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Maison v Lameri [2005] PGNC 198; N2794 (11 March 2005)

N2794

PAPUA NEW GUINEA
(NATIONAL COURT OF JUSTICE)
WS 262 OF 2005

JACOB MAISON
Plaintiff

AND

ROSS ALAN LAMERI
Defendant

LAY J.

PORT MORESBY

2005:8th and 11th March

Counsel
Mr. R. Maguire for the Applicant Plaintiff
Ex parte

PRACTICE AND PROCEDURE – National Court Rules - O6 r10 – service on resident agent - Defendant resident out of the jurisdiction – considerations to grant leave to serve the agent.

Cases Cited

Neville v National Fire and Marine Insurance Company [1881] QLJ 23; Maurox v Sociedade Commerciale Abel Pereira de Fonesca SARL [1972] 1 WLR 962; Russell Wilks & Co Ltd v Peck & Co [1908] St Qld 134; Hemelryck v William Lyall Shipbuilding Co. Ltd [1921] 1 A.C. 698 (PC); Cromie v Moore [1936] 2 All ER 177 CA; Bowling v Cox [1926] AC 751 AC

_______________________

This is an application made pursuant to O6 r10 of the National Court Rules for an order for leave to serve the writ on the Defendant's Papua New Guinea resident agent and to send a confirmatory copy of the writ and order to the Defendant by post. The statement of claim endorsed to the writ claims Australian Dollars $1,183,522.58 for the sale of vanilla bean.

The Facts

The Applicant Plaintiff has filed affidavits deposing that he entered into a series of contracts for the sale of vanilla bean with one Daniel Balingi who represented to the Defendant that a company of which he is a director, Commodities Links Limited, is buying agent for the Defendant. The Defendant is a natural person resident in New South Wales, Australia. The first contract occurred in early April 2004 and on 6th April 2004 640.135 kilograms of bean was shipped. Another contract was made in the same manner about 20th April 2004. Shortly after the Plaintiff rang the Defendant in Australia and the Defendant confirmed to him that the bean had been received and that the quality was satisfactory.

There were 5 subsequent transactions all of which were conducted in a similar manner. All transactions were done through Balingi as a director of Commodities Links Limited. There were subsequent conversations with the Defendant in an attempt, unsuccessfully, to negotiate payment for the sales. The Defendant now refuses to return the Plaintiff's telephone calls and refers the Plaintiff to the Defendant's agent. The Plaintiff has not been able to get Mr Balingi or anyone else from Commodities Links Limited to return his telephone calls.

The Law

Order 6 Rule 10 is in the following terms:

10. Service on agent of principal out of Papua New Guinea.

(1) Where the Court is satisfied that—

(a) a contract has been entered into within Papua New Guinea with or through an agent who is either a natural person residing or carrying on business within Papua New Guinea or a corporation having a registered office or place of business within Papua New Guinea; and

(b) the principal for whom the agent was acting was at the time the contract was entered into and is at the time of the application neither such a natural person nor such a corporation; and

(c) at the time of the application either the agent's authority has not been determined or he is still in business relations with the principal,

the Court may authorize service of a writ of summons commencing an action relating to the contract to be effected on the agent instead of the principal.

(2) An order under this Rule authorizing service of a writ of summons on an agent shall limit a time for the notice of intention to defend of the defendant.

(3) An application under this Rule may be made ex parte supported by an affidavit stating the facts on which the application is founded.

(4) Where an order is made under this Rule authorizing service of a writ of summons on an agent, a copy of the order, the writ and the endorsements on it shall be sent by prepaid post to the defendant at his address out of Papua New Guinea

There are no reported cases on the provision within Papua New Guinea. The provision appears to have been taken from Order 10 rule 2 of the Rules of the Supreme Court in the United Kingdom as it identically worded apart from the reference to Papua New Guinea in our rule. There is a useful precedent for an affidavit to prove the elements of the rule in Chitty and Jacob's Queens Bench Forms[1].

Similar provisions can be found in the Northern Territory rule 6.12; Queensland rule 118; Tasmania rule 139; Victoria rule6.13; Western Australia Order 9 rule3. Counsel referred me to a number of cases[2], however each of those cases arose on an application for substituted service on an agent, or service out of the jurisdiction, but not under the equivalent rule to O6 r10. What those cases show is that common law courts were allowing substituted service on the agent of a principle not resident in the jurisdiction long before the introduction of the rule and before the turn of the 20th century.

The term "the Court is satisfied" used in O6 r10 is used throughout the Rules and it appears not to have been found necessary in reported cases to identify its meaning. The Concise Oxford Dictionary provides the following meanings for the word "satisfy" of which the word "satisfied" is the past tense:

1 tr. a meet the expectations or desires of; comply with (a demand). b be accepted by (a person, his taste) as adequate; be equal to (a preconception etc.).

2 tr. put an end to (an appetite or want) by supplying what was required.

3 tr. rid (a person) of an appetite or want in a similar way.

4 intr. give satisfaction; leave nothing to be desired.

5 tr. pay (a debt or creditor).

6 tr. adequately meet, fulfil, or comply with (conditions, obligations, etc.) (has satisfied all the legal conditions).

7 tr. (often foll. by of, that) provide with adequate information or proof, convince (satisfied the others that they were right; satisfy the court of their innocence).

8 tr. Math. (of a quantity) make (an equation) true.

9 tr. (in passive) a (foll. by with) contented or pleased with. b (foll. by to) demand no more than or consider it enough to do.

The 6th example, which I have highlighted, seems to me to provide the proper meaning of the term as it is used in O6 r10. The Application must adequately meet, fulfill or comply with the criteria set out in sub rule (1)(a) to (c).

The following quotation from the Law Times Journal, which appears in The Supreme Court Practice1991[3] Vol.1 and is also cited in Williams Supreme Court Practice (Victoria)[4]and Civil Procedure Victoria (Williams)[5] is of assistance:

The powers of serving an agent given by this rule is one that must be exercised with very great caution. It was not at all intended by the rule to do away with service out of the jurisdiction in ordinary cases. The power to make an order under the rule is discretionary, and except under exceptional circumstances it ought not to be exercised in cases where there is no difficulty in getting an order for and effecting service out of the jurisdiction in the ordinary way. An order should not be made under the rule merely because the defendant has contracted by or thorough an agent in this country.

The application for an order under the rule should in each case be supported by an affidavit going fully into the circumstances relating to the making of the contract and the difficulties that exist in effecting service out of the jurisdiction in the ordinary way. The mere statement that the defendant resides out of the jurisdiction and has made a contract through an agent within the jurisdiction is not sufficient.

"an important factor may be whether the agent in question is a general agent or what may be called a casual agent, eg:

"(1) A foreign firm may have regular agents here doing large business for them. It might be highly proper to allow service in such a case where, although the principals could be served, delay and trouble would be thereby occasioned.

"(2) A foreigner might make a purchase here through a broker on one of the markets, such as Mincing Lane or the Stock Exchange in quite an isolated transaction. If other means of service could be availed of, it would not be proper to order service on the broker.

The affidavits must in such case disclose facts sufficient to enable the judge to decide whether the case is a proper one for the exercise of the discretion. The order should not be made as a matter of course, but only where special circumstances are shown, justifying the application of the rule.

The time for appearance should in each case be fixed by the judge when making the order, and should depend on the circumstances, and chiefly upon the residence or place of business of the defendant. In the absence of any special order, the time would be the ordinary eight days, and run from the service on the agent, but as the agent would generally have to communicate with his principal, time should in ordinary cases, be allowed for that purpose"[6]
.
Although this Practice Note from the United Kingdom in1920 is helpful, I am not convinced that there should be any over emphasis of the observations in the first paragraph and the second sentence of the penultimate paragraph. I suspect these observations were made when the rule was first introduced and before there was a thorough appreciation of all of its requirements. I consider that the rule itself adequately covers all considerations and there is no justification for saying that exceptional circumstances must be shown before application is made under this rule, rather than the rules relating to leave to serve out of the jurisdiction. The circumstances which must be shown are those which meet the criteria in the rule and I do not consider that there is any need or justification for placing any further 'gloss' on the rule in terms of showing exceptional circumstances. The examples given in numbered paragraphs (1) and (2) of the Practice direction are fully covered by the requirement in O10 r6(1)(c) to establish that there is a continuing relationship, which would be difficult to do where there was a 'one off' relationship. I would treat the first paragraph and second sentence of the penultimate paragraph of the Practice Direction only as a warning that there must be evidence of each of the requirements in O6 r10(1)(a), (b) and (c).

It seems to me in the circumstances of Papua New Guinea; many small businessmen are at a disadvantage on many fronts compared with their counterparts in more developed countries. In particular, small businessmen in Papua New Guinea are at a disadvantage when having to engage legal services in countries with much stronger currencies than Papua New Guinea. If foreign businessmen are pleased to do business in Papua New Guinea through an agent, then I consider they should also be pleased to accept service of process through that agent where the requirements of the rule can be established. Thus Papua New Guinea businessmen should be able to take advantage of the economy offered by the rule without any consideration of the relative ease or difficulty of effecting service out of the jurisdiction.

Order 6 r10(2) requires the Court to limit a time for entry of an appearance to the writ. Ordinarily when a writ is served within the jurisdiction the time endorsed on the writ for the Defendant to enter an appearance is 30 days, and out of the jurisdiction 60 days, pursuant to the provisions of O4 Rule 11. It would not have been necessary to provide O6 r10(2) unless the intention of the judges, in making the rule, was for the Court to give consideration to whether or not the time for entry of an appearance should be extended beyond 30 days. One of the considerations being, as the United Kingdom Practice Direction quoted above notes, the place of business of the defendant and the time necessary to permit communication between the agent and the defendant principal.

Order 10(3) provides the application may proceed ex parte. To my mind this Rule grants a right to the applicant, not discretion to the Court. It is therefore unnecessary for the Court to grant leave to proceed ex parte. I leave open the question of whether or not the Court might, in an appropriate case, require the application to be served, for example, where the evidence of continuing business relationship or non termination of the agency is weak.

Nor is it necessary for the Court to make any order pursuant to Order 6 r 10(4) that a copy of the writ and endorsements on it and the order of the Court be sent to the Defendant by post, as this is a duty cast on the Plaintiff by the Rules once the order granting leave to serve the agent is made. I consider that the intention of the rule is that the documents be sent by post immediately the order is made. I note my view is contrary to the practice set out in Chitty and Jacob's Queens Bench Forms[7].

To prove service in accordance with 06 r10 it would of course be necessary to establish by affidavit both that the writ has been served on the agent in any of the ways permitted by the Rules or an Act applicable to the agent; AND that the writ and the order have been sent by post to the address of the principle defendant.

This Case
In the circumstances of this case, just re-stating the criteria in the rule, the Applicant must show:

1. The Plaintiff is resident in Papua New Guinea;
   
2. The Defendant is not resident in Papua New Guinea;
   
3. The Defendant has an agent resident in Papua New Guinea;
   
4. The Plaintiff entered into a contract with or through the agent, as agent for the Defendant;
   
5. The agent's authority has not been terminated or he is still in business with the Defendant.
   
6. The Plaintiff's cause of action arises out of the contract.
   

I am satisfied on the evidence that the Defendant is resident in New South Wales, Australia, and is thus not resident in Papua New Guinea; and that Commodities Links Limited is a company resident in Papua New Guinea.

The representations by Balingi are unambiguous as to Commodities Links Limited agency relationship with the Defendant. That the Defendant has acknowledged receipt of the vanilla beans without at any time taking the opportunity to repudiate Commodities Links Limited as his agent, and the fact that the Defendant has referred the Plaintiff back to Commodities Links Limited in relation to payment confirms the continuing status of that company as the agent of the Defendant.

I am therefore satisfied that the Plaintiff entered into contracts for the sale of vanilla bean with the Defendant through the agency of Commodities Links Limited, a company resident in Papua New Guinea, that company remains the agent of the Defendant and that the cause of action arises out of those contracts.

As to the time within which an appearance is to be entered for the purposes of O10 r6(2) I take the following matters into account:

1. Service is to be effected within the jurisdiction but the Defendant is out of the jurisdiction and it will be necessary for the agent to communicate with the Defendant;
   
2. There is a business relationship between the agent and the Defendant & I draw the inference that communication between them is done in a businesslike manner, that is rapidly by telephone and facsimile;
   
3. The Defendant is resident in our nearest southern neighbour with whom communication facilities are excellent;
   
4. The Defendant will have to engage a lawyer resident in Papua New Guinea and to do this he may need to first engage a lawyer in his place of resident, which would entail some communication delays.
   

In all of those circumstances I do not consider that the time for entry of an appearance should be extended to the full 60 days allowed for service out of the jurisdiction. However I consider some additional time should be allowed to take into account the communication delays which may occur. I fix 45 days as the time within which an appearance must be entered. The Defendant can of course apply for further time to file his defence should there be grounds for doing so.

ORDERS:

1. The Court authorizes that the writ of summons in these proceedings be served on Commodities Links Limited as agent for the Defendant;
   
2. The time for the Defendant to file a Notice of Intention to Defend is limited to 45 days.
   
3. The costs of the application are reserved to the trial judge.
   

I thank Mr. Maguire for his assistance.

Lawyers for the Applicant Plaintiff: MAGUIRE

^[1] The common Law library No. 4 , Sweet and Maxwell, 21^st Ed. Form 48 page 59;
^[2] Neville v National Fire and Marine Insurance Company [1881] QLJ 23 Lilley CJ; Maurox v Sociedade Commerciale Abel Pereira de Fonesca SARL [1972] 1 WLR 962; Russell Wilks & Co Ltd v Peck & Co [1908] St Qld 134; Hemelryck v William Lyall Shipbuilding Co. Ltd [1921] 1 A.C. 698 (PC); Cromie v Moore [1936] 2 All ER 177 CA; Bowling v Cox [1926] AC 751 AC.

^[3] P.80 note 10/2/2
^[4] 2^nd Ed. Former Order 9 rule 7
^[5] Butterworths
^[6] 150 L.T.J. 388; 65 S.J. 131 December 4, 1920
^[7] Supra, at Form 49 page 60.