Waysang Kum Kee v Abamakoro Trading Ltd [2001] KICA 9; Civil Appeal 06 of 2000 (5 April 2001)

IN THE KIRIBATI COURT OF APPEAL
CIVIL JURISDICTION
HELD AT BETIO, KIRIBATI

Civil Appeal No 6 of 2000

BETWEEN:

WAYSANG KUM KEE,
trading as BIT Store
Appellant

AND:

ABAMAKORO TRADING LTD
Respondent

Before: Casey JA
Bisson JA
Tompkins JA

Counsel: Neil Allen for appellant
Ioane Bakaie, Financial Officer of the respondent

Date of Hearing: 29 March 2001
Date of Judgment: 5 April 2001

JUDGMENT OF THE COURT

[1] On the 25th November 1999 the respondent, the plaintiff in the High Court issued a writ against the appellant claiming $6,731.40 "being the balance of the purchase price of goods sold and delivered to the [appellant] between 26 March 1999 and 25 June 1999 and interest". The writ was served on the appellant on the 21st February 2000: the appellant entered an appearance on the 3rd March 2000 but did not file a defence in time. On the 23rd March 2000 the respondent obtained a judgment for $6,731.40, interest and costs in default of defence.

[2] On 3 April 2000 goods were seized under a writ of fieri facias. They were 42 pushbikes that came from a warehouse owned by the appellant and 2 deep freezes and 1 commercial refrigerator that came from the BIT store. They were sold for sufficient to satisfy the debt. The case does not reveal the total amount received and how much came from the different categories of goods.

[3] On 29 March 2000 the appellant applied for an order that the judgment be set aside. After hearings on 10 and 15 August 2000, the Chief Justice dismissed the application. The appellant has appealed against that decision.

The course of the application

[4] The respondent, in his affidavit in opposition, gave the following reasons for not having filed a defence in time.

"(i) I had asked the true owners of the Store, my children, to see my Lawyer. They did not make an appointment as I had asked.

(ii) Pressure of work at the People's Lawyers Office prevented my Lawyer from checking with me whether this had been done."

[5] The draft defence is sparse to the point of being deficient. It reads:

"1. It is not admitted that the goods were sold and delivered to the Defendant.

2. It denies that the Defendant trades as B.I.T. Store."

[6] Following a number of mentions, the Chief Justice, on 8 August 2000, directed that the appellant file a further affidavit setting out the names of the true owners of the BIT Store and that the true owners themselves swear affidavits acknowledging the ownership of the store and setting out the nature of the arrangements.

[7] The further affidavit filed by the appellant did not establish the ownership of the store, nor were any affidavits filed by any persons acknowledging the ownership of the store. The appellant said that the business was owned by his former wife. On his divorce the business was given to his son Teneti. The appellant deposed "I allowed him to take over the business..." The affidavit continued:

"I do not accept that I am to be treated as the owner of the business. I handed over the store in 1998. It was understood between Teneti and I that he was to be responsible for the buying and selling of stock. I received no profits or return from the business. In the past I have paid some of the bills run up by the store, but these have been on the basis of a loan to Teneti. The store should have a business license..."

[8] He went on to depose that if leave to defend be given, he would issue third party proceedings against Teneti.

[9] A further affidavit was filed by a legal assistant in the office of the appellant's solicitors. She said that she had a telephone conversation with the Betio Town Council. She inquired who were the owners of the store and whose name appeared on a licence. She was informed that the person to whom she spoke was unable to locate the license book, a license had been issued for the store that year, but she could not confirm whether the store had received a certificate. The deponent went to the store to check the license but the person to whom she spoke said she did not know about the license and who owns the store.

[10] At the resumed hearing on 15 August 2000, counsel for the respondent handed up a letter from the Betio Town Council stating that the appellant had taken out a licence for the store in January 1999. As the Chief Justice pointed out, this was contrary to the appellant's affidavit. But we also note the appellant's submission that the contents of the affidavit are hearsay.

[11] Because of the lack of evidence concerning the ownership of the store, the Chief Justice dismissed the application to set aside the judgment.

The principles to be applied

[12] Rule 12 of the High Court (Civil Procedure) Rules 1964 provides that any judgment by default may be set aside by the Court, upon such terms as to costs or otherwise as the Court may think fit. As it does not set out the grounds upon which the discretion is to be exercised, the common law approach is to be adopted.

[13] The Court has unfettered discretion to set aside a judgment obtained in accordance with the Rules. In determining the essential question whether there may have been a miscarriage of justice, and where the overall justice lies, three considerations have long been considered of dominant importance: whether the defendant has a substantial ground of defence to the plaintiff's claim, whether the defendant's failure to take any steps, or to appear at the hearing, was excusable, and whether the plaintiff will suffer irreparable harm if the judgment is set aside: Alpine Bulk Transport Company Inc v Saudi Eagle Shipping Company Inc, The Saudi Eagle [1986] 2 Lloyd's Rep. 221, 223 (CA), Paterson v Wellington Free Kindergarten Assn Inc [1966] NZLR 975, 983 (CA) The onus of establishing a substantial ground of defence is on the defendant. The defendant must show a defence of sufficient substance to justify delaying the plaintiff in obtaining the fruits of the judgment.

[14] In the present case the Court was concerned with the first of the three considerations, namely whether the appellant had a substantial defence to the respondent's claim. It was not suggested that the delay was inexcusable, nor that the respondent would suffer harm if the judgment were set aside.

Conclusion.

[15] It was the case for the appellant that he had established a substantial ground of defence by his evidence that he was at the material time not the owner of the store. Although there was no clear evidence, it appeared to be his contention that the owner of the store was his son Teneti, so that he was the person from whom the appellant should recover.

[16] The evidence to establish this defence was in several respects unsatisfactory. It is unclear whether the appellant was ever the owner of the store. He claimed that the business was owned by his former wife and that it became Teneti's on their divorce, suggesting that he was never the owner, but the reference to allowing his son to take over the business and to his handing over the store in 1998 suggests that he was in fact the owner at some stage. If the relationship with the respondent were established while the appellant was the owner, the respondent may have been justified in considering that the appellant remained liable to pay for goods ordered in the absence of any evidence of notice to the respondent that the appellant was no longer to be liable. Further the fact that he paid some of the bills run up by the store may have led the respondent to believe that the appellant remained liable for goods supplied.

[17] However, the evidence certainly establishes an issue concerning the ownership of the store that may be sufficient to discharge the onus on the appellant to establish a substantial defence. Many of the factual issues involved may only be able to be resolved following discovery and a full hearing. If the relationship between the appellant and his son precludes the appellant obtaining the necessary records from the store, it may well be that they will only be available from the respondent. The respondent did not file an affidavit in opposition so there is no evidence to answer the appellants assertions. On balance therefore and on the evidence before the court, the appellant has discharged the onus of establishing a substantial defence.

[18] It remains to consider whether, if leave to set aside the judgment were declined, there would be a miscarriage of justice, and where the overall justice lines.

[19] In considering this aspect we have regard to the amount of the debt, $6,731.40, that this amount has been paid from the sale of the seized goods, that of the seized goods apparently valuable items, two deep freezes and one commercial refrigerator, came from the store so that the proceeds from their sale are in the fact a realisation from the owner of the store, whoever that may be, and that if the appellant's son is the person liable for the debt, the appellant would be able to recover such amounts of the debt as he has in its effect paid from the son. The appellant has indicated his willingness to claim against his son by the offer to issue third party proceedings. But it would, in our view, be unjust to the respondent to require it to be involved in what appears to be an argument between the appellant and his son.

The result

[20] For the reasons we have expressed we are satisfied that the overall justice lies in refusing the application. The appeal is dismissed. As the respondent appeared through the representative of the company, there will be no order for costs.

Casey JA
Bisson JA
Tompkins JA