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Lord & Company Ltd v Inapero [2014] PGSC 79; SC1624 (14 November 2014)

SC1624

PAPUA NEW GUINEA
[IN THE SUPREME COURT OF JUSTICE]


SCA No. 61 of 2009


BETWEEN:
LORD & COMPANY LIMITED
Appellant


AND:
TIMOTHY INAPERO

Respondent


SCA No. 62 of 2009


BETWEEN:
LORD & COMPANY LIMITED
Appellant


AND:
TIMOTHY INAPERO TRADING AS GORDONS SPORTS AND ENTERTAINMENT CENTRE

Respondent
Waigani: Injia CJ; Collier & Poole JJ
2014: 27th October, 14th November


PRACTICE AND PROCEDURE – order for filing amended defence not complied with in National Court proceedings – matter involving allegations of fraud - defendant failed to appear before trial judge – self-executing order made at hearing for defendant to appear at future hearing and give reasonable explanation for non-attendance or Defence to be struck out and default judgment entered for the plaintiff – defendant appeared at following hearing and provided affidavit by legal representative claiming non-appearance due to administrative issues within defendant law firm – trial judge not satisfied explanation reasonable – Defence struck out and judgment entered for plaintiff – whether trial judge erred in ruling explanation for non-appearance unreasonable – whether trial judge erred in finding that defendant’s explanation amounted to negligence on part of lawyer – whether trial judge erred in entering default judgment – difference between summary judgment and default judgment – difference between summary judgment and matter disposed of summarily – O 10 r 9A(15), O 12 r 25(b) and O 12 r 38 National Court Rules – exercise of judicial discretion – interference by appellate court with exercise of judicial discretion – summary determination of matter involving serious allegation of fraud

Facts:

The appellant/defendant appealed against an order made in the National Court order striking out its Defence and entering judgment for the respondent/plaintiff in a matter involving, among other things, allegations of fraud. The appellant had failed to file an amended defence by the deadline set in previously orders made and failed to appear before the primary judge, prompting an order to be made that the appellant appear at the next hearing date and provide a reasonable explanation for the want of appearance or the Defence be struck out and judgment entered for the respondent/plaintiff. At the subsequent hearing the appellant put on evidence that the failure to appear was caused by administrative problems internal to the appellant’s law firm. The National Court judge did not accept the explanation as reasonable as it involved an element of negligence on the part of the appellant’s lawyers. His Honour ordered that the Defence be struck out and entered judgment for the plaintiff. The appellant appealed against this on the basis that, inter alia, the entry of judgment was an improper exercise of the primary judge’s discretion.

Held:

  1. Although it was not explicitly identified, the primary judge made an order pursuant to Order 10 rule 9A (15) of the National Court Rules. “Summary disposal” of a matter pursuant to Order 10 Rule 9A (15) is not “summary judgment” within the meaning of Order 12 Division 4 National Court Rules, and Order 12 Rule 37(b) is not relevant to summary disposal of a matter in those circumstances.
  2. It was open to his Honour to summarily dispose of the proceedings before him, notwithstanding that they were founded on allegations of fraud.
  3. The appellant has not satisfied the Court that the primary judge was clearly wrong in concluding that the appellant’s lawyer was negligent. It was open to the primary judge to refuse to accept the appellant’s excuse as reasonable.
  4. Although the primary judge was not strictly prohibited from summarily disposing of the matter because of the allegation of fraud pursuant to O12 r 37(b), the element of fraud was a relevant factor that the primary judge was required to take into consideration in deciding how to exercise his discretion.
  5. This case is distinguishable from the decision in Kalang Advertising v Kuppusamy [2008] SC924 on the basis that the appellant in this case filed affidavit material to substantiate the reasons for its want of appearance whereas in Kalang there was no such material.
  6. That the appellant had previously filed a Defence and had until that point played an active role in defending the proceedings was a material consideration which the primary judge failed to consider.
  7. In the appeals from each of the decisions of the National Court in WS No. 844 of 2003 and Ws No. 846 of 2003, the Court orders that:

Cases cited:


Ampaoi v Tauriko [2012] SC1166
Augerea v The Bank South Pacific Ltd [2007] SC869;
Curtain Bros (PNG) Limited v University of Papua New Guinea [2005] SC788
Daniel v Pak Domoi Ltd (2009) SC970
Department of Works v International Construction (PNG) Ltd [2011] SC1122
Iewago v Nambawan Super Ltd [2011] N4214
Kalang Advertising Ltd v Kuppusamy [2008] SC924
Kappo No 5 Pty Ltd v Wong [1997] SC520
Kawage v Motor Vehicle Insurance Trust Ltd [2008] N3354
Kewakali v Independent State of Papua New Guinea [2011] SC1091
Kumagai Gumi Co Ltd v National Provident Fund Board of Trustees [2006] SC837
Kunton v Junias and the Independent State of Papua New Guinea (2006) SC929
Lambu v Torato [2008] SC953
National Fisheries Authority v Tipi [2012] N4836
Porgera Freighters Limited v Bank of South Pacific Limited (2004) N2662
Provincial Government of North Solomons v Pacific Architecture [1992] PNGLR 145
Telikom PNG Ltd v Tulin [2004] SC748
Tsang v Credit Corporation (PNG) Ltd [1993] PNGLR 112
Wamabiang v Palme [2012] PGNC 84


Counsel:


L Kari, for the Appellants
J Abone, for the Respondents

14th November, 2014


  1. BY THE COURT: Before this Court are two related appeals from decisions of the National Court in proceeding WS No. 844 of 2003 and WS No. 846 of 2003. In both cases, which were heard together, the Judge found that self-executing orders previously made by him were satisfied, and ordered (inter alia) that judgment be entered against the defendants.
  2. Relevant facts and issues for consideration significantly overlap in both cases. Accordingly, we will deal with the appeals together.
  3. It is convenient to set out the background facts before turning to consideration of the issues in appeal.

Background

Claims of the plaintiffs/respondents


  1. On 31 March 2009 amended writs of summons and amended statements of claim in both sets of proceedings were filed pursuant to orders of the National Court of 2 March 2009. The plaintiff in each case was Mr Timothy Inapero, either in a personal or business capacity. Mr Inapero is also the respondent to these appeals, and it is convenient to refer to him as “the respondent” where appropriate in this judgment.
  2. The plaintiffs sought relief against five defendants in each proceeding. The defendants included individuals and two corporations. The fourth defendant in both proceedings was Lord & Company Limited (“Lord & Company”), which is the appellant in both appeals before this Court. (It is also convenient to refer to Lord & Company as “the appellant” where appropriate.).
  3. Lord & Company was a licensed operator and owner of poker gaming machines. The fifth defendant in both proceedings was Alika Holdings Limited (“Alika”), at all material times a site owner or the licensee of premises dealing in gaming machines.
  4. It is clear that both sets of proceedings have a long and complex procedural history, with lengthy periods during which there was little activity on either side.
  5. In WS No 844 of 2003, the plaintiff/respondent claimed, in summary:
  6. The plaintiff in that proceeding, being Mr Timothy Inapero, sought:
  7. In WS No 846 of 2003, the plaintiff/respondent claimed, in summary:
  8. The plaintiff sought:
  9. On 18 March 2009 in both proceedings the plaintiff/respondent applied to the National Court to extend filing dates ordered by the Court on 2 March 2009. The application, and then orders, were made ex parte because no appearance was entered by any of the defendants at the hearing. The National Court made the following orders:


Events of 22 April 2009


  1. The matter returned to Court before the primary judge on 22 April 2009. Again, no appearance was entered by any of the defendants, including Lord & Company. In particular, no amended Defence was filed by the defendants as required by Order 5 of 18 March 2009. In the circumstances his Honour made the following orders in both proceedings:


Judgment of 6 May 2009


  1. Both proceedings returned to the National Court on 6 May 2009. During that time Mr Kera, the lawyer for the appellant, filed an affidavit explaining the appellant’s failure to appear on either 18 March 2009 or 22 April 2009, and its failure to comply with the Court orders of 18 March 2009. On 6 May 2009 Mr Kera appeared at the hearing before his Honour on behalf of the appellant. The appellant’s explanation to his Honour for its non-appearances on either 18 March 2009 or 22 April 2009 can be summarised as follows:
  2. Mr Abone for the plaintiffs/respondents invited his Honour to confirm the self-executing orders of 18 March 2009. In response Mr Kera submitted, in summary (transcript WS No. 844 of 2003 and WS No.846 of 2003 6 May 2009 page 8):
  3. His Honour delivered judgment ex tempore in each matter. After setting out the background his Honour continued:

“Following the orders [of 22 April 2009] that were made they were taken out and served on the defendants’ lawyers and there is no contest on that being done. So the question really is, what is the explanation, if any, and is that explanation reasonable? The defendants’ lawyers make reference to it seems, misadministration of this file as regards which lawyer to attend to this matter at the relevant times. At one stage it seems it was Mr Kera and at another stage it was Ms Salika, at another stage it was Ms Geroro. Between them the correspondence seem to have been criss-crossing to the extent that no one was able to attend to this matter in a timely manner and that has resulted in the non compliance of the various orders.

“I have already alluded to in the course of counsel arguing for the plaintiffs – sorry, the defendants that the leading case on lawyer negligence or failures of lawyers representing a client has been ably covered by the Supreme Court, ably and authoritatively covered by the Supreme Court in Pacific Architecture and North Solomons Provincial Government which simply supports the proposition that the negligence of a lawyer is no excuse and is not a reasonable explanation for any failures on the part of a party required to take certain steps in the proceedings.

“There is no submission as to why that judgment should not apply in the present case. What it is is negligence on the part of the defendants’ lawyers in terms of failing to meet time lines, not once but twice and coupled with non appearance in court. The explanation being provided as to counsel not being able to attend at the relevant time, that is on 18 March, the excuse of being in another court and not this court is not a reasonable excuse. I have said it and many other judges have said it that if a lawyer is not going to be in one court at the same time, another must be instructed to appear in court. The professional conduct rules say that it is the lawyers that wait for the court and not the other way around and if a lawyer is not able to appear himself then brief out must be well in advance organised to the point of enabling appearance and allowing the program of the court in a particular matter to proceed unhindered. It is becoming a common excuse for many lawyers these days of saying : I was caught up in another court... These are all in blatant breach of the professional conduct rules which require all lawyers to give priority to this court and not to unnecessarily delay the proceedings of the court.

“This is one of those cases and those explanations that are sought to be provided is no explanation for me. I am not persuaded that these are reasonable excuses.

“The situation did arise more recently in terms of order 15 – sorry rule 15 of the ADR Listings Rules which gives this court summary and disposal powers. They were the subject of the Supreme Court proceedings in Kalang Advertising Ltd v Luke Lukusami SC 924.... In that case orders similar to the one in question in this case were made by myself in the National Court.... When the matter returns the defendant sought to provide some explanation but I was not persuaded that the explanation was satisfactory and I had the defendant’s defence struck out and entered judgment for the plaintiff. Being aggrieved by that decision, the appellant went to the court – no, went to the Supreme Court on appeal and the Supreme Court held that there was no error on the part of the trial judge in making or arriving at the decision I had arrived at and having found that there was no reasonable explanation provided...

In this case I find it is no different. The explanation provided is simply failures on the part of lawyers which is no reasonable explanation for the reasons I have earlier given. This must now mean that the self executing part of the order must now be given their natural – must be given their natural meaning and effect which is that the defendants’ defence are struck out with damages to be assessed.(transcript WS No.844 of 2003 and WS No.846 of 2003 6 May 2009 pages 9-11)”


  1. His Honour then made the following orders in each proceeding:

Leave to appeal


  1. On 10 June 2009 Lord & Company filed an application for leave to appeal his Honour’s orders of 22 April 2009 in each of the proceedings. We note that the other original defendants did not seek leave to appeal his Honour’s orders. No explanation was given in the appeals as to why this was so. It follows that Lord & Company is the only appellant in both appeals.
  2. In any event, leave was granted to appeal the decision of his Honour in both proceedings.

Notice of appeal


  1. In both proceedings a Notice of Appeal dated August 2014 was filed. A number of grounds, however, were abandoned by the appellant at the hearing in this Court. They included ground (i) in SCA No 61 of 2009 which was as follows :
  2. The grounds of appeal pressed by the appellant in the appellant in SCA No 62 of 2009 (on appeal from the decision of his Honour in WS No 844 of 2003) were as follows:
  3. The remaining grounds of appeal pressed by the appellant in SCA No 61 of 2009 (on appeal from the decision of his Honour in WS No 846 of 2003) were as follows:

(ii) That in exercising his judicial discretion, the Learned Judge erred in mixed fact and law in ruling that the Applicant [sic] had not provided a reasonable explanation for non attendance on 22 April 2009 and non compliance with the Court Orders of 18 March 2009, when the Applicant [sic] did provide a reasonable explanation and reasons for non attendance on 22 April 2009 and had by reason of its Amended Defence filed 17th September 2004, compiled with the Court Orders of 18 March 2009 to file a Defence by 8 April 2009.

(iii) That in exercising his judicial discretion, the Learned Judge erred in mixed fact and law in ruling that the Applicant [sic] had not filed its Defence (by 8 April 2009) to the Respondents Amended Statement of Claim filed 31 March 2009, when in fact and law the Applicant [sic] had filed and was entitled to rely on its Amended Defence filed 17 September 2004 and effectively had complied with the Court Order of 18 March 2009 to file a Defence by 8 April 2009.

(iv) That in exercising his judicial discretion, the Learned Judge erred in mixed fact and law in ruling that the explanation put forward sown by evidence amounted to negligence by the lawyer when the said explanation showed that reasonable steps were taken to safeguard the Applicants [sic] interests in the peculiar circumstances existing at the material time.

(v) That in exercising his judicial discretion, the Learned Judge erred in mixed fact and law in finding that the Applicants’ [sic] lawyer was negligent in terms of failing to meet deadlines twice when it was clear that the failure occurred only on one occasion.

(vi) That in exercising his judicial discretion, the Learned Judge erred in mixed fact and law in replying on the Supreme Court’s decision in the case of Provincial Government of North Solomons v Pacific Architecture [1992] PNGLR 145 to support his (the Learned Judge) reasoning that lawyer’s negligence was no excuse and not a reasonable explanation for a party’s failure when the said case stood for a different proposition of law altogether.

...

(ix) That in exercising his judicial discretion, the Learned Judge erred in mixed fact and law striking out the Applicants Amended Defence filed 17 September 2004 and entering default judgment when the circumstances did not warrant default judgment being entered against the Applicant, which had the effect of shutting out the Applicant and prevented it being heard on its Defence to the claim in a trial proper before final judgment.

(x) The Learned Judge erred in mixed fact and law misapplying the principals in the Supreme Court decision of Kalang Advertising Limited v Visvanathen Juppusany (2008) SC 924 when that case could have been distinguished from the Applicant’s [sic] case in that the Applicant [sic] did provide a proper and reasonable explanation and sworn evidence for non-attendance on 22 April 2009 and for non compliance of Court Orders.

(xi) The Learned Judge erred in mixed fact and law in failing to give consideration to submissions that the Applicant [sic] defended the matter vigorously from the start as opposed to showing a “no care attitude”, and that a costs order was a more appropriate alternative, and that there was no demonstrable prejudice to the Respondent by the non-compliance but if there was, the Respondent could be compensated by costs.

  1. The orders sought by the appellant in both appeals were, in summary, that:

Consideration


  1. At the hearing there was some confusion as to the nature of his Honour’s judgment and orders of 6 May 2009. In particular, there was confusion in respect of whether the judgment of his Honour in each case was –
  2. These are important threshold issues, which we will consider before turning to the substantive grounds of appeal in these proceedings.

Self-executing order


  1. As we noted earlier in this judgment, the orders of his Honour of 22 April 2009 followed orders made on 18 March 2009, in particular:

2. Unless the Defendants appear and give a reasonable explanation for non attendance today and the non compliance of the Court Orders of 18th March 2009, the Defendant’s Defence is struck out and Default Judgment will is [sic] entered for the Plaintiff.


  1. This Court in Kalang Advertising Ltd v Kuppusamy [2008] SC924 considered an order of a very similar nature. At [14] their Honours found that the relevant order in that case was not self-executing because it:

“... made provision for the exercise of a further judicial function at a later time; the function being the determination of whether [the defendant] gave a satisfactory explanation. Conditional orders of this nature are a proper exercise of judicial power (Baing and The State v PNG National Stevedores Pty Ltd and BSP Ltd (2000) SC627.” (emphasis added)


  1. In our view this reasoning can be equally applied to the orders of 22 April 2009. While they provide context for the orders of 6 May 2009, the orders of 22 April 2009 were not self-executing orders. It follows that the appeals in this case have properly been against the judgments and orders of his Honour of 6 May 2009.


Type of judgment – summary or default?


  1. An important issue for determination by this Court is identification of the nature of the judgments giving rise to the orders made by his Honour on 6 May 2009. Certainly in his orders of 22 April 2009 his Honour assumed that it was open to him to enter default judgment for the plaintiff in each proceeding.
  2. At the hearing and following questions from the Bench in these appeals, Mr Kari for the appellant submitted that the appellant would not press ground (i) in SCA No 61 of 2009 because his Honour’s judgment below was not a “summary judgment”. As we will shortly explain, abandonment of ground (i) was a proper course by Counsel in the circumstances.
  3. Although there was some discussion during the course of the appeal as to whether the judgments of his Honour were “default judgments” as contemplated by Order 12 Division 3 of the National Court Rules, in our view they were not. Order 12 rule 25(b) of the National Court Rules defines a defendant as being “in default” for the purposes of Order 12 Division 3 of the National Court Rules
  4. We note that in the proceedings below the appellant had not filed its amended defences as ordered on 18 March 2009, and, notwithstanding that it had earlier filed a defence in each proceeding, it was nonetheless “in default” of Court orders in each proceeding within the meaning of Order 12 rule 25(b) of the National Court Rules in respect of its amended defences. As a general proposition, in circumstances where there is no consideration of matters involving the defence of a defendant, and the judgment is purely based on the default of a party in filing pleadings, the judgment is not a summary judgment within the meaning of Order 12 Rule 38 – it is a default judgment under Order 12 Rule 25: Telikom PNG Ltd v Tulin [2004] SC748.
  5. Importantly, however, in the proceedings below his Honour did not enter default judgments against the appellant because it had not filed its amended defences. His Honour ordered that the appellant’s defence in each proceeding be struck out and judgment entered for the respondent because his Honour was not satisfied that the explanations given by the appellant in each case for its non-attendance on 22 April 2009 and its non-compliance with Court orders of 18th March 2009 were reasonable.
  6. As a result, in these proceedings it is clear that on 6 May 2009 his Honour dealt with the matters before him summarily. They were not default judgments.
  7. The task for the Court is to properly characterise a matter disposed of summarily in accordance with the National Court Rules where the primary Court does not identify the source of its power to do so. The matter is further complicated by, for example, the specific reference in the National Court Rules to “summary disposal” in Order 10 Rule 9A (15) of the National Court Rules, and “summary disposal” of a matter within the meaning of Order 12 Division 4 of the National Court Rules (which is headed Order 12 Division 4 – Summary Disposal).
  8. The manner in which a Court has summarily disposed of a matter can be critical – and is in these circumstances – because Order 12 Rule 37 of the National Court Rules (which itself is in Order 12 Division 4) provides :

“This Division applies to all proceedings except proceedings which include

(a) A claim by the plaintiff for libel, slander, malicious prosecution, false imprisonment, seduction or breach of promise of marriage; or
(b) A claim by the plaintiff based on an allegation of fraud; or
(c) A claim for damages arising in respect of the death of any person or in respect of personal injuries to any person.”
  1. In summary, if the judgments of his Honour in the proceedings below purported to be “summary disposals” within Order 12 Division 4, the orders made would not have been open to his Honour because Order 12 Rule 37 (b) prohibits summary determination pursuant to Order 12 Division 4 of the National Court Rules in proceedings where claims are founded on allegations of fraud (cf Kumagai Gumi Co Ltd v National Provident Fund Board of Trustees [2006] SC837; Kappo No 5 Pty Ltd v Wong [1997] SC520; Porgera Freighters Limited v Bank of South Pacific Limited (2004) N2662; Daniel v Pak Domoi Ltd (2009) SC970; Wamabiang v Palme [2012] PGNC 84).

Order 12 Div 4


  1. An important question for this Court is: were his Honour’s judgments such as to fall within the description of “summary disposal” of proceedings within the meaning of Order 12 Division 4 of the National Court Rules? Order 12 Division 4 comprises seven Rules, including Order 12 Rule 37. Most relevantly for the purposes of this appeal, Order 12 Rule 38 provides for “summary judgment”. The Rule states :

“38. Summary judgment (13/2)


(1) Where, on application by the plaintiff in relation to any claim for relief or any part of any claim for relief of the plaintiff –

(a) there is evidence of the facts on which the claim or part is based; and

(b) there is evidence given by the plaintiff or by some responsible person that, in the belief of the person giving the evidence, the defendant has no defence to the claim or part, or no defence except as to the amount of any damages claimed, the Court may, by order, direct the entry of such judgment for the plaintiff on that claim or part, as the nature of the case requires.

(2) Without limiting Sub-rule (1), the Court may under that Sub-rule direct the entry of judgment for the plaintiff for damages to be assessed.

(3) In this rule, “damages” includes the value of goods.”

39. The nature of a summary judgment for the purposes of Order 12 Rule 38 is well-settled. Order 12 Rule 38 clearly requires the Court to have regard to the evidence in the relevant case and to assess both whether there is evidence upon which a judgment can be founded and whether the defendant has no defence. There are many authorities of this Court in which this Rule has been considered: see for example Tsang v Credit Corporation (PNG) Ltd [1993] PNGLR 112, Kappo No 5 Pty Ltd v Wong [1997] SC520; Daniel v Pak Domoi Ltd (2009) SC970).

40. Order 12 Division 4 also contemplates “summary disposal” in other specific circumstances, namely:

41. In such a case the Court may order that the proceedings be stayed or dismissed generally or in relation to any claim for relief in the proceedings: Order 12 Rule 40

42. It is clear that the judgments of his Honour the subject of the appeals to this Court were not “summary disposals” of the proceedings in the National Court as contemplated by Order 12 Division 4. They certainly do not fit the description of “summary judgments” as defined by Order 12 Rule 38. Further, they do not fit the descriptions of other forms of “summary disposal” in Order 12 Division 4.

43. Accordingly, unless the summary disposition of his Honour in the proceedings below can be brought within the compass of that Division through some other avenue in the National Court Rules, the prohibition in Order 12 Rule 37(b) in respect of claims based on allegations of fraud was irrelevant, and did not prevent his Honour making the orders he did on 6 May 2009 in these proceedings.

If not Order 12 Division 4 of the Rules, what was the foundation of his Honour’s judgments?

44. There are a number of ways in which the National Court can dispose summarily of proceedings under the National Court Rules without the judgment being a “summary judgment” within the meaning of Order 12 Division 4. By way of example, the Supreme Court in Curtain Bros (PNG) Limited v University of Papua New Guinea [2005] SC788 dealt with an appeal from a case where a judge of the National Court summarily gave judgment to a plaintiff pursuant to Order 9 rule 15 (1)(b) National Court Rules following failure of the defendant to give discovery.


45. Relevantly for the purposes of the appeal before this Court, Order 10 rule 9A (15) of the National Court Rules permits summary disposal of a matter in the following terms:


“15. SUMMARY DISPOSAL

(1) The Court may summarily determine a matter:

a. ...

b. on its own initiative; or

c. ...

(2) The Court may summarily dispose of a matter in the following situations :

a. ...

b. for a failure to appear at any of the listing or directions hearing by a party or his lawyer; or

c. for non-compliance of any order or directions previously made or issued by the Court at any of the listing processes.

d. ...

e. ...”


46. An example of a case where a matter was summarily disposed of pursuant to this Rule was considered by this Court in Kalang Advertising Ltd v Kuppusamy [2008] SC924. The facts of that case – which bear a marked similarity to those in these proceedings – were helpfully summarised in the headnote as follows:

“The respondent (then the plaintiff) commenced proceedings against the appellant (the defendant) in the National Court, claiming damages for breach of contract. The matter was set down for a directions hearing but only the plaintiff’s lawyer appeared. The Listings Judge adjourned the matter and made a conditional order, that unless the defendant turns up in court and provides reasonable explanation for not turning up in court and assisting at directions hearing for today... the defence shall be struck out and judgment entered for the plaintiff with damages to be assessed.

The defendant’s lawyer appeared on the appointed day and gave an explanation to the Listings Judge, but the Listings Judge was not satisfied with the explanation, which was also not supported by affidavit, and struck out the defence and entered judgment against the defendant with damages to be assessed. The defendant appealed, arguing that the Listings Judge erred in making both the conditional order and the order for summary judgment.”


47. The Supreme Court in Kalang Advertising at [11]-[14] accepted that the determination of his Honour constituted a valid summary disposal of the case within the meaning of what is now Order 10 rule 9A (15) (1) and (2) of the National Court Rules. The decision explains that the primary judge dealt “summarily” with the matter before him, but in a manner outside the purview of Order 12 Division 4.


48. Returning to the appeals before this Court, although Order 10 rule 9A (15) of the National Court Rules was not specifically identified by his Honour as the source of his judgment and orders of 6 May 2009, we are satisfied that, in fact, that was the case. We note that his Honour drew an analogy between the cases before him and Kalang Advertising. It is clear that his Honour applied the Rule the subject of consideration in that case.


49. Interestingly, the existence of different sources of the power of the National Court under the National Court Rules to summarily dispose of proceedings was addressed by this Court in Daniel v Pak Domoi Ltd [2009] SC970. In that case the respondent had filed a writ of summons seeking certain declaratory orders as to ownership of registered freehold land, and damages. The respondent obtained an order from the National Court restraining one of the appellants from proceeding with the sale of land. That order was subsequently dissolved on application by that appellant. The respondent then by notice of motion sought the same declaratory orders in the writ of summons and a further order that damages be assessed. The principal basis upon which the respondent sought this further relief was that the appellants had failed to file and serve a defence after filing their Notice of Intention to Defend. The motion was heard inter partes and, as the Court explained, “summary judgment” was entered against the appellants in respect of the declaratory orders sought. It was this “summary judgment” which was the subject of the appeal.

50. After noting the terms of Order 12 Rule 38 of the National Court Rules, their Honours observed as follows :

27. The Appellants argued that the trial judge erred when he first ruled that the application was an application for “summary judgment”. They said it was not a “summary judgment”. They argued that by applying the strict application of Order 12, rule 38 of the National Court Rules and the case authorities on summary judgment, such as Bruce Tsang v Credit Corporation (PNG) Limited [1993] PNGLR 112 and Curtain Bros (Qld) Pty Limited v The State [1993] PNGLR 285, the trial judge would not have found that the application was for summary judgment because the requirements for summary judgment would not have been met.

28. Secondly, it was argued that the trial judge having determined the nature of the application proceeded to deal with the application as an application under Order 8 rule 21 and Order 9 rule 30 (1) of National Court Rules.

29. From our reading of the trial judge’s written decision, one matter that is apparent is that, the Appellants seem to have misunderstood the application of “summary judgment” under Order 12 rule 38 and the application of judgment under Order 8 rule 21 and Order 9 rule 30 (1). These applications are quite distinct in a sense that the principles governing their application are different although they have a common resultant effect and that is, they dispose of proceedings in a “summary way”. In an application for summary judgment under Order 12 rule 38 an Applicant must show that :

1. there is evidence of the facts proving the essential elements of the claim; and

2. that the Applicant or some responsible person give evidence that in his belief there is no defence.

30. If an Applicant is able to establish these two elements, summary judgment may be granted without a need for a full trial.

31. In an application for judgment under Order 8 rule 21 and Order 9 rule 30 (1), judgment is entered based on admissions...

32. ...

33. In considering these two different applications in the present appeal, we find that his Honour did not apply the rules on applications for summary judgment in this case. What his Honour did however was that, he found that the Appellants failed to file their defence even though they had filed a Notice of Intention to Defend... this is apparent from his Honour’s judgment at p4 or p97 of the Appeal Book. ..

34. ...

35. Thus, it is clear to us that his Honour did not deal with that application as an application for “summary judgment” although he had stated at the introductory part of the judgment that “The plaintiff (sic) motion is seeking declaratory orders by way of summary judgment”. See p94 of the Appeal Book. On the other hand, we find that the true nature of the application before the trial judge was not a “summary judgment” under Order 12 rule 38 but an application for judgment based on admissions purportedly made by the Appellants under Order 8 rule 21 and Order 9 rule 30 (1). On that basis, we find that the trial judge did not consider the application before him as a “summary judgment” application.


51. The decision of the Supreme Court in Daniel v Pak Domoi Ltd is of assistance in the matter currently before the Court because it recognises that, while Order 12 Division 4 of the National Court Rules is entitled “Summary Disposal”, there are other provisions in the National Court Rules outside Order 12 Division 4 which empower the National Court to deal with, and dispose of, proceedings in a summary way. Relevantly, Order 10 Rule 9A (15) provides a general jurisdiction to the National Court to summarily dispose of a matter before it, similarly to Order 13 Rule 16 of the Supreme Court Rules 2012 (cf Iewago v Nambawan Super Ltd [2011] N4214, Department of Works v International Construction (PNG) Ltd [2011] SC1122). There is no reason for this Court to conclude that these other forms of summary disposal not specifically dealt with in Order 12 Division 4 of the National Court Rules are nonetheless somehow subject to the provisions of Order 12 Division 4 (and in particular Order 12 Rule 37 (b)).

52. As a general proposition, “summary disposal” of a matter pursuant to Order 10 Rule 9A (15) is not “summary judgment” within the meaning of Order 12 Division 4 National Court Rules, and Order 12 Rule 37(b) is not relevant to summary disposal of a matter in those circumstances.


53. In our view his Honour below in these proceedings dealt “summarily” with the cases before him. His judgments, however, did not constitute “summary disposal” within the meaning of Order 12 Division 4 of the National Court Rules. Accordingly, while we consider that the judgments of his Honour of 6 May 2009 were summary disposals, they were not summary disposals whereby the National Court is limited by the terms of Order 12 Rule 37(b). For the purposes of the application of the National Court Rules it was open to his Honour to summarily dispose of the proceedings before him, notwithstanding that they were founded on allegations of fraud.


54. In this light we now turn to the grounds of appeal before the Court.

Exercise of discretion – refusal to accept explanations


55. Any summary disposal of a matter by a Court requires the exercise of judicial discretion: cf Augerea v The Bank South Pacific Ltd [2007] SC869; Ampaoi v Tauriko [2012] SC1166; Curtain Bros (PNG) Limited v University of Papua New Guinea [2005] SC788, Kawage v Motor Vehicle Insurance Trust Ltd [2008] N3354 .


56. In this case his Honour declined to accept as reasonable the explanations given by the appellant for its failure to comply with his Honour’s orders of 18 March 2009 or appear at the hearing of 22 April 2009. While in a number of their grounds of appeal (grounds (i), (iii) and (v) of SCA No 62 of 2009 and grounds (ii), (iv), (v) and (vi) of SCA No 61 of 2009) the appellant takes issue with the “reasonableness” of his Honour’s view of the appellant’s explanations, and his Honour’s conclusion that the lawyers for the appellant had been negligent, in fact the appellant did concede before his Honour that their non-appearance and failure to comply with Court orders was as a result of “inefficiencies” within their law firm. It was open to his Honour to decline to accept such an excuse as “reasonable”. Appellate Courts must be slow to interfere with the exercise of discretion such as that exercised by his Honour unless the exercise of that discretion is clearly wrong : Telikom PNG Limited v Tulin [2004] SC748; Curtain Bros (PNG) Limited v University of Papua New Guinea [2005] SC788. On the material before us, we are not satisfied that his Honour was clearly wrong in refusing to accept as “reasonable” explanations based on inefficiencies in the appellant’s law firm.


57. While we note that the decision of the Supreme Court in Provincial Government of North Solomons v Pacific Architecture [1992] PNGLR 145 is not authority for the proposition that a lawyer’s negligence is no excuse for failure to comply with Court orders, we are also not satisfied that his Honour was clearly wrong in concluding that the appellant’s lawyer was negligent in the circumstances presented to his Honour. Members of Mr Kera’s law firm representing the appellant failed to appear at two separate hearings of the National Court, for reasons ranging from miscommunication within the firm to the apparent attendance of one of the appellant’s lawyers at a hearing in another matter in preference to that scheduled before his Honour. Further, on the evidence before the Court the failure of the appellant to comply with orders of the Court of 18 March 2009 was attributable to the sluggish progress of correspondence through Mr Kera’s law firm to the proper recipient. Inefficiency and carelessness in their inhouse systems appears to characterise the conduct of the lawyers. Whether this Court would have reached the same conclusion as his Honour that the lawyers for the appellant were negligent is not relevant. We do not consider that we ought to disturb his Honour’s finding in this respect.

Exercise of discretion – serious allegations of fraud


58. However, as we have already observed, in this case the claims of the plaintiff/respondent involved serious allegations of fraud. While Order 12 rule 37(b) is not applicable in this case, in our view in considering whether to exercise his discretion to summarily determine the matters before him, a relevant consideration for his Honour to have taken into account was the fact that the statements of claim raised serious allegations of fraud or deceit. We note that this was the view taken by Kariko J in National Fisheries Authority v Tipi [2012] N4836 where his Honour was invited to make a summary determination pursuant to O9 r15(1)(b) National Court Rules in respect of a failure to comply with discovery orders. In that case his Honour said that he ought not summarily determine the matter in circumstances where the claim was based on allegations of fraud, unless the failure has been intentional. As his Honour observed at [11] :


The rationale why a claim should not be summarily determined where it is founded on allegations of fraud is that fraud is a serious allegation and may amount to a criminal offence, so in the interest of justice the claim should be properly tried. For the same reasons, this court has held that default judgement should not be granted where the statement of claim raises serious allegations of fraud and deceit, as the interests of justice require those allegations to be proved by evidence in a trial before judgment is given on the merits; Bala Kitipa v Vincent Auali, Supply and Tenders Board of Western Highlands Provincial Government and Others (1998) N1773.


59. In our view the cautious approach adopted by Kariko J in National Fisheries Authority v Tipi had merit. Certainly this Court has previously cautioned that care needs to be taken in giving default judgment where fraud or deceit are alleged: Lambu v Torato [2008] SC953 at [119], Kunton v Junias and the Independent State of Papua New Guinea (2006) SC929 at [21] and Kewakali v Independent State of Papua New Guinea [2011] SC1091 at [23]. In our view similar principles are applicable in cases involving summary disposal, even those outside the scope of Order 12 Division 4 of the National Court Rules.


60. Because it is clear that his Honour did not have regard to a material consideration in determining whether to exercise his discretion, namely the fact that serious allegations of fraud were pleaded in both statements of claim, we consider that the exercise of his discretion miscarried.


61. Ground (viii) in SCA No 62 of 2009 and ground (ix) in SCA No 61 of 2009 are, in this respect, substantiated.

Application of decision in Kalang Advertising


62. In summarily disposing of the matters in these proceedings his Honour relied on the decision of the Supreme Court in Kalang Advertising v Kuppusamy [2008] SC924. While there are strong similarities between the facts of that case and those in the proceedings under consideration, an important distinction is that in Kalang Advertising the primary judge was not satisfied with the explanation provided by the lawyer for the defendant, when that explanation was not supported by affidavit. Their Honours observed:


“18. As for the second submission, we agree with the Listings Judge that the explanation proffered by Mr Mapiso could only be properly put to the court in the form of an affidavit. The same goes for submission Nos 3, 4 and 5. All of these matters should have been put in an affidavit.

19. It is not sufficient for lawyers who are formally asked, via a court order, for an explanation for their non-appearance at a directions hearing or about anything to do with the conduct of proceedings, to simply attend court and give an oral explanation. The explanation should be given in an admissible form.”


63. In the cases before his Honour it is not in dispute that affidavit material had been filed by the lawyer for the appellant to explain the non-appearance of the appellant at the hearing of 22 April 2009 and the failure of the appellant to file its defence in accordance with Court orders. Kalang Advertising is, in this respect, distinguishable.


64. To that extent ground (ix) in SCA No 62 of 2009 and ground (x) in SCA No 61 of 2009 are substantiated.

Exercise of discretion – prosecution of proceedings

65. Finally, we note the issues raised in grounds of appeal (ii) and (x) in SCA No 62 of 2009, and grounds (iii) and (xi) in SCA No 61 of 2009, namely that the primary Judge failed to give consideration to the fact that the appellant had defended the matter vigorously from the start. In our view, this criticism of his Honour’s reasoning has merit. We note his Honour’s evident frustration at the non-appearance of the appellant at the hearings of 18 March 2009 and 22 April 2009, and the apparent carelessness of the lawyers inherent in their explanations tendered to his Honour by affidavit and orally at the hearing of 6 May 2009. We also note that while the appellant had earlier filed a defence in each proceeding, the appellant had failed to file an amended defence as ordered by his Honour on 18 March 2009. However the fact remains that a defence was already on each file at the time his Honour gave judgment on 6 May 2009, and the appellant could have relied on these defences should it have chosen to do so. Further, it appears that the appellant was in a position to file an amended defence as ordered by 6 May 2009. These were considerations relevant to the exercise of his Honour’s discretion to summarily dispose of the matters before him. There is no material before us from which we can infer that his Honour took these relevant matters into account

66. In our view grounds of appeal (ii) and (x) in SCA No 62 of 2009 and grounds (iii) and (xi) in SCA No 61 of 2009 are substantiated.

Conclusion


67. The appeal should be allowed in both proceedings, and the appellant given its costs of the appeals.

Orders


68. The Court orders as follows:

In the appeals from each of the decisions of the National Court in WS No. 844 of 2003 and Ws No. 846 of 2003, the Court orders that:

(a) The appeal be allowed and the decision of the National Court of 6 May 2009 be quashed.
(b) The appellant file its amended defence within 14 days.
(c) The appellant be paid its costs of the Appeal from the decision of the National Court of 6 May 2009, to be taxed if not otherwise agreed.

__________________________________________________________
PNG Legal Services: Lawyers for the Appellants
Parkil Lawyers: Lawyers for the Respondents



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