Samoa National Provident Fund Board v Lauano [2008] WSSC 70 (28 August 2008)

IN THE SUPREME COURT OF SAMOA
HELD AT APIA

BETWEEN:

SAMOA NATIONAL PROVIDENT FUND BOARD
a corporate body established under the National Provident Fund Act 1976
and carrying on business in Apia
Plaintiff

AND:

TOIAIVAO FILI LAUANO
businessman of Lotopa
Defendant

Counsels: AK Su’a for the plaintiff
LT Malifa for the defendant

Decision: 28th August 2008

DECISION OF NELSON J.

By statement of claim dated 2nd May 2007 the plaintiff instituted proceedings to recover the balance of the defendants loan. The defendant is a former employee of the plaintiff and the loan was obtained on favourable terms while the defendant was so employed. The defendant failed to meet his repayments and the plaintiff as mortgagee sold the property that secured the advance. The monies netted were insufficient to effect full repayment of the advance and these proceedings relate to the remaining balance.

The plaintiff experienced difficulties in serving the proceedings in fact the file shows the plaintiffs original statement of claim dated 18th April 2006 was enlarged for service seven times. Accordingly the court by order dated 21st June 2007 granted the plaintiffs application to dispense with personal service and authorized substituted service by publication of the statement of claim in the Samoa Observer. The claim was published on 22nd August 2007.

The defendant engaged counsel to act but for reasons not clear from the file, his counsel did not attend mentions of this matter on 17th September 2007 or 24th September 2007. Counsel did however by letter dated 18th September 2007 to the Registrar of Court copied to the plaintiff request that all his matters scheduled to be called on 24th September 2007 including this case be adjourned to the next mention date as he would be overseas from 21st to 29th September 2007. On 24th September 2007 I noted the record that Mr Malifa represents the defendant and in accordance with that request and with the consent of the plaintiff adjourned the proceedings to 22nd October 2007. No appearance was entered that day by defendants counsel or the defendant and Vaai, J at the plaintiffs request entered a judgment by default.

The defendant now seeks a re-hearing of a Judgment Summons Order dated 12th December 2007 but I can find no record on the file of such an Order only a Judgment Summons application dated 7th November 2007. I assume therefore the defendant is applying to set aside the default judgment of Vaai, J entered on 22nd October 2007. A perusal of the grounds of the application reinforces this view as they all seem to relate to that judgment. The defendants application is dated 3rd March 2008.

The grounds of the application will be dealt with in turn.

1. Special circumstances:
   

(i) That the proceedings were issued without the knowledge of the defendant – this does not affect the validity of a default judgment provided the proceedings are properly brought to the attention of the defendant by personal or substituted service in accordance with the rules of court. It is also not a requirement the proceedings be brought to the notice of the defendant before they can be initiated. A defendants permission is not required before he can be sued by a plaintiff, it is only required that a legally valid cause of action lie against him.

(ii) The proceedings were not served on the defendant. Substituted service was effected as ordered by the court and the defendants action in engaging counsel indicates knowledge of the claim.

(iii) Defendants address well-known to the plaintiff – this seems to suggest the defendant could have been served at any time at his home. The affidavit in support of the application for substituted service outlines the unsuccessful attempts by the plaintiff to serve the proceedings at the defendants place of residence and elsewhere. Add to this the many enlargements of the original statement of claim and the inference could readily be drawn that the defendant was evading service.
(iv) Inability to effect personal service is disputed by the defendant - the affidavit leading to the grant of the order for substituted service is to the contrary. In any event the defendant was aware his account was delinquent (admitted by paragraph 7.1 of his Amended Statement of Defence) and as a senior ex-employee he should have realised the potential for legal proceedings.
(v) This ground indicates the defendant was aware proceedings had been instituted against him but his complaint is discriminatory treatment by the plaintiff.
(vi) Location of the ‘no trespass’ sign - the defendant is being pedantic, the sign was obviously visible and plainly referred to the defendants land.
(vii)

None of these circumstances are special or provide reason to set aside the judgment.

2. Non provision of documents by the plaintiff - again I fail to see how this can be a ground for vitiating the judgment. In any event plaintiffs counsel confirmed at the last calling of the application that all documents relevant to this matter have now been served on defence counsel.

3. The plaintiffs actions violate the defendants liberty to contract - the relevance of this even if factually correct is difficult to see. Quare whether such a "liberty" is recognized by the laws of this country. If it is based on article 6(1) of the Constitution that article appears restricted to deprivations of "personal liberty" only (i.e. the physical liberty of a person as opposed to other kinds of liberty) and the subject matter of articles 6(2) to 6(4) support this interpretation.
   
4. Plaintiffs actions violate equality of treatment and equal protection of the law - although in the defendants application, there has been no expansion on the argument. The affidavit in support indicates that the defendants complaint here is inequality of treatment viz-a-viz other clients and customers of the plaintiff. He cites a number of examples and threatens to reveal more at trial.
   

Again the court must assume in the absence of submissions from counsel that the defendant is alleging infringement of his constitutional right to equal protection under the law pursuant to article 15(1) of the Constitution. If that is the case he should by appropriate application seek relief under article 4 of the Constitution. Making such bold and unsubstantiated allegations with no evidentiary basis of some kind is unhelpful. Because the defendant believes it does not make it so. The argument lacks substance.

Relevant law:

Rule 118 of the Civil Procedure Rules 1980 provides that if on the trial of an action the defendant does not appear and the claim is for a liquidated amount, the court may enter judgment by default without a hearing. I have no difficulty concluding the claim here was served as required by the rules of court, it was for a liquidated amount and that on 22nd October 2007 neither the defendant nor his counsel appeared. The default judgment was validly entered.

The jurisdiction to set aside a default judgment is contained in rule 140 which relevantly provides:

"140. Setting aside Judgment or Order given in Absence of Defendant – (1) Where in any proceedings a defendant does not appear at the hearing and a judgment or order is given or made against him in his absence, the judgment or order 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. "

Rule 141 goes on to say:

"141. Rehearing - (1) The Court shall in every proceeding have the power to order a rehearing to be had upon such terms as it thinks reasonable.

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.

.....

(5) An application for a rehearing may be heard by the Judge who heard the proceedings or, if that Judge is not available, by any other judge.

.....

(8) The Court upon rehearing may either affirm, reverse or vary the judgment."

The general principles governing such applications are not contained in the Rules or any previous decisions of this court that I have been able to locate, but some guidance is afforded by those followed in New Zealand in applications under the equivalent New Zealand provisions rules 143 and 469 of the New Zealand High Court Rules. These are that the discretion vested in the court is unfettered but that there are three considerations commonly regarded as of dominant importance:

(i) that the defendant has a substantial ground of defence;

(ii) that the delay is reasonably explained; and

(iii) that the plaintiff will not suffer irreparable injury if the judgment is set aside (see Russell v Cox [1983] NZLR 654 and Equiticorp Finance Group Ltd v Cheah [1988] NZCA 273; [1989] 3 NZLR 1, both decisions of the New Zealand Court of Appeal). To this in New Zealand by the terms of their Rules must be added the further requirement that the judgment can only be set aside "if it appears to the court that there has been or may have been a miscarriage of justice." This is in line with the over-riding requirement in applications of this nature that the final test should be whether it is just in all the circumstances to grant the application. As noted by the court in Russell v Cox (a case decided before the miscarriage of justice test was introduced into rules 143 and 469) at 659 – "the several factors mentioned in the judgments discussed should be taken not as rules of law but as no more than tests by which the justice of the case is to be measured........." There is no reason why these principles should not be applied to applications to set aside under rules 140 and 141.

Discussion:

The first issue requiring consideration is whether the application complies with the proviso to rule 141(1). Clearly it does not as the application was lodged on 3rd March 2008, more than fourteen days after the judgment of 22nd October 2007. It is not even within fourteen days of the Judgment Summons Order it claims was issued on 12th December 2007.

There is a discretion for the court to consider applications out of time but the application fails to address the issue. Indeed the application fails to make mention of either rules 140 or 141. Counsel should consider reading the relevant Rules before making such applications to the court. He may find them useful. On this ground alone the application fails.

As to whether the application meets the criteria referred to above:

(i) the onus of establishing a substantial ground of defence is on the defendant. And the ground of defence must be substantial, not trivial shallow or in the language of plaintiffs counsel "shadowy". The defendant must show a defence of sufficient substance to justify delaying the plaintiff in obtaining the fruits of the judgment: Sandall v Cardna (unreported) 18th May 1987 where Hardie Boys J in the Blenheim High Court put the question thus – "Does the defendant have a defence which ought to be heard?" Not every defence would satisfy such a test, each case must be assessed on its merits.

I have considered the Amended Statement of Defence dated 6th June 2008. Therein the defendant admits receiving the loan monies both original and additional from the plaintiff and mortgaging his Vailele property as security. He further admits defaulting in payment of his loan but denies receiving a default notice or being notified about the mortgagee sale of the mortgaged land. He alleges the plaintiff has acted illegally unlawfully and in breach of his liberty to contract under the Constitution. He also raises the issue of discriminatory treatment and equal protection under the law.

The defendant and his counsel seem unable to see the wood for the trees. This is a simple debt collection proceeding. The defendant received a loan, he has failed to repay it, the plaintiff has foreclosed on its security and there remains an outstanding balance. The validity of the plaintiffs security is not in issue and in any event is no longer a live issue as foreclosure has occurred. There is no challenge to the validity of those actions, only as to the minutiae of this matter. His non-receipt of notices provides no defence as he has admitted being in default. He must have been aware certain consequences would follow if he did nothing. Neither does non-receipt provide a basis upon which he can base a legitimate constitutional or legal challenge on the validity of the plaintiffs actions. Furthermore there is no constitutional freedom of liberty to contract in this jurisdiction and such an argument is spurious to say the least. I have already dealt with the defendants protestations of discriminatory treatment and constitutional inequality. The amended statement of defence discloses no defences of any substance, the defendant has not discharged the onus required of him in that regard.

(ii) The application makes no reference to the delay or reasons for inaction on the part of the defendant or his counsel.

(iii) This is an action to recover a debt that continues to accrue interest against a debtor who seems to be procrastinating. The longer matters are delayed the greater the injury to the plaintiff if the judgment is set aside. The balance of this consideration favours the plaintiff.

(iv) In respect of the overall justice of the matter there is little in the defendants favor. He has no real defences to the action and he should have been so advised. The application is without merit. It must be declined. The plaintiff is entitled to costs on the application. Plaintiffs counsel to file the necessary memorandum within seven (7) days hereof.

The original judgment of Vaai, J dated 22nd October 2007 is affirmed.

JUSTICE NELSON