Wilfred v Westpac Banking Corporation [2012] VUCA 31; Civil Appeal 25-12 (12 November 2012)

IN THE COURT OF APPEAL OF
THE REPUBLIC OF VANUATU
(Civil Appeal Jurisdiction)
Civil Appeal Case No. 25 of 2012

BETWEEN:

RICHARD RORY WILFRED
Appellant

AND:

WESTPAC BANKING CORPORATION
Respondent

Coram: Hon. Chief Justice Vincent Lunabek
Hon. Justice Bruce Robertson
Hon. Justice John Mansfield
Hon. Justice Oliver A. Saksak
Hon. Justice Daniel Fatiaki
Hon. Justice Robert Spear

Counsel: Saling Stephens for the Appellant
Abel Kalmet for the Respondent

Date of Hearing: 22 October 2012
Date of Original Decision: 25 October 2012

Date of Corrected Decision: 12 November 2012

Judgment of the Court

The Judgment of the Court delivered on 25 October 2012 is now recalled and certain errors corrected. The Court is grateful to Counsel for bringing the errors to the Court's attention.

1. The appellant seeks leave of the Court to appeal out of time against the refusal by Justice Aru to set aside the default judgment dated 2nd July 2012.
   
2. The background of the case can be understood from the following chronology of events:
   
   • (a) On 30th May 2011 Westpac Banking Corporation as claimant (respondent) filed proceedings in Civil Case No. 100 of 2011 against the defendant (appellant). The bank as mortgagee sought to enforce a mortgage under section 59 of the Land Leases Act [CAP. 163] by sale and/or transfer. The amount of the defendant's indebtedness to the bank as at 19th May 2011 stood at VT10,345,945;
     
   • (b) On 3 June 2011 the claim and the sworn statement of May Boe was personally served on Mr. Wilfred and proof of service by the serving officer Johnny Vuti was filed on 9th June 2011;
     
   • (c) On 8th June 2011 the defendant's solicitor filed a notice of beginning to act for Mr. Wilfred;
     
   • (d) On 5 September 2011 Westpac wrote to the Chief Registrar enclosing a Request for Default Judgment given that no steps had been taken by Mr. Wilfred to file his response and defence to the claim;
     
   • (e) On 20 September 2011 the Court issued the orders empowering sale in favour of Westpac being the default judgment;
     
   • (f) On 22 September 2011 Mr. Wilfred was notified and copied with the default judgment;
     
   • (g) On 27 September 2011 Westpac proceeded to hand by cover of a letter, a Notice to Quit of even date along with a copy of the default judgment on Mr. Wilfred;
     
   • (h) On 11 October 2011 Mr. Wilfred filed an application to suspend the default judgment with a supporting sworn statement;
     
   • (i) On 24 October 2011 Westpac filed an application for Enforcement Warrant with a supporting sworn statement;
     
   • (j) On 2 November 2011 at a conference hearing the suspension application was noted for hearing on 12 December 2011. On that date further directions were issued returnable for 14 February 2012.
     
   • (k) On 14 February 2012 the matter was adjourned to 9th March 2012. On that date Mr. Wilfred withdrew his application to suspend the default judgment and direction orders were issued directing that an application to set aside the default judgment be filed within 7 days and that the application be heard on 10th May 2012;
     
   • (l) On 7 May 2012 Mr. Wilfred filed his application to set aside the default judgment;
     
   • (m) The application was heard and was refused on 2 July 2012;
     
   • (n) Mr. Wilfred filed a Notice of Appeal on 3 August 2012;
     
   • (o) The appellant filed his Grounds of Appeal only on 17 October 2012.
     
3. From the chronology of events it is apparent the appellant was late in filing his Notice of Appeal by about 2 days. However Mr. Wilfred's Grounds of Appeal were late by 3 months and 15 days. The only explanation given by counsel for the appellant for those delays were that he was too busy seeking alternative employment and pursuing his proceeding for dismissal against his former employer, TVL. We do not find any evidence deposed by Mr. Wilfred to support those reasons to excuse his inactions and lengthy delays.
   
4. The Court enquired from counsel for the appellant as to what he wanted the Court to do and Mr. Stephens indicated that the case should be remitted to the Supreme Court for a proper trial. Counsel indicated that out of the total of 6 drawdrowns, the last 3 drawdowns were suspicious and done by the Bank dishonestly and without the defendant's consent and knowledge. The total amount disputed is VT3,542,500. Further it was submitted that the drawdowns were duly authorized by the Bank's engineer, however counsel admitted he did not plead negligence against the Bank's engineer.
   
5. Negligence was not an issue before us. However the Court notes from the evidence that the engineer was the Bank's agent and as such he owed a duty of care solely to the Bank.
   
6. Even if the case went to trial and if it were found that the sums of VT3,542,500 were unjustified and were disallowed, the balance of VT6,803,445 would remain to which the defendant would have no arguable defence and no means to settle. With interests accruing on a daily basis, the degree of prejudice to the Bank is so substantial that it would be detrimental to grant the application.
   
7. Laho Ltd. v. QBE Insurance (Vanuatu) Ltd. [2003] VUCA 26 lays down the four factors of importance:
   
   • (a) The length of delay;
   • (b) The reasons for the delay;
   • (c) The chances of the appeal succeeding if time for appealing is extended; and
   • (d) The degree of prejudice to the respondent.
     
8. From the material before us, the Court is clearly of the view that the delay of more than 3 months was unreasonable, that no sufficient reasons have been provided by the defendant for those delays, that there is no chance of the appellant's appeal succeeding and that the degree of prejudice to the Bank is substantial.
   
9. The primary judge refused the application to set aside the default judgment on the basis of Rule 9.5 (3) in that the defendant –
   
   • (a) Had not shown reasonable cause for not defending the claim; and
   • (b) Had no arguable defence to either liability or the amount of the claim.
     

In short, the primary judge found there were no merits in the defendant's claims. We agree with that conclusion.

10. Although not raised on the pleadings the Court was engaged with counsel in a dialogue as to the metes and bounds of Default Judgments.
    
11. In the Civil Procedure Rules No. 49 of 2002 the following provisions are of relevance:
    

"9.1 If a defendant:

(a) does not file and serve a response or a defence within 14 days after service of the claim; or

(b) files a response within that time but does not file and serve a defence within 28 days after the service of the claim;

the cnt may may file a sworn statement (a "proof of service") that the claim and response form was served on the defendant as required by Part 5."

style='text-indent:0pt; margin-top:0pt; margin-bottom:0pt;'0pt;' value='12' value="12">On a plain reading the claimant is authorized to initiate a proceeding under Rule 9.1, but, arguably the Court is authorized to grant relief in 2 specific circumstances covered in Rules 9.2 and 9.3.

"9.2 (1) This rule applies if the claim was for a fixed amount.

(2) After the claimant has filed a proof of service, the claimant may file a request for judgment against the defendant for the amount of the claim together with interest and costs. The request must be in Fo.m 12.

(3) In the Magistrates Court, the request may be made orally.

(4) The court may give judgment for the claimant fo>

(a) the amount claimed by the claimant; ant; and

(b) interest from the date of filing the claim at a rate fixed by the court; and

(c) costs in accordance with Part 15.

(5) Default judgment must not be given in the Magistrates Court before the first hearing date.

(6) The claimant must serve a copy of the judgment on the defendant.

(7) If the defendant does not apply within 28 days of service to have the judgment set aside under rule 9.5, the claimant may:

(a) file a sworn statement that the judgment was served on the defendant as required by Part 5; and

(b) apply to the court for an enforcement order.

[NOTE: For enforcemrders, see Pare Part 14.]

9.3 (1) This Rule applies if the claim was for an amount of damages to be decided by the court.

(2) After the claimant has filed a proof of service, the claimant may file a request for judgment against the defendant for an amount to be determined by the court. The request be in Form 13.m 13.

(3) In the Magistrates Court the request may be made orally.

(4) The court may:

(a) give judgment for the claimant for an amount to be determined; and

(b) either:

(i) determine the amount of damages; or

(ii) if there is not enough information before the court to do this, fix a date for a conference or hearing to determine the amount of damages.

(5) Default judgment must not be given in the Magistrates Court before the first hearing date.

(6) The claimant must serve on the defendant:

(a) a copy of the judgment; and

(b) if a conference is to be held to determine the amount of damages, a notice stating the date fixed for the conference."

13. Such a reading would curtail the operation of Default Judgments which could have an effect on the commercial community but the words of the Rules cannot be ignored and amendment may be required.
    
14. If that were the case claimants like the respondent in this case, would have to set the matter down for hearing, even on short notice, and have a formal trial. That is effectively what happened here so the narrow question of interpretation is not a live matter on this appeal and does not require final resolution in this case.
    
15. However for the reasons noted it is necessary to refuse leave to appeal. The appellant must pay normal costs to the respondent.
    

FOR THE COURT

_________________________________________
Hon. Chief Justice Vincent Lunabek