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Rabaul Shipping Ltd v Aisi [2004] PNGLR 19 (24 September 2004)

NATIONAL COURT OF JUSTICE

RABAUL SHIPPING LIMITED

V

PETER AISI – FIRST ASSISTANT SECRETARY, SAFETY OFFICER MARITIME DIVISION – DEPARTMENT OF WORKS;
JEROME AINUI – ASSISTANT ENGINEER SURVEYOR MARITIME DIVISION – DEPARTMENT OF WORKS;
CYRIL MUDALIGE – PROVINCIAL SHIPS SURVEYOR – MARITIME DIVISION – DEPARTMENT OF WORKS; AND
THE INDEPENDENT STATE OF PAPUA NEW GUINEA

KOKOPO: LENALIA J

11, 21 June & 24 September 2004

PRACTICE AND PROCEDURE – Default judgment – Status of – Application to dismiss whole proceedings – Application made after default judgment had been entered – Whether application to dismiss is appropriate when a default judgment is in existence after refusing to set it aside.

PRACTICE AND PROCEDURE – Mode of proceedings – Interlocutory applications can only be made when a claim is in existence- Order 4. r. 4, National Court Rules.

PRACTICE AND PROCEDURE – Default judgments – Application to set aside default judgment made previously – Such application refused – Whether it is appropriate at that stage to apply for dismissal for lack of compliance with s.4 and 5 of the Claims by and Against the State Act 1996.

PRACTICE AND PROCEDURE – Frivolity – Vexatious proceedings – Abuse of the Court process – Principles of – Discretion to dismiss where a claim is frivolous and vexatious – Order 12 r.40 (1)(2), National Court Rules.

Facts

The defendants having conducted an inspection of the plaintiff's vessel, MV Kondor, as required under the Merchant Shipping Act, chapter No. 242, withheld the certificate of seaworthiness.

This resulted in financial loss to the plaintiff's, for which it brought an action for damages against the defendants. A default judgement was entered against the defendants.
The defendants' previous application to set aside the default judgement was dismissed. The defendants filed a further application to dismiss the plaintiff's action on the basis that the plaintiff failed to comply with the requirements of s.5 of the Claims By and Against the State Act, 1996, to serve notice on the State.

Held

1. The state's application to dismiss the plaintiff's action is misconceived in law in view if the fact that its first application to set aside the default jusgement was dismissed and consequently that default judgement stands.

2. Application dismissed with costs.

Papua New Guinea cases cited

Daniel Hewali v The State (2002) N2233.
George Page Pty Ltd v Malipu Balakau [1982] PNGLR 40.
Green & Company Pty Ltd v Green [1976] PNGLR 73.
John Bokin & Others v Sergeant Paul Dana & Others N2111 (24.5.01).
Kabil Worm and 101 Others v Sergeant Koken and The State [1996] PNGLR 58.
Map Makers Pty Ltd v Broken Hill Proprietary Company Ltd [1987] PNGLR 178.
Odata Limited v Ambusa Copra Oil Mill Limited & National Provident Fund Board of Trustees N2106.
Paul Toihan, Minister of Police and The State v Tau Liu SC566.
Peter Norman Moore [1993] PNGLR 470.
R v Abia Tambule [1972] PNGLR 250.
The Government of Papua New Guinea and Davies v Baker [1977] PNGLR 386.

Other cases cited

Grierson v The King (1938) C.L.R. 431.
Hubbuck & Sons Ltd v Wilkinson Heywood & Clark Ltd [1899] All ER 244.

Counsel

K Kawat, for the applicant.
G Maki, for the respondent.

24 September 2004

Lenalia j. The plaintiff commenced proceedings against the four defendants for the failure of the first defendant being the Safety Officer of the Maritime Division of the Department of Works to carry out inspection and to issue a Certificate of Seaworthiness to the plaintiff's company. The plaintiff's company whose proprietor is Mr. Peter Sharp, operates a fleet of ships based in Rabaul for both passengers and cargo throughout the country and even off-shore.

The failure by the first defendant and of course the second and third defendants to appoint a Surveyor to attend to the plaintiff's motor vessel the "MV. KONDOR" breached s.69 (3) of the Merchant Shipping Act, Ch. No. 242. The plaintiff claims in the pleadings that despite the first three defendant's appointed Surveyor based in Rabaul conducting a survey on the vessel, the first three defendants withheld the Certificate of Seaworthiness resulting in the plaintiff loosing business for the period for which they now claim for.

If the dates on the Writ of Summons are correct, the Writ was filed on 6 March, 2003 and was served pursuant to s.5 of the Claims By and Against the State Act 1996 (No.52 of 1996) on 12 of that same month. Some correspondences were exchanged between the parties. Then an Intention to Defend and Defence were filed by the Acting Solicitor General. A Notice of Request for better particulars was served on the plaintiff on 10 October 2003.

More documents were exchanged, served and filed. The plaintiff's lawyer applied pursuant to 0.9 r.15(b) of the National Court Rules to strike out the defendants' collective Amended Defence due to the failure by the defendants to serve a list of documents. That order was granted and on 6 February 2004, a Default Judgment was entered for the plaintiff on that same date. That order was entered pursuant to O.12 r.28 of the National Court Rules.

Following entry of the default judgment, the Acting Solicitor General Mr. Francis Kuvi filed a Notice of Motion seeking orders to set aside the default judgment. The Court heard arguments from counsels and directed counsels to file written submissions. On 16th April this year, this Court refused the application to set aside on the basis and principles laid down in Green and Company Pty Ltd v Green [1976] PNGLR. 73 and other cases such as The Government of Papua New Guinea and Davis v Barker [1977] PNGLR. 386, George Page Pty Ltd v Malipu Balakau [1982] PNGLR 40 and Map Makers Pty Ltd v Broken Hill Proprietary Company Ltd [1987] PNGLR 78.

The above cases set out three or four basic principles namely, that to set aside a default judgment, an applicant must explain why the judgment was allowed to be entered by default. Such application must be made quickly and it must be on the merit. He must also show that there was and is a prima facie defence on the merit. And finally, evidence must be adduced to satisfy the Court of the above factors.

Having dismissed the defendants' application for the default judgment to be set aside, on 6 February 2004, that order stands entered.

Before this Court on 21 of June this year were two separate Motions on Notice. The first of those notices was by the plaintiff seeking leave to be granted to them to file fresh evidence. The fresh evidence which they seek to file are two affidavits one by Ms. Lousia Wesley and the other by Mr. Peter Robert Sharp who is the proprietor of the plaintiff's Company. Obviously this issue comes under the principles of reception of fresh evidence only on the basis of such evidence was not available at the date the hearing was conducted. However, the assessment of damages is still to be done.

No hearing has been conducted as to the merits of this claim except to say a default judgment had been entered for assessment of damages to be assessed on a later date. I shall return to the plaintiff's motion a little later in this discussion.

Mr. Kembo'nga Kawat of Paraka Lawyers argued the fourth defendant's application to dismiss the proceeding for two basic reasons. In their motion, they seek the following orders:

1. That the entire proceedings be dismissed for non-compliance with s.5 (2)(a) and (c) of the Claims By and Against the State Act 1996.

2. Alternatively, the entire proceedings be dismissed for non-compliance with s.5 (3) of the Claims By and Against the State Act.

3. Further and in the alternative that the entire proceedings be dismissed for lack of sufficient particulars in the plaintiff's s. 5 Notice dated 20th February 2003.

The thrust of the argument for and on behalf of the fourth defendant is that the whole proceedings be dismissed because the plaintiff did not comply with s.5 of the Claims By and Against the State 1996, Act (No.52 of 1996). Mr. Kawat referred this Court to a great volume of authorities in his written submissions which point to strict compliance with provision of s.5 of the above legislation. For convenience of reading this short judgment, I quote s.5 of the Act verbatim.

"5. Notice of claims against the State.

(1) No action to enforce any claim against the State lies against the State unless notice in writing of intention to make a claim is given in accordance with this section by the claimant to—

(a) the Departmental Head of the Department responsible for justice matters; or

(b) the Solicitor-General.

(2) A notice under this section shall be given—

(a) within a period of six months after the occurrence out of which the claim arose; or

(b) where the claim is for breach of a contract, within a period of six months after the claimant became aware of the alleged breach; or

(c) within such further period as—

(i) the Principal Legal Adviser; or

(ii) the court before which the action is instituted,

on sufficient cause being shown, allows.

(3) A notice under Subsection (1) shall be given by—

(a) personal service on an officer referred to in Subsection (1); or

(b) leaving the document at the office of the officer with the person apparently occupying the position of personal secretary to that officer between the hours of 7.45 a.m. and 12 noon, or 1.00 p.m. and 4.06 p.m., or such other hours as may from time to time be declared by or under the Public Services (Management) Act 1995 to be the normal public service hours of duty, on any day which is not a Saturday, Sunday or a public holiday declared by or under the Public Holidays Act 1953".

The issue of Notice pursuant to s.5 of the Act has been repeatedly addressed both by the National and Supreme Courts. With the greatest respect to the defence counsel's submission, I distinguish the facts of these proceedings and the current application by the fourth defendant from the application and the decision in Kabil Worm and 101 Others v Sergeant Koken and The State [1996] PNGLR. 58. In that case, it was an application by notice before His Honour Injia, J. (as he then was) and it was an application to set aside a default judgment previously entered.

In Paul Toihian, Minister of Police and The State v Tau Liu SC 566, the Supreme Court there said that the requirement to give notice remains the same whether or not the notice is required to be given within 6 months or within such other period as granted by the Principal Legal Advisor or by the Court.

In Paul and Mary Bal v Kenny Taiya, Francis Arumba, Philip Denge and The State (2003) N 2481, Davani, J held that service under s.5 of the Claims by And Against the State Act is mandatory. The Court further stated that service pursuant to s.5 (3)(a) or (b) of the Act is an obligation. See also John Bokin and Others v Sergeant Paul Dana and Others N.2111 (24.5.01). I totally agree with the above position in law.

Quite obviously, not only that the principle of strict compliance has been adopted and developed from case law authorities but by the very terms of the section concern suggesting an obligation on the part of an intended claimant to serve Notice of his or her intention to claim within six months from the date on which an action is alleged to have been committed. The use of the phrase "shall" in Subsections (2) and (3) of s.5 of the above Act connotes an obligation placed on an intended claimant to serve either the Departmental Head responsible for justice matters or the Solicitor General within six months from the date on which the claim arose.

The mode of service on the designated persons is implicit from s. 4 of the Act and thus service must be served personally on those designated persons in s.5 of the Act.

On the alternative order sought by fourth defendant, Mr. Kawat submitted and relied on the case of Daniel Hewali v The State (2002) N2233 for the proposition that where a plaintiff has not given sufficient particulars, that would amount to insufficient notice and therefore the Court must dismiss the whole proceedings.

On frivolity O.12 r.40 of the National Court Rules provides:

"(1) Where in any proceedings it appears to the Court that in relation to the proceedings generally or in relation to any claim for relief in the proceedings—

(a) no reasonable cause of action is disclosed; or

(b) the proceedings are frivolous or vexatious; or

(c) the proceedings are an abuse of the process of the Court,

the Court may order that the proceedings be stayed or dismissed generally or in relation to any claim for relief in the proceedings.

(2) The Court may receive evidence on the hearing of an application for an order under Sub-rule (1)".

It is further submitted by Mr. Kawat that, this Court must prevent any abuse of it's process and this Court must control its procedure. He cited cases such as R v Abia Tambule [1972] PNGLR. 250 and The State v Peter Pamke [1976] PNGLR. 210. The above cases were criminal proceedings where the Courts there considered the issue of the abuse of the Court process. As was stated in Abia Tambule's case (supra), in a civil proceedings an abuse of the Court process can arise where to commence or pursue proceedings which do not disclose any reasonable cause of action, it is said to be frivolous or vexatious and is an abuse of the Court's process.

It is established law that the test to determine whether a reasonable cause of action is disclosed where it is plain and obvious from the pleadings that the Court can say at first glance that the statement of claim as it stands is insufficient even if proved to entitle the plaintiff to what he claims for: Hubbuck & Sons Ltd v Wilkinson Heywood & Clark Ltd [1899] A11 ER. 244; see Odata Limited v Ambusa Copra Oil Mill Limited and National Provident Fund Board of Trusties N2106 (6.7.01).

The above test was further stated in Grierson v The King (1938) CLR. 431 where it was said that, no reasonable cause of action is disclosed if the purported cause of action pleaded is "obviously contestably bad". The above test was adopted and applied in a number of cases in this jurisdiction such as PNG Forest Products Pty Ltd & Inchuape Berhad v The State and Genia [1992] PNGLR. 85 and in Ronney Wabia v BP Exploration & Ors. N 1697.

In the PNG Forest Products Pty Ltd and Inchuape Berhad v The State and Another (surpa), the Court there held that a party has a right to have his case heard as guaranteed by the Constitution and the laws of this country all uphold that right and such right cannot be lightly set aside; see also In the Matter of The Lawyers Act 1986 and In The Matter of An Application by Peter Norman Moore [1993] PNGLR. 470.

Ms. Maki counsel for the respondent/plaintiff argued that, is not proper in practice to come to the Court at this stage of these proceedings where the Court had entered a default judgment and after an application to set aside had been refused. I am greatful to Ms. Maki for your helpful submissions particularly touching the issue of whether or not the defendants can come to Court to apply to dismiss the proceeding when an application to set aside had been refused meaning that the default judgment stands entered.

I agree with counsel that this is the case where a default judgment was entered then after sometime, an application to set aside was heard and refused and the applicant before me now has no application to O.4 r.37 of the National Court Rules.

The motion before me now is not an application to set aside the default judgment entered against the four defendants on 6 February 2004 pursuant to O.12. Under that Order, the Court has a discretion to either set aside or vary an order previously ordered by it. That stage of proceedings had already been reached and determined on 6 February 2004. It is my view that, that opportunity to apply to set aside or vary my judgment of 6 February had already been tested when this Court refused to set aside the default judgment on 16 March this year.

Let me quote myself on my findings on the second last paragraph of my short judgment refusing the application to set aside on the 16 March this year.

"The question I ask is, what evidence is there in support of the instant application which will persuade this Court to set aside it's own orders of 6 February 2004. There is no such evidence of persuasive value to cause this Court to set aside it's own orders and which would go to counteract all evidence by the proprietor of the Plaintiff company sworn and filed on which this Court acted on 6 February this year".

Even though the judgment of 6 February this year was a default judgment, such judgment had been formally recorded and entered and it could only be varied or discharged on appeal. Counsel cited a quote by Sir Garfield Barwick in Barley Marinoff (1971) 125 CCR. 529 where the Court there said:

"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 or relevant statutory provision, is at end in that Court and it is 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 to reinstate a proceeding of which it has finally disposed".

The above passage was quoted by Acting Justice O'Leary in Green and Company Pty Ltd v Green (supra) at page 76 of that judgment.

The fourth defendant has come in the guise of O.4 r.37 to apply at this stage of these proceedings with an interlocutory application when they fully know that there is a default judgment which lies against them if not appealed. SObviously, the application on Notice by the fourth defendant is misconceived and although this Court has discretion to set aside it's own default judgment under O.12 r.8 of the Rules, I cannot exercise that power now as I am of the view that this is not the proper or appropriate venue to decide the issues raised in relation to service of the process as required by s.4 and s.5 of the Claims By and Against the State Act of 1996.

Counsels will note that because of the nature of this application and the manner under which it had been instituted at such stage of these proceedings, I have not seriously done any critical analysis of the service pursuant to provisions of the Claims By and Against the State Act of 1966. I must once again say that the application before me for these proceedings to be dismissed is misconceived and is an abuse of the Court process. I must dismiss their application with costs.

Having ordered so, I am of the opinion that, it is not necessary for the Court to determine or decide the application by the respondent/plaintiff at this stage as I felt, the decision of this Court of 16 March this year should be first tested before the plaintiff gets to the next stage.

Lawyer for the plaintiff: Gillian Maki – Rabaul Shipping Limited.
Lawyer for the fourth defendant: Paraka Lawyers.