N2099

PAPUA NEW GUINEA

[IN THE NATIONAL COURT OF JUSTICE]

WS. 784 of 2000

BETWEEN:

RURAL DEVELOPMENT BANK LIMITED
Plaintiff

AND:

PARUA KURI
Defendant

Waigani:	KANDAKASI J
2001: 23 May & 13 June

PRACTICE & PROCEDURE – Defendant admitting claim in its defence – Application for summary judgement not proper – Instead application for judgment on admission appropriate

SUMMARY JUDGMENT – Application for summary judgment denied because of lack of affidavit setting out facts and belief that defence filed can not be sustained – But judgement order on the basis of the Defendants admission - Pleading reason of non payment of debt not falling within loan terms not a valid or proper defence – Order 12 Rule 38 & Order 9 Rule 30 of the National Court Rules.

Cases Cited:
Tsang vs. Credit Corporation (PNG) Ltd [1993] PNGLR 112
Curtain Bros (Qld) Pty Ltd vs. PNG [1993] PNGLR
Pastor Geyangoling Saki & Anor v. Kadir Contractors Ltd (25/02/99) SC599
Hornibrook NGI Pty Ltd - v – Lihir Management Company Pty Ltd and West Process Engineering Pty Ltd (Administrator Appointed) (18/6/98) N1735
Pacific helicopters Pty Ltd v. The Department of North Solomons and The State (24/7/98) N1815
Samson Kai & Ors vs. State (1992) N1077.
Pak Domoi Pty Limited v. Alfred Alan Daniel & Sigfred Daniel (WS 690 of 1994 unreported and unnumbered judgment of Salika J)
Dep International Private Ltd vs. Ambogo Sawmill [1987] PNGLR 117
Kappo No. 5 Pty Limited & Ors vs. Wong (1990) SC520
Provincial Government of North Solomons v. Pacific Srchitecture Pty Ltd [1992] PNGLR 145

Notice of Motion

This is an application on notice by the plaintiff for summary judgement and in the alternative judgement on admission respectively under Order 12 Rule 38 and Order 9 Rule 30 for a debt claim. The Defendant admits in his defence the Plaintiff’s claim and pleads mismanagement as cause of the debt.

Held:

1.	The requirements under Order 12 Rule 38 have not been met in that no affidavit setting out the facts and expressing a belief that the Defendants defence can not be sustained has been filed and served by reason of which summary judgment is declined. 

2.	Claims of mismanagement is not a valid defence to a claim for recovery of monies lent out under a loan agreement which was not made conditional on good management 

3.	An application for judgement on admission under Order 9 Rule 30 is appropriate and not an application for summary judgement when there is admission on the pleadings.

4.	The defence of the Defendant is struck out with judgement in the sum of K124, 728.96 against the Defendant with costs. 

Counsel:
Mr. A. Manase for the Plaintiff
No Appearance for the Defendant

13th June 2001

KANDAKASI, J: Under a loan agreement, the plaintiff lent the Defendant K100,000.00 to improve and equip a coffee plantation. The plaintiff claims that the Defendant has defaulted in a repayment of the loan. He has fallen into arrears and a sum of K124, 728.96, is now due and owing which the plaintiff is seeking to recover from the Defendant. The Defendant admits the Plaintiffs claim and pleads that he could not repay the loan as agreed because of mismanagement by his agent Ou Limited, which has since been deregistered. On this basis, the plaintiff is applying for summary judgement and or in the alternative judgement on admission against the Defendant. The Defendant failed to appear and oppose the application.

Issue

The issue for me to determine is whether there is basis to order judgement under Order 12 Rule 38 or alternatively under Order 9 Rule 30 of the National Court Rules (NCRs). 

Facts

The undisputed facts are these. The parties entered into a written loan agreement on the 20th of May 1986 in which the Plaintiff agreed to lend to the Defendant K100, 000.00 to improve and equip a coffee plantation called Kitip-kitip near Mt. Hagen in the Western Highlands Province. The Defendant in return, agreed to repay the loan in instalments. 

On the 5th of February 1986 and 16th of May 1990, the repayment terms were varied by agreement of the parties. The Defendant made only one payment of K3, 500.00. There were no further variations agreed to by the parties. The principle due and owing together with interest and costs accumulated to a total of K124, 728.96. On the 19th of January 2000, the Plaintiff demanded the Defendant to pay up the debt. The Defendant has either neglected or refused to meet that demand.

On 5th of July 2000, the Plaintiff issued these proceedings. With an order of the court, the Writ of Summons was served on the Defendant by an advertisement in both the National and Post Courier newspapers on the 23rd and 24th of August 2000. The Defendant then filed respectively, on the 5th of September and 30th of October 2000, his Notice of Intention to Defend and Defence through Parau Lawyers. As noted earlier, the Defendant in his defence admits the debt and pleads that, mismanagement by his agent, Ou Limited, which has since been de-registered resulted in his default in the loan repayments and the accumulation of the debt. In the light of that, the Plaintiff is applying for summary judgement under Order 12 Rule 38 or in the alternative judgement on admission under Order 9 Rule 30 of the NCRs.

There is no affidavit by a responsible person deposing to the relevant facts and a confirmation of a belief that there is no defence on the merits or that the defence that has been filed can not be sustained.

The Law

The provisions of Order 12 Rule 38 of the NCRs provide:

"(1) Where, on application by the Plaintiff in relation to any claim for relief or any part of any claim for relief of the Plaintiff –

(a)	there is evidence of the facts on which the claim or part is based; and

(b)	there is evidence given by the Plaintiff or by some responsible person that, in the belief of the person giving the evidence, the Defendant has no defence to the claim or part, or no defence except as to the amount of any damages claimed,

the Court may, by Order, direct the entry of such judgement for the Plaintiff on that claim or part as the nature of the case requires."

While the provisions of Order 9 Rule 30 of NCRs provide that:

"Judgement on Admission

(1)	Where admissions are made by a party, whether by his pleading or otherwise, the Court, may on the application of any other party, direct the entry of any judgement or make any order to which the applicant is entitled on the admissions."

The law on summary judgement is settled. In the case of Tsang vs. Credit Corporation (PNG) Ltd [1993] PNGLR 112 at page 117, the Supreme Court held that two elements must be met before summary judgement can be entered. These are: 

1.	There must be evidence of the facts proving the essential elements of the claim; and

2.	That the Plaintiff or some responsible persons give evidence that in his belief the Defendant’s Defence can not be sustained.

In that case, the first element was not in issue but there was issue on the second. On that issue the Supreme Court said at pages 117-118:

"In this case, there is no issue in relation to the first element. As to the second element, the Plaintiff must show in absence of any defence or evidence from the Defendant, that in his belief the Defendant has no defence. If a Defence is filed, or evidence is given by the Defendant as in this case, the Plaintiff must show that upon the facts, and/or the law, the Defendant has no defence. The Plaintiff will not be entitled to summary judgement, if there is a serious conflict on questions of fact or law. Whether a case should go to trial on these issues will be determined on the facts of each case. However, the authorities show that the summary jurisdiction should only be invoked in a clear case. see the Chief Collector of Taxes vs. T.A. Field Pty Ltd [1995] PNGLR 144."

This principle has been adopted and applied in many subsequent cases by both the Supreme and National Courts. For examples of these see Curtain Bros (Qld) Pty Ltd vs. PNG [1993] PNGLR 144; Pastor Geyangoling Saki & Anor v. Kadir Contractors Ltd (25/02/99) SC599and Hornibrook NGI Pty Ltd - v – Lihir Management Company Pty Ltd and West Process Engineering Pty Ltd (Administrator Appointed) (18/6/98) N1735.

It is clear from the above line of authorities that, if a defendant either expressly or impliedly by conduct admits a claim against him, than judgement should be signed against him. In Pacific helicopters Pty Ltd v. The Department of North Solomons and The State (24/7/98) N1815, summary judgement was entered against the Defendants on the basis of an admission of the debt in communication between the parties and their lawyers.

However the procedure under Order 9 Rule 30 of the NCRs is separate. That is the procedure to use where there is an admission of the facts or the matters plead. Application could be made under that procedure to enter judgement. Such an application was made under this procedure in Samson Kai & Ors vs. State (1992) N1079 on a deemed admission for failure to admit facts and the application was refused..

In Pak Domoi Pty Limited v. Alfred Alan Daniel & Sigfred Daniel (WS 690 of 1994 unreported and unnumbered judgment of Salika J) the court ordered judgement against the Defendants for their failure to traverse each of the matters pleaded against them in the statement of claim. That was pursuant to Order 8 Rule 21 and Order 9 Rule 30 of the NCRs.

In an earlier case, Dep International Private Ltd vs. Ambogo Sawmill [1987] PNGLR 117, the National Court held, inter alia that 

"… a Plaintiff is entitled to judgement under Order 12 Rule 38 where admissions sufficient to support the claim are made, either formally or informally, provided they are sufficiently strong and unambiguous to be acted upon."

In approving that judgement, the Supreme Court in Kappo No. 5 Pty Limited & Ors vs. Wong (1990) SC 520, the Court stated:

"There is support for the proposition that where a defendant admits the facts this may form the basis of an application for summary"

Present Case

The Defendant in the present case has filed and served a formal Defence in which he admits the debt claimed by the Plaintiff. At the same time he pleads that, because of mismanagement of the plantation (for which the loan was given), by his agent, he has defaulted. He neither pleads nor is there any evidence of the repayment of the loan being made subject to or conditional on there being no mismanagement. I do not believe that the Plaintiff would have entered into the loan agreement if its repayment was made conditional on a proper management of the plantation. This is because, it would have made no sense and certainly failed to provide any security for the loan because, the Defendant could escape repaying the loan by deliberately failing to provide a good management for the plantation. Thus, in my view, this is not a valid or any defence to the Plaintiff’s claim. 

The Plaintiff’s application for summary judgement is not opposed perhaps because of the position the Defendant has taken. In any case, he has formerly admitted the claim against him. His claim of mismanagement of the plantation by his agent is no defence to the Plaintiff’s claim. If anything, it is an admission of a failure on his part to allow for a proper management of the plantation to ensure his loan repayment requirements being met. He may have a cause of action as against his agent but that has nothing to do with the Plaintiff’s claim against him.

Nevertheless, I am not satisfied that the requirements under Order 12 Rule 38 has been met. This is simply because, there is no affidavit from a responsible officer of the Plaintiff company setting out the relevant facts and confirming a belief that the defence filed and served on behalf of the Defendant, can not be sustained. All I have is an affidavit from the Plaintiff’s lawyers. That affidavit does not depose to any facts but makes submissions based on the Defendant’s admission. It is settled law that, affidavits by lawyers based on instructions of their clients are nothing more than evidence of instructions and not facts: see the Supreme Court decision in Provincial Government of North Solomons v. Pacific Srchitecture Pty Ltd [1992] PNGLR 145 at pages 148-149. It was thus improper for the Plaintiff to apply for summary judgement without first meeting the requirements of the relevant rules. I am therefore, not prepared to order judgement under Order 12 Rule 38 of the NCRs.

I am however, prepared to order judgement against the Defendant on the basis of his admission under Order 9 Rule 30. This is because it is open to the Plaintiff to apply for judgement under this Rule. Indeed, the plaintiff applies for judgement on the Defendant’s admission under this Rule in the alternative to the application under Order 12 Rule 38. As I have already indicated, there is admission of the Plaintiff’s claim by the Defendant in its Defence filed on the 30th of October 2000. The claim of mismanagement raised as an excuse is not a valid defence. I therefore, order a strike out of the defence and order that judgement in the sum of K124, 728.96 be entered against the Defendant with costs and interest.
______________________________________________________________________
Lawyers for the Plaintiff:				Pato Lawyers
Lawyers for the Defendant:				Parau Lawyers