DC889

PAPUA NEW GUINEA
[IN THE DISTRICT COURT OF JUSTICE]

DC No 165 of 2005

BETWEEN

JONTO LIMITED
Complainant

AND

JOHN KOMBAGL MAINE
Defendant

Lae: C Inkisopo
2005: 6th October

District Courts Civil (Practice and Procedure) – Application to set aside ex parte default judgment – Ex parte default judgment order irregularly entered to be set aside as matter of principle – Ex parte default judgment order regularly entered requires exercise of discretion; material relevant to exercise of discretion being; presence or otherwise of evidentiary material showing defence on merit, explanation why judgment allowed to go by default, explanation of any delay in applying and/or promptness of application.

Practice and Procedure – Service of default summons upon complaint for a civil debt on Defendant – Defendant refusing to accept summons personally served by process server – Process server walking away with the process without handing over the process when refused – Effect of the refusal to accept service on the question of service of process.

Practice and Procedure – Appropriateness of process issued upon a legal bill of costs subject of dispute – Whether choice of originating process appropriate – Whether legal bill of costs in that disputed form a liquidated demand such as to warrant the issuance of a Default Summons under Section 156 of the District Courts Act. 

Cases cited/referred:

1: Barker –vs- Government of Papua New Guinea [1970] PNGLR 340
2: BSP -vs- Spencer [1983] PNGLR 239
3: Duque -vs- Paru [1997] PNGLR 378
4: George Page Pty Ltd -vs- Malipu Bus Balakau [1982] PNGLR 140
5: Green & Company -vs- Green [1976] PNGLR 73
6: Koopa -vs- Henry Tokam & State [1996] PNGLR 277
7: William Duma -vs- Yehiura Hriewazi (2004) N2526
8: Worm -vs- Sergeant Koken [1996] PNGLR 7358

Counsel:

1: Mr John Kombagl Maine:  Applicant/Defendant in person
2: Ms Lydia Karre:   for the Respondent/Complainant

REASONS FOR RULING ON ‘SET-ASIDE’ APPLICATION

C Inkisopo: Mr John Maine Kombagl referred to hereinafter by his initials "JKM" applies to this Court seeking to set aside a certain ex parte default judgment entered against him on the 12th of April, 2005 for the payment of K4, 442.00 to the Complainant Jonto Limited (referred to by "JL" for short). The background facts of this case will become apparent during the course of the judgment.

2: JKM comes to Court asking to have that order dated 12th April, 2005 set aside on grounds; (1) that he was not served with the process and (2) that on the date of the ex parte default judgment, he was out of the province in Madang on official government business.

3: This Court has power under Section 25 of the District Courts Act Chapter 40 to entertain such applications when it says;-

"A conviction or order made when one party does not appear may be set aside on application to the Court on such terms as to costs or otherwise as the Court thinks just…"

4: There are well established principles governing such applications in this jurisdiction beginning with the oft-cited case of Green & Company Pty Ltd -vs- Green [1976] PNGLR 73 which has been expanded on, improved and refined by several subsequent judicial pronouncements by the high courts of this land.

5: In approaching this matter, the first consideration comes to mind as to the nature and type of the judgment and the circumstances under which that judgment was entered. I consider this to be the crucial issue because several other issues emanate from that consideration like for instance, the question of whether or not the judgment order in issue was one regularly entered or irregularly entered. Generally, it seems, if the judgment in issue is one entered irregularly, then the Court before which the application is made would normally have no discretion but to grant the application whereas if the judgment in issue was regularly entered, then the Court before which the application is made would have to exercise a discretion to either refuse to grant the application or to grant it.

6: In BSP -vs- Spencer [1983] PNGLR 239, his honour Mr Justice McDermott at p.240 said;

There is a strong distinction between setting aside judgment for irregularity in which case the Court has no discretion to refuse to set it aside, and setting aside where the judgment though regular has been obtained through some slip or error on the part of the Defendant in which case the Court has a discretion to impose terms as a condition granting the Defendant relief. But though the Court is bound to set aside an irregular judgment, ex debito justitiae, it has always exercised a discretion as to costs and has imposed terms as a condition of the exercise of that discretion."

7: In George Page Pty Ltd -vs- Malipu Bus Balakau [1982] PNGLR 140, the same Court said that the power to set aside ex parte default order is discretionary, relevant to the exercise of the discretion is the presence or otherwise of evidentiary material showing;

(a) defence on merit, 

(b) reasonable explanation why judgment was allowed to go by default and/or 

(c) an explanation for any delay in applying to set aside.

Judgment irregularly obtained would, as a matter of principle, be set aside. See Barker -vs- Government of PNG [1976] PNGLR 340 and BSP -vs- Spencer [ 1983] PNGLR 239

8: It would therefore follow that it is in situations of applying to set aside regularly entered default judgments that the Green & Green case and those other cases that help the Courts to make determinations by the exercise of discretions.

9: In order to help address the issue in this case, we firstly need to consider the facts of the case leading to the entry of the judgment the subject of this application.

10: "JL" took out a default summons upon complaint for an alleged civil debt against "JKM" for a claimed non-settlement of legal fees incurred by him on account of an action he (JKM) instituted against the National Housing Corporation (NHC) at the National Court in Lae. JKM works at the Angau Memorial General Hospital at its Dental Health Clinic. JL’s Complaint and Summons for a civil debt dated 29th March, 2005 was attempted to be served on JKM on 31st March, 2005 by the process server, one Mr Francis Mala which was refused acceptance by JKM.

11: The process server attempted to serve the process on JKM on 1st April, 2005 for the second time but JKM still refused acceptance, so as he deposed to in his affidavit, he took the document to his office.

12: In so refusing acceptance of the process, JKM told the process server that he should hold onto the process until he came back from Madang where he was going on official government business which was to be for a week from then. He even communicated his impending absence from Lae for the week following then to the Clerk of Court through a letter. 

13: The process was registered at the District Court registry and made returnable in Court on 12th April 2005 at 9:00am. The Magistrate’s work sheet hand notes show that at 9:00 am, the lawyer for JL appeared whilst neither JKM nor his representative (if he had any) made any appearance just as the Court record discloses.

14: The matter was mentioned at 9:00am and stood over to 1:30pm that day. The work sheet record further notes that at 9:00am, there was ‘No appearance of Defendant’, Proof of Service filed’ and ‘No notice of intention to defend filed’. The Court subsequently made the order which is the subject of this application. The formal sealed copy of the order was served on JKM on 11th May 2005 at exactly 9:27 am. JKM filed this application by way of a notice of motion made returnable on 31st May, 2005 at 9:00am.

15: The primary facts of the case being that JL took out a default summons upon complaint for a civil debt against JKM for a claimed non-settlement of legal fees on account of acting for him prosecute a National Court claim against the National Housing Corporation (NHC) at Lae.

16: JKM was employed as a dentist with the Angau Memorial General Hospital’s Dental Clinic. It was there that JL through its process server attempted to effect service of the process on JKM who refused its acceptance. It so happens that when JKM refused to accept service of the process on him, the process server Mr Francis Mala took the whole process back to his office, as borne out in paragraph #4 of his affidavit when he says: "I returned to my office with the said document". I take that statement to mean that the complaint and summons that he attempted to serve on JKM was taken back to his office without leaving it or putting it down in JKM’s office in his presence and explaining its nature etc to him. From what transpired as recorded here, I would agree that the process was not actually and properly served on JKM by JL’s process server in order for JKM to have known and become aware of its existence and the nature of the claim even though I consider that JKM was sufficiently aware of or at least has had some idea of JL’s pending claim against him as borne out from records of previous correspondences between him and JL and that JKM at least was aware that such a claim against him from JL existed and that such a court process was forthcoming his way if he did not do something to settle the account sooner as borne out from Annexure "F" of Ms Lydia Karre’s affidavit sworn dated 31st May, 2005.

17: I now deal with each of the basic requirements as set out in the Green & Green case (supra) that subsequent other higher Courts have expanded on and refined in a number of cases thereafter. 

18: The first consideration therefore is whether or not JKM has provided reasonable explanation as to why the ex parte judgment was allowed to be entered against him that he now seeks to have set aside. In my humble view, JKM has furnished a reasonable explanation to my satisfaction why the ex parte judgment was allowed to be entered against him.

19: The second consideration relates to whether or not JKM has taken steps without delay to have the ex parte order set aside. I am satisfied that JKM took a prompt action as soon as he became aware of the existence of the ex parte order in applying to have that adjudgment set aside.

20: The process server, Francis Mala served a sealed copy of the order on JKM personally on 9th May, 2005 at exactly 9:27am as per his affidavit sworn on 11th May, 2005. JKM then filed this application by way of a Notice of Motion dated 18th of May, 2005. In my humble view, a lay person taking at the most just over a week to file the application to set aside that ex parte order is but a reasonably prompt action. I am accordingly satisfied that JKM has taken a reasonably prompt action to file this application from the moment he was served with notice of the existence of the ex parte order against him.

21: The final consideration that I’d like to touch on is whether JKM provided affidavit material stating facts disclosing ‘defence on merits’. JKM has filed affidavit material in support of his application.

22: In order to fully address this issue, one must take into consideration JL’s cause of action founding the substance of its claim. The cause of its claim was non-payment of an alleged over due legal costs on account of legal fees charged for legal professional work done for him at his own instructions to initiate an action at the National Court against the National Housing Corporation. Before this present cost recovery action was instituted, there were numerous correspondences that passed between JL and JKM touching the question of the legal fee ‘sum’ itself. See Annexures "F" and "G" of JKM’s affidavit. The Court also notes JKM’s request for a proper taxation of JL’s legal costs whilst JL’s lawyers wrote arguing in response that their pro-forma fee note had been sufficiently itemized to be understood as per the lawyer’s letter of First November, 2004 which is Annexure "H" to JKM’s affidavit. 

23: In all of those correspondences, JKM was raising issues with the fees as charged and that it would have, to my mind, become imperative and also in JL’s best interests to have taken the initiative to submit for taxation as its client was disputing that cost and even before instituting its costs recovery action under Part VI of the Lawyers Act of 1986. It was apparent from day one that JKM was already disputing JL’s bill of costs the subject of this case and furthermore, JKM was already even requesting the costs to go for taxation by the Assistant Registrar under Section 63 of the Lawyers Act, 1986. Even if the lawyer explained that their pro-forma fee note had been sufficiently itemized, and according to them (JL’s lawyers), the matter need not go for taxation, I am still of the humble view that the matter should still have needed to go for taxation notwithstanding the fact that JKM was not disputing the fact that such a bill was forthcoming from JL. Needless to say, JKM was still taking issue with the figure itself that needed to be settled.

24: Besides, he says in paragraph #13 of his affidavit that he had settled some portions of his legal bills. Apparently, there seemed to be two (2) sets of legal bills that he has had to pay to fully settle his account. Annexure "D" of JKM’s affidavit in two (2) pages bearing invoice number 1966 is one of the invoices rendered JKM for payment whilst the other invoice is JL’s pro-forma fee note dated 30th April, 2004. To my mind, this matter is one where it becomes a question of figures that JKM feels particular about that needed to be taxed as he did not agree with the figures of the costs. To that extent, I am of the humble view that whilst I do not accept that JKM has defence on merits, he still has what I would call ‘an arguable case’ on merits to be argued on in order to mitigate the final bill that he has had to pay.

25: One other factor I’d like to touch on is the service of process aspect of this matter on JKM. It is abundantly obvious to me that the process server during his second attempt at service on JKM seems that when he (JKM) refused acceptance of the process service effected on him, the process server took the process back to his office. Strictly speaking, to my mind, service of the process was not duly effected. Section 47 of the District Courts Act Chapter 40 talks about service of process on the natural person by delivering a copy of the process on him personally or if he can not be found, by leaving it at his last known place of abode. I would have accepted it as due service if the process server Mr Francis Mala had just left the document there in JKM’s office and just walked away. But the fact remains that Mr Francis Mala took the process back with him to his office. Accordingly, I find as a fact that proper service of the process in this matter was not made in this case. 

26: A further additional observation I’d like to make in this case relates to the type and form of choice for the originating process issued in this case. It is clear from the face of the process issued that JL’ cause of action was based on an alleged non payment of legal professional costs that had already been a cause for dispute by JKM who had then asked for the matter to go for taxation by the Assistant Registrar. Until that process (taxation of the claimed legal professional costs) was carried out, the bill in issue was and is an unliquidated demand such that the originating process (current default summons upon a civil debt) issued in this case by JL would by that fact be rendered irregular. The issue of irregularity is one consideration that has been considered at some length in this application.

27: In the final upshot, I find that the ex parte judgment order the subject of this application is considered as being irregular in two (2) phases;-

(a) The Complaint and Summons in this case have not been duly served on JKM, 

(b) The cause of action in the instant case is a claim for a purported liquidated demand when it is a disputed legal professional costs being one of an unliquidated demand that it can not have been proceeded upon by way of a ‘default summons’ as is the case in the present case.

28: Accordingly, and as I have found, JKM was not duly served with the process at all and also that as the default summons was issued for what is otherwise an unliquidated demand, I find on these two (2) grounds that this ex parte judgment order dated 12thApril, 2005 can not and should not stand. Further, the explanation advanced by JKM explaining why the ex parte order was allowed to be entered and also in view of the promptness of this application and JKM’s affidavit material showing an ‘arguable case’ on merits meriting a mitigation of the final bill in issue that JKM has had to pay, the sheer justice of the case militates in favour of granting the relief JKM seeks.

29: Orders accordingly

____________________

Lawyers:

1: Applicant himself in Person.
2: Pryke & Jansen Lawyers - for the Respondent