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Green & Co Pty Ltd (Receiver Appointed) v Green [1976] PNGLR 73 (5 March 1976)

Papua New Guinea Law Reports - 1976

[1976] PNGLR 73 - Green & Co Pty Ltd (Receiver Appointed) v Roger Britain Green 

[1976] PNGLR 73

N28

PAPUA NEW GUINEA

[NATIONAL COURT OF JUSTICE]

GREEN & COMPANY PTY LTD

(RECEIVER APPOINTED)

V

GREEN

Waigani

O’Leary AJ

2 March 1976

5 March 1976

PRACTICE AND PROCEDURE - Application to set aside default judgment - Principles applicable - Defence on merits to be particularized - Rules of Court, O. XXXI, r. 15[xcii]1.

On an application under O.XXXI, r. 15 of the Rules of Court, to set aside a judgment by default regularly entered, the principal matter that must be shown by the applicant is that he has a defence on the merits.

Gamble v. Killingsworth[1970] VicRp 22; , [1970] V.R. 161 at p. 168; Bayview Quarries Pty. Ltd. v. Castley Development Pty. Ltd.[1963] VicRp 64; , [1963] V.R. 445 at p. 446, and Evans v. Bartlam, [1937] A.C. 473 applied.

Such a defence should be sufficiently particularized as to enable the Court to be satisfied that it is reasonable that the particular defence should be raised.

Wallingford v. The Directors &c. of the Mutual Society (1880), 5 App. Cas. 685 at p. 704 applied.

In addition the applicant should explain his default in allowing the judgment to be entered.

Evans v. Bartlam, [1937] A.C. 473 referred to. The application should be made as soon as possible after the judgment comes to the knowledge of the defendant.

Rosing v. Ben Shemesh[1960] VicRp 28; , [1960] V.R. 173 referred to.

And any prejudice or injustice to the other party or rights of third parties to intervene must be taken into account.

Grimshaw v. Dunbar, [1953] 1 Q.B. 408 at p. 415 referred to.

Where an application was made to set aside a judgment regularly entered for default in failing to file a defence to a writ of summons specially endorsed under O.VI, r. 7 of the Rules of Court, claiming money received to the use of the plaintiff, where the defence raised was a denial by the defendant of receipt of any moneys for the use of the plaintiff, where the explanation given for allowing judgment to be signed was that the time limitations for entering a defence had not been adverted to and where no explanation was offered for a delay of fourteen months in making the application,

Held

The application should be refused.

Summons

This was an application under O. XXXI, r. 15 of the Rules of Court to set aside a default judgment entered on 13th December, 1974. Relevant facts are set out in his Honour’s reasons for judgment hereunder.

Counsel

DS Awaita for the applicant (defendant)

GJ Cartledge for the respondent (plaintiff)

Cur. adv. vult.

5 March 1976

O’LEARY AJ:  This is an application under O. XXXI, r. 15 of the Rules of Court to set aside a judgment signed for failure to deliver a defence within the time allowed by the Rules.

The action was commenced by writ of summons issued on 12th August, 1974. The indorsement on the writ expresses the plaintiff’s claim as being “for $8,915.60 money payable by the defendant to the plaintiff for money received by the defendant for the use of the plaintiff”. Particulars of the amounts said to have been so received by the defendant to the use of the plaintiff are given. They are stated to be a number of short payments on certain contracts for the sale of Trocos Shell, Blackslip and Green Snail Shell. Details of the contracts and the dates of the sales are also given.

The writ was specially endorsed under O. VI, r. 7 in that being an action in which the plaintiff sought to recover a debt or liquidated demand, it was endorsed with particulars of the nature of the plaintiff’s claim and of the amount sought to be recovered. It was also endorsed under O. VI, r. 8 in that besides stating the nature of the claim, it also stated the amount claimed for debt and for costs respectively, and it further stated that upon payment thereof within the time allowed for appearance, that is 16 days from the date of service of the writ, further proceedings would be stayed.

On 29th August, 1974, an appearance to the writ was entered on behalf of the defendant.

On 13th December, 1974, the defendant not having delivered a defence within the time prescribed by the Rules, the plaintiff signed judgment for the amount claimed in the writ and for costs.

In signing judgment the plaintiff relied on the provisions of O. XXV, r. 6 and O. XXXI, r. 2. O. XXV, r. 6 provides that:

“When a statement of claim is delivered to a defendant, he must deliver his defence within eight days from the time of the delivery of the statement of claim, or from the time limited for appearance, whichever is the later time, unless such period is extended by the Court or a Judge.”

O. XXXI, r. 2 provides that:

“If the plaintiff’s claim is for a debt or liquidated demand only, and the defendant fails, ... to deliver a defence within the time allowed for that purpose, the plaintiff may, at the expiration of such time, enter final judgment against the defendant ... for the amount claimed, ... with his costs of action.”

It will be seen from the provisions of O. XXV, r. 6, that the question whether or not the defendant can be said to have failed to deliver a defence within the time allowed depends upon whether or not a statement of claim has been delivered to him. It is only when a statement of claim has been delivered to him that the defendant is required to deliver a defence. In some jurisdictions the question has arisen as to whether an indorsement on a writ constitutes a statement of claim so as to require a defendant to deliver a defence to it: see, for example, Harrison’s Timber Pty. Ltd. v. Haster[xciii]² and Geelong Retreads Pty. Ltd. v. Allstates Transport Pty. Ltd.[xciv]³. However, in this jurisdiction the matter is expressly provided for in the Rules, O. XXIV, r. 5 of which provides, inter alia, that:

“When the writ is specially indorsed under Order VI, Rule 7, no further statement of claim shall be delivered, but the indorsement on the writ shall be deemed to be the statement of claim.”

In the present case, the writ was specially endorsed under O. VI, r. 77. The indorsement is therefore deemed to be the statement of claim, with the consequence that the defendant was required to deliver a defence within the time provided by the Rules. Having failed to do so, the plaintiff was entitled to sign judgment against him.

I have considered this matter in some detail because in cases of this kind the first question to be considered is whether or not the judgment was regularly entered. If it was irregularly entered then “the defendant is entitled to have it set aside ex debito justitiae and without terms — except as part of the condition of an order as to costs”; see Anlaby v. Praetorius[xcv]⁴; Daly v. Silley[xcvi]⁵; Gamble v. Killingsworth[xcvii]⁶. If, however, the judgment is one that has been regularly entered, then other considerations apply and I will refer to those hereafter.

In the present case I am satisfied that the judgment was regularly entered. Consequently, I now proceed to consider the subsequent proceedings in the action and the basis of the present application.

Following entry of judgment against the defendant, the plaintiff took some steps to enforce it. On 13th December, 1974, that is on the day on which judgment was signed, a writ of fi. fa. was issued against the goods, chattels, choses in action and other property of the defendant. To that writ a return of nulla bona was made. On 8th July, 1975 an order nisi was made for the attachment of all debts owing or accruing due from the Australia and New Zealand Banking Group Limited to the defendant to answer the judgment. So far as I can see, nothing was recovered under that order.

On 10th February, 1976, the present application was filed. That is almost 14 months after judgment signed. In it the defendant seeks an order that the judgment entered against him be set aside. In support of the application, two affidavits have been filed and are relied upon, one by the defendant himself and one by his father, Harold N. Green.

Before considering the contents of those affidavits, it is convenient to set out here what I conceive to be the principles according to which applications of this kind should be dealt with.

The general rule relating to judgments is that once they have been formally recorded or entered they can only be discharged or varied on appeal — Grierson v. The King[xcviii]⁷ per Dixon J.

In Bailey v. Marinoff[xcix]⁸, Sir Garfield Barwick expressed the principle in these words:

“Once an order disposing of a proceeding has been perfected by being drawn up as the record of a court, that proceeding apart from any specific and relevant statutory provision is at an end in that court and is in its substance, in my opinion, beyond recall by that court. It would, in my opinion, not promote the due administration of the law or the promotion of justice for a court to have a power to reinstate a proceeding of which it has finally disposed.”

It is clear, however, that a court may be given power to set aside or vary judgments by statutory provision either in the form of a section of an Act of Parliament or by rules made pursuant to some such section. In this case provision for setting aside the judgment is to be found in O. XXXI, r. 15. Order XXXI deals with default of pleading, and r. 15 of that order provides that:

“Any judgment by default under this Order may be set aside or varied by the Court or a Judge, upon such terms as to costs or otherwise as the Court or Judge may think fit.”

On an application to set aside a judgment by default, entered regularly, the principal matter that must be shown by the applicant is that he has a defence on the merits. In fact, it has been said that it is an “almost inflexible rule” that the court will not accede to the application unless the applicant does show such a defence: see Gamble v. Killingsworth[c]⁹ at p. 168. Obviously, on any such application, a court would be bound to consider “whether any useful purpose is served by acceding to the application. Plainly no useful purpose is served if it appears that if the judgment were set aside and the action allowed to go to trial, there would be no possible defence”: see Bayview Quarries Pty. Ltd. v. Castley Development Pty. Ltd.[ci]¹⁰, per Sholl J. It is sufficient, however, for the applicant to show a prima facie defence on his affidavit: Evans v. Bartlam[cii]¹¹ per Lord Atkin.

But the applicant must do more than that. He should as well explain his default in allowing the judgment to be signed against him, (Evans v. Bartlam[ciii]¹²) and the application should be made as soon as possible after the judgment comes to the knowledge of the defendant: Rosing v. Ben Shemesh[civ]¹³.

It has been said that delay in moving to have a judgment set aside is not in itself important, unless it results in some prejudice to the other party or it enables rights of third parties to intervene: see Grimshaw v. Dunbar[cv]¹⁴, per Jenkins L.J. With respect, I agree that is so. Very often delay can be compensated for by the imposition of appropriate terms as to costs or otherwise. But there are cases where the delay is such that of itself it must work a prejudice to the other party and where it would be an injustice to him to allow the case to be re-opened.

In the present application, the material put forward by the applicant as constituting a defence on the merits is to be found in pars. 14, 15, 16 and 17 of his affidavit of 24th January, 1976. In short, he says that his father purchased the shells mentioned in the plaintiff’s statement of claim, that in doing so he acted as his, the defendant’s, agent, and not as the plaintiff’s agent, that he sold them and received the purchase money for them. He denied that he “was ever expressly or impliedly appointed or authorized as agent or to act in any way on behalf of the plaintiff company or did so act as agent or in any way on behalf of the plaintiff company in any matter relating to” his dealings with the purchaser of the shells. He therefore denied that he had ever received the sum claimed in the writ or any moneys for the use of the plaintiff. In his affidavit, the defendant’s father says that he purchased from the plaintiff the shells mentioned in the statement of claim, but he says he purchased them acting as the defendant’s agent. He also says that he subsequently sold them, and received the purchase money for them, but again as the defendant’s agent and not as on behalf of the plaintiff.

The only explanation proffered by the defendant as to why he allowed judgment to be signed against him is that, owing to illness, his father, who he says was handling the matter for him, “did not advert to the time limitations” within which a defence should have been delivered. He too, he says, failed to advert to these time limitations, as his father was handling the matter for him. In his affidavit, the defendant’s father offers no explanation for the delay in delivering a defence and makes no mention of any illness.

The fact is that on 30th August, 1974, the defendant’s solicitors, having entered an appearance to the writ, wrote to the defendant’s father explaining that as the writ was specially endorsed it would be necessary to enter a defence to it, and asking him to let them have his “fullest instructions as to the circumstances surrounding (the) action, so that a defence might be drafted”.

According to the defendant, on 5th March, 1975, that is more than six months afterwards, his father dictated and had typewritten a letter to his solicitors containing the particulars regarding his defence. That letter has not been tendered in evidence although, oddly enough, the solicitor’s reply to it is. If the defendant really wishes to press the point that he has a good defence on the merits, I would have thought he would be anxious to have that letter put before the court.

On these facts I find it difficult to accept as his explanation for allowing judgment to be signed against him, the defendant’s bald statement that neither he nor his father adverted to the time limitations for entering a defence to the action. The defendant describes himself in his affidavit as a merchant. His father does not say in his affidavit what his occupation is. However, since he acted as the defendant’s agent in the transactions which are the subject of this action, I assume that, at least, he has some knowledge of the ordinary affairs of life.

I cannot accept that either of them could have thought that they could ignore for more than six months a writ issued out of this Court and not appreciate that to do so would not be visited with consequences adverse to them. To suggest otherwise is, to me, not only an affront to the intelligence of any judge called upon to hear the application, but little less than an insult to the whole judicial system itself. I therefore do not accept it as a reasonable explanation for the defendant’s action in allowing judgment by default to be signed against him.

As to his delay in making this present application, no explanation whatever has been offered. This I find difficult to understand, but perhaps it reinforces the impression I have that throughout the defendant has treated these proceedings with a certain amount of casual contempt, perhaps comfortable in the knowledge that he had left these shores for Australia. Now both he and his father are living in Australia.

I have considered with a good deal of anxious care the question whether the matters put before me amount to a good defence on the merits. During the course of argument I asked Mr. Awaita, who appeared for the defendant, whether in fact any draft defence had been prepared. He told me it had, and when asked what defences were raised in it, he told me that it was merely a denial by the defendant that he had ever received any moneys for the use of the plaintiff.

A defence in those terms is clearly in breach of O. XXV, rr. 1 and 3. In particular, r. 3 of that order specifically requires that a defence in an action for money received to the use of the plaintiff “must deny the receipt of the money, or the existence of those facts which are alleged to make such receipt by the defendant a receipt to the use of the plaintiff”.

It seems to me that the defendant, in his affidavit, has not gone any further towards showing a defence on the merits than he has in that draft defence.

In a case such as this the onus is on the applicant to show that he does have a defence on the merits, and I do not think it is sufficient for him merely to say, in effect, “I was not the agent of the plaintiff, and I therefore did not receive the moneys claimed to his use”. I think the same principle applies in these cases as applies in the case of a defendant resisting an application for summary judgment. As Lord Blackburn said in Wallingford v. The Directors &c. of the Mutual Society[cvi]¹⁵, the defendant must “condescend upon particulars. It is not enough to swear, ‘I say I owe the man nothing’. Doubtless, if it was true, that you owe the man nothing, as you swear, that would be a good defence. But that is not enough. You must satisfy the judge that there is reasonable ground for saying so. So again, if you swear that there was fraud, that will not do. It is difficult to define it, but you must give such an extent of definite facts pointing to the fraud as to satisfy the judge that those are facts which make it reasonable that you should be allowed to raise that defence. And in like manner as to illegality, and every other defence that might be mentioned.”

In the present case I think the defendant has failed to show, in this sense, a defence on the merits. I think the explanation proffered for allowing judgment to be signed against him is quite unacceptable, and furthermore the failure to offer any explanation for the delay of fourteen months in making this application is something which cannot be over-looked. Such a delay must already have prejudiced the plaintiff, and I feel it would be doing an injustice to him to allow the case to be re-opened now.

For these reasons I think the application must fail and accordingly I dismiss it with costs.

Application dismissed with costs.

Solicitors for the plaintiff: McCubbery Train Love & Thomas.

Solicitors for the defendant: Craig Kirke & Wright.

[xcii]O.XXXI, r. 15 provides:

Any judgment by default under this Order may be set aside or varied by the Court or a Judge, upon such terms as to costs or otherwise as the court or Judge may think fit.

[xciii][1974] 3 A.C.T.R. 1.

[xciv][1974] 3 A.C.T.R. 5.

[xcv](1888) 20 Q.B.D. 764.

[xcvi][1960] V.R. 353.

[xcvii][1970] VicRp 22; [1970] V.R. 161, at p. 168.

[xcviii][1938] HCA 45; (1938) 60 C.L.R. 431, at p. 436.

[xcix][1971] HCA 49; (1971) 125 C.L.R. 529, at p. 530.

[c][1970] VicRp 22; [1970] V.R. 161, at p. 168.

[ci][1963] VicRp 64; [1963] V.R. 445, at p. 446.

[cii][1937] A.C. 473.

[ciii][1937] A.C. 473.

[civ][1960] V.R. 173.

[cv] [1953] 1 Q.B. 408, at p. 415.

[cvi] (1880) 5 App. Cas. 685, at p. 704.