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Lailai v Ace Guard Dog Security Services Ltd [2003] PNGLR 13 (6 May 2003)

SUPREME COURT OF JUSTICE

SCA NO. 85 OF 2001

LINDSAY LAILAI
ACTING MANAGING DIRECTOR;AND
TELIKOM (PNG) LIMITED

V

ACE GUARD DOG SECURITY SERVICES LIMITED

SCA NO. 87 OF 2001

LINDSAY LAILAI - ACTING MANAGING DIRECTOR; AND
TELIKOM (PNG) LIMITED

V

YAMA SECURITY SERVICES LIMITED

WAIGANI: INJIA, DAVANI & MOGIS JJ

27 April; 6 May 2003

PRACTICE AND PROCEDURE — Applications for default judgment and summary judgment—Different in nature and substance.

PRACTICE AND PROCEDURE — Order to file further and better particulars — No time period specified — Time period unilaterally fixed by one counsel — Both counsel to agree on what is a reasonable time.

PRACTICE AND PROCEDURE — Further and better particulars of defence filed in court — Courts should be loathe to strike out defence - Order for costs against defaulting party.

Facts

Two appeals against a single National Court decision at Waigani given on 5 December 2000 in two similar proceedings in WS 1358 and 1359 of 1999 involving the respondent as the plaintiff/applicant and, the appellants as defendants/respondents. Two motions for the same orders were moved by the respondents and a single ruling made. The Court entered "judgment on liability" and for damages to be assessed.

Held

1. The National Court's decisions of 5 December 2000 in WS 1358 and 1359 of 1999 are quashed;

2. both matters proceed to trial on the defence and further and better particulars to the defence already filed;

3. the respondent shall pay the costs of the appeal, to be taxed if not agreed;

4. the court certifies the appearance of Southern Counsel.

Papua New Guinea cases cited

[no cases cited]

Counsel

I Molloy and T Nonggorr, for the appellants.
J Poro and A Amet (Jnr), for the respondent.

6 May 2003

By the court. There are two appeals against a single National Court decision at Waigani given on 5 December 2000 in two similar proceedings in WS 1358 and 1359 of 1999 involving the respondent as the plaintiff/applicant and, the appellants as defendants/respondents. Two motions for the same orders were moved by the respondents and a single ruling made. The Court entered "judgment on liability" and for damages to be assessed.

The respondents' claims were for damages for breach of contract to provide security services to the appellant by the respondents. The respondent, Yama Security Services Ltd's claim is for K6, 114,598.62 and the respondent, Ace Guard Dog Security Services Ltd's claim was for K4,526,280.00; a total of K10,641,266.62.

The appellants filed two separate appeals against the decision but they were argued together because the issues were the same. They advanced several grounds of appeal, which in summary were that the court erred in entering judgment when the court already had before it the further and better particulars requested by the respondent. The appellants also say that the court had not advanced any good reasons to enter judgment.

It should be stated at the outset that the learned judge gave very brief reasons for granting "default" judgment on liability and for damages to be assessed.

Background facts

Applications in both proceedings came before the Judge by the respondents' notice of motion filed on the 23 August 2000 seeking:

• Default judgment for failure to file a verified defence and for judgment in the sum claimed in the writ of summons.
  
• Alternatively, summary judgment for failure to disclose reasonable defence to the claim and for failing to furnish further and better particulars on the defence and for judgment in the same amount.
  

The other parts of the motion were not pursued. We accept the submission by counsel for the respondent that his client did not pursue the application for summary judgment before His Honour.

On 21 September, 2000, the Court dealt with both motions and refused to enter default judgment and ordered that the appellant "properly request further and better particulars of defence from the defendants to be given within a specified time." His Honour did not specify any time for parties to request and exchange such particulars.

On 24 October, 2000, about a month later, the respondent's lawyers in both matters requested particulars to be given within 7 days. The request was served at the offices of the appellants' lawyers' town agent in Port Moresby because the appellants' lawyer was based in Mount Hagen. The 7 days were to expire on 31 October, 2000. The appellants did not supply the particulars immediately. On 1 November, 2000, the respondent filed a motion seeking "judgment in term of the relief's claimed in the writ of summons." In support of this motion was an affidavit of Mr. Poro, which was sworn on 31.October, 2000. It should be noted that this affidavit was deposed to before the expiry of the 7 days. The basis of the motion was that the appellants had breached His Honour's order of 21 September, 2000 in failing to provide the particulars within 7 days, which, in our view, firstly, was inaccurate because at the time of swearing the affidavit, the 7 days had not yet expired, and secondly, His Honour on 21.September 2000 did not stipulate a time frame for requesting particulars. The motion was heard on 16 November, 2000 and ruling handed down on 5 December, 2000. It is this order of 5 December, 2000, which is the subject of these appeals.

Preliminary procedural point

There is a procedural issue before the National Court, which is worth noting. This is in relation to the application made by the respondent, which gave rise to this appeal. We refer to the notice of motion filed by the respondents on 1 November, 2000, which sought substantive relief in the following terms. "judgment in terms of the reliefs claimed in the writ to be entered in favour of the plaintiff, costs and other orders." We note that when the motions were moved before His Honour on 16 November, 2000, counsel for the respondents moved a motion for "Default" judgment on three (3) grounds; firstly, for failure to provide better particulars, secondly, being in breach of the court order of 21 September, 2000, and thirdly, the second ground being that the defence pleaded did not disclose a cause of action. On questioning by the court as to this procedural anomaly, Mr. Pena agreed that the motion was in fact for default judgment. Mr. Poro now confirms that the motion was in fact for "default judgment" but given the rather confusing multiple basis for the application for default judgment sought on 21.September, 2000, it was not proper for the respondent to plead the relief sought in the motion in this vague manner.

With respect, the learned judge should have clarified with counsel as to whether he was moving a motion for default judgment, or summary judgment, or some other summary relief or even the substantive relief. This is because the procedure and principles applicable to these different reliefs differ in many respects.

Hence, we are of the view that the motions before His Honour on 16 November, 2000 and the basis on which they were moved were incompetent and as such, they should not have been dealt with by His Honour in the way he did. Rather, the motions should have been struck out.

Substantive appeal

On a more substantive note, at the time the motions were moved on 16 November, 2000, the appellants' particulars was ready and copies were delivered to the appellants' counsel in court. The particulars were lengthy, extensive and comprehensive and raised substantive issues including fraud, conspiracy to defraud and illegality of contract. The issue before us is whether the 7 days was a reasonable period. The court had said that the plaintiff 'properly request' further and better particulars. This in our view meant that the respondent would have had to consult the appellants as to what was a reasonable period within which to require the defendants to supply the particulars requested or seek further directions from the court. But the respondents did not adopt such course.

In the absence of any clear direction from His Honour as to a reasonable time limit, and the respondent's failure to either consult the appellants or seek further directions from His Honour, and given the remote locality of the appellants' lawyer and the sizeable nature of the particulars requested, we are of the view that the 7 days unilaterally fixed by the respondent's lawyer was clearly insufficient and therefore unreasonable. It is understandable that the appellant could not supply the particulars within 7 days because it was seeking instructions and drafting a very detailed, 30-page reply to the respondents' request for further and better particulars. This reply makes reference to particulars of the defences of undue influence, fraud, conspiracy and other allegations of foul play that allegedly occurred in the tendering process involving the security contract between the appellants and respondent. Indeed, at the hearing of the motion, the appellants' Counsel complained bitterly about the unreasonableness of this time and his request for extension from the plaintiffs' lawyer, which he did not get. His Honour did not address the issue of reasonableness of time in his ruling. His Honour acknowledged the late delivery of the particulars, but went on to determine the substance of the defence pleaded in the defence and the particulars in this way:

"At this stage of the proceeding one does not have to be so rigid in the principles regarding fraud, undue influence etc as discussed in many cases including Noki v Pundia [1993] PNGLR 337 but I consider it needed little more than tell tales and suspicions when none of the two parties could be in a disadvantaged position. However, there is a claim that the rate proposed to be paid was varied subsequently."

It is submitted by Mr. Poro that the defence as enhanced by the particulars supplied by the appellant were not only deficient in that it did not comply with order 8 Rule 30 of the National Court Rules but also lacked substance and that they were merely assumptuous and speculative. Therefore, there were no triable issues disclosed in the defence pleaded to warrant a trial.

In our view, the issue of deficiency or lack of substance of a defence filed is irrelevant to an application for default judgment. There are different avenues prescribed under the National Court Rules for summary disposition of proceedings such as default judgment, summary judgment or summary termination of proceedings, on the basis that the proceeding or pleadings do not disclose a reasonable cause of action, a reasonable defence, or is an abuse of process of the court. An application for summary dismissal of a defence on the basis that it does not disclose reasonable defence is not a proper basis for granting default judgment.

We are of the view that the trial judge erred in granting what appeared to be a default judgment based on a defence, which allegedly lacked substance. His Honour also erred in failing to determine the real issue of the defendants' default in supplying the particulars requested within time, and the related issue of whether the 7 days notice was reasonable.

In our view, the Court, with the benefit of the reply to the further and better particulars before it, should have accepted the reply but with an order for costs against the appellants. However, the court decided the matter on an issue that was not properly before it, namely, the adequacy of the particulars when neither party had sufficiently addressed it. These were substantial claims involving public monies and the appellants should not have been barred by the court from defending them when the respondents had not demonstrated any prejudice as a consequence of the delay.

We accept Mr. Molloy's submission that the trial judge wrongly exercised his discretion to summarily dismiss the substantive defences raised in the defence and particulars without a trial on their merits. The defences were clearly arguable and deserved to go to trial. The trial judge erred in not determining the reasonableness of the 7 day time limit unilaterally fixed by the respondent's lawyer. Further, we consider that the trial judge erred in proceeding to determine what was otherwise an incompetent motion in the first place.

For these reasons, we allow these two appeals and make the following orders:

1. The National Court's decisions of 5 December, 2000 in WS 1358 and 1359 of 1999 are quashed;

2. both matters proceed to trial on the defence and further and better particulars to the defence already filed;

3. the respondent shall pay the costs of the appeal, to be taxed if not agreed;

4. the Court certifies the appearance of Southern Counsel.

Lawyer for the appellants: Gadens Lawyers.