SC819

PAPUA NEW GUINEA
[Supreme Court of Justice]

SCA 125 of 2003

BETWEEN

NATIONAL EXECUTIVE COUNCIL
First Appellant

AND

FRANCIS DAMEN, ATTORNEY GENERAL
AND PRINCIPAL LEGAL ADVISER TO THE
NATIONAL EXECUTIVE COUNCIL
Second Appellant

AND

JOHN KALI, SECRETARY OF THE
DEPARTMENT OF PERSONNEL MANAGEMENT
Third Appellant

AND

KOIARI TARATA, SECRETARY OF THE
DEPARTMENT OF TREASURY
Fourth Appellant

AND

THE INDEPENDENT STATE OF PAPUA NEW GUINEA
Fifth Appellant

AND

SOIAT WILLIAMS
Respondent

WAIGANI: SEVUA, SAWONG & GABI, JJ
2005	 :	30 August & 8 December

PRACTICE AND PROCEDURE – Appeal against interlocutory judgment – Judgment entered by default – Appellants admitted default – Application for default judgment opposed – Defence on merit not presented by way of draft defence – Whether Court erred in entering default judgment.

Appeal – Practice and procedure – Application seeking leave to file defence out of time – Not filed – No affidavit in support – Whether it is proper to oppose application for default judgment on grounds that there is a defence on the merit – Whether it is proper procedure to apply for leave to file defence out of time at time plaintiff is applying for default judgment.

Cases cited:
Credit Corporation (PNG) Ltd v. Gerald Jee [1988-89] PNGLR 11
Titus Keran v. Jerry Warun & Country Motors Pty Ltd [1994] PNGLR 130
Curtain Bros (PNG) Limited & Curtain Bros (Qld) Pty Limited v. University of Papua New Guinea, (2005) unreported, SC788, 31 May 2005.
Motor Vehicles Insurance (PNG) Trust v. James Pupune [1993] PNGLR 370
Motor Vehicle Insurance (PNG) Trust v. James Etape [1994] PNGLR 596
Peter Peipul v. Justice Sheehan Tribunal & 2 Ors (2001) unreported, N2096, 25 May 2001
Fly River Provincial Government v. Pioneer Health Services Limited; (2003) unreported, SC705, 24 March 2003.
Kepa Wanege v. The State (2004) unreported, SC702, 1 April 2004
Masolyau Piakali v. The State (2004) unreported, SC771, 13 December 2004
Leo Duque v. Avia Andrew Paru (1996) unreported, SC510, 18 October 1996

M. Pokia for Appellants
N. Kubak for Respondent

8 December 2005

BY THE COURT:	This is an appeal against an interlocutory judgment of the National Court entered on 8 October 2003 where the Court entered default judgment against the appellants with damages to be assessed.

The brief facts were that the appellants had failed to file a defence within time therefore the plaintiff sought, and was granted, default judgment on 8 October 2003.

The appellants now appeal against the entry of default judgment on the ground that the trial Judge erred in exercising his discretion in granting default judgment when there was an affidavit by the appellants setting out a defence on the merit.

The Supplementary Notice of Appeal sets out the grounds of appeal as follows:

3. Grounds

1.	The learned trial Judge erred in law when exercising his discretion in not taking into account that the Respondent had signed a Deed of Release ("Deed") on 2 May 2003, which Deed was in evidence before him, wherein the Deed released the Appellants from any further claims by the Respondent and barred or estopped the Respondent for making any further claim based on his employment with the State.

2.	The learned trial Judge erred in law in refusing to grant an extension of time to file a Defence when there was clear evidence of a meritorious defence of accord and satisfaction and estoppel by deed.

The Orders sought are:

1.	The decision of the trial Judge dated 8 October 2003 granting default judgment with damages to be assessed be quashed.
2.	The Supreme Court pursuant to Section 16 of the Supreme Court Act dismiss the original proceedings before the National Court as disclosing no cause of action and its frivolous and/or vexatious.
3.	Alternatively, the appellants be given leave to file its Defence within 21 days.
4.	Costs.
5.	Any other Orders.

Perhaps at this juncture, a chronology of events of what transpired in the National Court would provide a better understanding and appreciation of the plaintiff’s/respondent’s position and the basis of his application for default judgment. The defendants do no challenge these facts.

12 May 2003	Originating Summons filed.	
19 May 2003	Amended originating summons filed.	
22 May 2003	Solicitor General filed notice of intention to defend.	
4 June 2003	Court granted leave to file statement of claim for matter to proceed by way of pleadings.	
.. June 2003	Statement of Claim served on Solicitor General.	
2 July 2003	Solicitor General filed another notice of intention to defend.	
8 July 2003	Defendants filed affidavit of John Kali, but not served on plaintiff until 8 October 2003, (served in Court but plaintiff’s counsel refused to accept service at the bar table).	
19 September 2003	Plaintiff filed notice of motion seeking default judgment.	
8 October 2003	Court entered default judgment in favour of plaintiff with damages to be assessed.	

The transcript of the National Court proceedings reveal that when the plaintiff moved his motion for default judgment on 8 October 2003, the defendants opposed the application. Mr. Kumura who appeared as counsel said he opposed the application on the ground that, "The lack of filing a defence was really, I would say, I seem to have overlooked the particular aspect". That statement thus raises the question whether that is a good and valid reason? Failure to file a defence because counsel overlooked that obligation was the reason advanced by the defendants now appellants.

As it transpired, the defendants, not only failed to file a defence, but failed to file a formal application to seek leave to file their defence out of time. So at the eleventh hour, that is, on the hearing of the plaintiff’s motion for default judgment, the defendants made an oral application for leave, purportedly supported by an affidavit sworn by John Kali, "which is to be filed" (our emphasis).

Section 9 of the Claims By and Against the State Act gives 60 days to the State to file a defence. This is more than ample time to file a defence, a period of time not accorded to other defendants in proceedings in the National Court. As the learned trial Judge alluded to at page 167 of the appeal book, 

"And the purpose of that extension that was extended to the State was to give the State more time. That is basically not available to other ordinary litigants. And that is the thing that with respect, I find hard to fathom. The very purpose of that legislation extending the time was to enable the State more time. And now, you are seeking more time, an extension after the 60 days. If I were minded to grant you, what are the grounds of seeking leave?"

So the appellants’ argument in this appeal in essence is that, the trial Judge should have refused to exercise his discretion to enter default judgment in favour of the respondent. This Court needs to ask, on what basis should the trial Judge have exercised his discretion in favour of the defendants in not granting default judgment? Whilst we agree with the appellants’ submissions that the trial Judge still has a discretion not to enter a default judgment even though the defendants had defaulted in filing a defence, we say such a discretion must be exercised judicially. The trial Judge must be satisfied that there are convincing or cogent reasons not to exercise his discretion in favour of granting the default judgment.

Needless to say, in the present case, there was no satisfactory or convincing reason for the trial Judge not to enter default judgment other than, "I simply overlooked the fact that we were to file a defence". Refer page 168 appeal book. Is that the kind of reason that litigants demand that judicial discretion be exercised in their favour? Of course not.

We consider that the learned trial Judge adequately addressed this issue at p.172 of the appeal book in his brief ruling. His Honour said:

"Firstly, I am satisfied on the documents that the defendants defaulted in defending this action as the rules of the National Court envisage. Learned counsel for the defendants readily acknowledged the default……….I have no cause to exercise any discretion in favour of the defendants extending an already well-extended period of time to comply with the requirements of the National Court Rules. And if I may pause to note, by way of repetition, an over-extended period that is not normally available to other litigants before the courts in this jurisdiction. I am not satisfied that the relief that is sought here by operation of law ought to be stopped in its tracks to grant the defendants more time to do what they were required to do under the rules."

With respect we see no error in that ruling. We do not see how the trial Judge had exercised his discretion erroneously. There was nothing to satisfy him otherwise then to grant the respondent’s application.

We need not remind the appellants that there are resources under the rules of Court to utilise. The appellants had the right to utilise the procedures available under the rules but failed to exercise that right. It is trite law that if a party ignores Court procedures, he does so at his own peril. See: Credit Corporation (PNG) Ltd v. Gerald Jee [1988-89] PNGLR 11; Titus Keran v. Jerry Warun & Country Motors Pty Ltd [1994] PNGLR 130; and Curtain Bros (PNG) Limited & Curtain Bros (Qld) Pty Limited v. University of Papua New Guinea, (2005) unreported, SC788, 31 May 2005.

In the present case we find that the defendants defaulted in filing a defence and offered no reasonable explanation as to why they allowed judgment to be entered against them by default. The reason offered by counsel, ie. that he overlooked to file a defence is not a valid reason and is not an explanation that deserved the exercise of judicial discretion in favour of the appellants. It is a serious case of personal negligence and unethical conduct. We find no error by the trial Judge and we are satisfied that his ruling in favour of the respondent’s application and refusing the defendants’ application for leave did not amount to an error of law.

However, this Court is also asked to consider and determine an issue that was not raised before the trial Judge. This issue constitutes appeal grounds 3 (1). There is therefore no need to waste time discussing that ground suffice it to say that the appellants cannot raise issues before this Court which they failed to raise before the trial Court. In this instance, the issue of the deed of release was not raised in the trial thereby depriving the respondent and the Court of the opportunity to address them. As this issue was not raised before the trial Judge, they cannot be raised in this Court as grounds of appeal. There are a number of Supreme Court authorities on this issue and the law is pretty settled in this jurisdiction.

The recent decision of the Supreme Court on 31 May 2005, Curtain Bros (PNG) Limited & Anor v. University of Papua New Guinea, (2005) unreported, SC.788, 31 May 2005, cited previous authorities on this issue. At page 5, the Court said:

"….An appeal should only be lodged on issues that were properly raised before the trial Court; both parties having had the opportunity to address all the issues raised in the trial Court and lastly, the trial Judge has had the opportunity to hear the parties and consider their arguments and then made a decision, not on the basis of what was never raised in that Court."

The Court then cited Motor Vehicles Insurance (PNG) Trust v. James Pupune [1993] PNGLR 370; Motor Vehicle Insurance (PNG) Trust v. James Etape [1994] PNGLR 596; Peter Peipul v. Justice Sheehan Tribunal & 2 Ors (2001) unreported, N2096, 25 May 2001; Fly River Provincial Government v. Pioneer Health Services Limited; (2003) unreported, SC705, 24 March 2003. The Court in Curtain Bros also referred to the same issue being addressed in the context of a criminal trial. See: Kepa Wanege v. The State (2004) unreported, SC702, 1 April 2004 and Masolyau Piakali v. The State (2004) unreported, SC771, 13 December 2004.

On the basis of these authorities and what we have canvassed, we rule that ground 3 (1) is incompetent and we dismiss it. That leaves us with ground 3 (2) only as grounds 3 (3) and (4) were abandoned. The transcript of the National Court proceedings do not show that the appellants had filed any affidavit attaching a draft defence to show the trial Court that they had a ‘meritorious defence’ as contended in this appeal. On a careful perusal of the transcripts, it is apparent that the appellants, then defendants in the Court below, had filed an affidavit sworn by John Kali, the third appellant herein. We believe this is the affidavit at pages 89 to 94 of the appeal book.

However, we go to pages 167 to 171 of the appeal book and we see from the exchanges between the trial Judge and Mr. Kumura that the affidavit referred to was filed in relation to the original Originating Summons which was later converted to a Statement of Claim. Therefore the real position regarding that affidavit is that, it was evidence filed by the appellants in respect of the initial originating summons which no long exists as it has been converted to a statement of claim. We reiterate that that affidavit was not filed in support of the oral application by Mr. Kumura who was seeking leave to file a defence out of time, so what is the basis of the appellants argument that that affidavit shows a "meritorious defence"?

We are of the opinion that there is no basis for the appellant’s contention that at the time of entry of default judgment, there was a defence on the merit. No affidavit was filed in support of Mr. Kumura’s oral application therefore there was no affidavit in support. It is quite absurd and preposterous to insist that John Kali’s affidavit was filed in support of the oral application for leave made by Mr. Kumura on 8 October 2003. There was no affidavit in support of the oral application and that is a fact, uncontroverted as it were. We are not persuaded by the appellants’ submissions.

The issue therefore is, did the appellants establish to the satisfaction of the trial Judge that there a defence on the merit, or there was a "meritorious defence" as they contended in their notice of appeal?

The transcript of proceedings is quite clear. There was no affidavit annexing a draft defence filed prior to 8 October 2003 that the appellants through Mr. Kumura, in the National Court, could rely on. The affidavit which he tried to rely on, as we have discussed, was filed in relation to the originating summons which has been superceded by a statement of claim. So was there an affidavit showing a defence on the merit? There was no affidavit stating material facts showing a defence on the merit therefore there could be no meritorious defence. See: Leo Duque v. Avia Andrew Paru (1996), unreported, SC510, 18 October 1996. We are not convinced that the trial Judge made errors of law in his decision. 

Even if we accept the affidavit of John Kali, it was never served on the respondent, but more importantly as we have observed earlier, Mr. Kumura had informed the trial Judge that "it is yet to be filed". Secondly, no application was made nor an order granted by the Court to dispense with the requirements of the National Court Rules. As a result, that affidavit was not properly before the Court.

Again we reiterate that the trial Judge did not fall into error. There is no error of law and we fail to see where the appellants were coming from, when they had more than two months to file a defence, but neglected their interest and accused the trial Judge of making errors of law. No error of law has been demonstrated to this Court and there is no basis for upholding the appellants’ appeal.

For these reasons, we hold that the appeal is unmeritorious, and we order that it is dismissed. We further order that the appellants pay the respondent’s costs of the appeal.

Lawyer for Appellant	:	Posman Kua Aisi Lawyers
Lawyer for Respondent:	Norbert Kubak & Co.