Default Judgment and the Doctrine of Estoppel Per Rem Judicata: A Legal Conundrum in Order 10 Rule 6 & Order 13 Rule 6(2) of the High Court (Civil Procedure) Rules, 2004 (C. I 47)

Voice Summary by Author:

Introduction

 Meaning of default judgment

Default judgment is a judgment which is not on its merits but a judgment based solely on the inability of a respondent to the application to file appearance or defence within the statutory periods set down by the rules.[1]This can be argued that a default judgment is not a final judgment but an interlocutory one. As stated in Bozson v Alttincham Urban District Council[2], Lord Alverstone CJ said as follows:

“Does the judgment or order, as made, finally dispose of the rights of the parties? If it does, then I think it ought to be treated as ‘final’ order; but if it does not, it is then, in my opinion, an interlocutory order.”

If a trial is terminated as a result of a default by any of the parties and judgment is entered, such a judgment could be set aside by the defaulting party at any time. Any default judgment, whether liquidated or unliquidated, is a judgment by default with no finality. Anything that is by default is not final in the legal sense. The default could be corrected not necessarily on appeal but by the very court upon an application. It is only where the trial court wrongly refuses to set it aside that the defendant could appeal against that decision.[3]

The only reason why the rules describe default judgment in liquidated claims as ‘final’ judgments is because, if the defendant fails to apply to the court to have such judgment set aside, there is nothing left to be done by the trial court since the amount claimed is fixed. Such a judgment only assumes ‘finality’ when the defendant does not challenge it by applying to have it set aside, being judgment not entered on its merits, it remains an ‘interlocutory judgment’, no matter the description given to it under the rules of court. The applicant could therefore only appeal against it within 21 days after its delivery.[4]

Meaning of res judicata

Spencer-Bower and Turner’s book, Res Judicata[5], defines estoppel by res judicata as a rule of evidence and may be stated thus: “where a final decision has been pronounced by a judicial tribunal of competent jurisdiction over the parties to, and the subject matter of the litigation, and any party or privy to such litigation, as against any other party or privy thereto is estopped in any subsequent litigation from disputing or questioning such decision on the merits whether it be used as a foundation of action or relied upon as a bar to any claim.”

This well-established rule of estoppel by judgment, is based on two policy grounds, namely that it is in the public interest that there is an end to litigation and that nobody should be vexed twice on the same matter.

In In re Sekyedumase Stool; Nyame v Kese Alias Konto[6] it was held per Acquah JSC (as he then was) that:

“The plea of res judicata can be invoked in respect of any final judgment delivered on the merits by a judicial tribunal of competent jurisdiction. Such a judgment is conclusive as to rights of the parties and their privies, and, as to them, constitutes a bar to a subsequent action involving the same claim, demand or cause of action. The court further reiterated that, the plea of res judicata really encompasses three types of estoppel: cause of action estoppel, issue estoppel in the strict sense, and issue estoppel in the wider sense. In Summary, cause of action estoppel should properly be confined to cases where the cause of action and the parties (or their privies) are the same in both current and previous proceedings. In contrast, issue estoppel arises where such a defence is not available because the causes of action are not the same in both proceedings. Instead, it operates where issues, whether factual or legal, have either already been determined in previous proceedings between the parties (issue estoppel in the strict sense) or where issues should have been litigated in previous proceedings but, owing to “negligence, inadvertence, or even accident”, they were not brought before the court (issue estoppel in the wider sense), otherwise known as the principle in Henderson v Henderson (1843) 3 Hare 100…”

In Mensah v Intercontinental Bank Ghana Ltd[7], It was held per Adinyira JSC that:

“Ordinarily, this plea is available only after the issue has been determined in a contested action in which both parties have been heard. But it has been held to apply even in cases where the decision was reached in default of either party.

The key word from the definition of the doctrine of res judicata supra is that it must be a ‘final’ judgment. It must be a judgment on its merit and not an interlocutory one. However, in the Mensah case supra, the decision can be invoked when both parties have been heard and the decision was in default. The author is of the view that since default judgment is an interlocutory application the doctrine of estoppel can be applied in interlocutory matters when both parties have been given the opportunity to be heard and the decision has not been appealed against. In Republic v High Court, Accra (Commercial Division); Ex parte Hesse (Investcom Consortium Holdings SA & Scancom Ltd Interested Parties)[8], it was held per Wood CJ thus:

“The res judicata rule was not confined to the issues which the court has been actually asked to decide. The rule would also cover issues or facts which were so clearly part of the subject-matter of the litigation and so clearly could have been raised that it would be an abuse of the process of the court to allow a new proceeding to be started. And it was also well-settled rule of estoppel, applicable not only to substantive actions but interlocutory matters as well, that if a court of competent jurisdiction had tried and disposed of a case, the parties themselves and their privies could not thereafter, bring an action on the same claim or issue. The rule was applicable to matters actually dealt with in the previous litigation as well as those matters which properly to that litigation and could have been brought up for determination but were not raised.”

Analysis                                                                                       

The question is, under what circumstance can an interlocutory judgment result in a result plea of res judicata? This article is aimed at delving into the circumstances under which one can invoke a successful plea of res judicata in a default judgment. The differences between default judgments (of appearance or defence) and summary judgment under Order 14 of the High Court (Civil Procedure) Rules, CI 47 (2004). On the other hand, if default judgment is not a final judgment how can a party invoke it to result in a successful plea of res judicata? I will delve into some case law and analyse same for readers for the sake of emphasis.

In Asamoah v Marfo[9], the Supreme Court held that “summary judgment on the merits though it is obtained by a formal motion without a plenary trial, it is a judgment granted on the simple grounds that the respondent on the application has no defence to the action or part thereof or any reasonable defence to be allowed to contest the case on the merits to waste time and expense. Default judgment, on the contrary, though obtained by motion is not a judgment on the merits but a judgment based solely on the inability of respondent to the application to file appearance or defence within the statutory periods set down by the rules. “

This can be argued that default judgment is not a judgment on its merit but an interlocutory one. The position of the law is that a judgment obtained by default cannot be obtained in mortgage actions and money lenders action except with leave of the court under Order 10 r 9 & 10 and Order 59 r 4& 5 of CI 47. Such judgments can be final if it is not appealed against while judgment obtained by default under Order 10 r 6 of the High Court (Civil Procedure) Rules, CI 47 (2004) cannot be obtained by default unless evidence is taken and the matter is set down for trial.

Again in Republic v Major Atta Wirrom (RTD); Ex parte Erasmus Quayson[10], it was held that:

“It is provided under Order 66 r 39 and r 42 of the High Court (Civil Procedure) Rules, CI 47 2004, that the court has no jurisdiction to enter default of appearance in probate matters.”

This means that in probate matters the case has to reach it finality and the question of judgment obtained by default cannot be arise. This can be deduced that a successful plea of res judicata can be invoked in probate matters without any academic discussions.

 

Circumstances under which default judgment can result in a successful plea of res judicata.

In Botchway v Daniels[11], the Court per Kpegah J. (as he then was) held:

“The next point for consideration is whether the defendants have shown by their affidavits evidence that they have a reasonable defence for the claim. In this way, one may say they are offering a defence of res judicata– that the matter had already been decided by the Department of Social Welfare. Where a defendant pleads the defence of res judicata, it is incumbent upon him to show that the decision he is relying upon was given by a court of competent tribunal or that the said adjudicating authority had jurisdiction in the matter or was properly seised of it. The Doctrine of Res Judicata[12] by Spencer-Bower, the learned editor stated the law in very clear and concise language at paragraph 113, p. 92. This is what he says:

“Competent jurisdiction is an essential condition of every valid res judicata, which means that, in order that a judicial decision relied upon, whether as a bar, or as a foundation of an action, may conclusively bind the parties, or (in cases of in rem decisions) the world, it must appear that the judicial tribunal pronouncing the decision had jurisdiction over the cause or matter, and over the parties, sufficient to warrant it in so doing.”

By this decision it can be argued that if the court that gave the decision in default has jurisdiction then the doctrine of res judicata can be invoked in default judgment. Again, the default judgment need to be clear and unambiguous in order for estoppel per rem judicata to prevail. In Laryea v Oforiwah[13], the Court per Abban JA (as he then was) held thus:

“There was no doubt that a default judgment was capable of giving rise to an estoppel but it should always be critically examined and scrutinized with extreme particularity for the purpose of ascertaining the bare essence of what it must necessarily have decided. In the instant case, the default judgment suffered from certain defects which made it almost worthless. The orders were contradictory in terms. The first order implied that the Sempe Mantse, Nii Tetteh Kpeshie II, with the consent of the plaintiff in that case could grant or alienate Sempe stool lands. But the second order forever barred him from alienating or granting the said lands with or with the consent of the plaintiff’s. Such contradictions made it difficult for the terms of the default judgment to be ascertained with complete precision. A judgment which was uncertain to every intent could not give rise to estoppel by record. Consequently, although the trial judge did not give any reason for not considering the default of the Ga Native Court B, there was ample legal justification for ignoring it. It could not have advanced the defendant’s case one way or the other.”

In some older cases, estoppel was said to be odious because it prevented a suitor from relating the truth. In Nokes, Introduction to Evidence[14] , the author says:

“Estoppel is a rule by which a party to litigation is stopped from asserting or denying a fact….It is thus a rule of exclusion, making evidence in proof or disproof of a relevant fact inadmissible. An estoppel has been so described because a man’s own act or acceptance stoppeth or closet up his mouth to allege or plead the truth.”

The plea is available only after the issue has been determined in a contested action in which both parties have been heard. But it has also been held that estoppel applied to default judgments whether the default was in appearance or pleading, once a valid decision was reached. Thus in the old case of Aslin v Parkin[15], Lord Mansfield is reported to have said:

“There is no distinction between a judgment in ejection upon a verdict, and a judgment by default. In the first place, the right of plaintiff is tried and determined against the defendant, in the last, it is conferred.”

In an action for mesne profits, the defendant was held concluded by a default judgment. All the older cases on this subject were to the same effect.[16]  In Conca Engineering v Moses[17], the Court Apaloo CJ, held:

“Ordinarily the plea of res judicata or estoppel by record was available only after the issue had been determined in a contested action in which both parties had been heard. But it had been held to apply even in cases where the decision had been reached in default of pleading or appearance. However, in recent times judges had sought to limit the binding efficacy of estoppel in default judgment. Thus in the New Brunswick case [1939] AC 1, HL it was stated that an estoppel based on default judgment must be carefully limited. The true principle in such a case would seem to be that the defendant was estopped from setting up in a subsequent action a defence which was necessarily and with complete precision decided in the previous judgment. Again in the Kok Hoong case ([1964] 1 All ER 300, PC) the court held of a defaulting judgment as speaking of nothing but that a defendant for unascertained reasons, negligence, ignorance or indifference, had suffered judgment to go against him in the particular suit in question. There was obvious danger in permitting such a judgment to preclude the parties from ever reopening before the court on another occasion whatever issues could be discerned as having been involved in the judgment so obtained by default.”

The court further held;

“I think the modern approach to judgment by default which the New Brunswick and Kok Hoong cases typify is a more suitable weapon for achieving the ends of justice and should be followed in this country. If a judgment by default does not necessarily preclude the parties in highly literate and sophisticated society like England because the defendant may have been ignorant or negligent or indifferent in the former action, it must be an a fortiori in this country where the level of literacy and sophistication is much less than England.”

Default judgment for declaratory reliefs.

Facts in the Conca Engineering case:

In 1955 the plaintiff obtained a customary grant of a piece of land from one S who had described himself as the caretaker of the Osu stool land. The transaction was evidenced by a receipt indicating that the land measured 100 feet by 100 feet without relating the boundaries to any physical features, except the boundary owners. The receipt attached no site plan. Subsequently by a deed executed in 1960, the Osu stool conveyed a building land (identical to the land granted to the plaintiff by caretaker) to one K measuring approximately 85 feet by 90 feet K registered the deed of conveyance together  with attached site plan in 1968. He also later conveyed it to another person H and that deed was registered in 1976. H in turn by deed of conveyance sold in 1981 to the second defendant who also had his conveyance registered. The second defendant subsequently deposited gravels on the land which he found vacant at the time of the purchase. He also allowed the first defendants to park their vehicles on the land. However, the plaintiff objected to the presence of the defendants on the land and therefore sued in the Circuit Court, Accra, for title and possession-relying on the customary grant of the land obtained in 1955 from the caretaker of the Osu stool. The second defendant also set up as a defence his 1981 registered deed of conveyance-tracing his root of title from his immediate vendor H through K to the original conveyance from the Osu stool. At the trial the plaintiff pleaded that he had earlier obtained in 1968 a judgment in default of appearance against K at the Circuit Court in respect of the disputed land and that he, the plaintiff, had been declared the owner thereof. The matter was therefore res judicata and K was thereby estopped. Since the plaintiff was privy to K, the judgment against K bound him the second defendant who was thus equally estopped by the default judgment once his predecessor K had not appealed against the judgment or have it set aside. The trial circuit court accepted the plaintiff’s plea of res judicata founded on the default judgment and concluded, inter alia, that on the totality of the evidence, the plaintiff had proved his claim and that judgment be awarded in his favour “for the reliefs claimed”. In the instant appeal by the defendants against that decision, the court having found, inter alia that K, the predecessor-in-title of the second defendant, had, in fact, sought unsuccessfully to have the default judgment against him set aside for want of service on him of the writ of summons.

The court held:

“Since ownership and possession were reliefs indorsed by the plaintiff on the writ and the trial judge gave him a global judgment, it stood to reason that the judgment had granted both the claim for ownership and possession. But the court had no power on an application for judgment in default of appearance under Order 13 r 8 of the High Court (Civil Procedure) Rules, 1954 (LN 140A), to make more than an order for recovery of possession in the plaintiff’s favour. And since no express provision was made by the other rules of Order 13 where title as distinct from possession could be granted, the proper applicable rule was Order 13, r. 12. Under that rule, if a party defaulted in entering appearance, the action might proceed as if such party had appeared. That was another way of stating that the case should take its normal course. And in our adversary system, the plaintiff who sought a declaration of title, had to establish that by clear and acceptable evidence whether or not the defendant against whom he sought the relief was present or absent. Since the plaintiff admittedly led no evidence of title in the 1968 suit, the circuit judge at that trial had no jurisdiction either under Order 13, r 8 or r 12 to adjudge title in the plaintiffs’ favour. The default judgment would accordingly be set aside as void. It could not be a valid foundation for a plea of estoppel on an issue of ownership in the present action.[18]

This decision is to the effect that default judgment cannot be granted in claims for declaration of title. This can be found in Order 10 rule 6 of the High Court (Civil Procedure) Rules, CI 47 (2004) headed; Actions not specifically provided for. According to this rule, when a default judgment is entered against a defendant, the plaintiff would have to proceed as if the defendant had entered appearance. This principle was re-echoed in the case of In re Nungua Chieftaincy Affairs; Odai Ayiku IV v Attorney-General (Borketey Laweh XIV Applicant)[19], where the Supreme Court per Owusu RC said thus (Holding 3):

“……In an action like that, not specially provided for under the rules, if a party served with the writ did not appear within the time limited for appearance, the plaintiff might file an affidavit of service and the action might proceed as if such party had appeared. All that the phrase “proceed as if such a party had appeared” meant was that the case has been set down for hearing. The plaintiff must lead evidence in proof of his claim. Where a plaintiff has claimed a declaration for title, he still had to lead evidence in proof of his title notwithstanding the failure on the part of the defendant to enter appearance.”

Again, in Republic v High Court Accra; Ex parte; Osafo[20], the Supreme Court held per Gbadegbe JSC in (Holding 1) thus:

 “It appeared the default judgment had been entered by the High Court on 26 January 2009 under Order 13, r6 (2) of the High Court (Civil Procedure) Rules, 2004 (CI 47). A careful examination of the orders made by the trial High Court, would reveal that whilst the first relief was substantive, the other reliefs were ancillary to it. Since the substantive order made was a declaration, by the settled practice of the courts, such orders, to be good, must be made only after hearing all the parties to the action or at least offering them an opportunity to be heard. In the instant case, before making a declaratory order or judgment, the court should have received evidence from the parties in the matter in accordance with the practice of the courts in such matters. The insistence on hearing the parties, would enable the judge, who was invited to make the order, to hear them before making pronouncements that were good and not limited to only the parties to the dispute. That requirement would be satisfied when the judge has ensured that the parties to the dispute, particularly the one against which its pronouncement was sought, was served to appear before the court. There was no indication from the earlier judgment of the High Court that the defendants had been served and the trial judge appeared not to have received any evidence before acceding to the declaratory relief. The said lapse on the part of the court was an instance of breach of the fundamental right of hearing and would deprive the court of jurisdiction in the matter.”[21]

Default judgment in liquidated claims

Under this principle the decision in Mensah v Intercontinental Bank supra comes to mind. The issues for determination were whether the causes of action in the two suits were the same and whether the 1^st suit determined the issues between the parties.

Facts of the case

The plaintiff issued a writ with suit No. BFS/3/06 at the High Court (Commercial Division) Accra on 23/1/2006 claiming against the defendant:

1. An order directed at the defendant to reconcile the passbook entries with the statement of account to reflect the true state of the amounts deposited in the Savings Accounts Numbers 3838 and 8542 belonging to Comfort Mensah (deceased) which the defendant bank failed to capture in the respective bank statements issued to the plaintiffs by the defendant.

1. Interest on the amounts which the defendant has failed to credit the deceased accounts with from the respective dates on which they should have been credited up to and inclusive of the date of payment.

• Costs

The defendant entered appearance but failed to file a defence. The trial court entered a judgment in default of defence against the defendant on all the reliefs claimed by the plaintiffs. The plaintiffs filed an entry of judgment for an amount GHC64,334.94 and proceeded to attach the properties of the defendant by way of execution. The defendant had the execution set aside on the grounds that the judgment was only an order directed at the defendant to reconcile accounts. The court ordered the defendant to comply with the judgment by reconciling the passbook entries within 7 days. Based on this order the defendant submitted to the court registry a reconciliation report, exhibit M, stating the total balance. The plaintiffs were dissatisfied with this report and alleged that the report filed by the defendant did not reflect the outcome of the reconciliation of the accounts which their own auditor had participated in with officers of the bank. They accordingly filed a motion to the High Court for the appointment of a court expert under order 26 r 1 of CI 47 to do the reconciliation. The court refused the application on the ground that the defendant has satisfied the order and the court was functus officio. The plaintiffs still dissatisfied issued a writ of summons with suit No. RPC/107/2006. The plaintiffs whether by design failed to mention in the original statement of claim the earlier case and the others and the reconciliation report produced by the defendant pursuant to the order. They simply asked for the payment by defendant the sum of GHC49,249.01 with interest and cost. It was the defendant who raised these antecedents as the basis for its defence of estoppel by judgment. The defendant resisted the action on the grounds that the issues raised by the plaintiffs had already been determined or could have been claimed and determined in the previous Suit No. BFS/3/06, and thus the subject matter of res judicata. The trial judge was of the view that the propriety or otherwise of the reconciliation report raised a fresh issue for her determination and gave judgment for the plaintiffs. The defendant appealed to the Court of Appeal which reversed the judgment of the trial court on the sole ground that the cause of action in the two suits was the same and the matters was therefore res judicata. The plaintiff being dissatisfied filed an appeal to the Supreme Court

At the Supreme Court, it was submitted on behalf of the plaintiffs that the factual situation in existence of which entitled the plaintiff to institute the 1^st suit were different from that of the 2^nd suit. He submitted that the 1^st suit was commenced because the defendant refused to rectify the anomalies between the passbooks and the statements, whereas the 2^nd suit arose to enforce the sum of GHC49,249.01 with interest reached after the reconciliation. The stand of counsel for the defendant was simply that the appellants in both suits wanted what they thought was due and owing to the deceased credited to her accounts. Counsel for the plaintiffs submitted further that nothing was directly decided in the 1^st case as the defendant failed to file a defence by the court and there could be no issues to be identical with the issues that arose in the 2nd suit.

The Supreme Court per Adinyira JSC distinguished between cause of action estoppel and issue estoppel and held:

“The submissions on behalf of the plaintiffs seem quite attractive and convincing. But with respect to learned counsel, we think they are misplaced. These are our reasons. In determining whether the cause of action or the issues arising from the subject-matter of the two suits were the same, the court would scrutinize the pleadings and the judgment in the previous action. On the facts of the instant case, the Supreme Court, like the trial court, would conclude that the cause of action in both suits were the same. The trial court had also correctly held that the first suit had settled the issue of reconciliation of the accounts between the parties. However, the trial judge failed to appreciate the law upon making such a finding, the same parties were estopped from re-opening the matter of the propriety or otherwise of the reconciliation issued by the defendant bank by a fresh action either before the same court or court of co-ordinate jurisdiction. The decision relating to reconciliation of accounts was final and it could not be varied or re-opened by the same court or a court of co-ordinate jurisdiction. And being a final judgment it was only subject to appeal. Their remedy was to lodge an appeal and not a fresh suit. So long as the judgment in the first suit stood, the issue as to what were the actual balances in the two savings passbooks had been determined and concluded between the parties. The trial judge had therefore erred in holding in the second action that the plaintiffs had a fresh cause of action to challenge the propriety of the reconciliation report issued by the defendant bank.

The Court further thus:

“The default judgment given in the suit was interlocutory, but it became final when the defendant Bank lodged the reconciliation report, exhibit M, in the court registry. So as the trial judge held, the issue as to the reconciliation of the accounts was concluded…”

Conclusion

The doctrine of estoppel per rem judicata can be applied in default judgment or interlocutory matters in liquidated or unliquidated claims. However, in declaratory reliefs default judgment can only be applied when parties have led evidence to prove their case before final judgment can be entered for the parties. In other words, if a plaintiff endorses his writ of summons with the relief of declaration of title, it is trite that such a plaintiff cannot avoid a trial. In Jibril Mahama v Akwasi Mensah[22], the Supreme Court per Marful Sau JSC (of blessed memory) relying on the English case of Metzger v Department of Health & Social Security[23], where Megarry VC delivered as follows:

“The court does not make declarations just because the parties to litigation have chosen to admit something. The court declares what it has found to be the law after proper argument, not merely after admission by the parties. There are no declarations without argument; that is quite plain.”

[1] Asamoah v Marfo [2011] 2 SCGLR 832

[2] [1903] 1 KB 547

[3] Karletse pinyin v Nuro [1979] 194

[4] Ntiamoah v Addo [2009] 5 GMJ 198 CA

[5] 2^nd edition

[6] [1998-99] SCGLR 476

[7] [2010] 26 MLRG 10 SC

[8] [2007-2008] SCGLR 1230

[9] [2011] 2 SCGLR 832

 

[10] [2014] 65 GMJ 133 CA

[11] [1991] 2 GLR 262 CA

[12] (2^nd ed)

[13] 1984-86] 2 GLR 410 CA

[14] (4^th ed) at p. 213

[15] (1758) 97 ER 501 at 501

[16] Nosbit v Rishtou (1839) 113 ER 408; Kerr v Williams (1885) 29 SJ 681

[17] [1984-86] 2 GLR 319

[18] Dictim of Verity CJ in Emegwara v Nwaimo (1953) 14 WACA 347 cited. Mosi v Bagyina [1963] 1 GLR 337 , SC applied.

[19] [2010] SCGLR 413

[20] [2011] 2 SCGLR 966

[21] Republic v High Court Accra; Ex parte Salloum (Senyo Coker Interested Party) [2011] 1 SCGLR 574 at 585

[22] [2020] 170 GMJ 441 SC

[23] [1977] 3 ALL ER 444 at 451