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Barlow Industries Pty Ltd v Pacific Foam Pty Ltd [1993] PNGLR 345 (19 August 1993)

PNG Law Reports 1993

[1993] PNGLR 345 - Barlow Industries Pty Ltd v Pacific Foam Pty Ltd 

[1993] PNGLR 345

SC454

PAPUA NEW GUINEA

[SUPREME COURT OF JUSTICE]

BARLOW INDUSTRIES PTY LIMITED

V

PACIFIC FOAM PTY LIMITED

Waigani

Los Konilio Brown JJ

22 February 1993

19 August, 1993

PRACTICE AND PROCEDURE - Judgment by default - Statement of claim including various types of prayer for relief - Whether "liquidated claim" part of prayer - What are "mixed claims"?

APPEAL - From decision of National Court refusing to set aside judgment by default - Equitable claim does not fall within the understood "liquidated amount" - Need to be able to quantify claim on material in statement for "mixed claims" to be included in such statement of claim - A claim for "account, damages or alternatively the sum of K213,062.30" pleaded as a "mixed claim".

Facts

The plaintiff successfully moved the Court for a default judgment pursuant to a writ of summons in which he claimed, inter alia, an account of money the defendant received on his behalf and, in the alternative, a balance of K213,062.30 of that money, exemplary damages etc. In a motion by the defendant to set aside the default judgment, the trial judge dismissed the motion, holding that the plaintiff was entitled, and is deemed to have elected, to pursue the claim for the liquidated sum, as such he could recover on a default summons.

Held

1.       Before judgment by default can be entered, the plaintiff must clearly have pleaded a claim which can be categorised as "liquidated". Dempsey v Project Pacific Pty Ltd [1985] PNGLR 93 applied. Spain v The Union Steamship Co. of New Zealand Ltd [1923] HCA 21; (1923) 32 CLR 138 followed.

2.       A claim to account, relying on the payment of insurance moneys to the defendant on behalf of the plaintiff and seeking to prove an agency agreement between the plaintiff and the defendant on dealings partly written, oral and to be implied, does not admit of easy quantification and cannot be categorised as "liquidated".

3.       While "mixed claims" are envisaged and allowed by the National Court Rules, the plaintiff, to recover on a default summons, must still frame his claim for a liquidated amount in such a fashion that the amount claimed can be ascertained clearly from the material pleaded. In this case, the plaintiff had not done so. Watson Specialised Tooling Pty Ltd v Stevens [1991] 1 QdR 85 followed.

Cases Cited

Papua New Guinea Case Cited

Dempsey v Project Pacific Pty Ltd [1985] PNGLR 93.

Other Cases Cited

Alexander v Ajax Insurance Co Ltd [1956] VicLawRp 5; [1956] VLR 436.

G L Baker Limited v Barclays Bank Ltd [1956] 3 All ER 519.

Spain v The Union Steamship Co. of New Zealand Ltd [1923] HCA 21; (1923) 32 CLR 138.

Watson Specialised Tooling Pty Ltd v Stevens [1991] 1 QdR 85.

Counsel

P Payne, for the appellant.

C J Coady, for the respondent.

19 August 1993

LOS J: I have read the judgment of Brown J and agree with him. I would uphold the appeal.

KONILIO J: I would uphold the appeal for the reasons given in Brown J's judgment.

BROWN J: The appellant originally claimed relief in his writ of summons in these terms:

"And the plaintiff claims:

A.       An account of how the defendant has used or applied the sum of K213,062.30.

B.       Damages, alternatively the sum of K213,062.30.

C.       Aggravated or exemplary damages.

D.       Interest on any sum found to be due pursuant to the Judicial Proceedings (Interest on Debts and Damages) Act.

E.       An order for payment by the defendant to the plaintiff of all monies found to be due to him on the taking of an account.

F.       Further or other relief".

On 28 April 1992, judgment in default of the defendant's appearance or defence was entered for K213,062.30 plus costs of K180. No other steps were taken by plaintiff to pursue other claims.

On 15 May 1992, by motion, the defendant sought to set the default judgment aside. The motion was heard by Kapi DCJ in the National Court June 1 and 3, and was dismissed. He dealt with two grounds relied on by the defendant in its motion. The first was that a claim for both a liquidated amount and a claim for unspecified damages could not be joined in a statement of claim. The trial judge relied on the rationale expressed in Watson Specialised Tooling Pty Ltd v Stevens [1991] 1 QdR 85, quoting at 93:

"What is the plaintiff's claim in the writ to which the defendants did not appear? It seems to me that the defendants have admitted either the liquidated demand of $291,823.20 or the alternative claim for damages for conversion, but not both. They are entitled to say that the Court will not permit judgment to go against them for both but only one of them as they are claimed in the alternative".

The Judge was satisfied the plaintiff was entitled to and had elected. He said:

"In accordance with (the quoted passage in Watson's case) it is proper to enter for the liquidated sum but not for both. This is not irregular".

In argument before us, the appellant/defendant has pointed to various National Court Rules of Court which he says illustrate why the trial judge was in error. O 12 rr 27, 28, while dealing with liquidated and unliquidated demands, are qualified by r 31. That rule (dealing with mixed claims) provides for a plaintiff to have judgment in respect of a particular claim where the plaintiff's claim for relief includes two or more of the particular claims, called "mixed claims" and no other claim, as if that were the plaintiff's only claim for relief against the defendant.

In fact, the statement of claim as can be seen, included a claim for an account and subsequent payment of such monies found to be due, claims not falling within the categories dealt within r 31 as "mixed claims".

But O 12 r 32 provides, generally, that where a plaintiff claims relief, the rule permits a court to direct entry of such judgment against a defendant as the plaintiff appears entitled to on his writ.

Having obtained judgment for a liquidated amount pleaded, a plaintiff would be prevented from seeking orders for account pursuant to r 32, for those orders can only be in the alternative on the pleadings.

FACTS

The amount of the default judgment in K213,062.30 relates to writ of summons proceedings with an endorsed statement of claim by the plaintiff alleging that the defendant had and received money from E.C. Heath (Insurance Broking) Limited for the use of the plaintiff and had neglected or refused to pay the sum to the plaintiff. In the alternative, the plaintiff pleaded that the defendant was the agent of the plaintiff and had failed to account. While the plaintiff couched its prayer for relief to include one seeking an account, it went on to claim damages, "alternatively the sum of K213,062.30".

In addition it sought aggravated or exemplary damages, interest, and costs.

The writ bore an endorsement under O 8 r 24 requiring the defendant to verify his defence. There was no defence filed within the time prescribed, and the plaintiff entered default judgment on 28 April 1992. By motion of 5 May 1992, the defendant sought to set aside the default judgment. On 3 June, the Judge refused the motion.

The motion was on two grounds. Firstly, it was argued that the judgment was irregular in that the writ included other claims as well as a liquidated claim, contrary to the provisions of O 8 r 24. Secondly, if that argument failed, the defendant had shown a defence on the merits, there having been proper explanation for the failure to defend within time.

The trial judge found that entry of default judgment was not irregular, in these circumstances, and that the defendant had failed to show a defence on the merits.

Going to the trial judge's first finding, that the default judgment was not irregular because the sum claimed was certain, Mr Payne says that that was an error of law. The judge's refusal to set aside the judgment in his discretion, finding, as he did, no defence on the merits, is not the principle ground in the appellant's case before us.

Mr Coady, for the respondent, deals with the irregularity argument this way. He quotes a passage from Odgers Pleading and Practice 5th ed p 41: "Whenever the amount to which the plaintiff is entitled can be ascertained by calculation or found by any scale or charges or other positive date, it is liquidated".

He relies on the authority of the Australian High Court's decision in Spain v The Union Steamship Company of New Zealand Limited [1923] HCA 21; (1923) 32 CLR 138 and the English Court of Appeal in G L Baker Limited v Barclays Bank Ltd [1956] 3 All ER 519. He also quoted Lord Evershed's dictum that "it would not be right to give to the phrase, liquidated demand, a narrow and technical meaning; if I look at the writ and take the case of the third defendants by way of illustration, it is plainly according to the language and its context, a claim to recover the sum of $10,648 exactly, that sum being, as the writ alleges, the plaintiff's money".

Mr Coady then went on to cogently argue the effect of O 12 r 31, which allows mixed claims, so that, he says, it is available to a plaintiff to enter default judgment for the liquidated demand.

In the long run, we find we do not need to go into those arguments for we are not minded to agree with the respondent's submissions that the claim, as framed, permits categorisation as "liquidated", sufficient to enable a default judgment by reference to the material pleaded.

STATEMENT OF CLAIM

The plaintiff alleges both a species of fiduciary duty by the defendant and an agency agreement with it in relation to moneys received from an insurer as a result of a claim upon a common policy of insurance held by the parties in respect of premises of the defendant in which the plaintiff carried on business. The parties acted in concert in negotiations with the insurer.

The plaintiff says that the defendant received from the insurer, on behalf of the plaintiff, the plaintiff's entitlements to insurance in the amount of K1,034,492.00 but accounted to the plaintiff only to the sum of K821,429.70. In the alternative the defendant received that sum as agent of the plaintiff, an agency agreement to be found from dealings partly written partly oral and to be implied. The terms of the agreement were, inter alia:

(a)      The defendant would for valuable consideration lead each company which had suffered loss in the fire in negotiations with the insurer.

(b)      The defendant would receive the agreed proceeds of insurance from the insurer and distribute the same to the appropriate recipient, based upon losses found to have occurred by MBS Loss Adjusters.

(c)      The defendant would, as and when requested by the plaintiff so to do, render to the plaintiff a true, full, and accurate account of how it has applied the proceeds of insurance.

Accordingly, the plaintiff went on to plead in para 9 of its statement of claim:

"In breach of the said agreement, the defendant has wrongfully failed and refused to render to the plaintiff any or any true or full or accurate account of how it has applied the proceeds of insurance and has failed to pay to the plaintiff the balance of the plaintiff's insurance monies as found by MBS Loss Adjusters in the amount of K213,062.30".

Both counsel before us relied on Pratt J's ratio decidendi in Dempsey v Project Pacific Pty Ltd [1985] PNGLR 93. His Honour dealt with Baker's case and followed Alexander v Ajax Insurance Co Ltd [1956] VicLawRp 5; [1956] VLR 436.

While Mr Coady did not apply the reasoning to the particular facts of this case, Mr Payne argued by analogy the Ajax Insurance case, for the value of goods the subject of insurance had not been agreed prior to loss.

In Dempsey's case, Pratt J said at 96:

"The fact that the parties may agree on certain matters and more particularly may agree to take any damages to be a particular sum does not convert an ordinary action into one for a liquidated demand. Such conversion by mere agreement is not permitted (Luckie v Bushby [1853] EngR 697; (1853) 13 CB 864 at 878). Nor can one convert into a claim for a liquidated demand an action which is essentially one for account. Such actions are taken 'to ascertain the ultimate amount which, on consideration of a number of debits and credits, one litigant owes to another, and arise most frequently in actions for the administration of trusts ....', and are essentially actions for equitable relief (Atkin's Court Forms, Vol 1, at 172). An action for account expressed as an alternative gave rise to difficulties which were resolved by the Court of Appeal in G L Baker Ltd v Barclays Bank Ltd [1956] 1 WLR 1409 where the court overruled the judge of first instance on the basis that there was a claim for a 'liquidated demand' as well as a claim which could not be described in such terms, namely, for 'property of the plaintiffs traceable in 'equity' (to) be repaid respectively by the defendants to the plaintiffs' (Birkett LJ at 1414). The authority however is of no assistance to the appellant in this case because the resolution of the dispute depended very much on the English Rules which do not have an exact counterpart in our own Rules. The parties are thus denied any opportunity to sail between the Scylla and Charybdis mentioned by Lord Evershed".

The action for an account, in my view relates to the equitable relief claimed by the plaintiff where he impliedly alleges a fiduciary duty in the defendant who received "the plaintiff's entitlements to insurance", both parties having acted in concert in the negotiations.

The entitlement to insurance has a different connotation to the phrase, for instance, "moneys of the plaintiff". One relates to a right whilst the other is a direct assertion of fact. The quantification of right, in this case, is claimed by the plaintiff by way of account. It is that equitable claim which does not fall within the understood "liquidated amount" asserted by the plaintiff. It says the liquidated amount is described in the alternative to damages where the sum of K213,062.30 is claimed in its statement. It seems incongruous that the plaintiff should claim damages (an unliquidated claim) and in the same breath claim a liquidated amount. Rather, it seems the plaintiff is putting forward the sum of K213,062.30 as the measure of damages.

Nevertheless, the amount is described as an alternative to damages. The basis of the calculation of the sum is not clear, however, when the statement of claim is read. The claim for account clearly relates to the alleged fiduciary nature of the payment of the sum of K1,034,492.00.

The sum of K213,062.30 is described as a balance of the plaintiff's insurance moneys, as found by MBS Loss Adjusters. In the statement of claim, the plaintiff says that it was part of its agreement with the defendant that proceeds of insurance moneys would be distributed, based on losses found to have occurred by MBS Loss Adjusters, but no detail of the plaintiff's losses are supplied or the basis of the distribution. If the total amount of the actual losses exceeds, for instance, the insurance moneys, are the particular losses to be reduced, pro rata, or shall some claims be paid in their entirety and some discounted. Hence, the plaintiff seeks an account. On the face of the statement of claim, I must say I cannot find sufficient positive data to ascertain the amount to which the plaintiff is entitled.

It would seem the parties are entitled to share a common fund, but there has been no agreement as to the particular entitlement of each. This is clearly not a claim for a liquidated amount.

The factual situation in Spain's case is not analogous, for the High Court was there called upon to interpret a federal award and determine whether the plaintiff fell within a particular class to gain the benefit of expenses incurred by the plaintiff. The expenses were quantified.

In this case, there can be no interpretation, for the contract of agency has yet to be found. The actual losses have yet to be shown, so that Spain's case rather supports the appellant.

The trial judge has relied upon a Queensland decision of Watson Specialised Tooling Pty Ltd v Stevens [1991] 1 Qd R 85 at 93, quoted earlier. This clearly goes to the issue of whether a claim for a liquidated demand may be included in the alternative, having regard to the National Court Rules, but it does not address the first issue: has the plaintiff, in fact, pleaded a claim which can be categorised as liquidated? For the reasons I have given, I think not. In the course of argument, there arose a problem with the omission in the transcript to show what paragraphs of particular affidavits had been struck out by the trial Judge. The transcript was not, in fact, a proper record. These affidavits had been filed by the appellant in support of his case on the merits.

His Honour said:

"Evidence which was purported to be relied upon in the affidavits of Carrol, Kattapuram & Kanji was not admitted on the basis that deponents (sic) could not depose to those facts. The relevant paragraphs were struck off with the consent of Mr Fiocco".

There was material filed here which went to the recollection of counsel as to what, in fact, was struck and whether it had been struck by consent. Because of the obvious importance of these matters, this Court was of the unanimous view that it would seek a report of the trial judge pursuant to O 11 r 24 of the Supreme Court Rules. His Honour said:

"My recollection is that as Mr Coady raised objections to certain paragraphs of several affidavits, I discussed these matters with Mr Fiocco, and he accepted the basis of the objections. I deleted the paragraphs on the basis of his concessions. As I recall, I did not make any formal ruling, as Mr Fiocco agreed to the basis of objections. This is reflected in my brief reasons for decision".

The original affidavits on the court file bear the judge's pen marks where the particular paragraphs were struck out.

I do not intend to try and resolve the issues which arise having regard to the judge's report, for counsel have not had the opportunity to address us on the correct approach to adopt in the light of his honour's remarks. The original affidavits do bear witness to the fact that certain paragraphs have been struck, however. Further I do not propose to rule on whether or not there was just cause to strike those paragraphs, for offending the "hearsay rule" or some other evidentiary rule. In those circumstances, they remain struck out if the appellant were to seek to rely on these particular affidavits and to read them in this cause, having regard to the Court's eventual order. I have not sought to unravel the issues which arise from the judge's report, for the preliminary question (Was the applicant entitled ex debito justistiae to have the default judgment set aside?) should have been answered in the affirmative in my view. The proper order then is for the decision of the National Court to be set aside and, further, the appellant shall file and serve its defence within 30 days of today's date. There-upon, the proceedings shall continue in the normal course, as one for an unliquidated claim.

The appellant shall have its costs both here and in the National Court.

Lawyer for the appellant: Blake Dawson Waldron.

Lawyer for the respondent: Chris Coady & Associates.