N8092
PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS No. 692 of 2019

BETWEEN:

JARO INVESTMENT LIMITED
Plaintiff

AND:

NATIONAL HOUSING CORPORATION
Defendant

WAIGANI: Anis J
2019: 6 & 8 November

MOTION SEEKING JOINDER, SETTING ASIDE OF DEFAULT JUDGMENTAND INTERIMINJUNCTION – Order 4 Rule 49(5)(ii) – Order 5 Rule 2 and 8(3) – Order 12 Rule 35 – Order 12 Rule 1 – National Court Rules – Section 155(4) – Constitution 

Cases cited:

Makop v. Billy Parako (2004) N2593
Green –v- Green (1976) PNGLR 73
The Government of PNG & Davies v Barker (1977) PNGLR 386
Leo Hannet v ANZ Banking Group (PNG) Limited (1996) SC505
Provincial Government of North Solomon’s v Pacific Architecture Pty Ltd (1992) PNGLR 145

Counsel:

Mr H Leahy, for the Plaintiff
MrS Gor, for an interested party
No appearance, for the Defendant

RULING

8th November, 2019

1.	ANIS J:	The application filed by Yan Gui Ping seeking, amongst others, to be joined as a party was heard on 6 November 2019.  I reserved my ruling to today at 9:30am.

2.	This is my ruling.

BACKGROUND

3.	The plaintiff obtained default judgment ex-parte on 16 October 2019.  Its claim was in relation to a property that is based in Vanimo in West Sepik Province.  The property is described as State Lease, Volume 25, Folio 99 Allotment 7, Section 2, East Tower Hill, Top Vanimo, Sandaun Province (the Property).  The plaintiff pleadedin its statement of claim the following.  On 6 June 2018 it said it entered into a contract of sale of the Property with the defendant.  It said the purchase price was K505,312.50.  It said on the same day on 6 June 2018, it paid its 10% deposit of K51, 531.75 to the defendant.  It claimed that on 18 June 2018, the defendant had written a letter to it.  In the letter, the defendant informed the plaintiff that the property had been sold to another person.

4.	That has led the plaintiff to file this proceeding where it has obtained orders for specific performance of the contract.  That is, on 16 October 2019, this Court granted default judgment against the defendant.  The orders include orders against occupants of the Property, including Mr Ping whom the plaintiff had claimed was an occupant, to give up vacant possession of the Property to the plaintiff.  The actual order of the Court reads, and I quote in part,

1.	The Defendant shall forthwith complete the contract for the sale of land signed with the Plaintiff and dated 6 June 2018 in respect of the property, allotment 7 section 2, East Tower Hill, Top town Vanimo, Sandaun Province (State Lease volume 25 folio 99)(the ”Land”); and
2.	The Defendant and any person in possession of the Land including Mr. Yan Gui Ping shall immediately deliver up vacant possession of the Land to the Plaintiff, free of encumbrances of any kind; and
3.	The costs of and incidental to the Plaintiff’s notice of motion filed 8 October 2019 shall be paid by the Defendant, National Housing Corporation; and
4.	These orders are abridged to the time of settlement by the Registrar which shall take place forthwith.

MOTION

5.	Mr Ping’s notice of motion seeks various orders.  They include the following,

2.	Pursuant to Order 5 Rule 2 and 8(3) National Court Rules the Applicant, Mr Yan Gui Ping be joined as the Second Defendant in this proceeding.
3.	Pursuant to Order 12 Rule 35 National Court Rules the Order for default judgment made and entered 16 October 2019 be set aside forthwith.
4.	Pursuant to Order 12 Rule 1 National Court Rules and this Honourable Court’s inherent jurisdiction under section 155(4) Constitution, until further Order, the Plaintiff and its servants and agents be restrained from entering on to the property described as Allotment 7 Section 2, Top Town/Fourmill Vanimo, West Sepik Province, and Mr Yan Gui Ping and his servants and agents be allowed to continue and complete the construction work.

EVIDENCE

6.	Mr Ping relies on his affidavit he filed on 30 October 2019.  He also relies on an Undertaking as to Damages which he also filed on 30 October 2019.

7.	The notice of motion is opposed.  In reply, the plaintiff has filed its response through an affidavit, that is, one deposed by Jason Lin which was filed on 5 November 2019.

ISSUES

8.	In my view, the main issues are, (i), whether Mr Ping should be joined as a party to the proceeding, (ii), subject to the first issue, whether default judgment should be set aside and whether interim restraining orders should be granted to Mr Ping against the plaintiff.

JOINDER – ORDER 5 RULE 8

9.	Mr Ping cites Order 5 Rule 8(3) of the National Court Rules as one of the sources of the rules that he is relying on to seek joinder.  I will begin by setting out in full Order 5 Rule 8 herein,

8.	Addition of parties. (8/8)
(1)	Where a person who is not a party —
(a)	ought to have been joined as a party; or
(b)	is a person whose joinder as a party is necessary to ensure that all matters in dispute in the proceedings may be effectually and completely determined and adjudicated on,
the Court, on application by him or by any party or of its own motion, may, on terms, order that he be added as a party and make orders for the further conduct of the proceedings.
(2)	A person shall not be added as plaintiff without his consent.
(3)	Without limiting the generality of Sub-rule (1), where a person not a party to proceedings for possession of land is in possession (by himself or by a tenant) of the whole or any part of the land, the Court, on application by him, may, on terms, order that he be added as a defendant and make orders for the further conduct of the proceedings.

(Underlining mine)

10.	Evidence filed by Mr Ping shows that he holds a state lease over the Property.  I refer to annexure C to his affidavit.  There, Mr Ping attaches a copy of the title to the Property which was issued to him on 13 December 2018.  He also attaches at annexure B to his affidavit, an earlier title to the Property which was under the name of the plaintiff which had been issued on 15 June 2018.  Mr Ping’s title shows that the plaintiff’s title was subsequentlypurportedly cancelled on 1 October 2018 before it was purportedly registered to his name.  Upon hearingsubmissions from counsel for the plaintiff, the plaintiff does not dispute the existence of the two (2) titles.  Counsel also submits that the plaintiff has also recently filed a judicial review proceeding in the National Court where the leave hearing is pending, that is, leave to apply for judicial review to challenge Mr Ping’s title over the Property.

11.	As for the plaintiff, I refer to its submissions.  In summary, it claims that Mr Ping has no real interest in the present proceeding.  It submits that its claim, based upon which default judgment was entered, was based on enforcement of a contract for the sale of the Property between itself and the defendant.  It submits that Mr Ping is not privy to the said contract for sale of land and therefore has no interest in the proceeding that is before this Court.  The plaintiff submits that the Court should refuse the joinder application.  I note that I had asked counsel for the plaintiff this, that if his client already had or has title to the Property, then what was the purpose for filing the proceeding in the first place.  In my view, counsel did not give a satisfactory answer to that.  I also asked counsel that if the defendant had already sold the property to Mr Ping who has now produced a copy of the title in evidence, then how can the plaintiff by this proceeding seek to enforce a contract for sale of the Property against a party who no longer holds title or interest to over the land in question.  In my view, the principle of indefeasibility of title should not be overlooked or put aside if the outcome of a proceeding is to or maydisturb or affect a title to a property which has a registered proprietor who is not named as a party to the proceeding.  I say this in view of the case law and the laws that govern leases over state land, and in particular, section 33 of the Land Registration Act Chapter No. 191.  

12.	On these basis alone, and there are other reasons which I will get to below, I find that Mr Ping has a direct interest in the matter or to the Property which is the subject of this proceeding.  I find that he ought to have been joined as a party in the first place.  I also note and it is not disputed that Mr Ping currently occupies the Property in Vanimo.  He has been occupying it for some time and evidence shows that he is presently building on the Property.  I am therefore satisfied that the applicant has satisfied the requirements under Order 5 Rule 8 of the National Court Rules, and I order that he be added as a defendant to this proceeding.

13.	Upon joining Mr Ping, I note that Order 5 Rule 8(3) also gives the Court the power to make orders for the further conduct of the proceedings.  

14.	Given my finding to join Mr Ping, and with my powers under Order 5 Rule 8(3), I am at liberty now to make orders as to the further conduct of the matter without having to further consider the processes that are required for setting aside a default judgment.  In my view, exercise of the Court’s power under Order 5 Rule 8(3) and Order 12 Rule 35, are two are completely different processes with different requirements to be met as well as consequences. 

15.	As such and in this case, I will order the default judgment of 16 October 2019 to be set-aside.  I will also order Mr Ping to file his Defence within 14 days from the date of this order or subject to further considerations. I will also make other consequential orders, one of which may be to allow the plaintiff to amend its writ of summons and statement of claim where required.  But before I do so, let me consider the other issues.

SETTING ASIDE DEFAULT JUDGMENT

16.	In this case, Mr Ping has also sought separately in his notice of motion for default judgment to be set aside.

17.	In regard to setting aside of the default judgment, Mr Ping relies on Order 12 Rule 35 of the National Court Rules.  It state, and I quote in part, 

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

18.	There are many case authorities on point.  In this case, I will refer to the case of Makop v. Billy Parako (2004) N2593.  Justice Manuhu summarises the difference between a judgmentthat is entered ‘regularly’ to a judgment that is entered ‘irregularly’.  His Honour stated, and I quote in part,

In applications like this, the initial inquiry is whether the exparte order was made regularly or not.  Where an exparte order has been made irregularly, the only just remedy is to rectify the irregularity by setting aside the exparte order.  Non-compliance with an important procedural requirement under the National Court Rules is usually considered as an irregularity, which generally results in an exparte order being set aside.  On the other hand, where an exparte order has been made regularly or in compliance with relevant procedural requirements, setting it aside is dependent on what is just and fair in all the relevant circumstances; and, what is just and fair is dependent on the reasons for the non-appearance which permitted the matter to proceed exparte; the merits of the applicant’s case; and, the promptness of the application to set aside exparte order.  

19.	Mr Ping, through counsel, submits that default judgment in this case was irregularly entered. Let me say this.  The plaintiff, with respect, has not fully disclosed all the facts in both its pleading as well as in evidence to the Court before default judgment was entered.  In my view, what appears to be a claim to enforce a contract of sale of land may be misconceived, or it may also be, with respect, perceived as a disguise to avert or subvert Mr Ping’s interest over the Property.  I do not say this lightly given the recent revelations of evidence in the two (2) recent affidavits filed by both Mr Ping and the plaintiff through Mr Lin (the evidence).  The evidence showsthat the plaintiff was well aware of the existence of the two (2) state leases or titles before it filed this proceeding.  It therefore makes me wonder and I cannot help but ask whether the actual cause of action should be for the plaintiff to sue Mr Ping instead of the defendant, and also, whether the correct process should be judicial review.  I note that I haveraised these with counsel for the plaintiff at the hearing.  That was when counsel informs the Court that the plaintiff has actually filed such a review which is pending before the National Court.  In Mr Lin’s affidavit,he attaches evidence which shows that there was a similar proceeding which had been commenced by the plaintiff against Mr Ping and the defendant in 2018.  The plaintiff had claimed, amongst others, fraud against Mr Ping in relation to his title over the Property.  The proceeding is described as WS 855 of 2018.  The proceeding was discontinued by consent of the parties this year on 18 April 2019.

20.	The plaintiff presents one argument against Mr Ping’s intention to set aside the default judgment order.  It submits thatit had issued due notice to Mr Ping, as an occupant of the Property, before default judgment was entered.  It submits that Mr Ping did nothing and waited until he was served with the Court Order for default judgment.  The plaintiff submits that Mr Ping has failed to provide reasons as to why he did not act promptly but waited and now belatedly makes this application.  I have considered the submissions of counsel.  In my view, I find the argument misconceived.  Mr Ping was not a party to the proceeding.  Had he been a party to the proceeding and had default judgment been regularly entered, he would be required to provide explanations for his delay or for allowing judgment to be entered in his absence.This is not the case here nor is it the line of argument raised by Mr Ping.  Mr Ping is claiming, as stated above, that default judgment was irregularly entered.  Under the circumstances, this Court is required to consider whether there was Non-compliance with an important procedural requirement under the National Court Rules, as held in Makop v. Billy Parako (supra).  See also cases:  Green –v- Green (1976) PNGLR 73; The Government of PNG & Davies  v Barker(1977) PNGLR 386, Leo Hannet v ANZ Banking Group (PNG) Limited (1996) SC505, and Provincial Government of North Solomon’s  v Pacific Architecture Pty Ltd (1992) PNGLR 145.

21.	So, was default judgment irregularly entered?  The plaintiff, as the evidence now reveals, knew all along that Mr Ping has a direct interest in the Property, that is, that Mr Ping holds a title over the Property.  Yet ithascommenced this proceeding to seeks specific performance and other orders against the defendant in relation to the Property when the plaintiff knew or ought to have known that the Property had been sold to Mr Ping and that the defendant no longer owns it.  I say this without hesitation in light of the pleading in the previous Court proceeding that had been filed, that is, WS 855 of 2018, and based on the evidence that are contained in the two affidavits filed by both the plaintiff and Mr Ping.  

22.	To me, I find too many plausible flaws and breaches of procedures and court rules that warrants or proves to my satisfaction that default judgment was irregularly entered.  The defendant, as confirmed in both titles, did not appear to have a legal interest in the Property yet it was named as the relevant party and was sued over something which it may not have to which it may not pass on to the plaintiff.  Secondly, Mr Ping, whose name appears on one of the two (2) titles was not named as a party.  I note that the plaintiff may have already taken steps to challenge Mr Ping’s title by way of judicial review.  But as it is, Mr Ping’s title is the latter title and his title shows that the earlier title under the name of the plaintiff had been cancelled, and the matter may now be subject of another judicial proceeding.  I must state clearly here that I am of course not making a determination as to the validity of the two titles.  That is something which perhaps the judicial review Court will determine at some point in time.  But for this purpose, it gives all the more reason to show that Mr Ping must be joined and that he appears to have a valid defence in this matter and he should be allowed to file his defence.  

23.	I also notice this.  The plaintiff applied for default judgment specifically seeking relief 2 in its statement of claim.  I granted default judgment based on that. Relief 2 in the statement of claim states, and I read,

An order that the Defendant specifically performs the Contract and delivers up good and clear title to the Plaintiff and further more delivers up vacant possession of the Property to the Plaintiff free of encumbrances of any kind whatsoever.

24.	However, the minute of the Order that was taken out by the plaintiff reads in part,

1.	The Defendant shall forthwith complete the contract for the sale of land signed with the Plaintiff and dated 6 June 2018 in respect of the property, allotment 7 section 2, East Tower Hill, Top town Vanimo, Sandaun Province (State Lease volume 25 folio 99)(the “Land”); and
2.	The Defendant and any person in possession of the Land including a Mr Yan Gui Ping shall immediately deliver up vacant possession of the Land to the Plaintiff, free of encumbrances of any kind.

25.	I note that a draft order was handed up in Court in those terms and were endorsed by the Court.  It is obvious that the Court had endorse draft orders that had not been originally sought and granted in the plaintiff’s notice of motion.  Therefore, it is yet another reason why the ex-parte default judgment orders of 16 October 2019 should be set aside.

INTERIM INJUCTION

26.	Mr Ping has also sought in his notice of motion that interim restraining orders should be ordered against the plaintiff from interfering with his dealings or affairs on the Property.  He has filed an undertaking as to damages in support of his claim.

27.	I note that the plaintiff has not made any submissions to this claim.  In my view, I am inclined to grant the interim relief.  I am satisfied that the Mr Ping has an arguable defence and I refer to what I have already stated above in my decision.  I also note that he is currently occupying the Property and he has been there for over a period of time.  The balance of convenience in my view favours Mr Ping.  Mr Ping has given an Undertaking as to Damages which was filed on 30 October 2019.

COST

28.	Cost award is discretionary.  In this case, Mr Ping has asked for cost to be ordered in the cause.  I will order cost in that manner.  

ORDERS OF THE COURT

29.	I make the following orders 

1.	The interested person Yan Gui Ping is joined as the first defendant in the proceeding, and National Housing Corporation which is the current defendant shall be named as the second defendant.

2.	Default judgment which was entered ex-parte on 16 October 2019 is set aside.

3.	The plaintiff is at liberty to amend, file and serve its writ of summons and statement of claim where required upon the defendants, within 21 days from the date of this Order.

4.	The first defendant Yan Gui Pingshall file its defence within 14 days thereafter.

5.	Until further Order, the plaintiff and its servants and agents are restrained from entering onto the property described as Allotment 7 Section 2, Top Town/Fourmil Vanimo, West Sepik Province, and Mr Yan Gui Ping and his servants and agents be allowed to continue and complete the construction work.

6.	Cost shall be cost in the cause.

7.	Time for entry of these orders is abridged to the time of settlement by the Deputy Registrar of the National Court which shall take place forthwith.

The Court orders accordingly
________________________________________________________________

Pacific Legal Group:	Lawyers for the Plaintiff
NHC in-house lawyer:	Lawyers for the Defendant
Fiocco& Nutley	Lawyers for an interested party