(19*2) 1982 March 5 [Lows, STYUANIDES, PIKIS, JJ.] TAKIS PHYLACTOU AND OTHERS, Appellan ts-Plaintiffs, v. EVAGORAS MICHAEL, Respondent-Defendant. (Civil Appeal No. 6051). Civil Procedure—Judgment by default—Setting aside of—Discretion of the Court—Principles applicable—Merits of defendant's case—Need to uphold effectively, on the one hand, the right of aparty to be heard in his cause and need to ensure expeditious transaction of judicial business on the other—Where conduct 5 of the party applying to set asidejudgment is inexcusable, contumelious to the extent of gross disregardfor thejudicial process or the rights of his adversary the Court may, in its discretion, refuse to set aside thejudgment—Conduct of defendant excusable —Nothing advanced before Court of Appeal warranting its inter- 10 vention with the way the trial Judge exercised its discretion. Court of Appeal—Discretion—Judicial discretion toset asidejudgment given by default of appearance—Review of exercise of—Principles applicable—Court of Appeal particularly reluctant to interfere with the exercise of discretion of trial Judge and will not do so 15 except where the discretion is exercised upon a wrong principle, or where it results in injusticeor where the trialJudge wentwrong on a specific issue. Civil Procedure—Judgment by default of appearance—Conditions upon which it may be set aside—Discretion of the Court as to 20 the conditions must be judicially exercised—Costs—Principal consideration that should guide the Court in the exercise of its discretion is the responsibility of each party for costs thrown away—Appellants did nothing to contribute to costs thrown away —Respondent should have been adjudged to pay all costs thrown 25 away in consequence of his default. 204 1 C.L.R. 5 10 15 20 25 30 Phylactou v. Michael Contract—Sale of land—Obligations of purchaser under the contract assumed by thirdparty—Action by selleragainst purchaser for breach of contract—/// anapplication toset asidejudgment given bydefault of appearance, interpretation of section 41 of the ContractLaw, Cap. 149 not theonlydefence ofdefendant. The appellants-plaintifFs sued the respondent-defendant claiming various sums of money under a contract for the sale of land by appellants to respondent. The respondent contested the claim alleging that his obligations under the contract were assumed by a third party in whose name the property was transferred andwho agreed to repay the balance of thepurchase price. Following the close of the pleadings the action was fixed for hearing; and upon Counsel for the respondent withdrawing with the leaveof the Court a newdate ofhearing wasfixedwith directions to notify respondent, who was residing abroad, of the newdate. The respondent failed to appear on the day fixed for trial, the appellants proved their claim and judgment was given in their favour in the absence of the respondent. Thereafter the Court on the application of the respondent set aside the abovejudgment having held that the respondent had prima facie a good defence to the claim and that his non attendance at the hearing of the case contained no element of contempt for the Court or disregard for the rights of his opponent. In fact by a letter addressed to the Court some ten days prior to the hearing respondent sought to inform the Court of the difficulties in his way of appearing, a letter that was not apparently placed before the Court prior to judgment being given by default. In setting aside thejudgment the Court deprived the appellant of the costs thrown away in consequence of the default of the respondent and awarded to them the costs of the application for setting aside the judgment. Upon appeal by the plaintiffs it was contended: 35 (a) That the trial Judge wrongly held that the facts, relied upon in support of the application for setting aside judgment, disclosed sufficient merits to justify the re-opening of the case because the defendant merely raised a matter of interpretation of a statutory provision, s.41of the Contract Law, Cap. 149,that a court, 205 Pbytactou v. Michael
(1982)dealing with an application to set aside judgment, was equally competent to decide, being a pure question of law, as the trial Court that would be seized of the case. (b) That the trial Judge wrongly deprived the plaintiffs of the costs thrown away in consequence of the default of the defendant. 5 Held,
(1)that the submission ofthe appellants that the defence of the respondent merely revolved round the interpretation of s. 41 of Cap. 149or that it raised a pure question of law cannot 10 be sustained; that such defence as was disclosed, entailed the evaluation of the factual allegations made by respondent and their consequential fate on the outcome of the case; that a mixed question of law and fact had to beresolved, pre-eminently suitable for determination by the trial Court; that first and 15 foremost, what was in issue, were the implications of the subsequent intervention of the third parties on the rights of the original contracting parties; accordingly the trial Judge correctly found that the defence disclosed sufficient merits to justify the reopening of the case. 20
(2)That indealing with an application to set aside ajudgment given bydefault thetask ofthetrial Judgeisprimarily todiscern whether sufficient meritsaredisclosed astojustify the re-opening of the case; that in exercising its discretion the trial Court must strive to balance two considerations fundamental for the admi- 25 nistration of justice. The need to uphold effectively, on the one hand, the right of a party to be heard in his cause, and the need to ensure the expeditious transaction of judicial business, on the other, which isclosely associated with the need to uphold finality ofjudgments; that wheretheconduct ofthe party apply- 30 ing to set aside judgment is inexcusable, contumelious to the extent of gross disregard for the judicial process or the rights of his adversary, the Court may, in its discretion, refuse to set asidejudgment; that inthiscasethetrialJudgefound theconduct of the respondent excusable; that nothing has been advanced 35 before this Court to warrant its intervention with the way the trial Judge exercised his discretion; that the Court of Appeal is particularly reluctant to interfere with the exercise of discretionary powers by the trial Court, and will not do so, except in one or more of three instances, that is, where the discretion 40 206 1 C.L.R. \ Phylactou v. Michael inexercised upon a wrongprinciple, where it results in injustice, and wherethe trial Courtwentwrongona specific issue;accordingly the appeal against the order setting aside the judgment given by default of appearance must be dismissed. 5 10 15 20
(3)That the discretion of the Court as to the conditions that should accompany stay, must bejudicially exercised; that, with regard to costs, the principal consideration that should guide the Court in the exercise of its discretion, is the responsibility of each party for costs thrown away; that it is well established that in approving the terms upon which judgment may be set aside, the Court should pay heed to the conduct of the parties inthe proceedings; that on any view of the facts, the appellants did nothing to contribute to costs thrown away that weresolely occasioned by the default of the respondent; that in face of this reality, therewasonly onewayinwhichjudicial discretion could be exercised, and that was by adjudging the respondent to pay all costs thrown away inconsequence of hisdefault; that, therefore, the appeal is partlyallowed;and the respondent is ordered to pay, in addition to the costs of the application for setting aside judgment, all costs thrown away in consequence of his default to appear and half the costs of this appeal. Appeal partly allowed. Cases referred to: Lambertv. Mainland Market [1977] 2 All E.R. 826 at p. 833. 25 Appeal. Appeal by plaintiffs against the judgment of the District Court of Nicosia (Orphanides, S.D.J.) dated the 21st December, 1979 (Action No. 1172/75) whereby a judgment givenearii^, following the default of the defendant to attend the hearing 30 of the case, was set aside. P. Ioannides with Cr. Papabizou, for the appellants. L. Papaphilippou with G. Pavlides, for the respondent. LORIS J.: Having heard counsel argue the appeal before us, weconsider it unnecessary to break for ourjudgment. Pikis, 35 J. will proceed to deliver the judgment of the Court. PIKISJ.: This isan appeal against the decision of the Nicosia District Court, whereby Orphanides, S.D.J, set aside a judgment earlier given in the cause following the default of the defendant 207 Pikis J. PhyUctou τ. Michael
(1982)to attend the hearing of the case. The appeal mainly turns on the propriety of the decision to re-open the case and, secondly, on the terms imposed upon directing that the case be re-opened. The essence of the submission for the.appellants is that the Judge wrongly held that the facts, relied upon in support of 5 the application for setting aside judgment, disclosed sufficient merits tojustify the re-opening of thecase. Intheir contention, the respondent, defendant before the trial Court, merely raised a matter of interpretation of a statutory provision, notably s. 41 of the Contract Law, Cap. 149, that a court, dealing with 10 an application to set aside judgment, was equally competent to decide, being a pure question of law, as rhe trial court that would be seized of the case. Apart from this question of law, it was argued, the facts raised no complication nor did they necessitate adjudication upon for their elucidation. 15 Section 41, regulating acceptance of performance of contra ctual obligations by a third party, envisages, according to Indian case law on the interpretation of a corresponding provision of the Indian Contract Law, actual performance by a third party and not a promise to perform in substitution to the obliga- 20 tions of a contracting party. (See Dutt on Indian Contract,4th ed., p. 405, Pollock & Mulla, 9th ed., p. 361, and A. C. Patra on Indian Contract, p. 689). Consequently, inasmuch as the facts set forth in theaffidavit of the respondent before the District Court merely referred to the assumption of the obligations of 25 the respondents by a third party and not their actual perfor mance, the respondent was not absolved of the relevant obliga tions; hencewe were invited to rule that no merits were disclosed by the respondent justifying the setting aside of the judgment earlier given. 30 The background to the case is that appellants agreed, by virtue of a contract in writing dated 2.11.1973, to sell to the respondent several plots of land situate in the Kyrenia district foi £120,000.- payable by instalments specified in the agree ment in question. A term of the contract provided that the 35 property might, at the option of the purchasers, be transferred in ihe name of a third party, a condition that was given effect to, resulting after a point of time in the assumption of the obli gations of the respondent by a third party in whose name the 208 1 C.L.R. \ Phylactou v. Michael Pikis J. property wasXtransferred and who agreed to repay the balance of the purchase price mortgaging the proptrty as security for repayment. The respondent submitted that, as a result of the stepping-in of the third parties, the respondent was freed from 5 liability under the contract of salethereafter, and drew attention to an averment in the defence, filed prior to the default of the respondent to appear at the trial, resulting in judgment being given against him, to the effect that the transfer into the name of third parties was not made merely pursuant to the terms 10 of the original contract of sale but was also the subjecl of a subsequent agreement, amounting to an act of novation. We are unable to sustain the submission of the appellants that the defence foreshadowed by the affidavit of the respondent merely revolves round the interpretation of s. 41 or that it raises 15 a pure question of law Such defence aswas disclosed, entailed the evaluation of the factual allegations made by respondent and their consequential fate on the outcome of the case. A mixed question oflaw and fact had to beresolved, pre-eminently suitable for determination by the trial Court. It is incorrect 20 that the question raised merely concerned the interpretation of s. 41 of the Contract Law. Other provisions of the Contract Law were at stake as well. But first and foremost, what was in issu , were the implications of the subsequent intervention of the third parties on the rights of the original contracting * 25 parties. Principles upon whickjudgment given by default ofappearance of one party may be set aside: It would be injudicious on the part of the trial Judge to pronounce either on the correctness of the facts propounded before 30 him at the stage of the application to set aside judgment, or their implications on the rights of the parties. This is properly the province of the trial Court. His task is primarily to discern whether sufficient meritsare disclosed astojustify the re-opening of the case. The disclosure of such merits being, as counsel 35 agreed, the foremost consideration governing the discretion of the Court on the subject of re-opening a case. The principles upon which the discretion of the Court to set aside a judgment given by default are exercised, are well known to the point of making it unnecessary to discuss them 40 by reference to specific cases. 209 Pikis J. Phylactou τ. Michael
(1982)In exercising its discretion, the Court must strive to balance two considerationsfundamental for theadministrationofjustice: The need to uphold effectively, on the one hand, the right of a party to be heard in his cause, and the need to ensure the expeditious transaction of judicial business, on the other. The 5 speedy determination of judicial causes is not merely a matter of convenience but an all important factor for the effective vindication of therights of the citizen. This principleis closely associated with another consideration likewise important for theadministration ofjustice, thatis, theneed to uphold finality 10 of judgments. If a party is lightly allowed to re-open a case, the imprint of finality, attaching to a judgment, with all that goes with it, and the certainty it imports in the management of human affairs, will disappear with grave consequence to the administration of justice. (See, Observations of Megaw L.J. 15 in Lambert v. Mainland Market [1977] 2 All E.R.826,aip.833 (c-
- d)). The effect of the case law is ihat the Courtmust not be astute to unseat a party from his right to be heard in his cause, so long as he discloses merits. But the Couit may, nevertheless, 20 decline to re-open the case if his conduct is such as to strike at theroot of theadministration ofjustice. Where the conduct of the party applying to set aside judgment u inexcusable, contumelious to the extent of gross disregard for the judicial process or the rights of his adversary, the Court may, in its 25 discretion, refuse to set aside judgment. In this case, the Judge found the conduct of the respondent excusable, taking the view, as one may surmise from the judg ment, that his non appearance at the hearing of the case contained no dement of contempt for the Court or disregard 30 for the rights of his opponent. In fact, as the Judge pointed out, by a letter addressed to the Court some ten days prior to the hearing, he sought ίο inform the Court of the difficulties in his way of appearing, a letter that was not apparently placed before the Court prior to judgment being given by default. 35 Nothinghasbeenadvanced before usίοwarrant ourintervention with theway thetrial Judge exercised hisdiscretion. Th;·Couit of Appeal is particularly reluctant to interfere with the exercise of discretionary powers by thetrial Court, and will not do so, except in one or more of three instances, ihat is, wheie the 40 discretion is exercised— 210 \ \ 1 C.L.R. , Y \ . . Pb'ytactoa v. Michael \ · . • · Pikis J. , (
- a)upon a wrong principle, (
- b)where it results in injustice, and (
- c)where the trial Court went wrong on a specific issue. Conditions uponwhich judgment may be set aside: 5 There is a second aspect of this appeal, and that relates to the terms upon which judgment was set aside. Itisthecasefor tht appellantsthat theJudgewronglydeprived them of costs thrown away in consequence of the default of ;he respondent The Judge only awarded the appellants the 10 costs of the application and made no provision with regard to costs otherwise thrown away because of the default of the respondent. For the respondent, it was argued that the Judge must have been impressed, though he does not disclose his reasons inthis area, by the allegation of the respondent that he 15 is a displaced person. In fact, our attention was drawn to the last-mentioned allegation as an additional factor justifying the dismissal of the appeal on the merits inasmuch as its substantiation atthetrialwouldrendertheaction underanycircumstances premature in view of the provisions of the Debtors 20 Relief Law, 24/79. The discretion of the Court as to the conditions that should accompany stay, must be judicially exercised. Wiih regard to costs,iheprincipal consideration that should guidethe Court in the exercise of its discretion, is the responsibility of each 25 partyfor costs thrown away.It iswellestablished thatinapproving thetermsuponwhichjudgment maybesetaside,the Court shouldpayheedto theconduct ofthepartiesintheproceedings. Onanyviewofthefacts,theappellantsdidnothingto contribute to costs thrown awaythat weresolely occasioned bythe default 30 of the respondent. In face of this reality, there was only one way in which judicial discretion could be exercised, and that was by adjudging the respondent to pay all costs thrown away in consequence of his default. In the result, the appeal is partly allowed; the respondent is 35 ordered to pay, in addition to the costs of the application for 211 Pikis J. Phylactou v. Michael
(1982)setting aside judgment, all costs thrown away in consequence of his default to appear. Further, respondent is adjudged to pay half the costs of this appeal. Appeal partly allowed. Order 5 for costs as above. 212