N3714 

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS 51 OF 2006

BETWEEN:

THOMAS RANGIP
First Plaintiff

AND:

FOUNTAIN FINANCE LIMITED
Second Plaintiff

AND:

PETER LOKO, CITY MANAGER, NATIONAL
CAPITAL DISTRICT COMMISSION
First Defendant

AND:

NATIONAL CAPITAL DISTRICT COMMISSION
Second Defendant

Waigani: Hartshorn J.
2009: 8th July,: 11th August

Application to Set Aside Ex Parte Order Dismissing Proceeding for Want of Prosecution – Order 12 Rule 8(3)(a) National Court Rules 

Facts:

The plaintiffs apply for a dismissal order of this court to be set aside. That order was, amongst others, that the proceeding be dismissed for want of prosecution. At that hearing, the dismissal order was sought and granted ex parte. This application is now brought by the plaintiffs pursuant to Order 12 Rule 8(3)(a) National Court Rules and s. 155(4) Constitution. 

Held: 

1. The National Court has jurisdiction to set aside its own ex parte order that dismisses a proceeding for want of prosecution; Order 12 Rule 8 (3)(a) National Court Rules; (Malt v. Queen (2009) N3577 not followed.)

2. In an application to set aside an ex parte order dismissing a proceeding for want of prosecution the onus is on the applicant to satisfy the court:

a) why the order was allowed to be entered in the absence of the applicant,

b) if there is a delay in making the application to set aside, a reasonable   explanation as to the delay, and

c) that there is a reasonable explanation for the proceeding not being prosecuted with due diligence. 

3. The plaintiffs have not shown that the defendants’ dismissal application was an abuse of process as alleged.

4. The ex parte order was made in the absence of the plaintiffs’ former lawyers as there was sufficient evidence that the dismissal motion and supporting affidavits were properly served upon the lawyers on the record for the plaintiffs.

5. There has not been any delay as the original notice of motion to set aside the Dismissal Order was filed within a month of the Dismissal Order being made.

6. The plaintiffs have not provided a reasonable explanation as to why their proceeding was not prosecuted with due diligence 

7. The application of the plaintiffs’ to set aside the order of this court made on 7th April 2009 dismissing the proceeding for want of prosecution is refused. 

Cases cited: 

Papua New Guinea Cases

Shelley v. PNG Aviation Services Pty Ltd [1979] PNGLR 119
North Solomons Provincial Government v. Pacific Architecture Pty Ltd [1992] PNGLR 145 
Peter Dixon Donigi v. Base Resources Ltd [1992] PNGLR 110
Smith v. Ruma Constructions Ltd (2002) SC695 
Obadia Buka v. Jude Baisi & Anor (2004) N2602 
Peter Makeng & Ors v. Timbers (PNG) Ltd & Ors (2008) N3317 
Malt v. Queen (2009) N3577 

Overseas Cases:

Nicholson v. Nicholson [1974] 2 NSWLR 59 

Counsel:

Mr. L. Yandeken, for the Plaintiffs 
Ms. B. Bakau, for the Defendants

11th August, 2009 

1. HARTSHORN J. The plaintiffs apply for the order of this court dated 7th April 2009 to be set aside. That order was amongst others that, "This proceeding is dismissed for want of prosecution." (Dismissal Order).

2. The Dismissal Order was ordered by me following the hearing of the defendants’ notice of motion filed on the 19th September 2008 which sought amongst others, that the proceeding be dismissed for want of prosecution. At that hearing, the plaintiffs were not represented.

3. When the plaintiffs’ amended notice of motion seeking to set aside the Dismissal Order was mentioned before me on the 18th June 2009, both counsel informed the court that their respective clients did not have any objection to me hearing the plaintiffs’ application to set aside the Dismissal Order that was made by me.

4. In this regard I note that this is in accordance with Order 4 Rule 49 (19)(4)(1) National Court Rules, (as amended by the Motions (Amendment) Rules 2005). It is as follows:

"An application to set aside ex parte order shall be made inter partes before the same judge who made the ex parte order."

5. The application is brought by the plaintiffs pursuant to Order 12 Rule 8(3)(a) National Court Rules and s. 155(4) Constitution. As to s. 155(4) Constitution, counsel for the plaintiffs conceded that s. 155(4) is only to be relied upon to protect the primary rights of parties in the absence of other relevant law. In addition, s. 155(4) cannot be applied to do anything contrary or inconsistent with the provisions of the National Court Rules: Peter Makeng & Ors v. Timbers (PNG) Ltd & Ors (2008) N3317 per Injia DCJ (as he then was). Consequently I will only consider whether the plaintiffs are able to have recourse to s. 155(4) if I determine that this court does not have jurisdiction under Order 12 Rule 8(3)(a).

Jurisdiction

6. The first issue is whether this court has jurisdiction to set aside an ex parte National Court order that dismisses a proceeding for want of prosecution. Counsel for the defendants submitted that this court does not have that jurisdiction and relied upon the recent National Court decision of Makail AJ (as he then was) in Malt v. Queen (2009) N3577, in which it was held amongst others, that as an ex parte order dismissing an entire proceeding for want of prosecution finally disposes of the proceeding, the same court does not have jurisdiction to set it aside, only the Supreme Court does on appeal.

7. In Malt v. Queen (supra), Makail AJ refers to the Supreme Court case of Smith v. Ruma Constructions Ltd (2002) SC695 which was a successful appeal against a National Court decision that set aside a summary judgment that had been granted after an ex parte hearing. Kapi DCJ (as he then was) after considering the approach taken by the trial judge said:

"The approach taken by the trial judge with respect is fundamentally wrong. In essence the learned trial judge reviewed the decision of Woods J. The trial judge had no jurisdiction to do this under an application to set aside judgment under O12 r8 of the Rules."

8. Before this however, Kapi DCJ had said that the discretion to set aside a default judgment under Order 12 Rule 35 is couched in identical terms to Order 12 Rule 8(2) and (3) and that the principles governing the exercise of discretion would be the same. He then said that those principles are well settled and detailed them.

9. It is clear then that Kapi DCJ was of the view that the National Court could set aside a National Court judgment or order under Order 12 Rule 8 after a consideration of the correct principles governing the exercise of discretion, but that in the case before Kapi DCJ, the trial judge had not done so and had instead embarked upon a review of another National Court judge’s decision.

10. In Malt v. Queen (supra), Makail AJ went on to say that:

"… in the context of an ex parte order dismissing an entire proceeding for want of prosecution, where a Court dismisses a proceeding for want of prosecution, the entire proceeding is at an end. It cannot be revived."

"...an "ex parte" order dismissing the entire proceeding for want of prosecution is a permanent or final order".

"… before the National Court can entertain an application to set aside any form of ex parte orders, it must satisfy itself that the ex parte order is an interim one."

11. As to whether an ex parte order dismissing a proceeding for want of prosecution is a final order does not require determination here. I note in this regard that there are conflicting Supreme Court decisions on this point as to what constitutes a final order: Shelley v. PNG Aviation Services Pty Ltd [1979] PNGLR 119 and North Solomons Provincial Government v. Pacific Architecture Pty Ltd [1992] PNGLR 145.

12. If such an order is a final order, although the general rule is that a court ordinarily has no power to set aside a final order once it has been passed and entered, Order 12 Rule 8 National Court Rules and the New South Wales equivalent, Pt 40 r 9 from which our Rule is derived, deal with several exceptions to the general rule: Ritchie’s Supreme Court Procedure Vol. 1 40.9.

13. One of those exceptions is where the judgment or order has been made ex parte: Order 12 Rule 8(2)(b) and (c), and (3)(a). In this regard I refer to the New South Wales Supreme Court decision of Nicholson v. Nicholson [1974] 2 NSWLR 59, where Jenkyn J., after noting that the power to set aside or vary an order can be given to a court by a statutory provision or a validly made rule, considered Pt 40 r 9(3), which is the same as Order 12 Rule 8(3) and concluded at p.64 that its application is not limited to interlocutory orders but applies also to final orders.

14. After considering Smith v. Ruma Constructions Ltd (supra) and the other authorities cited, I am of the view that this court does have jurisdiction to set aside an ex parte National Court order that dismisses a proceeding for want of prosecution and to that extent, I respectfully disagree with Makail AJ where he expresses a contrary view in Malt v. Queen (supra).

Setting aside – principles

15. As referred to, the principles governing the exercise of discretion as to whether an ex parte order should be set aside are well settled and were detailed by Kapi DCJ in Smith v. Ruma Constructions Ltd (supra). The onus is on the applicant to satisfy the court:

a) why the order was allowed to be entered in the absence of the applicant,

b) if there is a delay in making the application to set aside, a reasonable   explanation as to the delay, and

c) that there is a defence on the merits. 

In this instance, as the order sought to be set aside is a dismissal for want of prosecution and not a default judgment, the principle to be considered is whether there is a reasonable explanation for the proceeding not being prosecuted with due diligence.

Preliminary

16. Before considering the above principles, the plaintiffs have submitted that the defendants’ dismissal application was an abuse of process of the court and the resulting Dismissal Order should be set aside.

17. The alleged abuse of process is that:

a) the pleadings were not closed and so Order 10 Rule 5 National Court Rules should not have been relied upon by the defendants to bring their dismissal application, and

b) the defendants moved their dismissal application without   withdrawing another motion that had been filed previously.

18. As to whether the pleadings were closed, Order 8 Rule 23(1) relevantly provides that:

"The pleadings on a statement of claim shall… be closed as between any plaintiff and any defendant on the date of expiry of the last of the times fixed by or under these Rules for filing a defence or reply or other pleading between those parties on the statement of claim."

19. As all of those times had expired in this instance, the pleadings had closed.

20. As to the defendants moving their dismissal application without withdrawing a prior unmoved motion; the unmoved motion sought dismissal of the proceeding for failure to comply with the Claims By and Against the State Act and alternatively, leave to file a defence out of time.

21. Counsel for the plaintiffs did not cite any authority for the proposition that it is an abuse of process to move a motion while a motion filed earlier in time by the same party remains unmoved. In this regard, it was always open to the plaintiffs to apply to have the unmoved motion heard or struck out for want of prosecution.

22. Counsel for the plaintiff submitted that by moving the dismissal application without prosecuting the unmoved motion, the defendants had not come to court with clean hands. He did not however, produce any satisfactory argument as to why this was supposedly so.

23. I am not satisfied that the plaintiffs have shown that the defendants’ dismissal application was an abuse of process as alleged.

Ex parte order made in absence of plaintiffs

24. The plaintiffs submit that their lawyers at the time were not aware that the dismissal application was to be heard as they were not served with the notice of motion but if they were, then the notice of motion was left with an unauthorised person.

25. The lawyers for the plaintiffs at the time were Yapao Lawyers. There is no evidence from that firm that they were not served with the notice of motion seeking dismissal or that if they were, the person served was not authorised to accept service. Mr. Rangip in one of his affidavits deposes that Mr. George Yapao told him that Yapao Lawyers were not served. This is hearsay.

26. Ms. Bakau for the defendants, deposes that amongst others:

a) a letter dated 8th September 2008 to Yapao Lawyers warning of the filing  of a dismissal application was served on 9th August 2008.

b) the notice of motion seeking dismissal, supporting affidavit and affidavit of search were served on Yapao Lawyers on 23rd September 2008.

c) a letter dated 16th September 2008 to the Registrar National Court and copied to the Principal, Yapao Lawyers, seeking a return date for the dismissal motion, was served on Yapao Lawyers on 20th October 2008.

d) the motion was mentioned before me on 5th November 2008 and there was an appearance by counsel Mr. A. Kalani for the plaintiffs as well as representation on behalf of the defendants. The endorsement on the court file confirms this. The motion was adjourned sine die.

e) the motion was mentioned again on 1st December 2008. The plaintiffs again were represented by Mr. A. Kalani. The court was informed by the plaintiffs’ lawyer that there were settlement negotiations taking place. The motion was adjourned to the Registry.

f) after numerous letters requesting a hearing date for the motion, it became returnable on 7th April 2009.

g) a letter dated 26th March 2009 to Yapao Lawyers informing of the 7th April date was served on Yapao Lawyers on 30th March 2009.

h) a letter dated 18th March 2009 was sent by the Registry to the second defendant and copied to Yapao Lawyers informing of the 7th April date.

i) a further affidavit of Leslie Alu in support of the dismissal application was served on Yapao Lawyers on 10th March 2009.

27. According to Ms. Bakau there were 9 personal services of documents or letters upon the offices of Yapao Lawyers. The annexures to Ms. Bakau’s affidavit disclose 9 acknowledgements of receipt by the persons who received the documents or letters on behalf of Yapao Lawyers. There were also 2 occasions when counsel appeared on behalf of the plaintiffs when the dismissal application was mentioned in court. 

28. I am satisfied that the dismissal motion and affidavits were properly served upon the lawyers on the record for the plaintiffs. If there was not proper service, the lawyers on the record were made aware of the dismissal motion as evidenced by the appearance of counsel on 2 occasions on behalf of the plaintiffs. Mr. Rangip deposes in one of his affidavits that his lawyer Mr. A. Kalani appeared on those 2 occasions. I find it with respect, rather unlikely that Yapao Lawyers were not aware of the dismissal application given the evidence of Ms. Bakau to which I have referred.

29. I am further satisfied that Yapao Lawyers were made aware of the proposed hearing on 7th April 2009. In any event, it was the responsibility of the counsel who appeared on behalf of the plaintiffs and Yapao Lawyers to ascertain the exact status of a motion that sought such critical relief in respect of their clients proceeding. 

30. I am not satisfied with the submission that the plaintiffs’ former lawyers were not aware of the existence of the dismissal motion or the date upon which it was to be heard. I am satisfied that the evidence is that they were aware.

Delay

31. As to whether there was any delay in bringing the application to set aside the Dismissal Order, the plaintiffs submit that they only became aware of the proceeding being dismissed on 1st May 2009 after a search of the court file was conducted. Instructions were then given to the plaintiffs’ current lawyers on 6th May 2009 to act for the plaintiffs and to apply for the Dismissal Order to be set aside.

32. There is evidence filed on behalf of the defendants that the Dismissal Order was personally served upon Yapao Lawyers on 9th April 2009. Again, there is an acknowledgement of service by the person who purportedly received the Dismissal Order on behalf of Yapao Lawyers. 

33. Given that the original notice of motion to set aside the Dismissal Order was filed within a month of the Dismissal Order being made, I am satisfied that there has not been delay in this regard.

Due diligence

34. As to whether the plaintiffs have a reasonable explanation as to why their proceeding was not prosecuted with due diligence, the plaintiffs submit that they were pursuing or attempting to pursue settlement negotiations with the defendants from about November 2006 to date, but that because of changes in the political leadership of the second defendant, the plaintiffs’ claim has not been settled.

35. Mr. Rangip annexes to one of his affidavits a copy of a letter dated 13th November 2006 from the Acting Chief of Staff of the Office of the Prime Minister to the then Chairman of the second defendant in which amongst others, the intervention from the Chairman's office was sought to urgently settle the issue. Then annexed are copies of correspondence from the second defendant to Yapao Lawyers and its own lawyers at the time, concerning amongst others, the possibility of negotiations for settlement. This correspondence is dated November and December 2006 and appears to have been generated as a result of the letter from the Office of the Prime Minister.

36. Mr. Augustine Ravi on behalf of the defendant's deposes amongst others that:

a) he was the Financial Control of the second defendant from January 2004  to September 2008 and has knowledge of the facts of this matter,

b) he was not aware of any settlement negotiations either on the agenda for management meetings or as a submission to the full Commission of the second defendant since 2006,

c) there may have been approaches on behalf of the plaintiffs to the second defendant suggesting settlement, of which he is not aware.

37. It is the responsibility of a plaintiff to prosecute his action with due diligence and it is the plaintiff who has to take the next step in proceedings to get a matter ready for trial: Obadia Buka v. Jude Baisi & Anor (2004) N2602, page 11. Here the evidence is that no action has been taken by the plaintiffs to progress the matter to trial since August 2006. Even if the period when the proposed negotiations for settlement were to occur is considered, the plaintiffs have not taken any action in the proceeding since December 2006.

38. In this regard, although settlement negotiations might occur or are occurring, that is not a sufficient reason for a plaintiff to hold the progression of a proceeding to trial in abeyance, unless it is with the consent of the defendant. Prudence dictates that any such consent should be express and in writing.

39. The defendants made their intentions known, by the filing of their dismissal application, after first giving written notice to the lawyers for the plaintiffs. That was in September 2008. Regardless of whether Yapao Lawyers were served, Mr. Kalani appeared on behalf of the plaintiffs on 5th November 2008, so the plaintiffs by their lawyers, were aware of the motion to dismiss at that time.

40. Notwithstanding this, no affidavit was filed or any other action taken to explain the reasons for the delay in prosecuting the proceeding. In addition, no further action was taken to progress the proceeding to trial. If it is argued that their lawyers were at fault in not properly acting for the plaintiffs, that to my mind, is not a reasonable explanation for delay in prosecuting a matter with due diligence.

41. It has been held on numerous occasions in this jurisdiction that the negligence of a lawyer is not a good reason for an extension of time to be granted: Peter Dixon Donigi v. Base Resources Ltd [1992] PNGLR 110. Similarly in my view, the negligence of a lawyer is not a good reason to allow a proceeding that should otherwise be dismissed, to continue. The plaintiff in such circumstances may have recourse against his lawyer.

42. After considering the submissions made and the evidence filed on behalf of the plaintiffs, I am not satisfied that the plaintiffs have provided a reasonable explanation as to why their proceeding was not prosecuted with due diligence. As I have already found that I am not satisfied with the explanation given as to why the dismissal order was made in the absence of representation on behalf of the plaintiffs, the plaintiffs have not satisfied me in respect of 2 of the required principles referred to by Kapi DCJ in Smith v. Ruma Constructions Ltd (supra). Consequently the application of the plaintiff to set aside the order of this court made on 7th April 2009 dismissing the proceeding for want of prosecution is refused. 

43. The costs of and incidental to this application shall be paid by the plaintiffs to the defendants.

___________________________________

Yandeken Lawyers: Lawyers for the Plaintiffs 
National Capital District Commission: Lawyers for the Defendants