SC2596
PAPUA NEW GUINEA
[IN THE SUPREME COURT OF JUSTICE]

SCA NO 165 OF 2022

ALBERT SALEPA MONAVE
Appellant

V

PHILIP NAUGA, AUDITOR-GENERAL
First Respondent

THE INDEPENDENT STATE OF PAPUA NEW GUINEA
Second Respondent

Waigani: Cannings J, Murray J, Dowa J
2024: 25th & 28th June 

PRACTICE AND PROCEDURE – default judgment – power of National Court to set aside default judgment – National Court Rules, Order 12 rules 8 and 35.

The appellant succeeded as plaintiff in the National Court in obtaining a default judgment against the respondents, who subsequently applied to the National Court to have the default judgment set aside. The National Court refused to set aside the bulk of the judgment but varied the judgment by ordering that the part of the judgment that ordered damages be paid by the respondents to the appellant be set aside. The appellant appealed against that decision of the National Court on grounds including that the issue of whether the appellant be awarded damages was res judicata and that the judge hearing the application to set aside the default judgment was functus officio.

Held: 

(1)	The National Court has power to set aside an order for default judgment whether the default judgment has been irregularly entered (in which case it is set aside as a matter or right) or regularly entered (in which case it can be set aside as a matter of discretion). 

(2)	The power to do so is conferred by Order 12 rules 8(2)(a) and 35 of the National Court Rules, even where the default judgment was entered after an inter partes hearing.

(3)	Arguments about res judicata and the National Court being functus officio are misconceived as the issues involved in an application for a default judgment and an application to set aside a default judgment are separate and distinct.

(4)	Here the judge hearing the respondents’ application to set aside the default judgment exercised the discretion to vary the terms of the default judgment (by excising the order for damages) lawfully after taking into account the haphazard manner in which the appellant had run the litigation.

(5)	No error of law occurred in the decision to vary the terms of the default judgment. The appeal was dismissed with costs.  

Cases Cited

Albright Ltd v Mekeo Hinterland Holdings Ltd (2014) SC1400
Curtain Brothers (PNG) Ltd v University of Papua New Guinea (2005) SC788
Green & Co Pty Ltd v Green [1976] PNGLR 73
Monave v Nauga (2022) N8319
Monave v Nauga (2022) N9964

Counsel

J Napu, for the Appellant
S Ray, for the Respondents

28th June 2024

1.      BY THE COURT: This is an appeal against the decision of the National Court of 21 September 2022 to vary the terms of a default judgment which on 19 May 2020 had been made also in the National Court.

2.     The appellant, Albert Salepa Monave, was an officer of the Office of Auditor-General who was dismissed from his employment. He sought review of his dismissal by the Public Services Commission (PSC), which found in his favour and decided that he be reinstated and paid back-pay for salaries lost since the date of his dismissal. The Auditor-General failed to implement the decision of the PSC. So the appellant, as plaintiff, commenced proceedings by writ of summons in the National Court, in WS (HR) No 29 of 2017, seeking enforcement of the PSC decision and damages. 

3.     The defendants (now the respondents) the Auditor-General and the State, failed to file a defence so the appellant applied for default judgment.

4.     On 19 May 2020 the National Court constituted by Justice Tamate ordered default judgment against the respondents (Monave v Nauga (2022) N8319). In particular his Honour ordered that the appellant be reinstated and paid back-pay and that he be paid damages, which would be assessed at a separate trial. 

5.     The respondents then applied to the National Court to set aside the default judgment, relying on Order 12 rules 8(2)(a) and 35 of the National Court Rules. These rules provide:

6.    Order 12 r 8(2)(a): 

The Court may, on terms, set aside or vary a judgement … where the judgement has been entered pursuant to Order 12 Division 3 (default judgement).

7.    Order 12 r 35: 

The Court may, on such terms as it thinks just, set aside or vary a judgement entered in pursuance of this Division [Division 12.3 (default judgment].

8.    The respondents’ application was heard by Justice Narokobi who delivered his decision on 21 September 2022 (Monave v Nauga (2022) N9964).

9.     His Honour noted that the default judgment was regularly entered and that therefore he had a discretion to exercise. His Honour identified the relevant considerations arising from the leading case, Green & Co Pty Ltd v Green [1976] PNGLR 73. He reasoned that there was no reasonable explanation for the failure to file a defence and, though there was no delay in applying to set aside the default judgment, there was no defence on the merits. It was also relevant that the appellant would be prejudiced if the case was further prolonged. 

10.    As to the interests of justice, his Honour held that the part of the default judgment that enforced the PSC decision (ie the orders that the appellant be reinstated and paid back-pay) should remain but that the order for damages should be set aside. 

11.     It is from that part of the judgment that the appellant appeals. He is aggrieved by the decision of Narokobi J to set aside his damages claim. 

APPEAL

12.     The appeal is on four grounds:

(a)	the decision offended the principles of res judicata (the thing has already been decided);
(b)	the National Court was functus officio;
(c)	the primary Judge contradicted himself by deciding that the appellant would suffer prejudice if the case were prolonged, but deciding that the claim for damages should be removed from the default judgment; and
(d)	the decision to remove the damages claim represents an unjustified punitive sanction against the appellant for being sloppy in the conduct of his various National Court proceedings.

PRELIMINARY POINT: OBJECTION TO COMPETENCY

13.     Before addressing the grounds of appeal we mention a preliminary point made in submissions by counsel for the respondents, Ms Ray: that the appeal is incompetent and should be summarily dismissed for offending against Order 7 rule 9(b) of the Supreme Court Rules. This rule provides:

The notice of appeal shall … state whether the whole or part only and what part of the judgment is appealed from.

14.    The appellant’s counsel, Mr Napu, argued that this point should be rejected as there was no notice of objection to competency filed. 

15.     It is correct that a notice of objection to competency should probably have been filed, but that does not mean that we cannot consider the ground of objection, which we have done. 

16.     The objection is a trivial point as it is abundantly clear that the appeal is only from a part of the judgment of Narokobi J: the part in which his Honour ruled that the appellant’s claim for damages be set aside. The preliminary point is without merit. In so far as it is an objection to competency of the appeal, it is refused. We will now address the grounds of appeal.

MERITS OF THE APPEAL

17.    We consider that none of the grounds of appeal have merit. The National Court has power to set aside an order for default judgment whether the default judgment has been irregularly entered (in which case it is set aside as a matter or right) or regularly entered (in which case it can be set aside as a matter of discretion). 

18.     The power to do so is conferred by Order 12 rules 8(2)(a) and 35 of the National Court Rules, even where the default judgment was entered after an inter-partes hearing (Albright Ltd v Mekeo Hinterland Holdings Ltd (2014) SC1400).

19.     Arguments about res judicata and the National Court being functus officio are misconceived as the issues involved in an application for a default judgment and an application to set aside a default judgment are separate and distinct.

20.     The primary judge exercised the discretion to vary the terms of the default judgment after considering the haphazard manner in which the appellant had run the litigation. His Honour held:

On the final question of the interest of justice, I have reached the conclusion that terms 1, 3, 4 and 5 of the orders of 19 May 2020 should remain. The orders for damages should be set aside and dismissed. I say this for the following reasons. The plaintiff was availed the opportunity like his colleagues to go to judicial review and enforce the decision of the PSC. He did that but did not succeed because of inadequate pleadings. An appeal to the Supreme Court was also not successful. If he had, he would have obtained orders in much the same terms as Thomas Holland, Peter Siperau and Gabriel Koh, that is, reinstatement without loss of salary and entitlement, back dated to date of dismissal. No order for damages would be likely, going by the similarity of claims of his colleagues. He then filed human rights proceedings as judicial review was not now possible, only to realise that he did not give s 5 notice. Proceedings were withdrawn for that aspect to be corrected before he initiated proceedings again. I am of the respectful and considered view that the plaintiff should bear some responsibility for this haphazard manner of litigation he ran. The best way to address this is to deny the plaintiff damages and that he should only be allowed reinstatement and claim lost salaries and entitlements, and costs of proceedings. That is, his claim should be limited to enforcement of the PSC decision.

21.    The Supreme Court must be slow to interfere with the exercise of discretionary judgment by the National Court in a procedural matter within its jurisdiction. If the exercise of discretion is clearly wrong or if an identifiable error occurred in the exercise of discretion, the Supreme Court may intervene. Alternatively, a discretionary judgment can be set aside where there is no identifiable error, but the resulting judgment or order is "unreasonable or plainly unjust", such that an error can be inferred (Curtain Brothers (PNG) Ltd v University of Papua New Guinea (2005) SC788). 

22.     We find that the exercise of discretion by the primary judge was not clearly wrong. No identifiable error has occurred. He has not applied any wrong principle or taken into account any irrelevant consideration. The resulting order was not unreasonable or plainly unjust. His Honour has lawfully and in a clear and coherent manner exercised the discretion available under Order 12 rules 8(2)(a) and 35. His Honour has not contradicted himself in the manner contended for by the appellant. His Honour has not imposed any “punitive sanction” on the appellant. The appeal must be dismissed.

COSTS

23.     In view of the ill-conceived and late objection to competency of the appeal, made without notice to the appellant, it is not appropriate that the respondents have their costs. The parties will bear their own costs. 

ORDER

(1)	The appeal is dismissed.

(2)	The order of the National Court of 21 September 2022 in WS (HR) 29 of 2017 is affirmed.

(3)	The parties shall bear their own costs of the appeal. 
__________________________________________________________________
Napu & Company Lawyers: Lawyers for the Appellant 
Solicitor-General: Lawyer for the Respondents