N3757

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

W.S.NO 759 OF 2007

BETWEEN:

THAI ITAO trading as
THIBEN BUILDING MAINTENANCE
Plaintiff

ELIAS KAMARA
First Defendant

KAIRAK INVESTMENT LIMITED
Second Defendant

Kokopo: Lenalia; J
2009: 11th, & 18th September

PRACTICE & PROCEDURE – Default judgment – Application for –Personal service effected – Order 12 Rules 25 (b) 26 (a) 27 (2) & 28 of the National Court Rules

PRACTICE & PROCEDURE – Application for default judgment where a party has defaulted in filing a defence in time

Cases cited

Thomas Koral v Alex Kavie and Petrus Alex (1999)
Motor Vehicle Insurance (PNG) Limited v Sosie Joe (2.5.07) SC863
Luke Tai v Australia and New Zealand Banking Group Ltd (2000) N1979
David Ande & 8 Others v Nelson Pano & Other (15.2.08) N3271 

Counsels

P. Yange, for the Plaintiff.
N. Motuwe, for the Defendants 

18th September, 2009

1. LENALIA, J. On this case, the Writ of Summons was filed on 9th July 2007 and served on the Defendants on the 13th of the same month at their registered office at TDS in Kokopo. A second Affidavit of Service filed by Police Constable Belden Eiba of Kokopo Police Station says that the Writ was served on the Defendants on 28th August 2007. On 27th July of that year, the two Defendants filed their Intention to Defend. Since then, the two Defendants had not taken any steps to file their Defences against the claim.

2. On 15th January this year, Mr. Yange of counsel for the Plaintiff wrote a letter to the two Defendants warning them to take steps to seek leave of the Court to file their Defence out of time. On 24th March Mr. Yange conducted a file search and found that no Defences had yet been filed. 

3. On 14th May, Motuwe Lawyers filed a Notice of Appearance for the Defendants. On 18th day of same month, Motuwe Lawyers filed an application to seek leave to file the Defence out of time. 

4. Following consultation and discussions between the lawyers, on 12th June counsels reached a concession that, the Notice of Motion seeking Default Judgment filed by the plaintiff on 13th May 2009 be withdrawn and the plaintiff to file an Amended Writ of Summons to cater for the contractual relationship between the plaintiff and defendants. An Amended Writ of Summons was filed on 15th June.

5. On 12th June this year, the Court granted leave to file their Defence out of time and included an order to the plaintiff to file an Amended Statement of Claim. In that order, the Defendants were given 14 days to file the Defence out of time after being served with the Amended Statement of Claim. 

6. On the instant application, the Plaintiff is saying now that, after the Amended Writ of Summons was filed and served on the Defendants, the 14 days as ordered expired on 31st June this year. (See affidavit of Service by Gideon Waenavi 1st July 2009). On 20th July 2009 a file search was conducted at Kokopo Registry Office, found that the Defence had not been filed hence, this application for Default Judgment. (See Affidavit in Support by Mr. Yange sworn 26th August).

7. Mr. Yange of counsel for the Plaintiff submitted that, the Defendants have defaulted as sufficient time had been granted to them to file their Defence out of time and although they had filed one on 21st August, the Defendants did no seek leave of the court to do so. Obviously this was irregular on the part of the Defendants.

8. For the two Defendants, Mr. Motuwe submitted that, his clients had been really busy over the last couple of months and they could not file their Defence in time. Counsel referred the court to an affidavit deposed to by the First Defendant who says at paragraph 5 that he was busy with logging operations and he could not be able to come to his lawyers to give instructions in order for the lawyer to verify his Defence. 

Issue and Law

9. The issue is whether default judgment should be entered against the Defendants. They were given leave to file their Defence out of time but they did not comply with the court order of 12th June this year. The Defendants had clearly defaulted in terms of the National Court Rules. The plaintiffs through their lawyer made an application for default judgment to be entered pursuant to Order 12 Rules 25 (b) 26 (a) (27 (2) and 28 of the National Court Rules. Order 12 Rules 25, 26 and 27 of the National Court Rules state:

"25. Default. 

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

(a) where the originating process bears a note under Order 4 Rule 9, and the time for him to comply has expired but he has not given the notice; or

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

(c) where he is required under Order 8 Rule 24 to verify his defence and the time for him to verify his defence in accordance with that Rule has expired but he has not so verified his defence.

26. Procedure on default. 
Where a defendant is in default, the plaintiff may—

(a) take the steps mentioned in Rules 27 to 33 according to the nature of his claim for relief against the defendant in default; and

(b) carry on the proceedings against any other party to the proceedings."

10. The Plaintiffs claim is both liquidated and unliquidated. In the Plaintiffs Amended Notice of Motion filed on 7th of the instant month and moved four days after filing it, they cited this Court’s jurisdiction under Order 12 Rules 27 & 28 which state:

"27. Liquidated demand 

(1) Where the plaintiffs claim for relief against a defendant in default is for a liquidated demand only, the plaintiff may enter judgement against that defendant for a sum not exceeding the sum claimed in the statement of claim on that demand and for costs.

(2) Where a claim for a liquidated demand includes interest at an unspecified rate, interest accruing after the date of filing the statement of claim to the date of entry of judgement shall, for the purposes of judgement under this Division be reckoned at the rate of 8% yearly.

28. Unliquidated damages.

(17/5)Where the plaintiffs claim for relief against a defendant in default is for unliquidated damages only, the plaintiff may enter judgement against that defendant for damages to be assessed and for costs."

11. The power of the court to enter default judgment pursuant to Order 12 Rule 25, 27 & 28 of the National Court Rules is discretionary by the use of the word "may" in Rules 27 and 28. (See Kante Miniga v The State (1996) N1458 on the issue of discretion of the court to enter default judgment). 

12. At this stage, I would like to make a few observations. First, because the Defendants did not file their Defence in time, they could not just come as of right and file the Defence to the Amended Writ of Summons and Cross-Claim. They ought to have sought leave as they had defaulted in terms of the Order dated 12th of June 2009. 

13. Defendants have clearly defaulted. The order of the above date was that, after filing the Amended Statement of Claim, the Defendants were required to file their Defence within 14 days from the date they received the Amended Writ of Summons. Not only that but Order 8. Rule 4 (1) of the National Court Rules provide:

"4. Defence

(1) Subject to Sub-rule (2), a defendant shall file and serve on the plaintiff his defence in Form 1—

(a) where the statement of claim is endorsed on the writ—before the expiry of 14 days after the date of expiry of the time limited for him to give notice of intention to defend; or

(b) where the statement of claim is not endorsed on the Writ—before the expiry of 14 days from the date of service of the statement of claim; or

(c) in the case of a defendant to a cross-claim who is not required to give notice of intention to defend the cross-claim—before the expiry of 21 days after the date of service of the cross-claim on him.

(2) Where, before the date on which a defendant files his defence, a plaintiff serves on that defendant notice of a motion under Order 12 Rule 38 for summary judgement on any claim for relief or part of any claim for relief—

(a) Sub-rule (1) shall not apply to that defendant; but

(b) if, on the motion for summary judgement, the Court does 

not dispose of all the claims for relief against the defendant the Court may order him to file and serve his defence before the expiry of a time fixed by the Court.

(3) This Rule does not apply to proceedings on a cross-claim for contribution to which Rule 48(2) applies." 

14. In Motor Vehicle Insurance (PNG) Limited v Sosie Joe (2.5.07) SC863 the Respondent sued MVIL for personal damages for injuries received in an accident. The later filed its Notice of Intention to Defend after 30 days, the time limited by Order 4 Rule 11 (a) (b) of the National Court Rules. The Supreme Court comprising of Injia DCJ (as he then was), Manuhu and Hartshorn JJ heard the appeal. The Court unanimously held that the MVIL required leave to file its Defence out of time.

15. The need to obtain leave before filing a defence out of time is mandatory according to Thomas Koral v Alex Kavie and Petrus Alex (1999) Unreported and Unnumbered Judgment – WS 286/98 which was adopted and relied upon by Kapi DCJ in Luke Tai v Australia and New Zealand Banking Group Ltd (2000) Unreported National Court Judgment No. N1979. (See also David Ande & Others v Nelson Pane & Other (15.2.08, N3271)

16. The law is clear on the requirement for leave. The Defendants had given notice of their intention to defend the proceeding pursuant to Order 7 r.2 of the National Court Rules. However no Defence had been filed regardless of the fact that the time allowed by the Rules had lapsed. 

17. The important point to bear in mind is that if that notice is given after the defendant’s time allowed under the Rules to file a defence has run out, then leave must first be obtained before the defence is filed according to the requirement of O.7 r.6 which provides for that type of situation in particular paragraph (2). This Rule states:

"6. Late notice. 

(1) A defendant may give a notice of intention to defend at any time without leave.

(2) Where a defendant gives a notice after the time limited for doing so, he shall not, unless the Court otherwise orders, be entitled to file a defence or do any other thing later than if he had given a notice of intention to defend within that time." (Emphasis added)

18. The explanation given by the First Defendant that he was busy attending to logging operations somewhere is not good enough. After all, the two Defendants are represented by a legal counsel who is charged with carriage of these proceedings. It seems to the court, there was some breakdown of communication between the parties. 

19. For the foregoing reasons, the court orders that Default Judgment be entered in favour of the Plaintiff in the present case pursuant to Order 12 Rule 28 for damages to be assessed. The Defendants shall meet the costs of this application. 

______________________________________

Warner Shand Lawyers: Lawyer for the Plaintiff
Motuwe Lawyers: Lawyer for the Defendants