Lauano v Samoa National Provident Fund Board [2009] WSCA 3; CA 11 of 2008 (1 May 2009)

IN THE SAMOA COURT OF APPEAL
HELD IN APIA

No. CA 11/08

BETWEEN:

TOIAIVAO FILI LAUANO
Appellant

AND:

SAMOA NATIONAL PROVIDENT FUND BOARD
Respondent

Coram: Honourable Chief Justice Sapolu
Honourable Justice Fisher
Honourable Justice Hansen

Counsel: L T Malifa for appellant
T Malolo and A Su’a for respondent

Hearing: 29 April 2009
Judgment: 1 May 2009

JUDGMENT OF THE COURT

This is an appeal against the refusal of Vui C Nelson J, on 28 August 2008, to set aside a default judgment entered against the appellant by Vaai J on 22 October 2007. The judgment was in the sum of $64,158.95 together with costs.

After the morning adjournment Mr Malifa applied to withdraw the appeal. We declined this application and directed the matter proceed to judgment.

Background

In 1992 and 1993 the appellant was employed by the respondent. In February 1992, he was granted a loan by the respondent of $105,000 to build a house on his property at Lotopa. In 1993, an additional advance of $40,000 was made to complete the house and pay creditors. Security was to be by way of a 1st mortgage.

By June 2003 the appellant was in default. The respondent issued a default notice that was not honoured. Following a legitimate mortgagee sale process there was a shortfall of $64,091.45. In May 2007 proceedings were issued in the Supreme Court to recover this sum. After a number of enlargements His Honour Chief Justice Sapolu ordered substituted service by way of advertisement in the Samoa Observer. That appeared on the 22 August 2007 and gave a hearing date of 3 September 2007. On that date the Appellant appeared in person and the matter was adjourned to the 17th of that month to enable him to engage counsel.

On the 17th September the Court was not available and the matter was adjourned until the 24th of September. At least by the 18th September Mr. Malifa had been instructed, as he now accepts. On that date he wrote to the court advising he would be overseas from 21 September to 29 September. He requested cases he was involved in during that period, including this case, be adjourned. With the concurrence of the plaintiff, Nelson J adjourned the matter to the 22 October 2007. On that date, in the absence of the appellant, Vaai J entered judgment by default. On 14 December 2007 the respondent, as it was entitled to do, issued a Judgment Summons with a return date of 4 February 2008. It is clear that this summons has never been heard and no order has been made on it.

On 3 March 2008 the appellant filed an application seeking the rehearing of the Judgment Summons. That document, as with the subsequent appeal documents and submissions, is discursive, prolix and hard to comprehend.

On the same date, notwithstanding that judgment had been entered, the appellant purported to file a Statement of Defence. On the 6th June a purported amended Statement of Defence was filed. In the light of the judgment entered neither of these documents can have any standing.

The appellant’s application was heard by Vui C Nelson J on 28 August 2008. He was obviously troubled by the application. He inevitably treated it as an application to set aside the default judgment and dismissed it. However, on 26 February 2009 he granted leave to appeal.

Mr. Malifa insisted before us that this was an appeal against the refusal to rehear the Judgment Summons. As with the application before Vui C Nelson J such a course was totally misconceived. Under s.19 of the Judgment Summons Act 1965 a person against whom a judgment order has been made may apply for a rehearing. The problem in this case is that an order has never been made on the Judgment Summons. Put simply and bluntly, there is nothing to rehear.

Ultimately Mr. Malifa accepted this self evident proposition. It was agreed that this matter should proceed as an appeal against the refusal to set aside the default judgment.

Such applications are governed by Rules 140 and 141 of the Supreme Court (Civil Procedure Rules) [1980]. Those rules read:

[140] (1) Where in any proceedings a defendant, or a defendant to a counter-claim, does not appear at the hearing and a judgment or order is given or made against him in his absence, the judgment or order and any execution thereon may on application be set aside and a new hearing may be granted.

(2) The application may, if the parties are present, be made on the day on which the judgment or order was given or made, and in any other case shall be made on notice.

(3) Notice of a new hearing pursuant to this rule shall be in the form 29 and shall be served on the plaintiff seven clear days before the date fixed for the new hearing.

[141] (1) The Court shall in every proceeding have the power to order a rehearing to be had upon such terms as it thinks reasonable, and in the meantime to stay proceedings:

Provided that a rehearing shall not be granted on an application made more than fourteen days after the judgment or order, unless the Court is satisfied that the application could not reasonably be made sooner....

As Vui C Nelson J noted those rules are silent as to the applicable principles. However the rules are similar to the equivalent New Zealand High Court Rules 143 and 469. Vui C Nelson J was correct to identify that the discretion to grant a rehearing is unfettered. But, as he also noted, to succeed the applicant must establish:-

1. A substantial ground of defence.

2. A reasonable justification for the delay.

3. The plaintiff will not suffer irreparable harm if the judgment is set aside.

(Russell v Cox [1983] NZLR 654 and Equitcorp v Finance Group Limited v Cheah [1988] NZCA 273; [1989] 3 NZLR 1).

The respondent does not rely on the third ground.

Substantial Ground of Defence

After considerable exchange with the bench only one ground of defence was advanced. This was that other debtors of the respondent have apparently managed to have their loans rescheduled or in some cases written off. Such a defence has no basis in law. In any event any such submission must be fatally flawed because there is no evidence that the appellant ever requested the respondent to restructure or write off his loan.

Delay

It was only at the hearing of this appeal that the appellant finally applied to set aside the default judgment. Mr Malifa candidly accepted that this was because he did not properly understand the nature and effect of a default judgment, or the correct procedure to set such judgment aside. Unfortunately, for the appellant this does not amount to a reasonable explanation for the 18 months delay in his case. He cannot rely on his counsel’s hopelessly misconceived application to justify delay. Such delay is fatal both under Rule 141 and under the applicable legal principles set out above.

In addition, to successfully apply to set aside this default judgment, the appellant would need to give a reasonable explanation for his, and his counsel’s, failure to appear on the 22 October 2007. Mr Malifa submitted that somehow it was the obligation of the respondent’s solicitor and the Court to advise him of the adjourned date. This submission is misguided. By 18 September 2007 Mr Malifa had been instructed. He applied to the Court to adjourn this case. The grant of an adjournment is the grant of an indulgence by the Court. It is counsel’s obligation in such circumstances to ascertain the adjourned date. Mr Malifa obviously failed to do that and the appellant cannot now seek to visit that failure on others.

The appeal as presented was misconceived. As reformatted by the Court it is without merit and is dismissed.

The respondent sought solicitor / client cost. The appellant resisted, apparently on the basis that he already owed money to the respondent.

The appeal as filed, as we have already noted, was legally misconceived. The appeal as finally presented was without merit. Applying standard principles the respondent in such circumstances is entitled to solicitor / client costs. If the quantum of such costs cannot be agreed they are to be noted by the Registrar. Given the error appears to be that of counsel the appellant will be entitled to raise with counsel who should pay the respondent’s costs.

Regrettably in this case there are two further matters we need to comment on.
The first relates to an exchange of correspondence between the appellant’s counsel and the respondent. On the 18 October 2007 Mr Malifa wrote to the respondent seeking certain information. The respondent’s legal manager replied on 23 October 2007 stating the letter had only been received that morning and that default judgment had been entered the day before.

In his submissions Mr Malifa alleged that it was clear the letter had in fact been received on the 19th of October. He alleged untruth by counsel for the respondent, effectively to cover up that there was to be a hearing on the 22 October. This is a very serious allegation to make against a fellow practitioner and an allegation that should be never be made without fully checking the facts. Eventually, after we took Mr Malifa through the documents he accepted that there was no basis whatsoever for such a serious allegation. It was ultimately apparent he had confused September correspondence with October correspondence. Mr Malifa apologised fulsomely to Mr Malolo and Mr Su’a. Nothing more needs to be said other than to reiterate counsel’s obligations.

The second matter relates to a letter of 12 November 2007 written by Mr Malifa to Vui C Nelson J. In that letter he takes exception to the judge listing Mr Malifa as counsel when the matter was called on the 24th September 2007. He alleges such an entry was false. In the second paragraph of his letter he goes on to insist he knew nothing about this case until the 16 October 2007. At the commencement of the hearing we questioned Mr Malifa about this letter. He confirmed both the truth and content of the letter. We then put to Mr Malifa his own letter to the Court of 18 September seeking an adjournment. He accepted that letter established he knew of the case and had been instructed by 18 September. His explanation was that when he wrote the letter of 12 November he must have overlooked his letter of 18 September. Given the emphatic terms of his letter of 12 November that does seem surprising.

Whether the letter of 12 November was authored inadvertently or deliberately it placed incorrect information before the Court. Its effect was to mislead the Court. This has caused us great concern. We have determined that the matter is so serious that we are obliged to report it to the Law Society of Samoa. Accordingly, we direct the Registrar to forward a copy of this decision to the President of the Law Society. To assist the Law Society we annex to this judgment the letters of 18 September and 12 November 2007.

Honourable Chief Justice Sapolu
Honourable Justice Fisher
Honourable Justice Hansen