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Eastern Highlands Savings & Loans Society Ltd (in Liquidation) v Nowek Ltd [2013] PGNC 101; N5315 (8 August 2013)

N5315

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

OS (COMM) 168 OF 2013

BETWEEN:

EASTERN HIGHLANDS SAVINGS
& LOANS SOCIETY LIMITED
(IN LIQUIDATION)
Plaintiff

AND:

NOWEK LIMITED
Defendant

Waigani: Hartshorn J.
2013: 5th & 8th August

Application to set aside an order made in the absence of representation of the defendant – Order 12 Rule 8 (3) (a) National Court Rules – principles considered

Facts:

The plaintiff seeks amongst others the vacant possession of a property, leave to issue a Writ of Possession, Mesne Profits and Damages. The plaintiff is a Savings and Loans Society in liquidation and is the registered proprietor of the property. The defendant applies to set aside an order that gave vacant possession of the property to the plaintiff. The order was made in the absence of representation of the defendant.
Held:

1. The defendant has not given any reasonable explanation for the vacant possession order being made in the absence of representation on behalf of the defendant.

2. The defendant has not shown that it has a defence on the merits.

Cases cited:

Smith v. Ruma Constructions Ltd (2002) SC695
Rangip v. Loko (2009) N3714
National Development Bank Ltd v. Masket Iangalio (2012) N4931

Counsel:

Mr. M. Goodwin, for the Plaintiff
Mr. P. G. Tamagle, for the Defendant

8th August, 2013

1. HARTSHORN, J. The defendant Nowek Ltd applies for the order of this court dated 9th July to be set aside. That order was amongst others, that the plaintiff, Eastern Highlands Savings & Loans Society Ltd (In Liquidation) have vacant possession of the land and improvements known as allotment 4 section 83 Goroka (the property) and that it be granted leave to issue a Writ of Possession forthwith (vacant possession order). The defendant applies pursuant to Order 12 Rule 8 National Court Rules. The plaintiff opposes the application.

2. The vacant possession order was ordered by me following the hearing of the plaintiff's notice of motion filed on 4th April 2013. At the hearing, the defendant was not represented.

Background

3. The plaintiff commenced this proceeding seeking amongst others the vacant possession of the property, leave to issue a Writ of Possession, Mesne Profits and Damages. The plaintiff is a Savings and Loans Society in liquidation and is the registered proprietor of the property.

Contentions

4. The defendant contends that the vacant possession order should be set aside as:

a) the reason that the vacant possession order was made in the absence of representation of the defendant was that the lawyers' that it had engaged terminated their services and did not advise of the hearing date,

b) there is a current District Court proceeding in Goroka seeking the same relief as this proceeding and a ruling is pending,

c) it has a valid lease agreement with the Eastern Highlands Savings and Loans Society represented by its directors and those directors are challenging the liquidation of the plaintiff in a current review to the Supreme Court,

d) by its occupation of the premises, it is providing security for the property and the liquidator has never taken possession of the property.

5. The plaintiff contends that the vacant possession order should not be set aside as:

a) it is not an ex parte order as the defendant was served with a copy of the notice of motion and given notice of its hearing date, at its address for service,

b) the explanation for there not being any representation of the defendant at the hearing of the motion is not reasonable,

c) on the evidence filed or at all, the defendant does not have a defence on the merits,

d) the Goroka District Court proceeding referred to by the defendant has been determined by being struck out in August 2012,

e) in the Supreme Court review referred to by the defendant, an application for a stay of the National Court Orders, the subject of the review, was dismissed in April 2012,

f) the purported directors of Eastern Highlands Savings and Loans Society from whom the defendant alleges it leases the property were declared to be vexatious litigants by the Mount Hagen National Court in September 2011,

g) the defendant has been aware for some time that the plaintiff is in liquidation, that it owns the property, that the liquidator wishes to sell the property and that all persons occupying the property are required to vacate it.

Law

6. The defendant relies upon Order 12 Rule 8 National Court Rules but does not specify upon which part of Rule 8 it relies. As the vacant possession order was made in the absence of representation of the defendant, I will assume that the defendant is relying upon Order 12 Rule 8 (3) (a) as this Rule specifically concerns an order made in the absence of a party.

7. Order 12 Rule 8 (3) (a) is as follows:

"The Court may, on terms, set aside or vary an order-

(a) where the order has been made in the absence of a party, whether or not the absent party is in default of giving a notice of intention to defend or otherwise in default, and whether or not the absent party had notice of motion for the order; or..."

8. The principles governing the exercise of discretion as to whether an ex parte order, and in my view, an order made in the absence of a party, should be set aside are well settled and were detailed by Kapi DCJ (as he then was) in Smith v. Ruma Constructions Ltd (2002) SC695: see also Rangip v. Loko (2009) N3714 and National Development Bank Ltd v. Masket Iangalio (2012) N4931. The onus is on the applicant to satisfy the court:

a) why the order was allowed to be entered in the absence of the applicant,

b) if there is a delay in making the application to set aside, a reasonable explanation as to the delay, and

c) that there is a defence on the merits.

Discussion

9. The plaintiff has not submitted that there has been delay in making this application and as this application was filed 20 days after the vacant possession order was entered, I am of the view that there has not been any such delay.

10. As to why the vacant possession order was allowed to be made in the absence of representation on behalf of the defendant, Ms Lynn Asaha Shelley, the Managing Director of the defendant, deposes that the lawyers engaged by the defendant, terminated their services and did not advise Ms Shelley or the defendant of the motion hearing date.

11. The evidence of the service of the notice of motion that sought the vacant possession order and of the letter informing of the motion hearing date, which is uncontested, is that they were served on separate occasions on 6th May and 13th June 2013 at the service address of the defendant. According to the extract from the Registrar of Companies for the defendant, which is in evidence, that service address is located at the offices of George Kuno Accountants'. On both occasions that service was effected, there was an acknowledgement of service. The first was by George Kuno himself and the second was by Jessie Sauhuahombo, Accountant of George Kuno Accountants' office.

12. Consequently, one would have thought that George Kuno or one of his employees would have notified the officers of the defendant of the service of the copy of the notice of motion and the letter informing of the motion hearing date. In any event, I am satisfied from this evidence that the defendant was properly served with the notice of motion and the letter informing of the motion hearing date. Further as the service of the motion was together with the Originating Process and was the first service of this new proceeding, it would be effected upon the defendant and not the defendant's lawyer. In the absence of other evidence, the lawyers to whom Ms Shelley refers would not have known that the motion had been served and its hearing date until instructed to act for the defendant. Given this I am not satisfied with this explanation of Ms Shelley.

13. In addition, a notice of intention to defend was filed on 24th June 2013 by Warner Shand lawyers, 14 days before the hearing of the motion that sought the vacant possession order. For the notice of intention to defend to be filed, Warner Shand lawyers obviously must have been instructed. It seems highly unlikely that when they were instructed, they were not informed of the motion hearing date. If however they were not informed of the motion hearing date, then in my view it was incumbent upon them to ascertain the hearing date from either the court registry, or the lawyers for the plaintiff, or by conducting a search of the court file.

14. Given the above I am not satisfied that the defendant has given any reasonable explanation for the vacant possession order being made in the absence of representation on behalf of the defendant.

15. As to whether it has been shown that the defendant has a defence on the merits, the only reference to a possible defence is that the defendant has a valid lease. Ms Shelley however deposes that this lease is with the Eastern Highlands Savings and Loan Society which is represented by its directors. There is no copy of the purported lease in evidence.

16. Further, Ms Shelley deposes that the defendant, by occupying the property, is providing security there, and that the liquidator has not taken possession of the property.

17. In regard to the defendant having a valid lease, from the evidence that has been filed on behalf of the plaintiff, this court in Mount Hagen has recognised the liquidation of the plaintiff by the dismissal of proceedings WS 758/09. The current liquidator of the plaintiff, Mr. Andrew Pini, deposes amongst others, that no person or corporation holds a valid lease or licence to occupy the property, nor is there any mortgage of the property which could entitle a mortgagee to enter into possession of the property. Further, the defendant has been aware for some time of the liquidator's desire to sell the property and that all persons occupying the property must vacate it. Given this, the mere deposition of Ms Shelley as to a valid lease does not show a defence on the merits.

18. As to the defendant providing security for the property and the liquidator not taking possession of the property, this evidence of Ms Shelley does not indicate any entitlement of the defendant to occupy the property or form the basis of any defence on the merits.

19. As to there being current District Court proceedings in Goroka - Complaint no. 168/11 seeking similar relief as this proceeding - counsel for the plaintiff produced a copy of a Court Order evidencing that those proceedings were struck out in September 2012. Any argument that the defendant may have had that the continuation of this District Court proceedings somehow precluded the plaintiff from pursuing this proceeding has therefore been removed. In any event the mere existence of the District Court proceedings does not in some way constitute a defence on the merits.

20. Similarly, in the Supreme Court review of the Mount Hagen National Court decision, an application for a stay of the National Court decision was dismissed in April 2012. Again therefore, any argument that the defendant may have had that the pending Supreme Court review should prevent the plaintiff from pursuing this proceeding has been removed. Again, the mere existence of this review does not in some way constitute a defence on the merits.

21. As I have found that the explanation for the vacant possession order being made in the absence of representation on behalf of the defendant is not reasonable and that the defendant has not shown that it has a defence on the merits, the application by the defendant for the vacant possession order to be set aside should be refused.

Orders

22. The orders of this court are:

a) the order sought in the notice of motion of the defendant filed 29th July 2013 for the order of this court dated 9th July 2013 to be set aside is refused.

b) the defendant shall pay the plaintiff's costs of and incidental to the notice of motion referred to in a) above,

c) time is abridged.
_____________________________________________________________

O'Briens: Lawyers for the Plaintiff
Warner Shand Lawyers: Lawyers for the Defendant