N1979

PAPUA NEW GUINEA

[In the National Court of Justice at Waigani]

OS 519 of 1996

BETWEEN:

LUKE TAI
Plaintiff

AND:

AUSTRALIA & NEW ZEALAND BANKING GROUP (PNG) LIMITED
Respondent

Waigani: Kapi DCJ.
10th & 17th July 2000

Practice and Procedure – Default Judgment – meaning of "..but he has not filed his defence" pursuant to O 12 r 25 (b) of the National Court Rules considered.

Counsel:
N. Kubak for the plaintiff
S. Nutley for the respondent

17th July 2000

Kapi DCJ.	The plaintiff commenced this cause of action by way of originating summons on 13th December 1996 seeking various orders in respect of an interest bearing deposit with the ANZ Bank. 

The proceeding was subsequently converted to proceed by way of pleadings under O 4 r 35 of the National Court Rules (Rules) by order of Court dated 7th July 1998. This order directed the plaintiff to file the statement of claim within 21 days of the order and he did so on 29th July 1998.

There appears to be a period of inaction in this matter until lawyers for the plaintiff filed notice of motion on 12th March 2000 for judgment on the ground that the respondent defaulted in failing to file a defence. When the lawyers filed the notice of motion, there was no defence filed in the court file. However, it now appears that a defence was subsequently filed on 20th March 2000.

The issue which has arisen for determination is, whether, the respondent has defaulted within the meaning of O 12 r 25 (b) of the Rules:

"A defendant shall be in default for the purposes of this Division-

(a)…
(b) where he is required to file a defence and the time for him to file defence has expired but he has not filed his defence;.."

Counsel for the plaintiff submits that the defence presently filed does not constitute a valid defence in that it was filed outside the prescribed time under the Rules and leave has not been obtained to file defence out of time and is therefore invalid. He submits that the respondent has defaulted and the plaintiff is entitled to judgment pursuant to O 12 r 31 of the Rules.

On the other hand, counsel for the respondent submits that as there is a defence filed, even though filed without leave, the respondent ceased to be in default pursuant to O 12 r 25 (b) of the Rules. He submits that there are three requirements under this provision:

(a)	a defendant is required to file a defence; and
(b)	the time for him to file defence has expired; but
(c)	a defendant has not filed his defence.

He submits that it is not sufficient that the respondent has failed to file defence within the time referred to in (b). He submits that the respondent would be in default if it did not file defence before the application is heard. He submits that there is a defence even though filed out of time.

Both counsel advised the Court that this issue has not been the subject of decision in this jurisdiction or in New South Wales after which our Rules are modelled. Counsel have not been able to refer to any decision from any other jurisdiction dealing with the same issue.

It is helpful to examine the position with regard to notice of intention to defend and defence under the Rules. 

Notice of Intention to Defend

In respect of an originating summons, a defendant is required to file notice no later than the date set down for the hearing of the originating summons (O 4 r 11 (a)) and in the case of other originating proceedings, a defendant is required to file notice within 30 days of service within the country (O 4 r 11 (b) (i)).

If a defendant fails to file notice within the prescribed period, he may do so at any time without leave of the Court (O7 r 6 (1)). However, if a defendant files notice outside the prescribed period, he may not file defence or do any other thing without the leave of the Court (O 7 r 6 (2)). A defence filed without leave in these circumstances would be invalid (Thomas Koral v. Alex Kavie & Petrus Alex (Unreported judgment of the National Court dated 11 June 1999, N1899).

Defence

The Rules regulating defence are applicable to writ of summons and not originating summons (O 8 r 1). Where a statement of claim is endorsed on a writ, the defendant is required to file defence before the expiry of 14 days after the date of expiry of the time limited to give notice of intention to defend (O 8 r 4 (a)).

Where a statement of claim is not endorsed on the writ, a defendant is required to file defence within 14 days from the date of service of the statement of claim (O 8 r 4 (b)). 

Where defence is not filed within the prescribed period, parties may by consent extend time without the leave of court (O 1 r 15 (3)). If there is no agreement between the parties, or the defendant fails to file within the agreed extended period, the court may order extension (O 1 r (15) (1).

In the present case, the proceeding was converted from originating summons and the matter was ordered to continue by way of pleadings. The statement of claim was filed within the time directed by the court order but no direction was given in respect of period of time in which to file defence. In the circumstances, the period of time would be regulated by O 8 r 4 (b) of the Rules; a defence must be filed before the expiration of 14 days from the service of statement of claim. In the present case, it is not disputed that the 14 days have expired and that the defence presently in the court file was filed without leave of court.

The critical words that call for interpretation appear at the end of O 12 r 25 (b): "…but he has not filed his defence". A literal reading of these words supports the proposition advanced by counsel for the respondent; that is to say, a defendant may file a defence without leave of court after the expiration of the prescribed period and cease to be in default for the purposes of an application for default judgment.

This interpretation would render meaningless the requirement of the Rules to file defence within a prescribed period and application for leave to extend time to file defence out of time. As I have pointed out before, O 8 r 4 (b) requires defence to be filed within 14 days of the date of service of statement of claim and O 1 r 15 requires extension of time in which to file defence where time to file defence has expired. 

Furthermore, the literal interpretation of the words would conflict with O 7 r 6 (2) in circumstances where the notice of intention to defend is filed outside the prescribed period, the defendant cannot file defence without the leave of court. This is a mandatory requirement (Thomas Koral v Alex Kavie and Petrus Alex (supra). To allow a defence filed without leave as a valid defence pursuant to O 12 r 25 (b) is in conflict with the requirement for leave under O 7 r 6 (2).

This conflict can be avoided if the critical words are interpreted to take into account the requirements in O 1 r 15, O 7 r 6 (2) and O 8 r 4 (b) of the Rules. It is well established principle of interpretation of statute that:

"While we are to collect what the legislature intended from what it has said, we must look, not at one phrase or one section only, but at the whole of the Act …."

See South Eastern Railway Co. v. The Railway Commissioners (1880) 5 Q.B.O 217 at 240. I adopted this principle in Minister for Lands v. Frame [1980] PNGLR 433 at 453. I also adopted the following principle at p 461:

"It is well settled principle of interpretation of statute that an Act should be interpreted as a whole so that, as far as possible, the clauses are in harmony with one another. See Maxwell on Interpretation of Statutes (12 ed.) ch 9 ‘Construction to avoid collision with other Provision’."

Taking these principles into account, I would interpret the critical words in context to mean a defence filed in accordance with the Rules. That is to say, a defendant who has allowed time to expire may file defence in accordance with O 1 r 15 (3), or in accordance with O 1 r 15(1) or in accordance with O 7 r 6 (2). Where a defendant files a defence in accordance with these Rules, he cannot be in default at the time of the hearing of application for default judgment. Therefore, the critical words in my opinion cannot mean a defence that is filed without first obtaining an extension of time or filed without leave of court. 

I would have thought that the respondent in this case would have applied for extension of time in which to file defence. I find that it had plenty of warning from the time notice of motion for default judgment was received to make an application for leave to file defence. In fact I note from the file that there is a notice of motion filed on 23rd May 2000 for leave to file defence and amended defence. For reasons only known to counsel for the respondent, this motion has not been pursued.

It follows from the reasons I have set out, the defence in the present case has not been filed in accordance with the Rules and therefore, the respondent is in default. I therefore direct that default judgment be entered for the plaintiff with damages to be assessed. The plaintiff will have the costs of this application.
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Lawyers for the Plaintiff		:	Kubak Lawyers
Lawyers for the Respondent		:	Gadens Lawyers