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Kumul Construction Ltd v Digicel (PNG) Ltd [2019] PGNC 218; N7993 (13 September 2019)

N7993

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS No. 771 of 2018 (COMM)

BETWEEN:
KUMUL CONSTRUCTION LIMITED
Plaintiff

AND:
DIGICEL (PNG) LIMITED
Defendant

Waigani: Anis J
2019: 4 & 13 September

NOTICE OF MOTION – dismissal of proceeding - Order 9 Rule 15(1)(a), Order 10 Rule 5 and Order 10 Rule 9A(15)(2)(a) & (e) of the National Court Rules - whether the delay in filing the list of documents was inordinate - whether there was reasonable explanation provided for the delay - whether the plaintiff failed to set the matter down for trial within 6 weeks after close of pleadings - whether the Court should dismiss or summarily dismiss the proceeding - exercise of court’s discretion - other considerations such as pleadings, merits and prejudice considered

NOTICE OF MOTION – section 155(4) - Constitution - Order 12 Rule 1 - National Court Rules - request for leave for the Court to accept belatedly filed list of documents - whether delay was not inordinate - whether reasonable or valid reason given for the delay

PRACTICE AND PROCEDURE – correct mode of application by the plaintiff - whether correct mode should have been to seek extension of time to file list of documents out of time - Order 9 Rules 1 and 2(1) considered

Cases Cited:

Brian Joshia v. Stephen Raphael (2016) N7640
John Cybula v Nings Agencies Pty Limited [1978] PNGLR 166

Counsel:

Mr Charles Mende, for the Plaintiff
Mr J P Munull Jr, for the Defendant

RULING

13^th September, 2019

1. ANIS J: I dealt with two (2) applications, one by the defendant seeking to dismiss the proceeding and the other by the plaintiff seeking leave to regard its belatedly filed list of documents as duly filed, on 4 September 2019. I reserved my ruling thereafter to a date to be advised.

2. The parties have been notified so I will rule on it now.

BACKGROUND

3. I refer to the statement of claim. The plaintiff’s claim is this. It says that in October, 2016, it entered into an agreement (contract) with the defendant to construct a telecommunication tower (tower). It says the contract was worth K276, 647. It says the tower was erected at the designated location near Frieda River in East Sepik Province. It says upon completion of the tower in May of 2017, the defendant failed to pay its final invoice, that is, in relation to the construction and completion of the tower. The plaintiff is therefore suing the defendant for breach of contract.

4. The defendant on the other hand has filed a defence and cross-claim. It says that the plaintiff is not entitled to be paid the balance of the contract, that is, K193, 655. It denies that the plaintiff is entitled to anything further. It claims that it was the plaintiff that had breached the contract. It says the plaintiff had failed to complete the construction of the tower. It says because of that, it had to use its own resources to complete the tower after a delay of 7 months. It says that in doing so, it had incurred its own cost totaling K52,630. In its cross-claim, it seeks the said sum plus other relief.

APPLICATIONS

5. The defendant’s notice of motion was filed on 21 May 2019. The main relief it seeks is this, and I quote in part, the proceedings herein be dismissed pursuant to Order 9 Rule 15(1)(a), Order 10 Rule 5 and Order 10 Rule 9A(15)(2)(a) and (e) of the National Court Rules and this Honourable Court’s inherent jurisdiction to control proceedings before it.

6. The plaintiff’s notice of motion was filed on 18 July 2019. The main relief sought is this, and I quote in part, pursuant to Section 155(4) of the Constitution and Order 12, Rule 1 of the National Court Rules and pursuant to the inherent jurisdiction of the Court, leave be granted to the Plaintiff to its List of Documents filed on the 2^nd July 2019, to be accepted as duly filed for all purposes and in response to the Defendants Notice for Discovery filed on 28^th November 2018.

COMMON GROUND

7. The parties are at common ground that the plaintiff had delayed in filing its list of documents. Secondly, I note that the delay period was also not contested so I note that as well except perhaps the extent of the delayed period, which I will determine herein.

ISSUES

8. The main issues are as follows, (i), whether the plaintiff should have applied for extension of time to file its list of documents rather than to seek leave of the Court to allow its purported filed list of documents to be accepted as duly filed as it is sought in its application, (ii), whether the plaintiff has provided a reasonable explanation for the delay, and (iii), whether the Court should exercise its discretion and summarily dismiss the proceeding.

COMPETENCY ISSUE

9. Can the plaintiff apply in the manner as it has done under the circumstances of the case? The defendant argues otherwise under Order 10 Rule 9A(15)(e) of the National Court Rules. The said rule reads, and I quote in part, The Court may summarily dispose of a matter...... on any competency ground relating to non-compliance with the National Court Rules or any other relevant rules of Court. Stating that as the source of its application, the defendant submits that the correct approach should have been for the plaintiff to first of all apply for extension of time to file its list of documents out of time. The plaintiff, on the other hand, submits that its application is in order; that it could request the Court for leave to have regard to its already filed list of documents.

10. Let me refer to Order 12 Rule 1. The plaintiff relied upon this as one of the sources in its notice of motion. It reads, and I quote, The Court may, at any stage of any proceedings, on the application of any party, direct the entry of such judgment or make such order as the nature of the case requires, notwithstanding that the applicant does not make a claim for relief extending to that judgment or order in any originating process.

11. I note the submissions of the parties on point. These are my views and findings. Firstly, I find the source, Order 12 Rule 1 of the National Court Rules, relevant in this instance in that it invokes the National Court’s power to grant relief such as this that is being sought by the plaintiff in its application. Before arriving at this finding, I noticed that there is no provisions in the National Court Rules that expressly states that an applicant who has defaulted in giving discovery must first of all, apply for extension of time before he (include she or it) could file, for example, his list of documents or like in the present case. In practical terms and in a situation like this, it is therefore not unusual for a party to either request for leave to file his list of documents out of time, or to request the Court accept or regard his list of documents that had been filed well over 14 days, as duly filed. In this case, it is not disputed that the plaintiff had taken more than 14 days or that it had delayed in filing its list of documents. Given that fact and in my view, I do not find the selected approach taken by the plaintiff in this instance to be inappropriate or incompetent, namely, to apply to request the Court to regard its list of documents as duly filed. I have however made remarks on this towards the end of my decision, and would refer to that.

12. I therefore dismiss the defendant’s submission that the plaintiff’s application is incompetent or is baseless.

INORDINATE DELAY

13. The main issue relates to delay, that is, whether there was inordinate delay, and if so, whether the plaintiff has provided a reasonable explanation for it.

14. The defendant’s notice for discovery was filed on 21 May 2018. It was served on the plaintiff on 6 December 2018. Order 9 Rule 2(1) states, and I quote in part,....A party required under Rule 1 to give discovery shall....give discovery within such time, not being less than 14 days after service on him of the notice for discovery, as may be specified in the notice for discovery. The defendant claims that the 15 days period for the plaintiff to comply and file and serve its list of documents expired on 22 December 2018. Evidence filed shows that on 30 January 2019, the defendant wrote a letter to the plaintiff. In the letter, the defendant gave the plaintiff an additional 7 days period to file and serve its list of documents. The plaintiff did not file its list of documents within the extended period. The plaintiff filed its list of documents on 2 July 2019, that is, about 6 months after being served with the notice for discovery.

15. The plaintiff in this case is represented by counsel. I have considered its evidence filed in support of its application. Its reason for not filing its list of documents within the 15 days period as requested in the notice for discovery is this. It says that it had instructed its lawyers in December of 2018 not to take further steps because there were discussions for possible out of court settlement. This is also confirmed from evidence from its lawyers. Is that a valid reason, I ask myself? To me, I would answer to that in the negative. The proceeding was alive and the plaintiff was required to give discovery so that the matter could progress to trial. There was no consensus reached between the parties then that the parties should stop the proceeding to discuss possible out of court settlement. The plaintiff’s evidence and claim that there was such an understanding is limited only to its evidence but is not corroborated by the evidence of the defendant. And I note that the defendant denies that there was such an understanding in place at the material time. The defendant also submits that the negotiations that had been entered into with the plaintiff had been on a without prejudice basis. And I note that the defendant has produced evidence to support its claim in that regard.

16. When I consider all that, I must say that I am not satisfied that the plaintiff has proven its contention or alleged fact. I find that the plaintiff, on its own accord, had decided against taking active steps to progress the matter to trial or to comply with the notice for discovery. I find that there were out of court discussions for settlement, but I note that these had been conducted on a without prejudice basis. And let me also say this. The fact that the plaintiff had decided to instruct its lawyers against taking further steps to progress the matter in Court, was its own personal decision which it was entitled to do. But that cannot be regarded, in my view, as a valid excuse for not complying with the court process, and in this case, with the requirement to give discovery within the period requested by the defendant in its notice for discovery.

17. I find the delay herein to be inordinate. And I find that the plaintiff has not provided a valid or a reasonable explanation for the inordinate delay.

18. I note that the plaintiff has also in its defence, relied on one of the maxims of equity, namely, he who comes to equity must come with clean hands. The plaintiff’s reliance on the said maxim is based on this. It submits that the parties had been negotiating possible out of court settlement and that the defendant knew about that, but yet had gone ahead and filed this application to claim that the plaintiff has not taken any steps to progress the matter and has sought to dismiss the proceeding. It claims that the defendant has therefore acted in bad faith in that it has come to the Court without clean hands.

19. I find the maxim inapplicable herein. I say this in light of my earlier findings. I found that negotiations that were had in the past were done on a without prejudice basis; that there was no agreement or consensus in place between the parties to stop the proceeding pending these negotiations. As such, the defendants, in my view, were entitled to make the application.

OTHER CONSIDERATIONS

20. Before I consider exercising my power, I take note of the following. Firstly, I note that pleading in the matter has been completed. I note that the defendant has filed a cross-claim.

21. Secondly, I also note this. The pleadings shows that the defendant does not deny that work had been undertaken in relation to the construction of the tower. The defendant has admitted in its defence to paying the plaintiff a sum of K82, 995 as mobilization cost at the commencement of the contract. The real issue I note is not whether there existed a contract but rather its terms and whether the contract was duly performed and other related issues that would follow from that. I see merit in both the statement of claim and the defence and cross-claimed that are filed.

22. I also ask myself this question. Did the defendant suffer any real prejudice in relation to discovery by the belated filing of the plaintiff’s list of documents? In my opinion, I would answer “no” to the question. The list of documents has now been provided, and the defendant is at liberty to inspect them. And since the list has now been provided by the plaintiff, it would, in my view, be in the best interest of justice that the matter progress to trial rather than be summarily dismissed. May I also add that this Court does have the power to order discovery without dismissing the proceeding. See the case Brian Joshia v. Stephen Raphael (2016) N7640.

23. Let me, at this juncture, refer to the case, John Cybula v Nings Agencies Pty Limited [1978] PNGLR 166. At page 167, Mr. O’Regan noted that Pritchard, J quoting the authors in Odgers Principles of Pleading and Practice (20th ed 1971) said, and I quote:

“The Court is reluctant to exercise its power to strike out the defence and will only do so when a party has at least once disobeyed a peremptory order insisting that he make discovery within a specified time... “These are highly penal provisions and will only be enforced in the last resort, where it seems clear that the party in default really intends not to comply with an order of the court”.

24. I find these relevant and I adopt them herein. I note that these considerations can apply similarly in a situation where one seeks to strike out or to dismiss a statement of claim or the proceeding based on want of discovery.

25. I have to ask myself this. Should I simply dismiss this proceeding on the basis that the plaintiff has belatedly complied with a discovery request? Will justice be served if I dismiss the proceeding? Or will the dismissal of the plaintiff’s case be regarded as a very harsh form of punishment for the plaintiff? With respect, and taking into account the considerations stated above, I would answer in the negative to the first and second questions. And in relation to the third question, I would answer in the positive, and say that dismissing the plaintiff’s claim on the basis of want of compliance with discovery would be regarded as a very harsh or extreme form of punishment for the plaintiff.

WANT OF PROSECUTION

26. The defendant refers Order 10 Rule 5 of the National Court Rules as a basis of why it says that the proceeding should be dismissed. Rule 5 reads, and I quote, Where a plaintiff does not, within six weeks after the pleadings are closed, set the proceedings down for trial, the Court, on motion by any other party, may, on terms, dismiss the proceedings or make such other order as the Court thinks fit.

27. In this case, I note that although pleadings were completed, discovery did not end, and it is still an issue to this day. Order 10 Rule 5 is clearly not mandatory. It gives, in my view, the National Court a wider power to exercise. In preparations for trial, I note that discovery shall follow after pleadings are closed. That being the case, the wider discretion of the Court under Order 10 Rule 5, in my view, would take such considerations into account. For example, if no discovery is sought after pleadings are closed, then a plaintiff may be expected to set his matter down for trial, and failure to do so may attract an application under Order 10 Rule 5. However, if discovery proceeds after pleadings, then obviously regard must be had to that, and the Court’s consideration, in my view, cannot be restricted only to the requirement that the plaintiff should within 6 weeks after the close of pleadings, set the proceeding down for trial. The Court may have to take into account the period that had been spent in attendance to discovery or interrogatories. Questions therefore may arise as to whether Order 10 Rule 5 may be a relevant or an appropriate source to invoke in a case like this (i.e., where discovery has followed after pleadings have closed).

28. Having made these remarks, the real issue again in this case is whether the delay, which is not disputed, is inordinate and whether plaintiff has provided a reasonable explanation, which I note that have already deliberated upon above in my decision.

EXERCISE OF DISCRETION

29. Given the above, despite my findings that the delay was inordinate and that the plaintiff has failed to demonstrate a good reason for failing to comply within the time that was specified in the defendant’s notice for discovery, I find that to dismiss the entire proceeding based solely on want of compliance with a discovery request, would be unjust and also would be regarded as a very harsh form of punishment for the plaintiff. In coming to this conclusion, I have also taken into account considerations such as the readiness of the matter, its merit and prejudice. When I say prejudice, I of course mean whether the defendant had been prejudiced in any substantive way or manner by the delay in furnishing the plaintiff’s list of documents.

30. In conclusion, I have decided against exercising my discretion to dismiss the proceeding summarily for default in compliance with the notice of discovery or for want of prosecution.

COST

31. Cost ward is discretionary. I will exercise my discretion and award cost in favour of the defendant. Firstly, I note that I have found delay and want of a good explanation for the delay against the plaintiff in terms of complying with the notice for discovery. Secondly, I note that it was because of the plaintiff’s belated action in filing its list of documents that had caused the defendant to make its application before this Court.

32. I will therefore award costs for both applications in favour of the defendant on a party/party basis to be taxed if not agreed.

REMARKS

33. Let me make the following remarks. In a situation such as this where a party belatedly files its list of documents, it cannot, in my view, be regarded as a default within the strict meaning of Order 9 Rule 2(1). The said rule does not expressly provide a cut-off period within which one is required to give discovery. It rather only provides a minimum mandatory period, namely, 14 days whereby within the said 14 days after service of the notice for discovery, the party that is requesting discovery shall not insist discovery upon the party that is required to give discovery. In other words, the rule provides a fixed period for one not insist discovery upon another, but on the same token, it does not provide a fixed period for one to furnish his list of documents to the other.

34. The notice for discovery form, namely, Form 30, states, and I quote in part, The plaintiff requires you to give discovery of documents with (without) verification within (15) days after service of this notice on you. I note that the period of 15 days appears to be (or merely used as) an inference that is drawn based upon the wording of Order 9 Rule 2(1) of the National Court Rules.

ORDERS OF THE COURT

35. I make the following orders

1. The defendant’s notice of motion filed on 21 May 2019 is refused in principal.

2. The plaintiff’s notice of motion filed on 18 July 2019 is granted in principal.

3. Leave is granted to and the Plaintiff’s List of Documents filed on 2 July 2019 shall be accepted as duly filed for all purposes and in response to the Defendant’s Notice for Discovery filed on 28^th November 2018.

4. Cost of both motions is awarded against the plaintiff in favour of the defendant on a party/party basis which may be taxed if not agreed.

5. Time for entry of these orders is abridged to the time of settlement by the Deputy Registrar of the National Court which shall take place forthwith.

________________________________________________________________
Wantok Legal Group: Lawyers for the Plaintiff

John Peter Munnull Lawyers: Lawyers for the Defendant