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Monave v Nauga [2022] PGNC 417; N9964 (21 September 2022)

N9964

PAPUA NEW GUINEA
[IN THE NATIONAL COURTOF JUSTICE]

WS (HR) NO. 29 OF 2017

BETWEEN:
ALBERT SALEPA MONAVE
Plaintiff

AND:
PHILIP NAUGA AS AUDITOR GENERAL
First Defendant

AND:
THE INDEPENDENT STATE OF PAPUA NEW GUINEA
Second Defendant

Waigani: Narokobi J
2020: 16^th July
2022: 21^st September

PRACTICE AND PROCEDURE – Application to Set Aside Default Judgment – National Court Rules, Order 12, Rule 8(2)(a), Order 12, Rule 35-Whether default judgment should be set aside.

The First Defendant sought to set aside a default judgment entered on 19 May 2020 pursuant to Order 12 Rule 8(2)(a) and Order 12 Rule 35 of the National Court Rules. If that application succeeds, then they move the court to dismiss the proceedings. In the alternative they seek extension of time to file defence out of time.

Held:

1. The principles for setting aside default judgments regularly entered are as follows:
   

(1) Why the judgment was allowed to be entered in absence of the applicant.

(2) If there is a delay in making the application to set aside, a reasonable explanation as to the delay.

(3) That there is a defence on the merits.

(4) What is the prejudice to the other party.

(5) Where does the interest of justice lie?

2. In the circumstances of this case, much weight should be given to the fact that the delay was inexcusable, the Plaintiff stands to suffer the most if the matter prolongs and there is no defence on the merits. The order for damages should, however, be set aside in the interests of justice considering the history of the proceedings.
   

Cases Cited:

Albright Ltd v Mekeo Hinterland Holdings Ltd (2014) SC1400
Arman Larmer Surveys Ltd v Chan Consolidated Ltd (2014) SC1609
Green & Co. v Green [1976] PNGLR 73
Holland v The State (2015) N6116
Kagle v Pitpit, Public Solicitor (2021) N9470
Monave v Nauga (2017) N8319
Polem Enterprise v Attorney General (2008) SC911
Reference by the Public Solicitor Pursuant to Constitution, Section 19(1), In re [2019] PGSC 93; SC1871
Tipaiza v Yali [2005] PNGLR 623

Statutes Cited:

Claims By and Against the State Act 1996

Counsel:

Mr J Napu, for the Plaintiff
Mr T Tanuvasa, Mr J Bakaman and Ms V Bale, for the Defendants

RULING ON NOTICE OF MOTION

21^st September, 2022

3. NAROKOBI, J: This matter was argued before his Honour late Justice Tamate on 16 July 2020. Upon his Honour’s demise, I assumed carriage of the file after parties have agreed for me to deliver the decision after hearing the transcripts and considering the affidavits and submissions. This is therefore my ruling on the application.
   
4. The First Defendant through the Office of the Solicitor-General filed a Notice of Motion on 6 July 2020 seeking to set aside a default judgment entered on 19 May 2020 pursuant to Order 12 Rule 8(2)(a) and Order 12 Rule 35 of the National Court Rules. If that application succeeds, then they move the court to dismiss the proceedings. In the alternative they seek extension of time to file defence out of time. Initially Ashurst Lawyers ceased acting for the First Defendant and the matter reverted to the office of the Solicitor-General.
   
5. I will deal with the application to set aside first. If that application succeeds, then I will consider the second and third leg of the application in the Notice of Motion. If the application fails, then the orders made by the court on 19 May 2020 remains and the Defendants are required to comply with them.
   
6. The orders that were made on 26 May 2020 were as follows:
   
   1. Pursuant to Order 12 Rule 25(b) of the National Court Rules default judgment is hereby entered against the defendants.
   2. Damages to be assessed at a separate trial.
   3. Consequential to the entry of default judgment the Plaintiff shall be re-instated to his substantive position forthwith without loss of salaries and entitlements for the period backdated to the date of his termination to the date of his reinstatement per the decision of the Public Service Commission dated 22 April 2014.
   4. Costs in favour of the Plaintiff.
   5. Time for entry of this order is abridged to the date of settlement by the Registrar which shall take place forthwith.
      
7. The issue that is before me is whether the orders made on 26 May 2020 should be set aside?
   
8. The first point I have to determine in this exercise is whether the default judgement was obtained regularly, or it was not. Irregularly obtained default judgments are set aside as a matter of course unless they should not be set aside for some extenuating reasons. Such judgements are obtained without following proper procedures. Gavara-Nanu J in Kagl v Pitpit, Public Solicitor (2021) N9470 held that the following are some examples of a default judgement entered irregularly:
   

“Such irregularity, as noted by his Honour may arise from abuse of court processes, bad pleadings, failure to establish a reasonable cause of action resulting from lack of s. 5 notice, statute-bar under s. 16 of Frauds and Limitation Act, 1988, issues being res judicata, issue estoppel and so on. I respectfully agree with his Honour’s observations. In such situations, the court would in essence be enforcing the right of the aggrieved party to have the default judgment set aside. The aggrieved party would have the onus to prove the irregularity to invoke the power of the court to set aside the default judgment by seeking such remedy. See, Motor Vehicles Insurance Ltd v. Nominees Niugini Ltd (2015) SC1435; Paul Marinda v. The State (1991) N1026; John Bokin v. The Independent State of Paua New Guinea (2001) N2111 and Kerenga Kaupa v. The Independent State of Papua New Guinea (2011) N2491.”

9. The default judgement entered here does not appear to fall in the category of being irregularly entered. It was entered inter partes, and no substantial issue of procedural irregularity was raised, and it is not a fraudulent claim as such. Furthermore, the matter was argued inter-partes and was therefore regularly entered.
   
10. The Defendants relies on the case of Green & Co. v Green [1976] PNGLR 73 to persuade the court that it has met the requirements for the default judgment to be set aside. They also rely on the case of Albright Ltd v Mekeo Hinterland Holdings Ltd (2014) SC1400 to argue that a default judgement regularly entered may be set aside. In that case the Supreme Court held that the court has jurisdiction to set aside default judgments even where it is regularly entered. That was a case default judgment was entered after inter partes argument. It was later set aside as the amount of money claimed was exorbitant. The appeal was unsuccessful, with the Supreme Court of the firm view that the National Court had jurisdiction to set aside a regularly entered default judgment. As it is a Supreme Court decision, I am bound by it, so that by the strength of that authority, I am conferred jurisdiction to set aside a default judgment regularly entered, even where it was argued inter partes.
    
11. This would mean that the Plaintiff’s contention that the court is functus officio would have to be rejected. In my view, the Plaintiff has mounted a strong case that the principle of finality of cases requires that decision must be finalised and should not be reagitated. However, the Supreme Court has taken the contrary view. The Plaintiff relied also on the case of Christopher Smith v Ruma Constructions Ltd (2002) SC695, but that case applied the principles of Green v Green [1976] PNGLR 73 on setting aside default judgements, so I do not think it supports the proposition advanced by the Plaintiff.
    
12. What is left for me now is to see whether the principles enumerated in the various case authorities on setting aside default judgment have been met by the Defendants, for default judgment to be set aside.
    
13. The first point to note about the setting aside of default judgment is that it is discretionary, in fact the Supreme Court said it was unfettered discretion. This was confirmed by the Supreme Court in Arman Larmer Surveys Ltd v Chan Consolidated Ltd (2014) SC1609.
    
14. The second point to note is that the National Court may set aside a default judgment, “...on terms...” (Order 12, Rule 8(2), National Court Rules). I take that to mean that conditions may be imposed or additional orders, as may seem just may be imposed when setting aside the default judgment.
    
15. The principles for setting aside default judgments regularly entered are as follows:
    

(1) Why the judgment was allowed to be entered in absence of the applicant.

(2) If there is a delay in making the application to set aside, a reasonable explanation as to the delay.

(3) That there is a defence on the merits.

(4) What is the prejudice to the other party.

(5) Where does the interest of justice lie?

16. The first three considerations were enumerated in Green & Co. v Green. The fourth consideration was established with some certainty in Arman Larmer Surveys Ltd v Chan Consolidated Ltd (2014) SC1609. The fifth consideration was proposed by Cannings J in Tipaiza v Yali [2005] PNGLR 623.
    
17. I have heard the submissions on both parties on each of these requirements through their submissions and the affidavit materials tendered. I now turn to each of the considerations.
    
18. Why was the default allowed to run? The Defendants say that this was because the Plaintiff had filed multiple proceedings, and this confused them. I am not satisfied that this is a reasonable explanation. I say this for two reasons. Firstly, it filed its Notice of Intention to Defend in time. The State was therefore aware of these proceedings. Furthermore, Tamate J’s decision in Monave v Nauga (2017) N8319 found that s 5 Notice under the Claims By and Against the State Act 1996 was duly served and was not an issue. I am disinclined to revisit this issue. This gave additional notice to the Defendants to prepare for the claim against the State. Thirdly Mr Monei of counsel for the State appeared and made submissions in response to the default judgment application stating that the statement of claim did not disclose a reasonable cause of action. The court considered this in detail and decided that there was a cause of action. Taking all these factors into account, I find that the explanation provided for the delay is inadequate.
    
19. On the second consideration, the application to set aside was filed by the defendants on 6 July 2020, that is some two months after the default judgment was entered on 19 May 2020. Two months is not inordinate delay, it is a prompt application. I therefore determine this consideration in favour of the Defendants.
    
20. The third and perhaps the most important consideration is whether there is a defence on the merits. For this consideration, the main contention by the Defendants is that the office of the Auditor-General is an independent constitutional office, and not subject to the jurisdiction of the Public Service Commission (PSC). The State relies on the case of Reference by the Public Solicitor Pursuant to Constitution, Section 19(1), In re (2019) SC1871 as supporting this position. Additionally, the State submits that the default judgment had made a substantive order in an interlocutory application. On the jurisdictional limitation of the PSC against the Auditor-General’s office, I find that the Supreme Court decision was made on 13 November 2019 and the PSC decision was made on 22 April 2014. The Supreme Court’s decision cannot have retrospective application, see Polem Enterprise v Attorney General (2008) SC911. The second leg of the Defendant’s contention is its strongest. However, when one considers that what the National Court was doing was simply recognising the decision of the PSC, which is a matter of public record, and secondly is legally binding after 30 days as per s 18 of the Public Service Management Act 1995, His Honour Tamate J in his decision held that there is no evidence that the Defendants appealed the decision of the PSC or filed a judicial review challenging the decision. Thirdly, common sense and fair play would dictate that since the Plaintiff’s colleagues at the Auditor-General’s office, Thomas Holland, Peter Siperau and Gabriel Koh (see Holland v The State (2015) N6116) were reinstated without loss of salaries and allowances, he should be similarly treated. I am therefore left with the conclusion that the Defendants do not have a defence on the merits.
    
21. On the question of prejudice, the Defendants submits that since the Plaintiff has been reinstated, he suffers no prejudice, and the matter should proceed to trial on the question of liability. Whilst this may be true, when viewed in the context of how long this matter has proceeded, having gone back to 2014, some eight (8) years, and the costs that the Plaintiff has incurred in going in and out of court, and that a person’s natural life is not static, as people get old and move on, my view is that when comparing the position of an ordinary citizen against that of the State, a citizen is not able to run a marathon of litigation. The Plaintiff stands to be prejudiced the most if the case is further prolonged.
    
22. On the final question of the interest of justice, I have reached the conclusion that terms 1, 3, 4 and 5 of the orders of 19 May 2020 should remain. The orders for damages should be set aside and dismissed. I say this for the following reasons. The Plaintiff was availed the opportunity like his colleagues to go to judicial review and enforce the decision of the PSC. He did that but did not succeed because of inadequate pleadings. An appeal to the Supreme Court was also not successful. If he had, he would have obtained orders in much the same terms as Thomas Holland, Peter Siperau and Gabriel Koh, that is, reinstatement without loss of salary and entitlement, back dated to date of dismissal. No order for damages would be likely, going by the similarity of claims of his colleagues. He then filed human rights proceedings as judicial review was not now possible, only to realise that he did not give s 5 notice. Proceedings were withdrawn for that aspect to be corrected before he initiated proceedings again. I am of the respectful and considered view that the Plaintiff should bear some responsibility for this haphazard manner of litigation he ran. The best way to address this is to deny the Plaintiff damages and that he should only be allowed reinstatement and claim lost salaries and entitlements, and costs of proceedings. That is, his claim should be limited to enforcement of the PSC decision.
    
23. After saying all this, I would give much weight to the fact that the delay was inexcusable, the Plaintiff stands to suffer the most if the matter prolongs and there is no defence on the merits. I would partially refuse the application except for term 2 of the orders. I therefore make the following orders:
    
    1. Terms 1, 3, 4 and 5 of the Orders of 19 May 2020 are confirmed.
    2. Term 2 of the Orders of 19 May 2020 is set aside.
    3. The Defendants shall pay the costs of the entire proceedings, including this application, to be taxed if not agreed.
    4. The matter is considered determined, and the file is closed.
    5. Time for entry of these orders is abridged to the date of settlement which shall take place forthwith.
       
24. Judgement and Orders accordingly.
    

________________________________________________________________

Napu and Company Lawyers: Lawyers for the Plaintiff

Solicitor-General: Lawyer for the Defendants