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In the Matter of an Application by Linah Edward [2005] PGNC 144; N2804 (11 February 2005)

N2804

PAPUA NEW GUINEA

[IN THE NATIONAL COURT OF JUSTICE]

OS NO 40 OF 2005

IN THE MATTER OF AN APPLICATION
BY LINAH EDWARD

KIMBE: CANNINGS J
11 FEBRUARY 2005

RULING ON APPLICATION

PRACTICE AND PROCEDURE – application for extension of time to appeal to National Court against decision of District Court – application to stay operation of District Court order – applicant aggrieved by order of District Court to award K3,000.00 damages against her for defamation – put matter in hands of lawyer – lawyer failed to institute appeal – time limit of one month for instituting appeal – time limit of 40 days for entering appeal – District Courts Act, Part XI – summary of principles governing setting down of appeals to National Court – distinction between institution of appeal and entry of appeal – requirements for institution of appeal – effect of instituting and entering appeal on operation of District Court orders – circumstances in which District Court orders are automatically stayed – National Court’s discretion to dispense with conditions precedent to the right of appeal or to extend the time for compliance with a condition precedent – matters relevant to exercise of discretion – application of relevant considerations – whether negligence of lawyer a sufficient reason to extend time limit for appealing – whether extension of time for compliance with conditions precedent automatically stays operation of District Court orders – whether separate application necessary – identification of considerations relevant to discretion whether to grant stay – application of considerations – order made by National Court – conditions imposed.

Cases cited:
Anton Angra and Oimbo Security Services Pty Ltd v Tony Ina [1996] PNGLR 303
Bougainville Copper Ltd v Liu [1978] PNGLR 221
Gary McHardy v Prosec Security and Communications Ltd, trading as Protect Security (2000) SC646
Kiau Nikints v Moki Rimints [1990] PNGLR 123
Kimbe Bakery Pty Ltd v Ben Jalatang (1993) N1274
Leo Duque v Avia Andrew Paru [1997] PNGLR 378
Lucy Ande v Anson Isingi (2001) N2206
Motor Vehicles Insurance Ltd v Martha Kuma (2000) SC650
New Zealand Insurance Company Ltd v Chief Collector of Taxes [1988-89] PNGLR 522
Sangam Mote v Alkan Tololo [1996] PNGLR 404
SCR No 1 of 1992; Re Peter Dickson Donigi v Base Resources Ltd [1992] PNGLR 110
Sunga Andrew v Helen John (2001) N2031
William Moses v Otto Benal Magiten (2000) N2023
Yap v T S Tan [1987] PNGLR 227

Counsel:
L Edward, the applicant, in person

CANNINGS J:

INTRODUCTION

This is an application to extend the time for appealing against an order of the District Court and for an order staying the operation of that order.

BACKGROUND

On 1 October 2004 the District Court at Kimbe ordered the applicant to pay K3,000.00 damages to Elizabeth Titoam in proceedings commenced by her, as complainant, against the applicant for defamation of character. The applicant was given three months to pay. She has not, to date, paid anything to the complainant. Both the applicant and the complainant are schoolteachers.

The applicant consulted a lawyer in Kimbe, Epita T T Paisat, and paid some money to him for court fees and legal fees. On 25 October 2004 she paid K200.00, on 12 November 2004, K400.00, and on 25 November 2004, K600.00. In December 2004 she went home to Kavieng for school holidays, thinking that the appeal had been instituted.

An appeal from the District Court to the National Court must normally be filed within one month after the District Court decision. The appeal should have been filed by 1 November 2004. Nothing, however, has been filed.

In late January 2005, on returning to Kimbe, the applicant was served with an oral examination summons to appear in the District Court and explain why she had not paid up.

She advised the Clerk of the District Court that she had filed a notice of appeal but soon discovered that her lawyer had not filed any appeal documents.

She went back to see her lawyer to find out what the problem was. He does not have a current practising certificate but apparently he helped her draft an originating summons for the National Court, seeking an extension of time to appeal against the order of 1 October 2004.

On 1 February 2005 the originating summons was filed and on 10 February 2005 an affidavit in support was filed.

APPLICANT’S SUBMISSIONS

The applicant’s reason for seeking leave to file an appeal out of time is that she put the case in the hands of her lawyer and she did that within one month after the District Court decision. She trusted him to do the right thing. She should not be penalised because of his apparent slackness.

ABSENCE OF COMPLAINANT

The complainant in the District Court, Ms Toitam, was not present and I could not be satisfied that she had been given notice of the proceedings. The court must normally be satisfied that a person who may be affected by an application has been given notice of the matter, either by stating the time and place of the hearing in the originating summons or by filing and serving a notice of motion under Order 4, Division 5 (motions) of the National Court Rules. In this case the originating summons did not state the time and place of the hearing of the application and there was no notice of motion.

However Section 231 of the District Courts Act allows applications such as this to be heard ex parte.

Section 231 states:

The National Court may—

(a) dispense with compliance with a condition precedent to the right of appeal prescribed by this Act, if, in its opinion, the appellant has done whatever is reasonably practicable to comply with the provisions of this Act; and

(b) on application made ex parte by the party appealing—extend the time for compliance with a condition precedent to the right of appeal prescribed by this Act.

I am satisfied that by virtue of Section 231(b) I was able to hear this application ex parte, ie in the absence of the person in whose favour the District Court decision was made.

RELEVANT LAW

Part XI

Appeals from the District Court to the National Court are governed by Part XI (appeals from decisions of district courts) of the District Courts Act. It consists of Sections 219 to 246. Those provisions fall into three broad categories. They:

• govern how an appeal is set down and the effect of instituting an appeal (Sections 219-228, 231, 237, 238); and
  
• govern the procedure for hearing an appeal and the powers of the National Court (Sections 229, 230, 232, 239-244); and
  
• state what happens after the appeal is decided (Sections 233-236).
  

As the present case concerns the proposed setting down of an appeal I will summarise the main principles arising from the first category of provisions.

Who can appeal?

A "person aggrieved" by a conviction, order or adjudication of the District Court has a right of appeal under Section 219(1), provided the appeal is prosecuted in accordance with Part XI.

What has to be done and when does it have to be done?

An appeal must be instituted within one month after the day when the District Court decision is pronounced. The person appealing, called ‘the appellant’, must do four things within that one-month period:

• lodge a notice of appeal with the Clerk of the District Court at the place where the decision was made; and
  
• serve a copy of the notice of appeal on the respondent(s) to the appeal, in accordance with Section 238(1); and
  
• serve a copy on the Registrar of the National Court; and
  
• enter into a recognisance (ie a promise) or make a payment into court.
  

(District Courts Act, Sections 220-222.)

Notice of appeal

The notice of appeal must be in writing and state the nature of the grounds of appeal (Section 221(1)).

Recognisance or payment into court

The requirement to enter into a recognisance or make a payment into court is imposed by Section 222(1), which states:

Subject to Subsection (2), within one month after the day when the decision is pronounced an appellant shall enter into a recognizance with a surety before a Magistrate in such sum as the Magistrate thinks fit, conditioned—

(a) to prosecute the appeal; and

(b) to abide the order of the National Court on the appeal; and

(c) to pay such costs as are awarded by the National Court,

or the appellant may, instead of entering into a recognizance, deposit with the Clerk of the Court by which the conviction, order or adjudication was made such sums of money as a Magistrate in writing directs.

The appellant thus has a choice:

• enter into a recognisance and surety (ie she promises to prosecute the appeal, abide by the National Court decision and pay any costs awarded against her and if she breaks that promise she has to pay the amount of the surety fixed by the magistrate); or
  
• pay an amount directed by a magistrate to the Clerk of the District Court.
  

One of those two things must be done within one month after the District Court decision. If neither is done within one month, this can render the appeal incompetent, ie it is liable to be struck out by the National Court (Kimbe Bakery Pty Ltd v Ben Jalatang (1993) N1274, National Court, Sevua AJ (as he then was)).

What does the Clerk of the District Court have to do?

Immediately after the notice of appeal is lodged, the Clerk of the District Court must forward a bundle of certified true copies of documents to the Registrar of the National Court; the District Court conviction, order or adjudication; the reasons for decision; the complaint; depositions; all other proceedings, ie documents; and exhibits. (District Courts Act, Section 224.)

The Clerk must always check to see whether the presiding magistrate gave reasons for his or her decision. If no reasons were given the Clerk must notify the magistrate immediately after the appeal is lodged. (District Courts Act, Section 225(1).)

The magistrate must then immediately forward a written report to the Registrar of the National Court setting out the reasons for the making of the conviction, order or adjudication. (District Courts Act, Section 225(2).)

The magistrate’s report should state the main issues of fact and law that arose and the processes of reasoning by and the principles of law upon which such issues were resolved. The report should be sufficiently comprehensive to allow the National Court to decide whether the magistrate erred. The report should address the grounds of appeal. If a magistrate does not forward a report as required, an order to do so may be granted by the National Court on application by either the appellant or the respondent. Costs of such an application can be awarded personally against the magistrate in an appropriate case. (See Bougainville Copper Ltd v Liu [1978] PNGLR 221, National Court, Greville-Smith J and Anton Angra and Oimbo Security Services Pty Ltd v Tony Ina [1996] PNGLR 303, National Court, Doherty J.)

What else does the appellant have to do?

The appellant must enter the appeal for hearing in the National Court. This is a separate and distinct step to lodging the notice of appeal and entering into a recognisance or making a payment into court. The appeal must be entered within 40 days after it is instituted. An entry is made by delivering a memorandum in the prescribed form to the Registrar of the National Court. (District Courts Act, Section 226.)

Appellant not to leave country

An appellant is not generally permitted to leave Papua New Guinea, once an appeal is instituted. This prohibition arises from Section 237 of the District Courts Act, which states:

If it is made to appear on oath to a Magistrate that a person who has instituted an appeal under this Part is about to leave the country, the Magistrate may issue his warrant for the apprehension of the appellant and may commit him to prison, there to be kept until the determination of the appeal, unless he in the meantime enters into a recognizance, oral or in writing, with a surety or sureties sufficient, in the opinion of a Magistrate, to secure his appearance to abide the judgement of the National Court.

Does the District Court order have to be complied with after an appeal is instituted?

This depends on whether the appeal is instituted and entered in time, ie instituted within one month after the date of the District Court decision and entered within 40 days after being instituted. The following principles apply:

• If the appeal is instituted in time the District Court decision is stayed for a period of 40 days (the time given to the appellant to enter the appeal for hearing). In that period the District Court order does not have to be complied with.
  
• If an appeal is not instituted in time the District Court decision is not stayed and must be complied with. Failure to comply with it will make the offender liable to contempt of court proceedings. (Kimbe Bakery, per Sevua AJ, relying on Yap v T S Tan [1987] PNGLR 227, Supreme Court, Hinchliffe J.)
  
• If an appeal is entered in time, ie within 40 days after the date of institution of the appeal, the District Court decision is stayed, pending determination of the appeal.
  
• If an appeal is not entered in time the District Court decision is not stayed and must be complied with. Failure to comply with it will make the offender liable to contempt of court proceedings.
  

The above represents the National Court’s interpretation and application, in several cases, of Section 227 of the District Courts Act.

Section 227 states:

If, within 40 days after the institution of an appeal, the appellant does not enter the appeal for hearing, a Court or Magistrate has the same authority to enforce the conviction, order or adjudication as if it had not been appealed against.

The leading cases are Sangam Mote v Alkan Tololo [1996] PNGLR 404, Injia J; William Moses v Otto Benal Magiten (2000) N2023, Kandakasi J; and Sunga Andrew v Helen John (2001) N2031, Kandakasi J.

In Lucy Ande v Anson Isingi (2001) N2206, Jalina J held that the institution of an appeal does not automatically stay a District Court order. However that view is inconsistent with the preponderance of precedent and I decline to follow it.

What happens if a District Court order is not automatically stayed?

In these circumstances a person who has instituted or proposes to institute an appeal must apply to the National Court for an order staying the operation of the District Court order.

In Lucy Ande’s case Jalina J discussed the principles to apply when determining an application to stay a District Court order. His Honour held that the same principles that apply to applications to stay National Court orders, when there is an appeal to the Supreme Court, should apply. I agree with his Honour on that issue. The test is the one developed by the Supreme Court in Gary McHardy v Prosec Security and Communications Ltd, trading as Protect Security (2000) SC646, Amet CJ, Jalina J, Kirriwom J.)

The Supreme Court stated:

To conclude that the test for a successful application for stay should be whether there are "special" or "exceptional circumstances" or that there is a "good reason" or that it is an "appropriate case" is restrictive. We think what is important to articulate are the factors and circumstances that may be relevant or appropriate in differing cases from time to time.

We distil from these precedent cases the kinds of factors and circumstances that the Court will consider, amongst others, in the exercise of the discretion whether or not to grant a stay order. We start with the principal premise that the judgment creditor is entitled to the benefits of the judgment. The other factors include the following:

• Whether leave to appeal is required and whether it has been obtained;
• Whether there has been any delay in making the application.
• Possible hardship, inconvenience or prejudice to either party.
• The nature of the judgment sought to be stayed.
• The financial ability of the applicant.
• Preliminary assessment about whether the Applicant has an arguable case on the proposed appeal.
• Whether on the face of the record of the judgment there may be indicated apparent error of law or procedure.
• The overall interest of justice.
• Balance of convenience.
• Whether damages would be sufficient remedy.
  

In Sunga Andrew, Kandakasi J expressed a similar view to Jalina J in Lucy Ande. There appears to be no conflicting authority. Therefore the National Court should apply the McHardy principles when an application is made for a stay of a District Court order and there is no automatic stay operating.

Who fixes the hearing date?

The Registrar. The respondent(s) and the Clerk of the District Court must be given at least seven days prior notice. (District Courts Act, Sections 226(1), 228.)

Can the National Court entertain an appeal if the conditions precedent are not met?

Yes, the National Court has a discretion under Section 231 of the District Courts Act (quoted above). It can dispense with compliance with a condition precedent or extend the time for compliance with a condition precedent.

The term ‘condition precedent’ has been given a restrictive interpretation. In Kiau Nikints v Moki Rimints [1990] PNGLR 123, National Court, Woods J held that the requirement to enter into a recognisance was mandatory and the court had no power to dispense with compliance with it. That view was followed in the Kimbe Bakery case.

THE PRESENT CASE

Discretion

The applicant is asking for an extension of time to appeal. She is not asking that any of the conditions precedent to the right of appeal be dispensed with. Therefore the application is to be determined under Section 231(b) of the District Courts Act. The discretion conferred on the National Court is not expressly conditioned by formation of an opinion, eg that the appellant has done whatever is reasonably practicable to comply with the provisions of the Act (that being the opinion that conditions the exercise of discretion in Section 231(a)). Nevertheless the discretion is not unfettered and must be exercised judicially.

Relevant considerations

The matters I consider the court should weigh in the balance when determining this application are:

• the extent of the delay;
  
• whether the applicant has complied with the District Court order proposed to be appealed against;
  
• possible hardship, inconvenience or prejudice to either party;
  
• the nature of the judgment sought to be appealed against;
  
• the financial ability of the applicant;
  
• whether the applicant has been let down by another person, eg a lawyer, in whom trust was reasonably placed;
  
• whether the applicant has an arguable case on the proposed appeal; and
  
• the interests of justice.
  

Application of considerations

There has been a lapse of three months between the date that the appeal should have been instituted (1 November 2004) and the date that the application for an extension of time was filed (1 February 2005). That is a significant but not inordinate delay in the circumstances.

The applicant has not complied with the District Court order, so that does not help her cause.

As to hardship, inconvenience or prejudice, I take account of the applicant’s occupation as a schoolteacher. I can reasonably infer that she is a person of moderate means and that if the District Court order were to be enforced, it would put her in some financial difficulty. The amount of damages she has been ordered to pay, K3,000.00, is substantial for a schoolteacher. There would be more prejudice caused to the applicant, if she were required to pay the K3,000.00, than to the complainant, who will – for the time being at least – be denied the fruits of the District Court judgment in her favour.

As to the nature of the District Court order, it is for payment of a specific amount of damages. It is not an order that will become stale with the passage of time. It is capable of being enforced for a long time after it is made. There are elaborate procedures in the District Courts Act and the National Court Rules to secure and enforce payment of that amount in the event that an appeal to the National Court is unsuccessful. Those things support the exercise of discretion in favour of the applicant.

I am also persuaded by the applicant’s submission that she has acted genuinely and reasonably. She has, it appears, been let down by her lawyer – a person in whom she reasonably placed trust – who undertook to institute an appeal on her behalf but failed to do so and failed to communicate with her. There is a number of Supreme Court cases in which the negligence of a lawyer in failing to meet a statutory time limit for filing a court process or other claim has been held not to be a good reason to exercise a discretion in favour of the client who has been adversely affected. For example:

• in both New Zealand Insurance Company Ltd v Chief Collector of Taxes [1988-89] PNGLR 522, Bredmeyer J, Amet J, Barnett J, and SCR No 1 of 1992; Re Peter Dickson Donigi v Base Resources Ltd [1992] PNGLR 110, Kapi DCJ, Hinchliffe J, Salika J, a lawyer’s negligent failure to comply with the 40-day time limit in the Supreme Court Act for appealing from the National Court to the Supreme Court was held not to be a good reason to grant leave for an application for review under Section 155(2)(b) of the Constitution;
  
• in Leo Duque v Avia Andrew Paru [1997] PNGLR 378, Kapi DCJ, Salika J, Sevua J, a lawyer’s negligence in allowing default judgment to be entered was not regarded as a sufficient reason to set aside the judgment;
  
• in Motor Vehicles Insurance Ltd v Martha Kuma (2000) SC650, Kapi DCJ, Jalina J, Sawong J, a lawyer’s negligent failure to ensure that a notice of an intention to make a claim was lodged with MVIL within six months after a motor vehicle accident was not considered a good reason to exercise the court’s discretion under Section 54(6) of the Motor Vehicles (Third Party Insurance) Act to extend the time for giving notice.
  

However, an appeal from the District Court to the National Court is a different process and I do not feel bound to follow those cases. I am not suggesting that the apparent negligence of a lawyer is a sufficient reason to grant an extension of time. But it is something to be weighed in the balance in ascertaining whether an applicant has acted reasonably and genuinely.

I have not examined the possible merits of the appeal so I do not express an opinion on that. It is a neutral factor.

As to the interests of justice I consider that it would be best served by granting an extension of time.

I will therefore extend the time for compliance with the conditions precedent to the right of appeal to the National Court, in particular those prescribed by Sections 220 to 222 of the District Courts Act. I will extend the time to two weeks after today.

SHOULD A STAY ORDER BE MADE?

Extending the time for compliance with conditions precedent is one thing. Does that automatically stay the operation of the District Court order of 1 October 2004? My guarded answer to that question is yes. It would appear consistent with Sangam Mote and the cases which have followed it to extend the ‘automatic stay rule’ to this situation. However for the avoidance of doubt I will presume that the answer is no and apply the McHardy principles to this case.

For similar reasons to those given above for extending the time to appeal, the District Court order should be stayed. They should be stayed subject to the same timelines that would have applied if the notice of appeal had been instituted and entered in accordance with the District Courts Act.

ORDER

The Court orders that in respect of the decision of the District Court at Kimbe pronounced on 1 October 2004 in the complaint of Elizabeth Tiotam against Linah Edward:

1. the time for compliance with the conditions precedent to the right of appeal against that decision, prescribed by Sections 220, 221 and 222 of the District Courts Act and any other laws, is extended to 12 noon on 25 February 2005; and
   
2. operation of that decision is stayed until 12 noon on 25 February 2005; and
   
3. if all conditions precedent are met by that time, operation of that decision will be stayed until a further 40 days after the institution of the appeal; and
   
4. if the appeal is entered for hearing within 40 days after institution of the appeal, operation of that decision will be further stayed pending determination of the appeal.

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