SC2653

PAPUA NEW GUINEA
[IN THE SUPREME COURT OF JUSTICE]

SCA 26 OF 2020

BETWEEN:
TANIKE PAULUS
Appellant

AND:
TONY ABIO
First Respondent

AND:
SAI BUSINESS GROUP
Second Respondent

Waigani: Logan J, Polume-Kiele J and Kaumi J 
2024: 28th February

PRACTICE AND PROCEDURE – where proceedings had extensive history, with statement of claim being filed in 2004 – where proceedings were dismissed by the National Court for default of appearance by the plaintiff – where primary judge found that National Court did not have jurisdiction to review its own decision dismissing proceedings under Order 12, rule 8(3) of the National Court Rules – where subsequent Supreme Court decision clarified extent of National Court’s jurisdiction under Order 12, rule 8(3) – whether National Court did in fact have such jurisdiction at the time of making the dismissal decision – whether Supreme Court should exercise discretion to set aside default judgment and remit the matter for hearing

Facts

The appellant commenced proceedings in the National Court in 2004 seeking to recover an alleged loan debt from the respondents. The proceedings progressed slowly. On 15 February 2017, the National Court dismissed the proceedings due to a default of appearance by the plaintiff. The plaintiff challenged this decision in the National Court. The National Court found that it did not have jurisdiction to set aside its own final order under Order 12, rule 8(3) of the National Court Rules. The appellant appealed from that decision.

Held:

1.	The law concerning the operation of Order 12, rule 8(3) was clarified by the Supreme Court in Cragnolini v Leia (2023) SC2464.

2.	Applying Cragnolini, the National Court does have jurisdiction to set aside final orders under Order 12, rule 8(3).

3.	The discretion to set aside the default judgement should be exercised in the circumstances and the proceedings remitted to the National Court for further determination.

Cases Cited:

Cragnolini v Leia (2023) SC2464
National Superannuation Fund Limited v Yawenaik Holdings Limited (2018) SC1709
Thomas Barry v Joel Luma (2017) SC1639
Wawoi Guavi Timber Company Limited v John Molu (2016) SC1514

Legislation:
National Court Rules

Counsel:
Mr. Napu, for the Appellant
Mr. Karu, for the First and Second Respondents

Oral decision delivered on 28th February 2024

1.	LOGAN J: As long ago as 27 July 2004, Mr Tanike Paulus instituted proceedings in the National Court at Lae against a Mr Tony Abio, as first defendant, and SAI Business Group Incorporated, as second defendant.

2.	The statement of claim annexed to the writ discloses that Mr Paulus alleges that he lent a sum of K14,800 to Mr Abio on behalf of SAI Business Group on terms that interest would accumulate at the rate of K3 upon every K10 every seven days in respect of the sum then outstanding. A defence of the second defendant is on file in the National Court. That was filed in 2006.

3.	To say that the proceedings have progressed in a somewhat leisurely way in the National Court is something of an understatement. However that may be, on 15 February 2017, the National Court ordered that the proceedings be dismissed in default of an appearance by the plaintiff.

4.	The plaintiff then made an application to set aside the judgment given in default of appearance. That application came to be heard in the National Court at Lae on 28 February 2020.

5.	The learned primary judge offered a most helpful summary indeed of the course of proceedings in the National Court at [2] through to and including [19]. The summary offered by her Honour was as follows:

“2. A background to this application is best illustrated through a chronology of events. Plaintiff instituted this proceeding on 27th July 2004 in person for recovery of money he loaned to the Defendants on 20th October 2003.
3.	On 9th August 2005, he engaged the services of Habuka Lawyers.

4.	On 24th August 2005, the Plaintiff applied for and was granted Default Judgment in the sum of K78, 801.00 with interest.

5.	On 9th June 2006, following a successful application by the Second Defendant, the Default Judgment granted on 24th August 2007 was set aside and it was granted leave to file its defence which it did on the same date.

6.	On 10th July 2006, the Plaintiff through his lawyers Habuka Lawyers filed his Reply to the Second Defendant’s Defence.

7.	On 11th February 2012, 6 years later, a Notice to Appear on 21st March 2013 and to “Show Cause” why the matter should not be summarily determined was sent to the Plaintiff by the National Court Registry.

8.	On 21st March 2013, after satisfying itself that the matter should not be summarily determined, the Court removed the matter from the Summary Determination list and adjourned it for Directions Hearing.

9.	On 3rd May 2013, Manu & Associates Lawyers entered n appearance to act for the Plaintiff.

10.	On 10th September 2014, a Notice to set down for Trial was filed by the Plaintiff himself.

11.	On 13th March 2015, Manu & Associates Lawyers filed a Notice Ceasing to Act for the Plaintiff.

12.	On 17th August 2015, Kaore & Associates on behalf of the Plaintiff filed a Notice of Motion seeking Summary Judgment. That Motion was later dismissed on 6th November 2015, after it was adjourned several times for non-appearance by the Plaintiff’s Lawyer.

13.	On 24th January 2017, Kaore Lawyers who were then still acting for the Plaintiff, were advised that the matter was fixed for Direction Hearing on 7th February 2017.

14.	On 7th February 2017, there was no appearance by the Plaintiff nor his lawyer. As a result, the Court listed the matter for Summary Determination the second time on 15th February 2017 and directed the Assistant Registrar to notify the Plaintiff.

15.	On 10th February 2017, as directed by the Court, a letter was sent by the National Court Assistant Registrar to Kaore Lawyers who were still the Plaintiff’s lawyers specifically informing them of the Court Directions of 7th February 2017 that, the matter was listed for Summary Determination on 15th February 2017.

16.	On 15th February 2017, after noting there was no appearance by the Plaintiff’s Lawyer and the Plaintiff himself, the Court dismissed the proceedings.

17.	On 18th August 2017, the Plaintiff himself filed his application to set aside the orders of 15th February 2017 dismissing his proceeding. Whilst that was still on foot, Kusip Lawyers who entered on appearance on behalf of the Plaintiff on 7th June 2018 filed another Notice of Motion seeking same orders.

18.	On 13th September 2019, Kusip Lawyers filed a Notice of Ceasing to Act for the Plaintiff.

19.	On 22nd January this year, Berem Lawyers filed a Notice of Change of Lawyers and after numerous adjournments of the Plaintiff’s application seeking to set aside the orders of 15th February 2017, Mr. Berem finally moved the application before me, ex parte, after I was satisfied that the Defendants were notified of the hearing date. I heard the application and reserved my decision.”

6.	The learned primary judge appreciated that the application was one made pursuant to Order 12, rules 1 and 8(1)-(3) of the National Court Rules. She also appreciated that the application was one supported by affidavits read on behalf of the plaintiff which offered an explanation for the default in appearance.

7.	Her Honour also considered that, at the time, there was a conflict of authority in judgements of this Court as to whether or not there existed a power, in the events which had transpired, to set aside the default judgement pursuant to Order 12, rule 8. Her Honour identified the conflict to be on the one hand judgements given in Wawoi Guavi Timber Company Limited v John Molu (2016) SC1514 and Thomas Barry v Joel Luma (2017) SC1639 on the one hand, and National Superannuation Fund Limited v Yawenaik Holdings Limited (2018) SC1709 on the other.

8.	Her Honour concluded that the National Superannuation Fund case was not on point and that she was obliged to follow the views expressed in Wawoi Guavi and Thomas Barry, to the end that she had no power to set aside the judgement given in default of appearance.

It is unnecessary, for the purposes of this appeal, to determine whether or not the National Superannuation Fund case was indeed on point or to resolve any conflict between Wawoi Guavi and Thomas Barry and the National Superannuation Fund case. That is because, on 28 September last year, in Cragnolini v Leia (2023) SC2464, a unanimous Supreme Court comprised of five judges and specially constituted so as to resolve any controversy as to, materially, the meaning and effect of Order 12, rule 8(3), concluded that, in circumstances where an order had been made dismissing a proceeding for want of prosecution in the absence of parties, the National Court had power to set aside, on terms, the judgement given in default of appearance. Our attention has helpfully been drawn to Cragnolini by counsel for the appellant.

9.	There was an endeavour on behalf of the respondents to have us resolve the case by reference to case law as it stood in 2020. But that is something we cannot do; there is an authoritative judgment of this Court which states what is the meaning and effect of Order 12, rule 8(3). That rule had that effect in 2020. It is just that, as can happen, a view which the learned primary judge reached as to the meaning of that rule has, by later authority, been shown to be wrong. What follows is that the National Court did have power, pursuant to Order 12, rule 8(3), to set aside the judgement in default of appearance given on 15 February 2017.

10.	An affidavit made by Mr Paulus on 7 February 2020 for the purposes of his application discloses that there was a succession of lawyers who acted for him with what one might describe as an insufficient attention by some of those lawyers to the filing of a notice of change of lawyers. There was also some difficulty by him, understandable enough given resource limitations, in securing legal aid by the Public Solicitor’s office. Yet further, and understandably also, Mr Paulus felt some apprehension in travelling to Lae during the period of the 2017 National General Elections, because of apprehension on his part about safety when travelling along the Highlands highway. Considered together, there is, in my view, offered by Mr Paulus, a reasonable explanation for why there was no appearance by or on his behalf on 15 February 2017.

11.	As I have mentioned, the case is one which has lingered long on a court list. I have taken that into account, but in so doing I have noticed that earlier events of default have been excused in the National Court.

12.	It seems to me that the case is one where there ought to have been a setting aside of the judgement in default of appearance.

13.	Nothing in what I have said should be regarded in any way as offering any support for the merits of the plaintiff’s claim, especially insofar as it claims a particular rate of interest on monies lent. That truly is an issue for trial in the National Court, should it ever come to trial.

14.	It may very well be that the appellant and the respondents would be well advised to try and reach a reasonable compromise in respect of the claim and to do so as soon as possible and without the case progressing to trial. It needs to be remembered that there is not an unlimited ability in law to claim any rate of interest whatsoever. I do no more than observe that so as to sound a cautionary note in respect of the furtherance of the proceedings to trial.

15.	For the present, and for the reasons which I have just given, I would allow the appeal, set aside the order made in the National Court on 28 February 2020 by which the plaintiff’s application to set aside the judgement in default of appearance given on 15 February 2017 was dismissed and would in lieu thereof order that the plaintiff’s application to set aside the default judgement given on 15 February 2017 be upheld, the default judgment given on 15 February 2017 be set aside and that there be no order as to costs in the National Court.

16.	I have proposed no order as to costs in the National Court because the case, which as her Honour records in her reasons for judgement, was one which was determined on hearing but one of the parties, although the other had been notified. It would be necessary to hear counsel in respect of the position as to costs of the appeal.

17.	POLUME-KIELE J: Thank you. Basically, in relation to the facts of the proceedings that have been stated by our President, Logan J, I need not repeat them but I adopt them and concur with all reasons that his Honour has handed down in court this afternoon.

18.	KAUMI J: I concur with the President’s decision and views shared and the reasons. I have nothing to add.

19.	LOGAN J: The appellant has made application for an order for costs. The respondents highlighted that there exists a discretion in respect of costs. That, of course, is true, but the ordinary way in which a discretion as to costs is exercised is that costs follow the event. The event here is the dismissal of the appeal after a contested appeal.

20.	There may well be a lesson to be learnt by the profession from this case in terms of minimising a client’s jeopardy as to costs in circumstances where, after an exercise of original jurisdiction in the National Court, a decision given by this Court on appeal makes it clear that the National Court acted in error of law.

21.	That truly is the position which occurred here. It was open to the respondents, having learned of this Court’s judgement in Cragnolini, to join with the appellant in promoting that the appeal, in light of this Court’s judgement in that case, had to be allowed, but that did not occur. Instead, there was a contested appeal.

22.	In my view in those circumstances, costs should simply follow the event.

23.	I would therefore order that the respondents pay the appellant’s costs of and incidental to the appeal to be taxed, if not agreed.

24.	POLUME-KIELE J: I agree with the President of the Court that taxed costs be allowed.

25.	KAUMI J: I agree with the President.

Orders

1)	The appeal be allowed.
2)	The order of 28 February 2020, by which the plaintiff’s (appellant’s) application to set aside judgement in default of appearance was dismissed, be set aside.
3)	In lieu thereof, it be ordered:

a.	the plaintiff’s application to set aside default judgement given on 15 February 2017 be allowed.
b.	The default judgement given on 15 February 2017 be set aside.
c.	There be no order as to costs.

4)	The respondents pay appellant’s costs of and incidental to the appeal, to be taxed if not agreed.

________________________________________________________________
Napu and Company Lawyers: Lawyers for the Appellants
Daniels and Associates Lawyers: Lawyers for the Respondents