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Smeeton and Shelley v Davara House Pty Ltd [1979] PNGLR 324 (16 August 1979)

Papua New Guinea Law Reports - 1979

[1979] PNGLR 324 - Charles Delavan Smeeton and Grahame Robert Shelley v Davara House Pty Ltd 

[1979] PNGLR 324

N198

PAPUA NEW GUINEA

[NATIONAL COURT OF JUSTICE]

CHARLES DELAVAN SMEETON AND GRAHAME ROBERT SHELLEY

V

DAVARA HOUSE PTY. LTD.

Waigani

Saldanha J

3 August 1979

16 August 1979

PRACTICE AND PROCEDURE - National Court - Setting aside judgment by default - Irregular judgment - Writ endorsed with claim for liquidated demand and interest at rate of thirteen per cent per annum - Interest at rate of five per cent permitted under O. XV, r. 3 of Rules of National Court - Judgment irregular being for more than due - Order for interest not made under s. 42 of Law Reform (Miscellaneous Provisions) Act 1962 - Application to set aside judgment must state grounds of objection - Advisable to show defence on merits - Leave to defend within court’s discretion - Judgment set aside - Leave to defend granted subject to conditions.

Order XV, r. 2 of the Rules of the National Court provides:

“When the writ of summons is indorsed for a debt or liquidated demand only, whether by special indorsement or otherwise, and the defendant fails, or all the defendants, if more than one, fail, to appear thereto, the plaintiff may enter final judgment against such defendant or defendants for any sum not exceeding the sum indorsed on the writ, together with interest at the rate claimed by the indorsement as the rate agreed upon, if any, or, if no rate is claimed to have been agreed upon, at the rate of five per centum per annum, to the date of the judgment, and costs as provided by Order VI, Rule 8.”

Section 42(1) of the Law Reform (Miscellaneous Provisions) Act 1962 provides that “in proceedings tried in a court for the recovery of a debt or damages ... the court ... may if it thinks fit, order that there be included in the sum for which judgment is given ... interest at such rate as it thinks proper ...”

On an application to set aside a judgment obtained in default of appearance for K11,970 for fees agreed and K3,760.57 for interest on this sum “at the rate of thirteen per cent per annum ... pursuant to the provisions of s. 42(1) of the Law Reform (Miscellaneous Provisions) Act 1962,” and for leave to come in and defend,

Held

(1)      Under s. 42(1) of the Law Reform (Miscellaneous Provisions) Act 1962, interest is recoverable only in “proceedings tried in a court” and only if the court thinks fit to “order ... interest at such rate as it thinks proper.”

(2)      There being no proceedings which had been “tried” in a court, and no order by a court for interest at the rate of thirteen per cent, the plaintiffs were only entitled to interest at five per cent per annum under O. XV, r. 3 of the Rules of the National Court.

(3)      Accordingly judgment for the sum of K3,760.57 as interest was for more interest than was due.

(4)      Judgment for more than is actually due at the time when it is signed is irregular and liable to be set aside ex debito justitiae.

Hodges v. Callaghan [1857] EngR 395; (1857), 26 L.J.C.P. 171; 140 E.R. 434;

Hughes v. Justin[1894] UKLawRpKQB 33; , [1894] 1 Q.B. 667; and

Anlaby v. Praetorius [1888] UKLawRpKQB 55; (1888), 20 Q.B.D. 764, applied.

(5)      An application to set aside an irregular judgment must state in the application the grounds of objection.

English practice O. 2, r. 2 of the Rules of the Supreme Court (U.K.), adopted.

(6)      On an application to set aside an irregular judgment it is advisable to show a defence on the merits.

English practice as set out in Chitty and Jacob’s Queen’s Bench Forms (20th ed., (1969) form 74, at p. 63; and Atkin’s Encyclopaedia of Forms in Civil Proceedings (2nd ed., 1961), vol. 14, at p. 277, adopted.

(7)      The power to grant leave to come in and defend proceedings, where judgment by default has been entered is discretionary and may be granted upon terms.

Cockle v. Joyce [1877] UKLawRpCh 278; (1877), 7 Ch. D. 56; and

Re Hartley; Nuttall v. Whittaker[1891] UKLawRpCh 51; , [1891] 2 Ch. 121, referred to.

(8)      The grounds of the objection having been stated and disclosure made of a defence that a condition precedent to payment of the fees had not been fulfilled by the plaintiffs, the judgment should be set aside and the defendants given leave to come in and defend the action subject to the amount claimed being brought into court.

Application

This was an application to set aside a judgment including interest on the amount claimed, in default of appearance pursuant to O. XV, r. 3 of the Rules of the National Court, and for leave to come in and defend.

Counsel

R. Major, for the applicant/defendant.

P. A. Dempsey, for the respondent/plaintiff.

Cur. adv. vult.

16 August 1979

SALDANHA J: This is an application by the defendant to set aside a judgment obtained by the plaintiffs in default of appearance.

The plaintiffs are a firm of architects and the defendant company the owner of the Davara Motel in Port Moresby.

The plaintiffs brought an action against the defendant claiming the sum of K11,970 and interest. The statement of claim endorsed on the writ of summons averred that the sum of K11,970 was for fees agreed between the parties for the preparation by the plaintiffs of plans for the extension of the Davara Motel, and claimed interest on this sum at the rate of thirteen per cent per annum from 19th February, 1977, being the date on which the account for the fees was rendered until judgment pursuant to the provisions of s. 42(1) of the Law Reform (Miscellaneous Provisions) Act 1962.

The writ of summons was served on the defendant on 9th July, 1979. It required the defendant to enter an appearance within eight days of the service of the writ. The defendant failed to do so and on 19th July, 1979, the plaintiffs entered judgment against the defendant for K11,970 and K3,760.57 as interest.

The defendant by notice of motion now seeks to have the judgment set aside on the grounds that it is irregular in that (1) it was entered before the time allowed for the defendant to file a defence had expired, and (2) the judgment wrongly allowed the plaintiffs’ claim for interest at the rate of thirteen per cent per annum. The defendant also seeks leave to be allowed to come in and defend the action.

I find that there is no merit in ground (1) above. The defendant had been duly served with the writ of summons and had failed to enter appearance within the time allowed. An affidavit of service of the writ has been filed pursuant to O. XV, r. 2 and the plaintiffs were therefore entitled to sign judgment under O. XV, r. 3 which is in the following terms:

“When the writ of summons is indorsed for a debt or liquidated demand only, whether by special indorsement or otherwise, and the defendant fails, or all the defendants, if more than one, fail, to appear thereto, the plaintiff may enter final judgment against such defendant or defendants for any sum not exceeding the sum indorsed on the writ, together with interest at the rate claimed by the indorsement as the rate agreed upon, if any, or, if no rate is claimed to have been agreed upon, at the rate of five per centum per annum, to the date of the judgment, and costs as provided by Order VI, Rule 8.”

There is no dispute that the sum of K11,970 had been agreed between the parties as fees for the preparation of plans and that the endorsement on the writ for the claim of this sum is for a liquidated demand. But as far as the claim for interest is concerned the plaintiffs would be entitled to interest at the rate of thirteen per cent per annum only if this rate “is claimed by the endorsement as the rate agreed upon.” It is not so claimed in the endorsement, obviously either because there is no agreement that interest should be paid or no agreement as to the rate of interest to be charged.

The claim for interest at the rate of thirteen per cent per annum is purported to be made under the provisions of s. 42(1) of the Law Reform (Miscellaneous Provisions) Act 1962. This section reads as follows:

“42(1) Subject to the next succeeding subsection, in proceedings tried in a court for the recovery of a debt or damages, and in an arbitration for the assessment of compensation for the acquisition of resumption of land, the court or the arbitrator, as the case may be, may, if it or he thinks fit, order that there be included in the sum for which judgment is given, or at which compensation is assessed, interest at such rate as it or he thinks proper on the whole or part of the debt, damages or compensation for the whole or part of the period between the date on which the cause of action arose and the date of the judgment or assessment.

(2)      Nothing in the last preceding subsection contained:

(a)      authorizes the giving of interest upon interest;

(b)      applies in relation to a debt upon which interest is payable as of right, whether under an agreement or otherwise; or

(c)      affects the damages recoverable for the dishonour of a bill of exchange.”

Under this section interest is recoverable only in “proceedings tried in a court” and only if the court thinks fit to “order ... interest at such rate as it thinks proper.” The instant case has not been “tried” in a court, and there is no order by a court for interest at the rate of thirteen per cent per annum to be paid. There was no warrant for claiming interest at the rate of thirteen per cent per annum. All that the plaintiffs were entitled to was five per cent per annum under O. XV, r. 3.

The judgment for the sum of K3,760.57 as interest at the rate of thirteen per cent per annum was for more interest than was due. Judgment should be signed for the amount actually due at the time when it is signed, and no more. Hodges v. Callaghan[ccclxxxi]¹. And a judgment for more than is actually due is irregular and liable to be set aside. Hughes v. Justin[ccclxxxii]². The defendant is entitled to have a judgment irregularly obtained set aside ex debito justitiae: Anlaby v. Praetorius[ccclxxxiii]³.

Order 2, r. 2 of the English Rules of the Supreme Court is to the effect that an application to set aside an irregular judgment must state in the summons or notice of motion the grounds of objection. The instant application is by notice of motion and the grounds of objection have been stated.

In Chitty and Jacob’s Queen’s Bench Forms (20th ed., 1969), form 74, at p. 63, it is stated:

“If it is contended that the judgment is irregular ... it is strictly unnecessary to show a defence on the merits, yet it is advisable even in such a case to set out the facts disclosing the defence on the merits.”

The following footnote appears in vol. 14 of Atkin’s Encyclopaedia of Court Forms in Civil Proceedings (2nd ed., 1961), at p. 277:

“(k)     Whilst it is not strictly necessary to show a defence on the merits where the application is to set the judgment aside on the grounds that it was irregular there is nothing to be lost, and may be a good deal to be gained, by doing so.”

In the affidavit in support of the application the defendant’s counsel has deposed (1) that the managing director handed him a copy of the writ of summons served on him after the time for entering an appearance had expired and (2) that there is a good defence on the merits in that a condition precedent to the payment of fees has not been fulfilled by the plaintiffs. While there is little or no merit in (1) the nature of the defence has been disclosed in (2).

The giving leave to come in and defend is discretionary and the court can impose terms: see Cockle v. Joyce[ccclxxxiv]⁴; Re Hartley; Nuttall v. Whittaker[ccclxxxv]⁵.

Having regard to the circumstances set out above I order that judgment be set aside and that the defendant be given leave to come in and defend the action. There will be no need to enter an appearance but the defence must be filed on or before 23rd August, 1979. The defendant must also bring into court the sum of K11,970 on or before that date. The defendant must pay the plaintiffs’ costs up to but not including signing of judgment and the costs of signing judgment and setting aside the judgment must be paid by the plaintiffs.

Orders accordingly.

Solicitor for the defendant: Richard Major.

Solicitor for the plaintiff: Gadens.

[ccclxxxi](1857) 26 L.J.C.P. 171; 140 E.R. 434.

[ccclxxxii][1894] 1 Q.B. 667.

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

[ccclxxxiv](1877) 7 Ch. D. 56.

[ccclxxxv][1891] UKLawRpCh 51; [1891] 2 Ch. 121.