PNG Law Reports 1994
[1994] PNGLR 418
SC453
PAPUA NEW GUINEA
[SUPREME COURT OF JUSTICE]
MICHAEL NEWAL WILSON
V
HAROLD ROSSER HOWARD
Waigani
Hinchliffe Konilio Jalina JJ
26 April 1993
PRACTICE AND PROCEDURE - Striking out defence - General denial only pleaded - Defence struck out - National Court Rules O 8 rr 27 and 28.
PRACTICE AND PROCEDURE - Liquidated claim - Defence and General denial - Verification of defence by affidavit mandatory - National Court Rules O 8 r 24.
Facts
The appellant appealed against an order that his defence be struck out and summary judgment be entered against him. The respondent had brought the application to strike out under O 8 rr 27 and 28 of the National Court Rules, "Embarrassment etc" and pleading "the general issue", respectively.
Held
1.       The appellant's defence fell within the ambit of O 8 r 28: pleading "the general issue".
2.       As the respondent's claim was one for liquidated demand and no other, the appellant was required to verify his defence by affidavit pursuant to O 8 r 24.
3.       The appellant's defence and cross-claim were a sham, and objections to various aspects of the respondent's affidavit material were not genuine.
4.       The trial judge did not fall into error when he exercised his discretion in favour of the respondent.
5.       Appeal dismissed with costs.
Cases Cited
Hornibrook Constructions v Kawas Express [1986] PNGLR 301.
Counsel
M N Wilson in person, with G Sheppard, for the appellant.
P Payne, for the respondent.
26 April 1993
HINCHLIFFE KONILIO JALINA JJ:  This is an appeal against a decision of the National Court on 1 August 1992, whereby the National Court ordered that:
"(1)     The defence of the defendant filed on 18 December, 1991 be struck out.
(2)      The judgment be entered for the plaintiff in the sum of K42,081.78 together with interest at the rate of 15.25% per annum from 27 August, 1991 to the date of judgment and continuing.
(3)      The defendant pays the plaintiffs costs."
STATEMENT OF CLAIM
"1.      By an agreement in writing made between the plaintiff and the defendant in or about March 1991, the plaintiff agreed to sell and the defendant agreed to purchase the plaintiff's share and interest in the legal practice of Warner Shand Lawyers, Mount Hagen, including the units and goodwill thereof. At the trial, the plaintiff will refer to the said agreement as if the same were set out herein in full.
2.       There were express terms of the said agreement, inter alia, as follows:
(a)      The purchase price shall be K55,000, payable by the defendant to the plaintiff as to K8,250 upon the execution of the agreement and the balance thereof by equal instalments of K2,377 each at intervals of one month, calculated from the date of the agreement. The first such payment to be made one calender month from the date thereof;
(b)      the instalments shall be paid to the plaintiff's bank account no. 3803597801 at the Mount Hagen Branch of Westpac Bank;
(c)      interest at the rate of 15.25 percent per annum shall be paid by the defendant on so much of such balance of the consideration as shall remain unpaid from time to time;
(d)      time shall be of the essence.
3.       There were further express terms of the agreement, inter alia, as follows:
(a)      If the defendant fails to comply with the provisions referred to in the last preceding paragraph then he shall be immediately in default and breach of the agreement;
(b)      a determination by the plaintiff that any of the events constituting such a breach has occurred shall be final and binding upon the defendant;
(c)      payments to the plaintiff then and in that event the balance of the consideration as aforesaid shall become immediately due and payable in full including all or any interest thereon.
4.       The defendant failed to pay the instalment due in August 1991 under the said agreement whereby the whole of the balance of the consideration (including interest) became immediately due and payable.
5.       By facsimile transmission dated 27 August, 1991 from the plaintiff to the defendant the plaintiff gave the defendant notice of his determination that there had been an occurrence constituting a default and breach under the agreement and that the said balance of the consideration was due and payable.
6.       The defendant has failed and neglected and continues to fail and neglects to pay the balance of the consideration of any part thereof due under the said agreement whereby the plaintiff has suffered loss and damage.
Purchase price	K55,000.00	 	
Deposit	 	K8,250	
Interest	K644.57	 	
April payment	 	K2,337	
May payment (default)	 	 	
Interest	K1,148.35	 	
June payment	 	K2,337	
Interest	K549.85	 	
July payment	 	K2,337	
 	K42,081.78	 	
Plus interest at 15.25% per annum from July, 1991 and ongoing.
And the plaintiff claims:
(1)      K42,081.78 as aforesaid;
(2)      Interest at the rate of 15.25% per annum as agreed;
(3)      Costs."
In the appellant/defendant's defence, which was contained in the same document as the counter-claim, the defendant denied each and every allegation contained in paras 1-6, inclusive, of the respondent/plaintiff's statement of claim. Further, and in the alternative, the appellant/defendant sought to set off so much of his counter claim calculated to be sufficient to satisfy or extinguish the respondent/plaintiff's claim, as adjusted (if any).
The appellant/defendant's counter-claim was based on a separate deed entered into between the appellant and respondent on 1 May 1986. For reasons which will become clear later in this judgment, we do not consider it necessary to recite the basis of the counter-claim in full, except to point out the terms:
"And Wilson counter-claims:
(i)       a sum equivalent to Howard's due proportion of partnership losses for the year ended 31 December 1990;
(ii)      a sum equivalent to Howard's due proportion of partnership debts as at 31 December 1990;
(iii)     the sum of K13,011.34;
(iv)     damages;
(v)      costs
(vi)     interest pursuant to the Judicial Proceedings (Interest on Debts and Damages) Act."
Unlike the appellant/cross-claimant, who made a general denial of the respondent/cross-defendant's claim, the respondent/cross-defendant made specific denials of each and every allegation of the appellant/cross-claimant.
As we have stated earlier, the learned trial judge upheld the respondent/plaintiff's motion to strike out the appellant/defendant's defence and entered summary judgment for the respondent/plaintiff with costs. These orders were made on an application by the respondent/plaintiff pursuant to O 8 r 27 and r 28 of the National Court Rules.
"27.    Embarrassment, etc. (15/26)
(1)      Where a pleading:
(a)      discloses no reasonable cause of action or defence or other case appropriate to the nature of the pleading; or
(b)      has a tendency to cause prejudice, embarrassment or delay in the proceedings; or
(c)      is otherwise an abuse of the process of the Court,
the Court may at any stage of the proceedings, on terms or otherwise, order that the whole or any part of the pleading be struck out.
(2)      The Court may receive evidence on the hearing of an application for an order under sub-rule (1).
28.     General issue abolished. (15/27)
A party shall not plead the general issue."
The purpose of O 8 r 28, which we endorse, is as stated by Kapi DCJ in Hornibrook Constructions v Kawas Express [1986] PNGLR 301 at 302:
"The purpose of O 8 r 28 is to prohibit the defendant from making a general denial without specifically denying the facts or basis upon which the plaintiff's cause of action is based. The reason for this is obvious. The purpose of pleading is to set out clearly the issues; not only to inform the other party but the Court as well. Each party needs to know the nature of the case against him so that he cannot be caught by surprise at the trial. Any pleading which tends not to deny specifically a fact but denies a matter generally, eg a simple denial of a debt in an action for debt, would be a general denial without specifically denying the basis of the plaintiff's action."
In that case, the plaintiff's statement of claim, which was based on contract, contained 12 paragraphs. Paragraphs 3 to 10 pleaded the contract and the circumstances relating to its breach. By paragraphs 2 and 3 of the defence, the defendant said:
"2.      The defendant does not admit the allegations contained in paragraphs 3 to 10 of the statement of claim.
3.       Save as aforesaid, the defendant denies each and every allegation contained in the statement of claim."
His Honour struck out the defence, as it came within the prohibition in O 8 r 28.
In this case, as we have indicated earlier, the respondent's claim was based on contract, the terms of which and the circumstances relating to the alleged breach by the appellant were specifically pleaded in detail and contained six paragraphs.
In paragraph 1 of the appellant's defence, however, the appellant said: "The defendant denies each and every allegation contained in paragraphs 1 to 6 inclusive of the plaintiff's statement of claim."
The appellant did not even admit the contract and then deny the alleged breaches of its terms. Instead, he denied even the existence of the contract itself. This has forced the respondent to prove through the affidavit of Rio Fiocco, filed on 6 April 1992, that there was, in fact, a contract signed between the appellant and the respondent, for the breach of which the respondent made the claim.
Applying his Honour's reasoning in the Hornibrook Constructions case (supra), we cannot see how, from the defence filed by the appellant, the respondent as well as the Court were to become aware of the issues for trial, let alone the respondent avoiding being embarrassed by the appellant at trial. We are, therefore, of the opinion that the appellant's defence fell within the ambit of the prohibition in O 8 r 28.
The respondent's claim being one for a liquidated demand, and no other, the appellant was required to verify his defence. This requirement was endorsed on the writ and, as such, the appellant was no doubt aware of it. Furthermore, by virtue of O 8 r 24 the appellant was required to verify his defence by affidavit:
"24.    Defence: Verification. (15/23)
(1)      Where a plaintiff, by his statement of claim, makes a claim against a defendant for a liquidated demand, but no other claim, and the statement of claim bears a note requiring the defendant to verify his defence, the defendant shall verify his defence, that is to say, he shall, within the time limited for filing his defence, file an affidavit verifying his defence to the claim in accordance with this Rule.
(2)      Subject to Sub-rule (4) the deponent making an affidavit verifying a defence shall, in the affidavit, swear that the defence is true in substance and in fact.
(3)      An affidavit verifying a defence may be made:
(a)      by the defendant; or
(b)      where the defendant is a Minister or officer of the government of Papua New Guinea sued in his official capacity - by some officer of the government having knowledge of the facts;
(c)      where the defendant is a corporation or a body of persons which, by law, may be sued (whether in its own name or in the name of any officer or other person) - by some member or officer of the corporation or body having knowledge of the facts; or
(d)      where the defendant is a disabled person - by his guardian at law.
(4)      The Court may, by order, give leave to a defendant to file, instead of an affidavit in accordance with Sub-rules (2) and (3), an affidavit by such deponent and as to such facts in or towards verification of his defence, or instead of verification of his defence, as the Court may determine.
(5)      A defendant may apply for an order under Sub-rule (4) without filing or serving notice of the motion.
(6)      A defendant filing an affidavit verifying defence shall, on the day of filing, serve the affidavit and, where the affidavit is filed pursuant to an order under Sub-rule (4), serve the order, on the plaintiff.
(7)      The affidavit required by or under this Rule in relation to a defence may be subscribed to the defence."
To say that the appellant's verified defence was too general when referring, in fact, to his general denial in his defence was no verification of his defence, which was required by O 8 r 24(1) and (2) to be by affidavit. In that affidavit, the appellant was required by sub-rule (2) to "swear that the defence is true in substance and in fact." No such affidavit was filed by the appellant.
The appellant had also filed a cross-claim, even though clause 9a(i) provided for the continuing partner (the appellant) to indemnify the respondent from all claims and payments of any nature whatsoever for which the retiring partner (the respondent) may directly or indirectly become liable etc. We are of the opinion that not only the appellant's defence but also his cross-claim were a sham, and his objections to the various aspects of the respondent's affidavit were not genuine.
On the basis of the foregoing, we are of the opinion that the learned trial judge did not fall into error when he exercised his discretion in favour of the respondent. We would, therefore, dismiss the appeal with costs.
Lawyer for the appellant: Warner Shand.
Lawyer for the respondent: Blake Dawson Waldron.