Home | Databases | WorldLII | Search | Feedback Supreme Court of Papua New Guinea

Bluewater International Ltd v Mumu [2019] PGSC 41; SC1798 (1 May 2019)

SC1798

PAPUA NEW GUINEA
[IN THE SUPREME COURT OF JUSTICE]

SCA 66 OF 2017

BETWEEN:
BLUEWATER INTERNATIONAL LIMITED
Appellant

AND:
ROY MUMU, SECRETARY DEPARTMENT OF TRANSPORT
First Respondent
AND:

INDEPENDENT STATE OF PAPUA NEW GUINEA
Second Respondent

Waigani: Kandakasi DCJ, Pitpit & Dingake JJ.
2018: 25^th and 26^th June
31^st October
2019: 1^st May

CONTRACT LAW - Claim for breach of contract – Contract providing for dispute resolution mechanism – Resolution by direct negotiations and failing that arbitration – Commencement of Court proceedings contrary to contractual provision – Effect of – Court action precluded – Contracting parties choice as to process for resolution of their dispute must be given effect to - Court action flawed – National Court proceedings stayed pending resolution of proceedings through agreed process.

CAUSES OF ACTION – Action against the State – Condition precedent – Notice of intention to make a claim – Issue not raised by either of the parties – Can the Court raise it on its own initiative when a plaintiff applies for default judgment? – Courts powers – Court has power to raise issues of the plaintiff meeting all condition precedent and obvious and applicable statutory provisions other requirements of the law before signing default judgment – Section 5 Claims by and Against the State Act 1996 – S.54(6) Motor Vehicle (Third Party Insurance) Act (Chp. 295)

JUDGMENTS & ORDERS – Judgement declining to uphold an application for default judgment – Effect of – Plaintiff is required to prove his or her claim – No issue finally determined – Appeal inappropriate remedy – Leave to appeal against an interlocutory decision not correctly granted - Appeal dismissed as having no merit– Section 14 (3) of Supreme Court Act (Chp.37).

PRACTICE & PROCEDURE – Purpose of pleading with particulars – Fully disclose each of parties claim and defence - Parties duties – Pleadings must disclose a cause of action known to law and or a defence on the merits of the case – Pleadings must lay the necessary found for judgment and assessment of damages – Failure to properly plead – Effect of – No foundation to apply for and default judgment to be entered.

PRACTICE & PROCEDURE – Application for default judgment – There must be foundation in the pleadings for the application and for the entry of judgment – Lack of proper pleading – Effect of – No proper foundation for entry of default judgment – Lawyers duty and Courts duty – Check and ensure there is foundation in the pleadings before there can be an application for and grant of – Lawyers and parties have a duty not to apply for default judgment if there is no proper foundation in the pleadings – Breach of – Denial of application and costs on full indemnity to visit erring lawyer and parties - Judges should refrain from entering default judgement if the pleadings are insufficient – Failure to – Ready set aside on application to set aside or on appeal - Order 8, rr.7-43 of National Court Rules.

PRACTICE & PROCEDURE – Application for default judgment - Defence on court file – Defence allegedly filed out of time and is therefore invalid – Correct process and procedure – A successful application for a set aside of the invalid defence must precede an application for default judgement to meet the requirements for the entry of default judgment – Failure to take appropriate action to set aside or strike out invalidly filed defence – Effect of - There is a defence on the court filed unless and until it is set aside or struck out – No default judgment in default of a defence can be sought and granted – Order 12, r. 25 of the National Court Rules

Cases Cited

Matiabe Oberia v. Police & The State (2005) SC801
Sir Julius Chan v. Ombudsman Commission [1999] PNGLR 240
Rendel Rimua & Ors v. Simon Ekanda & ors (2011) SC1094
Lyons Putupen v. Enga Provincial Government (2009) SC1035
Philip Takori v. Simon Yagari (2008) SC905
Kerry Lerro trading as Hulu Hara Investments Ltd v. Philip Stagg, Valentine Kambori & The State (2006) N3950
Michael Kuman v. Digicel (PNG) Ltd (2013) SC1232
Jackson Tuwi v. Goodman Fileder International Ltd (2016) SC1500
Mount Hagen Urban Local Level Government v. Sek No. 15 Ltd (2009) SC1007
Agnus Kunton v. John Junias (2006) SC929
Bui Minig v. Joycelyn Minig (2013) SC1283

Counsel:

Mr. S. Malanga, for the Appellant
Mr.T. Tanuvasa, for the Respondents

01^st May, 2019

1. BY THE COURT: Bluewater International Limited (Bluewater) is appealing against a refusal by the National Court to enter judgment in default of the Respondents’ (the State) filing a defence to its claim for breach of contract. The main basis for the refusal was a finding that Bluewater failed to give the required notice under s.5 of the Claims by and Against the State Act 1996 (CBASA) and insufficiency of pleadings.
   
2. Although Bluewater has pleaded a number of grounds for its appeal, they essentially come down to two grounds. The first ground is a claim by Bluewater that the learned trial Judge erred in raising the issue of s.5 notice on the Court’s own motion and used that to dismiss its application for default judgment which was otherwise made out. Further and in support of that argument, Bluewater points out that, the Respondents’ defence which was allegedly filed out of time was no defence for the State and did not form the foundation to raise the s.5 notice issue. The second ground is one that concerns the sufficiency of pleadings or the pleadings being found questionable. In response, the State argues against Bluewater’s arguments and argue for the opposite of those arguments and submits the learned trial Judge did not fall into error as alleged or at all and argues for a dismissal of the appeal.
   
3. During the course of the hearing the Court raised two additional points which became apparent from the facts and or the relevant chronology of events as they were presented to us. These were the fact that the:
   

(1) relevant contract between the parties provided for a system or process of resolving all disputes between them either by direct negotiations and or failing that, by international arbitration; and

(2) decision the subject of this appeal was an interlocutory decision which did not finally determine the issues between the parties, against which there can be no appeal.

Issues for determination

4. Hence, the issues for this Court to determine are these:
   

(1) Can there be an appeal against a decision refusing to enter default judgment?

(2) Was Bluewater entitled to issue the National Court proceedings despite the parties’ agreement to resolve their disputes by either direct negotiations or arbitration?

(3) Was the learned trial Judge entitled to raise on her own initiative the issue of s. 5 notice and dismiss Bluewater’s application for default judgment?

(4) Did Bluewater meet the requirements for a grant of its application for default judgment?

(5) Were the pleadings sufficient for the purposes of applying for and the signing of any default judgment against the State?

Relevant facts

5. We will deal with the questions in the order in which they are presented. But first, we need to appreciate the factual background from which the appeal is before us. Turning to the relevant facts then, we note that, in the National Court, Bluewater claimed damages for breach of a consultancy contract entered into between itself and the State on 31^st May 2013. The contract was worth K7 million which was for Bluewater to provide a feasibility study for a wharf at Dogreto Bay, near Wewak in the East Sepik Province. Bluewater allegedly carried out its first part of the works and rendered an invoice up to 7^th December 2015 for K1,530,000.00.
   
6. It was a term of the agreement that Bluewater would be paid progressively based on performance of its part of the contract. Following a non- payment of Bluewater’s invoice, it followed up on the none from January to June 2016. Then by letter dated 21^st July 2016, Bluewater purported to give notice of its intention to make a claim under s. 5 of the CBASA. Before that, Bluewater gave notice under clause 3.10.4 (a) of the contract. Despite these notices, the State did not pay the invoiced amount or at all. That resulted in Bluewater issuing National Court proceedings under reference WS No. 1192 of 2016, on 26^th September 2016.
   
7. On 13^th October 2016, the State filed its notice of intention to defend. Thereafter on 15^th February 2017, the State filed its defence. The defence did not raise the issue of, no notice under s. 5 of the CBASA. By notice of motion filed on 28^th March 2017, Bluewater sought judgment on liability with damages to be assessed. That motion went before her Honour Polume-Kiele J., on 11^th April 2017. Her Honour refused to sign default judgment against the State. Amongst others, that was on the basis of s.5 of the CBASA not being met. The appeal is against that decision.
   
8. With this factual background in mind, we will now turn to a consideration of each of the issues presented. As we said already, we will go by the order in which we have set out the issues, starting with the first issue first.
   

Issue (1) - Can there be an appeal against a decision refusing to enter default judgment?

9. Section 14 of the Supreme Court Act (Chp.37) governs civil appeals to the Supreme Court. Most relevantly, subsection 3 stipulates:
   

“(3) No appeal lies to the Supreme Court without leave of the Supreme Court—

(a) ....

(b) from an interlocutory judgement made or given by the National Court except—

(i) where the liberty of the subject or the custody of infants is concerned; or

(ii) in cases of granting or refusing an injunction or appointing a receiver; or

(iii) in such other cases prescribed by the Rules of Court as are in the nature of final decisions; or

(c) from an order of the National Court as to costs only that by law are left to the discretion of the National Court.”

10. It is trite law in our jurisdiction that, there can be no appeal out of an interlocutory judgment or order that do not finally resolve any issue or matter in any proceeding before the Court, except with leave of the Court. The bases on which leave can or cannot be granted are also well settled in our jurisdiction. These include the following:
    

(1) The applicant must demonstrate an arguable case that the trial judge was wrong by reference to the questions of:^[1]

(a) Was the ruling within the discretion of the Court?

(b) Has it been shown that its exercise was manifestly unreasonable, exercised on wrong principle or mistake of fact?

(c) Does the decision have any bearing on the final determination of the issues between the parties? and

(d) Will it affect the primary rights of the parties or even prevent the determination of the issue?

(2) The Applicant must show a strong case of an error in the judgment, which must be something more than an arguable case and not merely an error but a patent error on the face of the record;^[2]

(3) The Court may refuse leave where there is recourse in the court below, that the decision does not have any bearing on the final determination of the substantive issues between the parties and that the decision does not affect the primary rights of the parties or prevents a determination of those issues;^[3]

(4) The Court having the task of whether or not to grant leave needs to remind itself of the strong presumption of correctness which attaches to the decision involving exercise of discretion in a civil case on a procedural matter within the Court’s jurisdiction;^[4]

(5) Given (4) above, an applicant for leave has a harder roe to hoe;^[5]

11. Applying these criteria or tests, application for leave to appeal against decisions refusing applications for default judgment have been dismissed. Amongst others the main reason for this was because:
    

(1) Such a decision has no bearing on the final determination of the issues between the parties. The decision simply deprives the appellant or the plaintiff of an opportunity to deprive the respondents or the defendants of the opportunity or right to defend themselves; and

(2) No substantial injustice will be suffered by an appellant (the plaintiff) if the decision is allowed to stand. He will be able to exercise all of his rights to have a trial on the issues.^[6]

12. These two factors go into the heart and the very nature, and effect of a decision refusing to enter default judgment against a defendant. As noted, an appeal against such a decision is effectively asking the Supreme Court to shut a defendant out from having his or her day in Court in his or her defence before final judgment and allow a plaintiff to succeed without any proper hearing on the substantive merits of the case. Allowing an appeal against such a decision runs contrary to the well accepted principle that, the Courts must always seek to dispense justice on the substantive merits of the case and allow each party to have their day in Court. Many judgments of the Supreme Court emphasise this point especially, in the context of summary judgment applications. The decision of this Court in Philip Takori v. Simon Yagari (2008) SC905, which has been cited with approval and applied in many subsequent decisions of the Supreme Court emphasise this point in these terms:
    

“Our judicial system should never permit a plaintiff or a defendant to be ‘driven from the judgment seat’ in a summary way, ‘without a Court having considered his right to be heard.’ A party has a right to have his case heard, as guaranteed by the Constitution and the laws of the land. The Rules are designed to enhance those rights and to ensure the prompt and fair disposal of matters coming before the Court. That right cannot be lightly set aside.”^[7]

13. Non-compliance of rules and any other technical requirements such as not filing a defence within the time limits prescribed by the National Court Rules, or filing a defence out of time must give way to the right of a party to be heard in his or her defence, if a defendant in default is able to offer a satisfactory explanation for all non-compliances and is now committed to taking the next steps promptly to allow for an expedited resolution or disposal of the matter. Unlike a defendant who stands the risk of a judgment, effectively arrived at summarily, which would be the end of the matter for him or her, a plaintiff suffers no such consequence. The only prejudice a plaintiff would suffer is costs, which could easily be taken care of by an appropriate order for costs. A plaintiff would still have the opportunity to establish his or her claim against a defaulting defendant and would also recover the costs of doing so upon succeeding.
    
14. Appreciating this position, this Court on many previous occasions refused to uphold appeals against refusal of applications for default judgment. For examples of cases on point, we refer to the decision of this Court in Agnus Kunton v. John Junias (2006) SC929 and Matiabe Oberia v Chief Inspector Michael Charlie (2005) SC801. Similarly, the Supreme Court has dismissed proceedings brought before it, if the appellant or the applicant as recourse in the National Court and is not shut out. The decision of the Supreme Court in Bui Minig v Joycelyn Minig (2013) SC1283 is an example of that. Given the importance of the two principles, as a matter of course, no appeal should be allowed out of a decision refusing to enter default judgment.
    
15. A few cases have departed from that approach. One such departure is represented by the decision in BSP Ltd v. Robert Tingke (2014) SC1355. The Supreme Court with respect did not consider and apply the criteria discussed above and the most direct and relevant decisions of the Supreme Court. Instead, the decision resorted to rely upon a number of foreign judgments and delved into the merits of the case more than the basis upon which an appeal against a refusal to enter default judgment could be allowed. In so doing, the Court with respect failed to give any meaningful consideration to the two principles discussed above. We are respectfully of the view that the departure as represented by the decision in BSP Ltd v. Robert Tingke (supra) is wrong law and should not be followed.
    
16. Our short answer to the question presented is this. No appeal should be allowed against a decision refusing entry of default judgement because of the two important principles of:
    

(a) such a decision has no bearing on the final determination of the issues between the parties. The decision simply deprives the appellant or the plaintiff of an opportunity to deprive the respondents or the defendants of an opportunity or right to defend themselves; and

(2) No substantial injustice will be suffered by an appellant (the plaintiff) if the decision is allowed to stand. He or she will be able to exercise all of his or her rights to have a trial of the issues in the cases and a decision arrived at on the substantive merits of the case.

Issue 2 – Bluewater issuing proceedings contrary to parties’ agreement?

17. We now turn to a consideration and determination of the second question. The second question concerns the parties’ agreement and Bluewater issuing proceedings contrary to their agreement.
    
18. The relevant part of the parties’ agreement is in clause 3.11 headed:
    

“DISPUTES AND ARBITRATION” reads:

3.11.1 Amicable Settlement

The Parties agree that the avoidance or early resolution of disputes is crucial for a smooth execution of the Contract and the success of the assignment. The Parties shall use their best efforts to settle amicably all disputes arising out of or in connection with this Contract or its interpretation.

3.11.2 Dispute Resolution

Any dispute, claim or difference out of breach or termination of the Agreement shall be agreed between the Agency and the Consultant or falling agreement shall be referred to arbitration in accordance with clause 3.11.3.

3.11.3 Arbitration

Arbitration may be commenced prior to or during the performance of the Services, and proceedings shall be conducted in accordance with the rules as specified below:

1. A Contract with Foreign Consultant

Any dispute, controversy or claim arising out of or relating to this Contract, or breach, termination or invalidity thereof, shall be settled by arbitration in accordance with the UNCITRAL Arbitration Rules as shown at website:

www.uncitral.org/English/texts/arbitration/arb-rules/arb-rules.pdf; or

2. A Contract with a National Consultant

Any dispute, controversy or claim arising out of or relating to this Contract, or breach, termination or invalidity thereof, shall be settled by arbitration in accordance with the provisions of Arbitration Act of 1951 of Papua New Guinea.”

19. The law in relation to breach of contracts and the courts role or duty is well settled and clear in our jurisdiction. In Tian Chen Limited v. The Tower Limited (N0.2) (2003) N2319, Kandakasi J., (as he then was) discussed the Courts role in breach of contract cases from the decision of the English Court of Appeal in Scammel & Nephew Ltd v. Ouston [1941] AC 25 and the earlier decision in Hillas (W.N.) and Co. Ltd v. Arcos Ltd [1932] UKHL 2; (1932) 38 Com. Cas 23, to the decision in the Australian case of York Air Conditioning and Refrigeration (A/asia) Pty Ltd v. Commonwealth [1949] HCA 23; (1949) 80 CLR. 11 and the Australian High Court case of Upper Hunter County District Council v. Australian Chilling and Freezing Co. Ltd [1968] HCA 8; (1968) 118 CLR 429. His Honour then concluded:
    

“It is clear from these authorities that, it is the duty of the Court to uphold the agreement of the parties regardless of whatever difficulties there might be in the construction of their contract. In the exercise of that duty, the Courts must endeavour to uphold the agreement of the parties, particularly in commercial arrangements. This is because the Courts are not there to destroy the agreement of parties but to uphold them. This should readily be the case where the parties have not only agreed but have gone further into implementing their agreement resulting in expenses being incurred by either or both of the parties. In so doing, the Courts can and have ignored words or clause that are meaningless or superfluous (Nicolene v. Simmonds (1953) 1 QB 543) and supply terms or words as appear reasonable and necessary in the circumstances to give effect to the parties agreement.”

20. This Court in its decision in Fly River Provincial Government v Pioneer Health Services Ltd (2003) SC705, adopted and applied this statement of the law.
    
21. As in this case, most international and domestic contracts often contain dispute resolution provisions as part of their contract. Business men or women after due consideration of all factors including, the serious backlogs in the Courts and much delayed decisions, often chose to have their disputes or differences resolved by mediation or arbitration. Hence, to them, their preferred process for a resolution of their disputes is what they chose, mediation or arbitration or a combination of the two. Also, often times business men and women who are new to a country do not know much about the Judges who man the Courts and who will deal with any case that they might take to them. Further subject specialisation is a rarity in the Courts. Hence, they opt for a process they know and can appoint their arbitrator or mediator who is knowledgeable of the subject matter and they can dictate the times for the various steps to be taken through to final resolution. They also know and accept that, there will be no appeals or reviews of the outcome which prolongs a final resolution of their disputes. Indeed, we note that a country that actively prompts the use of mediation, arbitration or other forms of dispute resolution and is friendly to these other forms of dispute resolution gains the confidence of the business community. This encourages more foreign investment as is the case for Singapore.
    
22. In our jurisdiction, the Courts have not been consistent in their attitude toward the parties’ choice in opting for arbitration and the flow on consequences from that. The Courts started well, with for example, the decision in Delta Constructions Pty Ltd v. Administration of the Territory of Papua and New Guinea [1965-66] PNGLR 381. There the Court held that the onus of proof is in effect reversed, once it is established that a dispute falls within an arbitration clause. Where such is the case, the tendency of the courts is to stay the proceeding pending conclusion of arbitration.
    
23. A number of cases have correctly almost readily upheld the agreement of parties as to how they wish their commercial or contractual disputes to be resolved. In Huon Electrical Ltd v. RD Tuna Cannery Ltd (2000) N2005, when granting an application by a defendant to stay proceedings and refer a dispute to arbitration. Sakora J (as he then was) said:
    

“The... point to make is that the contract containing the arbitration clause ... is an agreement, a mutual agreement at that, between the parties. It is, therefore, no function of the Court to write up new contracts for the parties, as it were. The Court’s function is only to interpret the contract, according to law, to determine what was it that the parties intended and entered into, and with what legal consequences, if any.”

24. Later in Paul Pilimbo Pora v. Larry Hull (2009) N3729, the Court correctly applied the law in these terms:
    

“...the forum chosen by the Plaintiff and the Second Defendant to resolve any dispute concerning the construction of the Shares Agreement or to ascertain the intention of the parties evidenced by the Shares Agreement through arbitration by a single arbitrator appointed in accordance with the Arbitration Act must be given effect to by the Court where the terms of the arbitration clause is in clear terms: Willesford v. Watson [1873] 8 Ch. 473 at 480 per Lord Selborne LC. That is to ensure that the parties abide by their contractual rights: Mauga Logging Company Pty Ltd. The Shares Agreement in particular Clause 10 is in clear, unambiguous and mandatory terms. The Plaintiff must therefore go with the Second Defendant to arbitration to resolve the dispute which as I have observed already also concerns the Third Defendant in his capacity as a shareholder and director and the First Defendant whose interest or connection with Arabicas is that as I have discussed already.”

25. At the highest, this Court comprising of Mogish, Yagi & Ellis JJ in Lavongai Equities Ltd v. Club 21 Ltd (2009) SC1001, pointed out three ways in which a dispute could be referred to arbitration in Papua New Guinea. In its own words the Court said:
    

“There are three ways a matter can be referred to arbitration. First, the parties may proceed with that course, without any court proceedings being commenced. Secondly, one of the parties may commence court proceedings. In such a case, the other party is entitled to have those proceedings stayed and the matter referred to arbitration in order to give effect to the agreement of the parties embodied in the arbitration clause. Part II of the Act, which includes sections 2 to 12, covers such situations, which are commonly called submissions. Thirdly, court proceedings may be commenced and the court may, with or without the consent of the parties, refer the matter to arbitration. Such a situation, commonly called a reference, is covered by Part III of the Act, which covers sections 13 to 15.”

26. Most importantly, the Court also went onto say:
    

“It is important for lawyers to realise that arbitration is a form of alternative dispute resolution which has the objectives of being quick, streamlined and less expensive by comparison with litigation through the courts and of producing an outcome which is less susceptible to challenge on appeal. The failure of a lawyer or the client of that lawyer to cooperate in the arbitral process cannot be condoned and the courts should not allow pettifoggers to hamper trade and commerce by preventing the achievement of the objectives of arbitration.”

27. Earlier in Brem Maju (PNG) Ltd v. Bee Constructions Ltd (2006) SC852, this Court comprising of Injia DCJ, (as he then was), Jalina & Gavara-Nanu JJ correctly noted and upheld the parties’ agreement to submit to arbitration in the following terms:
    

“11. It is normal to expect parties in major commercial contracts to include an arbitration clause to settle disputes arising under the Contract. In the present case, it appears that the Building Contract contained an arbitration clause. The Building Contract is not contained in the Appeal Book and we are unable to ascertain the working of the arbitration clause. We would assume it would be in the standard form where the parties agreed to oust the jurisdiction of the Courts and submit any dispute arising under the contract to arbitration. It appears the WS proceedings instituted by the appellant was in breach of the arbitration clause hence the reason for the Court Order made on 25 October 2002 under s.4 of the Act.

12. There is no question on the appointment of the arbitrators and the arbitration conducted and concluded. There is no dispute on the effect of the arbitration award – it is “final and binding on the parties” (Schedule 1.8); it is “equivalent to the verdict of the Court” (s.14 (2)) and it is enforceable as a judgment or order of the Court (s.12).”

28. Other decisions as the one in Rustproof Ltd v. Eastpac Ltd (2015) N7038, have similarly recognized and have upheld the agreement of the parties. On the other hand, however, some Judges have allowed themselves to be misguided by considerations other than the need to be guided by the intention of the parties when the parties by their deliberate choice have expressed an intention to have their disputes resolved by arbitration. A good example of this line of cases are the decisions in Niugini Civil Petroleum Ltd v. West New Britain Development Corporation Ltd (2005) N2909 and Newsat Ltd v Telikom PNG Ltd (2007) N3448, per Cannings, J (the Cannings decisions). In these judgments his Honour proposed eight considerations to be taken into account when determining whether to grant or refuse a stay of proceedings for arbitration. These considerations are:
    
    1. Is there a good reason for not going to arbitration?
    2. Was the defendant ready and willing to go to arbitration when the plaintiff instituted court proceedings?
    3. Is the defendant still ready and willing to go to arbitration?
    4. Has the defendant filed a defence or taken any other step in the court proceedings?
    5. Does the arbitration clause make it mandatory for disputes to be referred to arbitration?
    6. Was the application for stay of proceedings brought within a reasonable time after commencement of the court proceedings?
    7. Has the defendant waived its rights to arbitration?
    8. Has the plaintiff rushed to court?
       
29. A number of subsequent decisions of the National and the Supreme Court’s decision as in Rei Logona v. Meissy Roaveneo (2016) SC1498, per Sawong and Frank JJ., have readily adopted and applied these considerations. Considerations 1 to 5 and 8 are totally irrelevant considerations, whilst 6 and 7 are relevant. What matters is the intention of the parties to the contract. As clearly stated by the decision in Fly River Provincial Government v Pioneer Health Services Ltd (supra), (endorsing my decision in Tian Chen Limited v. The Tower Limited) the Court’s duty is to ascertain the intention of the parties. Once that intention is ascertained, the Court must do all it can to give effect to the parties’ agreement and not destroy it. This may as of necessity include an ignorance of words or phrases that are meaningless or superfluous and or supply terms or words as appear reasonable and necessary in the circumstances to give effect to the parties’ agreement and hence, their intention.
    
30. What this means in the case of an agreement or contract containing an arbitration clause is this. The parties have expressed an intention to have their dispute resolved by arbitration and not by the formal court process or litigation. A courts duty then is to do all it can to give effect to that intention as was done in the case of Able Constructions Ltd v. W.R. Carpenter (PNG) Ltd (2014) N5636. There, the Court ignored reference to a process (arbitration) that did not exist and allowed for a process (mediation) that existed to give effect to the parties’ intention to have their dispute resolved by a process other than the formal court process. It does not sit well with the parties’ choice and hence their intention for the courts to look for reason not to give effect to their agreements by coming up with the kinds of factors set out in the Cannings decisions or any other that ignores, dilutes and departs from the parties’ intention. The only exceptions to these would be cases in which a statutory provision expressly excludes arbitration as was noted by this Court in Chief Collector of Taxes v Bougainville Copper Ltd; Bougainville Copper Ltd v Chief Collector of Taxes (2007) SC853, in the context of income tax or the parties have not in fact entered into a contract.
    
31. Since 1975 with beginnings in the United States of America and later spreading rapidly through out the world, alternative methods of dispute resolution to that of the formal courts have been developed and applied. This was forced on by serious backlogs in the Courts worldwide and a desire for expedited resolution of disputes at less costs and taking lesser time than the formal Court process. As Sheila Sukwianomb, notes in her paper, “Mediation in the Pacific: Resolving Cross-border Commercial Disputes,”^[8] resolving business disputes in the Courts in the Pacific Island countries which includes PNG, has been a problem. There have been lengthy delays in the court process and has proven to be an expensive exercise for businesses. Consequently, the countries in the region have failed to attract more foreign investment and trade because of the inefficiencies in contract enforcement which is essential for creating a business-friendly environment. Worldwide studies have shown that “an efficient justice system is fundamental in reducing business risks and improving the business climate in emerging market economies.”
    
32. In a deliberated commitment to improve on the position in PNG, her Judiciary decided to adopt ADR. Formal steps were taken in 2008, with amendments to the National Court Act to allow for mediation and other forms of ADR and the ADR Rules promulgated by the Judges in 2010. Kandakasi J., (as he then was), in several of his decisions, such as the one in Hargy Oil Palm Ltd v. Ewasse Landowners Association Inc (2013) N5441, his Honour elaborated on these developments and highlighted the benefits of the Judiciary’s promotion of the use of mediation and ADR. In so doing, his Honour referred to his earlier decision in PNG Ports Corporation Ltd v. Canopus No 71 Ltd (2010) N4288 where I observed:
    

“The Courts have repeatedly made it clear that, almost all disputes that enter the Court are capable of settlement, by the parties’ direct negotiations. The recent developments in ... Alternative, Active or Appropriate Dispute Resolution (ADR) further strengthens that position. Indeed, the Supreme Court on 9th November 2001, in Public Officers Superannuation Fund Board v. Sailas Imanakuan.... confirmed that position in these terms:

‘... Courts are there only to help resolve or determine disputes that cannot be resolved by the parties themselves despite their best endeavours to do so. All human conflicts and disputes are capable of settlement without the need for court action. That is possible only if the parties are prepared to allow for a compromise of their respective positions. People in other jurisdictions are already recognizing the benefits of settling out of court as it brings huge savings to the parties in terms of costs and delay and help maintain good relations between the parties. This is why in other jurisdictions, out of court settlements are actively being pursued through what has become known as Alternative Dispute Resolutions or ADRs. We in Papua New Guinea have briefly talked about it in workshops and seminars but have not formerly embraced that into our court process and procedures. Work is now being undertaken to do that.’”

33. Supreme Court decisions like the one in NCDC v. Yama Security Services Pty Ltd (2003) SC707, have repeated the call for more use of ADR and or mediation. The enactment of the amendments to the National Court Act was a recognition and strengthening of that call and to obligate the Courts to use more and more ADR or mediation. After discussing these developments in his Honour’s decision in the Hargy Oil Palm case, he concluded at paragraph 40:
    

“A few imperatives are standing out clearly and prominently from the above discussions. The first is an imperative for parties and in particular businesses or corporations in a dispute or conflict to have their issues resolved as quickly as is possible because it makes business and economic sense to resolve their conflicts promptly. This can be achieved through direct negotiations between themselves. If, however, that fails, they have a duty to use other appropriate alternative processes facilitated by an independent third party who is appropriately trained, experience and accredited. A failure to act in accordance with this imperative attracts the risks of orders for costs or such other sanctions the Court might consider appropriate in each case. The only exception to this imperative is for cases which require without any further consideration a judicial consideration and determination, such as the interpretation of a statutory provision, or cases in which there is a need for setting a proper precedent.”

34. Though these observations and decisions were in the context of a focus on mediation, they equally apply to arbitration as a form of ADR and other forms of ADR such as early neutral evaluation, expert case appraisal and so on. Indeed, the Judiciary has decided to turn to modernising arbitration in PNG since last year, 2018, which culminated in the successful hosting and conclusion of PNG’s first ever conference on mediation and arbitration from 25^th – 29^th March 2019. The same underlying reasons for promoting mediation equally apply to the modernising arbitration as a form of ADR. It follows therefore, in the light of all these developments that, the Courts should readily uphold the parties’ choice of choosing to have their disputes resolved by arbitration unless they by their own conduct waive that choice, or arbitration is prohibited by statutory law or the parties did not agree to submit to arbitration.
    
35. In the present case, the relevant provisions of the parties’ contract or agreement as extracted and set out at paragraph 18 above are very clear. First, the parties agreed to have their disputes resolved amicably through negotiations and failing that through arbitration. There is no evidence of Bluewater taking any meaningful steps to have the issues raised in this proceeding resolved by the parties’ own direct negotiations. Also, there is no evidence of Bluewater taking all steps necessary to have the issues resolved by arbitration. In the absence of such evidence, it is clear that Bluewater issued these proceeding seeking to enforce its contractual rights in breach of the dispute resolution provisions contained in the same contract in clause 3.11.1 to 3.11.3. By these provisions, the parties ousted the Courts jurisdiction. They made a deliberate decision not to go to court. Given that, the Court and its processes cannot be availed by either of the parties except only for the enforcement of their dispute resolution provisions and or enforce any agreement or resolution arrived at through the use of their dispute resolution process set out in clause 3.11 of their agreement, be it a mediated agreement or an arbitration award.
    
36. In these circumstances, we find Bluewater was at no liberty and therefore not entitled to issue the National Court proceedings which gave rise to this appeal. It was instead, barred by its own deliberate choice and agreement per the provisions referred to above from going to Court. Given that, we find the Court had good reason, although it did not constitute part of the learned trial Judge’s reasons, not to grant Bluewater’s application for default judgment as the proceedings were flawed from the beginning.
    

Issue (3) - Was the learned trial Judge entitled to raise on her own initiative the issue of s. 5 notice and decline the application for default judgment?

37. The foundation for this issue are appeal grounds 3 (a) and (b). There are obviously two parts to this issue. The first part concerns the learned trial Judge raising the issue on her own motion. The second concerns the learned trial Judge’s decision to decline the application for default judgment because of her finding that, Bluewater failed to meet the notice requirements. Dealing firstly with the first part of the question, we note a case directly on point is the decision of this Court comprising of Collier, Neill & Liosi JJ., in Michael Keka v. Pius Yafaet (2018) SC1673. In that case, the learned trial Judge did what the learned trial Judge did in this case. The trial Judge raised the issue of s.5 notice on the Court’s own initiative and dismissed the proceedings. Aggrieved by that decision, an appeal was lodged.
    
38. In order to come to its decision on the appeal, the Court had regard to the decision in Karl Paul v. Aruai Kispe and 2 Ors (2001) N2085, where the Court said:
    

“The Court has wide powers to control the conduct of proceedings before it, subject to jurisdictional limitations fixed by Statute. It is in the inherent jurisdiction of the court to take firm control of the proceedings to ensure that the business of the Court is conducted in an orderly and fair and timely manner and to ensure that justice is done in the particular case. To this end, it is within the inherent jurisdiction of the Court to scrutinize the form and contends of documents before it...

There is a wide discretion vested in the Court by the NCR to screen and weed out claims which do not disclose a reasonable cause of action, are frivolous and vexatious or an abuse of process of the Court, (O12 r 40), or the documents filed in Court are scandalous irrelevant or otherwise oppressive (O2 r 29), or the ground of irregularity. That discretion is normally exercised upon application by an interested party. Nevertheless, it goes without saying that the Court may exercise that discretion on its own initiative. It is open to the Court to raise and determine questions concerning the regularity (O1 r 9) or competency of proceedings at any stage of the proceedings with or without application by an interested party...”

39. The Supreme Court also had regard to the decisions in Paul & Mary Bal v. Kenny Taiya (2003) N2481 and Chefs Secret Limited v. National Capital District Commission [2011] N4217. In both cases, the Court recognised the discretion vested in the Court to strike out proceedings on its own motion specifically in circumstances where s.5 of the CBASA has not been complied with, which renders the proceedings incompetent. This line of cases, urges the Courts not to take a back seat. Instead, they require the Courts to be vigilant in their delivery of justice by ensuring that parties comply with stipulated and mandated procedures.
    
40. Having regard to these authorities, the Supreme Court for the case before it, found in favour of the National Court having the jurisdiction to raise the issue and strike out or dismiss proceedings on its own motion. The Court further found this as a necessary part of its inherent jurisdiction to control and manage the proceedings before it.
    
41. To this we add, an application for default judgment is based on a technical failure, namely failing to file a defendant’s defence within time periods required by the National Court Rules. Sometimes, such applications are contested. Other times, they are ex parte the defendants. In either case, technically, plaintiffs applying for such judgment have an obligation to demonstrate to the satisfaction of the Court that they themselves have complied with all the relevant and applicable technical requirements as they apply to them. Such requirements include, meeting condition precedents such as, the notice requirements under s. 5 of the CBASA in the case of a claim against the State and s. 54 (6) of the Motor Vehicles (Third Party) Act (Chp. 295) as amended, in the case of a claim against the Motor Vehicles Insurance Limited. A claim being brought within the statutorily prescribed time limits, the claim meeting the relevant requirements of the National Court Rules and other additional technical requirements in the form of practice requirements imposed by practice notes or case law, are requirements plaintiffs must meet in order to secure a default judgment. Where a plaintiff fails to address and satisfactorily meet any of these technical requirements, that should cause the presiding Judge, acting within his or her discretion to raise the relevant issues and determine the application on being satisfied either that, the applicant has met all of the requirements or has failed to do so.
    
42. Proceeding on the basis of the above, we are of the view that, the learned trial Judge was entitled and was within her discretion to raise the issue of notice under s.5 of the CBASA. As already mentioned, the requirement for notice is a condition precedent that must be first met before any claim against the State can proceed. The learned trial Judge needed to be satisfied that, a condition precedent to the claim was met and there was no impediment to signing default judgment against the State. The duty was on Bluewater to demonstrate to the satisfaction of the Court that, this condition precent was met. When it failed to do so, the learned trial Judge was within her discretionary power to raise the issue of s. 5 notice in the way she did.
    
43. This then leads us to the next question of, whether the learned trial judge was correct in finding Bluewater failed to meet the notice requirement. The law in respect of this issue is also well settled. All persons wishing to make a claim against the State are required by s.5 of the CBASA to give notice of their intention to do so within 6 months from the date when the cause of action arose or, within such further time as may be granted by a Court on a plaintiff’s application. The only exception to that are, in respect of judicial review proceedings^[9] and claims for enforcement of contractual obligations through arbitration proceedings.^[10] This is so because, such proceedings have their own notice periods. In the case of judicial review proceedings, it is 4 months or such further period as may be approved by a court. As for arbitration proceedings, usually contracts imbedding arbitration clause stipulate time frames that are in most cases, shorter than 6 months.
    
44. It is also settled law that, the notice must give sufficient details about the claim. In Daniel Hewali v. Papua New Guinea Police Force and The Independent State of Papua New Guinea N2233, Kandakasi J(as he then was) considered the issue of sufficiency of a notice under s. 5 of the CBASA and said:
    

“The wording in this section (s.5 of CBASA) is identical to section 54(6) of the MVIT Act. There are two differences between the two sections. First, there is no guidance has (sic.) to what form a notice under section 54 (6) of the MVIT Act, should take, whereas under the CBASA it provides that the notice must be in writing. Akuram J (as he then was) spoke of this difference in Kamapu Minato & Anor v. The State N1768. Secondly, it prescribes the manner in which the notice must be served.

All the cases on point, such as Kamapu Minato & Anor v. The State (supra), agree that, the purpose or intend (sic.) of Parliament behind s. 5 of the CBASA, is the same as that under the MVIT Act, as held by the Supreme Court in the Rundle case (supra).

It is to give the MVIT early notice of an impending claim against it so that, it can carry out its own investigations while the trail of evidence is still fresh to enable it to meaningfully decide whether or not to settle the intended claim. No such investigations could be carried out if no details of the kind spoken of by the other judgements are disclosed or given.

...Such notice must give sufficient details about the impending claim so that the State can carry out its investigations and gather its evidence to properly address the claim once lodged against it. Such details should include dates, time, names of people and places, copies of any correspondence or such other information that could enable the State to carry out its own investigations...”^[11]

45. In the present case, the learned trial Judge found Bluewater failed to give notice within the required 6 months period and in any case, the purported notice was insufficient. Bluewater in its pleadings in the National Court and in its argument before this Court, says it rendered its first invoice up to 7^th December 2015. Following no payment, it sent follow up letters in January and again in July 2016. Despite that, the invoice stood unpaid. On 5^th July 2016, Bluewater gave notice under clause 3.10.4 (a) of the Contract between itself and the State that its invoice had been outstanding. Later, on 21^st July 2016, Bluewater purported to give notice of its intention to make a claim against the State.
    
46. Clearly, Bluewater’s cause of action accrued when there was no payment received upon the expiry of the first given time frame. The period given to the State to pay was by 05^th January 2016. That was the date when the time period for Bluewater to give notice commenced and expired 6 months thereafter on 05^th July 2016. Instead of immediately giving notice when there was no payment, Bluewater did nothing and purported to give notice by letter dated 21^st July 2016. Obviously, that purported notice was outside the prescribed 6 months under s. 5 of the CBASA.
    
47. Once the time period for giving notice under s. 5 of the CBASA expired, Bluewater had only one option to take. That was to apply for an extension of time under s.5 (2) (c) of same Act. This, Bluewater failed to do. Instead, it purported to give notice of its intention to make a claim by its letter dated 21^st July 2016. Two problems attend that purported notice. Firstly, it was out of time. Secondly, the letter was insufficient in that it did not give the kind of information required to constitute sufficient notice as outlined in the Daniel Hewali case, by its failure for example, to disclose the possible witnesses, their whereabouts and where and how they could be contacted, the exact nature of the work done and how the fees payable were arrived at. In the circumstances, we are respectfully of the view that the learned trial Judge did not fall into any error in determining sufficient notice under s. 5 of the CBASA was not given. Accordingly, we would order a dismissal of appeal grounds 3 (a) and (b).
    
48. We now turn to a consideration and determination of the next issue of whether Bluewater met the requirements for it to be granted default judgment.
    

Issue (4) - Did Bluewater meet the requirements for a grant of its application for default judgment?

49. This issue is given rise to by grounds 3 (d) and (e) of the appeal. The law is very clear on the requirements that must be met before any default judgment can be signed against a defendant. The decision of this Court in Hilary Singat v. Commissioner of Police (2008) SC910, is directly on point. There, as Bluewater has done here, the appellant applied for default judgment despite a defence to his claim being filed for the respondents, albeit outside the prescribed time limits. The National Court decided against the application and the plaintiff appealed against that decision. Upon having heard the parties, the Supreme Court decided to dismiss the appeal as having no merit. In its reasoning the Court noted the requirements for a successful application are self-evident in the relevant rule namely O.12, r 25 of the National Court Rules.
    
50. Order 12, r.25 reads:
    

“25. Default. (17/2)

A defendant shall be in default for the purposes of this Division—

(a) where the originating process bears a note under Order 4 Rule 9, and the time for him to comply has expired but he has not given the notice; or

(b) where he is required to file a defence and the time for him to file his defence has expired but he has not filed his defence; or

(c) where he is required under Order 8 Rule 24 to verify his defence and the time for him to verify his defence in accordance with that Rule has expired but he has not so verified his defence.”

51. The Court then went on to add that, the Supreme and National Courts have built into these, additional requirements which requirements are necessary in the interest of doing justice on the merits of a case rather than a strict application of the Rules. The first of these additional requirements, is the requirement for forewarning a defendant before filing an application for default judgment by a plaintiff. That came out of the decision in Mapmakers Pty Ltd v Broken Hill Pty Ltd [1987] PNGLR 78, which held that, it is a good practice to forewarn a defendant who has filed a notice of intention to defend before filing and moving for default judgment.
    
52. As the Court in the Hilary Singat case noted, the Court’s earlier decision in The Government of Papua New Guinea and Richard Harold Davis v. Stanley Barker [1977] PNGLR 386, endorsed this as good practice by agreeing with similar views expressed in Pope v. Aberdeen Transport Co. Pty. Ltd [1965] N.S.W.R. 1550. This development in the case law eventually led to Practice Direction 1 of 1987, which reads:
    

“Default judgment – obligation to notify person or lawyer filing Notice of Intention to Defend.

In N8588 – Mapmakers Pty Ltd 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 Defence filed.

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

53. Since then, the requirement for a forewarning before filing and applying for default judgment has become an important requirement that must be met in addition to meeting the requirements in O.12, r.25 of the National Court Rules. The decision in Hilary Singat elaborated on what should be in a forewarning letter in the following terms:
    

“A proper and reasonable forewarning letter would have two parts. In the first part it would draw to the defendant’s attention that the time of (sic) the defendant to file and serve his or her defence has expired without a defence being filed and served. Then in the second part, it would give the defendant additional but limited time for him or her to file and serve his or her defence. The aim of the forewarning letter is thus, to give a defendant who might have inadvertently overlooked the need for filing and serving its defence within the prescribed time limits the opportunity to do so. This ties in well with the Courts usual desire to do justice on the substantive merits of a case as opposed to a judgment based purely on technicalities and deficiencies or defaults in compliance with the rules of the Court, which are only a means to an end and not an end in them.... At the same time, the requirement also ensures that, a defendant is not taken by surprise by a default judgment and thereby avoids the possibility of an application to set aside a default judgment, with the associated costs and the Court’s time issues.”

54. In the decision in Hilary Singat, the Court went on to state the second of the additional requirements. That is the requirement for a plaintiff to conduct a search of the relevant court file and ensure there is no defence in the court file before filing and moving for a default judgment. The decision in Hilary Singat elaborated in the following terms:
    

“The search in question is usually and should be conducted at the time of filing the motion and not any time before that to ensure that at the time of filing the motion for default judgment there is in fact no defence on the Court file. In all of the cases of default judgment that have thus far gone before the Courts, the Courts have invariably ensured a meeting of this requirement before granting a default judgment. In the unfortunate event of a default judgment being signed without meeting this additional requirement, they have been readily set aside.”

55. The Court went further to make the point that, there was a good reason for this additional requirement in that:
    

“In some cases, a defendant might file his or her defence but may have inadvertently overlooked the need to have the defence served on a plaintiff or that the defence may have been sent to the wrong address or person. Only a search of the relevant Court file would reveal whether a defence has been filed or not. All good and reasonable lawyers choose not to proceed with an application for default judgment if their search of the relevant court file reveals the filing of a defence ... but not ... served on them. This accord (sic) well with the notion of “default” within the meaning of O 12 r 25. For there can only be a default if no notice of intention to defend (r 25(a)), or a defence (r 25(b)) or a verified defence (r 25(c) (as the case might be) has not been filed. Where any of these documents is filed, strictly speaking, there can be no default in respect of any of them, even if they are filed outside the time limits imposed by the Rules. The default has to be in terms of filing the documents in question and not the time limits for filing it.”

56. Thereafter the Court went on to address the filing of a defence outside the required time limits in this way:
    

“Any defence filed outside the time limit would be irregular and invalid for that purpose. Nevertheless, that does not mean that, there is no defence and hence a default within the meaning of the rules under consideration. Rather, it renders the defence or step taken without leave, irregular and invalid but remain valid until declared as such.

“...The irregularity or invalidity attending the late defence or step taken without leave of the Court can be regularized or validated on proper application and good case being made out. Until they are regularized or validated, no further step can validly be taken by reason of the irregularity or invalidity.^[12]

57. Further, the Court noted that, its earlier decision in Philip Takori & Ors v. The Independent State of Papua New Guinea & Ors (2008) SC905 as a case on point and concluded:
    

“It should follow in our view therefore that, a defence or any further step taken in any proceeding without leave of the Court remains irregular and or invalid until regularized or validated by appropriate Court orders. Hence, unless the irregular steps taken and documents filed are regularized or validated, they entitle the opposing parties to apply for a strike out. If such an application is successful, it would then pave the way for an application to be made for default judgment. By this time, there would be no impediment to signing default judgment against the defendant or the defaulting party.”

58. Then in the case before it, the Court noted there was no issue that the Solicitor-General filed his notice of intention to defend and defence on behalf of all of the defendants within the prescribed time limits. This was however, unnecessarily complicated by a law firm filing and serving an application for leave to file and serve a defence out of time despite the defence that was already filed by the Solicitor-General, which rendered support to the appellant’s argument revolving around the authority of the Solicitor-General to file and serve those documents. That issue was determined against the appellant. In so doing, the Court stated:
    

“If however, we had come to a different conclusion, that would not have automatically, entitled Mr. Singat to apply for default judgment. Instead, he would have been entitled to apply for a strike out of the State’s defence and subject to succeeding on that application, apply for default judgment. Without that happening, there was a serious impediment to him getting to the relief he was applying for.”

59. In the present case, there is no evidence of the Bluewater having met all of these requirements. There is no evidence for instance, of Bluewater forewarning the State before applying for default judgment. Similarly, there is no evidence of Bluewater, conducting a search of the Court file and confirmed that no defence was filed either within time or at all. It is clear however that, Bluewater was aware that the State had brought in its defence out of time. The correct step for Bluewater to then take was to apply for a strike out of the defence and thereafter a default judgment upon succeeding on the application for a strike out of the defence. Until the defence is struck out from the Court’s record, a defence was and is on the Court file, which was a serious impediment for entering default judgment. Although this point was not considered by the learned trial Judge, it was and is an obvious and glaring factor against entry of any judgment, unless and until the defence is struck out for being filed out of time and without leave of the Court.
    
60. Our answer to the question of whether Bluewater met the requirements for an entry of default judgment as requested by it, is no. Hence, we would order a dismissal of appeal ground 3 (d) and (e) as having no merit.
    
61. This leaves us to deal with the final and remaining issue of sufficiency of pleadings. The foundation for this is appeal ground 3 (c).
    

Issue (5) – Were Bluewater’s pleading sufficient for the purposes of entry of default judgement against the State?

62. It is trite law in our jurisdiction that, parties must properly plead their claims with the relevant and appropriate particulars to sufficiently disclose a cause of action known to law and or disclose a defence to the matters pleaded, unless a plaintiff’s claim is not contested. This is because, it is the pleadings with particulars that drive the evidence that needs to be adduced and form the foundation for grant of the reliefs sought if a plaintiff is successful in his claim, or a dismissal of a plaintiff’s claim if a defendant is successful. There are numerous Supreme Court decisions on the role and function of pleadings with particulars.
    
63. In The Central Bank of PNG v. Gabriel Tugiau (2009) SC1013, this Court, stated in summary the relevant principles in the following terms:
    

“The law requires proper pleadings with particulars before any claim or prayer for relief can be granted. For as this Court said in Motor Vehicles Insurance (PNG) Trust v. James Pupune.... pleadings with particulars have the useful function to:

‘1. furnish a statement of the case sufficiently clear to allow the other party a fair opportunity to meet it;

2. define the issues for decision in the litigation and, thereby, enable the relevance and admissibility of evidence to be determined at the trial; and
3. give a defendant an understanding of a plaintiff's claim in aid of the defendant’s right to make a payment into court.’”^[13]
   
64. Clearly, therefore the function of pleadings is to eliminate any element of surprise and enable each of the parties to fully disclose their respective claims and where possible have the matter resolved^[14] This is important now in the light of emphasis being placed on parties resolving their disputes as promptly as possible to minimize costs, avoid strains on any existing relationships and to enable the parties to focus on their business or other things in life rather than being bogged down in unnecessary and prolonged litigation.
    
65. In the context of an application for default judgment, what this means is that a plaintiff first has the duty to ensure that his or her pleadings a sufficient and complete with the relevant and necessary particulars. Secondly, only when the plaintiff has fully discharged that obligation, should an application for default judgment be filed and moved. For a failure to do so may prove progressing to an assessment of the plaintiff’s damages may be difficult especially where damages are to be assessed.
    
66. The kind of difficulties a poorly or insufficiently pleaded claim could present in such a case was first highlighted by the Supreme Court in PNGBC v. Jeff Tole (2002) SC694. There, Jeff Tole secured a default judgment with damages to be assessed. When assessing his damages, ex parte the appellant, the trial Court included items of damages that had no proper foundation in the pleadings. In upholding an appeal against those awards, this Court said:
    

“But in this case, there was no trial.... The matter was dealt with ex parte. By reason of that, there was no trial on the new claims or issues raised outside the pleadings for the first time. In fairness PNGBC should have been given notice of those new claims and the opportunity to either admit or deny them. Without such notice and opportunity being accorded to PNGBC, no evidence could be led and damages awarded on matters not pleaded. The default judgement only resolved ... liability against PNGBC for the matters pleaded and for the relief prayed for in the statement of claim. It follows therefore that, the assessment of damages could only be made for the relief actually pleaded.”^[15]

67. Another case that highlights what could happen to poorly pleaded claims is the decision of this Court in John Wasis v. Margaret Elias (2016) SC1485. There default judgment was entered for the appellant with damages to be assessed. Before the matter could be fixed for trial for an assessment of damages, the National Court discovered insufficiencies in the pleadings and gave directions to the appellant to file and serve an amended statement of claim with the missing relevant and necessary particulars by a specified time frame and forewarned that, any failure to do so will result in the proceeding being dismissed. Upon a return of the matter to the Court, the appellant did not file and serve an amended statement of claim as required. This resulted in a dismissal of the appellants claim. On appeal, this Court affirmed the National Court’s decision. In so doing, this Court stated amongst others:
    

“10. It is trite law that entry of default judgment does not relieve a plaintiff from the burden of proving his losses. It is also trite law that pleadings lay the foundation for the kind of evidence that can be led at trial. The primary judge found that the pleadings were inadequate because the particulars of losses for each appellant were missing. The missing particulars were for salaries, allowances and leave monies. If the matter were to proceed to trial in the current form, objections will be raised at trial in relation to evidence as having no foundation in the pleadings.

11. In order for the appellants to call evidence to prove these losses, it was necessary that the particulars of these losses were pleaded in the statement of claim. It was for this reason that the primary judge directed them to amend the statement of claim or consider foregoing the default judgment. The appellants were to attend to the inadequacies and present the revised pleadings to the Court in the form of an amended statement of claim within a month...

68. The Court then added:
    

“We add, a conditional or self-executing order is not one that should be treated lightly. We say this because the order itself puts the party subject of the order on notice that a certain consequence will occur at a specified date in the future if the conditions of the order are not met. Thus, it is of utmost priority that the party required to comply adhere to its terms. Failure may result in an unfavourable consequence.”

69. In the case before the Court then, the Court found the appellant did not comply with the self-executing orders and also failed to comply with the orders. Accordingly, the Supreme Court affirmed the National Courts decision to dismiss the proceeding.
    
70. It should be clear from the foregoing that, no default judgment can be signed if the pleadings are insufficient. If notwithstanding such insufficiency, a default judgment is signed it has the risk of being revisited and set aside. All Judges should be on guard and ensure that they do not allow applications for default judgment without first checking and ensuring that the pleadings are sufficient in disclosing a cause of action known to law and that there is sufficient foundation either for entry of judgment for a liquidated claim or for an assessment of a plaintiff’s damages. Before that, all lawyers have a professional duty to the Court as officers of the Court to exercise the same care and refrain from bringing applications on pleadings that fail to clearly plead a cause of action known to law and with sufficient particulars to enable assessment of damages possible. Failures to adhere to this should result in an order for costs on a full indemnity basis.
    
71. In the present case, we had a close look at the statement of claim endorsed to the write of summons which appears at pages 188 – 190 of the appeal book. The Statement discloses a claim based on breach of contract. However, it does not give enough foundation to assess the plaintiff’s damages. It only pleads rendering an invoice for various items totalling K1, 530,000.00, but does not give a detailed outline of how each of the items of costs or expenses making up that total and included in the invoice were arrived at. Accordingly, we find the learned trial Judge was correct in forming the view that the pleadings were insufficient for the purposes of laying a proper foundation for assessing Bluewater’s claim. Proceeding on this basis, we would dismiss this ground of the appeal.
    
72. In summary, we have decided that we would dismiss each of the grounds of appeal as having no merit. We have also found additional basis to come to the conclusion that this appeal is without merit. Accordingly, we order as follows:
    

(1) The appeal be dismissed.

(2) Costs to the Respondents to be taxed, if not agreed.

(3) The substantive matter be remitted back to the National Court to be dealt with by a Judge other than her Honour, Polume-Kiele J.

(4) The National Court proceedings be stayed pending an exhaustion of the process provided for under Clause 3.11 “Disputes and Arbitration” contained in the Contract between the parties.

(5) The matter be assigned to the ADR track in CC2 to manage the process referred to term (4) of these orders.
________________________________________________________________
Sanol Malanga Lawyers: Lawyers for the Appellant
Solicitor General: Lawyer for the Respondents

^[1] From Matiabe Oberia v. Police & The State (2005) SC801.
^[2] Sir Julius Chan v. Ombudsman Commission [1999] PNGLR 240.
^[3] Ibid; Rendel Rimua & ors v. Simon Ekanda & ors (2011) SC1094.
^[4] Lyons Putupen v. Enga Provincial Government (2009) SC1035
^[5] Ibid.
^[6] From Matiabe Oberia v. Police & The State (supra); For other cases on point see Agnus Kunton v. John Junias (2006) SC929
^[7] Citing with approval from Kerry Lerro trading as Hulu Hara Investments Ltd v. Philip Stagg, Valentine Kambori & The State (2006) N3950. Endorsed by many subsequent decisions such as the one in Michael Kuman v Digicel (PNG) Ltd (2013) SC1232; Jackson Tuwi v. Goodman Fileder International Ltd (2016) SC1500 and Mount Hagen Urban Local Level Government v Sek No. 15 Ltd (2009) SC1007
^[8] https://researcharchive.vuw.ac.nz/xmlui/bitstream/handle/10063/5089/paper.pdf?sequence=1
^[9] See: Mision Asiki v. Manasupe Zurenuoc (2005) SC797
^[10] See: The State v. Downer Construction (PNG) Ltd (2009) SC979
^[11] Effectively endorsed by the Supreme Court in The State v. Downer Construction (PNG) Ltd (2009) SC979, per Gavara-Nanu J and the Court in Ruth Kaurigova v. Dr Russo Perone (2008) SC964
^[12] The Court then went on to discuss its earlier decision in Philip Takori & Ors v. The Independent State of Papua New Guinea & Ors (2008) SC905 as a case on point.
^[13] See also New Britain Oil Palm Ltd v. Vitus Sukuramu (2008) SC946, making the same statement
^[14] Public Officers Superannuation Fund Board v. Sailas Imanakuan (2001) SC677
^[15] Per Kandakasi J. (as he then was) with whom the then Chief Justice Sir Arnold Amet and Sheehan J agreed.