Inde Bank Limited v G. Mwamondwe t/a Carlitos Automobile Parts and Accessories (11 of 2008) [2008] MWCommC 5 (11 April 2008);

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IN THE HIGH COURT OF MALAWI

 

COMMERCIAL DIVISION

 

BLANTYRE REGISTRY

 

COMMERCIAL CASE NUMBER 11 OF 2008

 

BETWEEN

 

INDE BANK LIMITED………………………………………………………………PLAINTIFF

 

AND

 

G. MWAMONDWE t/a CARLITOS AUTOMOBILE

PARTS AND ACCESSORIES……………………………………….DEFENDANT

 

 

 

CORAM: HON. JUSTICE DR. M.C. MTAMBO

Mulemba of Counsel for the Appellant

Banda of Counsel for the Respondent

Kamanga Court Interpreter

 

 

 

 

 

 

 

 

RULING

 

 

 

 

 

 

 

Dr. Mtambo J.

BACKGROUND

 

This is an appeal from the decision of the Assistant Registrar in the Principal Registry setting aside default judgment on the Defendant’s (now Respondent) counterclaim for damages amounting to K4,888,947.65 plus interest at nine per cent for every three months compounded and costs. The grounds of appeal are stated to be:

 

  1. The Assistant Registrar failed to dispose of the Summons to set aside judgment in full, by omitting to make a finding as to whether judgment was irregular,

 

  1. The Assistant Registrar failed to dispose of the Summons to set aside judgment in full, by omitting to make an order on the Plaintiff’s application for reimbursement of sheriff fees,

 

  1. The Assistant Registrar failed to exercise his discretion properly by awarding costs of the application to the Defendant, notwithstanding that the application was necessitated by the judgment irregularly entered by the Defendant.

 

The pertinent facts of the matter being that the Appellant/Plaintiff took out a Writ in which statement of claim it claimed the sum of K393,359.00 from the Defendant/Respondent being amount outstanding on an overdraft facility extended by the Appellant to the Respondent plus ten per cent interest and costs of the action. The Respondent served a defence in which he counterclaimed K4,888,947.65 plus interest being money lost by the Respondent on the basis of breach of contractual fiduciary duty of care of a banker to its customer in that inter alia the Appellant failed to keep the Respondent well informed as to the effect and intent of the overdraft arrangement on the security of a customer’s fixed deposit and that the Appellant was dishonest by tricking the Respondent to borrow his own money. The counterclaim was served on the Appellant on 16th October 2007.

 

The Appellant served a defence to the counterclaim on 6th December 2007 well out of time for service of a defence. Apparently, the previous day, the Respondent had filed a default judgment which was not entered until 12th December 2007. The Respondent who should have had a copy of his own default judgment has been unable to produce the same to the court. The judgment entered on the counterclaim was for K4,888,947.65 plus 9% interest for every three months compounded and costs as claimed in the statement of claim which sums when added up came to K5,711,200,48. The sheriff executed in enforcement of the said judgment whose warrant of execution was later set aside by the Assistant Registrar in the Principal Registry on 22 January 2007 on application by the Appellant on condition that the Appellant paid K79,767.61 sheriff fees to be reimbursed by the Respondent if judgment on the counterclaim was later found to be irregular. The Appellant paid the sheriff fees. The Assistant Registrar granted the Respondent costs on the application to set aside judgment. No order was made as to whether judgment on the counterclaim was irregular or as to reimbursement of sheriff fees.

 

 

 

THE LAW

 

Under Rule 3 of the High Court (Exercise of Jurisdiction of Registrars) Rules, an appeal can lie from a decision of the Registrar to a judge in chambers and such appeal is by way of rehearing. The judge in chambers hears the whole matter afresh. This position of the law was expounded by Chipeta J. in J.T. Mbalame v Stanbic Bank Limited (High Court Civil Cause Number 2025 of 2005).

 

Mr. Mulemba learned counsel for the appellant, has argued that it is settled law that in an application to set aside default judgment, an affidavit in opposition is not allowed for to do so would lead to trial on affidavit evidence alone without an opportunity for cross examination of witnesses. He relies on Mussa v Chawawa 15 MLR 329 at 330 in which case he states, only the Defendant’s affidavit in support of a summons to set aside judgment was allowed. He therefore implores me to disregard an affidavit in opposition to the appeal herein filed by the Respondent. On the other hand, Mr. Banda learned counsel for the Respondent argues that his affidavit in opposition is for the guidance of the court to show that there was no irregularity and that it is not mere excuses as the Appellant claims. He cites the case of Re Hartley (1891) LTJ 229 in which he claims that an affidavit in opposition was allowed. I must point out at this juncture that with or without the Respondent’s affidavit in opposition, the sequence of dates as to when the relevant documents were filed, issued and served are not in dispute.

 

A defence to a counterclaim is under the Rules of the Supreme Court which governed the proceedings at the relevant time required to be served within fourteen days of service. The rules do not require that the defence should be filed. This is in contrast to Order 5 rule 3 of the High Court (Commercial Division) Rules which provides that:

 

Any reply to defence or defence to counterclaim shall be filed and served within seven (7) days of service of the defence or defence to counterclaim as the case may be”.

 

Where a defence has been served even out of time, that does not nullify the defence. In Kawonga v Attorney General [1990] 13 MLR 172, it was held that the court will not ignore a defence irrespective of whether the defence was served regularly or irregularly. Similarly, the Court of Appeal in Gibbins v Strong (1884) 26 Ch D 66 opined that if a defence is put in, though irregularly, the court will have regard to it, if it discloses a substantial ground of defence. In that case, the defence was supposed to be served with leave of the court but was served without the leave. Nevertheless, it was held that the Plaintiff could not enter judgment as if there was no defence. Other cases which came to the same conclusion are Gill v Woodfin (1884) 25 Ch D 707 and Montagu v Land Corporation of England (1887) 56 LT.

 

Learned counsel for the respondent Mr. Banda argued that the above cases are not applicable to the matter at hand because the applications for judgment therein were inter partes and the pleading which was served out of time was on the court file and as such the court could not ignore it unlike this matter where the judgment in default was entered ex parte and the defence to the counterclaim was not on the court file. Mr. Banda further argues that the rules of the supreme court merely state that one must serve, they do not state that one must not file and that it is good practice to file when one is out of time. He does not state the authority for that statement of good practice. With due respect I do not subscribe to those arguments. The crux of the matter is that the Rules of the Supreme Court do not require the defence to be filed and as such there was no need to file but simply serve. If this matter had been commenced in this court and not merely transferred as is the case, my finding would have been otherwise as our rules are clear and to the contrary.

 

Where a claim comprises unliquidated damages, final judgment entered even where a specific amount is indicated in the writ and statement of claim will be irregular. Such a course of action is only open where the claim is one of liquidated damages. Under Order 19 rule 3 Rules of the supreme Court, it is provided that:

 

Where the Plaintiff’s claim against a defendant is for unliquidated damages only, then, if that defendant fails to serve a defence on the plaintiff, the plaintiff may, after the expiration of the period fixed by or under these rules for service of the defence, enter interlocutory judgment against the defendant for damages to be assessed and costs…”

 

Liquidated damages are ones in the nature of a debt, that is, a specific sum of money due on a contract. The amount must already be ascertained or capable of being ascertained as a matter of mere arithmetic. If the ascertainment of an amount of money even though it be specified or named as a definite figure, requires investigation beyond mere calculation, then the sum is not a “debt or liquidated demand, but constitutes “damages”, whether in tort or in contract.

 

In Paul Gatrell Agencies Ltd. v J. Yasini [1993] 16(16) MLR 416, the Plaintiff claimed K7,464 from the Defendant in the tort of negligence arising from a collision between the respective vehicles of the Plaintiff and Defendant. Judgment in default was entered against the Defendant for the amount claimed. It was held that the judgment being final as opposed to interlocutory was irregular and as such was set aside. Similar conclusions were arrived at in Peterson v Wellington Free Kindergarten Association Inc. [1966] N.Z.L.R. 486 at 491 and Novetech Engineering v Malawi Housing Corporation High Court Civil Cause Number 389 of 2001.

 

A default judgment cannot include interest unless it is claimed in the writ or pleaded in the statement of claim to be under section 11 of the Courts Act. However, where the interest claimed is more than the statutory one, the claim will be for unliquidated damages even though the interest amount is specified.

 

Where judgment is entered for more than is claimed on the indorsement to the writ, such will be for too much and irregular.

 

An irregular judgment can be set aside ex debito justitiae. See Anlaby v Praetorious (1888) 20 Q.B.D. 764. In such a case any sheriff fees paid by the party against who the irregular judgment was entered must be refunded to that party by the one causing the irregular judgment to be executed.

 

FINDINGS OF THE COURT

 

It is obvious that a judgment of the court takes effect not on the date of filing but on the date it is entered. Since there is no requirement for the Appellant to have filed the defence to the counterclaim under the Rules of the Supreme Court governing the matter and judgment on the counterclaim was entered six days after service of the defence to the counterclaim, the judgment entered was irregular. The Respondent’s claim of interest at 9% for every 3 months compounded was more than the statutory interest of 5 % under section 65 of the Courts Act. As such, the claim was for unliquidated damages and final judgment thereon was irregular.

 

 

CONCLUSION AND DISPOSITION

 

From the totality of the facts, the Defendant’s default judgment on the counterclaim was irregular having been entered after service of defence to the counterclaim.

 

But even if I were wrong in my conclusion above, the judgment in default, being final judgment on a claim for unliquidated damages and having been entered for too much would be irregular anyway.

 

As the judgment in default was irregular I, in accordance with its terms when being granted, uphold the ruling of the Assistant Registrar setting it aside but go further to order that sheriff’s fees and expenses paid by the Appellant be reimbursed by the Respondent.

 

Under section 30 of the Courts Act, costs of and incidental to all proceedings in the High Court are at the discretion of the court although per Order 62 of the Rules of the supreme Court and the cases of Chihana v Speaker of the National Assembly and Malawi Electoral Commission High Court Misc Civil Cause Number 2933 of 2005 and Speedy’s Limited v Liquidator of Finance Bank Commercial Case Number 14 of 2007 costs normally follow the event

 

Looking at the chronology of events in this matter, although the Appellants were not obliged to file the defence to the counterclaim, they are responsible for the confusion which emanated in that the Respondent had lost control of the documents filed on 5th December 2007 and it would be expecting too much of them to have required them to go to court to withdraw those documents after the 6th December 2007 when the defence to the counterclaim was served on them well out of time. The order of costs against the Appellant in the court below by the Assistant Registrar can therefore be considered to have been justified. However, I exercise my discretion to order that as both parties were somehow to blame in this matter, costs here and below shall be in the cause.

 

Pronounced in Chambers this 11th day of April 2008.

 

 

Dr. M.C. Mtambo

JUDGE