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Bank of South Pacific Ltd v Zama [2016] SBHC 64; HCSI-CC 147 of 2014 (13 May 2016)

IN THE HIGH COURT OF SOLOMON ISLANDS
CIVIL JURISDICTIONS

Civil Case No. 147 of 2014

BETWEEN:

BANK OF SOUTH PACIFIC LIMITED
Claimant

AND:

JONATHAN AQARAO ZAMA
(As administrator of the estate of
Renagi Zama deceased)
Defendant

Date of Hearing: 29th April 2016.
Date of Ruling: 13th May 2016.

Mr. A. Radclyffe for the Claimant/Respondent.
Mr. D. Nimepo for the Defendant/Applicant.

KENIAPISIA; PJ:

RULING ON APPLICATION TO SET ASIDE CONSENT JUDGMENT

1. Claimant (formerly Westpac Banking Corporation) filed a Category A Claim against the defendant on 16/5/2014. The claim was for various loans against the defendant and Smart Solomons Limited. Though the claim did not name Smart Solomons Limited (“SSL”) as a party, it specifically pleaded that SSL has loan accounts arrears with the claimant. On 27^th April 2006, the deceased (defendant) and others entered into a written unlimited guarantee with the claimant, whereby the deceased (defendant) jointly and severally with others, guaranteed repayment of all debts and interests owing by SSL to the claimant^[1].
   
2. From the claim, it is clear that the defendant is the guarantor for all of SSL loans with the claimant^[2], together with others. SSL outstanding loans totalled up to $1,889,470.30^[3]. The defendants own personal loan was $609,931.49^[4]. You add SSL loans with the defendant’s loan and the total sum of outstanding loans is $2,549,401.79. This is the amount claimed for by the claimant in this proceeding, together with interests and costs, plus sell of Parcel Number 191 – 077 – 16 (“PN 16”) and Parcel Number 191 – 042 – 21 (“PN 21”). When I did my calculations it only came to $2,499,401.79. But Court will accept the unchallenged figure in the claim.
   
3. Defendant did not file a defence. Claimant applied for default judgment on 28/8/2014, with draft judgment order also filed. On the 8/9/2014, instead of the Court endorsing the draft default judgment order, the claimant and the defendant executed a consent judgment. Under the Consent Judgment, the amount of loan arrears by the defendant and SSL had inflated to $2,671,186.21. I assume logically, this must have been a result of interest on the loans accruing since filing of claim.
   
4. Further terms of the Consent Judgment were: sell of PN 16 and PN 21, through leave of the Court. Further terms of the Consent Judgment are: order for sell be suspended on condition that defendant paid $1,335,593.10 by 12/9/2014 and $1,335,593.11 by 13/10/2014.
   
5. On 9/12/2014, the Court convened before Registrar to update on the Consent Judgment compliance. Counsels Radclyffe and Dive were in attendance, before the Registrar. Court noted that defendant has not complied. Court then adjourned to 21/01/2015 to update on compliance again.
   
6. On 21/01/2015, only Counsel Radclyffe, appeared. Defendant did not comply with Consent Judgment.
   
7. On 24/6/2015, Claimant applied and sought leave to sell PN 21 to Kikolo and to evict the defendant. On 20/08/2015, Maina J, granted endorsement to claimant to sell PN 21 to Kikolo for $500,000.00 and for defendant to vacate PN 21. File record also showed that the defendant applied to set aside Consent Judgment on 17/8/2015.
   
8. Recently I also ordered substitution of party name. Today the Court is dealing with the defendant’s application to set aside Consent Judgment filed 17/08/2015. The said application is supported by sworn statement (ss) of Mr Jonathan Zama, filed 17/8/2015.
   

Defendant’s Case

9. Defendant’s case is that, the deceased’s (defendant’s) known personal loan account arrears had a total sum of $516,078.71. And that the defendant had paid $500,000.00 to clear the said personal loan arrears account on 14/11/2014. And that the $500,000.00 payment was intended to clear the deceased’s personal loan account in order to save PN 21 (Lio Creek property) from being sold. Defendant said, he did not pay $500,000.00 to off-set against SSL outstanding loan arrears accounts.
   
10. Defendant also put in an offer of $600,000.00 to purchase PN 21, having paid off on $500,000.00 to clear the deceased’s personal loan in respect of PN 21. Defendant says Claimant was negligent and discriminatory in awarding the tender to a lower bidder, Mr Kikolo, who put $500, 000.00 as his offer. Defendant said his bid was for a higher amount of $600,000.00.
    

Claimant’s Case

11. Claimant’s case is that, in this proceeding, the outstanding loan arrears amount sought to be recovered against the defendant was $2,549,401.79, plus interest and sell of PN 16 and PN 21. Claimant says that the deceased estate (defendant) being the “guarantor” for SSL loans and for the deceased’s personal loans, is liable to meet all of the defendant’s/deceased’s personal loan arrears plus SSL various loan arrears (consolidated loans). These are actually pleaded in the Claim - Statement of Case (I repeat and reaffirm paragraphs 1, 2 and 3 above).
    
12. The Court is of the view that under this proceeding, the claim covers the loan arrears of SSL and the deceased’s personal loan (consolidated loans). This is why the initial claimed loan arrears amount was $2,549,401.79, plus interest. There was no defence meaning, the Court must accept the claim as pleaded and unchallenged. Not only that, but by a Consent Judgment, perfected 8/9/2014, the defendant acknowledged that the outstanding loan arrears, under this case was $2, 671,186. 21. The figure had gone up, apparently due to interest accumulating since filing of claim on 16/5/2014.
    
13. Of the arrears amount as at 8/9/2014 (consent judgment), the defendant had paid $500,000.00 on 6/11/2014. When defendant paid this amount, claimant had used it to clear the consolidated loans arrears, pleaded in the claim. You minus that $500,000.00 (paid in November 2014), from the 8/9/2014 consolidated loan arrears amount, of $2,671,186.21, the defendant still owe the bank (claimant) in excess of $2 million dollars.
    
14. By the time claimant put for sell PN 21, around February 2015, the Defendant’s bid for $600,000.00 was rejected. To the bank, the defendant was a bad debtor, because he was still to settle his loan arrears with the bank in excess of $2 million as of 6^th November 2014, under the 8/9/2014 Consent Judgment.
15. I could not find any serious ground to set aside the Consent Judgment. There is no fraud suggested, against the claimant bank. I found no reason to set aside the Consent Judgment under R. 17.55 – for instance there was no fraud or that the Consent Judgment was made in the absence of the defendant or that the Consent Judgment did not reflect the Court’s intention at the time the consent judgment was made.
    
16. I also reject the defendant’s submission that the payment of $500,000.00 was to off-set the deceased’s personal loan account arrears and to save the Lio Creek property and not to be used to off-set against SSL loan arrears. This submission must fail because the claim which has no defence to it was for the deceased’s personal loan account arrears as well as SSL loan accounts arrears (consolidated loans). In other words, the unchallenged claim was against the deceased’s personal loan account arrears and also SSL loans accounts arrears, because the deceased together with others jointly and severally in 2006, were the “guarantors” for all of SSL loans. The defendant as one of the “guarantors” is liable to pay for SSL loan account arrears in addition to the deceased’s personal loan account arrears.
    
17. Accordingly, the Court Order that:
    
    • 17.1 The application to set aside Consent Judgment is rejected.
      
    • 17.2 Costs against the defendant on standard basis.
      

THE COURT

JOHN A KENIAPISIA
PUISNE JUDGE

^[1] See paragraph 2 of Statement of Case of the Claim.
^[2] See paragraph 4 of Statement of Case of the Claim.
^[3] See paragraph 5 of Statement of Case of the Claim.
^[4] See paragraph 5 of Statement of Case of the Claim