Waiqele Sawmills Ltd v Begg [2015] FJHC 171; HBC23.2014 (11 March 2015)

IN THE HIGH COURT of FIJI
AT LABASA
CIVIL JURISDICTION

CIVIL ACTION NO: HBC 23 OF 2014

BETWEEN :

WAIQELE SAWMILLS LIMITED
a limited liability company having its registered office at Qelewaqa, Labasa.
PLAINTIFF

AND:

WAHID BEGG of Tuatua Labasa
DEFENDANT

Before : Master H Robinson
Appearances: Mr. Sen of Maqbool & Co for the Plaintiff
Mr. Sharma of Samusamuvodre Sharma Law for the Defendant

RULING

Introduction

1. This an application by the defendant seeking an order that default judgement entered against him on the 15 July 2014 be set aside. The application was supported by an affidavit sworn by the defendant which states as the basis of the application that:-

(1) That he was served with the writ of summons and that he sought legal advice thereafter;

(2) That after consultation and discussion with the director of the company one Aziz Begg the matter was resolved;

(3) That he trusted Mr. Begg because he is a close relative and as a result he did not give further instructions to his solicitor to file a defence;

(4) That Mr. Begg also called my solicitor to confirm that we have settled the matter;

(5) That he was taken by surprise when default judgement was taken against him and that he has a good defence on the merit;

(6) That the default judgement obtained against him is irregular and ought to be set aside and further the action is statute barred the Limitation Act; and

(7) That he believes that there would be no prejudice to the plaintiff if the default judgement is set aside.

2. The plaintiff opposes the application and filed an affidavit in opposition sworn by Mr. Aziz Begg as the director of the plaintiff company who states so far as is relevant the following:-

(1) That he is the Managing Director of the company and is authorised to swear the affidavit on behalf of the company;

(2) That he denies the contents of the affidavit in support and in particular that there was discussion between himself and the defendant’s lawyers or the defendant himself;

(3) That the defendant is not related to him and that the plaintiff had promised on various occasions to settle the debt but did not;

4) That he denies having any conversation with the defendant’s solicitor regarding settling the matter;

(5) That the defendant has no defence as it is a liquidated debt;

(6) That he denies that the action is statute barred;

(7) That the application is designed to delay the proceedings and to deny us the fruits of the judgement;

(8) That the defendant was provided with invoices and dockets of all the transactions and did not object to them; and

(9) That the defendant paid the sum of $100:00 on the 4th April and again another $100:00 on the 31st May: and

(10) The proposed defence is frivolous vexatious and an abuse of process.

3. The defendant in response to the affidavit in opposition replies briefly that the allegations contained in the affidavit are denied. That the defendant had never paid the money on the dates referred to in the affidavit and further states that the stated payments were designed to bring the action within the limitation period.

Principles of Setting Aside Default Judgements and Analysis

4. Default judgements can be obtained regularly or irregularly and both of these forms of judgements could be set aside. An irregular default judgement can be set aside as of right whilst default judgements obtained regularly can be set aside on conditions. This distinction was succinctly put by Fry L J in ANLABY –v- PRAETOTIOUS (1888) 20 QB 764 at 769 as follows:-

“There is a strong distinction between setting aside a default 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.”

5. The above principle was applied by the Court of Appeal in Subodah Kumar Mishra -v- Rent-A-Car (1985) 31 FLR 41 at 52. Where an irregular default judgement was entered against a defendant which irregularity cannot be cured the defendant is entitled as of right to have the default judgement set aside.

6. Where however the default judgement is regular the Court has a wide discretion and neither Order 13 rule 10, nor Order 19 rule 9, impose any restriction in the manner in which the discretion is to be exercised. When considering an application to set aside a default judgment the Courts will consider whether there is prima facie a defence on merits; the reasons for the default judgment; the promptness with which the application to set aside is made; and whether the setting aside would cause prejudice to the plaintiff which could not be adequately compensated for by a suitable award of costs; Evans –v- Bartlam (1937) AC 473; Adams –v- Kennick Trading (International) Ltd. & Ors. (1986) 4 NSWLR 503 .These primary factors have been cited and applied in many judgements and applications to set aside and I need not refer to them.

Regular and Irregular Default Judgements.

7. The first issue to be determined in this application is whether the default judgement was regularly entered. If the default judgement was irregular then the defendant has the right to have the judgement set aside. If the default judgement is regular but that the defendant does have a meritorious defence the Court may exercise its discretion and set aside the default judgement.

8. What is a regular default judgement? Firstly a default judgement is a judgement obtained without resistance of the pleadings from the defendant and it is obtained in this instance by the failure of the filing of a defence by the defendant. But what makes the default judgement regular or irregular given the non-resistance?

9. A default judgement regularly obtained is said to be one in which, according to the rules, the plaintiff was entitled to enter a judgement by default. In most instances this is obtained by the failure of the defendants to file a defence within the time stipulated by the rules. There are decisions where judgement could be amended if it was entered regularly, this is possible given the Court’s wide discretion, for example where judgement for an un-liquidated amount was given in default the Court could amend it such that damages are to be assessed (provided of course there is no defence on merit); see Suresh Charan –v- National Insurance Co Ltd (1999) ABU 67/98.

10. `The statement of claim was served on the defendant on the 7 May 2014 and the default judgement was obtained on the 15 July 2014, on there being no notice of intention to defend or defence to the claim filed within the prescribed period. Was the default judgment regular? Firstly the claim is for a liquidated amount, and that is, the sum claimed could be easily ascertained. The claim is for timber allegedly sold to the defendant, so the value can clearly be ascertained. The defendant after being served with the claim has to file a notice of intention to defend within the time prescribed under Order 12 rule 4 of the High Court Rules. If the defendant fails to file a notice of intention to defend within the prescribed time the plaintiff is entitled obtain default judgement under Order 13 rule (1).

Order 13 rule (1) of the High Court Rules states:-

1.-(1) Where a writ is indorsed with a claim against a defendant for a liquidated demand only, then, if that defendant fails to give notice of intention to defend, the plaintiff may, after the prescribed time enter final judgment against that 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.

11. The prescribed time for the filing of notice of intention to defend and the acknowledgment of service of writ is stipulated under Order 12 rule 4 as fourteen days. After the filing of the notice to defend the defendant then has fourteen days to file a defence, so a defendant practically speaking has 28 days from the filing of the writ to file a defence; when Order 12 rule r(4) is read with order 18 r (2).

12. In this instance the writ was served on the 7 May and default judgement obtained on the 15 July, there was ample time to file both the notice of intention to defend and a defence. The default judgement was therefore obtained regularly.

13. The next point to consider is whether the defendant was prompt in the application to set aside the default judgement. Having obtained default judgement on the 15 July the plaintiff did not serve it on the defendant until the 8 September almost two months after. I will deal with this delay later. The defendant then filed this application on the 16 September 8 days after service. In my view the defendant has filed the application promptly, there is no delay and therefore no prejudice to the plaintiff.

14. I will not deal with the issue of the reasons for the non-filing of the notice of intention to defend or the filing of the defence and concentrate rather on whether the defendant has good defence on merit. The reason for this is that the reasons given by both parties is in itself moot and will not, in my view, progress the matter further.

15. The next and most important consideration is whether the defendant has a good defence on the merit. The issues which ought to be raised as a defence are often those alluded to in the affidavit in support although there is a growing emphasis on the proposed defence to be annexed to the affidavit in support of the application. In this respect the proposed defence is taken into account as to whether there is defence on the merit.

The Defence on the Merit

16. The proposed defence raises an important legal point and that is the action is statute barred the Limitation Act. More specifically Section 16 of the Limitation Act precludes the plaintiff from instituting the action. The plaintiff on the other hand states that the action is not statute barred as the last payment made by the defendant was in 31 May 2011 and this action was instituted within the three year period. In my view the solution to the discourse is for evidence to be adduced. This issue was also raised in the affidavit in support of the motion.

17. The second point raised in the proposed defence is that there was an agreement between the parties in which there was an exchange of a farm house given by the defendant to the plaintiff’s company director, for the timber which is the subject of the claim. In this respect the defendant wishes to join the director of the company as a party to the proceedings.

18. On the strength of the above two points alone this Court need not go any further but to conclude that the defendant has a good defence on the merit. All the defendant has to do is disclose an arguable or triable issue. The Court is not required to pronounce a judgement on the merits. In Fiji Forests Industries Ltd. v. Timber Holdings Ltd. & Ors. 1994 HCA 117 of 1994 (Unreported) per Scott J. said at p. 8:

"This of course does not mean that I should attempt to resolve the issue between the parties now, that I should decide whether I think that the proposed defence is likely to be successful. All that I have to decide is whether I am satisfied that the Defendants have put forward a bona fide defence giving rise to tri-able issues."

19. I am satisfied that the defendant has a defence on the merit and the default judgement, although regularly obtained, should be set aside on conditions.

20. As an aside the Court would like to deal with the delay and any prejudice which may arise from the setting aside. The plaintiff obtained default judgement in July 2014 but did not serve the default judgement on the defendant until September, some two months later. Order 42 rule 8 requires that default judgement should be served on the affected parties within fourteen (14) after it was obtained. This rule states:-

A party entering judgement must serve a copy of the sealed judgement on every other party not later than 14 days after entry of the judgement.

21. This rule was inserted on the 13 September 2005 by Legal Notice 47/05 and is not present in the Supreme Court Practice or the 1999 version of the White Book. The need to serve every other party to the proceedings or those affected by a judgement with a copy of the judgement is necessary for obvious reasons.

22. The defendant in this matter ought to be served so that he should be aware of the effect of the judgement and to do what is required of him. In some jurisdictions the party obtaining judgements is required to immediately serve, not only to every other party to the proceedings but also to those affected by it. The rule does not state the implications of non-compliance. Order 2 rule 1 however states that where at any proceedings or at any stage of or in connection of any proceedings there has been a failure to comply with the requirements of these Rules whether in respect of time (or place, manner, form, or content, etc.) the failure shall be treated as an irregularity and shall not nullify the proceedings.

23. Order 19 rule 9 however provides the Court with a wide discretion for not only can it set aside a default judgement but it can also vary any judgement entered. Paragraph 19/9/1 of the Supreme Court Practice 1999 version at page 368 state that:-

The wording of this rule is wide enough to authorise the Court, in its discretion, to set aside one part of the default judgement and to grant a general stay of execution on another part (National Westminster Bank plc v.Humphrey (1984) 128 S.J. 81,CA.)

24. The plaintiff has submitted that the defendants application is merely an exercise in delaying the plaintiff from the fruits of the default judgement. The Court's view is that were the plaintiff keen on obtaining the fruits of the default judgement it would have served the judgement promptly but not two months later. The delay was of its own making whilst the defendant on being served with the default judgement acted immediately in making the application to set aside.

25. For the above reasons the Court will treat the non-compliance of Order 42 rule 8 as an irregularity under Order 2 and as a result the delay and the filing of the application to set aside as not prejudicial to the plaintiff right to benefit from the fruits of the default judgement.

Conclusion

26. From the above the application to set aside the default judgement is granted in that the defendant has a defence on merit. Further as the default judgement was regularly obtained and there being no prejudice to the plaintiff the setting side is granted on the following conditions:-

(1) The defendant is given 21 days to file and serve its defence;

(2) The plaintiff is given 14 days thereafter to file a reply to the defence if necessary;

(3) The plaintiff is granted costs which summarily assessed at $300:00 to be paid prior to the filing of the defence; and

(4) The matter to take its normal course.

Master Robinson
High Court, LABASA

11 March 2015