Lal v Pacific Autronics Ltd [2015] VUSC 185; Civil Case 62 of 2015 (28 August 2015)

IN THE SUPREME COURT OF
THE REPUBLIC OF VANUATU
(Civil Jurisdiction)

Civil Case No. 62 of 2015

BE'TWEEN:

AMIT LAL
Claimant

AND:

PACIFIC AUTRONICS LTD
Defendant

Coram: Justice Aru
Counsel: Mr. J. Malcolm for the Claimant Mr. J. Kilu for the Defendant

RULING

1. The claimant filed his claim on 1 April 2015 seeking relief for breach of an employment contract he had with the defendant. It was then served on Arvind Lal of Pacific Autronics Lld at its place of business at Tagabe area on 2 April 2015. When no response or defence was filed by the defendant within 28 days as required by the Civil Procedure Rules, the claimant filed a request for default judgment with a proof of service. (Sworn Statement of Kupa Turis as to service).

2. Default judgment was then entered on 18 May 2015 as follows:-

''a). Judgment to the claimant in the sum of VT2, 714,455;

b). interest at 5% per annum from 14 May2 13;

c). costs for service and filing VT 50, 000; and

d). costs to be taxed if not agreed"

Application to set aside

3. The defendant company now applies to set aside the default judgment and says that no response or defence was filed on time due to the following reasons:-

a) The incident happened in 2013 in Santo and it had difficulty locating its records for the purposes of preparing its defence;

b) Counsel was engaged in Court of Appeal matters and didn't have the time to prepare the response and defence in time;

c) The claimant should have known that Mr. Kilu had always acted for the defendant company but instead served the claim on the defendant who is not aware of the time limitations for filing a defence.

4. Mr. Arvind Lal in his sworn statement filed in support of the application deposes that:-

"1. I confirm that I was not able to prepare my defence and counter claim in time due to the fact that important documents were either missing, misplaced or destroyed in Pacific Autronic Limited's office in Santo which office was managed by the claimant.

2. I am still trying to locate some missing documents from the office in Santo.

3. I annex hereto my proposed defence and counterclaim.

4. I believe I have an arguable defence and a good counterclaim which will be supported by evidentiary documents. "

5. Rule 9.5 of the Civil Procedure Rules requires that when a defendant is applying to set aside a default judgment it must set out the reasons why it did nol file a defence and must give details of its defence, if any and the application must be supported by a sworn statement.

6. Rule 9.5 (3) and (4) provides:-

".....

(3) The court may set aside the default judgment Ifit is satisfied that the defendant:

(a) has shown reasonable cause for not defending the claim; and

(b) has an arguable defence, either about his or her liability for the claim or about the amount of the claim.

(4) At the hearing of the application, the court must:

(a) give directions about the filing of the defence and other statements of the case; and

(b) make an order about the payment ofthe costs incurred to date; and

(c) consider whether an order for security for costs should be made,' and

(d) make any other order necessary for the proper progress ofthe proceeding.

7. In ANZ (Vanuatu) Ltd v Dinh [2005] VUCA 3, the court of Appeal said:-

"Suffice it to say that we think the language of rule 9.5 (3) is plain. There are two requirements each of which must be considered on an application to set aside a default judgment. There may be some scope for taking into account the nature and strength of a defence advanced under paragraph (b) of that rule when considering what would constitute 'reasonable cause" under paragraph (a) in the circumstances of a particular case.

If there were a case where an unanswerable defence was demonstrated, but reasonable cause was not demonstrated, the rules would permit the default judgment to be set aside........... The purpose of the rules is to further the administration of justice. The rules should not be applied so as to cause or perpetuate injustice."

(emphasis added)

8. The claimant submits that the reasons given for not filing a defence cannot constitute reasonable cause for not filing a defence. Similarly that the counter claim was previously dismissed by the court. In the alternative, and in the event that the default judgment is set aside, the claimant seeks security for costs in the sum of VT 1.5 million and payment of costs incurred to date in a total sum of VT 270,000 pursuant to rule 9.5 4 b) and c). It was submitted that an order for security for costs would be justified as the defendant company is in debt in the sum of VT 54,418,523 (Annexure "B" in the sworn statement of Amit Lal).

9. The defendant submits that there is no need for security for costs to be given as the defendant is a local company with assets and it has a strong defence and counterclaim.

10. Having considered the submissions and what was said in ANZ (Vanuatu) Ltd v Dinh referred to above, I am of the view that the defendant's submissions fall short of establishing that there was reasonable cause shown for not filing a defence within time. Lost documents could not have prevented the defendant from filing a response or a holding defence which with the leave of the court could be amended at a later date when the lost documents are recovered. It appears the defendant chose to do nothing until the documents were recovered. However, having said this the defence as filed with the counterclaim is arguable as the defendant is counter claiming for compensation in the sum of VT14, 606, 256.

11. Under rule 9.5 4) the court has the discretion to order the filing of the defence, payment of costs incurred, payment of security for costs and any order necessary to progress the matter.

12. Considering the level of indebtedness of the company and the amount claimed in the counterclaim, I am of the view that the giving of security for costs in addition to payment of costs already incurred would be justified. I therefore make the following orders:-

ORDERS

1. The application to set aside the default judgment is granted.
2. The default judgment entered on 18 May 2015 against the defendant is set aside;
3. The defendant shall pay security for costs in the sum of VT 1. 5 million into the Chief Registrar's Trust Account within 30 days;
4. The defendant shall file and serve its defence and counterclaim within 14 days thereafter;
5. The defendant shall pay the claimant's costs incurred to date in the sum of VT 270,000; and
6. A further conference is listed for 23 October 2015 at 10.30am.

DATED at Port Vila this 28 day of August, 2015.

BY THE COURT