N9143
PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

OS (COMM) NO. 392 OF 2018 (3)

BETWEEN
RUMBAM ENGINEERS LIMITED
First Plaintiff

AND
PERELO & ASSOCIATES CONTRACTORS
Second Plaintiff

AND
HIRI 152 DEVELOPMENTS LTD
First Defendant

AND
PAPA RESOURCE DEVELOPMENTS LTD
Second Defendant

AND
BURIA REAREA CAUTION BAY LTD
Third Defendant

AND
BOERA ENTERPRISES LTD
Fourth Defendant

AND
POREBADA INVESTMENTS LTD
Fifth Defendant

Waigani: Anis J
2021: 19th August, 20th September

NOTICE OF MOTION – application for default judgment – Order 12 Rule 25(b) – National Court Rules – failure to file defence – Order 12 Rule 27 – National Court Rules - default judgment for a liquidated sum – considerations – default established – exercise of discretion – claim based on verbal agreements – whether pleadings sufficient to warrant summary or default judgment without a proper trial

Cases Cited:

Rumbam Engineers Ltd and 1Or v. Hiri 152 Developments Ltd and Ors (2020) N8447
Davidwestern Advertising Group Ltd v. Hiri 152 Developments Ltd and Ors (2019) N7952
Christopher Smith v. Ruma Construction Ltd (2000) N1982
Michael Kuma v. Digicel PNG Ltd (2019) SC1851
Habolo Building and Maintenance Ltd v. Hela Provincial Government (2019) N8107

Counsel:

Mr S Kil, for the Plaintiffs
Nil appearances by the Defendants

RULING

20th September 2021

1.	ANIS J:  The plaintiffs had applied for summary judgment by their notice of motion filed on 3 October 2019.  On 11 August 2020, I declined the application in an un-reported judgment Rumbam Engineers Ltd and 1Or v. Hiri 152 Developments Ltd and Ors (2020) N8447 (earlier decision).  On 16 December 2020, the plaintiffs filed a second notice of motion seeking default judgment against the 5 defendants (NoM).  The NoM was not moved until on 2 July 2021 when it was part-heard.  It was adjourned on various occasions until 19 August 2021 when counsel completed his submission.  I reserved my ruling thereafter to a date to be advised.

2.	This is my ruling.

BACKGROUND

3.	The background of the case is set out in my earlier decision.  I adopt and recite from paragraphs 3 to 6 therein as follows:

3.	These are claims that are based on invoices for services alleged to have been rendered under various contracts in 2012.  This proceeding is related to proceedings WS 1075 of 2018 Davidwestern Advertising Group Ltd v. Hiri 152 Developments Ltd and Ors (proceeding WS 1075 of 2018).  Proceeding WS 1075 is also pending before the National Court.  The company Davidwestern Advertising Group Ltd (principal contractor) was the principal contractor.  Various developments had been undertaken at various Hiri villages or areas in the Central Province.  The principal contractor and others had been engaged by the defendants to carry out various civil works including engineering, construction, road grading and sealing to and from the various Hiri villages within the Liquefied Natural Gas (LNG) impact areas in the Central Province.  In turn, the principal contractor had engaged sub-contractors which included the plaintiffs in this proceeding, to carry out work.

4.	In this proceeding, the 1st plaintiff claims that in 2012, the defendants had directly engaged it and the principal contractor, to perform the works as described above.  The 2nd plaintiff on the other hand claims that he had been engaged by the principal contractor and the defendants to carry out similar works.

5.	Work appeared to have been performed by the principal contractor and the sub-contractors including the plaintiffs.  Monies appeared to have been owed by the defendants to the principal contractor and the plaintiffs.  So in 2014, the principal contractor and the plaintiffs commenced proceeding described as WS 654 of 2014 Davidwestern Advertising Group Ltd, Rumbam Engineers Ltd and Ors v. Hiri 152 Developments Ltd and Ors (WS 654 of 2014) against the defendants herein and the Central Provincial Government.  They had alleged that despite the work that they had undertaken as agreed to under the various pleaded contracts in their pleadings, the defendants and the Central Provincial Government, had failed to settle their claims or invoices that had been submitted.  They claimed a total sum of K9, 122,101.40 against the defendants in the said proceeding.  Later and after some negotiations, proceeding WS 654 of 2014 was discontinued.  A consent order and a deed of settlement and release were signed between the parties.  And from these, a sum of K4,500,000 was agreed to by the parties and was paid out by the Central Provincial Government, to the principal contractor to be distributed to the sub-contractors which included the plaintiffs herein.

6.	The plaintiffs herein commenced this new proceeding.  They allege that despite the deed of settlement and release, the consent orders that had been entered, and the payment of K4.5 million in proceeding WS 654 of 2014, the defendants still owe them monies.

MOTION

4.	The main relief sought in the NoM read:

1.	Pursuant to Order 12 Rule 25(b) of the National Court Rules, Default Judgment be entered in against the Defendants for failing to file their Defence against the Amended Statement of Claim filed ion the 18th November 2020.

2.	Pursuant to Order 12 Rule 27 of the National Court Rules Default Judgement be entered against the Defendants for K1,998,592 and K1,760,000 for the First and Second Plaintiffs respectively.

3.	Alternatively, pursuant to Order 12 Rule 28 of the National Court Rules, Default Judgment be entered against the Defendants with damages to be assessed.

5.	None of the defendants were present in Court at the hearings of the NoM.  I took the plaintiff’s counsel to task to show evidence of notification of hearing of the NoM.  I also took counsel to task to show evidence of proof, (i), of the registered office each defendant and (ii) that each person of the defendants who had accepted service of the originating process was entitled to accept such service.  After various adjournments, counsel provided evidence and I was satisfied that the defendants were duly served and notified of the hearing of the NoM.  I granted leave and the plaintiff moved its default application ex-parte.

6.	At the hearing of the NoM, the plaintiff was also able to establish defaults by the defendants in not filing their defences within the prescribed limitation period.  The defaults were obvious and not so much of an issue.  I had however enquired on how service, whether personal or otherwise, was effected on each of the defendants.  As stated above, I took counsel to task, and evidence were later disclosed which confirmed personal service of the originating process upon each of the defendants at their registered office or through their respective office holders or representatives.  I would refer to the transcript of the proceedings concerning details of my determination on this.  In any event and for clarity, I find that the defendants have been duly served with the originating processes and are in default in that they have not filed their defences within 44 days from the time of service of the originating process upon each of them.  Their defaults meet the requirements of Order 12 Rule 27 of the National Court Rules (NCR) which states that a defendant shall be in default where he or she is required to file a defence and the time for him or her to do so has expired.

ISSUE

7.	The main issue which I find requires careful consideration thus this written decision, is this; whether this is a case where, despite default being established, should be properly determined on its merit.

LAW

8.	There are various case authorities in this jurisdiction whereby Courts have refused to exercise their discretion after defaults have been established.  One of the reasons is where pleadings are in disarray.  I refer to the case of Michael Kuma v. Digicel PNG Ltd (2019) SC1851 where at paragraphs 90 and 91, the Supreme Court stated, and I quote in part:

90……The duty is on a plaintiff to properly plead each cause of action on which it relies with sufficient particulars: see Papua New Guinea Banking Corporation v. Jeff Tole (2002) SC 694.
91……It is a well established principle of procedural law that pleadings drive the evidence. Without proper pleading a claimant cannot lead evidence. In this instance the appellants cannot rely on the evidence in their affidavit material without having pleaded sufficient or adequate particulars: see Papua New Guinea Banking Corporation v. Jeff Tole (supra) and Andrew Moka v. Motor Vehicles Insurance (PNG) Limited (2004) SC729.

9.	Justice Polume-Kiele summarises the proposition in law that establishment of a default does not mean automatic right to a relief, in her decision in Habolo Building and Maintenance Ltd v. Hela Provincial Government (2019) N8107.  At paragraph 47, Her Honour gives a summary of relevant case authorities on point, which I adopt herein, as follows:

47.  In Lina Kewakali v The State (2011) SC1091, the Supreme Court held that entry of default judgement is not a matter of right even where the preconditions are satisfied, as the decision whether or not to order default judgement remains a discretionary matter for the court (see also Agnes Kunton & Ors v John Junias & Ors (2006) SC929; Lambu v Torato (2008) SC953). Matters that this Court can take into consideration in exercising discretion, include (amongst others) the question of whether the defendants appear to have a good defence (Kunkene v Rangsu & the State (1999) N1917; the extent of default by the defendant (Kunkene v Rangsu & State (supra); whether the pleadings are vague, i.e. whether the statement of claim discloses a reasonable cause of action (Laki v Alaluku (2000) N2001. This is because, ”even if the plaintiffs establish proof of due service of process on a defendant and proof of default, the Court still has a discretion to refuse to enter default judgment in cases where the effect of the default judgment would prejudice the rights of other co-defendants, or that the pleadings are so vague or do not disclose a reasonable cause of action or that the default cannot be sustained in law..”: (Kante Mininga v Independent State of Papua New Guinea, Doctor Ponifasio and Doctor Scotty Maclfish (1996) N1458).

PLEADINGS

10.	I note that in determining and refusing the plaintiff’s earlier notice of motion for summary judgment in my earlier decision, I made the following observations and findings at paragraphs 16 and 17, which I adopt herein, which are as follows:

16.  Based on these pleadings, namely, the ASoC, I make the following observations.  Firstly, the ASoC indicates that the plaintiffs’ invoices were meant to be covered by the K4.5 million payment.  The plaintiffs also plead that the principal contractor did not pay them out of the K4.5 million that was paid by the Central Provincial Government.  To me, this suggests that moneys for work incurred by the plaintiffs may have been fully settled by the payment of the K4.5 million and pursuant to the deed that was executed between the parties for the said payment, in 2015.  It also suggests that perhaps the plaintiffs may have a cause of action against the principal contractor and not the defendants; that to seek payment again from the defendants may be regarded as trying to receive double payment.  My second observation is this.  If the plaintiffs are to argue that these payments were based on contracts that were separate or outside those where based upon which the K4.5 million had been paid, then I observe that they are not clearly pleaded in the ASoC.  The ASoC, as it is, appears broad and vague in the sense that no distinction is made for work and invoices issued that may be regarded as different to those work and invoices that had been pleaded in proceeding WS 654 of 2014 where payment has been received.  My third observation is this.  It appears that this Court may have to properly observe the terms of the consent order and interpret the terms of the deed of settlement.  All these may be appropriately dealt with at the trial proper, most likely together with proceeding WS 1075 of 2018.  With that, I am of the view and I will make consequential orders, or orders for the administration of these matters.  Hearing them apart and on a piece meal basis should, in my view, be avoided.  They must also progress to trial without further delay.

17.  In my view, the reasons I give above are sufficient to decline the relief, particularly on the basis that (i), the cause of action may not be valid, and (ii), the pleading or the ASoC appears ambiguous.  Therefore, it would by unjust and wrong in law if I am to simply ignore these considerations and sign summary judgment.

11.	I note that based on my earlier decision, the plaintiffs then sought leave to amend their Statement of Claim.  Leave was granted and they filed their Amended Statement of Claim on 18 November 2020 (ASoC).  I have had the benefit of perusing the ASoC.  My general observation is this.  The plaintiffs appear to amend their pleadings to now say that they had signed various agreements, which were substantially verbal, with the defendants in regard to services that they had rendered for which they had received part-payments.  They also, by the ASoC, try to disassociate themselves from the principal contractor Davidwestern Advertising Group Ltd.  To me, all these amendments do not cure or show any clear light, so to speak, to the claim as a whole.  The pleaded purported agreements are substantially verbal in nature.  Pleadings still show that monies had been paid out not based on the merit of the claims but based on agreements reached which were reduced to a Court Order which was in proceeding WS 654 of 2014 where the plaintiffs were parties to and where monies had been received.  Liability was not established in that proceeding.  The plaintiffs herein now say that they never received their full sum.  In my view, they must be given the opportunity to prove the various verbal agreements that they claim to have with the defendants; they must prove that they had rendered services based on these agreements; they must prove that the K4.5 million that had been paid by the Central Provincial Government to Kubak and Co Lawyers who had acted for Davidwestern Group of Companies in proceeding WS 654 of 2014, did not include the outstanding monies that they now seek in this proceeding but that they (i.e., monies sought in this proceeding) were for separate work which they had performed and which they have not been paid for.  

12.	It is pointless to deliberate further, but it is my view that the plaintiffs cannot achieve judgment summarily or by default.  This is a matter that must be dealt with by a trial proper.  The plaintiffs are required or ought to call their evidence to prove fundamentally their various verbal agreements, and upon establishing them, prove that they had rendered services for which invoices had been issued which are separate to or from their services and invoices that had been rendered where they had received payments under the consent order in proceeding WS 654 of 2014.

SUMMARY

13.	I refuse the plaintiffs’ NoM.  It is not, in my view, a matter where I consider appropriate that I should exercise my discretion and grant default judgment.

COST

14.	I make no order as to cost.

THE ORDERS OF THE COURT

15.	I will make the following orders:

1.	The plaintiffs’ notice of motion for default judgment filed on 16 December 2020 is refused.
2.	No order as to cost.
3.	Time for entry of these orders is abridged to the date of settlement by the Registrar of the National Court which shall take place forthwith.

The Court orders accordingly.
_______________________________________________________________
Yansion Lawyers:      Lawyers for the Plaintiffs