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Curtain Bros (PNG) Ltd v University of Papua New Guinea [2005] PGSC 35; SC788 (31 May 2005)

SC788

PAPUA NEW GUINEA

[IN THE SUPREME COURT OF JUSTICE]

SC APPEAL NO. 48 OF 2001

Between:

CURTAIN BROS (PNG) LIMITED
-First Appellant-

And:

CURTAIN BROS (QLD) PTY LIMITED
-Second Appellant-

And:

UNIVERSITY OF PAPUA NEW GUINEA
Respondent-

Waigani: Injia, Dep.CJ, Jalina & Sevua, JJ.
2003: October 2
2005: May 31st

CIVIL LAW – Practice and procedure – Appeal from discretionary judgment – Defence struck out and summary judgment for failure to give discovery –Discretion wrongly exercised – Summary judgement quashed.

CIVIL LAW – Practice and Procedure – Appeal – Procedural Issues not raised before trial judge raised on appeal – Not open to be raised on appeal.

CIVIL LAW – Practice and procedure – Application for judgment based on defective Notice of Discovery – Duty of Counsel to raise issue – Duty of trial judge to raise and refuse application.

Cases cited in the judgement:
Ace Guard Dog Security Services Ltd v Yama Security Services ltd & Lindsay Lailai (2003) N2459.
Australia Coal and Shale Employees’ Union v The Commonwealth [1953] HCA 25; (1956) 94 CLR 621
Breckwoldt & Co. (N.G.) Pty Ltd v Groyke [1974] PNGLR 106.
Credit Corporation (PNG) Ltd v Gerald Jee [1988-89] PNGLR 11;
Cybela v Ning’s Agencies Pty Ltd [1978] PNGLR 167.
Fly River Provincial Government v Pioneer Health Services Limited SC705 2003
Freeman v Rakinov [1981] VicRp 52; [1981] VR 539.
Kepa Wanege v The State SC702,
Keran v Jenny Narun and another [1994] PNGLR 13.
Masolyau Piakali v The State SC771
Motor Vehicles Insurance (PNG) Trust v James Etape [1994] PNGLR 596.
Motor Vehicle Insurance (PNG) Trust v James Pupune [1993] PNGLR 370.
Peter Peipul v Justice Sheehan & Others (2001) N2096.
Titus Keran v Jerry Warun & Country Motors Pty Ltd [1994] PNGLR 130.
Westpac Bank (PNG) Ltd & Ors v Hugo Canning Company Pty Ltd, unreported, unnumbered judgement of Kapi DCJ, Hinchliffe J & Sheehan JJ dated 20th December 1991.

Counsel:
I. Molloy with M Wilson for the Appellants
A. Kongri for the Respondent

31st May 2005

BY THE COURT.: This is an appeal from an interlocutory judgment of the National Court made on 9th May 2001 whereby the trial judge struck out the Appellant’s Amended Defence and entered summary judgement on liability for damages to be assessed. Leave to appeal from this interlocutory judgment is not in issue.

There are five (5) grounds of appeal and these are:

(a) The requirement for discovery was premature: His Honour erred in law and in fact in not following the principle that discovery should not be enforced until the pleadings were closed, which they were not, on the date of filing and service of the Amended Notice of Discovery apparently relied upon by the respondent.

(b) The Respondents’ failure to obtain an order for discovery: His Honour erred in law and in fact in not following the principle that discovery should not be enforced before the pleadings were closed without an order for discovery pursuant to Order 9 Rule 7 of the National Court Rules or without a further Amended Notice of Discovery by the Respondent subsequent to the amendment to the Statement of Claim effected by the Respondent on 14th February 2001.

(c) The Amended Notice of Discovery was not addressed to either Appellant: His Honour erred in law and in fact in not enforcing compliance by the Respondent with Order 9 Rule 1 of the National Court rules with regard to the use of Form 30 whereby the Amended Notice of Discovery was not addressed to either or both co-defendants particularly as the co-defendants had filed separate and differing Defences.

(d) The First and Second Appellants were not culpable: His Honour erred in exercising his discretion by allowing extraneous or irrelevant matters to guide him so that he did not take into account the fact that the Appellants were endeavouring to give discovery and that the omission or neglect to comply was not a culpable one.

(e) Further time should have been given: His Honour erred in exercising his discretion by allowing extraneous or irrelevant matters to guide him so that he did not allow the First and Second Appellants further time which was applied for to file and serve the Verified List of Documents."

The background to the case is that between 1997 to 1998, the State contracted the Appellants to carry out extensive roadworks on the Waigani Drive and Kaega Roads situated between Waigani and Gerehu. On 15th January 1998, the Respondent commenced proceedings by Writ of Summons seeking damages against the First Appellant only, for damage caused to their land by the roadworks. The Respondent claimed that the First Appellant encroached on their land situated on Portion 1230 along the Waigani Drive and caused damage. On 16th of March 1998, the First Appellant filed a Defence denying the claim. However, on 19th August 1999, the Respondent filed an Amended Writ of Summons joining the Second Appellant as the Second Defendant and further amending other parts of the Statement of Claim. On 29th September 1999, the First Appellant filed an Amended Defence. On the 29th September 1999, the Second Appellant also filed its Defence to the Amended Writ.

On 3rd March 2000, the Respondent filed Notice of Discovery. Then on 28th March 2000, the Respondent filed an Amended Notice of Discovery:

On 14th February 2001, the Respondent amended paragraph four (4) of its Amended Statement of Claim to to plead the correct date of the Roadworks Contract between the Appellants and the State. The Notice of Amendment was served on the Appellants’ lawyer on 26th February 2001. The Appellants did not file any Amended Defence to this further Amended Statement of Claim.

On 7th May 2001, the Respondent moved a Notice of Motion under O.9 r.15(1) seeking orders striking out the "First and Second Defendants’ Amended Defences" and for entry of summary judgment on liability. The application was based on the Appellant’s failure to give discovery pursuant to the Amended Notice of Discovery filed on 28 March 2000. On 9th May 2001, the Court granted the orders sought. The Appellants appeal from this order.

The grounds of appeal raise two (2) main issues. We deal with the first issue. The first issue is whether the Court erred in finding the Appellants were in default. This issue arises from grounds (a), (b) and (c). These grounds raise procedural issues as to deficiencies or irregularities in the default procedure employed by the Respondents in applying for judgment under O.9 r.15(1).

Counsel for the Appellants, Mr Molloy made lengthy submissions in relation to them. Mr Kongri for the Respondent submits these procedural issues were not considered by the National Court judge because they were not raised by the Appellants before that Court and it is not open for them to raise them now: Motor Vehicle Insurance (PNG) Trust v James Pupune [1993] PNGLR 370; Motor Vehicles Insurance (PNG) Trust v James Etape [1994] 596; Peter Peipul v Justice Sheehan & Others (2001) N2096.

We have read the transcript of proceedings before the National Court on 9th May 2001 and noted that the Appellants’ counsel did not raise those procedural matters before the National Court and the Court did not address them.

We are of the view that there was a glaring failure by the appellants to raise in the trial Court the issues they have now raised on appeal. That is the essence of the respondent’s submission. The transcript of the proceedings of what had transpired in the National Court on 9th May 2001 is quite obvious. Simply, the appellants neglected or failed to raise before the trial Judge the issues they are now raising so that, not only would the trial Judge had given due consideration to those issues, but, the respondent would have been given an opportunity to address the trial Judge on those same issues.

We are of the view that Mr Kongri’s submission is the correct approach to be taken in this appeal. The issues should have been raised in the Court below however, for reasons known to the appellants themselves, they did not raise them. Can they do that in this Appeal? With respect, we consider that they cannot raise those issues now as grounds of appeal in this Court.

The facts are undisputed and are therefore quite clear. The appellants had failed to exercise their rights under the Rules of Court. The notice of discovery gave them 15 days to do that. The appellants failed to give discovery. They were further allowed an additional seven (7) days and still they failed to give discovery. Needless to say, twelve (12) months after service of the notice of discovery, the appellants failed or neglected to give discovery. Even if the notice of discovery was defective, they totally failed to take any reasonable and/or responsible step to protect their interests. How then could this Court say the trial Judge erred in his decision when the very issues raised here were never raised before him thereby depriving him of the opportunity to consider and address them?

It is our view therefore that the appellants are not entitled to raise these issues as grounds of appeal for the first time in this Court. They had the right and all the opportunity in the world to raise these issues in the National Court, but they failed and we see no reason in fact or in law to condemn the trial Judge’s decision as being an error of fact or law.

There is a line of case law and authorities on this issue, a few of which are National Court decisions which are not binding precedents on this Court, however, we consider them to be expounding very sound and persuasive principles.

We begin with the premise that a party who neglects or ignores the rules of procedure under the National Court Rules does so at his own peril: Credit Corporation (PNG) Ltd v Gerald Jee [1988 – 89] PNGLR 11; and Titus Keran v Jerry Warun & Country Motors Pty Ltd [1994] PNGLR 130.

Whilst the Court has a duty to protect its process from abuse by litigants, it is our view that the grounds of appeal No. (a), (b) and (c) are incompetent from the start therefore ought to be dismissed for that reason. An appeal should only be lodged on issues that were properly raised before the trial Court; both parties having had the opportunity to address all the issues raised in the trial Court and lastly, the trial Judge has had the opportunity to hear the parties and consider their arguments and then made a decision, not on the basis of what was never raised in that Court.

There are a number of cases in both the National Court and Supreme Court that have discussed this issue.

We start with the Supreme Court decision in Motor Vehicle Insurance (PNG) Trust v James Pupune [1993] PNGLR 370. The factual situation in that case is different to the present case in that, the defendant in that case did not object to the evidence of economic loss which the plaintiff had not pleaded, but was adducing evidence in relation to. On appeal to the Supreme Court, the Court said that the defendant cannot hark back to the pleadings and submit that economic loss was not pleaded.

It is obvious that in that case, the admission of evidence with no proper basis in the pleadings not having been opposed by the defendant in the trial, the defendant could not therefore raise that issue in the appeal. To our mind, that is trite law. If, for whatever reasons, a party fails to raise a relevant issue at the trial, he is not entitled to raise it on appeal and the appellate Court should be loathe to allowing that issue to be raised before that Court. That is a very sound principle of law in our view and one that both the National and Supreme Courts have applied in a number of cases.

In Motor Vehicles Insurance (PNG) Trust v James Etape [1994] PNGLR 596 for instance, there was a similar turn of events. The appellant in that case did not raise objections to the evidence of economic loss being led by the respondent even though particulars of such loss were not provided. The Supreme Court said at page 599:

"The appellant’s claim must fail so far as it relates to the trial judge’s alleged mistake in law in allowing the evidence of loss of wages and associated future earnings, for the Trust had not taken the point at the trial. (my underlining)."

The same issue arose in a judicial review application of the decision of a Leadership Tribunal in Peter Peipul v Justice Sheehan Tribunal & 2 Ors: N2096, 25th May 2001, where the National Court discussed the issue at pages 9 and 10 of its judgment and referred to Pupune (supra) and Etape (supra). There the applicant did not raise certain issues in the tribunal, however was raising them for the first time in the National Court in the review.

Since then, the Supreme Court has had another occasion to consider the same issue and principle in Fly River Provincial Government v Pioneer Health Services Limited; SC705, 24th March 2003. The Court discussed this issue on pages 9 and 10 of its judgment and also alluded to the previous cases of Pupune and Etape. In that case, the respondent had issued a writ against the appellant claiming more than K1m in debt. After the writ was served on the appellant, it commenced another proceeding in OS 155 of 1999. The appellant subsequently obtained a stay of the proceedings commenced by the respondent in the writ of summons and then both parties proceeded with the proceedings in OS 155 of 1999. The respondent did not raise any issue regarding the impropriety or otherwise of the steps taken by the appellant in the OS proceedings. However in the appeal, the respondent raised issues relating to that matter for the first time.

The Court’s opinion was the same as the other Courts in the cases we have referred to. At the top of page 10 the Court said, "It is settled law that, unless a party has raised an issue in the Court below, he is not at liberty to raise it in appeal"

The same issue has also been considered in criminal appeals. The Supreme Court in Mount Hagen last year considered and applied the same principle. See Kepa Wanege v The State; SC702, 1st April 2004 and Masolyau Piakali v The State; SC771, 13th December 2004.

In the present appeal, we reiterate that the issues, the subject of the grounds of appeal (a), (b) and (c) of he Notice of Appeal could and should have been raised before the trial Judge. The appellants had the right and the opportunity then to raise those issues so that the Court could consider them and furthermore, the respondent could be given the opportunity to address them as well. However as we have adverted to earlier, the appellants had failed to bring these matters up before the trial judge. The Court below therefore did not have the opportunity to consider those matters. The respondent was also not given the opportunity to argue those matters. They are being raised for the first time before the appellate Court.

It is our opinion based on the authorities and cases cited here, that the appellants should not be given the opportunity to present their arguments on these issues in this Court when they had the opportunity to do so in the Court below but failed to do so. The National Court Rules exist to regulate the procedures of that Court and parties or litigants have the right to utilize such procedures to protect their rights and interests. If they fail without good reasons to exercise their rights to utilize the procedures and avenues available to them in the National Court, they cannot come to the Supreme Court and take a "second bite at the cherry" as it were. It would be unfair to the opposing party and also unfair to the trial judge to criticize the Judge over something that was never put before him.

Having reached the above conclusion, we note however that the Amended Notice of Discovery on which judgment was granted was defective, in several respects, the principle one being that the Notice is a mixture of a Notice of Discovery under O9 r1, Form 30 and a Notice to Produce Documents under O9 r9, form 32. A quick perusal of the Notices of Discovery filed by the Respondent’s Lawyers shows they were badly drafted and therefore defective.

The first Notice of Discovery filed on 3rd March 2000 by the Plaintiff’s lawyers was badly drafted. The notice erroneously required the Defendants to give discovery of documents "relied on in your amended Statement of Claim" (our emphasis). It was signed by the "Lawyer for the Defendant" which was wrong. This Notice sought discovery of a specific document which is inconsistent with a general Notice for Discovery. This Notice was mixture of a Notice of Discovery under O 9 r 1 Form 30 and Notice to Produce Documents filed under a general Notice of Discovery. This Notice of Discovery was clearly defective. The defendant rightly ignored this Notice of Discovery in our view.

The Amended Notice of Discovery filed by the Respondents’ lawyer on 28th March 2000, sought to correct the obvious errors in the first Notice of Discovery. It states:

"The Plaintiff requires you to give discovery of documents relied on in your Defence to the amended Writ of Summons with verification within 15 days after service of this notice on you."

This is the notice of discovery on which judgment was granted by the judge. This notice again appears to be a mixture of a general Notice for Discovery under O 9 r 1, From 30 and a Notice to Produce Document under O 9 r 9, Form 32. The two (2) types of notices and forms are different and they serve different purposes.

Form 30 states:

"To the Defendant:

The plaintiff requires you to give discovery with (without) verification within (15) days after service of this notice on you."

This Notice of Discovery simply requires the other party to submit a List of Documents in its possession under O 9 r 6.

Form 32 states:

"NOTICE TO PRODUCE DOCUMENTS

The plaintiff (or defendant) requires you to produce for his inspection the following documents referred to in your Statement of Claim (or defence or affidavit) dated the ......................... day of .................................. 19 ...................

(describe documents required)"

This notice requires the party to produce a specific document referred to or described by the other party in the pleadings or affidavit.

The Notice of Discovery and Notice to Produce Document being defective from the start, a party served with a Defective Notice is not obliged to comply with it but should instead point this out to the other party so that the other party can remedy the defect. If that party without remedying the defect applies for default judgment based on the Defective Notice, the party served with the Defective Notice should raise the matter before the judge and the judge should determine the issue and so may refuse the application on that basis. Even if the parties do not raise them, there is a duty on the trial judge to raise the issue of defective notice and determine the issue. In the present case, if the Appellant had raised the issue of defective Amended Notice of Discovery, before the trial judge, the judge could have refused the Respondent’s application in our view.

For these reasons, we dismiss grounds (a), (b) and (c) of the grounds of Appeal.

The second issue is whether the Court erred in the exercise of its discretion to strike out the defences and entered summary judgment. This issue is raised in grounds (d) and (e).

Mr Molloy submits the Court erred in the exercise of its discretion. He submits this was a big case and the severe penalty of striking out a defence for failure to give discovery and entering judgement was not warranted. He submits the very document(s) they purportedly sought to discover, namely copies of the Construction Contracts were already provided to them upon their request, and there was no other documents to discover. This penalty is only available in a clear case of deliberate refusal to give discovery and the present case was not one such case: Westpac Bank (PNG) Ltd & Ors v Hugo Canning Company Pty Ltd, Unreported, unnumbered judgement of Kapi DCJ, Hinchliffe & Sheehan JJ dated 20th December 1991, Cybela v Ning’s Agencies Pty Ltd [1978] PNGLR 166, at p.167, and Freeman v Rakinov [1981] VicRp 52; [1981] VR 539 at 549 – 550. Mr Molloy in his written submissions also sets out various matters which he submits, the Court failed to consider or give sufficient weight to. These include -

(a) there had been no default of the notice alleged;
(b) It could not be said that the Appellants were deliberately refusing to provide discovery;
(c) Substantial defences had been raised;
(d) The Respondent had not alleged any prejudice;
(e) The Respondent itself had been guilty of delay;
(f) The Appellants had prepared a list of documents which could be verified within a few days.
(g) The default (if any) of the Appellants was out of all proportion to the judgment sought;

Mr Kongri submits the Appellants’ lawyers failed or refused to give discovery within the fifteen (15) days allowed and another extension of seven (7) days given by the Respondents and only came to the Court on the date of the application and pleaded for more time to allow them to obtain their clients’ instructions to verify the list. This was some twelve (12) months after service of the Amended Notice and the delay was inordinate and inexcusable: Keran v Jenny Narun and Another [1994] PNGLR 130 at p.134. They cannot just ignore the court process. They did not deserve another chance or extension. He submits the Court properly considered all these and other relevant matters and made its decision so it should not be disturbed.

The grant of summary judgment under O 9 r 15(1)(b) for failure to give discovery is discretionary. The appellate Court will not interfere with a discretionary judgment on a procedural matter within its jurisdiction, except where the exercise of that discretion is clearly wrong. A discretionary judgment may be set aside if an identifiable error occurred in the exercise of discretion. Alternatively, it may be set aside where there is no identifiable error, but the resulting judgment or order is "unreasonable or plainly unjust" and such that an error can be inferred. These principles are well established. We adopt a passage from Kitto J in the Australian High Court case of Australia Coal and Shale Employees’ Union v The Commonwealth [1953] HCA 25; (1956) 94 CLR 621 at p. 627, which was adopted by Clarkson J in Breckwoldt & Co. (N.G.) Pty Ltd v Groyke [1974] PNGLR 106 at p.112 – 113:

"The decision by the primary judge to stay the action was made in exercise of a judicial discretion and I accept that in those circumstances the principles on which this Court should act are as described by Kitto J. in Australian Coal and Shale Employees’ Union v The Commonwealth ... the true principle limiting the manner in which appellate jurisdiction is exercised in respect of decisions involving discretionary judgements is that there is a strong presumption in favour of the correctness of the decisions appealed from, and that that decision should therefore be affirmed unless the court of appeal is satisfied that it is clearly wrong. A degree of satisfaction to overcome the strength of the presumption may exist where there has been an error which consists in acting upon a wrong principle, or giving weight to extraneous or irrelevant matters, or failing to give weight or sufficient weight to relevant considerations, or making a mistake as to the facts. Again, the nature of the error may not be discoverable, but even so it is sufficient that the result is so unreasonable or plainly unjust that the appellate court may infer that there has been a failure properly to exercise the discretion which the law reposes in the court of first instance ..."

We accept Mr Kongri’s submission that the Appellants were at fault in responding to the Amended Notice of Discovery. The Appellants did not deny receiving the Amended Notice of Discovery. They also did not respond to the letter granting extension from the Respondents’ lawyers. They did not act for eleven (11) months, but on the day of the hearing, the Appellant’s counsel referred the Court to an unverified list of documents and pleaded for more time.

The trial judge considered the Appellants’ default in complying with the "Notice of Discovery" and granted the orders sought. The main reason for decision given by the trial judge was that the Appellants had not given discovery for more than eleven (11) months.

In our view however, the establishment of the default in complying with the Amended Notice of Discovery, per se, is no licence to the grant of the judgment sought. The Court must exercise its discretion in the light of all relevant factors and circumstances. We accept Mr Molly’s submission that the likely prejudice to the party relying on the default is a relevant consideration, in the exercise of discretion under O.9 r.15(1). In our view, it is an important consideration. We adopt a statement of principle enunciated by Sakora J in Ace Guard Dog Security Services Ltd v Yama Security Services Ltd & Linday Lai Lai (2003) N2459 in relation to O 9 r 15, which we consider to be relevant to the present case. His Honour said:

"I formally find, therefore, that default as envisaged by O 9 r 15(1) NCR was made by the two plaintiffs in respect, firstly, of the defendant’s Notices of Discovery filed and served 10 November 2000, and, secondly, of the fresh Notices of Discovery filed and served 16 and 19 May 2003 respectively and further extended to 27 June 2003. And this default directly attracts the operation of the default provision under O 9, r 15(1)(a) NCR (supra). The provision vests discretion in the Court as to an appropriate order to be made (see: Aisip Duwa v Ronald Senge, supra page 152). It is my respectful opinion that this discretion ought to be exercised against the defaulting party after a full and careful appreciation of the entire circumstances of the case. In this respect I would suggest that mere default by a matter of days would not provide sufficient basis for dismissing "as to the whole or any part of the relief claimed . . .", if the default was by a plaintiff (O 9, r 15(1)(a)).

I would further suggest that proceedings should be dismissed under the rule if failure or default in complying were, such as I find in this case, repeated, verging on what could properly be described here as chronic. Another ground for the exercise of discretion against the defaulting party would, I suggest, be where discovery was insufficient or deficient rendering a fair and expeditious trial nigh on impossible, and thereby causing prejudice and disadvantage to the opposing party."

We therefore accept Mr Molloy’s submission that the Respondents did not raise nor did they demonstrate any real prejudice to their case as a result of the failure to give discovery. This was a big claim and substantive defences were raised. The Appellants had a list of documents which, if allowed, could have been filed.

Assuming the Amended Notice of Discovery to be valid, there was no other important document pleaded in the Defences filed which showed the Respondent would have required discovery. The Respondents were already provided with a copy of the relevant construction contract dated 3 March 1995, which was the main document pleaded in all the defences filed by the Appellants. The affidavit of the respondent’s counsel filed in support of the application acknowledged receipt of the said Construction Contract. And so the Amended Notice of Discovery served no real purpose insofar as production or discovery of relevant documents was concerned.

More importantly, the Respondent’s counsel did not file any affidavits deposing to any prejudice suffered or likely to be suffered by the Respondents by the delay in filing a List of Documents.

The Court should have considered these important and relevant factors and given due and sufficient weight to them. In the proper exercise of discretion, the Court should have given the Appellants an opportunity to file their List of Documents and penalized them with costs. We therefore find the trial judge erred in this regard.

We also consider that the judgment on liability was also "so unreasonable or plainly unjust" to the Appellants in the circumstances. W therefore e find as a matter of inference, that an error in the exercise of the Court’s discretion occurred.

For these reasons, we allow the appeal in respect of grounds (d) and (e) of the Notice of Appeal. We grant leave to the Appellant to file and serve Notice of Discovery and/or Notice to Produce Documents, within fourteen (14) days. Each party shall bear its own costs of the appeal. We certify Southern counsel.
____________________________________________________________________
Lawyer for the applicants : Warner Shand
Lawyer for the Respondents : Nonggorr & Associate