national court of justice

JOHN KEWA AND 11 OTHERS

v

BRIAN MANGIPU;
JULIUS KERA; and
TELIKOM PNG LIMITED

mt. hagen: cannings j

22 October; 25 November 2004

Judgments and orders – Application for dismissal of proceedings after entry of judgment – Application to set aside judgment entered in absence of defendants – No notice of intention to defend filed – Whether applications can be entertained – Relevant considerations to determination of applications – Similarity with application to set aside a default judgment – Whether reasonable explanation for allowing judgment to be entered ex parte – Whether reasonable explanation of delay between service of judgment and filing of application to set it aside – Whether a defence on the merits – Application of considerations – Orders.

Facts

The plaintiff/respondents commenced proceedings in the National Court at Mt Hagen and successfully obtained orders against the defendants. Telikom, the 3rd defendant, filed a notice of motion. The issues for determination are:

1.	Whether the plaintiffs' case should be dismissed on the grounds that the plaintiffs have no cause of action and no locus standi (ie no standing to bring the case) and that the National Court has no jurisdiction;

2.	Whether the order of 16 January 2004 should be set aside on the ground that it was granted ex parte.

Preliminary issue: Whether the applications can be entertained in view of Telikom's failure to file a notice of intention to defend.

Held
1.	The Court cannot determine an application aimed at dismissing a plaintiff's case, after the Court has already entered judgment in the plaintiff's favour, without first setting aside its judgment. 

2.	Before a judgement or order of a Court obtained in default or in the absence of the other party could be set aside, the Court must be satisfied that:

a.	There is a reasonable explanation for allowing judgement to go in default or ex parte;

b.	The application is made promptly or if there is a delay there is a reasonable explanation for it; and

c.	That there is a defence or there is valid argument affecting the merits of the case.

3.	All three considerations must be satisfied by a defendant. As only one is satisfied, the application to set aside the judgment of 16 January must fail.

Papua New Guinea cases cited
Christopher Smith v Ruma Constructions Ltd [2002] SC695.
MVIT v Joseph Bure [1999] SC613. 

Counsel
B Aipe and J Kiwai, for the plaintiffs.
W Mapiso, for the third defendant.

25 November 2004

Cannings j. This is an application to dismiss the proceedings commenced by the plaintiffs or alternatively to set aside a judgment that has already been made in favour of the plaintiffs and to set the proceedings down for rehearing. 

Background

The repeater station 
Telikom PNG Ltd for many years operated a repeater station on Mt Ialibu in the Southern Highlands Province. Since the early 1990s, it has paid money at regular intervals to people it regarded as landowners of the site. Some money was for occupation of the site, some for safety and maintenance fees. The amount totalled about K160,000.00.

The plaintiffs' claims 

The plaintiffs, John Kewa and his clansmen, say that Telikom (the 3rd defendant) has been paying the money to the wrong people. They say Telikom has been paying the money to the 1st and 2nd defendants, Brian Mangipu and Julius Kera; whereas Telikom should have been paying them. In 2003 they found out that Telikom was proposing to make a payment of K23,000.00 to the Mt Ialibu landowners. So they decided to commence court proceedings to force Telikom to pay that money to them. 

In May 2003 the plaintiffs commenced proceedings in the National Court at Mt Hagen. They sought orders that:

the 1st and 2nd defendants refrain from getting any more money from Telikom and from holding themselves out as representatives of the landowner clans; 

Telikom release forthwith the sum of K23,000.00 to the plaintiffs.

No defence
None of the three defendants filed a notice of intention to defend or a defence. The plaintiffs obtained the orders that they sought. 

Orders 
On 28 July 2003 Hinchliffe J granted the first set of orders. His Honour ordered:

The 1st and 2nd defendants, their servants and agents refrain from getting monies from the 3rd defendant.

The 1st and 2nd defendants refrain from holding themselves out as the representatives of the Mokoi and Eki clans including the other clans. …

Those orders were entered on 31 July 2003.

On 16 January 2004 his Honour ordered:

Judgment be entered in the sum of K23,000.00 for John Kewa and 11 others.

That any future payment over Mt Ialibu repeater station be made to John Kewa and 11 others.

Interest be awarded at 8% in the sum of K1,204.80 on the judgment sum.

1st and 2nd defendants shall pay the plaintiffs' costs.

Those orders were entered on 20 January 2004.

Telikom's response Notice of motion.

Telikom, the 3rd defendant, is aggrieved by those orders. On 24 May 2004 it filed a notice of motion, seeking the following orders:

The proceedings be dismissed on the following basis:

(a)	that the plaintiff has no cause of action against the 3rd defendant;

(b)	that the plaintiff has no locus standi to issue these proceedings;

(c)	that the Honourable court lacks jurisdiction to preside on the matter.

Alternatively the ex parte order of 16 January 2004 be set aside.

The proceedings be set down for hearing at a date agreed by the parties.

Costs of this application be paid by the 1st defendant.

Such other orders the Court deems proper.

The correct position, according to Telikom
In support of Telikom's motion is an affidavit sworn by Avosa Mora. He is the Manager of the Lands and Survey Branch, within Telikom's Core Network Department. His responsibilities include land acquisition, settling land compensation demands, dealing with landownership issues and maintaining relationships with landowners particularly in relation to Telikom's repeater stations throughout the country.

Mr Mora states that the issue of ownership of the Mt Ialibu repeater station land was settled by a decision of the Ialibu Local Land Court in 1993. That Court ruled that the Ekai and Mokoi clans were the landowners. Telikom was approached by the 1st and 2nd defendants, who said they were representatives of those clans. In 1997 Telikom paid them K45,000.00 as occupation fees for the period from 1970 (when Telikom first occupied the site) to 1997. Other smaller amounts were paid for security and maintenance. In 2002 K41,000.00 was paid for the period from 1997 to 2003.

Mr Mora states that the 2002 payment was made by mistake. In 2000, the Mt Ialibu repeater station was decommissioned because of constant thefts and vandalism. It was relocated to Ialibu township. "Therefore, we do not owe any money to the landowners, where we should in fact be suing the landowners to reimburse the money allocated for 2001, 2002 and 2003, " he states.

Mr Mora states that the plaintiffs' claim appears to be based on a 1997 decision of the National Land Titles Commission, which apparently decided that the plaintiffs were the legitimate landowners. But he says that the National Land Titles Commission had no jurisdiction to make that decision. If the plaintiffs were aggrieved by the 1993 decision of the Ialibu Local Land Court they should have filed a review in the National Court.

Mr Mora concluded that Telikom did not owe any money to any landowners. If they did, it was not owed to the plaintiffs, as they are not the landowners of Mt Ialibu as per the Ialibu Local Land Court decision. 

Submissions 
Mr Mapiso, for Telikom, argued that Telikom had acted in good faith. Telikom no longer owes any money to any landowners concerning Mt Ialibu. They certainly owe no money to the plaintiffs. The plaintiffs have no cause of action. So the proceedings should be dismissed. In the alternative, the Court should at least set aside the orders of 16 January 2004 as they were made ex parte (in the absence of parties). 

Mr Aipe, for the plaintiffs, submitted that Telikom's application is misconceived. Hinchliffe J's orders were entered a long time ago. Telikom has not filed a notice of intention to defend or a defence. They have delayed making the application and they have disregarded the Court's orders. To argue that the National Court has no jurisdiction is illogical and contrary to Section 166(1) of the Constitution, which states that the National Court is a court of unlimited jurisdiction.

The issues
Telikom's application raises two issues:

Whether the plaintiffs' case should be dismissed on the grounds that the plaintiffs have no cause of action and no locus standi (ie no standing to bring the case) and that the National Court has no jurisdiction.

Whether the order of 16 January 2004 should be set aside on the ground that it was granted ex parte.

Before addressing those issues it is necessary to address a matter alluded to by Mr Aipe, for the plaintiffs: 

Whether the applications can be entertained in view of Telikom's failure to file a notice of intention to defend.

SHOULD THE APPLICATIONS BE ENTERTAINED?

None of the defendants in these proceedings filed a notice of intention to defend. Order 7, Rule 2 of the National Court Rules is therefore relevant. It states:

Subject to these Rules, a person shall not, except by leave of the Court, take any step in any proceedings unless, before taking the step, he has filed originating process in the proceedings or has given a notice of intention to defend in the proceedings.

The 3rd defendant, Telikom, should have sought and obtained leave of the Court before pursuing its applications. It did not do so. Leave of the Court is not granted. Therefore it cannot properly pursue its applications. For this reason alone neither application can be entertained. However, as the applications raise other aspects of practice and procedure I will address them on the assumption that leave is granted.

SHOULD THE PLAINTIFFS' CASE BE DISMISSED?
In determining this issue it is important to appreciate that the Court has already, by virtue of entry of the orders of 28 July 2003 and 16 January 2004, decided the substantive proceedings in favour of the plaintiffs. The plaintiffs' case cannot be dismissed unless and until those orders are set aside. The 3rd defendant, Telikom, considers that it has a good defence to the plaintiffs' claim and that the claim is without substance. However, it must approach the Court in the correct way if it wants its submissions to be entertained. The Court cannot determine an application aimed at dismissing a plaintiffs' case, after the Court has already entered judgment in the plaintiffs' favour, without first setting aside its judgment. 

So Telikom's first application is misconceived. Even if it were entertained, it would not succeed, as none of the three grounds advanced in the notice of motion have substance. Firstly, the plaintiffs' do not clearly lack a cause of action. Secondly, the question of the plaintiffs' locus standi is not capable of summary determination. Thirdly the argument that the National Court lacks jurisdiction is, for the reasons advanced by Mr Aipe for the plaintiffs, counter-constitutional and devoid of merit.

SHOULD THE ORDER OF 16 JANUARY 2004 BE SET ASIDE?

Final judgment

I reiterate that Hinchliffe J's order of 16 January 2004 was the final judgment on the plaintiffs' case. It was not an interlocutory order. There was nothing further to be decided. His Honour had already ordered on 28 July 2003 that the 1st and 2nd defendants refrain from getting any more money from Telikom and from holding themselves out as representatives of the Mokoi and Eki clans. On 16 January 2004 his Honour ordered that judgment be entered in the sum of K23,000.00 plus interest and that any future payments over the Mt Ialibu repeater station be made to the plaintiffs. That was it. The plaintiffs obtained judgment. They won the case.

Redress

The only redress available to the defendants, including Telikom, was to appeal to the Supreme Court within 40 days (which has not been done) or to ask the National Court to set aside its judgment. Telikom has chosen the second option. The 1st and 2nd defendants have apparently decided to accept and comply with the Court's judgment.

National Court Rules 

The National Court has a limited power to set aside its own judgments.

Order 12, Rule 8 of the National Court Rules states:

(1)	The Court may, on terms, set aside or vary a direction for entry of judgement where notice of motion for the setting aside or variation is filed before entry of the judgement.

(2)	The Court may, on terms, set aside or vary a judgement—

(a)	where the judgement has been entered pursuant to Order 12 Division 3 (default judgement); or

(b)	where the judgement has been entered pursuant to a direction given in the absence of a party, whether or not the absent party had notice of trial or of any motion for the direction; or

(c)	when the judgement has been entered in proceedings for possession of land pursuant to a direction given in the absence of a person and the Court decides to make an order that the person be added as a defendant.

(3)	The Court may, on terms, set aside or vary an order—

(a)	where the order has been made in the absence of a party, whether or not the absent party is in default of giving a notice of intention to defend or otherwise in default, and whether or not the absent party had notice of motion for the order; or

(b)	where notice of motion for the setting aside or variation is filed before entry of the order.

(4)	In addition to its powers under Sub-rules (1), (2) and (3), the Court may, on terms, set aside or vary any order (whether or not part of a judgement) except so far as the order determines any claim for relief or determines any question (whether of fact or law or both) arising on any claim for relief and excepting an order for dismissal of proceedings or for dismissal of proceedings so far as concerns the whole or any part of any claim for relief.

(5)	This Rule does not affect any other power of the Court to set aside or vary a judgement or order.

Order 12, Rule 8(2)(b)

The only part of Order 12, Rule 8 that is relevant to the present case is Rule 8(2)(b). Rule 8(1) is about variation of judgments before they are entered, not afterwards. Rule 8(2)(a) refers to the Court's power to set aside default judgments entered pursuant to Division 3 of Order 12. Division 3 only applies to proceedings commenced by writ of summons, not to proceedings – such as the present case – commenced by originating summons. Rule 8(2)(c) is to do with proceedings for possession of land. The present case relates to land, but not its possession. Rule 8(3) is about setting aside or varying orders, as distinct from judgments. In the present case what is at issue is a judgment that finally determined the plaintiffs' cause of action – not an order. Rule 8(4) is for similar reasons not applicable to the present case.

Rule 8(2)(b) is relevant because Hinchliffe J on 16 January 2004 directed the entry of judgment for the plaintiffs in the absence of the defendants. In his submission, Mr Aipe asserted that Telikom was represented on that day by Mr P Kak of Dowa Lawyers. But the Court's records do not disclose that. The only appearance recorded is that of Mr Aipe. 

Relevant considerations

The leading case on Order 12, Rule 8(2)(b) is Christopher Smith v Ruma Constructions Ltd (2002) SC695 (Supreme Court, Kapi DCJ, Los J, Kandakasi J). The Court followed its decision in MVIT v Joseph Bure (1999) SC613 (Supreme Court, Kapi DCJ, Jalina J, Kirriwom J). It held that, when deciding whether to set aside a judgment made in the absence of one of the parties, the considerations to take into account are the same as those applying to an application to set aside a default judgment.

Kapi DCJ stated at pages 6-7:

It is evident from this provision that the discretion to set aside a judgment under O 12 r 8 is the same whether a party is seeking to set aside a judgment under r 2 (a) (default judgment), (b) (judgment pursuant to a direction in absence of a party (c) (judgment for possession of land) or to set aside an order under r 3 (a) (any order made in absence of a party). The words "The Court may, on terms, set aside or vary a judgment" are applicable to applications to set aside all categories of judgments and orders set out above.

The discretion to set aside default judgment is also provided for under Order 12 r 35. The discretion to set aside under this provision is couched in identical terms to O 12 r 8 (2) and (3). It follows from this that the principles governing the exercise of discretion would be the same. 

These principles are now well settled in Green & Co v Green [1976] PNGLR 73; PNG v Baker [1977] PNGLR 386; George Page Pty Ltd v Balakau [1982] PNGLR 140. The onus is on the applicant to satisfy the Court:

(1)	Why the judgment was allowed to be entered in absence of the applicant.

(2)	If there is a delay in making the application to set aside, a reasonable explanation as to the delay.

(3)	That there is a defence on the merits.

Kandakasi J stated at pages 11-12:

The law on an application to set aside an ex parte order is clear. Order 12, r. 8 (3) grants the National Court power to set aside an order made in the absence of one of the parties. This Court in Motor Vehicles Insurance (PNG) Trust v. Joseph Bure (1999) SC613, said the principles governing the application of a set aside of a default judgement applies in the context of an application for a set aside of an ex parte judgement in an originating summons. The judgement did not consider O 12 r 8 but as the Deputy Chief Justice reasons in his judgement, by reason of placing default judgements and ex parte judgements or orders in the same rule, the same principles apply. Even if that were not the case, I am still of the view that by virtue of s. 155 (4) of the Constitution, I would adopt those principles and apply them. The reason for that is simple. Before a judgement or order of a Court obtained in default or in the absence of the other party could be set aside, the Court must be satisfied that:

1.	There is a reasonable explanation for allowing judgement to go in default or ex parte;

2.	The application is made promptly or if there is a delay there is a reasonable explanation for it; and

3.	That there is a defence or there is valid argument affecting the merits of the case.

In my view, these are the principles that govern and should guide a Court hearing an application to set aside an ex parte judgement or order. 

Application of considerations
I now apply the three considerations identified in the Ruma Constructions case to the present case.

First Telikom has not provided a reasonable explanation why the judgment of 16 January 2004 was allowed to be entered ex parte. They have not suggested that they were unaware of the plaintiffs' motion or when it would be heard. They have not explained why they were not represented. So the first consideration is not satisfied.

Secondly the application to set aside the judgment of 16 January 2004 was not made promptly. The judgment was entered on 20 January 2004. I infer from the affidavit of Mr Mora that Telikom knew about the judgment on 19 January 2004. Telikom has not suggested that the judgment was not duly served soon after it was entered. The application to set it aside was filed on 24 May 2004. That was four months after the judgment was entered. Given the nature of the case and the tension likely to be caused by Telikom being seen to be disobeying a judgment in favour of a group of landowners, it was incumbent on Telikom to act promptly. After the notice of motion was filed, it took a further five months for the motion to be heard. I do not hold Telikom responsible for that delay. It is only the period between service of the judgment and filing of the notice of motion that is relevant. Four months was, on the face of it, an unreasonable delay. It was incumbent on Telikom to provide a reasonable explanation. They have not discharged that onus. So the second consideration is not satisfied.

As to the third consideration it seems that Telikom did have a defence to the plaintiffs' claim. The matters revealed by Mr Mora's affidavit seem to raise valid arguments affecting the merits of the case. So the third consideration is satisfied.

However, all three considerations must be satisfied by a defendant. As only one is satisfied, the application to set aside the judgment of 16 January must fail.

Conclusion
The orders sought by Telikom's notice of motion filed on 24 May 2004 will be refused. First, no notice of intention to defend was filed. Therefore the applications cannot be entertained. If the applications were entertained, they would be refused. The application to dismiss the proceedings is misconceived. Such an application can only properly be made after the judgment of 16 January 2004 is set aside. However, the judgment of 16 January 2004 cannot be set aside as Telikom satisfied only one of three necessary considerations.

Order
The Court will therefore direct entry of the following order:

1.	The 3rd defendant's application, by its notice of motion filed on 24 May 2004, to dismiss the proceedings brought by the plaintiff, is refused.

2.	The 3rd defendant's application, by its notice of motion filed on 24 May 2004, to set aside the ex parte order of 16 January 2004, is refused.

3.	The 3rd defendant's application, by its notice of motion filed on 24 May 2004, to set the proceedings down for hearing, is refused.

4.	The National Court's order made on 16 January and entered on 20 January 2004 remains in force. For the avoidance of doubt it orders that: 

(a) judgment is entered against the 3rd defendant in the sum of K23,000.00 in favour of the plaintiffs; and 

(b) any future payment made by the 3rd defendant over the Mt Ialibu repeater station must be made to the plaintiffs; and 

(c) the 3rd defendant must pay interest of K1,204.80 to the plaintiffs; and 

(d) the 1st and 2nd defendants must pay the plaintiffs' costs pertaining to that judgment.

5.	The time within which the 3rd defendant is required to pay the money to the plaintiffs pursuant to the order of 16 January 2004 is specified, pursuant to Order 12, Rule 4(1) of the National Court Rules, to be 28 days after the date of service of this order on the 3rd defendant.

6.	The 3rd defendant shall pay the plaintiff's costs of and incidental to the proceedings resulting in this order, to be taxed if not agreed. 

7.	The time for entry of this order is abridged to the date of settlement by the Registrar. 

Lawyers for the plaintiffs: Public Solicitor.
Lawyers for the third defendant: Telikom PNG Ltd – Corporate Legal Division.