STATE INSURANCE CORPORATION v. OPOKU-DARKWA [1974] 1 GLR 439

HIGH COURT, CAPE COAST

Date:    16 MAY 1974

EDWARD WIREDU J

 

CASES REFERRED TO

(1)    Jacques v. Harrison (1883) 12 Q.B.D. 136; 53 LJ.Q.B. 137; 50 L.T. 246; 32 W.R.    274, C.A.

(2)    Windsor v. Chalcraft [1939] 1 K.B. 279; [1938] 2 All E.R. 751; 107 LJ.K.B. 609;    159 L.T. 104; 54 T.L.R. 834; 82 S.J. 432, C.A.

(3)    Vasquez v. Quarshie, High Court, Accra, 16 January 1968, unreported; digested in    (1968) C.C. 66.

(4)    Agyeman v. Ghana Railway and Ports Authority, Takoradi, Court of Appeal,    31 March 1969, unreported; digested in (1969) C. C. 60.

(5)    Sijuade v. Tijani (1954) 14 W.A.C.A. 611.

NATURE OF PROCEEDINGS

APPLICATION by the State Insurance Corporation to set aside a default judgment obtained against their insured and reported in [1974] 1 G.L.R. 272. The facts are sufficiently stated in the ruling.

COUNSEL

F. E. Obeng for the applicants.

K. A. Sarpong for the respondent.

JUDGMENT OF EDWARD WIREDU J

This is an application by the State Insurance Corporation (which shall hereafter be referred to simply as the applicants) the underwriters of the defendant in this action, to set aside a default judgment obtained by the plaintiff against the defendant on or about 25 March 1974.

The facts on which the applicants are seeking to set aside the said judgment as set out in their original supporting affidavit are that they were persons who have been injuriously affected by the said judgment as they were under a statutory dutv to pay the plaintiff the amount of the judgment and that if the judgment remains undisturbed by an order of the court they would be liable to the plaintiff in the sum awarded in the absence of any defence.

The propriety of the application is not in doubt. For the right of insurers to set aside default judgments obtained against their insured is now set to rest by authorities: see Jacques v. Harrison (1883) 50 L.T 246, C.A., Windsor v. Chalcraft [1938] 2 All E.R. 751, C.A. and Vasquez v. Quarshie, High Court, Accra, 16 January 1968, unreported; digested in (1968) C.C. 66.

The brief facts of this case which have provoked the present application are as follows: On 13 December 1973 a writ was issued by the plaintiff

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against the defendant in respect of an accident which occurred on 23 March 1973. Notice that the writ had been issued was given to the applicants as the insurers of the defendant. The writ itself was served on 31 January 1974, but the defendant failed to enter an appearance. On 25 February 1974, an interlocutory judgment was obtained against the defendant in default of appearance and the case set down for assessment of damages on 11 March 1974. Even though the defendant was served with notice of assessment of damages he failed to appear and on 25 March 1974, judgment in the sum of 048,030.00 damages was awarded in favour of the plaintiff. On the following day, i.e. 26 March entry of judgment was filed for service on the defendant.

It is the complaint of the applicants that:

“(1)    There was no notice given to the applicants that the writ of summons had been served on the

(2)    The second defendant-respondent policy holder was a nominal defendant and failed to enter appearance or attend court.

(3)    Judgment was entered against the defendant-respondent on 25 March 1974, in default for the sum of fifty thousand, seven hundred and eighty cedis costs inclusive.

(4)    The applicants being the underwriters for the nominal defendant have been injuriously affected by the said judgment by reason of the liability imposed on them by statute to pay the plaintiff-respondent herein the amount of that judgment.

(5)    In order to enable complete justice to be done as between all parties I swear to this affidavit in support of the application asking for leave to have the judgment set aside and the applicants be at liberty to defend the action in the name of the defendant-respondent the policy holder on its merits.”

Opposition to the application was by a twenty paragraphed affidavit sworn to by Mr. Sarpong, learned counsel for the plaintiff. The said affidavit reads as follows:

““(1) That I am the deponent herein.

(2) That I am one of the solicitors in charge of the conduct of this case.

(3) That I have the authority of the plaintiff to swear to this affidavit in opposition to the application to set the judgment obtained in this case aside.

(4) That some time after the issue of the writ of summons I personally sent notice of it to the insurers of the defendant herein and this was receipted by Mr. Aidoo of the State Insurance Corporation, Accra, and he promised to refer it to their solicitors to enter appearance.

(5) That some time after this I proceeded to Accra and informed the said Mr. Aidoo that no appearance had been entered and that they should make effort to get their solicitors to file their appearance.

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(6) That the said Mr. Aidoo rang to the office of their solicitors to inform them about same.

(7) That in the meantime it had been brought to my notice as to the service or non-service on the defendant of the writ of summons and statement of claim.

(8) That some time after this the solicitor to the defendant came to see me in Cape Coast when the motion for judgment was fixed for hearing on 18 February 1974 and sought my assistance to get the motion adjourned for one week to enable him visit the plaintiff so that he could make recommendation for settlement of the case out of court.

(9) That as a follow up to this request I sought adjournment of the motion to 25 February 1974.

(10) That the solicitor to the defendant asked for copies of the medical report as well as other relevant documents from me to enable him submit a report to Messrs State Insurance Corporation for settlement of the case out of court.

(11) That I duly supplied the relevant documents.

(12) That soon after the solicitor to the defendant had left for Accra I wrote to inform him of the adjourned date.

(13) That I have attached a copy of the letter as exhibit A.

(14) That nothing was done by way of filing appearance or filing his statement of defence.

(15) That since entering judgment, I have kept Messrs State Insurance Corporation, Accra, informed and they are aware of the progress of this case.

(16) That in point of fact the solicitor to the defendant has travelled all the way to Effiduasi in Ashanti to confirm the helpless nature of the injuries sustained by the plaintiff.

(17) That if indeed the case for the deponent herein is that the defendant is only a nominal defendant then by the same token they should not have waited for the defendant to submit the writ and the statement of claim before entering appearance but should have put their house in order as soon as they were served with notice of the issue of the writ of summons and the statement of claim.

(18) That at all material times the defendant was served with notice of assessment of damages and he had no reason to be absent.

(19) That at any rate, the defendant has no defence to this action either on the law or on the policy and they had sooner come to terms to pay the judgment debt.

(20) That as a point of law the application to set aside the judgment is not properly before the court and the same must be dismissed in limine.”

There were two more affidavits filed on behalf of the applicants. One by a Mr. William Nii Amaa of Accra an employee of the applicants as supplementary to the original affidavit in support of the application and

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the other by the solicitor of the applicants in answer to some of the points raised in the affidavit in opposition. These respectively read as follows:

“I, William Amaa of Accra, make oath and say as follows:

(6)    Wherefore I swear to this supplementary affidavit in addition to the one sworn on 4 April 1974, to have the judgment set aside and the case heard on its merits according to the prayer of the applicants’ motion, filed on 4 April 1974,” and the affidavit of counsel for the applicants reads as follows:

“I, Francis Emmanuel Obeng of Accra, make oath and say as follows:

(1)    That I am the solicitor for the applicants and have their authority to depose to the following.

(2)    That it is true the applicants were given notice that a writ has been issued against their insured, defendant-respondent herein.

(3)    That a perusal of the file of the applicants reveals that solicitor’s instructions for the applicants were as follows: ‘We forward to you copy of a writ of summons issued against our insured. We wish to mention that we are still trying to get a completed claim form from our insured.’

(4)    That there were no minutes on file to the effect that a Mr. Aidoo gave instructions or telephone message to the solicitor to enter appearance.

(5)    That it is true I saw plaintiff ‘s counsel at Cape Coast who told me that he had found the defendant at a village near Suhum in the Eastern Region. This was after he had already taken an interlocutory judgment against the defendant-respondent in default.

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(6)    That I asked if he could adjourn his motion for final judgment to    enable me    pass    the information to the investigation branch of the applicants to see if they could contact their insured for his statement.

(7)    That up to this present time the accident has not been reported to the applicants and no claim form has been filed for me to know how the accident happened.

(8)    That the said letter which is exhibited was received the    day after the    final judgment,    that is to say 26 February 1974.

(9)    That when the said notice referred to in paragraph (2) hereof was given it did not contain the relevant documents mentioned in paragraph (10) of the affidavit in opposition.

(10)    That when these documents were received after the final Judgment I saw for the first time the police report. This was handed to the applicants and consequently they swore to the supplementary affidavit.

WHEREFORE I swear to this affidavit to say that the overtures of counsel which were without prejudice were made in order to try to contact the insured defendant-respondent for his version of the accident and not that counsel had submitted to judgment.”

I have found it necessary to set out in detail the various affidavits relied on by the parties herein in view of their relevance to the determination of the fate of the present application.

In developing his arguments in support of the application learned counsel for the applicants founded himself on Chalcraft’s case (supra) and submitted that the facts of that case were on all fours with the present one. Counsel then referred to the observations made by the court on the principle laid down by Bowen L.J. in Harrison’s case (supra) on the mode by which a stranger to an action who was injuriously affected through any judgment suffered by a defendant by default could maintain an application to set aside that judgment and submitted that the present application was brought under the second alternative of the law as enunciated in that case. Continuing his submissions, learned counsel referred to paragraphs (3) and (5) of the supplementary affidavit and submitted that it was evident from the return to the notice of search made by the applicants on receipt of notice of the issue of writ against their insured that the defendant who was by the terms of his policy under a duty to refer all claims made on him in respect of the use of his vehicle and also to present all writs served on him to the applicants as his underwriters had changed his original address and this according to him had made it difficult for the applicants to contact him so as to obtain from him a completed claim form to enable them know how the accident occurred. Counsel tendered a copy of the police report on the accident as exhibit 1 and contended that the facts as stated on it showed that the applicants had a good defence to the action. He argued that it was quite clear from the facts as stated on the face of exhibit 1 that the accident could have

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been caused by a latent mechanical defect so that if the case was re-opened and the plaintiff was unable to prove the negligence as pleaded then his reliance on the alternative plea of res ipsa loquitur would have been explained away. He argued that the applicants have up to date not heard from the defendant and submitted that his conduct smacked of collusion with the plaintiff. He further argued that because of the conduct of the defendant the applicants did not know what line of defence to take until they lately received a copy of exhibit 1. Counsel therefore contended that the applicants being unaware of the service of the writ on their insured or the setting of the case down for hearing, and having shown that the defendant was a nominal defendant who owed a duty to have kept them informed of steps being taken against him, having failed to honour that duty and especially as the applicants have a defence to the plaintiff s action, the matter should be re-opened for the merits of the case to be gone into so as to ensure that justice was done to all affected parties.

Opposing the application, Mr. Sarpong for the plaintiff referred to his affidavit and submitted that the facts on which the applicants are relying to seek the setting aside of the judgment cannot be true. Continuing he submitted that he knew counsel for the applicants as solicitor engaged to act by the applicants in this case and that he had been in touch with him on a number of occasions about the case. He submitted that he had personally spoken to a Mr. Aidoo, an employee of the applicants and had requested him to ask their solicitor to enter an appearance. He further contended that he on one occasion saw counsel for the applicants in Cape Coast and told him that their insured had been traced to Suhum. He further stated that when he filed the application for an interlocutory judgment he conferred with learned counsel for the applicants and they both agreed to have the application adjourned for a week to enable counsel for the applicants to contact his clients on the case. Counsel further contended that in one such discussion with the applicants’ counsel, he provided him with relevant documents including a medical report on the plaintiff and that he was later told by counsel that he had travelled to see the plaintiff himself and was satisfied that the plaintiff was totally disabled. Counsel therefore contended that it was incorrect for the applicants now to turn round and submit that they did not know about the service of the writ or the setting of the case down for hearing when the solicitor engaged by them to deal with the matter had been in communication with him and that he had kept him informed of the progress of the case up to the time of taking interlocutory judgment. He further claimed to have supplied the applicants with a copy of exhibit 1 earlier than was being suggested. Counsel argued that the contention on behalf of the applicants that they do not know the present address of their insured cannot be true because, submitted counsel, if the applicants were serious they would either have contacted the bailiff of this court (who served the writ), the police in charge of the case or traced their insured to Suhum, the place shown on the notes as stated on their notice for a search. As the impression he gathered from the conduct of the applicants’ counsel was that he was trying to make a genuine move for a settlement that was why

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he kept on feeding him with information and also agreed to adjourn the application for an interlocutory judgment but only to hear nothing from him again, nor did he turn up on the adjourned date despite his confirmation by a letter to him that the matter had been adjourned for a week as agreed upon. He therefore submitted that from the facts on which the applicants were relying the application was not brought in good faith and it should be dismissed.

It is clear from the submissions of learned counsel for the parties that the fate of this application is dependent on whether the applicants have shown on the undisputed facts that they were not in the know about the steps taken by the plaintiff other than the notice given them about the issue of the writ which had culminated in the judgment against their insured on 25 March 1974, which judgment is now being sought to be set aside. Knowledge of this may be direct or indirect. If there exist facts which go to show that the applicants were aware or that there exist facts from which knowledge can be inferred or imputed to them then the application must fail, otherwise, the applicants’ case will be made out and the application must succeed.

I have carefully considered the submissions of learned counsel for the parties and I have no hesitation in concluding that the present application must fail. Much as I would have wished in my own way to have re-opened this matter in view of the sympathy I have for the applicants because of the amount involved to be paid, I feel I will be failing in my judicial duty if I allow my personal feelings about this to weigh with me against the background of the facts and justice of this case.

The case of Jacques v. Harrison (supra) which extended the right to strangers to intervene under certain circumstances to set aside judgments by which they are injuriously affected, which the defendants in the action had allowed to go by default, laid down two modes by which this could be done. These are that the stranger may either:

(a)    take out summons in the name of the defendant, or

(b)    if not entitled to use the name of the defendant, then he may take out a summons in his own name in which latter case both the plaintiff and the defendant must be made parties to the application and then apply for leave to have the judgment set aside and to be allowed to defend the action for the defendant on “such terms of indemnifying the defendant as the judge may consider right; or … be at liberty to intervene in the action in the manner pointed out by the Judicature Act of 1873”: see Jacques v. Harrison (1883) 50 L.T. 246 at p. 250, C.A.

The present summons was taken out in the name of the applicants themselves under the second alternative as stated above as was submitted by their counsel but it is surprisingly strange that the defendant was not made a party to the application. No explanation has been offered for this omission. It was not indicated on the summons that he was a party intended to be served with a copy of the summons even though he is referred to on the summons as defendant-respondent. His presence was an essential part of the principle as laid down by Bowen L.J. in the Jacques

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case (supra) to assist the court in determining the nature of the terms under which the relief being sought ought to be granted. His presence would also have cleared the air about his stand in the matter, It is mandatory under the principle laid down that he should be made a party to the application. It follows therefore from the above that the present application does not satisfy the requirement of the law as laid down and enunciated in the Jacques case (supra.)

Be that as it may, it is clear from the affidavits filed that the allegations made by learned counsel for the plaintiff which are not seriously disputed by the applicants make the present case distinguishable from the facts of Chalcraft’s case on which learned counsel for the applicants sought to rely.

A careful and critical examination of the facts of Chalcraft’s case (supra) reveal that the ground which led to the setting aside of the default judgment (on the application of the insurers of the defendant in that case) was absence of knowledge on the part of the insurers of any of the steps taken by the plaintiff in that case beyond the notice of the issue of the writ given to them by the plaintiff. In the instant case unlike Chalcrafts case (supra) which latter facts further show that the first time the insurers became aware of the judgment against their insured was when proceedings were initiated to enforce the said judgment statutorily against them, the facts of this case reveal that when notice that a writ had been issued against the defendant was given to the applicants, the applicants themselves caused a search to be made in the court’s registry on their behalf to ascertain whether the writ had been served. (Vide paragraph (2) of the supplementary affidavit filed in support of the application and sworn to by Nii Amaa.) The reply to this search revealed clearly to them that their insured was at Suhum. The facts further reveal that the application was made on behalf of the applicants by the same counsel appearing in this very application. Even though it is true that it was not revealed on the face of the application for the search on whose behalf he was acting or on whose instructions he made the search the undisputed facts show beyond doubt that he was acting for the applicants: (Vide paragraph (2) of the supplementary affidavit).

It would have been strange indeed if he was acting on his own. He could not have acted on the instructions of the defendant who according to him had not even reported the matter to the applicants and it would equally have been a very strange coincidence if he was engaged to prosecute the present application on behalf of the applicants without their prior knowledge about his previous engagement and involvement in the case.

The question here is why did I counsel put in the application for a search on behalf of the applicants? The conduct of the applicants in giving that instruction cannot be better explained than a desire on their part being persons interested to forestall any eventual surprise, and, in case the writ had been served and their insured had done nothing about it, to take steps to safeguard their interest. Counsel’s own affidavit does not deny that the applicants sent the file on the case to him and by paragraph (4) of his affidavit he gives the impression that he was not given

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instructions to enter an appearance because all that the file contained was the following, “We forward to you copy of writ of summons issued against our insured. We wish to mention that we are still trying to get a completed claim form from our insured” and yet he went beyond merely keeping the file. Quite apart from putting in an application for a search, a step not authorised on the face of the notes referred to above, be took steps to make overtures to the plaintiff s counsel and arranged to travel to see the plaintiff. How he even succeeded in getting to the plaintiff only the heavens know. A further point worthy of note is that there was only one application for judgment in this case (i.e. the one for interlocutory judgment). No other motion was filed for final judgment as learned counsel for the applicants would want to suggest so that the only application for judgment both counsel could have agreed to have adjourned for a week could not have been any other than the application for the interlocutory judgment. This was done according to the affidavit sworn to by learned counsel for the applicants at his instance so that he could pass on the information he had received to the investigating branch of the applicants where to find their insured. On the facts as known to him at that stage, it should have occurred to him even if he was not specifically told, that the writ had been served because he cannot profess ignorance that an application for judgment can only be taken when the writ had been served or that an application for an interlocutory judgment is a step taken only after service of the writ.

The other point which beats my understanding is that if learned counsel did not have instructions to enter an appearance and that his instructions were only limited to what according to him appeared on the file as shown in the affidavit which to me were no instructions at all, then why did he go beyond merely keeping the file but chose to put in an application for a search, a step which was not specifically spelled out as having been authorised. Why did he also go beyond that by making overtures to the plaintiff s counsel to the extent of even visiting the plaintiff? He agrees that when he visited the plaintiff he saw his condition and I am sure he did not keep what he saw to himself but must have passed this on to the applicants as it is clear from the tone of his affidavit that he was feeding the applicants with information that came to him from the plaintiff s counsel and in this connection be could not have failed to inform them about the application for the interlocutory judgment. In any case the facts show that he was the person acting on behalf of the applicants, between the applicants and the plaintiff s counsel, so that his knowledge was that of the applicants.

It is further not clear how learned counsel for the plaintiff came to know of the applicants’ counsel’s involvement in this case but it seems more likely that he must have known this as a result of his discussions with either Aidoo as contained in paragraph (6) of the affidavit in opposition or through the overtures made to him by the applicants’ counsel himself. It is of significance to note that no steps have been taken by the plaintiff to enforce the judgment against the applicants, they have also not told the court how they came by the information that judgment had gone

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against their insured. On this score the allegation by the plaintiff s counsel in this affidavit that he informed the applicants looks more probably true.

The particular circumstances and facts of this case as shown by the affidavits clear my mind beyond doubt that prior to the hearing of the application for an interlocutory judgment on 25 February 1974, both learned counsel for the applicants and the applicants themselves were aware that a step had been taken beyond the service of the writ but they showed more concern about the failure on the part of the defendant to honour the terms of his obligation with them by failing to report and to complete a claim form and cared little about the steps the plaintiff was taking in the case. Their conduct in this regard needs no commendation but rather condemnation. It should be remarked here that the Motor Vehicles (Third Party Insurance) Act, 1958 (No. 42 of 1958), which enjoins insurers to satisfy judgments obtained against their insured does not make it a condition precedent to satisfying the said judgments that the accident should have been reported and a completed claim form submitted by their insured. In fact the authorities suggest that failure on the part of the insured to report the accident is never a good ground for avoiding liability under the policy.

It should further be remarked that there is no principle of law which suggests that judgments by default are automatically set aside nor it is a relief obtained as of right. The right is a discretion vested in the court and like all judicial discretions its exercise is based on certain well recognised principles depending on the facts and circumstances of each individual case.

Failure on the part of any party to obey any rules of court amounts to contempt of the rules and such a contempt is purged by offering reasonable and satisfactory answer for the default. Where a party, whether he be an original party to the suit or a stranger entitled to intervene, seeks to set aside a default judgment, he must not only provide evidence of his defence but must also provide satisfactory explanation as to the circumstances accounting for his default and this must go beyond wilful and deliberate neglect: see Agyeman v. Ghana Railway and Ports Authority, Takoradi, Court of Appeal, 31 March 1969, unreported; digested in (1969) C.C. 60. Where therefore a stranger to a suit being aware that the result of the action will ultimately affect his interest shows a wilful act of indifference to the action or knowing that steps are being taken detrimental to his interest stands by and allows judgment to go against the original party and thus affecting his interest which he could have taken earlier steps to protect, it would be a wrong exercise of judicial discretion for the court to accede to a request by such indolent person to set aside a regularly obtained judgment: see Sijuade v. Tijani (1954) 14 W.A.C.A. 611 at p. 612. For the rule of equity is that it aids the vigilant and not the indolent.

In order to succeed in the present application on the basis of Chalcraft’s case (supra) the applicants should have shown a genuine ignorance about the steps taken by the plaintiff after notice of the writ was served on them. The facts of Chalcraft’s case (supra) show that apart from the notice of the writ issued against their insured they were unaware of any further steps

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taken in that action by the plaintiff until attempt was made to enforce the judgment against them as underwriters under section 10 of the English Road Traffic Act, 1934 (24 & 25 Geo. 5, c. 50). In the instant case an opportunity occurred for the applicants to have taken earlier steps to intervene, to set aside the interlocutory judgment, or even before it was taken as it was adjourned at the instance of the applicants’ counsel but they chose to be concerned solely with tracing their insured. This even on the undisputed facts seems to be in doubt because the information provided them on the search note did indicate that their insured was residing at Suhum and the subsequent information given by the plaintiff s counsel revealed to their counsel that their insured was at Suhum before the motion was heard. They could have done something about this at that stage by filing an application for leave to enter an appearance out of time and ask for time to enable them to file a defence since they had not been able to trace the defendant. They could then have contacted the service bailiff or the police in charge of the conduct of the case. Nothing has been said about unsuccessful attempts made to trace him at Suhum. The applicants and their counsel are found wanting in vigilance in this case and the equities weigh against granting their application.

A feeble attempt was made to suggest a possible collusion between the plaintiff and the defendant. This was the more reason why the applicants should have at least made the defendant a party to the present application as laid down in the Jacques case (supra), so that his stand in the matter could have been investigated.

Litigation these days is expensive, time and energy consuming. It is usually attendant with unpleasant experiences and where possible the courts should not encourage that a party undergoes such experience twice in the same case especially as in the present case where a full hearing of not less than four witnesses were involved, and the more so as in this case where having regard to the health of the plaintiff, the nature of his injuries, and the difficulties one experiences in getting medical officers especially the specialists to court to testify. The applicants want justice done to them, do the facts of this case justify their stand against the decision? The saying “justice delayed, justice denied” which is often placed at the doors of the courts is a good answer for the applicants. The facts of this case do not show any genuine ignorance on the part of the applicants about the various steps taken by the plaintiff after giving notice of the issue of the writ to them and I am of the view that the application was not brought in good faith. It therefore fails on the facts and on the law and the same will be dismissed.

DECISION

Application dismissed.

S.E.K.