N1320

PAPUA NEW GUINEA
NATIONAL COURT OF JUSTICE

WS 40 OF 1995

BETWEEN:

PANSAT COMMUNICATION PTY LTD
Plaintiff

AND:

DAVID MAI
1st Defendant

AND:

SOUTH PACIFIC POST LIMITED TRADING AS POST-COURIER
2nd Defendant

AND:

PACIFIC STAR PTY LTD TRADING AS NATIONAL
3rd Defendant

Waigani : Sawong AJ
1995: 5 & 19 May

Practise and Procedure - Application to set aside judgment by default - Discretion - Matters going to discretion.

Practise and Procedure - Service - Personal Service - Writ of Summons - Purported compliance of Practise Direction - 

Cases Cited

The following cases are cited in the judgment:
Green & Co v Green [1976] PNGLR 73.
Papua New Guinea Government & Davis v Baker [1977] PNGLR 386.
George Page Pty Ltd v Malipu Bus Balakau [1982] PNGLR 140.
Map Makers Pty Ltd v Broken Hill Proprietor Company Limited [1987] PNGLR 78.
Ainsworth v Redd (1990) 19 NSWLR 78

NOTICE OF MOTION

This was an application upon a notice seeking to set aside a judgment in default of pleadings.

J G Sheppard, with T M Rei, for the plaintiff (respondent).
P Kuman, for the defendant (applicant).

DECISION

19 May 1995

SAWONG AJ: This is an application to set a judgment by default pursuant to Order 12 Rule 35 of the National Court Rules. Order 12 Rule 35 reads as follows:

"35. Setting aside judgment.
The Court may, on such terms as it thinks just, set aside or vary a judgment entered in pursuant of this Division."

BACKGROUND

On 27th January, 1995, the respondent filed a Writ of Summons. The writ was purported to be served on 10 February, 1995 on the applicant.

The Writ required the applicant to file his Notice of Intention to Defend within 30 days from the date of service and it required a further 14 days for him to file his defence. On the 21st March, 1995, the Solicitor General filed a Notice of Intention to Defend on behalf of the applicant. Unfortunately for the applicant, no defence was subsequently filed as required by Order 8 Rule 4 of the National Court Rules. The reason for this appear from the affidavit of the applicant.

Judgment by default was obtained by the respondent on 31st March, 1995 on the basis that the applicant had not filed his defence.

On 24th April, 1995, some 23 days after default judgment was obtained, the applicant’s lawyers filed the present application to have the judgment set aside. It is not clear as to whether the default judgment was ever served either on the plaintiff or on his lawyers.

Mr Kuman advances two grounds in support of his client’s application. The first argument is that the default judgment was irregularly obtained, because the Writ was not properly served on the applicant. He says that it was not properly served, as the Writ was given to Mr Mai, and after he read the Writ, he gave it back to the process server. The process server then took the Writ and left. He did not leave the Writ behind or at Mr Mai’s presence as required by the Rules, in particular Order 6 Rule 3(1) of the National Court Rules.

Mr Sheppard on the other had says that the Writ was served properly. He says that on the evidence of both Mr Mai and the process server, there is clear evidence, that the process server did serve the Writ on Mr Mai, that Mr Mai then took the Writ and read it, he then handed it back to the process server and told him to leave. The process server than took the Writ, left the residence of Mr Mai. He did not leave the Writ behind and leave. In these, circumstances Mr Sheppard says that the Writ was properly served and the default judgment was properly obtained.

Order 6 Rule 3 of the National Court Rules reads as follows:

"3. Personal Service: How effected. (9/3)

(1) 	Personal service of a document may be effected by leaving a copy of the document with the person to be served or, if he does not accept the copy, but putting the copy of the document in his presence and telling him the nature of the document.

(2)	 Personal service of a document on a corporation may be affected by serving a copy of the document in accordance with Sub-rule (1) on the mayor, chairman, or president of the corporation, or on the town clerk, clerk, secretary, treasurer or other similar officer of the corporation.

(3) 	Sub-rule (2) applies in addition to any provision for service on a corporation made by or under any Act."

In my view, sub-rule (2) and (3) are not relevant for the purposes of the present application as they deal with services on corporations and the like. The only relevant provision is sub-rule (1) which prescribes two methods of personal service. The first, is by leaving a copy of the document with the person to be served; and secondly, if the person does not accept the copy, then, by putting it down in his presence and telling him the nature of the document. I have been unable to find any local authority directly on this point. Both counsel have cited no authority to support their arguments on this particular point. Nevertheless, I have been able to find only one authority which deals directly with this rule. In Ainsworth v Redd (1990) 19 NSW L R 78 dealt directly with this point. Our present rule for personal service is in fact in the same terms as in Order 9 Rule 3 (1) of the Supreme Court Rules of the New South Wales.

The facts of that case are as follows:

In that case the respondent and another person were standing together. A lawyer, who was acting on behalf of the appellants, approached the respondent and addressed him as a "Mr Redd." The Respondent, and then the other person, turned and looked at the lawyer. The lawyer and the respondent were standing directly with each other. The lawyer then held out the appellant’s statement of claim towards the respondent at an arms length. The document was facing upwards with the top of the pages towards the lawyer so that it could have been read by the respondent had he wished to do so. At the same time the lawyer said to the respondent; "Mr Redd, I’m afraid these document are for you." The respondent appeared to look at the document as it was held out towards him.

However, the respondent did not himself reach out to take the documents which Mr Sloan was offering him. The other person who was with the respondent asked the lawyer, what the documents were, and he then took the documents from the lawyers outstretched hand. The lawyer then said, looking at the respondent, I am just the job soldier in this. They are for you, Mr Redd." The respondent and his colleague, then soon after left, through an electronically controlled sliding door, and as they were going through the doors Mr Redd said to his colleague; "we had better take a look at these." Once inside the building, the two men paused. Mr Pike was holding he document between them and both appeared to be looking at it.

The question in that case was whether the lawyers effectively served Mr Redd with the Statement of Claim. The Court of first instance, held that the service of the documents as described, did not amount to effective service. On appeal to the Court of Appeal of New South Wales, the Court upheld the appeal and held that the documents had been effectively served.

His Honor, Kirby ACJ said (at 85):

"I have come to the conclusion that, in the facts found in the present case by Hunt J, his Honour ought to have upheld as within the Rule the service of the statement of claim by Mr Sloan".

The relevant object is to ensure that the originating process in the form of a document will come to the notice of the person named as a party so that any later default in defending his or her position (for example, by entering an appearance and being represented before the Court) is fairly to be attributed to a decision of that person. The obligation of a personal service thereby removes the risk that the jurisdiction of the Court over the person names will be asserted, conclusions reached and orders made, without a proper initial opportunity being given to the person named to appear and defend this proceedings..."

Clarke, JA (with whom Sammuels AP agreed said this (at 89): 

There is a dichotomy in the rule between a case in which the person proposed to be served accepts the document and the case in which he does not do so. If the proposed recipient does not accept the document then the server who wishes to effect personal service is obliged to put the copy document down in his presence and describe its nature to him. If, however, the proposed recipient does not decline to accept the document then effective service is achieved by "leaving a copy of the document" with him.

Accordingly, when an issue is raised as to whether personal service has been effected in accordance with r 3 the first question which needs to be answered is whether or not the proposed recipient declined to accept the document. If he did then it is incumbent upon the person seeking to establish that service was effected to show that there had been compliance with the second mode of service described in r 3. If, on the other hand, it is not shown that the recipient declined or failed to accept the document, then it is necessary merely to leave the document with him. In this instance there is no obligation, either express or implied, imposed on the server to inform the proposed recipient of the nature of the document or to read it to him. Nor is there any obligation on the server to take any steps to bring to the notice of the recipient the nature of the document which he is endeavouring to serve. All that he has to do is to leave a copy of the document with the recipient. ...

Clearly a document can be left with a person who does not actually take the document into his physical possession. for instance, if the person to be served informed the server that he was too busy to look at the document and asked him to leave it on his desk and the server complied with this request the first limb of the Rule would, in my opinion, have been complied with. The server had "left" the document with the person to be served. The position would be the same if the person to be served asked the server to hand the document to his lawyer, or any other person who was with him at the time."

I would adopt and apply the above cited passages to the present case. I am of the view that the views expressed in the above passage accurately reflects the position regarding the issue of personal service of documents, under Order 6 Rule 3 of the National Court Rules.

In the present case, the evidence from both Mr Mai and the process server is that Mr Mai was given a copy of the Writ in person. He got it. He then read it and after reading it gave it back to the process server and then asking him to leave his premises. It is therefore, clear, that service of the Writ was effected on Mr Mai on the first part of Order 6 Rule 3 Sub rule 1 of the National Court Rules. In the present case, I am of the view that the second part of sub rule 1 does not come into play at all because that part only becomes relevant and is applicable in the event of the person to be served, is either declining or refusing to accept service of the document.

For the reasons that I have given, I reject Mr Kuman’s first submission.

The second submission is based on well established principles. It prays for the Court’s discretion to be exercised in favour of the applicant. The onus is on the applicant to establish why a default judgment regularly entered ought to be set aside. To do that the applicant must, by affidavit evidence advance reasonable explanation as to why judgment was allowed to be entered be default, an explanation as to why there is delay in bringing the application and material adverting to a defence on the merits of the application. See Green & Co Pty Ltd [1967] PNGLR 73, George Page Pty Ltd v Malipu Bus Balakau [1982] PNGLR 40, The Government of Papua New Guinea and Davis v Baker [1977] PNGLR 386 and Map Makers Pty Ltd v Broken Hill Proprietary Company Ltd [1987] PNGLR 78.

In this case the application was filed as soon as it was made known to the applicant that default judgment was entered against him. The respondent does not say whether it served a copy of the default judgment on the applicant or not. Mr Mai deposes in his affidavit of 14 April, 1995, that he received a letter from his lawyers on the 31st March, 1995 the same day that the respondent obtained a default judgment. So we are only concerned with why judgment was allowed to be entered by default and whether there is a defence on the merits.

Why was judgment allowed to be entered by default? No argument was raised by either counsel on this particular issue. However, Mr Mai in his affidavit, in paragraphs 3 to 8 and 10 sets out the circumstances under which the default judgment was entered.

The respondent says that a letter was forwarded to the defendant on 14 February, 1995, in compliance with Practice Direction 1/87.

That letter is dated 14 February, and is addressed to Mr Mai at his residential address. The affidavit does not say whether the letter was delivered to Mr Mai personally or how it was sent to Mr Mai. In any case the default judgment was obtained on 31 March, 1995. However the Solicitor General had by 21st March, 1995 filed a Notice of Intention to Defend. On the 31st March, the respondent, conducted a search at the Registry of the National Court and found that no defence had been filed and they then proceeded to and obtained a default judgment.

Be that as it may, that failure in my view, does not determine the matter in favour of the respondent. Lawyers for the respondent had notice of the Notice of Intention having been filed and were on notice that a defence would be filed. And so when the stipulated time was about to expire or had expired common courtesy required a caution or notice be given to the other side that default judgment was about to be entered against their client. I consider that the letter of 14 February was not given in the spirit and intent of Practice Direction 1/87. That letter, does not in my view comply with Practice Direction 1/87. It was not given shortly before the expiry of time stipulated nor was it given shortly after time stipulated had expired. It is not even clear whether Mr Mai was in fact given that letter at all.

Is there a defence on the merits shown by the affidavit? Mr Mai’s two affidavits raise more that denials. I consider that they show a prima facie defence.

I have carefully considered all the submissions put to me. I have come to the conclusion and for the reasons I have given, that in all the circumstances the applicant be given an opportunity to defend the claim on its merit.

I therefore set aside the default judgment entered on 31st March, 1995.

I order that the applicant pay the respondents costs, such cost are to be agreed and, if not, to be taxed.

My formal Orders are as follows:

1. 	That the default judgment entered on 31 March, 1995, be set aside.

2. 	That the applicant pay the respondents costs, and such costs are to be agreed, if not, to be taxed.

Lawyer for the Plaintiff (Respondent): T M Rei 
Lawyer for the Defendant (Applicant): Joe Wal