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Iangalio v National Development Bank [2020] PGNC 69; N8278 (23 April 2020)

N8278

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS No. 631 of 2014 (COMM)

BETWEEN:
MASKET GABRIEL IANGALIO
Plaintiff

AND:
NATIONAL DEVELOPMENT BANK
First Defendant

AND:
MICHAEL YAI PUPU
Second Defendant

AND:
MARTIN MAUA
Third Defendant

Waigani: Anis J
2020: 18^th & 23^rd April

NOTIICE OF MOTION – Balance of relief sought – whether defence and cross-claim filed within time – Order 7 Rule 2 and Order 12 Rule 25(a) & (b) – National Court Rules – whether applicant has discharged burden of proof - whether Court can vary its earlier order ordering cost against 2^nd defendant – Order 12 Rule 8 (4) – National Court Rules - discretion

Case Cited:

Nil

Counsel:

Mr D Kamen, for the Plaintiff/Respondent
Mr J Kaki, for the First Defendant/Respondent
Mr A Benny, for the Second Defendant/Applicant
Mr C Jaminan, for the Third Defendant/Respondent

RULING

23^rd April, 2020

1. ANIS J: The balance of the 2^nd defendant’s notice of motion filed on 17 July 2018 (application) returned for hearing at 1:30pm on 18 March 2020. The application was contested. I reserved my ruling to a date to be advised

2. Parties have been notified so I will rule on it now.

BACKGROUND

3. The plaintiff claims that the defendants, through alleged fraud or fraudulent conducts, transferred his property, described as Volume 29, Folio 150, Portion 9 Milinch Wapenamanda (property), to the 2^nd defendant. The plaintiff had been a guarantor to a loan that had been obtained by a company called Mamaku Investment Limited. The guarantee agreement had been between the plaintiff and the 1^st defendant. The company defaulted and the 1^st defendant, as the creditor and holder of the security over the property, sold the property over to the 2^nd defendant. The plaintiff files this proceeding to, amongst other things, reclaim ownership of the property based on allegation of fraud against the defendants.

4. The defendants dispute the claim. Except for the 3^rd defendant’s defence and cross-claim, which are part of the issues now before me, the 1^st and 2^nd defendants have filed their defences.

MOTION

5. The outstanding relief sought the application are as follows:

3. In the alternative to relief (1) and (2),

......

(ii) The Third Defendant’s Defence and Cross claim filed on 18^th April 2018 be struck out pursuant to Order 7 Rule 2 and Order 12 Rule 25(a) and (b) of the National Court Rules; and

(iii) The Honourable Court varies the orders of 20^th February 2018 and further orders the Third Defendant to refund the K500.00, paid by the Second Defendant as costs, with interest and costs pursuant to Section 155(4) of the Constitution and Order 12 Rule 8(4) of the National Court Rules; and

(iv) Cost of this application be paid by the Plaintiff and the Third Defendant, to be paid within seven (7) days; and

4. In the further alternative to reliefs (3)(i), (ii) and (iii), the Second Defendant be granted leave to file his Defence to the Third Defendant’s Cross-Claim within fourteen (14) days pursuant to Order 1 Rule 15(1) of the National Court Rules and Section 155(4) of the Constitution; and
5. Such other Orders this Court deems necessary.
   

ISSUES

6. The issues are, (i), whether the 3^rd defendant has defaulted in filing his defence and cross-claim and if so whether his defence and cross-claim should be struck out, (ii), whether the Court’s order concerning the 3^rd defendant’s cost made on 20 February 2018 should be varied, and (iii) if in the event the Court finds the 3^rd defendant’s defence and cross-claim to be in order, whether leave should be granted to the 2^nd defendant to file his defence to the 3^rd defendant’s cross-claim.

DEFAULT?

7. The 2^nd defendant, with the support of the 1^st defendant, submits that the 3^rd defendant has filed his defence and cross-claim out of time. He submits that the 3^rd defendant did not seek leave of the Court before he filed the 2 pleadings. The 2^nd defendant therefore submits that the 3^rd defendant’s defence and cross-claim should be struck-out.

8. The plaintiff and the 3^rd defendant tend to concede that the 3^rd defendant’s defence and cross-claim may have been filed outside the required time. But the plaintiff argues that because fraud is pleaded and the rules do not provide for summary judgment, the way forward, he submits, should be to allow the defence and cross-claim in, and that the matter should progress to trial. The 3^rd defendant filed an affidavit to oppose the application. He claims to be a lay person and blames his many lawyers which he had engaged in the past, as the reasons why he had not take the necessary steps in the matter. The 3^rd defendant’s counsel urged the Court to exercise its discretion and allow the defence and cross-claim in, that is, as part of the pleadings.

9. I have considered the arguments and in particular the evidence that have been relied upon by the 2^nd defendant. I note that it is the 2^nd defendant that is seeking to strike out the 3^rd defendant’s defence and cross-claim. He therefore, in my view, has the burden of proof, that is, to prove that the 3^rd defendant has defaulted; that his defence and cross-claim have been filed out of time. So the question that I have is this. Has he done that? Or where is the evidence which shows that the 3^rd defendant has defaulted? When I look at the pleadings, I note this. The plaintiff has filed an amended statement of claim (ASoC). It was filed on 30 September 2016. The plaintiff had difficulties serving the ASoC on the 2^nd defendant. So on 29 November 2016, he applied to and the Court granted leave for substituted service of the ASoC upon the 2^nd defendant. The 2^nd defendant defaulted afterwards to file his defence to the ASoC. On 20 February 2018, he applied to and the Court granted him leave to file his defence out of time.

10. With these said, let me now refer to the 2 affidavits that were relied upon by the 2^nd defendant. The first is his affidavit which was filed on 17 July 2018, and the second is that of one Charles Kaki which was also filed on 17 July 2018. I have considered them. What stands out which is relevant to the 1^st issue, is this. Both evidence only refer to the original writ of Summons and Statement of Claim (original writ). Mr Kaki states at paragraph 6 of his affidavit that the 3^rd defendant was served with the original writ on 2 July 2014. Both he and the 2^nd defendant have computed time based on the said date of service, to establish the purported default claim against the 3^rd defendant. This is where I differ. Since the original writ has been amended, computation of time to consider whether the 3^rd defendant has defaulted, in my view, should commence on the date of service of the ASoC upon the 3^rd defendant. When I look at all the evidence that is presented before me, and in particular the evidence of the 2^nd defendant, I note that there is nothing there to assist me make that determination. It also brings into the question whether the 3^rd defendant was ever served with the ASoC. The parties generally have not assisted the Court in that regard. If the 3^rd defendant has not been served with the ASoC, then can he be in default of filing his notice of intention to defend, defence and cross-claim?

11. I am therefore not satisfied that the 2^nd defendant has discharged that burden of proof. The burden of proof therefore does not shift to the 3^rd defendant. I find that the 2^nd defendant failed in that regard. I will dismiss relief 3(ii) of the application. I refuse to strike out the 3^rd defendant’s defence and cross-claim.

VARIATION OF ORDER

12. The next issue is whether I should grant variation to part of the Court’s order that was made on 20 February 2018. The variation request relates to terms 2 and 3. In summary, they relate to orders made whereby the 2^nd defendant was ordered pay the 3^rd defendant’s cost at a fixed rate of K500, for the vacation of the trial date.

13. The 2^nd defendant submits that since the 3^rd defendant had defaulted in filing its defence and cross-claim, the Court should not have ordered cost at all or in the sum of K500, in favour of the 3^rd defendant. As such, he requests that the said orders to pay cost at K500 to the 3^rd defendant should be varied or set-aside.

14. I will refuse this relief. I do so for the reasons I gave above on the first issue. I will also add that the 3^rd defendant is a named party to this proceeding, and the Court was entitled to award costs in the manner as it had done.

LEAVE TO FILE DEFENCE

15. The 3^rd issue or relief, in my view, does not arise given my earlier finding and ruling under the first issue. I will dismiss it. Let me also remark that given the long delay, that that may be something that the parties could agree upon; or take a pragmatic approach by allowing the 2^nd and 3^rd defendants to settle their pleading issues, so that the matter can progress to trial, if not resolved, without further delays.

SUMMARY

16. For the reasons stated, the balance of the application shall fail.

COST

17. An order for cost is discretionary. In this case, I note that none of the parties were able to assist with the material issue, in particular, on the question of whether the 3^rd defendant had been served with the ASoC. Parties, in my view, had spent too much time addressing matters which had no serious bearing to the outcome of the application.

18. I will order each party to bear their own costs.

ORDERS OF THE COURT

19. I make the following orders:

1. The balance of the 2^nd defendant’s notice of motion filed on 17 July 2017 is dismissed.
   
2. For clarity, I refuse to strike out the 3^rd defendant’s defence and cross-claim.
   
3. Parties to bear their own costs of the application.
   
4. Time for entry of these orders is abridged to the date of settlement by the Registrar which shall take place forthwith.
   

The Court orders accordingly.
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Kamen Lawyers: Lawyers for the Plaintiff
In-house Lawyers: Lawyers for the First Defendant
Niuage Lawyers: Lawyers for the Second Defendant
Jaminan & Partners Lawyers: Lawyers for the Third Defendant