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Sodexo Laos PVT Sole Co v Dewan [2011] FJHC 655; HBC220.2010 (12 October 2011)

IN THE HIGH COURT OF FIJI
AT SUVA
CIVIL JURISDICTION


Civil Action No. HBC 220 of 2010


BETWEEN


SODEXO LAOS PVT SOLE CO
a company incorporated in Laos and having its registered office at No. 34, Unit 4 Ban Thaphalanxy, Sisattank District, Ventiane Lao, PDR.
PLAINTIFF


AND:


NAWIN AVIKASH DEWAN
(f/n Vasu Dewan Nair) of 54 Namena Road, Suva, Fiji, Sales Manager.
DEFENDANT


BEFORE : Master Deepthi Amaratunga


COUNSELS : Mr. Barnes N. for the Plaintiff
Mr. Prakash M for the Defendant


Date of Hearing: 17th June, 2011
Date of Ruling : 12th October, 2011


RULING


  1. INTRODUCTION
  1. The Defendant has applied to the court by way of summons to set aside the default judgment entered against him for alleged 'fraud' for specific amount of money from the Plaintiff's company and for interest and for cost on the indemnity basis. The Defendant state that the judgment is irregular and should be vacated unconditionally as it relates to an alleged 'fraud' and states that it is a tort and the amount is not liquidated. It is to be noted at the outset the claim is based on an amount of money that allegedly transferred from the accounts of the Plaintiff, using forged documents. The main argument is whether the judgment is obtained irregularly. The grounds for irregularity are mainly based on the types of claims described in Order 19 rule 2 to rule 5. Apart from this the Defendant also state that inclusion of interest in the default judgment , which is a discretionary power of the court and also state that inclusion of the cost on the indemnity basis is also another irregularity. The Plaintiff state though their claim is based on the alleged fraud it is quantifiable and the default judgment was obtained for liquidated amount and state that all frauds need not be liquidated. Both parties did not mention or address the ratio of the case of BCCI (Overseas) Ltd v Habib Bank [1998] 4 All ER 753 where it was held that 'a court would not set aside a default judgment which suffered from irregularities if there was sufficient evidence before the court from which it was able to conclude that the substantive content of the judgment was right'. Further, where the amount in the default judgment was wrong, the court would vary the judgment of the correct amount rather than set it aside. It is also important that the Plaintiff in his statement of claim has sought special damages, apart from the recovery of the money allegedly defrauded by the Defendant from the Plaintiff while he was employed with the Plaintiff. So the claim of the Plaintiff cannot be categorized as a liquidated one as special damages has to be quantified by a court of law rather than any arithmetical way, as in a claim for liquidated amount. It is also important that mere itemization of the special damages with specific amounts, in the statement of claim does not make it a liquidated one as special damages has to be ascertained and verified by the court by evidence, and cannot be ascertained by way of arithmetic means.
  1. LAW AND ANALYSIS
  1. Order 19 Rule 9 of the High Court Rules 1988 allows the Court to set aside or vary any Judgment. The rule states as follows:

"The Court may, on such terms as it thinks just, set aside or vary any judgment entered in pursuance of this Order."


  1. This is the Defendant's summons for setting aside default judgment entered against the Defendant on 1st September, 2010. The grounds of irregularity as stated by the Defendant in his Summons dated 6th December 2010 are:-
  2. The Defendant allege that the Default judgment be set aside unconditionally on the grounds that:-
  3. The Plaintiff has obtained default judgment against the Defendant for the sums of USD $186,568.00 and for a special damages of USD $10, 413.65 with interest at 8% per annum from 7th December 2009 and costs of the action on a full indemnity basis.
  4. Out of the said sums $186,568.00 is the alleged amount of money that was defrauded by the Plaintiff Company and USD 10,413.65 is the amount of special damages pleaded in the statement of claim for alleged various expenses that were incurred in regard to the alleged fraud for the Plaintiff including some expenses for travelling and lodging claimed to be incurred in pursuant to the recovery of the money that was transferred from its account.
  1. THE DEFAULT JUDGMENT IS IRREGULAR

i). The Claim is for fraud and it is not a liquidated claim as it is a claim involving tort of fraud.


  1. Order 18 Rule 11 (1)(a) of the High Court Rules requires particulars of fraud to be specifically pleaded in the Statement of Claim. Order 18 Rule 11 states follows:

"11 – (1) Subject to paragraph (2), every pleading must contain the necessary particulars of any claim, defence or other matter pleaded including, without prejudice to the generality of the foregoing words-


  1. Particulars of any misrepresentation, fraud, breach of trust, willful default or undue influence on which the party pleading relies...."
  1. In The Supreme Court Practice 1995, Volume 1, Order 18 Rule 12/7 on page 310 which states that:-

"(28) Fraud – Fraudulent conduct must be distinctly alleged and as distinctly proved and it is not allowable to leave fraud to be inferred from the facts (Davy – Garrett [1878] UKLawRpCh 8; (1878) 7 Ch. D 473, p 489; Behn v Bloom (1911) 132 L.T.J. 87; Claudious Ash Sons & Sons Co. Ltd v Invicta manufacturing Co. Ltd (1912) 29 R.P.C. 465 H.L)"


"General allegations however, strong may be the words in which they are stated, are insufficient to amount to an averment of fraud of which any Court ought to take notice (Wallingford v Mutual Society (1880) 5 App. Cas. 685, P697; see especially the remarks of Lord Hatherley and Blackburn, pp 701, 704). The acts alleged to be fraudulent must be set out, and then it must be stated that these acts were done fraudulently, otherwise no evidence in support of them will be received."


  1. This rule makes it clear that particulars of fraud has to be specifically and precisely pleaded and give as much information to the Defendant in order to make his defence. Paragraph 5 of the statement of defence describes the alleged fraudulent transfers from the Plaintiff's account using forged documents and the specific amounts of those transactions were set out. So the details of the alleged fraud were set out in the statement of claim. The word fraud was described and the alleged forgery to transfer the stated amounts using forged signatures of one of the Plaintiff's employees, was the alleged modus operandi.
  2. In the Court to the Court of Appeal case of Sharma v Akhil Projects Limited (2010) FJCA 8 where at paragraph 47, the Court held as follows:-

"The onus of proving fraud rests with the party alleging it. In Panama and South Pacific Telegraph Co. v India Rubber, Gutta Percha, and Telegraph Works Co. [1875] UKLawRpCh 58; (1875) 10 Ch. App. 515, at p. 530 Mellish, L.J. says:


"No doubt the court is bound to see that a cause of fraud is clearly proved, but on the question at what time the persons who have been guilty of that fraud commenced it, the court it to draw reasonable inferences from their conduct".


  1. The Defendant claims that the procedure followed by the Plaintiff in obtaining judgment was not correct because order 19 rule 2 applies to liquidated amounts only. The Defendant submits that the Plaintiff's claim is for an unliquidated amount because it is based on a plea of fraud and therefore judgment by default should be set-aside as being irregular.
  2. In support of that submission the Defendant cites of Jameson & Anor v Central Electricity Generating Board [1998] UKHL 51; [1999] 1 ALL ER 193 as authority for his submission that any claim of damages in tort is for an unliquidated amount and therefore default judgment cannot be granted under Order 19 rule 2.
  3. The Plaintiff submits that Jameson & Anor v Central Electricity Generating Board can be distinguished because:
  4. In GL Baker Ltd v Barclays Bank Ltd [1956] 1 W.L.R. 1409 the Defendant sought to set aside a default judgment on the basis that the judgment was entered irregularly because the claim was for an unliquidated amount. The Court held (pp. 1411-1412):

"The foundation for the view that the judgment itself was irregular depends upon whether, within the terms of Ord. 13. R. 3, this is a writ of summons indorsed for a liquidated demand. Mr. Eastham has argued that, as the writ has been indorsed, it is a claim founded on the tort of conversion: and that though, in the classic phrase, the plaintiffs might, Godlike, have waived the tort and sued for money had and received, they did not do so; and consequently, their proper relief was by way of damages. Further, although the sum claimed as damages might be, for all practical purposes, absolutely certain, nevertheless the claim was not one for a liquidated demand within the rule, but remained a claim for damages for which, in default of appearance, the remedy was an interlocutory judgment, with an inquiry as to the amount of damages.


I have come to the conclusion that it would not be right to give to the phrase "liquidated demand" so narrow and technical a significance. If I look at the writ, and take the case of the third defendants by way of illustration, it is quite plainly, according to the language and in its context, a claim to recover the sum of £10,648 exactly, that sum being as the writ alleges, the plaintiffs' money or property which had been fraudulently converted by the third defendants. That view of the matter is supported, I think, by the reference to the first claim against Barclays Bank, which I read: "Against the first defendants for the sum of £38,705 16s 3d the property of the plaintiffs." It is, of course, not suggested that Barclays Bank did any fraudulent conversion; that is a claim for money demanded, and not paid. But the phrase "the property of the plaintiff" is common to both; and I think it is inescapable, as a matter of English, that this is a claim for £10,648; and the addition of the words "fraudulently converted" does not prevent the sum claimed being a liquidated demand, I can find nothing in the rules (and no authority has been cited) which prevents me coming to that conclusion as a matter of common sense."


  1. From the above decision of Justice Upjon, it is clear that the word 'fraudulently' is not the decisive factor in the statement of claim in determination of whether the claim is liquidated or not, but the claim has to be looked as a whole and if the amounts of the alleged illegal diversion of funds can be ascertained it has to be considered as a liquidated amount. In this statement of claim at paragraph 4 the Plaintiff describes the method of fraud as forgery and state '... the Defendant presented forged documents to the Plaintiff's bank in .....'. If I draw an analogy it will be clearer and if a signature in a cheque is forged and the said amount in the cheque was deposited to an account and the amount stated in cheque is debited to the account, clearly that amount obtained fraudulently using the cheque is a liquidated amount, though it was obtained through fraud.
  2. In Subodh Mishra v Car Rentals (Pacific) Ltd (1985) 31 FLR 49, cited by the Defendant, the Court held that at p. 53 as follows

"So, in the instant case, if the appellant had not appeared at the hearing and a judgment was entered without the hearing of the evidence both as to liability in negligence and of the special damages claimed, such judgment would have been also given irregularly with the consequences previously outlined.

The difference between these two rules and that under consideration make it so it seems to use, abundantly plain that express provision has been made whereby failure to comply with interlocutory orders may be visited with the more drastic consequences and we conclude that, in such case, the Court may, in exercise of its discretion, enter a judgment whether the claim be liquidated or unliquidated and without the necessity of hearing evidence even in cases, such as the present, where the claim is in tort.


For the foregoing reasons and notwithstanding our finding the claim to be unliquidated – we reject the submission that the judgment was irregularly obtained. Accordingly, the appellant was not entitled to have it set aside unconditionally and as of right."


  1. The amount claimed is "ascertained or ascertainable as a mere matter of arithmetic as held in (Knight v Abbott 1882) 10 QB 1.1 The fact that the Plaintiff's claim is pleaded as a claim in fraud does not affect its ability to invoke the procedure available under Order 19rule 2 . The example given in the Knight V Abbot (supra) is 'specific sum of money due and payable under a contract' and non-payment or default on a contract can also be coupled with fraud depending on the mental element of the said defaulter, and clearly presence of such a mental element and inclusion of word 'fraud' in the statement of claim under such circumstances would not make the claim unliqidated. So, it is pertinent to note that the inclusion of the word 'fraudulently' is not material, but whether the amounts claimed can be ascertained or ascertainable as mere matter of arithmetic is the decisive factor. In this case the amounts of alleged fraudulent transfers that are yet to be recovered, amounting to the sum of USD 186,568,00 is claimed and the said sum is relating to three out of five alleged fraudulent transfers using forged documents that were specifically pleaded in the statement of claim. Plaintiff claims that two out of alleged illegally transferred amounts had been returned by respective recipients of money. In this case the amounts allegedly defrauded were ascertainable as a mere matter of arithmetic as the said sum is pleaded separately and inclusion of word 'fraudulently' would not make the character of the claim which can be considered as liquidated as it is ascertainable as mere matter of arithmetic. The Plaintiff is claiming only the unrecovered sums of money that were allegedly transferred from its account by the Defendant and it can be ascertained from the statement of claim and 'addition of the words 'fraudulently converted' does not prevent the sum claimed being a liquidated demand' as held in the GL Baker Ltd v Barclays Bank Ltd [1956] 1 W.L.R. 1409 and it is also important to know the allegation of forgery is made in the said transfer of money from the Plaintiff's account would not change its character from being a liquidated sum. The Plaintiff's claim for USD 186,568.00 is based on the said transfer of unauthorized amounts from its account that is yet to be recovered, using forged documents. The said amounts can be easily ascertainable from their account statement and the amounts were included in the statement of claim, including the amounts recovered by the Plaintiff. The allegation of forgery and fraudulently acting will not by itself make the claim unliqidated if it can be ascertained the amounts claimed easily. The amount allegedly transferred using forged documents is clearly a liquidated amount.

(ii) The Judgment has been entered against the Defendant without any proper application being made to the Court.


  1. Order 2 Rule 2 of the High Court 1988 provides for setting aside of Judgments for irregularity. The Rule states as follows:

"2 (1) an application to set aside for irregularity any proceedings, any steps taken in any proceedings or any document, judgment or order therein shall not be allowed unless it is made within a reasonable time and before the party applying has taken any fresh step after becoming aware of the irregularity."


  1. The Defendant state that Default Judgment was not properly served on them, but there is no delay in this application for setting aside and service of the default judgment cannot be an issue in this application. In House of Lords decision in Jameson & Anor v Central Electricity Generating Board [1998] UKHL 51; [1999] 1 All E.R 193 where Lord Hope stated at page 203, as follows:

"I take as my starting point the fact that a claim of damages in tort is a claim for unliquidated damages. It remains unliquidated until the amount has been fixed either by the judgment of the Court or by an agreement as to the amount which must be paid to satisfy the claim."


  1. High Court of Fiji decision in Sher Mohammed v Akbar Business Limited Lautoka High Court Civil Action No. 140 of 2001 the above House of Lords decision was accepted and applied. This is clearly the issue relating to special damages in this case as it was obtained without a proper application.

Inclusion of Special Damages in the Default Judgment.


  1. The Fiji Court of Appeal decision in Subhodh Kumar Mishra v Car Rentals (Pacific) Ltd (1985) 31 FLR 49 in which case the Court stated on page 52 as follows:-

"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."(emphasis is added)


  1. The Plaintiff is obtaining judgment in this case has invoked the procedure under Order 19 Rule 2. This procedure clearly applies to cases where the claim is for liquidated amount only. It is not available for claims for unliquidated amounts. The Plaintiff has treated its claim as a liquidated claim in applying and obtaining default judgment.
  2. The meaning to be given to a liquidated claim has been discussed by the Court of Appeal in Subhodh Kumar Mishra v Car Rentals (Pacific) Ltd (1985) 31 FLR 49 where the Court adopted the interpretation given in Knight –v- Abbott (1882) 10 Q.B. 11 and held( on page 52) as follows:-

"In Knight –v- Abbott (1882) 10 Q.B. 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- Llyod Brazileno (1908) 1K.B. 968 (CA):


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


  1. It is to be noted Plaintiff has indicated an amount as special damages in the default judgment. Although the Plaintiff has stated a specified figure, its ascertainment does require proof, as the amount of USD 10, 413.65 is claimed as of special damages. The said special damages as claimed in the statement of claim has allegedly incurred to the Plaintiff in the process of recovery of its money that was allegedly transferred by the Defendant. The said expenses were pleaded in the statement of claim and it contains taxi fares, air fares and some hotel expenses. These cannot be ascertained by mere matter of arithmetic by its own nature being a 'special damages', for which a court's intervention is necessary to find out which expenses are allowable under the circumstances of the case.
  2. The Fiji Court of Appeal decision in Mohammed Rafiz –v- Deo Raj and Mehmood Khan FCA 44 of 1983 where it was said that the various special damages claimed "would require proof of such matters as the need for and extent of travelling expenses incurred." The Plaintiff's claim cannot amount to a liquidated claim as it included an amount as the special damages and the said special damages are pleaded in the statement of claim with the amounts, but whether those amounts actually incurred or would be allowed as special damages is a matter that has to be determined by the court. In order to enable it to obtain a default judgment under Order 19 Rule 2 the claim has to be based only on liquidated amount. Inclusion of special damages would make it unliquidated.
  3. In the High Court of Fiji case in Farook v Kumar [2005] FJHC 703; HBC0146.2005L (25 November 2005) Justice Conners held

'The plaintiff's action against the 2nd defendant is in tort and the damages he claims must therefore be special damages which leads the claim to be an unliquidating claim. (emphasis is mine)


  1. Clearly the amount of USD 10,413.65 is a special damage as indicated in the said default judgment and from the above judgment of Justice Conners it is clear that special damages could not be classified as unliquidated, though the said amount is pleaded in the statement of claim with the details of the said amount. So the judgment as well as the method of obtaining it, including the procedure was irregular and it has to be set aside unconditionally. It is trite law in Fiji that the special damages in any tort has to be ascertained by courts, even in an interlocutory judgment, and cannot be included in a default judgment as held in The Fiji Court of Appeal decision in Subhodh Kumar Mishra v Car Rentals (Pacific) Ltd (1985) 31 FLR 49.

Without prejudice to the above position I will analyze the remaining issues in this case regarding the default judgment, though I have already decided for the reasons given above that this default judgment should be vacated unconditionally, on the ground of irregularity.


(iii). The Plaintiff has obtained default judgment for interest.


  1. The Plaintiff had obtained judgment for interest in the Default Judgment. The Defendant alleges that Judgment for interest cannot be considered to be a liquidated amount and no amount for interest has been even quantified in the said default judgment though the annual percentage of the interest was included. The claim for interest was made in paragraph 12 of the Statement of Claim for which states as follows:-

"12. The Plaintiff seeks interest on any judgment amount and special damages award in its favour at a rate to be determined by this Honorable Court from 7th December 2009 until the date of payment pursuant to the Law Reform (Miscellaneous Provision) Death and Interest) Act, Cap 27."


  1. It is clear that the Order 19 2(1) which relates to the liquidated demand and default judgment do not specifically deal with the issue of interest and resort to White Book is needed before deciding that the interest cannot be included in a default judgment . The Defendant also states that inclusion of interest in the claim would make the claim unliquidated sum.

The Supreme Court Practice (White Book) 1999, Volume 1, in p. 142 states that:


"13/1/5 Claim for Interest - ....if the claim for interest indorsed on the writ, whether it is pleaded as part of the statement of claim indorsed thereon or as part of the general endorsement, is for interest on the liquidated demand from the date the cause of action arose at a rate not higher than the rate payable on judgment debts at the date of the writ, and continuing at the same rate until payment or judgment, whichever is the earlier, the claim for interest will be treated for the purposes of r.1(1) as a liquidated demand, since its amount can be duly calculated as a mere matter of arithmetic...."


Also, the Supreme Court Practice 1999, Volume 1, in p. 361 states that:


"19/2/6 Judgment for interest - ....a claim which includes a claim for interest remains a claim for a liquidated demand."


  1. So, it is clear that mere fact of inclusion of interest on a claim does not by itself convert a liquidated claim to an unliquidated one, but in Fiji the law relating to interest is governed by Law Reform (Miscellaneous Provision)(Death and Interest) Act and that has to be looked into before determination of the issue.
  2. The Law Reform (Miscellaneous Provision) (Death and Interest) Act, Cap 27. Section 3 states as follows

"3. In any proceedings tried in the Supreme Court for the recovery of any debt or damages the court may, if it thinks fit, order that there shall be included in the sum for which judgment is given interest at such rate as it thinks fit on the whole or any part of the debt or damages for the whole or any part of the period between the date when the cause of action arose and the date of the judgment:


Provided that nothing in this section-


(a) shall authorise the giving of interest upon interest; or

(b) shall apply in relation to any debt upon which interest is payable as of right, whether by virtue of any agreement or otherwise; or

(c) shall affect the damages recoverable for the dishonour of a bill of exchange."


  1. Under the provisions of this Act, the award of interests on damages is discretionary and not a matter of right. The Court has the discretion to grant or not to grant interest after looking at the circumstances of the case. It also has the discretion to decide for what period and at what rate the interest is to be granted if at all. The award for interest in the Default Judgment cannot stand without the Court exercising its discretion to grant interest.
  2. It is clear that in the statement of claim at paragraph 12 the Plaintiff is seeking interest on judgment at a rate determined by the court, but in contrary to that has included a rate of 8% per annum in the default judgment, which is clearly irregular as it is not 'sum not exceeding that claimed by the writ in respect of the demand ...' as required in the Order 19 rule 2(1) of the High Court Rules. The Default judgment has included an amount not clearly in conformity with the statement of claim, because in terms of the paragraph 12 of the statement of claim the Plaintiff seeks court's intervention to ascertain the interest rate, but in the default judgment it has included an interest rate which was not ascertained by the court. The 8% interest that was included in the default judgment was not determined by court as per the request in statement of claim and that is clearly an irregularity in the Default judgment entered on 1st September, 2010.
  3. The issue is whether the said irregularity is sufficient to set aside the default judgment. In Bank of Credit and Commerce International (Overseas) Ltd (in liquidation) v Habib Bank Ltd [1998] 4 All ER 763 it was held that 'the court would not set aside a default judgment which suffered from irregularities if there was sufficient evidence before the court from which it was able to conclude that the substantive content of the judgment was right. Further, where the amount in the default judgment was wrong, the court would vary the judgment to the correct amount rather than set it aside.'
  4. Bank of Credit and Commerce International (Overseas) Ltd (in liquidation) v Habib Bank Ltd [1998] 4 All ER 763 Park J held at page 757 as follows

'Assume a case where the wirt and the judgment did suffer from some irregularities. Nevertheless assume also that, by the time that the application to set the judgment aside comes to beheard, time has passed and almost certainly a great deal of information about the case, verified by affidavits, will be before the court. If, from the affidavits and exhibits, the court concludes that, even though there were irregularities in the wirt or the judgment or both, the substantive content of the judgment is right, the court will not set the judgment aside. The only effect if it did would be to put the parties to further expense and delay to reach a regular judgment for the same amount.'(emphasis is added)


(At paragraph d on page 757)

'Further, it is the same in principle if the court is satisfied from the affidavits and exhibits that, although the amount in the default judgment was wrong, it (the court) knows what the correct amount was. The court will not set the incorrect judgment aside and make the plaintiff start again. It will vary the judgment to the correct amount.

Of course, if the material before the court shows that the judgment was or might have been wrong but the court cannot, without a trial, be confident of what the correct judgment should have been, it will set the judgment aside.'


  1. In the light of the said judgment it is clear that if the error can be corrected and the default judgment can vary to rectify the amount if the error is only as to the amount. But I do not think that this can be extended to a case where irregular procedure was adopted since the irregularity is at the root of the default judgment rather than on some arithmetic or other calculation or mere slip or omission on the form of the default judgment, which can be corrected if the substantive content of the default judgment is correct.

White Book (1988) at page 115 under the heading Claim for interest 13/1/14 states as follows:


'the default judgment cannot include interest unless it is claimed in the wirt or pleaded in the statement of claim as being due under S. 35 A of S.C.A. 1981, and the rate at which the interest is claimed is not higher than that payable on judgment debts at the date of the wirt. If therefore the claim for interest is not expressed to be under s 35A, or is for a rate higher than that payable on judgment debts or is claimed "at such rate as the Court thinks fit." The default judgment will exclude any interest, but interlocutory judgment for interest to be assessed will be entered.'(emphasis is added)


  1. In terms of the statement of claim in paragraph 12 the interest rate is to be determined by the court and form the above quotation from the White Book (1988) the interest should be excluded from the default judgment. The exclusion of interest component from the default judgment can be done without resorting to setting aside the whole default judgment as held in the case of Bank of Credit and Commerce International (Overseas) Ltd(in liquidation) v Habib Bank ltd [1998] 4 All ER 763 . So, if the default judgment was obtained following the correct procedure and substantive judgment is correct, the above irregularity could have been corrected and the interest would have excluded from the default judgment.
  2. It is to be noted that the Defendant also alleges that inclusion of interest has changed the character of the claim to unliquidated amount. In 1988 White Book at page 333 under 'Judgment for interest' 19/2/6 it states 'that a claim which includes a claim for interest remains a claim for liquidated demand' and the argument of the Defendant clearly fails and inclusion of interest in the statement of claim, has not changed the character of the claim to an unliquidated one.

(iii). The inclusion of cost on indemnity basis


  1. The Plaintiff has obtained judgment for costs of the action on a full indemnity basis in the Default Judgment. Order 19 rule 2(1) as stated above in this decision states 'enter final judgment against that defendant for a sum not exceeding that claimed by the writ in respect of the demand and for costs...." expressly indicating that judgment in default can be entered with cost included. In terms of the provision contain in Order 19 rule 2(1) the inclusion of cost is clearly not an irregularity. The statement of claim has clearly prayed for indemnity cost in prayer (iv) of the statement of claim dated 21st July, 2010. So it is clear that the Order 19 rule 2(1) empowers the Plaintiff to seek costs in the default judgment and it is not an irregularity as stated by the Defendant. The Defendants were amply notified of the claim and the request for indemnity cost. The Defendant's argument is that it has not been fully ascertained and because of that cost cannot be included in the default judgment. Clearly, if that interpretation is given, one cannot understand the how a party to an action is going to make use of the provision contained in Order 19 rule 2(1) where it clearly state that cost can be claimed in default judgment and such an express provision would be made nugatory if the Defendant's contention is accepted. The costing of an action has to be done by the costing officer in terms of Order 62 of the High Court Rules and cannot be included as to a certainty till it is determined and in this default judgment no amount is specified, but has stated that cost would be on indemnity basis, as parayed in the statement of claim.
  2. In Subhodh Kumar Mishra v Car Rentals (Pacific) Ltd (1985) 31 FLR 49 where the Court discussed regular and irregular judgments. The Court stated as follows at page 52:-

"We now turn to consider the question of whether or not the judgment was entered irregularly or regularly. And we preface our observations by saying that in the application of similar rules as to that which is here under consideration, both in England and New Zealand, the cases in which a default judgment may be set aside have been grouped accordingly as the judgment was regularly or irregularly obtained. The distinction is clearly stated by Fry L.J. in Anlaby v Praetorious [1888] UKLawRpKQB 55; (1888) 20 Q.B.D. 764 at page 769 where he said:


"There is a strong distinction between setting aside a judgment for irregularity in which case the Court has no discretion to refuse to set it aside and setting it aside where the judgment though regular has been obtained through some slip or error on the part of the defendant in which case the Court has a discretion to impose terms as a condition of granting the defendant relief."


See to the like effect Craig v Kanssen (1943) K.B. 256 and the cases discussed therein.


Accordingly, if the judgment was obtained irregularly as it is contended the appellant was entitled to have it set aside ex debitio justitiae but if regularly the Court was obliged to act within the framework of the empowering provision – in this case – the provision to Or XXXIV r3 which confers an unfettered discretion upon the Court."


  1. The judgment has been entered using the wrong process, namely Order 19 rule 2(1) since it contained special damage and cannot be categorized as a claim for liquidated demand only as required in the said provision in High Court Rules.

Order 19 Rule 2(1) of the High Court Rules 1988 states:


"Default of defence: claim for liquidated demand

2-(1) Where the plaintiff's claim against a defendant is for a liquidated demand only, then, if that defendant fails to serve a defence on the plaintiff, the plaintiff may, after the expiration of the period fixed by or under these Rules for service of the defence, enter final judgment against the defendant for a sum not exceeding that claimed by the writ in respect of the demand and for costs, and proceed with the action against the other defendants, if any."


  1. The Plaintiff applied for and obtained judgment in September 2010, only after the Defendant has failed to serve a defence that was due on or before 20 August 2010, but clearly with a claim of special damages it could not have obtained default judgment. The Defendant, through his lawyers, was aware of the proceedings and had filed an Acknowledgement of service on 26 July 2010and no explanation for that failure is provided in the affidavits, other than a suggestion that they were waiting for a reply to their request for further and better particulars. A request for further and better particulars does not automatically stop the time running for filing and the request was answered. The Plaintiff made an application on or about 8 September 2010 for default judgment to be granted and default judgment was sealed on 8 September 2010.

Non-service of the Default Judgment


  1. Order 2 Rule 2 of the High Court 1988 provides for setting aside of Judgments for irregularity. The Rule states as follows:

"2 (1) an application to set aside for irregularity any proceedings, any steps taken in any proceedings or any document, judgment or order therein shall not be allowed unless it is made within a reasonable time and before the party applying has taken any fresh step after becoming aware of the irregularity."


  1. The Defendant contends that the default judgment after being entered was not served on him and that this amounts to an irregularity.
  2. Pursuant to the rules the judgment in default was in effect from 8 September 2010, the day of its date and any irregularity after obtaining it, if at all cannot be considered as a default judgment obtained irregularly.
  3. The Plaintiff allege difficulty in serving the Defendant and an application was made to serve it by way of Advertisement. This application was granted on 9 November 2010 and an advertisement was placed in a newspaper on 22 November 2010.
  4. The Defendant was aware of the judgment and service has now been affected so no prejudice can flow from the alleged delay in service. The manner of service after obtaining a default judgment is not relevant to the principles under consideration in an application to set aside judgment on irregularity. The principles cover the circumstances in which judgment was entered and not how it was served. The irregularity that is material for setting aside of default judgment unconditionally is confined to any irregularity in obtaining the default judgment and not anything happening thereafter. In the case of Subhodh Kumar Mishra v Car Rentals (Pacific) Ltd (1985) 31 FLR 49 and it was cited with authority Anlaby v Praetorious [1888] UKLawRpKQB 55; (1888) 20 Q.B.D. 764 and held that; 'both in England and New Zealand, the cases in which a default judgment may be set aside have been grouped accordingly as the judgment was regularly or irregularly obtained. The distinction is clearly stated by Fry L.J. in Anlaby v Praetorious [1888] UKLawRpKQB 55; (1888) 20 Q.B.D. 764 at page 769

"There is a strong distinction between setting aside a judgment for irregularity in which case the Court has no discretion to refuse to set it aside and setting it aside where the judgment though regular has been obtained through some slip or error on the part of the defendant in which case the Court has a discretion to impose terms as a condition of granting the defendant relief."


  1. The Plaintiff does not allege that there has been undue delay in applying to set aside. So I need not examine that issue any further than this as it is totally irrelevant to setting aside of default judgment in this case as any irregularity, if at all after the default judgment was obtained would not be relevant in setting aside default judgment unconditionally. It can be a relevant issue only if there was delay in making this application to explain the delay, but that is not an issue of this case. A clear distinction is to be made between any irregularity before obtaining the default judgment that falls in to the category of 'irregularly obtained' as opposed to any irregularity in service.
  1. DEFENDANT HAS A DEFENCE ON MERITS
  1. The Plaintiff claims that the Defendant obtained from the Plaintiff the sum of USD $186,568.00 by presenting forged documents to the Plaintiff's bank and acting fraudulently. The Plaintiff further claims USD $10,413.65 as special damages, interest and costs.
  2. The Statement of Defence which is exhibited as Exhibit D in the Defendant's affidavit.

In paragraph 2 of the Proposed Statement of Defence, it is stated as follows:-


"(a) The Defendant admits the employment with the Plaintiff under a contract of employment entered on 6th November 2007 and which contract expired on 1st December 2009;


(b) The Defendant denies that his employment with the Plaintiff was governed by the alleged contract dated 24th March 2008 and 24th March 2009 and says that the alleged contracts were not the actual contract of the said employment and that the alleged contracts were sham documents entered into by the Plaintiff for ulterior motives."


  1. The Defendant has provided the alleged copy of the actual contract of employment that he is relying upon and it is Exhibit C1 in the Defendant's affidavit in reply. The plaintiff state that letter is a forged one. The Defendant has in paragraph 4 of his Proposed Statement of Defence categorically denied the allegations made by the Plaintiff in paragraph 4 of the Statement of Claim. The Defendant in paragraph 5 has also categorically denied that the alleged bank transfers.
  2. The Defendant in paragraph 7 of his proposed Statement of Defence further goes on to state as follows:-
  3. The Supreme Court Practice 1997 (Volume 1) page 145, 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] 8. T.L.R. 445, and Watt v Barnett (1978) 3 Q.B.D. 1983. 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 is 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)".


  1. The Plaintiff should be able to ascertain to which accounts the money was transferred illegally and the names of those account holders should reveal the path of transmission of the money. Since the money was transferred from the Plaintiff' s account the obtaining the account numbers of the recipient account/s cannot be an issue and since there is criminal investigation obtaining the details of the transactions in those recipient accounts again cannot be a difficult task.
  2. The Defendant has denied acting fraudulently in obtaining monies from the Plaintiff's bank account as alleged and he has further stated that the said monies transferred to the Colonial Bank in Fiji were his personal funds transferred from his own bank account and that the receipt of the funds by him is related to the benefits and entitlements obtained under his contract of employment which is in dispute between the parties. Even the very letter of appointment is disputed which contained remunerations which according to Plaintiff were inflated by the Defendant in forged letter of appointment. This can be ascertained easily by providing bank statements and proof of accumulation of funds in the Defendant's account as he alleges the funds being derived mainly from the salary and remuneration from the Plaintiff which is in dispute between the parties. It can be easily ascertained, but strangely the Defendant has not submitted any such evidence of bank statements of his account/s to show the bona fides of his claim for that the money he transferred. It is also noteworthy that a person who is depositing or transferring such an amount of money needs to explain the source of his money for regulatory as well as anti-money laundering reporting provisions in banking and since he has clearly stated that funds derived from his personal funds it is easy to ascertain, but strangely even the Plaintiff has failed to produce evidence of Defendant's salary slip or how the salaries were being dispatched on monthly basis to the Plaintiff and how much was actually paid in each month . This would have been easily done by production of its accounts relating to salary and would not have been as difficult as the voluminous documents that were filed to substantiate the alleged forgery which is clearly a matter for criminal offence. So, both parties have not done the things they could have done easily to substantiate their respective statements on merits. In consideration of the merits of this case and I will not venture any further than this in the issue as it is not necessary to do so at this stage as I have already decided that this judgment should be set aside unconditionally on irregularity as discussed in this ruling.
  1. CONCLUSION
  1. The Plaintiff's claim cannot be included in Order 19 rule 2(1) as a liquidate claim only as it contained a claim for special damages and the procedure adopted to obtain the default judgment is irregular and the default judgment should be set aside unconditionally. Considering the circumstances of the case I will not award cost for this application. Defendant is granted 21 days to file and serve a defence and the matter should take its normal cause thereafter.
  2. THE FINAL ORDERS
  1. The default judgment entered on 1st September, 2010 is set aside unconditionally.
  2. The Defendant is granted 21 days to file and serve a statement of defence and the matter should take its normal cause.
  1. No cost.

Dated at Suva this 12th day of October, 2011.


.................................................
Mr. Deepthi Amaratunga
Master of the High Court
Suva

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