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KA Properties (PNG) Ltd v Simatab [2017] PGNC 373; N7070 (17 May 2017)

N7070

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS 1173 of 2016

BETWEEN:
KA PROPERTIES (PNG) LIMITED
Plaintiff

AND:
HON. JIM SIMATAB,
Minister for Papua New Guinea
Correctional Services
First Defendant

AND:

MICHAEL WAIPO,
Commissioner of PNG Correctional
Services and Delegate of the Minister
for PNG Correctional Services
Second Defendant

AND:
THE INDEPENDENT STATE
OF PAPUA NEW GUINEA
Third Defendant

Waigani: Hartshorn J
2017: 15^th &17^th May

Application to file a defence out of time

Cases Cited:
Papua New Guinea Cases

Albright Ltd v. Mekeo Hinterland Holdings Ltd (2013) N5774
Green & Co Pty Ltd (Receiver Appointed) v. Roger Britain Green [1976] PNGLR 73
Independent Public Business Corporation v. Motor Vehicles Insurance Limited (2017) N6664
Lorma Construction Limited v. State (2012) N4636
Totamu v. Small Business Development Corporation (2009) N3702
Workers Mutual Insurance (PNG) Ltd (in Liq) v. Sathasivan Sivakumaran (2012) N4637

Overseas Cases

Evans v. Bartlam [1937] AC 473; 2 All ER 646
Gardner v. Jay (1885) 29 Ch 50

Counsel:

Mr. P. Lowing and Ms. E. Parua, for the Plaintiff
Ms. A. Nasu, for the Defendants

Oral decision delivered on

17^th May, 2017

1. HARTSHORN J: This is a decision on a contested application for the filing of a defence out of time. It is made by the three State defendants pursuant to s. 9(a)(i) Claims By and Against the State Act (Claims Act).
   

Background

2. The plaintiff KA Properties (PNG) Limited (KAPL) pleads amongst others, that it is the registered proprietor of a property described as Allotment 1 Section 427 Hohola, State Lease Volume 76 Folio 200 (property), that it has assumed all of the debts and liabilities associated with the property from the two previous registered proprietors, Zen No. 33 Limited and Kramer Ausenco (PNG) Limited, and that subject to a previous payment made by the Papua New Guinea Correctional Services (PNGCS) being treated as rent, PNGCS owes in rental over K6 million to KAPL. KAPL also seeks amongst others vacant possession of the property.
   

This application

3. The State defendants contend that they should be granted leave to file their defences out of time as they each have a defence on the merits. In essence it is that the State purchased the property from Zen No. 33 Ltd for K4,750,000 and that payments in excess of K5.7 million have been made to Zen No. 33 Ltd. Further as PNGCS is not a tenant as the State owns the property, it does not owe the rental sought.
   
4. Submissions from the bar table were made as to why defences were not filed in time, but there is no evidence as of this.

5. KAPL contends that the application to file a defence out of time should be refused as:
   
   1. The notice of motion is incompetent as it does not specify a correct and concise reference to the court’s jurisdiction as is required by Order 4 Rule 49(8) National Court Rules;
      
   2. The delay is significant, almost six months since the date for the filing of the notice of intention to defend, the State was aware of the matter/dispute a significant length of time before then, and there is no reasonable explanation given for the delay;
      
   100. The defendants do not have a defence on the merits;
        
   4. It would not be in the interests of justice.
      

Competency

6. As to the notice of motion being incompetent for lack of form, if I understand correctly, the submission is that the relevant National Court Rule should have been cited. In this instance however, as the defendants are State defendants and this claim is against the State, it is the Claims Act that provides the time, and such other time as the court may allow, by which a defence should be filed. This is provided for under s. 9 Claims Act, and not the National Court Rules. Consequently, this submission fails. I refer to my decision of Lorma Construction Limited v. State (2012) N4636 in this regard. I am satisfied that the notice of motion is not incompetent.
   

Law

7. I reproduce that part of my decision in Workers Mutual Insurance (PNG) Ltd (in Liq) v. Sathasivan Sivakumaran (2012) N4637 that considered the relevant principles concerning an application to file a defence out of time:
   

“In the case of Duma v. Hriehwazi (2004) N2526, Kandakasi J. stated that the principles applicable to an application to set aside a default judgment with appropriate modification should apply to an application for leave to file and serve a defence out of time. In the case of Tipaiza v.Yali (2006) N2971, Cannings J, agreed that the factors to be taken into account on an application for an extension of time were: the extent of the delay, the reasons for the delay and does the defendant appear to have a good defence? To those factors he added one further; where do the interests of justice lie? I also make reference to the case of Green & Co. Pty Ltd (Receiver Appointed) v. Roger Britain Green [1976] PNGLR 73. That case involved an application to set aside a default judgment regularly entered. It was held that on such an application, the principal matter that must be shown by the application is that he has a defence on the merits. That statement of the law, in my view, is equally applicable to an application seeking an extension of the time in which a defendant may file its defence.”

Consideration

8. As the principal matter that must be shown on an application such as this is that the applicant has a defence on the merits, I will consider this issue first.
   
9. As to a defence on the merits, the Supreme Court in Leo Duque v. Avia Andrew Paru [1997] PNGLR 378 said:
   

“It is clear to us from the authorities we have set out earlier in our judgment and subsequent cases in this jurisdiction that as a matter of practice, an applicant must in an affidavit state material facts showing a defence on the merits.”

10. In this instance, Michael Waipo, the second defendant and the Commissioner for PNGCS deposes as to the occupation of the property by the PNGCS, the purported purchase of the property by the State, the payments made, the sale agreement and a further purported agreement, and a further payment made to Zen No.33 Ltd. Mr. Waipo further deposes that despite Zen No. 33 Ltd receiving payments of over K5.7 million, it did not transfer the property to the State and transferred it to KAPL. Mr. Waipo also annexes a detailed draft defence to his affidavit.
    
11. Counsel for KAPL referred to the Supreme Court case of Peter Pena v J’s Motors Ltd (2006) SC961, which stated amongst others, that to show a defence on the merits, a proposed draft defence is not sufficient. The applicant must condescend upon particulars and statements of material fact should be made which support the pleadings. They must be sufficient to satisfy the court that the applicant has a prima facie defence and that it is reasonable that the defence should be allowed to be raised.
    
12. I am satisfied that Mr. Waipo, a party to the proceeding and the Commissioner of the PNGCS has stated material facts that show a possible defence on the merits.
    
13. As to the submissions of KAPL that the defence raised is not likely to succeed because of amongst others, admissions that payments were late, the transfer of the property to the State did not occur and that KAPL has an indefensible title, I am mindful that these are matters more properly to be considered at a substantive hearing. Further, it is apparent that KAPL may be a related or associated company to Zen No.33 Ltd, the company from which, the State alleges, it purchased the property.
    
14. I am satisfied that it is reasonable that the defence should be allowed to be raised.
    
15. As to the delay in filing a notice of intention to defend and in not filing a defence, I note that there is no evidence as to any reasonable explanation. However, in my view a delay of three months in filing a defence is not inordinate.
    
16. As to the exercise of this court’s discretion, as I did in Albright Ltd v. Mekeo Hinterland Holdings Ltd (2013) N5774 and in Independent Public Business Corporation v. Motor Vehicles Insurance Limited (2017) N6664, I make reference to the House of Lord’s decision of Evans v. Bartlam [1937] AC 473; 2 All ER 646 referred to in Green & Co Pty Ltd (Receiver Appointed) v. Roger Britain Green [1976] PNGLR 73 and recently referred to in the decision of David J in Totamu v. Small Business Development Corporation (2009) N3702.
    
17. In Evans v. Bartlam (supra), Lord Wright at 488 quoted with approval the following statement of Bowen, LJ in Gardner v. Jay (1885) 29 Ch 50, at 59:
    

“When a tribunal is invested by Act of Parliament or by Rules with a discretion, without any indication in the Act or Rules of the grounds upon which the discretion is to be exercised, it is a mistake to lay down any rules with a view of indicating the particular grooves in which the discretion should run, for if the Act or the Rules did not fetter the discretion of the Judge why should the Court do so?”

18. Taking that statement into account and in the circumstances, that a defence on the merits has been disclosed, no real prejudice has been caused to KAPL and the delay in filing a defence is not inordinate, I am satisfied that the court should exercise its discretion and permit the State defendants to file their defences out of time. As they have not provided proper explanations for the delay in not filing a defence in time and as to why there was delay in filing this application, KAPL is entitled to its costs. Given the above, it is not necessary to consider the other submissions of counsel.
    

Orders

19. The formal Orders of the Court are:
    

a) The defendants’ are granted leave to file their defences out of time and any such defences should be filed and served by close of business on 31^st May 2017;

b) The plaintiff’s costs of and incidental to the notice of motion of the defendants filed 9^th May 2017 are to be paid by the defendants;

c) Time is abridged.

______________________________________________________________
Leahy Lewin Lowing Sullivan: Lawyers for the Plaintiff
Office of the Solicitor General: Lawyers for the Defendants