Brenner v Johnson [1985] VULawRp 7; [1980-1994] Van LR 180 (15 October 1985)

[1980-1994] Van LR 180

IN THE SUPREME COURT OF
THE REPUBLIC OF VANUATU

CIVIL JURISDICTION

Civil Case No. 98 of 1985

BETWEEN:

MICHAEL BRENNER
Plaintiff

AND:

BOYD JOHNSON AND LILLIAN JOHNSON
trading as ROCOCO BOUTIQUE
First Defendants

AND:

ANDRE NATUREL
trading as PACIFIC TRANSIT
Second Defendant

Coram: Chief Justice Cooke

Counsel: Mr P. Coombe for Plaintiff
Mr W. McKeague for Defendants

JUDGMENT

[JUDGMENTS AND ORDERS - Default Judgment - Application To Set Aside]

On the 7th October 1985, Mr McKeague of Wayne J. McKeague and Associates, who stated he represented the first Defendant, applied by summons to set aside a default judgment entered herein on the 5th day of September 1985 and that the execution under the Writ of Possession and Fieri Facias, filed on the 9th September 1985, be stayed on the grounds that there are special circumstances which render it inexpedient to enforce the judgment and it is just and reasonable that the judgment be set aside and upon the further grounds appearing in the affidavit of Wayne John McKeague and Lilian Johnson, filed herewith, subject to such terms and conditions as the Court may think just.

First I will deal with the various authorities dealing with the application to set aside a default judgment and then deal with the facts on this application to ascertain whether or not there is any justification for interfering with and setting aside the default judgment.

Under Order 13 and 29 of the High Court Civil Procedure Rules applicable in Vila and Order 13 rule 10 of the Supreme Court Rules of England, the power to set aside a judgment obtained on default of appearance is given to the Court or a Judge. It is a power entrusted to the discretion of the Court or Judge.

Lord Ackin in Evans v Bartlam (1937) All E.R. p.646 at 650 states:

"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."

At page 656 of the same case, Lord Wright states:

"A discretion necessarily involves a latitude of individual choice, according to the particular circumstances, and differs from a case where the decision follow ex debito justitiae, once the facts are ascertained. In a case like the present, there is a judgment, which, though by default, is a regular judgment, and the applicant must show grounds why the discretion to set aside should be exercised in his favour. 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 pass a judgment on which there has been no proper adjudication."

Another case of interest in the matter under reference is Burgoine v Taylor [1878] UKLawRpCh 135; (1878) 9 Ch. D. 1. This action was in the list for trial before Mr Justice Fry on the 18th March 1877. The Defendant did not appear and judgment was given for the Plaintiff. The action has been originally set down before Vice-Chancellor Malins, and it was by an Order of the Lord Chancellor, dated the 21st of February 1878 transferred (with other actions) to Mr Justice Fry for trial. On the 20th March the Defendant applied to have judgment set aside and filed two affidavits one by his solicitor and the other by his clerk. The solicitor said "the order of transfer was unknown and unnoticed by me, the duty of watching the list was entrusted to the clerk of my office." That the Defendant has a good defence on the merits of the case and is prepared to substantiate such defence by evidence in Court. His clerk said he watched the lists daily of causes to be tried before Vice-Chancellor Malins as it appeared in the Times. "The order for the transfer of this case was entirely unknown and unnoticed by me." Fry J. at page 4 states:

"I am asked to set aside this judgment on the simple ground that the Defendant's solicitor and his clerk were so negligent that they did not know of the order for transfer, or that the action had come into the list for trial, and I think that I ought not, upon this simple ground of gross negligence, to grant the application. It is very important that it should be understood that solicitors are bound to use due diligence. The fact that the transfer had been made ought to have been known to the Defendant's solicitor or his clerk. The order for transfer was published in the Weekly Notes, which it is clear from the affidavits that the Defendant's solicitor took in. He had ample means of knowing of the transfer. If I were to accede to this application, the result would be that a solicitor who asked to have a judgment, obtained against his client in default of appearance at the trial, set aside, would only have to show that he himself had been guilty of gross negligence. I do not think it right to encourage negligence to that extent, and on the simple ground I refuse the motion with costs."

The Defendant appealed. Jessel, M.R. stated:

"We think that the Order asked by the Defendant ought to be made, solicitors cannot, any more than other men, conduct their business without sometimes making slips; and where a solicitor watches the list, and happens to miss the case, in consequence of which it is taken in his absence, it is in accordance with justice and with the course of practice to restore the action to the paper, on the terms of the party in default paying the costs of the day, which includes all costs thrown away by reason of the trial becoming abortive. As a general rule, solicitors in my branch of the Court consent to such an order as is now asked, and that such an application should be opposed is to me a novelty. Still, as the Appellant was in default, he must pay the cost of the application to the Court below, but no costs of the appeal."

The other Judges concurred.

In the case of Midland Bank Trust Co Ltd v Green (No. 3) (1979) Ch. page 503 Oliver J. in the course of his judgment at page 503 (E) states:

"Illustrations of the sort of circumstances in which, in general, it is appropriate for the Court to exercise its discretion under Rules of Supreme Court Order 35 r. 2, are to be found in Burgoine v Taylor (1878) 9 Ch. D1, the failure to attend at the trial was due to genuine mistake."

In the case of Sorrell v Clarke (1965) 109 SJ 354, it was due to absence through illness.

But where, as here, the failure to oppose the judgment sought to be set aside is attributable to the applicant's own informed and deliberate choice, there is, Mr Parker submits, no room for the application of the rule and a fairly recent example of this is to be found in the decision of Payne J. in re Barraclough, decd. (1965) 2 A.E.R. 311, a case where the Defendant in a probate action had, through her solicitors, withdrawn from the proceedings after the discharge of her legal aid certificate. The Court subsequently pronounced for the will without opposition in May 1963, and it was proved on September 11, 1963. Over a year later the Defendant applied to set aside the order and to amend her counter-claim to claim revocation of the probate. That application failed. There are some useful general observations on the jurisdiction in Payne J's judgment. At page 5 he stated:

"The object of that rule clearly is to avoid a miscarriage of justice through a decision being made in the absence of one of the parties; and the fact that the rule provides that an application should be made within six days indicates in general the kind of circumstances in which applications are likely to be made under the rule - cases where there is an opportunity to correct an erroneous decision if the matter is brought back to the Court expeditiously. On the other hand, it is possible under R.S.C. Ord. 3, r.5 to extend the times prescribed under many of the Rules of the Supreme Court and so it is clear that in a proper case, an extension of the time can be permitted for an application under R.S.C. Ord. 36 r. 33."

After citing a passage in Mortimer & Coates' Law and Practice of the Probate Division etc., Payne J continues on pp. 10-11:

"Both authors point out that not only parties to the proceedings but others who are privy to the proceedings or have knowledge of them and are interested in the proceedings are bound by the proceedings if they stand by and do not take part or intervene."

There is also a quotation from Sir Cresswell in Ratcliffe v Barnes (1862) 2 SW & Tr 486, 487 which is pertinent - it states:

"The general principle is this, that where a party has had full notice, and has had the opportunity of availing himself of the contest, he will be bound by the decision. That was not a mere dictum, but the express decision of a very learned Judge, Sir John Micholl."

The fundamental principle as it would seem, that a party should he bound by the decision if he has had an opportunity to appear and oppose the proceedings. However if by some unavoidable accident - genuine mistake or illness - the kind of thing for which R.S.C. Ord. 36 r. 33 provides a Defendant has been prevented from coming into Court and opposing the proceedings, would not the Court in the interests of Justice and under R.S.C. Ord. 36 r. 33 put the matter right? Would it not lead to a grave injustice if a decision could not be put right although by mistake or accident it had been given in the absence of somebody who genuinely wished to come to Court and oppose it?

I will now turn to the facts in this matter and attempt to ascertain what actually took place and why no appearance or defence was filed and then decide whether I would be justified in allowing or dismissing the application.

The facts in this case are clear:

On the 12th June 1985 the Plaintiff issued a writ of summons served on the Defendant on the 13th June 1985. A memorandum of appearance was due to be filed on the 27th June. It was not filed.

On the 26th June, a letter was written by Mr McKeague, at that point of time acting for the Defendant, to the Plaintiff's solicitor requesting reasonable extension of say a further twenty one days to enable the matter to be examined by a French legal adviser as he, Mr McKeague, held the view that the whole question of the lease is one for French law (annex "A" to Mr McKeague's affidavit). This period was seven days longer that the regular time to enter a defence. On this basis the appearance would be due on the 17th July 1985. This extension was allowed but nothing happened.

From paragraph 6 of the affidavit of Mr McKeague, he stated that a member of his staff was requested to deliver the file to Mr De Preville, who seemingly had stated he would act for the Defendant, with a compliment slip dated the 22nd July 1985 (annex "B" to Mr McKeague's affidavit). This date was five days later than the period of extension requested. This file turned up at the office of the Plaintiff's solicitor ten days later i.e. 10th August 1985.

On the 19th August 1985 the Plaintiff' solicitor wrote to the Defendant's solicitor (or Wayne J. McKeague & Associates) referring to their letter of the 26th June 1985 and noting that the period mentioned therein has now long since expired. The letter then stated:

"In the event that you fail to file an appearance and a defence by Monday 26th August 1985 we will proceed to sign judgment by default".

In my opinion the contents of that letter should have jolted any lawyer into immediate action.

By paragraph 7 of Mr McKeague's affidavit, he said he received the letter from the Plaintiff's solicitor on the 20th August 1985 and forwarded a copy to Mr and Mrs Johnson with a covering letter, a copy of which is annexed to Mr McKeague's affidavit and marked "E" which stated:

"I enclose herewith copies of two letters received from Turner Hopkins Coombe & Partners (Plaintiff's solicitor) (the second letter only referred to two cheques sent to his firm which had been returned) on 20th August. You last advised me that Mr De Preville was taking up the matter when he returned to Port-Vila at the beginning of July. You will see that it is most important that he take some steps in the proceedings by the end of this week. I will be away for two weeks from this Saturday (four days later) so if he requires any information from me or my own comments from the point of view of any English law involved he will not be able to contact me until after 8th September."

One would have thought that on receipt of the letter of the 19th August 1985 from the Plaintiff's solicitors, Mr McKeague would have phoned the Johnsons forthwith and explained the position to them and the urgency of the matter, informing them he had written to them and telling them to do something before 26th August 1985, even to the extent of going to the Court, seeing the Registrar and filing an appearance and seek further time to file a defence in view of the difficulties. The fact that Mr McKeague was leaving the country made it imperative that he satisfy himself, that the Johnsons had filed a defence before he left the country on Saturday 24th August, the last date for filing appearance being Monday 26th August. The action of Mr McKeague in not doing so was quite unforgivable, in my opinion.

The Plaintiff even then did not take immediate action when no appearance was filed. He waited until the 5th September, that is a further period of ten days before having the judgment signed by default.

On the 6th September the Plaintiff's solicitor informed Mr McKeague by letter (exhibit "F" attached to the affidavit of Mr McKeague) that he entered judgment and enclosed a copy of the default judgment and Order for costs and informed Mr McKeague that if the judgment was not fulfilled by the 9th September 1985 a Writ of Fieri Facias and a Writ of Possession would be issued against his client.

Nothing happened even as a result of that letter so writs of execution were issued on the 9th September. Still nothing happened.

On the 12th September 1985, Mr McKeague wrote a letter to the Registrar of the Supreme Court, annex "G" to his affidavit, setting out certain facts and informed the Registrar that by virtue of that letter he wished to appear before me in chambers to seek an interim order staying writs of execution until full application can be made to set aside the default judgment.

I allowed the matter to come before me in chambers on the afternoon of the 12th September but stressed I wished to hear the solicitor for the other party at the hearing of the application. This was arranged and Mr Coombe, solicitor for the Plaintiff, appeared and took immediate objection to the form of procedure i.e. a mere letter to the Registrar, when the proper procedure should be by summons supported by an affidavit. Mr Coombe stressed that all regular steps had been taken by him before applying for default judgment and had even given the Defendants a week after notice, that he was going to apply for such judgment before he took action and still got no action from the Defendants. It was only when the execution of the Writ of Fieri Facias became effective that Mr McKeague acted with any urgency and then giving no notice to the Plaintiff and in defiance of the correct procedure. Mr Coombe submitted that Mr McKeague could not make his own procedure and that the Court cannot hear the matter until it is properly before the Court.

Mr McKeague's reply was to the effect that the bailiff was ejecting the first Defendants from the premises. If the Court waits, irreparable damage may be done. That a Court had the power to entertain such informal applications in the interests of Justice.

Mr Coombe replied stating that Mr McKeague had no locus standi in the matter and everything stated by him should be struck from the record. That it was up to Mr De Preville to appear.

Mr McKeague then stated he was not representing the first Defendants.

I ruled that as Mr McKeague had no locus standi, the application would be dismissed with costs.

In my opinion, if the urgency taken on this occasion had been taken on the 20th August when he, Mr McKeague, received the letter of the 19th August 1985 from the Plaintiff's solicitors (paragraph 7 of Mr McKeague's affidavit) and giving him until the 26th August 1985 to file an appearance and defence, the problems arising now would not have taken place. A phone call to Mr De Preville and to Mrs Johnson or even a visit to one or both (Port-Vila being such a small town) would have resolved the latter. I appreciate the fact that Mr McKeague was about to leave the country but from the facts stated, that was not to take place until four days later. Writing letters to persons within a stone's throw of each other on an important matter as this when the phone can be used shows a grave lack of appreciation of the urgency required. Of course, letters can be written too for record purposes but in my opinion a phone call or a visit or both should have been made under the circumstances.

The matter came before me again on the 8th October 1985 when Mr McKeague, having filed a summons to set aside the judgment and for a stay of execution (I repeat in full his application),asked for orders that the execution under the Writ of Possession and Fieri Facias filed on the 9th September 1985, be stayed and that the default judgment entered herein on the 5th September 1985 be set aside on the grounds that there are special circumstances which render it inexpedient to enforce the judgment and it is just and reasonable that the judgment be set aside and upon the further grounds appearing in the affidavit of Wayne John McKeague and Lilian Johnson filed herewith.

Mr McKeague submitted there are circumstances in the first and second affidavits of Lilian Johnson which show there are real issues to be determined between the parties, whatever the merit may be, such that the Court would not be making a frivolous order if it set aside the judgment. That, where there is obvious conflicts on affidavits - it merely suggests those matters do need to be examined and cross-examined. I am not sure what Mr McKeague is suggesting here but the 'obvious conflicts' he refers to, is whether one or two leases exist. It is clear from the sworn affidavit of Pierre Arrighi, paragraph 2, that he was at all material times gérant (manager) of Société Civile Arrighi (called SCA) i.e. the lessor. That neither he or SCA consent to a sublease from Charles Mitchell to Johnson and if such sublease existed it was null and void. Clause 9 of the lease states:

"The lessee shall not have the right to assign his right to the present lease nor to sub-let the demised premises either in whole or in part, without the express consent in writing of the lessor. Any such purported assignment or sublease which is without such consent shall be null and void and at the discretion of the lessor, grounds for cancellation of the present lease. However, the lessee may assign the lease without such consent to his successor in business or grant a sublease of the whole of the premises to the lessee of the goodwill in the case of the return of the business to a system of franchise. Every assignment or sublease, in order to be valid, must be made in the presence of the representative of the lessor or duly submitted to him for approval and may not be approved if made in consideration of a lesser rent than in the present lease."

This clause of the lease shows there cannot be a valid lease between Mitchell and Johnson. The facts were that Johnson paid rent to someone other than the Plaintiff from June 1982 onward even when they were informed by letter that as from the 4th June 1982 Marisim Holdings Ltd became owner of the building in which their shop was situated. The letter informed the Defendants that they had thirty days to quit the premises and find alternative accommodation, as Marisim intends to use the building for its own purposes.

This was a matter entirely for the Defendants. They certainly did not pay rent to the lawful owner of the premises. They have their rights to recover the said rent from those who received it. On the other hand, if they thought they had a valid lease they should have taken action in 1982 to establish their rights. This is the reason the rent was not taken into account under the judgment. It cannot therefore be said they have a prima facie case.

Mr McKeague refers to the genuine belief that Mrs Johnson had. She had sought legal advice and thought the matter was being attended to by either himself or Mr De Preville and that she had nothing further to do. If Mr McKeague had phoned Mrs Johnson on the 20th August 1985 and informed her of the urgency of the matter of filing an appearance and a defence she would have been in a position to know that something urgently had to be done.

In my opinion the Defendants have not been denied anything.

1. They were warned in 1982 that the ownership of the premises was now with Marisim Holdings and to vacate the premises after thirty days.
2. They operated on an illegal lease and paid rent to persons other than the owner of the premises.
3. They were served with a writ of summons.
4. They were warned to enter an appearance and defence, through their lawyers or otherwise.
5. They were allowed extra time to file an appearance and defence.
6. Even then they were warned that if an appearance and defence was not filed by a certain date, judgment by default would be signed.
7. And even then, they were given another extra seven days from the date when judgment could be filed to take action but nothing was done.

Mr Coombe, for the Plaintiff, in his submission referred to all the opportunities he gave to the Defendants to enter an appearance and file a defence but received no answers to his letters and no action was taken until execution of the judgment commenced.

He submitted it was three months after the original writ was filed until this application was made by the Defendant's solicitor. That which is urged in support of Mr McKeague and Lilian Johnson is an astounding series of failure of communication between solicitor and client and in part is the basis requesting the Court to set aside a regular judgment. That if the first Defendants have unjustly suffered by the signing of the default judgment and execution, it is possible they are not without remedy and therefore would not be denied justice.

Mr Coombe further submitted that:

(a) Paragraph 2 of Mr McKeague's affidavit be struck out as irrelevant.

(b) Paragraph 3 conflicts with paragraph 2 of Mrs Johnson's affidavit filed the same day.

(c) Paragraph 4 conflicts with paragraph 5 of Mrs Johnson's affidavit filed the same day.

Mrs Johnson said she called on Mr McKeague. He said he received a phone call.

Mr Coombe continue to set out further inaccuracies i.e. assumptions, hearsay and vagueness, contained in Mr McKeague's affidavit and that of Mrs Johnson. These were in my opinion substantial and showed a complete lack of communication between solicitor and client.

Another matter which I considered was of importance was contained in the sworn statement of Pierre Arrighi paragraphs 4,5,6, and 7 which showed clearly that he was led to believe that only one lease ever existed. The paragraphs state:

Paragraph 4 - "I was aware that Mr and Mrs Johnson had moved into occupation of the ground floor premises, the subject of this action, but was always informed by Mr Johnson that he was working with Mr Charles Mitchell and that the lease between SCA and Mr Charles Mitchell was valid and subsisting and was the only tenancy agreement affecting the said premises."

Paragraph 5 - " Accordingly, at all times until SCA transferred its interests in the land and building, I believed from information supplied to me by Mr Boyd Johnson and also from conversations I had with Mr Charles Mitchell that the lease between SCA and Mr Charles Mitchell was still in full force and effect and that there was no other tenancy agreement affecting the said premises."

Paragraph 6 - "Consequently I wrote to Mr Charles Mitchell on 5th June 1982 advising him of the transfer of the land and buildings to Marisim Holdings Limited, a company owned by Mr Hainaut and the Plaintiff."

Paragraph 7 - "I subsequently learnt from Mr Hainaut and the Plaintiff that an alleged sublease affecting the said premises existed between Mr Charles Mitchell and the Defendants. This was a great surprise to me in view of what I had been previously told by both Mr Johnson and Mr Charles Mitchell. I knew it to be untrue. Therefore I wrote to Marisim Holdings Limited on 3rd November 1982 confirming that SCA had never consented to any sublease by Mr Charles Mitchell. A copy of the said letter is annexed hereto and marked with the letter "A"."

The contents of these paragraphs, in my opinion, make it clear that the Defendants have no prima facie defence:

(a) They were requested to vacate the premises in 1982.

(b) They were informed that Marisim Holdings were the new landlords in 1982.

(c) They acted on a lease which is null and void.

With such a view one may ask, why did the Defendants not take action in 1982, if they thought they had a good defence to the facts conveyed to them by Marisim Holdings and substantiated by Mr Brenner, the Plaintiff, in his sworn statement to the Court.

Having considered the many cases dealing with a matter such as this one before me, it is clear to me that if -

(a) an illness caused a delay, or

(b) a genuine mistake as to when the case was being heard, (as in the case of Burgoine v Tayloraforesaid) (nothing like such happened in this case)

then I would seriously consider the views of Jessel M.R. in the Burgoine v Taylor case when he stated "As a general rule, solicitors in my branch of the Court consent to such an Order as is now asked, and that such an application should be opposed is to me a novelty" but in my opinion, in this case, the lack of action by the solicitors is so grave, when considering Port-Vila is such a small town and that one can contact each other within the town limits in a matter of five minutes by car or less by phone, that I prefer to follow the views of Oliver J quoting Mr Parker in the case of Midland Bank v Green (No. 3) (1979) 1 ch. page 503 who stated:

"But where, as here, the failure set aside is attributable to the choice, there is no room for the Court to exercise its discretion under Order 35 r.2. to oppose the judgment ought to be applicant's own informed and deliberate application of the rule" i.e. the Court to exercise its discretion under Order 35 r.2.

I reiterate again the quotation from Sir Cresswell Cresswell in the Ratcliffe v Barne case:

"The general principle is this, that where a party has had full notice, and has had the opportunity of availing himself of the contest, he will be bound by the decision."

Accordingly, I find myself, although somewhat reluctantly, with no choice but to dismiss the application with costs.

15 October 1985

FREDERICK G. COOKE
CHIEF JUSTICE

[Editorial Note: This case was subsequently referred to in S/C 138/87 and S/C 15/88.]