SC969

PAPUA NEW GUINEA
[IN THE SUPREME COURT OF JUSTICE]

SCA No. 164 of 2004

BETWEEN:

JOSEPH PENG
Appellant

AND:

PHILLIP CRAIG TANGNEY
First Respondent

AND:

AGC (PACIFIC LIMITED)
Second Respondent

Waigani: Kapi CJ, Hinchliffe & Sakora JJ

2005: 01 September
Kapi CJ & Sakora J
2009: 06 May

SUPREME COURT – Appeal – Dismissal of application to enter judgment in default of defence – Defence filed without leave – Defence filed at same time as notice of intention to defend. 

Cases cited in the judgment: 

Mapmakers Pty Ltd v Broken Hill Proprietary Company Ltd [1987] PNGLR 78. 

Legislation cited:

National Court Rules 

Counsel:

R Tuva, for the appellant 
T Boboro, for the second respondent 

6 May, 2009 

1. KAPI CJ & SAKORA J: This is an appeal against the decision of the National Court (Kandakasi J) wherein his Honour dismissed an application to enter default judgment on the basis that the defence was filed in accordance with the National Court Rules (NCR). 

The relevant facts are the following. 

2. The writ of summons (WS No. 1579 of 2003) was issued out of the National Court at Waigani, and served on the respondents on 13 November 2003. And the time within which to file their respective notices of intention to defend expired on 18 December 2003. 

3. The second respondent had filed on its behalf a notice of intention to defend late, on 28 January 2004. A defendant is entitled to file a notice of intention to defend at any time. 

4. The second defendant had filed on its behalf a defence at the same time as the filing of the notice of intention to defend. The defence was filed without the leave of the court, thereby contrary to the NCR. 

5. The appellant filed an application for default judgment on the basis that, the purported defence filed at the same time as the filing of the notice of intention to defend was without first obtaining the leave of the court, and was, therefore, invalid. 

6. The trial judge refused the application, holding that the filing of the defence complied with the requirements of the NCR.

7. The grounds for the appeal are set out hereunder as follows: 

 "3.1 That His Honour Justice Kandakasi erred both in fact and law wherein he that the defence filed on 28 January 2004 in the matter of WS No 1579 of 2003 was filed in time and therefore was valid, contrary to Order 7 Rule 6(2) of the National Court Rules. 
 
3.2	that His Honour Justice Kandakasi erred in fact wherein the computation of time from 13 November 2003 to 13 December 2003 is roughly 30 days. The National Court went on vacation on 20 December 2004, which means that the Defendants were 37 days out of time in filing their Notice of Intention to Defend on 28 January 2004. 

3.3	that His Honour Justice Kandakasi erred in fact wherein he held that the defendants were not given a forewarning letter by the Plaintiff or if the purported forewarning letter was given it did not comply with normal forewarning letter pursuant to Practice Direction 1/87, prior to the Plaintiff moving a default application against the defendants when facts show that it is not possible for the plaintiff to forewarned (sic) the Defendants, due to the fact the Plaintiff nor (sic) his lawyer were served any court process by the Defendants until the (sic) he served them his forewarning letter after conducting a file search at Waigani National Court Registry on 21 July 2004, and only to find that the Second Defendant had already filed his Notice of Intention to Defend and Defence on 28 January 2004. 

3.4	that His Honour Justice Kandakasi erred in fact wherein he held that the Plaintiff’s purported forewarning letter pursuant to Practice Direction 1/87, when the evidence showed that, Plaintiff conducted a file search at Waigani National Court Registry on 21 July 2004 and found that the Defendant had already filed its Notice of Intention to Defend and Defence on 28 January 2004, it was not possible for the Plaintiff to bring thands (sic) of time, so that he comply with Practice Direction 1/87". 

8. This appeal raises two issues for consideration: (1) where a notice of intention to defend is not filed within the stipulated period under the NCR, what is the effect on a subsequent filing of defence?; (2) where a defendant fails to file a notice of intention to defend and files defence without the leave of the court (as in the instant case), what is the relevance of a forewarning letter pursuant to Practice Direction 1/87 before an application is filed for an order to enter judgment in default? 

9. The trial judge, in dealing with the first issue, held:
 
Now assuming that service was in order, defendants did have until 19th December 2003 to file and serve their notice of intention to defend. They did not. Under the rules governing filing of notice to defend, the rules say that even if the 30 day period expires without the filing of a notice of intention to defend, a defendant can still file his notice of intention to defend at any time without leave of the court. But if the time period for it to file and serve its defence has expired or had expired, then leave of the court required to file and serve its defence or take any further step in the proceeding. 

11. In this passage, we say with respect that his Honour correctly interpreted and applied O 7 r 6 (2) NCR. 

12. However, his Honour went on to say this: 

When the time period for filing of the notice of intention to defend expired on the 19th the defendant (sic) still had 14 days from thereafter, 19 December a 14 day period ran, and that would have run into in the court vacation period. 

If the notice of intention had been filed within the period (18th December), period of 14 days would have commenced to run, and it would have run into the court vacation period. Notice of intention to defend was filed on 28th January 2004. 

The true position is that a Defence can only be filed with the leave of the court. 

13. It is our respectful opinion that the learned trial judge fell into error in concluding as he did in that cited passage. He assumed that the notice of intention to defend had been filed on 19th December, and the 14 days commenced to run for the defence to be filed, and thus ran into the vacation period. 

14. The fact is that the time period within which the notice of intention to defend had expired on 18th December. When this happens, O 7 r 6 (2) NCR regulates when the defence should be filed. Because of this rule, a defendant cannot file a defence and take other steps in the proceedings, as being allowed to do so is subject to the discretion of the court. In this case, the notice was filed late (on 28th January), and the purported defence was filed without the express leave of the court, contrary to O 7 r 6 (2) NCR. 

15. We conclude that the defence filed was invalid due to non-compliance with the requirements of the NCR as briefly outlined above. We would, therefore, dismiss the appeal on this ground. 

Practice Direction 1/87. 

16. The issue of forewarning was raised by the trial judge, where in his judgment he made the following observation: 

I do not accept counsel for the Plaintiff’s submission that the purpose of the forewarning is to enable a defaulting defendant to file an application for extension of time or leave to file and serve a defence out of time . . . 
 
17. In this case, forewarning letter was issued on 9th August. By that time the defence was already in. It had already served its purpose. So no utility is intended when the letter of 9th August 2004 was issued which the Plaintiff claims is the warning letter. 

18. This Practice Direction was issued by the Registrar of the National Court in the following terms: 

PRACTICE DIRECTION NCR 1/87 

DEFAULT JUDGMENT – OBLIGATION TO NOTIFY PERSON OR LAWYER FILING NOTICE OF INTENTION TO DEFEND 

In N 588 – Mapmakers Pty Limited v Broken Hill Proprietary Company Limited, the Chief Justice has laid down the following principle to be followed when entering default judgments, namely that there must be a practice of forewarning lawyers of the opposite side (or the Defendant if in person) before entering judgment where there is a notice of Intention to Defend filed. 

In the event that this does not occur, then this failure may be a ground for setting aside the judgment. 

L M Newell 
Registrar 

15th June 1987 

19. The Direction was intended for defendants who had filed Notice of Intention to Defend, but had yet to file their Defence. A forewarning letter is intended to give the defendant an opportunity to file the Defence within time. 

20. We consider it unfortunate that what the learned Chief Justice had stated as a matter of professional courtesy as between lawyers, has been frequently misunderstood and misquoted, not to mention misapplied. It was never intended to be a statement of a principle of law, nor a mandatory rule of practice as subsequently translated into a Practice Direction by the Registrar. One needs only to read carefully what his Honour actually said. And this, with respect, appears on page 80 of the judgment, in the following terms: 

It is abundantly clear that the applicant had a default judgment entered against it as a result of its lawyers’ failure to properly attend to the matter. Be that as it may that failure by itself does not determine the matter in favour of the respondent. Lawyers for the respondent (plaintiff) having been served with the notice of intention to defend were put on notice that a defence was to be filed and when the stipulated time was about to expire or had expired common courtesy  required that a caution that a default summons was to be entered ought to have been given to the respondent’s lawyers. I consider that this practice should be adopted by all lawyers . 

21. It is noted also that the Headnotes formulate what his Honour stated in the following language: 

Whilst it is a desirable practice that should be adopted, that lawyers intending to have a judgment entered in default of pleadings, should forewarn the lawyer on the record for the other party of his intentions, in the absence of Rules of Court or other statutory provisions in relation to such a practice, a judgment by default regularly entered cannot be set aside ex debito justitiae for failure to adopt such practice. 

22. In respect of the circumstances of the instant case, the question arises: whether the Practice Direction is applicable? The Practice Direction was issued in the context of (and envisaging) filing of a notice of Intention to Defend being filed on time. And that, all that remained for the defendant to do was to file a Defence. 

23. Where a notice is not filed within time, a defendant needs to file an application to seek leave of the Court to file Defence out of time. 

24. We hold that the Practice Direction is not applicable here. 

25. In the result, we would grant this appeal and quash the decision, and we do order so, with costs. 

____________________________________________________
Tuva & Associates Lawyers: Lawyers for the Appellant 
Allens Arthur Robinson Lawyers: Lawyers for the Respondents