State and Davis v Barker [1977] PGSC 17; [1977] PNGLR 386 (26 October 1977)

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APPEAL - Practice and procedure - Nature of appeal - Appeal from District Court exercising discretionary power - Grounds on which appellate court may substitute discretion.

PRACTICE AND PROCEDURE - Application to set aside default judgment - Principles applicable - Whether affidavit showing defence on merits necessary - Defence on merits to be particularized - Rules of Court O.XXXI, r. 15[cccxciv]1.

On appeal against an order of the National Court dismissing an application pursuant to O.XXXI, r. 15 of the Rules of Court to set aside a judgment obtained in default of filing a defence.

N1>(1)�� (Per Prentice Dep. C.J. with whom Frost C.J. agreed.) The appeal, being an appeal against the exercise of a discretion, in order for the Appellate Court to substitute its discretion for that of the Judge appealed from (if it has the material for doing so) it must be shown that the Judge appealed from exercised his discretion upon a wrong principle, allowed extraneous or irrelevant matters to guide or affect him, mistook the facts or did not take into account some matter for consideration; (Lovell v. Lovell [1950] HCA 52; (1950) 81 C.L.R. 513 at p. 518, House v. The King (1936) 55 C.L.R. 499 at p. 504) and it being clearly wrong in its decision; (Australian Coal and Shale Employees� Federation v. The Commonwealth and Others [1953] HCA 25; (1953) 94 C.L.R. 621, or it appearing that otherwise injustice might be done; (Evans v. Bartlam [1937] A.C. 473 at p. 480.)

N1>(2)�� As a matter of practice, an application under O.XXXI, r. 15 of the Rules of Court to set aside a judgment by default regularly obtained should be granted only on an affidavit disclosing a defence on the merits.

Evans v. Bartlam [1937] A.C. 473 at p. 480, Gamble v. Killingsworth & McLean Publishing Co. Pty. Ltd. [1970] VicRp 22; [1970] V.R. 161 at p. 168, Green and Company Pty. Ltd. (Receiver Appointed) v. Green [1976] P.N.G.L.R. 73 at p. 76 followed, Frisch v. Bowman [1928] St.R.Qd. 242 and Seymour v. Holm [1961] Qd.R. 214 referred to.

N1>(3)�� Such an affidavit, to be considered as showing a defence on the merits must set out statements of material fact sufficient to satisfy the court that the applicant has a prima facie defence and that it is reasonable that the applicant should be allowed to raise that defence.

Evans v. Bartlam [1937] A.C. 473 at p. 482, Green and Company Pty. Ltd. (Receiver Appointed) v. Green [1976] P.N.G.L.R. 73 followed, Ritter v. North Side Enterprises Pty. Ltd. (1975) 49 A.L.J.R. 202 at p. 203 referred to.

This was an appeal against an order of the National Court dismissing an application made pursuant to O.XXXI, r. 15 of the Rules of Court to set aside a judgment obtained in default of filing a defence.

Wallingford v. the directors of the mutual society (1880) 5 App. cas. 685 at p. 704;

FROST CJ: This is an appeal against an order of the National Court on 29th June, 1976, dismissing a motion by the appellants that a judgment in default of defence entered against them by the respondent as plaintiff should be set aside. There was a motion also before the Court seeking an order that the statement of claim be struck out on the ground that it disclosed no reasonable cause of action. That motion was also dismissed but no appeal has been brought. Without objection both motions were heard together. Of course, no order could have been made striking out the statement of claim unless and until the judgment was set aside. But if the appellants had been able to demonstrate that no reasonable cause of action was shown, as I shall mention later, that would have been a sufficient ground in the circumstances for the judgment to be set aside. It is also to be noted that the appellant has sought to rely on the appeal upon certain observations of the judge, which on examination relate only to the motion that the statement of claim be struck out, and thus were not material available at the hearing of the motion.

I have read the judgment of Prentice Deputy C.J. and agree with it, but it is better that I state my reasons in my own words.

The cause of action set out in the statement of claim was a simple case of conversion on the part of the Government of Papua New Guinea and the second-named appellant, who was said to be the Harbour Master at Lae. The property concerned was the plaintiff�s catamaran �Sansangana� which had been left by the plaintiff moored at Voco Point, Lae. The allegation was that on or about 30th April, 1974, the second appellant as agent of the Government of Papua New Guinea delivered, or alternatively authorized the delivery of, the vessel to one Dennis William Bux, the third-named defendant, and another person or persons unknown, without any authority from the plaintiff and without any authority on the part of the third defendant to take possession of the vessel. By reason of these matters it was alleged as against each defendant that the vessel had been converted to their own use.

As against the third defendant it was also alleged that after possession had been taken of the vessel, the third defendant personally by his servants and agents so negligently and unskilfully handled and took care of the vessel that it was wrecked.

The law applicable in a case of conversion is set out in Salmond on the Law of Torts, 16th ed., at pp. 96-97, as follows:

A conversion is an act ... of wilful interference, without lawful justification, with any chattel in a manner inconsistent with the right of another, whereby that other is deprived of the use and possession of it. Two elements are combined in such interference: (1) a dealing with the chattel in a manner inconsistent with the right of the person entitled to it, and (2) an intention in so doing to deny that person�s right or to assert a right which is in fact inconsistent with such right. But where the act done is necessarily a denial of the other�s right or an assertion of a right inconsistent with it, the tort may have been committed, though the doer may not know of or intend to challenge the property or possession of that other. If a person, not being an agent or bailee, deals with the goods of another as his own, his intention is irrelevant, for liability in conversion is strict.�

In the same textbook is found the following statement relating to remoteness of damage:

�If the defendant has thus intentionally interfered with a chattel without lawful justification and loss of the chattel does in fact result from the interference, it is no defence that such a loss was not intended, or even that it was not the natural or probable result.� (At p. 107).

It will be noted that mere taking possession of a chattel by itself will not always be conversion. As Winfield says:

�If I snatch your hat from your head with intent to steal it, that is conversion as well as trespass, but if I throw it at another person, that is trespass only, for I am not questioning your title to it.� Winfield and Jolowicz on Tort, 9th ed., p. 422.

The facts of Fouldes v. Willoughby[cccxcv]², in which a ferryman put some horses ashore after a dispute with the owner who remained on board and it was held no conversion, provide a further illustration.

Now the case made against the two defendants was an interference or dealing with the yacht which constituted conversion, in law meaning an act deliberately done inconsistent with the plaintiff�s right, which as a matter of fact produced the loss of the yacht even though it was caused by the third defendant�s negligence. Accordingly as the judge at first instance found and, with respect, I agree, the statement of claim was well-founded. According to the facts of the case it may have been open to the defendants to show that they did not constitute any denial of the plaintiff�s title, and clearly they were entitled to base a defence on this ground. The ultimate question is whether such a defence was shown on the merits.

I should add that this Court has a special responsibility under the Constitution to assist in the development of the indigenous jurisprudence, adapted to the changing circumstances of Papua New Guinea. Constitution, s. 21. But in this case no submissions were made that the tort of conversion, the elements of which are to be found in the common law, was in any way unsuited to the circumstances of Papua New Guinea. For myself I can see no ground to support such a submission.

The motion now appealed against was brought under O.XXXI, r. 15 of the Rules of the National Court, which is as follows:

N2>�15.�� Any judgment by default under this Order may be set aside or varied by the Court or a Judge, upon such terms as to costs or otherwise as the Court or Judge may think fit.�

The Rule is similar to and clearly derived from the previous English Rule of Court, O.XXVII, r. 15. (See now 1965 Rules, O.19, r. 9, O.13, r. 9). The former English Rule has been the subject of much judicial construction both in England and in the Australian States where it was adopted in similar terms.

The principles applicable were stated in the judgment of Dixon A.J., as he then was, in Chitty v. Mason[cccxcvi]³, as follows:

�Judgments given by Courts of justice in the absence of one of the parties may be set aside for a variety of reasons, and, generally speaking, the principles upon which they are set aside are well settled. There is a great difference between judgments which are regularly obtained in good faith and judgments which are irregularly obtained or obtained in bad faith. The first class are not in general set aside save upon an affidavit of merits. The second class are set aside ex debito justiciae (as required in the interests of justice) irrespective of the merits of the party applying.�

Now in the present case it was not disputed that the judgment was regularly obtained. The defence was due within 28 days of the delivery of the statement of claim which took place on 14th November, 1975, and became overdue on the 13th December, but as that day was a Saturday and the vacation began on the Monday, I agree with Kearney J., whose judgment I have read in draft, that the defence was not due until after the long vacation. In fact the plaintiff�s solicitors delayed entry of judgment until 19th February, 1976. The delay in delivering the defence was due to an unfortunate series of events which would have entitled the appellants to relief, if an affidavit of merits had been filed.

An affidavit of merits is required because as Lord Russell pointed out in Evans v. Bartlam[cccxcvii]⁴:

�... obviously no useful purpose would be served if there were no possible defence to the action, ...�

(In that case the successful appellant, who had failed to have a judgment for debt set aside, was able to show that the debt was tainted with illegality). As counsel for the respondent submitted, if this were not the rule there would be no end to litigation; judgments would be set aside upon a practitioner�s mere assertion that there was a defence.

There is no doubt that by an affidavit of merits the applicant is required to go further and produce to the Court evidence that he has a prima facie defence. I join with the Judge at first instance and the Deputy Chief Justice in adopting as a statement of this requirement the admirable passage from the judgment of O�Leary A.J. in Green & Company Pty. Ltd. v. Green[cccxcviii]⁵. However, only material particulars need be set out. Ritter v. North Side Enterprises Pty. Ltd.[cccxcix]⁶, per Gibbs J. at p. 203.

The appellants� counsel, who is an experienced practitioner, did not avail himself of the trial judge�s suggestion that such an affidavit be filed. Counsel was apparently relying on his motion in relation to the statement of claim. This he was fully entitled to do, for if it is sufficient to show merely a good defence on the merits to have the judgment set aside, the case is so much the stronger if it is shown that the claim had no chance of success. But if the motion in relation to the statement of claim was dismissed, he could rely only on a bald statement in the affidavit that he had formed an opinion that the first and second defendants had a good defence on the merits and the loss was denied.

Now this case is not such a case as Collins Book Depot Pty. Ltd. v. Bretherton [cd]⁷, in which it was held that an executor was entitled to have a claim against the deceased estate proved before the Court. There is nothing special about this particular cause of action which would lead the Court to dispense with an affidavit of merits. Accordingly upon the well-settled principles for the construction of O.XXXI, r. 15, the only conclusion open to the judge was that his discretion should be exercised against the applicant. Determining the matter as required by way of rehearing, on the evidence in the Court below, this Court could come to no different conclusion. (Supreme Court Act 1975, s. 7).

As I understood the appellants� case, counsel then based an argument upon certain passages in the judgment, which are set out by the Deputy Chief Justice and which clearly relate to the motion for striking out the statement of claim. In this proceeding it is open for this Court to go behind the judgment on that motion. Whilst the way in which the judgment is expressed is not entirely satisfactory, the trial judge was only speculating as to defences which might prove to be open depending on the facts if the case were allowed to go to trial. He who seeks to set aside a judgment cannot put off the requirement of showing a defence on the merits whilst he embarks upon a fishing expedition and seeks further particulars hoping that some weakness in the plaintiff�s case may be disclosed. From the material before the judge there was nothing to indicate any possible defence, and there is no intermediate position of which the appellant can avail himself based on remarks by the trial judge which are not to the point.

The appellants� counsel with no great vigour indicated that he was before this Court prepared to file an affidavit and, when pressed, put forward an application for it to be received as fresh evidence. But we were of the clear opinion that it should be refused for the reasons stated by the Deputy Chief Justice.

The appellants� counsel finally invoked the principles of natural justice which, under the Constitution, are confirmed as rules of the underlying law. Constitution, s. 59(1). The succinct statement of the rule contained in the Constitution is:

�The minimum requirement of natural justice is the duty to act fairly and, in principle, to be seen to act fairly.� Constitution, s. 59(2).

However, I did not understand the appellants� counsel to be making any criticism upon this basis of the hearing in the Court below. His submission was really that this Court, under the Constitution, should not apply the settled principles of construction of O.XXXI, r. 15, but rather take the view that it was now open to the Court to exercise a broad unfettered discretion, and in view of the range of defences open in an action for conversion, the possibility that, if the case were tested, the delivery of the yacht may, on examination, be proved to be merely an apparent technicality, and the desire of his clients to contest any direct loss, this Court should now substitute a discretion in favour of the appellant for that of the trial judge. The submission, it was said, was supported by the Constitution, s. 158(2), which provides that:

N2>�158(2)�� In interpreting the law the courts shall give paramount consideration to the dispensation of justice.�

But in the dispensation of justice the interests of both parties must be considered. It was to take account of the considerations on both sides that the principles I have set out, or guidelines, as it were, have been laid down to help the Court in exercising its discretion, Evans v. Bartlam[cdi]⁸, per Lord Wright at p. 488.

The appellants� case comes down to an attempt to put the plaintiff to the technical proof of his case, without any defence being shown. In my opinion the well-settled principles are equally applicable to the circumstances of Papua New Guinea and are designed to ensure justice both to the party who seeks to uphold the judgment and to him who seeks to set it aside. Accordingly the appeal should be dismissed.

PRENTICE DCJ: Following the alleged taking of his yacht from its mooring at Lae, the respondent (plaintiff) brought an action in which he charged the appellants (the first and second named defendants) with conversion. A third defendant was sought to be held responsible for the loss of the vessel concerned both in conversion and negligence, in the same action.

Writ was issued on 11th April, 1975. Appearances were entered and an order made by the National Court on 12th November, 1975, by way of directions. In accordance with this order, statement of claim was filed and delivered on 14th November, 1975. None of the defendants took any action to file a defence within the 28 days after the filing of the statement of claim, as required by the Registrar�s order. On 19th February, 1976, the respondent signed judgment against all three defendants for default in filing defences. In the ordinary course, the matter would then have been listed for hearing in the National Court on the issue of damages only.

By notice of motion filed 13th April, 1976, the appellants sought to have the default judgment set aside (the third defendant taking separate action). In the meantime, on 24th March, 1976, the appellants had sent the respondent a letter indicating their intention to defend. The matter was before the Judge dealing with Chamber list on 1st, 3rd, 21st, 23rd and 29th June. By consent, and as a matter of convenience, his Honour dealt simultaneously with a further motion to strike out the writ (or rather the original �Statement of Claim� filed with the writ) for irregularity. His Honour found the writ and particulars (the original �Statement of Claim�), to be in a form provided for by the rules of Court, and therefore regular. He also found that no defence on the merits had been disclosed in the proceedings before him, and in the exercise of his discretion refused to set aside the judgment. By way of appeal therefrom, the appellants seek to be let in to defend.

It is clear from a perusal of the Interlocutory Judgment in the National Court, that the question of the necessity for the filing of a defence on the merits was introduced during the hearing of the motions, by the Judge. In the event, appellants� counsel refused to take up the running on this aspect; and no affidavit of merits was filed. Though apparently of the opinion before the Judge in chambers that an affidavit of merits was neither necessary nor desirable, counsel after some hours of argument of this appeal, sought leave of this Court to introduce such an affidavit in this appeal.

In pursuance of the need to strike a proper balance between the interest of the State in seeing that there be finality in litigation, and that of the subject to obtain justice despite procedural irregularity or laxity on his part in the pursuit of the same, rules governing the reception of new evidence on appeal have long been formulated in courts which operate along the lines of the Common Law. These have been adumbrated by Lord Denning in Ladd v. Marshall[cdii]⁹�as follows:

�... In order to justify the reception of new evidence or a new trial, three conditions must be fulfilled: first, it must be shown that the evidence could not have been obtained with reasonable diligence for use at the trial: second, the evidence must be such that, if given, it would probably have an important influence on the result of the case, although it need not be decisive: third, the evidence must be such as is presumably to be believed, or in other words, it must be apparently credible, although it need not be incontrovertible....�

The Court was of the opinion that this formulation is not inconsistent with a Constitutional Law, is neither inapplicable nor inappropriate to the circumstances of Papua New Guinea at the present time, nor inconsistent with custom. Nor was it suggested that an alternative underlying law to cover such matters should be sought. Accordingly in applying the Ladd v. Marshall rule[cdiii]¹⁰, the attempt to introduce an affidavit of merits at this late stage, after consideration of all the background circumstances relevant to the first condition of the formulation, was refused.

The appellants� application to set aside the judgment in this appeal, was supported by submissions that:

N2>(b)�� a good defence might be, and had been shown by means other than affidavit; and

N2>(c)�� in any event, the National Court�s discretion should have been exercised in the appellants� favour.

In the affidavit of counsel (the only affidavit) filed in support of the motion to set aside judgment, the only paragraph that refers to the question of defence reads as follows:

�I have given consideration to the plaintiff�s claim in this action and have formed the opinion that the first and second defendants have a good defence to the action on the merits. The first and second defendants deny the conversion alleged in paragraph 6 of the statement of claim, deny that the plaintiff suffered loss in consequence of any act, omission or matter related to the first and second defendants and also will allege that as a matter of law no cause of action is disclosed by the statement of claim against the first and second defendants.�

In my opinion this paragraph cannot be construed as other than an expression of opinion by counsel as to his client�s position in regard to the law.

An affidavit to be considered as showing a defence on the merits must set out statements of fact. With respect, I do not think the matter can be set out more clearly than was done by O�Leary A.J. in his judgment in Green and Company Pty. Ltd. (Receiver Appointed) v. Green[cdiv]¹¹�in a passage relied upon by the Chamber Judge in this case. It is as follows:

�In a case such as this the onus is on the applicant to show that he does have a defence on the merits, and I do not think it is sufficient for him merely to say, in effect, �I was not the agent of the plaintiff, and I therefore did not receive the moneys claimed to his use�. I think the same principle applies in these cases as applies in the case of a defendant resisting an application for summary judgment. As Lord Blackburn said in Wallingford v. The Directors &c. of the Mutual Society ((1880) 5 App. Cas. 685 at p. 704), the defendant must �condescend upon particulars�. It is not enough to swear, �I say I owe the man nothing�. Doubtless, if it was true, that you owe the man nothing, as you swear, that would be a good defence. But that is not enough. You must satisfy the Judge that there is reasonable ground for saying so. So again, if you swear that there was fraud, that will not do. It is difficult to define it, but you must give such an extent of definite facts pointing to the fraud as to satisfy the Judge that those are facts which make it reasonable that you should be allowed to raise that defence. And in like manner as to illegality, and every other defence that might be mentioned.�

I consider that the affidavit fails to disclose a defence. Even if it were to be regarded as amounting to a denial of the tort of conversion � this would not amount to a �condescension upon particulars� and disclosure of facts that if proved, would provide a defence.

Appellants� counsel points to cases in which no defence on the merits was disclosed by affidavit, such as Collins Book Depot Pty. Ltd. v. Bretherton[cdv]¹², a case which involved a claim against a deceased estate, in support of the proposition that a defence on the merits may appear otherwise than by affidavit. He is able to point also of course to the category of judgments obtained irregularly or in bad faith, which are commonly set aside as a matter of justice irrespective of the merits of the party applying (Dixon A.J. in Chitty v. Mason[cdvi]¹³). Commercial Traders Ltd. v. Furness[cdvii]¹⁴�is a case in which Walsh J. found a defence on the merits raised, but would have set aside judgment for irregularity in particulars, even if no defence on the merits had been disclosed. While not suggesting that bad faith occurred here, counsel was through his other notice of motion to set aside the writ and particulars, arguing inferentially that the judgment for default had been irregularly obtained for that it had not (sufficiently) disclosed a cause of action. He points to some of the reasoning expressed by the judge in chambers in deciding to dismiss the motion to strike out the writ, as having �found a defence� (for the appellants), which would stand substitute for an affidavit of merits. The passage on which he relies to support this branch of his argument is at p. 3 of the judgment under appeal as follows:

�When the time arrives for the plaintiff to lead evidence, which he will have to do whether the action is defended or not, it might well be that there is something in the argument that Mr. Ross makes and it might well be, depending on the facts, difficult for the plaintiff to demonstrate to the Court that the elements of the tort of conversion have been made out. I hasten to add that I am in no way pre-judging the matter, indeed it would be impossible for me to do so because the statement of claim is pleaded in an extremely terse way....�

�... It might well be that the plaintiff will have to lead in evidence some additional matter pointing to negligence on the part of the second-named defendant or something along these lines, for instance a complete indifference on the part of the second-named defendant as to the fate of the vessel, or it might be that the plaintiff could put the case much higher and point to actual knowledge on the part of the second-named defendant that the third-named defendant had absolutely no right to take the vessel away from the wharf. But as Mr. Griffin says it is early days, and there is no need for me at this stage to be made aware of the whole facts of the case, counsel submits that this is purely a pleading matter at this stage and submits that he has pleaded correctly and has complied with both the letter and the spirit of the Rules. I agree with this submission and I dismiss the notice of motion seeking to set aside the statement of claim. If I let the defendants in to defend they would undoubtedly seek further and better particulars of the statement of claim and I am sure that Mr. Griffin would concede that they would be entitled to further and better particulars. It might well be that when these were supplied they would demonstrate that the action was not maintainable and it would be at that stage appropriate for application to be made on behalf of the defendants to strike out the statement of claim.�

His Honour at this place in his judgment was concerning himself with whether the �Statement of Claim� delivered with the writ should be struck out (under O.XXII, r. 31) as not disclosing a cause of action. He allowed himself to speculate as to the course the pre-trial procedures would have taken if the defendants had wished to file defences at the appropriate time. But this situation did not occur, and his Honour found that the writ and statement of claim were in order and disclosed a sufficient cause of action in accordance with O.XXII, r. 5 of the Rules of Court. His Honour�s speculation as to the possibilities that might have occurred in an eventuality that had not arisen, cannot in my opinion amount to the disclosing by the judge himself, of a defence on the merits that had not otherwise been opened.

OUGHT NEVERTHELESS THE NATIONAL COURT'S DISCRETION HAVE BEEN EXERCISED IN THE APPELLANTS' FAVOUR?

Mr. Ross goes so far as to submit that s. 15 of the Supreme Court Act, and s. 7 thereof insofar as it provides for an appeal to be a rehearing, would allow this Court to consider the matter completely afresh, and to substitute its own ideas as to the exercise of discretion for those of the Judge of the National Court. In my opinion the phrase �by way of rehearing� is to be construed along the lines discussed by the High Court of Australia in Edwards v. Noble[cdviii]¹⁵, Whiteley Muir & Zwanenberg Limited v. Kerr and Another[cdix]¹⁶, and Da Costa v. Cockburn Salvage & Trading Pty. Ltd.[cdx]¹⁷. This being an appeal against the exercise of discretion, it must I think, be shown to this Court that the Judge in Chambers exercised his discretion upon a wrong principle, has allowed extraneous or irrelevant matters to guide or affect him, mistaken the facts, or not taken into account some matter for consideration. Then and only then (Lovell v. Lovell[cdxi]¹⁸, House v. The King[cdxii]¹⁹), the lower court having been shown to be clearly wrong in its decision (Australian Coal and Shale Employees� Federation v. The Commonwealth and Others[cdxiii]²⁰), or it appearing that otherwise injustice will be done (Evans v. Bartlam[cdxiv]²¹), the appellate court may exercise its own discretion in substitution for that of the lower court, if it has the material for doing so.

The application to set aside judgment was made under O.XXXI, r. 15 of the Queensland Supreme Court Rules (adopted). This rule is in terms similar to O.XXVII, r. 15 of the Rules of the Supreme Court of Victoria under discussion in the Collins Book Depot case[cdxv]²²; and to O.XXVII, r. 15 of the Rules of the Supreme Court of the United Kingdom (pre 1962).

This Court has been referred to many of the 19th century and 20th century cases in other countries in the interpretation of similar rules. Farden v. Richter[cdxvi]²³�indicates that the 19th century view in the United Kingdom was that it was an inflexible rule that a judgment regularly signed, might be set aside only on affidavit disclosing a defence on the merits. That this is no longer so is illustrated by Evans v. Bartlam [cdxvii]²⁴. As was stated by McInerney J. in relation to the Victorian rule, the present approach is to regard the necessity for disclosing merits �an almost inflexible rule� (Gamble v. Killingsworth & McLean Publishing Co. Pty. Ltd. [cdxviii]²⁵, and compare Frisch v. Bowman [cdxix]²⁶). This view was regarded as applicable to Papua New Guinea by O�Leary A.J. in Green and Company Pty. Ltd. (Receiver Appointed) v. Green [cdxx]²⁷. It is applied in Queensland from which was derived our rule Frisch v. Bowman [cdxxi]²⁸, Seymour v. Holm [cdxxii]²⁹. It may be departed from in no doubt rare but appropriate cases (Lord Atkin in Evans v. Bartlam [cdxxiii]³⁰). I am unable to appreciate any differential factor in the circumstances presently prevailing in Papua New Guinea that would call for a differing interpretation of our rule.

It was also argued on behalf of the appellants that certain of the provisions of the Constitution (ss. 22, 37, 59(1), 60 and 158(2)) required as a matter of natural justice that the judgment herein be set aside.

No irregularity occurred in the entry of judgment herein, nor undue precipitancy. It is clear that opportunity for the filing of an affidavit of merits would have remained open until the giving of judgment in the chamber applications, and that counsel was alerted to the possible consequences of his failing to comply with the �almost inflexible rule�. No defence having been disclosed, it cannot even yet be said that any good purpose would be served by letting the appellants in to defend. (See the speech of Lord Russell of Killowen in Evans v. Bartlam [cdxxiv]³¹). In addition, the reason expressed for the failure to put on a defence, namely that three different officers in the legal office concerned had successively had charge of the matter, does not strike me as having any cogency as an explanation, particularly when the fourth in line failed to �condescend upon particulars� at the hearing of the chamber summons, though alerted to the desirability or necessity to do so. It is perhaps not without significance that in an application brought by the third defendant to be let in to defend despite the filing of an affidavit that went a little further than that filed in this cause, a motion to set aside judgment (heard later than that under appeal) was refused (Stanley Barker v. The Government of Papua New Guinea and Davis and Bux [cdxxv]³²). Apart from the question of possible prejudice to the plaintiff adverted to at p. 8 of the judgment in chambers, the State must I think have an interest in ensuring certainty in the rules of practice which govern solicitors� proceedings in the courts, just as it has in ensuring an end to litigation in any particular matter.

I remain unpersuaded that in all the circumstances, the judgment under appeal involved an exercise of discretion upon erroneous grounds or was clearly wrong. In my opinion no injustice results to the appellants if the appeal be dismissed as I consider it should be.

KEARNEY J: This is an appeal from an order by the learned Chambers Judge dismissing an application to set aside a default judgment entered by the plaintiff.

Following a summons for directions, a consent order was made as a result of which the defendants had to deliver their defences by Friday, 12th December, 1975. This they failed to do. The Court vacation, fixed by the Rules of Court 1960, commenced on Monday, 15th December, and ended on Saturday, 14th February, 1976. On Thursday, 19th February, the plaintiff entered judgment against the defendants under O.XXXI, r. 4 for failure to deliver their defences.

Bearing in mind O.XC, rr. 3 and 4,[cdxxvi]33, I consider the defendants were by 19th February, 1976, for all practical purposes, some 4 days overdue in filing their defences. Though the defendants� solicitor was on the record it is common ground that the plaintiff�s solicitor gave no prior notice to the defendants� solicitor, of his intention to enter judgment by default. It is in fact apparent from the affidavit of search by the plaintiff�s solicitor of 18th February, 1976, upon the Court file, that the judgment was �snapped on�, for he was then of the belief that the defendants had until Tuesday, 17th February, to deliver their defences. Happily, this practice no longer prevails; I agree with Wallace J. in Pope v. Aberdeen Transport Co. Pty. Ltd. that �

�Where a party signing judgments does so without giving warning of its intention to do so, such party will generally, though perhaps not invariably, be in difficulties on a summons to set aside the judgment where a defence on the merits is disclosed.�[cdxxvii]³⁴.

The defendants� solicitor was not aware of the entry of judgment and on 24th March, 1976, he wrote to the plaintiff�s solicitor indicating that the action would be defended; the reply of 6th April informed him that judgment had been entered, and he thereupon took prompt action by way of notice of motion dated 13th April, to apply to have the judgment set aside and to obtain leave to defend.

The defendants� solicitor, by a second notice of motion also dated 13th April, 1976, sought to have the statement of claim struck out as disclosing no reasonable cause of action against his clients. The two applications were heard together, and became somewhat intermeshed, his Honour noting at p. 3 of the judgment that the defendants� argument in support of the second application � that no cause of action was disclosed � was also relied upon as part of the defence upon the merits advanced in support of the first application.

The application to set aside the default judgment was made pursuant to O.XXXI, r. 15, which reads:

N2>�15.�� Any judgment by default under this Order may be set aside or varied by the Court or a Judge, upon such terms as to costs or otherwise as the Court or Judge may think fit.�

I consider that the general principle to be observed in applications founded on provisions such as this is as stated by Lord Esher M.R. in Grundmann v. Stevens and Anor[cdxxviii]³⁵:

�Where the only fault was a blunder, and it could be set right upon payment of costs without injury to either party, the Court generally sets aside the judgment.�

A considerable amount of case law has become encrusted upon similar provisions in other jurisdictions, as to the necessity for an applicant to show a defence upon the merits, and whether he must do so by affidavit, where the judgment was entered, as here, regularly, and not in breach of good faith. Perhaps, as a matter of history, this development stemmed from the statutory requirement in s. 27 of the Common Law Procedure Act (U.K.) 1852,[cdxxix]³⁶, whereby an application to set aside a final judgment for non-appearance to a specially endorsed writ had to be �supported by satisfactory affidavits accounting for the non-appearance, and disclosing a defence on the merits�.

In Whiley and Another v. Whiley [cdxxx]³⁷, it was held that �disclosing� in s. 27 of that Act meant that the affidavit must not merely state that there is a defence on the merits; it must show what the nature of the defence is, and that it is an answer to the action. In other words, the affidavit must state facts showing the ground of defence, so that it is clear that on the face of it there is a real and substantial issue for trial.

The statutory requirement ceased to exist but the courts continued to insist on an affidavit disclosing merits, as a rule of practice; see Farden v. Richter [cdxxxi]³⁸. There were good reasons for such a requirement as a guide to the exercise of discretion, for clearly a court must consider whether any useful purpose would be served by setting a judgment aside:

�Plainly no useful purpose is served if it appears that if the judgment were set aside and the action allowed to go to trial, there would be no possible defence� Bayview Quarries Pty. Ltd. v. Castley Development Pty. Ltd.[cdxxxii]³⁹.

These reasons appear to me to be equally valid in Papua New Guinea and to support, as a matter of practice in any such application, a requirement that an affidavit be filed disclosing a good defence to the action; an affidavit is the most convenient way of putting forward such a defence. But it is a matter of practice, not of law, and the discretionary power in O.XXXI, r. 15 may be exercised despite the absence of such an affidavit; see Cuttle v. Brandt[cdxxxiii]⁴⁰. In the present case, the learned chambers judge required an affidavit of merits, and he was quite entitled to do so.

It is a curious and unexplained feature of this case that no affidavit of merits was filed. No doubt the defendant�s solicitor considered that the affidavit of 14th April, 1976, fell into this category; but it was inadequate for the purpose � see Tunnecliffe v. Besnard [cdxxxiv]⁴¹.

The other matter upon which the defendants relied in seeking to set aside the default judgment, was a point of law, namely that the statement of claim disclosed no cause of action. I consider that when a point of law alone is relied on, the chambers judge may decide it himself, if he considers that it can be satisfactorily dealt with at that stage; but if he decides that it cannot be so dealt with and that a real and arguable legal issue is involved, a defence that is fairly arguable in law, the only proper course, in my opinion, where a judgment has been entered in circumstances such as here, is to set it aside and let the defendants in to defend. Authority for this is to be found in Cuttle v. Brandt [cdxxxv]⁴², adopting the rule applied where a defendant is resisting an application for summary judgment. I think that the same rule should apply on applications of this type in Papua New Guinea.

Turning to the proceedings before the learned chambers judge, it appears to me that the joint hearing of the two applications mentioned earlier led ultimately to error. At p. 3 of the judgment, dealing with the defendants� legal point, on the application to strike out the statement of claim, his Honour said:

�When the time arrives for the plaintiff to lead evidence, which he will have to do whether the action is defended or not, it might well be that there is something in the argument that Mr. Ross makes and it might well be, depending on the facts, difficult for the plaintiff to demonstrate to the Court that the elements of the tort of conversion have been made out. I hasten to add that I am in no way prejudging the matter, indeed it would be impossible for me to do so because the statement of claim is pleaded in an extremely terse way.�

�With respect to Mr. Ross� argument, which had a good deal in it, I think it is too early to take the view that the facts here either fail to set up the cause of action or demonstrate clearly that there simply cannot be the cause of action on the facts as pleaded.�

�There is a good deal of force in what Mr. Ross submitted when he cited me the authorities which I have referred to above, which I acknowledge were not the only authorities referred to in his address.�

�But as Mr. Griffin says it is early days, and there is no need for me at this stage to be made aware of the whole facts of the case, ...�

His Honour accepted the plaintiff�s submission and for that reason dismissed the application to set aside the statement of claim; and then went on to speculate that in certain events it might be appropriate for an application to be made later to strike out the statement of claim.

His Honour then considered the application to set aside the default judgment and, at p. 8, dealing with the defendants� legal point � that the statement of claim disclosed no cause of action � said:

�As I have already indicated, although his submission that the statement of claim should be struck out as failing to demonstrate the tort of conversion failed, I thought that Mr. Ross put an excellent argument on this aspect.�

It is clear from the earlier extracts from the judgment that Mr. Ross� submission had �failed�, only in the sense that, for the purposes of the application to set aside the statement of claim, it was held to be premature. Because it was premature, its merits were never ruled on; nor were they ruled on when his Honour considered the point as a ground for setting aside the judgment. The two applications � to set aside the statement of claim, and to set aside the default judgment � involve quite different issues and considerations; I consider that the submission could not be premature when directed to the question of setting aside the default judgment. A plaintiff cannot argue �early days� on such an application; and any undue terseness in his statement of claim may be his undoing, for he is held to it as pleaded.

It is, I think, clear from the extracts quoted that his Honour considered that the defendants were raising very arguable matters of law in this submission; those matters have not been argued before this Court. As I understand it, his Honour did not decide the point � whether the statement of claim disclosed a cause of action � but adopted one of two courses. He may have been of opinion that he could not, in the state of the pleadings, satisfactorily decide the point at that stage; if that was his Honour�s view, then, in my opinion, bearing in mind the circumstances in which the default judgment was entered, and his Honour�s view that the point was very arguable, the defendants should have been allowed in to defend, so that their submission might properly be determined in due course. Alternatively, his Honour may have considered that the point was, for all purposes when the first application was dismissed, disposed of and did not need to be considered afresh in relation to the application to set aside the judgment; if so, that would, in my opinion, amount to an error of law.

In either event, I consider that the dismissal of the motion to set aside the judgment proceeded upon the application of a wrong principle, and an injustice to the defendants resulted. I do not think that any prejudice to the plaintiff in setting aside the judgment, was properly established.

For these reasons I would allow the appeal, set aside the default judgment, and allow the defendants in to defend.

[cccxciv]span>O.XXXI, r. 15 provides:

Any judgment by default under this Order may be set aside or varied by the Court or a Judge, upon such terms as to costs or otherwise as the Court or Judge may think fit.

[cccxcv](1841) 8 M. & W. 540.

[cccxcvi][1926] VicLawRp 47; [1926] V.L.R. 419 at p. 423.

[cccxcvii] [1937] A.C. 473 at p. 482.

[cccxcviii][1976] P.N.G.L.R. 73.

[cccxcix](1975) 49 A.L.J.R. 202.

[cd][1938] V.L.R. 40.

[cdi][1937] A.C. 473.

[cdii][1954] EWCA Civ 1; [1954] 3 All E.R. 745 at p. 748.

[cdiii][1954] 3 All E.R. 745.

[1976] P.N.G.L.R. 73 at p. 79.

[cdv][1938] V.L.R. 40.

[cdvi][1926] VicLawRp 47; [1926] V.L.R. 419 at p. 423.

[cdvii](1962) 79 W.N. (N.S.W.) 528.

[cdviii] (1971) 125 C.L.R. 296 at p. 304.

[cdix](1966) 39 A.L.J.R. 505.

[cdx][1970] HCA 43; (1970) 124 C.L.R. 192 at p. 199.

[cdxi][1950] HCA 52; (1950) 81 C.L.R. 513 at p. 518.

[cdxii](1936) 55 C.L.R. 499 at p. 504.

[cdxiii](1953) 94 C.L.R. 621.

[cdxiv] [1937] A.C. 473 at p. 480.

[cdxv][1938] V.L.R. 40.

[cdxvi][1889] UKLawRpKQB 79; (1889) 23 Q.B.D. 124 at p. 129.

[cdxvii] [1937] A.C. 473.

[cdxviii][1970] VicRp 22; [1970] V.R. 161 at p. 168.

[cdxix][1928] St.R.Qd. 242.

[cdxx][1976] P.N.G.L.R. 73 at p. 76.

[cdxxi][1928] St.R.Qd. 242.

[cdxxii][1961] Qd.R. 214.

[cdxxiii] [1937] A.C. 473 at p. 480.

[cdxxiv] [1937] A.C. 473 at p. 482.

[cdxxv][1976] P.N.G.L.R. 340.

[cdxxvi]r. 3: �Pleadings shall not be delivered or amended in vacation unless directed by a Court or a Judge�.

r. 4: �The time of the vacations shall not be reckoned in the computation of the times appointed or allowed by these Rules for filing, amending or delivering any pleading, unless so directed by the Court or a Judge�.

[cdxxvii] [1965] N.S.W.R. 1550 at p. 1551.

[cdxxviii] (1886-87) 3 T.L.R. 549, C.A.

[cdxxix]15 and 16 Vict. c.76.

[cdxxx][1858] EngR 816; (1858) 4 C.B.N.S. 653; 27 L.J.C.P. 305; 140 E.R. 1248.

[cdxxxi](1889) 23 Q.B.D. 124.

[cdxxxii][1963] VicRp 64; [1963] V.R. 445 at p. 446, per Sholl J.

[cdxxxiii] (1947) 64 W.N. (N.S.W.) 96 at p. 97.

[cdxxxiv](1938) 55 W.N. (N.S.W.) 58.

[cdxxxv] (1947) 64 W.N. (N.S.W.) 96 at p. 97.

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Supreme Court of Papua New Guinea

State and Davis v Barker [1977] PGSC 17; [1977] PNGLR 386 (26 October 1977)

Papua New Guinea Law Reports - 1977