N2781
PAPUA NEW GUINEA

[In the National Court of Justice]

OS NO. 394 OF 2004

BETWEEN:

NUKUMAL PLANTATION LIMITED
Plaintiff

AND:

TUKAKE LIMITED
First Defendant

AND:

PEPI S KIMAS AS SECRETARY FOR LANDS
AND PHYSICAL PLANNING
Second Defendant

AND:

SIR MICHAEL SOMARE AS THE MINISTER FOR LANDS
AND PHYSICAL PLANNING
Third Defendant

AND:

THE INDEPENDENT STATE OF PAPUA NEW GUINEA
Fourth Defendant

WAIGANI: GABI, AJ
2004: 15 December
2005: 4 February

PRACTICE & PROCEDURE – Self-executing or conditional order – No automatic operation – Further judicial function required to determine whether conditions satisfied before final order – An order made pursuant to a self-executing order in the absence of the parties is irregular and may be set aside.

Cases Cited:
FAI General Insurance Co Ltd v Southern Cross Exploration [1988] 16 CLR 268
Commodity Development Pty Ltd v Peter Karai [1994] PNGLR 463
Juan Jeffery v Siapu Yapo (1999) N1843
Hon Andrew Baing & The Independent State of Papua New Guinea v PNG National Stevedore Pty Limited & Bank of South Pacific Limited (2000) SC627
Henry ToRobert v Mary ToRobert (2004) N2744

Counsel:
M Titus, for the Plaintiff
N Kila, for the First Defendant
D Lambu, for the Second, Third & Fourth Defendants 

DECISION

4 February 2005

GABI, AJ: This is an application to set aside an order for dismissal of proceedings made pursuant to a conditional or self-executing order.

In October 2004, the first defendant applied to the Court to dismiss the proceedings or alternatively for the matter to be set down for trial. On 9 November 2004, a conditional or self-executing order was made (hereinafter "Order of 9 November"). The terms of the order were:

"1.	The matter is adjourned to 13 December 2004 at 1.30 pm for hearing.

2.	The Plaintiff is directed to proceed with the trial on that day.

3.	If the Plaintiff fails to appear on the hearing of this matter then the matter will stand dismissed.

4.	Costs of the application be paid by the Plaintiff.

5.	The time of entry of these orders be abridged to the time of settlement by the Registrar, which shall take place forthwith."

On 13 December 2004, at 1.35 pm when the Court sat to hear the case, there was no appearance by both parties. Consequently, the Court dismissed the proceedings and awarded costs against the plaintiff (hereinafter "Order of 13 December").

On the afternoon of 13 December 2004, at about 3 pm, the plaintiff filed this Motion seeking the following orders:

"1.	The Orders of the National Court made today be set aside.

2.	The proceedings are reinstated and placed on the next call-over for a new hearing date to be given to it.

3.	All the defendants, by themselves, their agents or servants are reinstated (sic) from exercising any rights pertaining to the grant of lease over Portion 46, Milinch, Kokopo, Fourmil, Rabaul until this application seeking to set aside the orders of the National Court made today are fully and finally determined".

The plaintiff filed two (2) affidavits in support of the application. They were the affidavit of Michael Titus sworn and filed on 13 December 2004 and the affidavit of Tanilo Wambor sworn and filed on 13 December 2004. Mr Titus is the Counsel for the plaintiff and Mr Wambor is the Chairman of the Board of Directors for the plaintiff. In his affidavit, Mr Wambor verifies the matters set out in the affidavit of Michael Titus. I set out the relevant parts of the affidavit of Michael Titus.

"1.	I am a Lawyer employed by Mirupasi Lawyers who are Lawyers for the plaintiff and I have the carriage of this matter on behalf of the plaintiff. I am thus aware of the matters set out in this my Affidavit.

2.	I arrived at the Court House at 1.25 pm and proceeded to the lobby to consult the Court diary. Before I reached the Court diary, Mr Kila, Counsel for and on behalf of the first defendant summoned me to the lobby at Court Room 2 and 3 and advised me that the matter had come on in the morning and he was making enquiries to ascertain what had happened to the matter.

3.	I then indicated to Mr Kila to take the appropriate steps and to advise me accordingly. I observed him instruct Court Officer Vali to make enquiries. Court Officer Vali returned after 5 minutes and advised us that the matter was in Court Room No. 6. The time was now about 1.35 pm, and we then rushed to Court Room No. 6, that is myself, Tanilo Wabor, John Kauli and Gabriel Essorm. These witnesses traveled from Rabaul on 8th December 2004, and over the 4 days have prepared extensively for trial".

The transcript of the proceeding on 13 December 2004 shows that there was no appearance by the parties. In dismissing the proceedings, the Court said:

"There is no appearance by parties this afternoon pursuant to the orders made by His Honour on 9 November. This is an originating summons seeking to review the decision of the then Minister for Lands and the Secretary for Lands. It is a judicial review matter and the provisions of order 16 of the National Court Rules apply. As I have said, there are (sic) no appearances (sic) by the plaintiff and in the absence of any explanation or any applications such as an application for adjournment and so forth, I must therefore enforce the orders made by His Honour on 9 November as there has been no appearance by the plaintiff to prosecute the matter.

I order that the matter be dismissed. Costs must certainly therefore follow the even."

There was no hearing before the Order of 13 December was made. The order was made in the absence of the parties.

Counsel for the plaintiff, Mr Titus, submitted that the Court has power under O.12 r.8(3) to set aside the Order of 13 December and reinstate the proceedings. He referred me to the cases of Commodity Development Pty Ltd v Peter Karai [1994] PNGLR 463 and Juan Jeffery v Siapu Yapo (1999) N1843. These cases set out the principles for setting aside ex parte orders. I find that these cases are of limited relevance.

Counsel for the first defendant, Mr Kila, submitted that O.12 r.8(4) provides exceptions and therefore an order for dismissal cannot be set aside. He further submitted that it is open to the plaintiff to institute fresh proceedings under O.12 r.7. However, any fresh proceedings commenced must be stayed until costs are paid.

Counsel for the second, third and fourth defendants, Mr Lambu, endorsed Mr Kila’s submissions. He submitted that as the proceedings have been dismissed, there is no action on foot or before the Court hence the application cannot be entertained. He further submitted that as the Order of 9 November is self-executing, it became effective on that date.

The issues before me are:

1.	Whether a conditional or self-executing order operates automatically?

2.	Were the requirements of the self-executing order met before the Order of 13 December was made?

3.	Whether an order made pursuant to a self-executing order may be set aside?

These issues are related and they are dealt with together.

The Law

The principles governing conditional or self-executing orders have been settled in our jurisdiction. A conditional or self-executing order does not operate automatically at the specified time. There must be a further judicial function to determine whether the conditions have been satisfied at the specified time before a final order is granted: Hon. Andrew Baing & The Independent State of Papua New Guinea v PNG National Stevedores Pty Limited & Bank of South Pacific (2000) SC627 and Henry ToRobert v Mary ToRobert (2004) N2744.

In Hon Andrew Baing & The Independent State of Papua New Guinea v PNG National Stevedores Pty Limited & Bank of South Pacific Limited (supra), the first respondent instituted proceedings against the appellants and the Harbours Board for damages. After the close of pleadings and during pre-trial proceedings, the respondent obtained orders for discovery of documents. The appellants did not comply with the orders for discovery. Consequently, the Court made a conditional consent order. The terms of the order were:

"1.	That the first and third defendants make file and deliver a List of Documents verified by Affidavit within forty-eight hours (48) of the making of this Order.

2.	That in default of compliance with this Order and on the filing of an Affidavit of non compliance the Defence be struck out and interlocutory judgement be entered for the plaintiff against the first and third defendants.

3.	That the first and third defendants pay the plaintiff’s cost of and incidental to this application, in any event".

The appellants failed to comply with the order. As a result, the respondents filed an affidavit for the appellants’ defence to be struck out and for entry of judgement with damages to be assessed. The Registrar accepted the affidavit, struck out the appellants’ defence, and entered judgement against them.

The appellants did nothing about the judgement against them until about sixteen (16) months later, when they made an application to set aside the order. The National Court refused the application and held that as the order was by consent of the parties, it lacked jurisdiction. That led to an appeal to the Supreme Court. In respect of conditional orders, the Supreme Court said at page 5:

"But what is equally clear is that said orders were conditional orders. We say they were conditional orders because the terms of it were conditional upon the happening of some event in the future. The event was that the appellants were to "make file and deliver a list of documents verified by affidavit within forty eight hours (48) of the making of this Order." This meant that if the appellants did not comply with the terms of the order, the respondent had to come back to the Court and an appropriate application to the Court. Thus, this required further judicial function to be exercised in determining that the condition had not been satisfied at the specified time".

The Supreme Court had regard to the decision of the High Court of Australia in FAI General Insurance Co. Ltd v Southern Cross Exploration [1998] 165 CLR 268. In that case, the High Court considered, among others, the meaning and the effect of conditional orders. Gaudron, J at 289 said:

"A conditional order, of its nature, necessitates the exercise of the further judicial function of determining that the condition was not satisfied at the specified time".

The Supreme Court held at page 6:

"In the present case as the orders of the 13 September 1996 were conditional orders, there was therefore a need for further judicial function to determine whether the condition had been satisfied or not at the specified time… … … …

Secondly, as we have said earlier, as the orders of the 13 September 1996 were conditional orders, the very nature of those orders necessitated the exercise of further judicial function of determining whether the conditions were satisfied or not at the specified time. This meant, in our view, that upon expiration of the specified time, the first respondent ought then to have applied by way of notice of motion to the Court under Order 9 r 25 (1)(b) NCR to have the appellants’ defence struck out and judgement entered. 

This would require the Court to exercise further judicial function to determine if the condition had been satisfied or not at the specified time.

Even though the orders of 13 September were by consent, nevertheless the orders were conditional orders requiring further judicial function to be performed. Therefore, it meant that the respondent had to come to the Court, for the Court to exercise further judicial function to determine whether the conditions had been satisfied or not at the specified time".

The question of the nature and effect of a conditional or self-executing order was again considered in Henry ToRobert v Mary ToRobert (supra). In that case, a conditional or self-executing order was made on 11th June 2003. A term of the order was that the applicant was to file and serve her answer and cross-petition on the respondent by or before 4 pm on 13th June 2003. If the applicant failed to do so, the relief sought in the petition by the respondent would be granted. On or about 13th June 2003, an order was obtained for failure by the applicant in complying with the self-executing order of 11th June 2003. His Honour Justice Kandakasi set aside the order on two (2) grounds. First, that the conditional order was made by the Registrar and not the Court. Secondly, there was no further exercise of judicial function to perfect the conditional order. His Honour reviewed the authorities on the subject and said at pp 11-12:

"It follows clearly that (sic) therefore that; there is no automatic coming into effect or issuance of the forewarned orders or judgement on the expiry of the set deadline. Given that, it appears clear to me that, it is a misnomer to describe the kind of orders under consideration as ‘self-executing’ or ‘conditional’ orders. They should instead be described as ‘condition imposing’ orders.

The authorities also make it very clear that, the further exercise of the judicial function requires the filing and serving of a notice of motion in accordance with the rules of the Court. This enables a hearing of both or all of the parties to the relevant action before arriving at the final decision on the satisfaction of the stipulated conditions and the consequence that should follow from a determination of that question. The authorities do not suggest, the party seeking benefit from a conditional order should proceed ex parte and informally in chambers. It follows therefore that, the notice of motion must be heard and disposed off in the normal way in open Court unless, the parties otherwise agree. This is necessary because it might end one’s claim or may mean judgement against one of the parties. Hence, before the Court comes to a decision on an issue that might ultimately end a party’s litigation or a defence, that party must be first heard".

I am in agreement with my brother Kandakasi, J that a conditional or self-executing order does not operate automatically on the expiry of the specified time. There must be a further hearing to determine whether or not the conditions have been met before a final order is made. A further hearing is therefore, a condition precedent to the granting of the final order. Such hearing cannot take place in the absence of the parties or an order cannot be made without the parties being heard. Where there is no further exercise of judicial function, an order obtained or granted is irregular in that the condition precedent had not been met and there is denial of natural justice.

The question then is whether the same Court has jurisdiction under O 12 r 8, to set aside the irregular judgement or order. Order 12 Rule 8 provides:

"(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 a notice of motion for the order; or

(b)	where notice of motion for setting aside or variation is file 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 accepting 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".

In my view, the factual situation in the present case is not covered under any of the specific situations enumerated in sub-rules (1) (2) (3) because those provisions apply to judgement entered and orders made ex parte or inter partes, and a draft minute of the judgement or order is authorized by the Court, to be filed by the party (ies) for settlement/entry by the Registrar. (See O.12, Div.2, (rr.10-23)).

Sub-rule (4) is ancillary power to sub-rules (1) (2) and (3). The two exceptions provided in sub-rule (4) relate to dismissal of proceedings on substantive merits of the case. Therefore, sub-rule (4) also does not apply to the facts of the present case.

In my view, sub-rule (5) specifically recognizes the existence of other provisions in the National Court Rules, which provide for setting aside judgements or orders. Order 1 r 9 provides the procedure for setting aside judgements or orders entered irregularly. Order 1 r 9 states: 

An application to set aside any proceeding for irregularity shall not be allowed unless it is made within a reasonable time, or if made after the party applying has taken any fresh step with knowledge of the irregularity."

An irregular judgement includes judgements entered or orders made without jurisdiction. As the Supreme Court said in the Hon Andrew Baing & Another v PNG National Stevedores Pty Ltd & Another (supra) at pages 6 and 9:

"First, it is now settled law that if a judgement is irregularly made or entered, then the defendant is entitled to have it set aside: Green & Co Pty Ltd [1976] PNGLR 73, Wong v Haus Bilas Corporation (PNG) Pty Ltd [1988-89] PNGLR 42…

Secondly, the Court had jurisdiction to set aside the judgement because it was irregular, as the Registrar had no jurisdiction to make the Orders under Order 9 r 25 (1) (b) of the National Court Rules. The jurisdiction to make orders under Order 9 r 25 remains with the Court…..

Finally, as the judgement was irregular, it ought to have been set aside as a matter of law. See Order 1 r 9 National Court Rule. See Green & Co Pty Ltd v Green (supra), Bank of South Pacific Ltd v Spencer [1983] PNGLR 239, Post and Telecommuniction Corporation v Takoa Pastoral Co Pty Ltd [1985] PNGLR 44."

In this case, there was no notice of motion filed by the defendants and served in accordance with the rules of Court. There was no further hearing to determine whether the conditions had been satisfied. The Order of 13 December was made in the absence of the parties. The Order of 13 December could not come into force or be granted without a further hearing. As there was no further exercise of judicial function and the fact that the Order of 13 December was made in the absence of the parties, the order was irregularly made. In the interest of justice, the order must be set aside.

For these reasons, I, therefore make the following orders:

1.	that the Order of 13th December 2004 is set aside pursuant to O 1 r 9 of the National Court Rules.

2.	The proceedings are reinstated and placed on the first call-over in 2005 for a new hearing date to be allocated.

3.	That the costs is in the cause.
____________________________________________________

Lawyer for the Plaintiff				 : Mirupasi Lawyers
Lawyer for the First Defendant			 : Kila Laweyrs
Lawyer for the Second, Third & Fourth Defendants : Solicitor-General