N8894
PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS (COMM) NO. 440 OF 2018

BETWEEN:
KINA BANK LTD
Plaintiff

V

MARK BAIAI
First Defendant

AND
GLORIA BAIAI
Second Defendant

Waigani: Anis J
2021: 18th & 30th June

NOTICE OF MOTION – Application for Stay – Order 13 Rule 11 – National Court Rules – matter at enforcement stage – seeking to stay final decision of the Court on the basis of matters occurring after the date of judgment – claim that one of the judgment debtors is employed and is able to renegotiate the loan – claim of a supreme court review being filed - exercise of discretion

Cases Cited:

Gary McHardy v. Prosec Security and Communication Ltd [2000] PNGLR 279
Pacific Trade International Ltd v. James Waisime (2019) SC1820
Yii Ann Hii v. The Deputy Commissioner of Taxation of the Commonwealth of Australia (2017) SC 1626

Counsel:

B Yalehen, for the Plaintiff
I Vere, for the Defendant

RULING

30th June, 2021

1.	ANIS J:	The defendants applied to stay execution of the final judgment of this Court made on 17 April 2020.  The application was contested.  I reserved my ruling on 18 June 2021 to a date to be advised.

2.	Parties have been notified of today’s hearing so I will rule on it.

BACKGROUND

3.	The plaintiff obtained judgment against the defendants on 17 April 2020.  In summary, this Court awarded judgment against the defendants in regard to housing and business loans that the defendants had with the plaintiff.  In regard to the housing loan, the Court awarded a judgment sum of K113,225.90, and in regard to the business loan, it awarded K36,476.40.  The judgment includes interest and costs.  A property had been put up as security for the loans by the defendants.  It is described as allotment 66, section 506, Hohola, National Capital District (the property).  The Court also ordered the defendants to give vacant possession of the property to the plaintiff, and for the plaintiff to sell the property where required to satisfy the judgment sums, interests, and costs.

4.	The defendants now file this application.

APPLICATION

5.	The notice of motion was filed on 13 May 2021.  The main relief sought are:

1.	Pursuant to Order 13 Rule 11 of the National Court Rules for a Stay of the execution of judgment on the grounds of matters occurring after the date of which the judgment took effect.  These matters are:
a.	The first and Second Defendant now being gainfully employed;
b.	Filing an application for Leave to Review the decision of the trial Judge in this matter, in DFTT SC Review No. 35 of 2020.

2.	Pursuant to Order 8 Rule 69(1) and (2) of the National Court Rules to:
a.	bring money into Court from time to time in answer to any one or more causes of action on which the Plaintiff claims;
b.	file a security in accordance with Rule 81

6.	The main evidence the defendants rely on is the affidavit of the first defendant filed on 13 May 2021. 

ISSUE

7.	The main issue, in my view, is this, whether this Court can grant a stay given that an appeal has been lodged and is pending before the Supreme Court which has been filed out of time by way of a Supreme Court Application for Leave to Review.  Subject to my findings, I may go on to consider the other issues.

THE LAW

8.	Order 13 Rule 11 of the National Court Rules reads: 

11.  Matters occurring after judgement. (42/12)

(1)	A person bound by a judgement may move the Court for a stay of execution of the judgement or for some other order, on the ground of matters occurring after the date on which the judgement takes effect and the Court may, on terms, make such order as the nature of the case requires.
(2)	Sub-rule (1) does not affect the powers of the Court under Rule 21 (stay of execution).

STATUS QUO

9.	In my view, the main consideration for this purpose should be the present status quo of the matter.  Judgement was entered on 17 April 2020.  The defendants have now filed an appeal which is pending before the Supreme Court.  The appeal appears to have been filed in 2021, that is, SCR No. 13 of 2021.  According to submissions by their counsel, the application for leave to review is set to be heard on 22 July 2021.  

10.	Given these 2 factual scenarios, I make the following observations.  Firstly, the decision of the Court of 17 April 2020 is a final decision.  And the defendants have decided to appeal against it.  It is of course their right to do so, and they have done that.  Their intention now, and since it appears that they were out of time to lodge an appeal, is to invoke the jurisdiction of the Supreme Court by seeking leave to challenge the National Court’s decision of 17 April 2020.  In my view, since that is their course for their action, the proper process, given that proceeding in the National Court has concluded, would be to seek leave and subject to leave being granted, obtain a stay in the Supreme Court.  See cases: Gary McHardy v. Prosec Security and Communication Ltd [2000] PNGLR 279, Pacific Trade International Ltd v. James Waisime (2019) SC1820, and Yii Ann Hii v. The Deputy Commissioner of Taxation of the Commonwealth of Australia (2017) SC 1626.  The defendants have followed that path so that should be the process to follow.  

11.	The stay relief is available and may be sought in their Supreme Court Review Application.  It seems quite obvious from the evidence that is before the Court that the defendants are taking this measure because the plaintiff is seeking to enforce the judgment.  There is nothing preventing them from seeking the stay relief in the Supreme Court.  They had all the opportunities to do so but it seems that they have not been proactive with their Supreme Court Review Application, and it has now come to this.

12.	I note that Order 13 Rule 11 provides for one to obtain a stay order against enforcement of a judgment, and at this juncture, it can be said that the defendants may invoke such a provision.  And in so doing, they rely on the grounds, firstly, that the first defendant has acquired employment, and secondly, that they have a pending review before the Supreme Court, which they claim have occurred after the National Court decision of 17 April.  I have made my decision regarding the second ground.

13.	My view in regard to the first ground is this.  With respect, I find the ground misconceived.  I do not think such a reason can be the basis for the Court to exercise its powers under Order 13 Rule 11.  The fact that one of the parties may have gained employment after the judgment, is of, in my view, little or no consequence to the final judgment of the National Court.  The reason may perhaps be negotiated separately between the defendants and the plaintiff to see whether an internal arrangement is possible.  That option is there, and the defendants may discuss that with the plaintiff.  However, to grant a stay and make orders as sought by the defendants, may effectively mean to re-open or revisit the final judgment of the Court of 17 April.  As such, I do not see that as good basis for me to exercise my discretionary power.  Events after judgment has been entered, such as, (i) in a case where a defendant has been adjudged insolvent or (ii), in the case of a company where it ceased to exist or has been declared insolvent, are some of the reasonable factors where the Court may be able to, if satisfied, exercise its discretion under Order 13 Rule 11.  This is not the case here.  And I will add this.  The nature of the transactions, based upon which judgment was entered, was commercial, and the plaintiff had established breach of contract and entitlement to enforce the mortgage agreement that judgment was entered in its favour, and the proceeding is now at the enforcement stage.  The defendants, in my view and with this application, may be indirectly attempting to renegotiate the terms of the loan agreement on the premise that one of them has gained employment and is able to make fortnightly deductions to off-set the judgement sum, when there has already been a final determination made by a Court of law in regard to allegations of breach of contracts that had been pleaded.  The issue may be regarded as res judicata.  I find that to be the case.

14.	Even if I may be wrong, I note that the defendants have not disclosed evidence of how they intend to fully settle the outstanding judgment. I have considered the evidence of the first defendant that was filed on 13 May 2021.  I notice in his deposition where he asserts that after he gained employment in January of 2020, he tried to make repayments, but the loan account was frozen.  As I had discussed with counsel at the hearing, once a loan transaction becomes bad, and after the notice of default and demand for payment is made by the bank, the status quo would be that the bank, as would be shown in the letter of demand, would require the full repayment of the loan arears as at the time the notice is issued out to a debtor.  Once that is done, the files are normally brought to the bank’s recovery section or to its lawyers for prosecution.  Any attempts by a debtor afterwards (i.e., after having received notice of default and demand for full repayment) to make normal repayment as per the terms of the loan agreement is futile or irrelevant, in the sense that the bank has repudiated the loan agreement and has demanded the full repayment of its total loan arears including interest and costs.  Limited options that may be available to a debtor at that time may be to fully repay the loan sum plus interest and costs, or the debtor may re-negotiate the terms and conditions of the loan agreement.  If the latter is successful, the parties may settle on that with new terms and conditions.  For these reasons, I would still not find the defendants’ first reason valid or as a good reason for me to exercise my discretion in their favour and grant a stay.

EXERCISE OF DISCRETION

15.	I therefore refuse the defendants’ notice of motion filed on 13 May 2021.

COST

16.	An award of cost in an interlocutory application remains discretionary.  I will order cost to follow the event.

REMARKS

17.	Let me make these remarks.  Firstly, I notice certain facts that were pleaded in the notice of motion which appears to be inaccurate.  The relief refers to both defendants gaining employment whereas the evidence refers to only the first defendant as having gained employment.  The next inaccuracy is this.  The defendants’ reference or description for their Application for Leave to Review in the notice of motion, is not the same as those revealed in their evidence and submissions.  As a result, concerns had been raised by counsel for the plaintiff which had to be clarified at the hearing.  And because the defendants did not attach a certified filed copy of their leave application, this Court is unable to confirm whether the correct court file number is SCR No. 35 of 2020, which is pleaded in the notice of motion, or whether it is SCR No, 13 of 2021 which is deposed to in evidence and in the submissions of the defendants.

ORDERS OF THE COURT

18.	I make the following orders: 

1.	The defendants’ notice of motion filed on 13 May 2021 is refused.

2.	The defendants shall pay the plaintiff’s cost of the application on a party/party basis to be taxed if not agreed.

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

The Court orders accordingly
________________________________________________________________
O’Briens:   Lawyers for the Plaintiff
Vere:          Lawyers for the First and Second Defendants