Verma v Prasad [2010] FJMC 91; Civil Case 71 of 2007 (16 July 2010)

IN THE FIRST CLASS MAGISTRATES COURT
AT NAUSORI
FIJI ISLANDS

Civil Case No: 71 of 2007

Sanjay Singh Verma
Plaintiff

And

Sanjay Rajendra Prasad
Defendant

Before: C. Lakshman
Resident Magistrate

For Plaintiff : Mr. Daveta (Nacolawa & Daveta)
Defendant : Ms N Raikaci (Ravono & Raikaci Law)

Ruling

Application

On 17th February 2010 the Defendants Counsels filed a Notice of Motion seeking to set aside the Order (Judgment by Default) of this Court entered on 5th February 2008 and sealed on 25th March 2008, The Defendants sought that they be given 14 days to file and serve the Statement of Defence, that the Committal warrant issued against the Defendant dated 13th January 2010 be revoked, and all monies paid by the Defendant not to be released pending the outcome of the case and costs.

The Law

Rule 3 of Order XXXIV of the Magistrates’ Courts’ rules is the relevant provision in this application.

"if a defendant in any suit makes such default or failure the court, may give judgment by default against such defendant, or make such other order as to the court make seem just".

"Provided that any judgment by default, may be set aside by the court upon such terms as to cost or otherwise as the court may think fit".

The Rule 3 of Order XXXIV confers the discretion to the magistrates’ court both in respect of the giving of a judgment by default or in the making of such other order and discretion in like terms to set aside the judgment by default as per the proviso of the said Rule 3 of Order XXXIV.

In Nand v Chand [2008] FJHC 310; HBC223.2007L (7 November 2008), Justice Scutt cited numerous authorities which are relevant to setting aside default judgment and this Court wishes to cite them in full for ease of reference:

“In Eni Khan v. Ameeran Bibi & Ors (HBC 3/98S, 27 March 2003) His Lordship Justice Gates set out the principles applicable to setting aside default judgment, referring to Burns v. Kondel [1971] 1 Lloyds Rep 554; Evans v. Bartlam [1937] AC 473; Vann v. Awford (1986) LS Gaz 1725; The Times LR (23 April 1986); and Fiji National Provident Fund v Datt [1988] FJHC 4; [1988] 34 FLR 67 (22 July 1988). So, too, His Lordship Justice Pathik in South Pacific Recordings Ltd v. Ismail [1994] FJHC 134; Hbc0597j.93s (30 September 1994) and also in Pravin Gold Industries Ltd v. The New India Assurance Company Ltd [2003] FJHC 298; HBC0250d.2002s (4 February 2003), referring to Pankaj Bamola & Anor v. Moran Ali (FCA 59/90), amongst others. In Kaur v. Singh [2008] FJHC 158; Appeal Case 61 of 2008 (5 August 2008) the authorities were also explored.

In Wearsmart Textiles Ltd v. General Machinery Hire Ltd [1998] FJHC 26; Abu0030u.97s (29 May 1998) the Court of Appeal similarly addressed the question of setting aside judgment, by reference to the authorities including Farden v. Richter [1889] UKLawRpKQB 79; (1889) 23 QBD 124; Hopton v. Robertson [1884] WN 77, reprinted 23 QBD 126n; Richardson v. Howell (1883) 8 TLR 445; Watt v. Barnett [1878] UKLawRpKQB 21; (1878) 3 QBD 183; Alpine Bulk Transport Co Inc v. Saudi Eagle Shipping Co Inc, The Saudi Eagle [1886] 2 Lloyd’s Rep 331 (CA); and Vann v. Awford (1986) 83 LS Gaz 1725; The Times LR (23 April 1986)

The principles therein distilled and a number of other authorities provide:

• Defendant does not need to show a good defence on the merits – ‘ ... need only show a defence which discloses an arguable or triable issue’: Burns v. Kondel [1971] 1 Lloyds Rep 554

• Applicant must produce to the court ‘evidence that he has a prima facie case’: Evans v. Bartlam [1937] AC 473, at 651

• ‘The defendant’s application is brought pursuant to Order 13 Rule 10 which confers on the court a discretion to set aside or vary any default judgment on such terms as it thinks just. The discretion is prescribed in wide terms limited only by the justice of the case and although various "rules" or "tests" have been formulated as prudent considerations in the determination of the justice of a case, none [has] been or can be elevated to the status of a rule of law or condition precedent to the exercise of the court’s unfettered discretion. These judicially recognised "tests" may be conveniently listed as follows:

(a) whether the defendant has a substantial ground of defence to the action;

(b) whether the defendant has a satisfactory explanation for his failure to enter an appearance to the writ; and

(c) whether the plaintiff will suffer irreparable harm if the judgment is set aside.

In this latter regard in my view it is proper for the court to consider any delay on the defendant’s part in seeking to set aside the default judgment and how far the plaintiff has gone in the execution of its summary judgment and whether or not the same has been stayed: Fiji National Provident Fund v Datt [1988] FJHC 4; [1988] 34 FLR 67 (22 July 1988), at 3

• ‘The basic principles applicable to setting aside judgments in the exercise of [a] Court’s discretion are set out in Halsbury’s Laws of England Vol 37, 4th edn, para 403, inter alia, thus:

In the case of a regular judgment, it is an almost inflexible rule that the application must be supported by an affidavit of merits stating the facts showing that the defendant has a defence on the merits ... For this purpose it is enough to show that there is an arguable case or a triable issue.

There it is further stated:

There is no rigid rule requiring the applicant to explain why he allowed judgment to go by default, but nevertheless, at least in the case of regular judgment, such explanation is obviously desirable to enable the court to exercise its discretion, especially as to any and if so what terms should be imposed’: Pravin Gold Industries Ltd v. The New India Assurance Company Ltd [2003] FJHC 298; HBC0250d.2002s (4 February 2003), at 3

• ‘A useful summary of the factors to be taken into consideration is to be found... [in] The Supreme Court Practice 1995, Vol 1 at 142 which I have considered and which is, inter alia, as follows:

The purpose of the discretionary power is to avoid the injustice which may be caused if judgment follows automatically on default. The primary consideration in exercising the discretion is whether the defendant has merits to which the court should pay heed, not as a rule of law but as a matter of common sense, since there is no point in setting aside a judgment if the defendant can[not] show merits, [but if they are shown] the court will not prima facie desire to let a judgment pass on which there has been no proper adjudication. Also as a matter of common sense the court will take into account the explanation of the defendant as to how the default occurred’: Pravin Gold Industries Ltd v. The New India Assurance Company Ltd [2003] FJHC 298; HBC0250d.2002s (4 February 2003), at 3

• ‘From Alpine Bulk Transport Co Inc v. Saudi Eagle Shipping Co inc, The Saudi Eagle [1986] 2 Lloyd’s Rep 221 (CA) ... the following propositions may be derived:

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

b) If proceedings are deliberately ignored, this conduct, although not amounting to an estoppel at law, must be considered "in justice" before exercising the court’s discretion to set aside’: Pravin Gold Industries Ltd v. The New India Assurance Company Ltd [2003] FJHC 298; HBC0250d.2002s (4 February 2003), at 4

• ‘[Having] carefully considered [the] submission ... I find that the defendants have shown defence on merits and not merely raised triable issues on the affidavit filed by them. The defendants only have to "establish a prima-facie defence" and that a "draft defence is not necessary, what is required is the affidavit disclosing a prima facie defence"’: South Pacific Recordings Ltd v. Ismail [1994] FJHC 134; Hbc0597j.93s (30 September 1994), at 3; citing The Fiji Sugar Corporation Limited v. Mohammed Ismail (CivApp No. 28/87 FCA, at 9

• ‘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, ie 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) ... inflexible rule that there must be an affidavit of merits, ie an affidavit stating facts showing a defence on the merits: Farden v. Richter [1889] UKLawRpKQB 79; (1889) 23 QBD 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. Farden v. Richter, at 129 approving Hopton v. Robertson [1884] WN 77, reprinted 23 QBD 126n; and see Richardson v. Howell (1883) 8 TLR 445; and Watt v. Barnett [1878] UKLawRpKQB 21; (1878) 3 QBD 183, at 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, CA ...’ Wearsmart Textiles Limited v. General Machinery Hire Limited [1998] FJCA 26; Abu0030u.97s (29 May 1998), at 8-9

• ‘On the application to set aside a default judgment the major consideration was 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) 834 LS Gaz 1725; The Times, 23 April 1986 (CA) 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 ...’: Wearsmart Textiles Limited v. General Machinery Hire Limited [1998] FJCA 26; Abu0030u.97s (29 May 1998), at 8

• ‘We all know that in the ordinary way the Court does not set aside a judgment in default unless there is an affidavit showing a defence on the merits. That does not mean that the defendant must show a good defence on the merits. He need only show a defence which discloses an arguable or triable issue’: Burns v. Kondel [1971] 1 Lloyds Rep 554, at 555, per Lord Denning, MR

• ‘[The Rules] give a discretionary power to the judge ... to set aside a default judgment. The discretion 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 applicant must produce to the court evidence that he has a prima facie defence. It was suggested ... that there is another rule, that the applicant must satisfy the court that there is a reasonable explanation why judgment was allowed to go by default, such as mistake, accident, fraud or the like. I do not think that any such rule exists, though obviously the reason, if any, for allowing judgment and thereafter applying to set it aside is one of the matters to which the court will have regard in exercising its discretion’: Evans v. Bartlam [1937] AC 473; 2 AER 646, at 650 per Lord Atkin

• ‘If there were a rigid rule that no one could have a default judgment set aside who knew at the time and intended that there should be a judgment signed, the [rules] would be deprived of most of their efficacy. The principle obviously is that, unless and until the court has pronounced a judgment upon the merits or by consent, it is to have the power to revoke the expression of its coercive power where that has been obtained only by a failure to follow any of the rules of procedure’: Evans v. Bartlam [1937] AC 473; 2 AER 646, at 650 per Lord Atkin

• ‘ ... the major consideration is where the defendant has disclosed a defence on the merits, and this transcends any reasons given by him on the delay in making the application even if the explanation given by him is false.’ ‘ ... that he has told lies in seeking to explain the delay, however, may affect [the] credibility of his defence and the way in which the Court should exercise its discretion’: Vann v. Awford (1986) LS Gaz 1725; The Times LR (23 April 1986)

• ‘ ... to enable the Court to properly exercise its discretion there are certain basic preconditions which have to be fulfilled by the applicant. They are: (i) reasons why judgment was allowed to be entered by default, (ii) application must be made promptly and without delay, and (iii) an affidavit depositing to facts that show that the defendant has a defence on the merits’: Pravin Gold Industries Ltd v. The New India Assurance Company Ltd [2003] FJHC 298; HBC0250d.2002s (4 February 2003), at 4, citing Pankaj Bamola & Anor v. Moran Ali (FCA 59/90) (Emphasis in original)

• ‘ ... it is an (almost) inflexible rule that there must be an affidavit of merit ie an affidavit stating facts showing a defence on the merits ...’ ‘At any rate where such an application is not thus supported, it ought not to be granted except for some very sufficient reason’: Farden v. Richter [1889] UKLawRpKQB 79; (1889) 23 QBD 124, at 129 per Huddleston, B.

• ‘A judgment in default is not a judgment "upon merits"’: Wearsmart Textiles Ltd v. General Machinery Hire Ltd [1998] FJCA 26; Abu0030u.97s (29 May 1998), at 6, citing Oppenheim v. Mohammed [1922] 1 AC 482

• 'The primary consideration is whether he has merits to which the Court should pay heed; if merits are shown the Court will not prima facie desire to let a judgment pass on which there has been no proper adjudication. This point was emphasised in Watt v. Barnett [1878] UKLawRpKQB 28; 3 QBD 363': Evans v. Bartlam [1937] AC 473, at 489 per Lord Wright

• 'The Court might also have regard to the applicant's explanation why he neglected to appear after being served, although as a rule his fault (if any) in that respect can be sufficiently punished by the terms as to costs or otherwise which the Court in its discretion is empowered by the rule to impose. The appellant here has an explanation, the truth of which is indeed denied by the respondent, but at this stage I see no reason why he should be disbelieved on what appears to me to be a mere conflict on affidavits': Evans v. Bartlam [1937] AC 473, at 489 per Lord Wright

• 'Discretion to set aside a default judgment "is in terms unconditional"': Evans v. Bartlam [1937] AC 473, at 480."

The Parties Submission and the Application of the Law

The Defendants Counsel submitted that the Plaintiff commenced two actions against the Defendant in the Nausori Magistrates Court, namely, C/A # 15 of 2006 and later C/A # 71 of 2007 in relation to the same issues.

C/A # 15 of 2006 was served upon the Defendant in person and he accepted the writ and acknowledged its service by signing it. The Defendant appeared in Court and defended the matter. The action was struck out on 5th September 2006 for non-appearance of the Plaintiff and/or his Counsel. Later the Plaintiff through his lawyers filed a Notice of Motion and Affidavit to re-instate the action on 19th September 2006. The Affidavit of Service sworn by the process server in this action stated that it was served by placing at Sidhars Takeaway and that the Defendant refused to sign the document. The Defendant in this action argued that the documents were not personally served on him and he was not at the Sidhars Takeaway and has always been in the business of a garage operator. The Defendant categorically denied that he refused to sign the documents as claimed by the Plaintiff as the service was not personally effected on him. The Defendant stated that his counsel appeared for him until 6th March 2007 when Action # 15 of 2006 was struck out by the Court for non-appearance by the Plaintiff and/or his counsel on two consecutive occasions.

The Defendant in relation to C/A # 71 of 2007 states that some 21 months after C/A # 15 of 2006 was struck out which dealt with the same issues, a bench warrant was executed against him for non-payment of a judgment debt. On 16th December 2008 when he appeared in Court his Counsel, Mr Daveta, told the Court that he was not served. The Court records note that "accused says he was not served, but there is affidavit of service in file." The Court also notes that the Affidavit of Service states "I, Dev Anand (fathers name Moti Lal) of 6 Charles Street, Toorak, Registered Bailiff, make oath and say as follows:- 1. That I did on the 5th day of December 2007 served Sanjay Rajendra Prasad with a true copy of the Writ of Summons by leaving it at his place at Mistry Lane, Nausori in Fiji which he refused to sign and which appeared to me to have been regularly issued out of Magistrates Court which was filed on the 3rd day of December 2007 respectively."

The Defendant states that upon the issuance and execution of the bench warrant he enquired with the Court Registry which revealed that a new writ was filed by the Plaintiff on 3rd December 2007, which is this current action. The Defendant denies that he was served with the writ of summons for this action. The Defendant further states that he defended the 1st Action (15 of 2006) which was struck out due to non-appearance of the Plaintiff and/or his Counsel and would have appeared in Court and defended the action had it been duly served upon him.

The Defendant also argues that the service was defective as leave of Court was not obtained as the rule specifically stipulates that's service cannot be effected by any other mode other than personal service except by leave of Court. The Defendant relies upon Order VII, Rule 3 of the Magistrate Court Rules.

The Plaintiff in his submission does not deny that 2 Actions were instituted against the Defendant relating to the same issues. The Plaintiff further submitted that services of documents were carried out by a Registered Bailiff who knew the "legal consequences". The Plaintiff also states that the Defendant did not tell the Court on 16th December 2008 that he was not served. The Court has already in the preceding paragraphs noted what was in the Court records. Which is the Defendant's counsel informing the Court that the Defendant was not served.

The Defendants position can be briefly summarised as that had he been served he would have defended the action. He had no notice of the action until the bench warrant was executed. He was not served and he told the Court on the first opportunity that he had to address the Court. The Defendants position is that the default judgment is irregular and the service was not as stipulated by the Magistrate Court Rules.

Order VII of the Magistrates Court Rules deals with Service of Process and Rule 3 states "unless, in any case, the Court thinks it just and expedient otherwise to direct, service shall be personal; that is the document to be served shall be delivered to the person to be served himself." The Court notes from the affidavit of service of the writ that it was served on the Defendant by "leaving it at his place at Mistry Lane, Nausori after he refused to sign". The affidavit of the process server does not indicate if the Defendant refused to accept and the process server left the writ at the Defendants place and in his sight after the Defendant refused to accept. The Courts cannot accept as regular an affidavit or a service where a service processor states that the writ was left at the Defendants place. It could virtually have been left anywhere and with no knowledge of the Defendant. The Court notes that the process server does not state that after the Defendant refused to accept the Writ and refused to sign the process server left the writ with the Defendant. The process server states that he left it at his place at Mistry Lane, Nausori. The Court also notes the response of the Defendant in the previous similar action where, when he was served he promptly attended and defended the action.

The Plaintiff's position is that the Writ was served by leaving a copy after the Defendant refused to sign. The Defendant all along maintained that he was never approached nor served with the Writ. The Court notes in the previous Action when the Defendant received the writs he signed and acknowledged. He also promptly appeared in Court with his Counsel and the Matter was finally struck out. The Court believes the Defendant as he from the Court records and documents in file indicates that he signed when he received the Writ in the previous Action and appeared in Court. The Defendant did not ignore the writ when he was served (in C/A # 15 of 2006) and the Court finds that he had no reason to ignore this Action if he was properly served.

This Court does not believe the writ was properly served on the Defendant.

The Court at this juncture would also like to point out that the current counsel for the Plaintiff, Mr Daveta was the Counsel for the Defendant on 16th December 2008 when the Court was advised that the Defendant was not served. The Court record notes "accused says he was not served, but there is affidavit of service in file." The Counsel, Mr Daveta had reasons to say that his client was not served and now the Court wonders what his position is when he is appearing for the Plaintiff. The Court at this juncture would like to point out the conflict of interest issue. Counsel's attention is drawn to Legal Practitioners Decree 2009 (Decree # 16). In particular Chapter 1 of the Rules of Professional Conduct and Practice. The chapter deals with relations with clients and clause 1.2 provides that "a party shall not act for more than one party in the same matter without the prior consent of all parties."

The Court finds that the service of Writ on the Defendant was defective and as a result the default judgement entered was irregular.

THE ORDERS

1. The default judgment of 5th February 2008 is set aside.
2. Defendant given 14 days to file statement of defence – next call 3/8/10.
3. Committal warrant revoked.
4. All monies paid by the Defendant and not released by the Court should be held and not released pending the outcome of this case.
5. No order as to costs.
   

Chaitanya Lakshman
Resident Magistrate

16/07/10