N9674

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS NO. 119 OF 2021

BETWEEN:
WALTER IPUL
Plaintiff

AND:
MOSA RURAL LOCAL LEVEL GOVERNMENT
First Defendant

AND:
WEST NEW BRITAIN PROVINCIAL GOVERNMENT
Second Defendant

Kimbe:  Numapo J
2021:	14th December
2022:10th & 24th February

CIVIL PRACTICE AND PROCEDURE – Application for default judgment -Order 12 Rule 28 NCR – Summary judgment - Order 12 Rule 38 (1) – Application to file defence out of time - Order 7 Rule 6 (2) NCR. 

Case Cited:

Luke Tai v Australia and New Zealand Banking Group (PNG) Limited (2000) N1979
Alois Alauro Maima v Walkaima Essy (2016) N6334
Virita v Mabep [2011] PGNC 38; N4236
Leo Duque v Aria Andrew Paru [1977] PNGLR 378, (SC)
Tipaiza v Yali, Governor of Madang Province (2005) N2971

Counsel:

Mr. B. Takua, for the Plaintiff
Mr. P. Mokae, for the First and Second Defendants

DECISION

03rd March, 2022

1.      NUMAPO J: Two motions were moved before me in this proceedings. The plaintiff moved for a default judgment pursuant to Order 12 Rule 28 of the National Court Rules (NCR) or alternatively, for a summary judgment pursuant Order 12 Rule 38 (1) of the NCR. The defendants filed an application seeking leave of Court to file their defence out of time pursuant to Order 7 Rule 6 (2) of the NCR. 

2.      I intend to deal with the two motions together, Firstly, the defendants’ application for extension of time to file its defence out of time and later the plaintiff’s application for default judgment.  

A.	BACKGROUND

3.     The plaintiff sought default judgment against the defendants pursuant to Order 12 Rule 28 of the NCR and moved that an Order for default judgment be entered in his favour and that the matter be set down for trial on assessment of damages. Plaintiff further claimed that the defendants do not appear to have a good defence and their evidence on defence lacks merit.

4.     The claim arose from an alleged breach of a ‘Written Lease Agreement’ (hereinafter, “The Agreement”) over the use of the Nahavio Market facilities managed and operated by the defendants. The Agreement were in these terms:

(i)	 The plaintiff to operate the Nahavio Market facility for a period of two (2) years from 6th August, 2018 to 6th August, 2020 and collect fees from the vendors using the facilities; and

(ii)	The plaintiff to pay a lease/rental fee of K800.00 to the defendants at the end of every month over the term of the lease.

 5.     However, in March 2020, the market was shut down due to the COVID-19 pandemic under the State of Emergency (SOE) Regulations issued by the Controller. Consequently, the market was not in operation from March 2020 to 07th June 2020, a period of almost three months. The plaintiff nonetheless continued to pay his rental lease during the lock-down period. Plaintiff requested the defendants to extend the lease after the lock-down was uplifted but this was refused. On 10 February 2021, the first defendant through its LLG Manager wrote and advised the plaintiff that the Agreement has been terminated by a meeting resolution held on 29 January, 2021. 

6.      The plaintiff claimed breach of Agreement, loss of business and refusal by the defendants to extend the term of the lease to recoup his expenses.

7.     Plaintiff seeks damages for the following:

(a)	Loss of business at K64, 050.00
(b)	 Cost of market facility maintenance and improvement at K47, 558.48
(c)	General damages at K5,000.00
(d)	 Interests and costs.

B.	DEFENDANT’S APPLICATION TO FILE DEFENCE OUT OF TIME

8.     Defendants’ application seeking leave to file defence out of time was made on 25 November 2021 pursuant to Order 7 Rule 6 (2) of the NCR and section 155 (4) of the Constitution. For completeness, it would have been proper, I would think, for the applicant to also consider including Order 1 Rule 7, Order 8 Rule 23 and Order 12 Rule 25 (b) in such applications. The combined effect of these provisions describes generally the power of the Court to dispense with compliance with any of the requirements of the Rules after the pleadings are closed. However, the view held by the Courts in the past, is that it was sufficient to plead any of these rules either together or individually as the source(s) for the relief sought which I am happy to adopt for the purpose of this application before me. (Luke Tai v Australia and New Zealand Banking Group (PNG) Limited (2000) N1979 which were later adopted and applied in Kipane v Anton and PNG Water Board (2003) N2429 and Alois Alauro Maima v Walkaima Essy (2016) N6334).

9.      In seeking to file his defence out of time, the defendant must firstly; give a reasonable explanation as to why he did not file his defence within time, secondly; he must show or demonstrate that he has a defence on merits. In that regard, he is required to produce a draft defence annexed to the affidavit in support of the application for leave, and thirdly; the applicant must make an application for leave promptly and without delay: (Virita v Mabep [2011] PGNC 38; N4236). I will elaborate further on each of these requirements shortly.

10.     In the present case, the defendant has not produced any draft defence nor did he disclosed in his affidavit any material facts demonstrating genuine defence on merits. In his affidavit, the defendant basically relied on two grounds seeking leave to file his defence out of time. Firstly, that the defendants were at the stage of negotiating a settlement with the plaintiff when proceedings were filed. Secondly, that they had no lawyer to act for them to file their defence within time. With respect, these are not defence on merits to find in the defendant’s favour. In his submission, Mr Mokae for the defendants submitted that in his opinion, his client has a strong case and a good prospects of defending the claim if leave is granted. However, an opinion by a lawyer that there are good prospects of success does not raise materials facts to support the application for leave; (Leo Duque v Aria Andrew Paru [1977] PNGLR 378, (SC).   

11.     In an application for leave to file defence out of time, the following are considered: (Tipaiza v Yali, Governor of Madang Province (2005) N2971):

(i)	     What is the extent of the delay?
(ii)	     What are the reasons for the delay and are they good reasons?
(iii)	Does the defendant appear to have a good defence or demonstrate with evidence that there is a defence on merit?; and
(iv)	Do the interests of justice favour the granting of leave?

(i)	Extend of the Delay

12.      I did some computation on the number of days and it became clear to me that it took the defendants almost seven (7) months from the date the writ of summons was served on them to the date they filed their application to file their defence out of time. This time frame involves the date the writ was served on the defendants which is on 27 April, 2021 to the date the application to file out of time was filed, which was on 25 November 2021. To meet the deadline required under the NCR, the due date for the defendants to file their defence should have been the 11 June 2021.  Therefore, the application to file defence out of time was five (5) months late after the due date. A rather long delay.

13.       Furthermore, the defendants filed their application three (3) months after the application for default judgment was filed and served which was on 09 August 2021. Defendant’s application seeking extension of time was filed on the 25 November 2021. There is clearly a delay on both instances. On this consideration, I rule in favour of the plaintiff.

(ii)	  Reasons for Delay

14.      Defendants gave no reasonable explanation for this inordinate delay. The affidavit filed did not disclose any factual circumstances pertaining to the delay and the factors hampering the ability of the defendants to file its defence on time. I must rule in favour of the plaintiff under this consideration.

(iii)	Defence on Merit

15.       For the defendants to be heard on application, they must show by evidence, good defence on merit. Defence on merits requires substantive material facts supporting the application and not just mere assertions. Filing a notice of intention to defend without a verified defence is no defence. 

16.     The only affidavit in support of the application was deposed by Councillor Robert Kong. He accused the Caretaker President for signing the Lease Agreement and alleged that he has some vested interest in it and should not have signed the Agreement on behalf of the Mosa LLG. For whatever it is worth, this is not evidence of material facts for the purpose of this application. 

17.     Defendant’s extract of submission does not contain evidence that demonstrate defence on merit or a verified defence against what seems to be a legitimate claim in my view. It clearly lacks material substance. The argument that the Caretaker President does not have the “financial powers” to commit any funds or enter into any Agreement(s) involving financial expenditures is not supported by any law or financial guidelines and procedures. The incumbent President has resigned to contest the National Election in 2017 and the Vice President took over as the Caretaker President. I am satisfied that the Caretaker President, for all intended purposes, has all the powers and authority that would normally be exercised by the President including financial powers to commit funds and enter into contractual arrangements for and on behalf of the Second Defendant. If this is the only evidence the defendants have then I have just made a finding that the Care- taker President has acted within his powers and has the authority to sign the agreement. In this regard, I find for the plaintiff.

(iv)	Interests of Justice

18.     The question here is; do interests of justice favour the granting of leave?
Interests of justice varies from case to case and the issue is one of prejudice. Whether or not the plaintiff would be prejudiced if the matter is further delayed or proceeded to a substantive hearing without a legal or valid defence been disclosed.  

19.     There is no evidence suggesting that genuine efforts have been made to settle, one of the reasons why the defendants did not file their defence on time. The plaintiff made no mention of any such discussions for settlement in his affidavit. I am sure the plaintiff would have pursued all options available to him in reaching an out of court settlement if a genuine offer was made for the reason that his primary concern is to recover his losses. Coming to court would be the last thing on his mind given the costs involved and the time it would take to resolve this dispute. Secondly, the argument that the defendants do not have the services of a lawyer in filing their defence within time does not find support in their own affidavits. The lawyer for the Second Defendant, Mr Walters Mallo in his letter to the First Defendant dated 24 May 2021, acknowledged receipt of the writ of summons dated 20 April 2021. Mr Mallo requested the First Defendant to state what his defence would be and revert back to him urgently so he could file their notice of intention to defend. It appears that the First Defendant had not responded to Mr Mallo’s request for him to file their defence within time. The reason therefore, that they were not able to secure a services of a lawyer to file their defence on time, is without basis.

20.     Plaintiff submitted that the defendants did not have a good defence against his claim and have defaulted in filing a notice of intention to defend including a defence within the required time. If however, the defendants do have a defence, they have negligently failed to file the same. Defendants were served the sealed copy of the writ of summons along with a statement of claim on 27 April, 2021. On 05 August 2021, the plaintiff conducted a court file search at the Kimbe National Court Registry and discovered that the defendants have not filed their notice of intention to defend or a defence. It appears therefore, that the defendants have not filed any defence to the claim. Given that the 44 days requirement on filing of defence under the NCR has lapsed, the plaintiff filed an application for default judgment against the defendants. The notice of motion and affidavits in support for the application for default judgment was served on the defendants on 09 August 2021. 

21.     In the present case, the lease agreement has not been disputed by the defendants. Both parties took no issue with it. Had it not been for the COVID-19 lockdown, the matter would not have come to court. The market facility was closed down during the lockdown period. Despite that, the plaintiff continues to pay his monthly lease to the First Defendant as per the terms of the lease agreement. This fact was not disputed by the defendants. The dispute only arose when the plaintiff sought extension on the lease after it has expired which was refused by the First Defendant that resulted in this action. There was no income generated during the lockdown period and it was for this reason that the plaintiff sought extension on the lease to recoup his losses. In the circumstances, I find that the request is fair and reasonable. Plaintiff is entitled to make a claim on his loss of earnings. The interests of justice lies in favour of the plaintiff in this case. I find accordingly.  

C.	PLAINTIFF’S CLAIM

22.     With respect to the plaintiff’s application for default judgment, I find no serious contention to the claim nor is there any defence. The application is in order and I therefore, find the defendants liable and am entering default judgment in favour of the plaintiff with damages to be assessed. 

D.	ORDERS

23.    I make the following Orders:

(i)	     Defendants’ notice of motion to file defence out of time is refused.
(ii)	Default judgment is entered in favour of the plaintiff with damages        to be assessed.

(iii)	Costs be in the cause.

Orders accordingly
________________________________________________________________
Public Solicitors:  		Lawyers for the Plaintiff
Justin Talopa Lawyers:    Lawyers for the Defendants