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White Corner Investments Ltd (trading as Glazeworks Glass & Aluminium) v Noka Builders Ltd [2020] PGNC 121; N8316 (13 May 2020)

N8316

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS NO. 1594 OF 2014

BETWEEN:
WHITE CORNER INVESTMENTS LIMITED t/a GLAZEWORKS GLASS & Aluminium
Plaintiff

AND:
NOKA BUILDERS LTD
Defendant

Lae: Dowa AJ
2020:18^th March &13^th May

PRACTICE AND PROCEDURE – application by defendant to set aside orders of court granting plaintiff judgment ex parte – defendant shows no reasonable explanation for delay in filing defence – defendant failed to file list of documents despite court granting Defendant extension of seven (7) days to file and serve- applicant is required to show a reasonable explanation why judgment/order was allowed to be entered by default - no reasonable explanation offered to set aside an order regularly entered – defendant’s application to set aside orders refused - Order 9 Rule 15 (1)(b) of the National Court Rules

Cases Cited:

Credit Corporation Ltd v Lee (1988 -1989) PNGLR 11
Green & Co. Ltd v Green (1976) PNGLR 73
Keran v Warun N1266" title="View LawCiteRecord" class="autolink_findcases">(1994) PNGLR N1266
Leo Duque v Avia Andrew Paru (1997) PNGLR 378
Niugini Mining v Bumbandy (2005) SC 804

Counsel:

L. Vava, for the Plaintiff
J. Unido, for the Defendant

RULING

13^th May, 2020

1. DOWA AJ: This is a ruling on an application by the Defendant. The Defendant applied by Notice of Motion to set aside Orders of this Court given 23^rd June 2017.

2. On 23^rd June 2017, the Court made the following orders:

“1. The Defence filed 23/02/2015 is struck out and judgment in the sum of K146,249.76 is entered against the Defendant with 8% interest per annum from date of filing of Writ of Summons to today.

2. Defendant shall pay the Plaintiff’s costs of the application to be taxed if not agreed.”
   
3. The orders were made ex parte, as there was no attendance by the Defendant nor its lawyers. The Defendants are now applying to Court to set aside those orders and give further directions for the conduct of proceedings.
   

Background Facts

4. The Plaintiff is a company. It has instituted proceedings against the defendant for outstanding invoices for building materials supplied to the Defendant for a total value of K146,249.76. On 23^rd February 2015, the Defendant filed a Defence, and a cross-claim for K12,000.00. On 26^th June 2012, the Plaintiff filed and served a Notice of Discovery. The Defendants did not file a list of documents. On 22^nd April 2016 the Plaintiff filed a Notice of Motion seeking to strike out the Defendants Defence and requested entry of judgment for the Plaintiff.

5. On 20^th May 2016 the Plaintiff’s motion was heard, and the court granted the Defendant an extension of seven (7) days to file and serve a list of documents. Again the Defendant did not file the list of documents within the extended time, or at all.

6. On 23^rd November 2016, the Plaintiff filed a fresh Notice of Motion seeking Orders that the Defendants Defence be struck out and judgment be entered for the Plaintiff. The motion was fixed for hearing on 23^rd June 2017. On 23^rd June 2017 the Plaintiffs Notice of Motion was heard, and Orders sought were granted, striking out the Defence and judgment was entered for the Plaintiff in the sum of K146, 249.76. On 10^thJuly 2017, orders of 23^rd June 2017 were served on the Defendant.

Defendants Notice of Motion

7. By Notice of Motion filed 17^th December 2019, the Defendant seeks the following Orders:

“1. Requirement of service and notice be dispensed with pursuant to Order 4, rule 38 2 (d) of the National Court Rules.

2. The Writ of Levy of Property filed on the 22^nd October be stayed pursuant to order 13, rule 21 of the National Court Rules.
   
3. The Ex parte order made on the 23^rd June 2017 be set aside pursuant to order 12, rule 8(a) of the National Court Rules.
   
4. Leave granted to the Defendant for an Extension of the Orders granted by consent on the 20^thMay 2016 to file the List of Documents pursuant to order 1, rules 1591) of the National Court Rules.
   
5. Costs be in the cause.
   
6. Such further orders as this Honourable Court sees fit.”
   

8. In support of the Notice of Motion the Defendant relied on the following Affidavits:

(a) Affidavit of Betty Kondowa sworn 5/12/19 filed 17/12/19.

(b) Affidavit of John Unido sworn 10/12/19 and filed 17/12/19.

(c) Affidavit of David Poka sworn 10/12/19 and filed 17/12/19.

Issue

9. Whether or not the Court should set aside the Orders of 23 June 2017.

Law

10. The application is made pursuant to Order 12 Rule 8 of the National Court Rules. Order 12 Rule 8 provides.

“Setting aside or varying judgement or order. (40/9)

(1) The Court may, on terms, set aside or vary a direction for entry of judgement where notice of motion for the setting aside or variation is filed before entry for the judgement.

(2) The Court may, on terms, set aside or vary a judgement-

• (a) Where the judgement has been entered pursuant to order 12 Division 3 (default judgement); or
  
• (b) Where the judgement has been entered pursuant to a direction given in the absence of a party, whether or not the absent party had notice of trial or of any motion for the direction; or
  
• (c) When the judgement has been entered in proceedings for possession of land pursuant to a direction given in the absence of a person and the Court decides to make an order that the person be added as a defendant.
  

(3) 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 or the order; or
  
• (b) Where notice of motion for the setting aside or variation is filed before entry of the order.
  

(4) In addition to its powers under Sub-rules (1), (2) and (3), the Court may, on terms, set aside or vary any order (whether or not part of a judgement) except so far as the order determines any claim for relief or determines any question (whether of fact or law or both) arising on any claim for relief and excepting an order for dismissal of proceedings or for dismissal of proceedings so far as concerns the whole or any part of any claim for relief.

(5) This Rule does not affect any other power of the Court to set aside or vary a judgement or order.”

Settled Principles

11. The law and principles relating to the setting aside an order for default is settled in this jurisdiction in the case of Keran v Warun (1994) PNGLR 130 and Credit Corporation Ltd v Lee (1988-1989) PNGLR 11. An Applicant is required to show a reasonable explanation why judgment/order was allowed to be entered by default.

The Defendant/Applicants Case

12. Betty Kondowa, the Administration Officer of the Defendant company, said they engaged Mr Emmanuel Mambei of Solwai Lawyers in 2015. He was the Lawyer on record when the motion was filed and heard. Neither his lawyer nor the lawyers for the Plaintiff advised the Defendant of the hearing date of 23^rd June 2017. Therefore, the defendant made no appearance on 23^rd June 2017.

13. She deposed to in paragraph 8 of her affidavit filed 17^th December 2019, that; when Police and Mr Vava, lawyer for the Plaintiff served them the orders of 23^rd June 2017, she confronted them. She told them that Mr Mambei was away for the 2017 National Elections, and that they should have informed them of the hearing date. Immediately thereafter, the defendant engaged Niugini Lawyers.

14. Mr David Poka, principal of Niugini lawyers deposed to in his affidavit that they were instructed by the Defendant on 26^th October 2017. On 6^th November 2017, Niugini Lawyers filed Notice of Appearance on behalf of the Defendant.

15. On 9^th November 2017, their firm wrote to the Registry of the National Court for a file search. Mr Poka said between November 2017, and April 2018, they sent several emails to the Court Registry and did a file search thereafter. On or around 19^th April 2018, their firm was served copies of the Orders of 23^rd June 2017. Mr Poka deposed that at the beginning of 2019, they obtained copies of all the Court documents from the National Court Registry. In or around May 2019, Mr Poka instructed Mr John Unido, who joined them as lawyer to take carriage of the matter.

16. Mr John Unido deposed to in his affidavit his involvement commencing 22^nd May 2019. Mr John Unido basically gives a summary of his search at the National Court Registry. He did a detailed summary of all the Court documents filed in Court starting from the Writ of Summons, Document No.1 to the plaintiff’s Notice of Motion, document No.26.

17. Except for Betty Kondowa’s Affidavit, both the Affidavits of Mr Poka and Mr Unido do not provide any explanation or reason for allowing the order to go by default. Their evidence/facts deposed to are irrelevant. This is understandable. They came to the scene later.

Decision of 23^rd June 2017

18. Her honour Murray J, was satisfied with due service when the matter was heard on 23^rd June 2017. I also consider her Honour was satisfied that there was no reasonable explanation for default, because by that time, the Defendant had still not filed and served a list of Documents. The Defendant did not file any affidavit explaining the reason for default too.

19. The only person who could provide an explanation for not turning up to Court on 23^rd June 2017, would be Solwai Lawyers. They were the lawyers on record, at the material time. They were the lawyers who were aware of the Court proceedings. They would be in a position also to advise the Court, why the list of Documents was not filed.

20. Ms Betty Kondowa said Mr Mambei was not available because he went for 2017 National Elections, and that Mr Vava was aware of that. Mr Vava filed an affidavit denying that. Mr Vava said he had no communication from Mr Mambei of his unavailability in Court due to the 2017 National Elections.

21. I find, it is a matter of personal arrangement between the Defendant and its lawyers. The Defendant’s lawyers have to explain why they did not file a list of documents. They also have to explain why they did not turn up in Court on 23^rd June 2017. A lawyer’s absence cannot amount to a reasonable explanation for purposes of setting aside an order entered on default.

22. The Supreme Court in Leo Duque v Avia Andrew Paru, (1997) PNGLR 378 said this at page 381:

“We consider that where a person chooses to instruct a lawyer to act on his behalf, he does so on the basis that the lawyer will be responsible for looking after his interests. If a lawyer allows a judgment to be entered then he must give a reasonable explanation. It cannot simply be ignored.

A lawyer may be able to give a reasonable explanation for allowing judgment to be entered in default.”

23. In the present case, no explanation has been given. For these reasons, I find there is no reasonable explanation offered to set aside an order regularly entered under Order 9 Rule 15 (1)(b) of the National Court Rules. I would refuse the application.

24. I am also of the view, there was undue delay in the filing of the application. The orders were made on 23^rd June 2017. The Defendant was served the orders on 10^th July 2017. The application was filed on 17^th December 2019, on the eve of Court holidays. That is a period of 2 ½ years. The Defendant did not run to Court.

25. The current lawyers were instructed early November 2017. That is more than 2 years. They filed the application only on 17^th December 2019. There is no reasonable explanation for the delay in filing this application. For this reason, I would also refuse the application.

26. Mr Unido of Counsel for the Defendant /Applicant raised the issue of the Cross-Claim. The Cross-Claim was part of the Defence. I agree with Mr Vava, of Counsel for the Plaintiff, that the Cross-Claim is not affected. Under Order 8 Rule 47 of the National Court Rules, the Defendant is at liberty to prosecute the Cross-claim.

27. Mr Unido of Counsel for the Defendant also submitted the Defendant has a defence on the merits, and in the interest of Justice, the orders be set aside. Counsel referred to the case of Green & Co. v Green (1976) PNGLR 73 in support of his assertion.

Mr Vava submitted that the requirements of showing defence on the merits in a typical application to set aside default judgment does not apply. Counsel relied on the case of Keran v Warun & Country Motors (1994) PNGLR 130.

28. I am inclined to agree with counsel for the Plaintiff. The requirements and principles of showing a defence on the merits does not apply. The orders were made under Order 9 Rules 15 of the National Court Rules. The Defendant defaulted in complying with the Rules. The defendant failed to file a list of documents, even during the extended period. The Court is given the discretion by the Rules of Court to make all such orders in the nature made in this case. The Court is empowered by the Rules and other legislation to enforce the National Court Rules to do justice in the circumstances of each case.

29. I am mindful of the decision of the Supreme Court in Niugini Mining v Bumbandy (2005) SC 804 where the Court held that the Rules of Court are not intended as an end in themselves but a means to achieving a just resolution of the dispute between parties. That is, the court has to be flexible in the application of the rules to serve interest of justice. And in this case, the Defendant was given a further seven (7) days by the Court on 20^th May 2016 to comply with the Rules by filing a list of Documents. The Court was flexible in the exercise of its discretion. The defendant, again, did not do anything even after more than 12 months. This resulted in the second application for default being filed.

Conclusion

30. For reasons and findings I made in my judgment, I conclude that the Defendant did not provide a reasonable explanation for default in not filing its list of Documents which resulted in the ex parte Order. The Defendant did not provide any reasonable explanation for failing to turn up in Court on 23^rd June 2017. The Defendant lawyer’s failure to turn up in Court, and his default in complying with orders of Court is not a reasonable explanation available to the Defendant/Applicant. Further the Defendant failed to bring the current application within a reasonable time. The Defendant failed to provide a reasonable explanation for the delay in bringing its application.

31. For reasons given above, the Defendant’s application is refused, with cost to the Plaintiff.

Orders

32. The formal orders of the Court are:
    
    1. The Defendant’s Notice of Motion filed 17^th December 2017 is dismissed.
    2. The Defendant pay the costs of the application.
    3. Time be abridged.

________________________________________________________________
Vava Lawyers : Lawyers for the Plaintiff
Niugini Lawyers : Lawyers for the Defendant