SAG Motors Ltd et Al v National Bank of Dominica

• Jurisdiction: Dominica
• Judge: Farara JA
• Judgment Date: 28 July 2023
• Judgment citation (vLex): [2023] ECSC J0728-1
• Docket Number: DOMHCVAP2022/0001
• Court: Court of Appeal (Dominica)

Between:

[1] Sag Motors Ltd

[2] Desmond Carlisle

Appellants

and

National Bank of Dominica

Respondent

Before:

The Hon. Mr. Mario Michel Justice of Appeal

The Hon. Mr. Paul Webster Justice of Appeal [Ag.]

The Hon. Mr. Gerard St. C. Farara Justice of Appeal [Ag.]

DOMHCVAP2022/0001

THE EASTERN CARIBBEAN SUPREME COURT

IN THE COURT OF APPEAL

Civil appeal — Judgment in default of defence — Application to set aside default judgment — Inordinate delay — Judgment debt — Statutory interest on judgment debt — Whether compound interest — Whether default judgment irregular — Finality of litigation — Sale of mortgaged property — Whether the judge erred in refusing to set aside the default judgment on the basis of delay only — Sale of land by mortgagee — Application to set aside sale of mortgaged property by public auction — Duty of the mortgagee — Good faith — Whether the judge erred in failing to deal with the application to set aside the public auction sale of the mortgaged property — Rules of the Supreme Court (Revision) 1970 Order 73.4, Order 2 rule 2(1) and Order 19 rule 9.

In 1999 the predecessor bank to the National Bank of Dominica (“the respondent”) commenced a civil claim against the appellants for non-payment of a mortgage debt with the respondent bank. The claim was for the sum of $3,900,319.27 being the balance due on a loan granted by the bank to the appellants on 8 ^th April 1997 “inclusive of interest to 31 ^st March 1999, with interest thereon at a rate of 10% per annum to the date of payment thereof.” On 9 ^th July 1999 the respondent entered judgment in default of defence against the appellants jointly and severally in the claim in the sum of $3,900,319.27 “together with interest thereon at the rate of 10% per annum from 1 ^st April 1999 to date of judgment and thereafter at the rate of 5% per annum to date of payment and $152.50 costs.”.

Having obtained the default judgment, the respondent bank on 3 ^rd February 2000 sought to enforce its security by entering upon and seizing the mortgaged property comprising 0.761 acres of land and dwelling-house thereon situate at Lot D, Canefield North Estate in the Parish of St. Paul in the Commonwealth of Dominica. On 19 ^th April 2000, the respondent bank filed a summons in the High Court of Justice to settle Articles of Sale, to estimate an upset price and to set the date for the sale of the mortgaged property. On 3 ^rd May 2000 an order was made to sell the mortgaged property and the building thereon by public auction at an upset price of $2,538,040.00. By December 2005 the upset price was by successive orders of the court reduced and fixed at $2,170,024.20. On each of the several hearings before the court on application by the respondent bank to settle articles of sale and to fix a new upset price and date for the sale of the mortgaged property, the appellants and their counsel appeared. On none of these occasions was any objection taken by or on behalf of the appellants as to the terms of the articles of sale or the upset price fixed by the court, and there was no application filed by the appellants to set aside the default judgment on the ground of irregularity or otherwise.

Between 25 ^th July 2000 and 20 ^th April 2006, seven (7) auctions were held to sell the mortgaged property. On the first five of the auctions there were no bidders and, upon the sixth auction, the successful bidder for the mortgaged property at a bid of $5,100,000.00 subsequently failed to pay the required deposit and the auction was declared null and void. At this auction the respondent bank had itself submitted an unsuccessful bid in the sum of EC$5,000,000.00. At the seventh and final auction held on 20 ^th April 2006, the respondent bank exercised its statutory right to bid for and purchased the mortgaged property for the sum of $2,170,224.20 being $200.00 more than the then upset price of $2,170,024.20. The appellants protested the sale in writing contending that the respondent bank, in breach of its duty, had purchased the mortgaged property at a gross undervalue being well below its market value and the said auction sale was, accordingly, unlawful, null and void, and of no effect in law.

On 22 ^nd November 2010, some 11 years and 4 months after the entry of the default judgment and 4 years and 7 months after the sale of the mortgaged property by public auction to the respondent bank, the appellants filed an application to set aside the default judgment obtained on 9 ^th July 1999, and to have the sale of the mortgaged property to the respondent bank declared null and void and of no effect on the basis that it had been sold to the respondent bank at a gross undervalue. The learned judge in considering the application first concluded that since the default judgment was obtained under the old Rules of the Supreme Court (Revision) 1970 (“the RSC”), the application to set it aside must also be considered under those rules and, following rule 73.4 of the Civil Procedure Rules 2000 (“the CPR”), in determining the said application she could have regard to the principles under the CPR, in particular Parts 1 and 25.

In a written judgment, the learned judge dismissed the contention that the default judgment was void ab initio for irregularity on the basis that it had wrongly included sums for compound interest. It was not however disputed by the appellants that the principal sum and interest under the mortgage was owing. The judge also found that the error as to the amount of interest in the default judgment raised belatedly by the appellants, would have made the default judgment sum erroneous and, on the authority of Muir v Jenks, would have entitled the appellants to have it set aside as of right. However, the learned judge considered that the 11 years plus delay in the filing of the application to set aside the default judgment amounted to an abuse of process and was a weighty consideration in determining whether to grant the application to set aside the default judgment. Accordingly, the learned judge found that the appellants' reason for the delay was unsatisfactory and dismissed the application to set aside the default judgment; and, as a consequence and without addressing it, the application to set aside the sale of the mortgage property to the respondent bank.

Being dissatisfied with the result, the appellants appealed to the Court of Appeal. The appeal raised two issues: (i) whether the learned judge erred in refusing to set aside the default judgment on the basis of delay only; and (ii) whether the learned judge erred in failing to deal with the substantive application to set aside the sale of the mortgaged property by public auction to the respondent bank.

Held: dismissing the appeal; and making the orders set out at paragraph 64 of the judgment, that:

• 1. An appellate court must exercise restraint in determining appeals that challenge the exercise of judicial discretion by a lower court. Thus, for an appeal against judicial discretion to succeed, it must be shown that in exercising his or her discretion, the judge erred in principle either by failing to take into account or giving too little or too much weight to relevant factors and considerations, or by taking into account or being influenced by irrelevant factors and considerations; and that, as a result of the error or the degree of the error of principle the judge's decision exceeded the generous ambit within which reasonable disagreement is possible and may therefore be said to be clearly or blatantly wrong. Dufour and Others v Helenair Corporation Ltd and Others (1996) 52 WIR 188 followed.

• 2. Where a default judgment was entered under the Rules of the Supreme Court (Revision) 1970 (“ RSC”) pursuant to rule 73.4 of the Civil Procedure Rules 2000 (“CPR”) the applicable rules when considering whether to exercise the court's discretion to set aside the default judgment is the RSC. Order 2, rule 2(1) and Order 19, rule 9 of the RSC gives the court the power to set aside any judgment, order or step in any proceedings within a reasonable time. The court below was accordingly entitled or obliged to consider the delay by appellants in bringing the application to set aside default judgment. In determining such an application, a judgment debtor should not be allowed easily to set aside a default judgment where, in particular, there has been a significant or inordinate delay in applying to set aside the default judgment, unless exceptionally compelling circumstances exist as to why it ought, in the interest of justice, to be set aside. It is only in the rarest and most extraordinary cases, where the reasons for the delay are truly cogent and compelling, that a court may be persuaded to consider setting aside the default judgment where the applicant/judgment debtor has essentially slept on their rights. What constitutes a ‘reasonable time’ within the meaning of Order 19 rule 9 of the RSC will naturally vary from case to case, and will depend on all the circumstances including the reasons for the delay as well as the likelihood of success of any proposed defence. The proposed defence presented by the judgment debtor would need to be remarkably robust, such that its success seems almost guaranteed. Furthermore, the court must determine that allowing the judgment to stand would result in a greater injustice than setting it aside.

  Gregory Bowen et al v Dipcon Engineering Services Ltd Civil Appeal No. 12 of 2005 (delivered 22nd May 2006, unreported) followed; Mercurine Pte Ltd v Canberra Development Pte Ltd [2008] SGCA 38 [97] applied; Avanesov v Shymkentpivo [2015] EWHC 394 (Comm) applied; Muir v Jenks [1913] 2 KB 412 considered; Civil Procedure Rules 2000 rule 73.4; Rules of the Supreme Court (Revision) 1970 Order 2 rule 2(1) applied; Rules of the Supreme Court (Revision) 1970 Order 19 rule 9 applied.

• 3. In this case, the application to set aside the default judgment came 11 years and 4...