hearing: 14 April 2011
Date of Judgment: 26 May 2011

INTRODUCTION

[1] On 4 October 2010 I dismissed the Third Party’s application to strike out the Defendants’ claim against it and ordered the action take its normal course. However, the Third Party did not file its defence within the time required by the High Court Rules so the Defendants entered default judgment against it on 19 November 2010.

[2] This is the Third Party’s application to set aside that default judgment.

THE BACKGROUND

[3] The Plaintiff built the Defendants’ house. It now sues the Defendants for the balance of the contract sum. The Defendants refused to pay it because they say the house was not built in accordance with the plans and specifications and they had to carry out remedial work. They also counter-claim for those extra costs against the Plaintiff.

[4] The Defendants have also issued a Third Party Claim against the architects on the basis that they failed to properly supervise the Plaintiff and ensure that the Plaintiff carried out fully its responsibilities under the building contract. That Statement of Claim was filed on 17 July 2009 and served on the Third Party on 22 July 2009.

THE DEFAULT JUDGMENT

[5] The Defendants entered judgment in default of defence against the Third Party on 19 November 2010. That was more than 28 days after I ordered on 4 October 2010 that the matter take its normal course so the default judgment was regularly entered and was therefore not an issue in this case.

THE APPLICATION TO SET ASIDE THE DEFAULT JUDGMENT

[6] The Third Party’s summons to set aside the default judgment was filed on 28 January 2011 pursuant to O 19 r 9 of the High Court Rules 1988. It was supported by the affidavit of the architect’s solicitor. She said, after the judgment on the strike out application was delivered, although the Third Party’s Defence was prepared, it was not filed because it was their intention to resolve this matter out of court. A copy of the proposed Defence and Counter-claim was annexed to her affidavit. The Defence was on the basis that the builder completed the works and the Third Party certified all payment certificates which the Defendants signed off for payment without complaint until now. The Third Party also counter-claimed against the Defendants for outstanding fees of $28,816.79 which remain unpaid despite demand.

[7] The architect, Vijay Sharma, also filed an affidavit in support of the application. He confirmed that the house had been completed but to date his company had been paid fees only up to 40% stage of completion. The total contract sum payable by the Defendants under the building contract was $335,000.

[8] The Defendants chose not to file any affidavit material.

THE LAW ON SETTING ASIDE

[9] O 19 r 9 of the High Court Rules 1988 provides that the Court may on such terms as it thinks just, set aside or vary any judgment entered in pursuance of this Order.

[10] I take the law as set out in the judgment of Wearsmart Textiles Ltd v General Machinery Hire Ltd [1998] FJCA 26; Abu0030u.97s (29 May 1998):

The general principles upon which a Court should act on an application to set aside a judgment that has been regularly entered, are set out in the White Book, i.e. The Supreme Court Practice 1997 (Volume 1) at p.143. They are as follows:-

"Regular judgment -If the judgment is regular, then it is an (almost) 13/9/5 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 [1986] 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)."

HAS THE THIRD PARTY SHOWN A MERITORIOUS DEFENCE?

[11] The affidavit material filed on behalf of the Third Party is not challenged. All payments have been certified and approved by the Defendants without challenge until now. I think the Third Party will have a good defence if it can show that the certificates cannot now be re-opened. They should be allowed to defend. I am satisfied that the material discloses a defence on the merits. I also accept that on the evidence now before me the Third Party has a counter-claim against the Defendants. The judgment entered in default of defence against the Third Party should be set aside and the Third Party be allowed to defend.

COSTS

[12] Whether the Third Party can prove its defence and counter-claim remains to be seen after trial so I order that costs be in the cause.

ORDERS

[13] The Orders are therfore:

1. The judgment in default of defence entered on 19 November 2010 is set aside.
   
2. The Third Party shall file its defence and counter-claim within 28 days.
   
3. The costs of this application will be costs in the cause.
   
4. The action is to take its normal course.
   

............................................................
Sosefo Inoke
Judge