N3702

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

W.S. NO. 768 OF 1998

BETWEEN

DANNY TOTAMU
Plaintiff

AND:

SMALL BUSINESS DEVELOPMENT CORPORATION
Defendant

Mt Hagen: David, J
2009: 27 March & 7 May

PRACTICE & PROCEDURE – application to set aside default judgment – first application dismissed for want of prosecution- an order dismissing an action for want of prosecution made ex-parte is not a decision on the merits – dismissal does not operate as res judicata – second application in order - O.12 r.7 (1) National Court Rules.

PRACTICE & PROCEDURE – application to set aside default judgment – O.12 r.35 National Court Rules - default judgment regularly entered – exercise of discretion – applicable principles – defence on the merits shown – no reasonable explanation given why judgment was allowed to go by default - application not made promptly and within a reasonable time – application refused.

Cases cited:

Papua New Guinea Cases

Green & Co. Pty Ltd v. Green [1976] PNGLR 73
The Government of PNG & Davis v. Barker [1977] PNGLR 386
George Page Pty Limited -v- Malipu Bus Balakau [1982] PNGLR 140
Provincial Government of North Solomons v. Pacific Architecture Pty Ltd [1992] PNGLR 145
Emmas Estate Development Pty Ltd v. John Mea & Ors [1993] PNGLR 215
Leo Hannet v. ANZ Banking Group (PNG) Ltd (1996) SC505
Leo Duque v. Avia Andrew Paru [1997] PNGLR 378
Andrew Baing v. PNG National Stevedores Pty Limited (2000) SC627
Christopher Smith v. Ruma Construction Ltd (2002) SC695
Lihir Civil Construction Limited v. New Ireland Provincial Government (2005) N2914
Kerry Lerro v. Philip Stagg (2006) N3050
Matthew Kamana Tuntafa v. John Kayapo (2008) N3277 

Overseas cases cited:

Evans v. Bartlam [1937] AC 473
Newmont v. Laverton Nickel NL (No.2) [1981] 1 NSWLR 221
Andrew v. Baradom Holdings Pty Ltd [1995] 36 NSWLR 700
Bailey v. Bailey [1983] 3 All ER 495
Rosing v. Ben Shemesh [1960] VR 173
North v. Shielaw (1897) 13 WN (NSW) 163
Term Sales Pty Ltd v. Joseph (1949) 67 WN (NSW) 44

Counsel:

K. J. Peri, for the Plaintiff
C. A. Kuira, for the Defendant

RULING ON MOTION

7 May, 2009

1.	DAVID, J: INTRODUCTION: The Defendant has applied on notice to have the default judgment granted ex-parte in favour of the Plaintiff on 6th November 1998 and entered on 8th November 1998 set aside pursuant to O.12 r.35 of the National Court Rules and to allow the Defendant to defend the proceedings.

2.	In support of its application, the Defendant relies on the following Affidavits:-

1.	Affidavit of Steven Maken sworn on 2nd October 2003 and filed on 21st October 2003; 

2.	Affidavit of Justin Issack sworn on 2nd October 2003 and filed on 21st October 2003.

3.	Affidavit of Diri Kobla sworn on 25th September 2008 and filed on 14th October 2008;

3.	The Plaintiff contests the application. He has not filed any answering Affidavit.

4.	Mr. Peri of counsel for the Plaintiff has objected to the use of the Affidavits of Messrs Maken and Issack because; they were filed in support of the previous application to set aside the default judgment which was filed on 21st October 2003 (the first application) and dismissed for want of prosecution on 13th June 2008; and they have not been incorporated into the only Affidavit filed in support of the present application. There is in fact a reference by Mr. Kobla at paragraph 7 of his Affidavit to the Affidavit of Mr. Maken relying on the latter’s Affidavit to explain why default judgment was allowed to be entered. So what Mr. Peri says in the latter part of his objection is not totally correct. Nonetheless, I think, in exercising the judicial authority of the people vested in the courts under s.158 of the Constitution and the mandate they are given in interpreting the law to give paramount consideration to the dispensation of justice and the fact that the Affidavits concerned were never used in the first application, I will reject the objection, but allow their use, consider the evidence contained in them and give appropriate weight where it is due. 

5.	At the hearing, Mr. Kuira of counsel for the Defendant handed up his client’s written submissions for my assistance for which I am grateful. I have perused and considered those submissions together with his oral submissions as well as those advanced by Mr. Peri. 

BRIEF BACKGROUND AND FACTS

Plaintiff’s allegations

6.	The Plaintiff was the owner of a PMV, a grey 15 seater Toyota Hiace bus bearing registration number P435R (the Plaintiff’s motor vehicle) which operated along the Okuk Highway between Wabag and Mt. Hagen and as far as Madang and Lae. On or about 11th November 1994 along the Wapenamanda Station Road, the Plaintiff’s motor vehicle was involved in an accident with a motor vehicle owned by the Defendant which is described as a green Toyota Hilux bearing registration number HAB 497 (the Defendant’s motor vehicle). The Defendant’s motor vehicle was driven by one Maima Kumulkop, a servant or agent of the Defendant when it bumped into the front right side of the Plaintiff’s motor vehicle. The accident was caused by Maima Kumulkop who drove the Defendant’s motor vehicle without a valid driving licence and without due care and attention. Maima Kumulkop was convicted on 15 December 1997 for driving without due care and attention and fined K100.00, in default three (3) months imprisonment.

7.	The Plaintiff claims that; the Defendant is vicariously liable for the actions of Maima Kumulkop; and he is therefore entitled to claim from the Defendant, damages for loss of earnings, costs for the repair of his motor vehicle, interest and costs. 

Chronology of events

8.	It will be of much assistance to set out the chronology of events from the commencement of these proceedings to the filing of the present application. To do that, apart from the evidence before the Court, I have taken judicial notice of a number of documents filed in the Court file which are also referred to below as they relate to events that are really not in dispute.
 
1.	On 18th August 1998, the Plaintiff’s Writ of Summons and Statement of Claim dated 17th August 1998 (the writ) was filed.

2.	On 16th November 1998 at about 11:28 am a Barry Kiway served the writ on the Defendant by leaving a sealed copy at the Defendant’s Office which is situated on Allotment 19 Section 53, Ume Street, Gordon: see Affidavit of Service of Barry Kiway sworn on 1st December 1998 and filed on 7th December 1998.

3.	On 11th May 1999, the Plaintiff applied for default judgment to be entered against the Defendant because of the Defendant’s failure to file a Notice of Intention to Defend and Defence: see Notice of Motion filed on 11th May 1999 and the Affidavit in Support of Notice of Motion of Koeya J. Peri sworn on 10th May 1999 and filed on 11th May 1999.

4.	Default Judgment was granted against the Defendant on 6th November 1999 and entered on 8th November 1999 for damages to be assessed and leave was also granted to set the matter down for trial for assessment of damages without the consent of the Defendant: see Order filed on 8th November 1999.

5.	On 16th February 2000, a Notice to Set Down for Trial dated 2nd February 2000 for assessment of damages was filed.

6.	On 31st July 2003, Paraka Lawyers filed a Notice of Appearance dated 24th July 2003 giving notice of their appointment as lawyers for the Defendant. 

7.	On 21st October 2003, the Defendant through Paraka Lawyers filed a Notice of Motion dated 10th October 2003 to set aside the default judgment.

8.	On 11th May 2006, Paraka Lawyers filed a Notice of Ceasing to Act giving notice that they had ceased to act as lawyers for the Defendant as of the time of filing.

9.	On 13th June 2008, the application to set aside the default judgment was dismissed for want of prosecution: see Order filed on 17th September 2008.

10.	On 26th August 2008, Ketan Lawyers filed a Notice of Change of Lawyers giving notice that the Defendant had changed lawyers and they were acting for the Defendant as of the date of filing.

11.	On 14th October 2008, the Defendant through Ketan Lawyers filed a Notice of Motion dated 25th September 2008 to set aside the default judgment.

THE ISSUES

9.	The major issues are:-

•	Whether the Court should entertain the application given this is the Defendant’s second application which was filed after the first application was dismissed for want of prosecution ex-parte.

•	If the answer to the first issue is in the affirmative, whether the default judgment should be set aside.

ANALYSIS OF THE ISSUES, LAW AND EVIDENCE

Whether the Court should entertain the application given this is the Defendant’s second application which was filed after the first application was dismissed for want of prosecution ex-parte.

10.	Mr. Peri submitted that because the first application was dismissed for want of prosecution as opposed to it being struck out, the Defendant could not return to the same forum to apply for the same relief the second time. To this, Mr. Kuira contended that whether the first application was struck out or dismissed for want of prosecution was irrelevant as what was significant was that the dismissal was made ex-parte and not on the merits. 

11.	An order dismissing an action for want of prosecution, particularly when made ex-parte, is not a decision on the merits and therefore does not operate as res judicata. Consequently, a second action for the same relief sought in the earlier action based upon the same facts against the same party can be filed provided statutory time limits permit: Newmont v. Laverton Nickel NL (No.2) [1981] 1 NSWLR 221; Andrew v. Baradom Holdings Pty Ltd [1995] 36 NSWLR 700; and Bailey v. Bailey [1983] 3 All ER 495. This, I think, is permitted by O.12 r.7 (1) of the National Court Rules. While this rule specifically prohibits fresh proceedings being instituted after there has been a trial on the merits, I think the rule has an equal application to applications the present application seeks to achieve. Order 12 rule 7 (1) is in the following terms. 

"7.	Dismissal. (40/8)

(1)	Where under these Rules the Court makes an order for the dismissal of proceedings or for the dismissal of proceedings so far as concerns the whole or any part of any claim for relief, the order for dismissal shall not, subject to any terms or conditions on which the order for dismissal is made, prevent the plaintiff or claimant from bringing fresh proceedings or claiming the same relief in fresh proceedings."

12.	Accordingly, in agreeing with Mr. Kuira, I find that the Defendant’s application, albeit filed the second time, is in order. 

If the answer to the first issue is in the affirmative, whether the default judgment should be set aside.

Was the default judgment regularly or irregularly entered?

13.	The Defendant claims that the default judgment was irregularly entered because:-

•	The Defendant was not served with the writ and also the notice of motion seeking default judgment in accordance with O.4 r.43 (1) of the National Court Rules, however if served, service was irregular;

•	the Defendant was practically not in existence at the material time.

14.	The Plaintiff, on the other hand, argues that:-

•	there was no doubt that service of the writ was effected properly on the Defendant which was in existence and operating at the material time when a sealed copy was left at Allotment 19 Section 53 Ume Street, Gordon, National Capital District given there was no evidence from the Defendant to dispute that that was not the location where its office was; 

•	it was not necessary under the National Court Rules to serve the notice of motion seeking default judgment where no notice of intention to defend had been filed by the Defendant. 

15.	The mode of service of an originating process upon a defendant is prescribed under O. 6 rr.2 and 3 of the National Court Rules. This is in addition to any other provision for service under any Act and the National Court Rules. I set out below O.6 rr. 2 and 3.

"2.	Originating process. (9/2)

(1)	Subject to any Act, and to these Rules, originating process shall be served personally on each defendant.

(2)	The copy for service shall be signed and sealed as specified in Order 4 Rule 12.

(3)	Where a defendant to any originating process serves a notice of intention to defend under Order 7, the originating process shall be taken to have been served on him personally on the date on which that notice is filed or on such earlier date as may be proved.

3.	Personal service: how effected. (9/3)

(1)	Personal service of a document may be effected by leaving a copy of the document with the person to be served or, if he does not accept the copy, by putting the copy down in his presence and telling him the nature of the document.

(2)	Personal service of a document on a corporation may be effected by serving the document in accordance with Sub-rule (1) on the mayor, chairman or president of the corporation, or on the town clerk, clerk, secretary, treasurer or other similar officer of the corporation.

(3)	Sub-rule (2) applies in addition to any provision for service on a corporation made by or under any Act."

16.	The Defendant is a corporation established by statute: see ss.3 and 4 of the Small Business Development Corporation Act 1990 (the SBDC Act). Section 26 of the SBDC Act prescribes the manner in which a notice, summons, writ or other process required to be served on the Defendant may be served. According to that provision, service of those documents may be effected by merely leaving them at the office of the Defendant; but in the case of a notice, it can also be served by post. Apart from those methods of service, there are no other requirements to meet such as who in particular is to accept service on behalf of the Defendant. Section 26 states:-

"26.	Service of process.

Any notice, summons, writ or other process required to be served on the Corporation may be served by being left at the office of the Corporation or, in the case of a notice, by post."

17.	Was the writ left at the office of the Defendant? The Affidavit of Barry Kiway leaves no room for doubt that he actually left the writ at the office of the Defendant which was at Allotment 19 Section 53 Ume Street, Gordon, National Capital District. I agree that the Defendant has provided no evidence to refute that the location where the writ was left was not where its office was located. I will say a little bit more about this and of the existence of the Defendant later. I find that service of the writ on the Defendant was in accordance with O.6 rr.2 (1) and 3 and s.26 of the SBDC Act and therefore proper. 

18.	Was it necessary for the notice of motion seeking default judgment to have been served on the Defendant in accordance with O.4 r.43 (1) of the National Court Rules prior to moving it? I set out below O.4 r.43:-

"43.	Service. (19/4)

(1)	Where notice of a motion is to be served on a person who has not given a notice of intention to defend and is not in default in giving that notice, the notice of motion shall be served personally.

(2)	An affidavit of service of a notice of motion shall be filed not later than the day before the day on which the motion is to be made."

19.	There are two (2) parts to sub-rule 1. For a notice of motion to be served personally, two (2) factors must be present:-

•	Firstly, the person served must be a person who has not given a notice of intention to defend; and

•	Secondly, the person served is not in default in giving that notice.

20.	Is the Defendant a person who had not given a notice of intention to defend prior to the filing and moving of the Plaintiff’s application for default judgment? Yes. Is the Defendant a person who was not in default in giving a notice of intention to defend? It was in default. Clearly, therefore because not all the factors mentioned above were present, it was not necessary for the notice of motion to be served personally.

21.	On the other hand, was it necessary at all for the notice of motion to have been served on the Defendant in accordance with O.4 r.38 of the National Court Rules prior to moving it? According to O.4 rr.38 (1) (notice necessary), 42 (time for service of notice), 43 (2) (service) and 44 (affidavits), a notice of motion and the affidavit(s) in support and all other documents the plaintiff is relying on, must be served on the defendant who has an address for service in the proceedings not less than three (3) days before the motion is heard and proof of service of the documents be substantiated by an affidavit of service. The Defendant did not have an address for service at the time the application for default judgment was filed and moved as it had defaulted in giving a notice of intention to defend (O.7 r.4 of the National Court Rules). Clearly, it was not necessary for the notice of motion seeking default judgment to have been served on the Defendant before it was moved.

22.	Almost any failure to comply with the National Court Rules renders a judgment to be set aside ex debito justitiae (as required in the interests of justice). I am satisfied that given the writ was properly served on the Defendant and that there was no need to serve the notice of motion, the default judgment was regularly entered.

Setting aside of default judgments

23.	As I have alluded to above, the Defendant relies on O.12 r.35 of the National Court Rules. It reads:-

"35.	Setting aside judgment.

The Court may, on such terms as it thinks just, set aside or vary a judgement entered in pursuance of this Division."

24.	The law on setting aside of orders obtained in the absence of a party regularly entered is settled: see Green & Co. Pty Ltd v. Green [1976] PNGLR 73; The Government of PNG & Davis v. Barker [1977] PNGLR 386; George Page Pty Limited -v- Malipu Bus Balakau [1982] PNGLR 140; Provincial Government of North Solomons v. Pacific Architecture Pty Ltd [1992] PNGLR 145; Leo Hannet v. ANZ Banking Group (PNG) Ltd (1996) SC505 and Leo Duque v. Avia Andrew Paru [1997] PNGLR 378. The jurisdiction to do so is exercised under either O.12 r.8 or O.12 r.35 of the National Court Rules and the principles are the same in each case.

25.	Mr. Kuira of counsel for Defendant adds to the above list some more cases for my consideration which I have read and they are the cases of Lihir Civil Construction Limited v. New Ireland Provincial Government (2005) N2914; Andrew Baing v. PNG National Stevedores Pty Limited (2000) SC627; Christopher Smith v. Ruma Construction Ltd (2002) SC695 (although this was an appeal, which was upheld, against the setting aside of a summary judgment); Kerry Lerro v. Philip Stagg (2006) N3050 and Matthew Kamana Tuntafa v. John Kayapo (2008) N3277. 

26.	The Court also has an unfettered discretion: see Evans v. Bartlam [1937] AC 473.

27.	In Leo Hannet, the Supreme Court restated the law as follows:- 

"Where a judgment is regularly obtained the manner in which the Court may exercise its discretion to set aside such a judgment is set out in Barker v. The Government of Papua New Guinea, Davis and Bux [1976] PNGLR 340, namely:

1.	There must be an affidavit stating facts showing a defence on the merits;

2.	There must be reasonable explanation why judgment was allowed to go by default; and

3.	The application must be made promptly and within a reasonable time."

28.	The onus is on the Defendant to satisfy the Court on the balance of probabilities those principles.

29.	Mr. Kuira further submitted that the Court consider what prejudice, if any, would the Plaintiff suffer if the default judgment were to be set aside relying on the case of Matthew Kamana Tuntafa. I will discuss this aspect later.
 
Does the Defendant have a defence on the merits?

30.	An applicant must "condescend upon particulars". This means that an applicant must satisfy the judge that there is reasonable ground for saying so as opposed to a mere denial. As a matter of practice, an applicant must in an Affidavit state material facts showing a defence on the merits: Leo Duque v. Avia Andrew Paru [1997] PNGLR 378. The Affidavit must be that of an applicant and not his or her lawyer as the lawyer usually cannot assert facts which are purely within the knowledge of his or her client. To do so would be hearsay unless the lawyer has direct knowledge of the circumstances of the particular case: North Solomons Provincial Government v. Pacific Architecture [1992] PNGLR 145 and Emmas Estate Development Pty Ltd v. John Mea & Ors [1993] PNGLR 215 per Brown,J.

31.	Mr. Kuira submitted that the Defendant does have a defence on the merits. That being the case, 'it should be given paramount consideration over the other considerations relying on the pronouncements in Andrew Baing; Christopher Smith; Kerry Lerro; and Matthew Kamana Tuntafa and that grave injustice would occur if the default judgment were not set aside he said. The defence, he said, is disclosed in the Affidavit of Mr. Diri Kobla, the caretaker Managing Director of the Defendant who, according to Mr. Kobla’s Statement of Facts On Vehicle Accident Along Okuk Highway dated 29th November 1994 (the Statement of Facts) which is annexure "A" of his Affidavit, was a Project Accountant with the Defendant based here in Mt. Hagen at the material time.

32.	Mr. Kobla deposes, amongst others, that:-

(a)	the Plaintiff’s claim is a sham;

(b)	he was actually the driver of the Defendant’s motor vehicle heading towards Wabag on a business run along the Okuk Highway near the Mukurumanda village on Thursday, 10th November 1994 (not on 11th November 1994) when it overturned whilst trying to avoid colliding with another motor vehicle described as a semi-trailer which was travelling from the opposite direction and he relies on the Statement of Facts;

(c)	He and a passenger, Mek Tan, sustained injuries in the accident;

(d)	He was not involved in a collision with the Plaintiff’s motor vehicle as is alleged or with any other motor vehicle and he relies on the Police Road Accident Report dated 21 November 1994 (the Road Accident Report) which is annexure "B" to his Affidavit to support his assertion;

(e)	the Defendant has a very good defence, a draft of which is annexure "C" to his Affidavit in which the Defendant basically states that it denies liability because the claim is a sham supported by the assertion that; the accident involving the Defendant’s motor vehicle occurred on 10th November 1994 and not on 11th November 1994; the Defendant’s motor vehicle was driven by Diri Kobla and not by Maima Kumulkop who was never an employee of the Defendant; and the Defendant’s motor vehicle was never involved in a collision with the Plaintiff’s motor vehicle. 

33.	Mr. Peri did not make any substantive submissions, except to say that the Affidavit of Mr. Diri Kobla was relevant for consideration because it provides evidence that a motor vehicle belonging to the Defendant was involved in an accident.

34.	I am satisfied that the Defendant does have a defence on the merits. 

35.	However, while it is clear from the cases cited above that defence on the merits is the principal consideration, it is not the only consideration. 

Explanation why judgment was allowed to go by default

36.	Mr. Kuira submitted that the Defendant has provided a satisfactory explanation as to why judgment was allowed to go by default. This he said is disclosed in the Affidavit of Steven Maken who was the Acting Managing Director of the Defendant at the time of swearing his Affidavit. 

37.	Mr. Maken basically deposes, amongst others, that:-

(a)	he became the Acting Managing Director of the Defendant following the death of the Managing Director, Mr. Sixtus Weseliyaki on 8th August 2003;

(b)	by a decision of the National Executive Council made in November 1998, it was resolved that the Defendant was to be abolished by 1st January 1999;

(c)	some staff were to be transferred to other departments and the rest were to be made redundant and retrenched;

(d)	payment of all staff entitlements including salaries calculated up to 31st December 1998 were then organised to be paid by PPE 16th December 1998;

(e)	by a circular from the Secretary of the Department of Commerce and Industry to the Defendant’s Acting Deputy Managing Director dated 10 March 1999, he requested an inventory of the Defendant’s capital assets to be furnished. 

(f)	by 2nd April 1999, the retrenchment exercise was completed;

(g)	by 9th April 1999, the Defendant’s office was vacated;

(h)	there was a change of government headed by Sir Mekere Morauta which in or about August 1999 resolved to resurrect the Defendant which was to have been abolished by the previous Skate Government.

(i)	on or about 5th August 1999, Mr. Sixtus Weseliyaki was appointed as Administrator of the Defendant to take steps towards reviving the Defendant including the preparation of a budget for funding in the 2000 Budget 

(j)	at its first meeting (Special Board Meeting No.1/99) on or about 27th August 1999, the Board of the Defendant discussed, amongst other things, the government’s directive to resurrect the Defendant;

(k)	he believes that because the proceedings were commenced against the Defendant and default judgment was subsequently allowed to be entered at the time when no staff was working, it was not in a position to effectively and diligently defend itself;

(l)	he believes that his office became aware of the proceedings including the default judgment through a letter from Warner Shand, the Plaintiff’s lawyers addressed to his office dated 5th May 2003;

(m)	the Plaintiff’s lawyers again wrote to them by their letter of 3rd June 2003 advising them of their intention to obtain a date for trial for assessment of damages;

(n)	they, on 5th June 2003, engaged the services of Paraka Lawyers to defend the action;

(o)	the failure to file a notice of intention to defend and defence within the prescribed periods was not intentional or deliberate, but due to circumstances beyond their control. 

38.	Mr. Kuira further submitted that the Defendant was never served with; the writ because nobody was at their office at the time to receive it due to its abolishment; the notice of motion seeking default judgment; and that it was practically not in existence or operation and therefore was not in a position to defend itself.

39.	Mr. Peri, as I have adverted to above already, submitted that the Defendant was in existence and operating when served with the writ and it was not necessary to serve the notice of motion.
 
40.	I have dealt with the issue of service of the writ and the notice of motion already. I will simply adopt here what I have said already and anything I say now will be in addition thereof. 

41.	As to the issue of the Defendant’s existence and its inability to defend these proceedings because of circumstances beyond their control attributed to the purported abolishment of the Defendant, this is what I say.

42.	Important aspects of Mr. Maken’s evidence that try to address this issue are that; the decision to abolish the Defendant by 1st January 1999 was made by the Skate Government in November 1998; the retrenchment exercise was completed by 2nd April 1999; and the Defendant’s office was vacated by 9th April 1999.

43.	According to Mr. Kiway, the writ was served on 16th November 1998 around the time the decision to abolish the Defendant was made.

44.	I therefore reject the Defendant’s arguments that; nobody was at their office at the time of service of the writ; and that it was not aware of the proceedings initiated against it until about 5th May 2003 as it is plainly clear from the evidence adverted to above that the Defendant was actually in existence and in operation in November 1998 and would have, in all probability, known of the proceedings commenced by the writ then. Whether the Defendant operated with a skeleton staff or with a full compliment of its staff is in my view immaterial under the circumstances. 

45.	As to the Defendant’s existence as a legal person, I think it would be a fallacy to say that because the Defendant was administratively not in operation at the time of service of the writ as Mr. Maken suggests, the Defendant did not exist. On the contrary, there is no evidence that the SBDC Act was repealed or that the Defendant’s legal or corporate personality was affected in any way by any other legislation. I find therefore, barring any evidence to the contrary, that the Defendant was at the time of service a body corporate capable of being sued in its corporate name. 

46.	I am not satisfied with the explanation given for allowing judgment to be entered by default.

Timing of application

47.	An application to set aside a default judgment should be made promptly and within a reasonable time after it comes to the defendant’s knowledge: see Rosing v. Ben Shemesh [1960] VR 173 and North v. Shielaw (1897) 13 WN (NSW) 163. Any delay in making the application must be satisfactorily explained: Term Sales Pty Ltd v. Joseph (1949) 67 WN (NSW) 44.

48.	Mr. Kuira submitted that the evidence by Mr. Maken was that the Defendant Corporation was not aware of the proceedings initiated against it and the default judgment until about 5th May 2003 when the Plaintiff’s lawyer’s letter of that date was received. The order was never served until then which was some four (4) years after default judgment was entered, he said. The delay in the service of the order by the Plaintiff’s lawyers until very belatedly on or about 5th May 2003 was part of the delay in making an application to set aside the order, counsel went on to say.
 
49.	Counsel further submitted that the Defendant responded without delay by instructing Paul Paraka Lawyers on 5th June 2003, to act for it. However, on or around 8th August 2003, the Managing Director of the Defendant, Mr. Sixtus Weseliyaki passed away making it practically impossible for further instructions to be obtained from the Defendant and the matter was delayed for another two (2) months before the application to set aside the default judgment was eventually filed on 21st October 2003, counsel said.

50.	Counsel also relies on the Affidavit of Justin Issack, an employed lawyer with Paraka lawyers at the time and the one who had the carriage of the matter there. In that Affidavit Mr. Issack confirms their firm receiving instructions from the Mr. Sixtus Weseliyaki on 5th June 2003 and thereafter commenced his contacts with the Defendant particularly with those involved in the alleged accident and the difficulties he encountered in obtaining further instructions from the Defendant. Upon receiving further instructions and the perusal of the Statement of Facts and the Road Accident Report, he had concluded that his client had a strong defence on the merits and proceeded to draft a defence which is attached to his Affidavit as annexure "C".

51.	Counsel conceded that there is in actual fact no explanation for the delay in Paraka lawyers not prosecuting the first application that led to its dismissal for want of prosecution on 13 June 2008. He submitted however that the failure was on the part of Paraka lawyers whose actions or omissions should not be held against the Defendant relying on the case of Lihir Civil and Constructions Ltd.

52.	Counsel said that attempts to get an explanation from Paraka lawyers had been to no avail because firstly, Mr. Isaack had left the firm; and secondly, the relevant file could not be located after Paraka lawyers had relocated their office in Mt. Hagen. This was the reason why no explanation can be offered for the period between October 2003 and June 2008, a period of almost five (5) years, counsel submitted. 

53.	Moreover, counsel reiterated that the matter was not progressed properly because of; the death of the Defendant’s Managing Director, Mr. Sixtus Weseliyaki; the departure of Mr. Issack from Paraka Lawyers; the lack of interest shown by the Plaintiff to progress the matter to a trial for assessment of damages quickly after obtaining default judgment resulting in non-action. 

54.	Mr. Peri submitted that:-

•	the Defendant is coming to Court ten (10) years on to set aside the default judgment in the manner it has adopted which appears to be misconceived after the first application was dismissed;

•	the matter should proceed to trial for the assessment of damages for the Plaintiff to prove his damages;

•	there was no evidence before the Court about the period of inactivity between the time when Paul Paraka Lawyers were engaged to the time this application was filed;

•	Negligence of lawyers is not a reason to set aside a default judgment. 

55.	I accept that part of the blame for not making the application to set aside the default judgment sooner was upon the Plaintiff for not serving the formal order for default judgment until about 5th May 2003.

56.	However, when the order was eventually served, the onus was on the Defendant to promptly and within a reasonable time to file its application to set aside the default judgment. It only acted after receiving a second letter from the Plaintiff’s lawyers on or about 3rd June 2003, some twenty nine (29) days later and then on 5th June 2003 engaged the services of Paraka Lawyers to defend the action. The Defendant has provided evidence about the difficulties its lawyer faced which is primarily attributed to the death of its Managing Director. I would have thought that Mr. Kobla was the right person to locate and obtain instructions from given the nature of evidence he has provided. Mr. Kobla also mentions in his Statement of Facts that a person called Mr. Mek Tan, a relative of his was with him in the accident he was involved in and who like him was also injured as a result. No satisfactory explanation has been given as to why further instructions could not be obtained from Mr. Diri Kobla sooner or from Mr. Mek Tan for that matter.

57.	I accept that there is no evidence before the Court explaining why the first application was dismissed for want of prosecution on 13th June 2008. Evidence from the bar table is unacceptable.

58.	There is also no evidence before the Court from the Defendant explaining about what transpired after the dismissal of the first application and before Ketan lawyers were engaged on or about 25th June 2008 and the period between 25th June 2008 and the subsequent filing of this application on 14th October 2008.

59.	I also agree with Mr. Peri that a lawyer’s negligent conduct is not a good reason for setting aside a default judgment: see Leo Duque.

60.	I am not satisfied with the explanation for the delay in making the present application. The delay in total is unreasonable. 

Prejudice

61.	Mr. Kuira submitted that the Plaintiff will not suffer any prejudice in the event the default judgment was set aside because:-

•	First, the Plaintiff was partly at fault for protracting for nearly (9) years in progressing the matter since obtaining default judgment;

•	secondly, costs was part of the litigation process and should not be taken as a serious determining factor;

•	finally, since the Defendant has a defence on the merits, the Court should be mindful of s.59 of the Constitution (principles of natural justice) and allow the matter to proceed to trial where parties will have the opportunity to test their cases against each other and in the end for the Court to decide the outcome. 

62.	Mr. Peri did not make any substantive submissions, except to say that the Defendant was coming to Court ten (10) years too late which could not possibly succeed in the circumstances and the Court should allow the Plaintiff to proceed to proving his damages.

63.	I have already addressed the matters raised by Mr. Kuira as to defence on the merits and delay and they should suffice. Whilst the principles of natural justice must be observed, in the present case, I do not see where the Defendant has been denied the opportunity to defend this action. The Defendant has had the opportunity to apply to set aside the default judgment twice inclusive of the present application and it was up to it to satisfy the established legal principles to enable it to go further from here. 

64.	As to costs, I disagree with Mr. Kuira’s submissions. The Plaintiff will incur more costs should the matter be delayed any further.

CONCLUSION

65.	Whilst the Defendant has a defence on the merits, the onus was on the Defendant to provide satisfactory explanations in respect of the remaining principles. I think it can be deduced from the evidence that a casual approach has been taken by the Defendant in dealing with these proceedings. Given there are no satisfactory explanations from the Defendant, one wonders why Paraka lawyers decided to file a Notice of Ceasing to Act on 11th May 2006 leaving the Defendant with no legal representative until Ketan Lawyers came into the scene.

66.	I am not swayed to exercise my discretion to set aside the default judgment.

67.	The Plaintiff still has to prove his damages. The Defendant is at liberty to be represented and be heard on that aspect of the proceedings.

ORDER

68.	These are the formal orders of the Court:-

1.	The Defendant’s application is refused.

2.	The Defendant shall meet the costs of this application.

_______________________________________
Warner Shand Lawyers: Lawyers for the Plaintiff 
Ketan Lawyers: Lawyers for the Defendant