Fiji Electricity Boad v Veitaladru [2012] FJHC 863; HBC98.2009L (9 February 2012)

IN THE HIGH COURT OF FIJI
AT LAUTOKA
CIVIL JURISDICTION

Civil Action No: HBC 98 of 2009L

BETWEEN:

Fiji Electricity Board
Plaintiff
AND:

Penijamini Veitaladru
73A Fifth Avenue, Enderely, Waikato, New Zealand
1st Defendant

AND:

Asesela Robaroballevu
2nd Defendant

INTERLOCUTORY JUDGMENT

Judgment of : Ms Dias Wickramasinghe J.
Counsel : Mr Anu Patel with Mr S Sen for the Plaintiff
Mr Quro for the Defendants
Solicitors : Raina & Sandy Consultancy for the Plaintiff
Messrs Quro Legal for the Defendant
Date of Judgment : 09 February 2012

Keywords: set aside; contract of guarantee; irregular orders. Order 13 rule 10; beneficium ordinis sue excussionis

INTRODUCTION

[1] The first and the second defendants, by their summons of 1 April 2010, seek an order to set aside the default judgments made against them on 29 October 2009 and 16 November 2009 respectively. They also seek leave of court to file statement of defence out of time. The default judgments were entered into for non-acknowledgement of services of writ of summons and notice of intention to defend. The affidavit of Asesela Robarobalevu dated 29 March 2010 was filed in support of the summons. (Supporting affidavit).

[2] The plaintiff filed an affidavit in reply of Juliet Elizabeth Naidu dated 24 April 2010 and a supplementary affidavit dated 12 May 2010 opposing the aforesaid defendant's summons.

[3] For clarity, I will consider the two default judgments separately.

Default judgment dated 29 October 2009 against the first defendant

[4] On 19 June 2009, the judge who presided over the case then, granted leave to the plaintiff to serve the writ of summons outside the jurisdiction of the court by (a) advertising in two local newspapers in New Zealand and Australia and (b) service by registered post. The plaintiff advertised in two local newspapers i.e Fiji Times and Fiji Sun and not in two local dailies in New Zealand and Australia. The defendant therefore asserts that the service is irregular and defective hence to set aside the default judgments.

(a) Advertising in the newspapers

[5] As set out in paragraph 'b' of the ex parte summons dated 17 June 2009, the plaintiff moved the court to grant leave for substituted service of the writ by advertising the notice in the form set out in exhibit 'A' in the schedule, in a daily newspaper circulating in New Zealand and Australia. However, Ms Naidu's affidavit in her reply dated 24 April 2010, filed on behalf of the plaintiff, deposed in paragraph 5, that the court did not make an order to publish the advertisements in daily newspapers in Australia and New Zealand and in fact, the order only required to advertise in local papers. The plaintiff also asserts that the court ought to have rejected and returned the order for correction if there was an error. I am unable to accept this deposition. Upon perusal of the notes of the judge, I find that paragraph (b) of the summons had been amended to include service of the writ by 'registered post' at the last known address in addition to advertising it in two local newspapers but did not specify which country the service should be advertised. The learned judge also specified the address stated in the caption as the address where the documents ought to be sent by registered post.

[6] It is evident from the affidavit evidence that before filing the writ, the plaintiff was well aware that the first defendant did not reside in Fiji and resided in either New Zealand or Australia[1]. It also appears that the plaintiff had engaged the services of Smith and Partners of New Zealand to locate the whereabouts of the first defendant, who had confirmed by letter dated 16 March 2009 that the first defendant is residing at the address mentioned in the caption, in New Zealand. The second defendant, an employee of the plaintiff, had at some point informed the plaintiff that the first defendant resides in Australia but the address was unknown to him. The plaintiff thus moved for summons for advertising in both New Zealand and Australia. It was the plaintiff's own choice not to advertise in the Fiji newspapers. In any event, it would have been purposeless to advertise in Fiji papers when the first defendant did not reside in Fiji. In these circumstances, I do not accept that the plaintiff was misguided by the learned judge's order that 'the service must be advertised in local papers' meant that the plaintiff was required to advertise in local papers in Fiji. If there was lack of clarity then the plaintiff should have obtained a clarification from court. Clearly, the plaintiff erred in advertising in local papers of Fiji. To that extent the plaintiff's service on the first defendant is defective and I agree with the submissions made by the defendants in that regard.

Registered post

[7] Let me now turn to determine the issue of service through registered post. The second defendant deposed that he has authority from the first defendant to depose to the facts stated in his supporting affidavit on behalf of the first defendant. However, I find that the affidavit of Ms Naidu is silent relating to the service effected by the plaintiff by registered post. I also find that the written submissions of the plaintiff have no reference to the service by registered post.

[8] The affidavit of service dated 28 August 2009 in paragraph 2 attaches a registered post receipt marked exhibit 'E'. The only marks available in the affidavit are 'letters – special services' and RR003111297 FJ. It does not disclose a date, the recipient or the sender. In the circumstances, I am unable to find a nexus between the postal article and the recipient, the first defendant. I therefore conclude that the plaintiff had not provided sufficient evidence to prove legal service of the writ. Accordingly, I conclude that the service is defective and I set aside the default judgment and permit the first defendant to file a statement of defence.

Default judgment dated 29 October 2009 against the second defendant

[9] The second defendant was first served with the writ and claim on 3 July 2009, which was returned to the plainitff without an endorsement by the Postal Department. Ms Naidu deposes that the said service was again sent on 4 September 2009 by way of prepaid registered post and the second defendant in his affidavit denied receiving it. Ms Naidu has attached to her supplementary affidavit exhibit 'A' the 'receipt for a registered article no 4033' which disclosed a signature of the recipient having received the contents on 7 September (the year is not specified). At the hearing, the second defendant was present in court. I therefore requested him to peruse the signature therein for the purpose of identification, and he confirmed the signature to be his. I am convinced that the second defendant did receive the service sent to him on 4 September 2009, contrary to his deposition in his affidavit. I therefore reject his affidavit evidence that he did not receive the writ, claim and other documents. Accordingly, the second defendant had a legal obligation to file a notice of intention to defend.

[10] The second defendant also moved court to set aside the default judgment. I have already concluded that the service is not defective. Therefore, his application must fail on that ground.

[11] The plaintiff also contends that the second defendant had admitted liability and therefore has no prospect of success. The second defendant in a letter dated 24 February 2010[2] wrote to the plaintiff offering to pay the balance sum as the 'Fiji Courts' and the plaintiff had asked him to pay. On a reading of the letter, I gather that the assertion of the second defendant's reference to Fiji courts means the default judgment and upon service of the judgment, and he being an employee of the plaintiff felt compelled to honour the debt. In my mind, it is not an admission of the debt pursuant to the demand notice.

[12] However, I find that there is a fundamental irregularity in the default judgment entered against the second defendant.

[13] Briefly, the facts of this case are as follows. The plaintiff sponsored the first defendant to undergo training in New Zealand subject to the conditions that the first defendant will serve the plaintiff for a mandatory period of 3 (three) years after training and secure his obligation to a sum of $22,500.00 by a guarantee bond. The second defendant signed as a guarantor for the first defendant. The parties entered into an agreement and a guarantee bond for fulfillment of the aforesaid conditions.

[14] After the training, the first defendant resumed work but unilaterally terminated the service on 16 November 2007 without completing the obligatory period of service. The alleged cause of action against the first defendant is founded on the said breach and the second defendant as the guarantor.

[15] The fundamental principle of contracts of guarantee is that the guarantor only becomes liable if the principle debtor becomes liable. Agro Caribbean Group v Lewis [1976] 2 Lloyd's Rep 289; Yeoman Credit Ltd v Latter [1961] 1WLR 828; Carlton Communications plc v The Football League [2002] EWHC 1650, (1 August 2002);

[16] The definition of a guarantee as stipulated in section 4 of the Indemnity, Guarantee and Bailment Act (Cap 232)[3] clearly defines that the guarantor only takes secondary liability. Therefore, if the principle debtor is not liable then the guarantor is not liable. It is therefore rights of the guarantor on the principle of beneficium ordinis sue excussionis to require the creditor to first seek payment from the principle debtor before seeking payment from the guarantor.

[17] Accordingly, in the instant case the second defendant would become liable only if the first defendant is found liable under the agreement. If the first defendant is found not liable then the plaintiff cannot maintain the cause of action against the second defendant. Therefore, in my judgment, a default judgment against the second defendant should not have been entered by the Deputy Registrar for want of notice of intention to defend. I therefore conclude that the default judgment was entered irregularly. As held in the case of Muir v Jerks [1913] 2KB 412, CA, a judgment irregularly obtained must be set aside independently of the questions of merit. In the circumstances, the second defendant is entitled to have the default judgment set aside ex debito justitae.

[18] Accordingly, I set aside the default judgment against the second defendant under O. 13 r. 10.

[19] The defendants also raised a defence relating to the interest payment. At this stage, I do not wish to deliberate further on the issue as I have concluded that the default judgments should be set aside.

ORDERS

1. Set aside the default Judgment entered against the first defendant dated 29 October 2009.
2. Set aside the default Judgment entered against the second defendant dated 16 November 2009.
3. The defendants to file their respective statement of defence by 17 February 2012.
4. Mention matter before me for further directions on 17 February 2012.
5. Costs in the cause.
   

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D. Dias Wickramasinghe
Judge

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^[1] paragraph 2 of the affidavit filed by Ms Naidu dated 17 June 2009 in support of the ex- parte motion
^[2] attached marked exhibit ‘K’ to the affidavit in reply of Ms Naidu.

^[3] A contract of guarantee is a contract to perform the promise or discharge the liability of third person in case of his default. The person who gives the guarantee is called the surety, the person in respect of whose default the guarantee is given is called the principal debtor, and the person to whom the guarantee is given is called the creditor. (Amended by 22 of 1918, s.8.)