Fielder Industries (SI) Ltd v Solwest Trading Company Ltd [1994] SBHC 25; HC-CC 153 of 1993 (19 August 1994)

HIGH COURT OF SOLOMON ISLANDS

Civil Case No. 153 of 1993

FIELDER INDUSTRIES(SI) LIMITED

-V-

SOLWEST TRADING COMPANY LIMITED

High Court of Solomon Islands
(Muria, CJ.)

Hearing: 17 May 1994
Judgement: 19 August 1994

J. Corrin for the Plaintiff
A. Radclyffe for the Defendant

MURIA, CJ: This is an application by the Defendant to set aside judgement in default entered against it on 2 July 1993 and to suspend the Writ of Execution dated 23 July 1993.

Mr. Radclyffe who appeared for the Defendant submitted that there is a good defence to the Plaintiff's claim in this case. As such his client is entitled to the discretion of the court to have the judgement set aside.

Counsel further submitted that while his client might have owed some money to the Plaintiff, it was not as large as the sum claimed in the Statement of Claim. In other words, the Defendant's dispute was to the total sum claimed by the Plaintiff.

The basic reason for the failure by the Defendant to file a Defence was the failure by the Defendant's former solicitor Mr. Kama to file a Defence, although instructed to do so. Mr. Radclyffe submitted that the Defendant's former solicitor did actually prepare a Defence but for some reasons, that Defence had not been filed. Consequently, a default judgement had been entered against the Defendant.

Ms Corrin strongly opposed the application . She argued that the failure by the Defendant's former solicitor to file a Defence cannot be a good reasons for the exercise of the Court's discretion in favour of setting aside a default judgement. She added that where a solicitor was at fault, he should be penalised.

In any case, Ms Corrin suggested that the Defendant had clearly ordered goods from the Plaintiff and failed to pay them. She also argued that the Defendant had in fact already agreed to pay off the debt by instalments and that what the Defendant is now doing is to prolong the matter of payment to the Plaintiff.

It has long been held that a failure to comply with the rules of procedures may entitle a party to a judgement in default. However, the opposing party is not necessarily debarred from seeking from the Court a judgement on the merits. This was recognised in Kayuken Pacific Limited -v- Harper [1987] SILR 54 referring to the English cases of Evans -v- Bartlam [1937] 2 All ER 646 and Grimshaw -v- Dumbar [1953] 1 All ER 350.

The party making the application to set aside must show that there is evidence of a good defence to the claim against him. That can be done, and is usually done so, by affidavit.

Once the party (Defendant) applying has shown that there is a good or prima facie defence to the action, the court will then move on to consider whether or not to exercise its discretion to set aside the judgement. The discretionary power of the court to set aside judgement in default is contained in Ord. 29 r. 12 which provides that:

"12. Any judgement by default, whether under this Order or under any other of these Rules, may be set aside by the Court, upon such terms as to costs or otherwise as such Court may think fit, and where an action has been set down on motion for judgment under Rule 8 of this Order, such setting down may be dealt with by the Court in the sane way as if judgment by default had been signed when the case was set down."

It will be observed that the discretion to set aside judgement under that rule is unfettered. As such where a prima facie defence is shown, the court may exercise its power under the rule and set aside the judgement.

There are certain factors which are relevant for consideration before the Court exercises its discretion and there are no hard and fast rules on this. However in this jurisdiction, the case of Kayuken Pacific Limited -v- Harper set out, in practice, the considerations to be taken into account when the court decides to exercise its discretion to set aside a judgement in default or not. These considerations are: (1) What was the reason for the failure by the absent party to appear? (2) Has there been undue delay by the absent party in launching his proceedings for a new trial? (3) Will the other party be prejudiced by an order for a new trial?

In the present case the Defendant failed to enter a Defence and court will consider what was the reason for the failure to file a Defence. As in the Harper Case, the Defendant in this case stated that his former solicitor, though instructed and did prepare one, failed to file a Defence. Again as in the Harper case, the Defendant in this case has now put before the court what it claimed to be a good defence.

It is also to be noted that when the director (Mr. William Uluilakeba) of the Defendant learned of the Judgement in Default, he contacted his then solicitor, Mr. Kama, who did not advise him of the reasons for not filing a defence nor advise him of the possibility of applying to set aside the judgement in default. This led Mr. Uluilakeba to approach the Defendant's present solicitor.

Clearly, I am satisfied that the reason for not filing a Defence was a failure to do so by the Defendant's former solicitor. He was instructed and prepared a Defence but why that had not been filed is not known. At least, there is nothing before the court pointing to the reasons for that failure by the solicitor.

As to the second consideration on delay, the Plaintiff in this case obtained judgement on 2 July 1993 and the application to set aside was filed on 7 April 1994 which was about nine months after the default judgement was made. The Defendant was not told of the Judgement in Default until several weeks later after the judgement was obtained. But it is unclear as to what the Defendant had been doing about the default judgement between the time it learned of the judgement until 30 March 1994 when Mr. Radclyffe was instructed by the Defendant.

The affidavit filed by Ms Corrin in this application, shows that two months after the Default Judgement was obtained against the Defendant, the Managing Director of the Defendant wrote to the General Manager of the Plaintiff enclosing the first instalment payment of $10,000.00 and assuring the Plaintiff that the Defendant would complete the payment within or less than two years (see Annexure "JC6"). The proposed payment arrangement was over a two year period with $5,000.00 per month for the first year and then increased to $10,000.00 per month in the second year.

Then "JC7" revealed that Mr. Kama was notified on 13 September 1993 of the above arrangement. In response Mr. Kama wrote on 14 September 1993 confirming his client's acceptance of the proposed arrangement for payment of the judgement debt. Again on 29 November 1993 Mr. Kama wrote to Plaintiff's solicitor confirming an instalment payment of $5,000.00 to the Plaintiff by his client.

Notably, no attempts by the Defendant or its solicitor to have the Default Judgement set aside throughout that time. Instead they were taking steps to settle the judgement debt by making necessary payment arrangement.

Perhaps the delay in taking steps to set aside the judgement was due to the negotiations and making arrangements to settle the judgement debt. But I feel the Defendant cannot have it both ways, either it disputed the judgement and took steps to have it set aside or accepted the judgement and took steps to arrange for settlement payments of the judgement date. The evidence has shown the latter.

There is clearly a delay of about nine months here. No steps have been taken by the Defendant or its solicitor to set aside the Judgement. They have known about the judgement and had been taking steps to pay the judgement debt as ordered.

The Defendant's then solicitor had a Defence already prepared but not filed and if there was any merit in that defence, one would expect that having received the judgement in default, he would have cause an application such as the present one to be filed in court, rather than proceeding to make the necessary arrangements to satisfy the judgement.

Mr. Radclyffe had taken prompt steps to file this application as soon as he was instructed. Unfortunately the delay and the reasons for that delay are such that he was not able to justify and I hold no blame on him for not being able to do so.

The third consideration is that of the prejudice to the other party if the judgement is to be set aside and a new trial ordered. Ms Corrin argued that if judgement in default is set aside and a new trial ordered, the Plaintiff would be very much prejudiced. She stated that the former Manager (Mr. Soden) of the Plaintiff's company no longer works for the Plaintiff and that there was no assurance that he would continue to remain in Solomon Islands. Further Ms Corrin stated, that there is no guarantee that Mr Soden would be willing to cooperate with the Plaintiff in this matter should the matter proceeds to a new trial.

The plaintiff who obtains a judgement is entitled to have his judgement enforced. In this case the Plaintiff having obtained judgement against the Defendant, is entitled to have that judgement enforced. In this regard the prejudice to the Plaintiff, if the judgement is set aside is to put the Plaintiff back to its position before the judgement in default was obtained. It would lose the benefit of the judgement which has been sitting in his favour for about one year.

I agree that in the circumstances some prejudice may be caused to the Plaintiff if the judgement in default which is now one year old is set aside. However this is only one of the matters to be taken into account in such application as this and must be borne in mind along with the other factors.

With those considerations in mind, the court must ask itself how such considerations bear upon the Defence now put before the court by the Defendant. I have seen the Defence now before the court exhibited as Annexure "WU2" to Mr. Uluilakeba's Affidavit.

It is almost an inflexible rule that where judgement has been obtained regularly, there must be affidavit of merit, showing a defence on the facts as stated in the affidavit. see Farden -v- Richter [1889] UKLawRpKQB 79; (1889) 23 QBD 124.

The affidavit of merit filed on behalf of the Defendant here in my view disclose a prima facie defence. I do not say at this stage that such a defence would be successful but suffice that there is a triable issue disclosed by the facts stated in Defendant's affidavit. That is sufficient for the purpose of an application such as this.

I have raised earlier the point that the Defendant knew about the judgement and yet proceeded to ask for settlement of repayment proposal of the judgment debt. I have mentioned that point for the sake of completeness. However it has been pointed out in Evans -v- Bartlam that such an action on the part of a Defendant did not preclude him from asking the court to set aside the judgement made against him.

In Evans -v- Bartlam, the defendant had a judgement entered against him in default of appearance. He obtained from the plaintiff time to allow him to pay the judgement debt. Later he applied by summons to have the judgement set aside. In the Court of Appeal, Slesser LJ stated that the defendant was seeking to approbate and reprobate, that he took a benefit under the judgement and could not thereafter be allowed to set it aside. SCOTT LJ preferred to put it as the defendant knew or must be presumed to know that he had the right to apply to set aside the judgement, and by asking for and obtaining time to pay, he irrevocably elected to abide by the judgement. On appeal to the House of Lords, Lord Atkin had this to say at page 649:

"My Lords, I do not find myself convinced by these judgements. I find nothing in facts analogous to cases where a party, having obtained and enjoyed material benefit from a judgment, has been held precluded from attacking it while he still is in enjoyment of the benefit. I cannot bring myself to think that judgment debtor, who asks for an receives a stay of execution, approbates the judgment, so as to preclude him thereafter from seeking to set it aside, whether by appeal or otherwise. Nor do I find it possible to apply the doctrine of election. It is a simple answer to say that, to infer election, it must be shown that the person concerned had full knowledge of the various rights amongst which he elects. There is here no evidence that the defendant, at the time he asked for a received time, had any knowledge of his right to apply to set the judgment aside. I cannot think that there is any presumption that he knew of this remedy, either sufficiently for the purposes of the doctrine as to election, or at all. For my part, I am not prepared to accept the view that there is in law any presumption that anyone, even a judge, knows all the rules and orders of the Supreme court. The facts is that there is not, and never has been, a presumption that everyone knows the law. There is the rule that ignorance of the law does not excuse, a maxim of very different scope and application"

Mr Uluilakeba in this case did not know of his right to apply to set aside judgement. His company's former solicitor did not advise him although he consulted the solicitor when he learned of the default judgement. He cannot be presumed to know of such a remedy available to him.

I have considered all these matters touching upon the exercise of the court's discretion in this application. I also bear in mind the inherent power of the court to prevent an abuse of its proceedings. At the same time I do have regard of the words of Lord Atkin at page 650 in Evans -v- Bartlam where he said:

"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"

With that principle in mind I come to the conclusion that in view of the fact that there is a prima facie defence disclosed in the affidavit of the defendant and that having considered all other matters in this case, I must allow the application and order the judgement in default of defence entered on 2 July 1993 be set aside. The Defendent shall file a Defence within 14 days.

The Writ of Execution filed in this action shall also be set aside.

Despite the circumstances as I have found, I feel the Plaintiff should have their costs in this application and I so order.

(G.J.B. Muria)
CHIEF JUSTICE