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Yamanka Multi Services Ltd v National Capital District Commission [2010] PGNC 1; N3904 (18 February 2010)

N3904

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS 768 OF 2001

BETWEEN:

YAMANKA MULTI SERVICES LIMITED
Plaintiff

AND:

NATIONAL CAPITAL DISTRICT COMMISSION
First Defendant

AND:

HEBOU CONSTRUCTION LIMITED
Second Defendant

Waigani: Hartshorn J.
2009: 15th September,
2010: 18th February

APPLICATION TO SET ASIDE DEFAULT JUDGMENT – Order 12 Rule 8 National Court Rules whether judgment irregularly obtained – matters to be considered – Order 1 Rules 8, 9, and 10 National Court Rules – ex parte judgment – whether reasonable explanation for delay in filing application

Facts:

The first defendant, National Capital District Commission, (NCDC), applied under Order 12 Rule 8 National Court Rules to have the ex parte default judgment entered against it set aside as, amongst others, it was irregularly entered as NCDC had filed a defence, it was entered ex parte, and NCDC has a good defence. The plaintiff, Yamanka Multi Services Limited opposes the application as, amongst others, the judgment was entered regularly and the application was not brought within a reasonable time.
Held:

1. Order 8 Rules 51(5)(d) & (e) National Court Rules do not require an amended defence to be filed. The defence already filed has effect and any new claims in the amended statement of claim are taken to be denied. Consequently NCDC was not in default and the judgment obtained against it for being in default was obtained irregularly.

2. The application to set aside has not been made within a reasonable time as required by Order 1 Rule 9 National Court Rules and there is no reasonable explanation for the delay of 4 years 9 months in making the application. Consequently the application to set aside the judgment, although entered irregularly, is refused.

3. The application to set aside the judgment as it was made ex parte is also refused.

4. The orders sought in the first defendant’s Notice of Motion are refused.

Cases cited

Page Pty Ltd v. Malipu Bus Balikau [1982] PNGLR 140
Leo Hannet & Anor v. ANZ Banking Group (PNG) Ltd (1996) SC505
Andrew Baing v. PNG National Stevedores Pty Ltd (2000) SC627
Smith v. Ruma Constructions Ltd (2002) SC695
Kerenge Kaupa v. State (2004) N2491
Frank Onga v. The State (2008) N3705

Counsel

Mr. A. Kwimberi, for the Plaintiff
Mr. R. Bradshaw, for the First Defendant
Ms. D. Doiwa, for the Second Defendant

18th February, 2010

1. HARTSHORN J. The first defendant, National Capital District Commission, (NCDC), applies under Order 12 Rule 8 National Court Rules to have the ex parte default judgment entered against it on 15th November 2004 set aside as it submits amongst others that the judgment:

a) was irregularly entered as NCDC had filed a defence. The failure of NCDC to file an amended defence to the amended statement of claim did not constitute a default: Order 8 Rule 51(5)(e) National Court Rules. Consequently default judgment should not have been entered.

b) was entered ex parte, and that

c) NCDC has a good defence.

2. The plaintiff, Yamanka Multi Services Limited opposes the application as it submits that:

a) the judgment was regularly entered but if it was not, then

b) NCDC was aware of the judgment from 22 November 2004.

c) the application to set aside the judgment was not brought within a reasonable time.

d) NCDC had taken further steps in the proceeding with knowledge of the judgment.

The law

3. The Supreme Court decision of Leo Hannet & Anor v. ANZ Banking Group (PNG) Ltd (1996) SC505 sets out the matters that an applicant must show for a court to be able to exercise its discretion to set aside a judgment.

4. For a judgment that has been obtained regularly, the court cited with approval the matters listed in Barker v. The Government of Papua New Guinea & Ors [1976] PNGLR 340 namely:

a) there must be an affidavit stating facts showing a defence on the merits;

b) there must be a reasonable explanation why judgment was allowed to go by default; and

c) the application must be made promptly and within a reasonable time.

5. For a judgment that has been obtained irregularly, the Supreme Court in Hannet (supra) in essence said that if the irregularity is not a nullity and falls within Order 1 Rule 8 National Court Rules:

a) the applicant must show a defence on the merits (adopting the opinion of Greville-Smith J. in Page Pty Ltd v. Malipu Bus Balikau [1982] PNGLR 140 that the practice in relation to judgments obtained regularly should apply to judgments obtained irregularly.)

b) the applicant shall not have taken a fresh step in the proceeding with knowledge of the irregularity, (a requirement of Order 1 Rule 9 National Court Rules.)

6. As the Supreme Court took into account the provisions of Order 1 Rule 8 and required compliance with part of Order 1 Rule 9, the other requirement of Rule 9 and associated Rule 10 by implication, must also be met. These other requirements are:

a) that the application is made within a reasonable time: Order 1 Rule 9 and,

b) the several objections intended to be insisted on, as to the irregularity, shall be stated in the notice of motion: Order 1 Rule 10.

7. I note that Order 1 Rules 9 and 10 are similar to and I suggest are derived from, Order 2 Rule 2(1) & (2) of the Rules of the Supreme Court 1965 of England which concerned applications to set aside amongst others, judgments, for irregularity. The requirements for a successful application under those Orders were that the application must be made within a reasonable time before the applicant has taken any fresh step after becoming aware of the irregularity, and the grounds of the objection must be stated in the summons or notice of motion. It was not a requirement under those Orders that a defence on the merits be disclosed. This court however, is bound by the decision in Hannet (supra) on this requirement.

8. Reference was made in submissions to the Supreme Court case of Andrew Baing v. PNG National Stevedores Pty Ltd (2000) SC627. In that case the Court commented upon when irregularly obtained judgments should be set aside. It is not apparent that Hannet’s case (supra) was considered. The subject matter before the Supreme Court in Baing's case (supra) concerned amongst others, conditional consent orders and is not specifically on point with the circumstances of this case.

Setting aside an ex parte judgment – principles

9. 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 (2002) SC695. 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.

10. These principles are in essence the same as the matters listed in Barker v. The Government of Papua New Guinea (supra) to be considered upon an application to set aside a judgment entered regularly.

Regular or irregular judgment

11. Given the above, the first issue to be determined is whether the judgment sought to be set aside was obtained regularly or irregularly.

12. The plaintiff submits that the judgment was regularly entered as:

a) the notice of motion seeking default judgment and the affidavit in support were properly served.

b) NCDC had failed to file its defence to new and additional claims in the amended statement of claim within the required time period.

c) the court order of 18th August 2004 required NCDC to file an amended defence.

13. NCDC submits that:

a) the judgment was irregularly entered as Order 8 Rule 51(5)(e) National Court Rules provides that the defence that it had filed to the statement of claim has effect as a pleading in answer to the amended statement of claim and therefore NCDC was not in default by not filing an amended defence.

b) the court order as to the filing of an amended defence merely provided a time limit for its filing if one was to be filed, but because of Order 8 Rule 51(5)(e) there was no requirement for an amended defence to be filed.

14. Paragraph 3 of the subject court order reads:

"The Defendant shall file and serve the amended defence within 14 days as of the date of service of the amended Statement of Claim."

15. There are two (2) defendants to this proceeding and so it can be argued that the court order is confusing as to whether it refers to both or either of the defendants. In addition, the time limit in the court order merely replicates the time provided in the National Court Rules for the filing of an amended defence.

16. That time limit in the Rules only applies if an amended defence is to be filed. I agree with the submission made on behalf of NCDC that Order 8 Rules 51(5)(d) & (e) do not require an amended defence to be filed. The defence already filed has effect and any new claims in the amended statement of claim are taken to be denied. Consequently NCDC was not in default and the judgment obtained against it for being in default was obtained irregularly.

17. As I have found that the judgment sought to be set aside was obtained irregularly, having regard to Hannet (supra) and the matters to be considered in respect of an irregularly obtained judgment, the next issues are whether NCDC has:

a) shown a defence on the merits; and

b) taken any fresh steps in the proceeding with knowledge of the judgment; and

c) made the application to set aside within a reasonable time; and

d) stated its objections to the irregularity that it insists upon in the notice of motion.

18. As all of the matters listed must be satisfied, the order in which they are considered is immaterial.

Stated objections in notice of motion

19. As to whether NCDC's objections to the irregularity have been stated in the notice of motion, the notice of motion relevantly reads that:

"The ex parte default judgment........ be set aside pursuant to Order 12 Rule 8(2)(a) and (b), 3(a) and (5) of the National Court Rules and on the ground that the default judgment was irregularly entered."

20. The National Court Rules stated in the notice of motion refer to the jurisdiction of the court to set aside the judgment. They do not give any indication as to the irregularity of which complaint is made. Also, merely stating that the default judgment was irregularly entered is not stating the objections intended to be insisted upon. Consequently NCDC's notice of motion does not comply with Order 1 Rule 10 National Court Rules. The application to set aside should be refused.

21. I note however that reference is made in the affidavit of Robert Bradshaw filed in support of the notice of motion to set aside, that NCDC's defence was on the court file at the time application for default judgment was made and that default judgment should not have been entered against NCDC. The plaintiff was aware then that this objection would be relied upon, even though it was not stated in the notice of motion. Given this, I will consider a further matter that has to be satisfied before an irregularly obtained judgment can be set aside.

Whether application made within a reasonable time

22. The default judgment sought to be set aside was obtained against NCDC on 15th November 2004. The application to set aside the judgment was filed on 31st August 2009, over 4 years 9 months later.

23. Ms. Mesa, the Acting Principle Legal Officer of NCDC, a lawyer, deposes amongst others that the NCDC file on the matter was dealt with by in house lawyers of NCDC before Mr. Bradshaw was instructed in November 2006. Ms. Mesa was not aware that default judgment had been entered ex parte until Mr. Bradshaw informed her on 16th July 2009.

24. Mr. Bradshaw deposes that he was instructed by NCDC on this matter on 6th November 2006 but that he was not aware that default judgment had been entered ex parte until Lay J. mentioned it at a pre-trial conference.

25. Both deponents do not depose that they did not know that default judgment had been entered, but merely that they did not know that default judgment had been entered ex parte.

26. The plaintiff submits that NCDC was aware that default judgment had been entered. There is an affidavit of service to the effect that a sealed copy of the judgment was served upon NCDC and there is a signed acknowledgement of receipt dated 22 November 2004. There is no evidence in opposition to this affidavit of service.

27. The reasons given on behalf of NCDC in regard to the delay in filing the application to set aside are not reasonable in my view. They concern knowledge as to whether the judgment was obtained ex parte, not knowledge as to whether judgment had been entered at all.

28. Further, there is no explanation as to the delay that occurred from 22nd November 2004 to November 2006, when Mr. Bradshaw was instructed. In addition, one would have thought that upon instructing or accepting instructions, a thorough review of the file received and the court file would have revealed how judgment had been obtained.

29. The period of time taken to file an application to set aside, over 4 years 9 months, is substantial. In the cases of, Kerenge Kaupa v State (2004) N2491 and Frank Onga v The State (2008) N3705, this court has refused applications to set aside judgments where the periods of time that had elapsed from the date of judgment to the filing of the applications where respectively, 4 years 1 month, and 4 years 4 months.

30. In this instance, I am not satisfied that it has been shown that the application to set aside has been made within a reasonable time as required by Order 1 Rule 9 National Court Rules or that there is a reasonable explanation for the delay of 4 years 9 months in making the application. Consequently the application to set aside the judgment as it was entered irregularly is refused.

Ex parte judgment

31. As to setting aside the judgment as it was made ex parte, counsel for NCDC conceded in his submissions that NCDC does not provide a good explanation as to why judgment was allowed to be entered in its absence. In fact NCDC does not provide any good explanation as to why judgment was allowed to be entered in its absence.

32. As to the requirement that the applicant show a defence on the merits, in this instance a defence was filed to the original statement of claim. There is no evidence however, as to whether NCDC has a defence on the merits to the amendments made to the statement of claim.

33. I have already found that the application to set aside was not made within a reasonable time or that there is a reasonable explanation for the delay of 4 years 9 months in making the application.

34. In the circumstances, I am of the view that NCDC has not properly satisfied this court in respect of the 3 required principles referred to by Kapi DCJ in Smith v. Ruma Constructions Ltd (supra).

35. Consequently the application to set aside the judgment as it was made ex parte should be refused.

36. Given this finding, it is not necessary to consider the other submissions of counsel.

Orders

a) the orders sought in the first defendant’s notice of motion dated and filed 31st August 2009 are refused.

b) the costs of and incidental to the notice of motion are to be paid by the first defendant to the plaintiff and the second defendant.

_____________________________________________
Kwimberi Lawyers: Lawyers for the Plaintiff
Bradshaw Lawyers: Lawyers for the First Defendant
Pacific Legal Group: Lawyers for the Second Defendant