KB Contractors v Kaivei [2005] PGDC 37; DC206 (26 August 2005)

DC206

PAPUA NEW GUINEA
[IN THE DISTRICT COURT OF JUSTICE]

CASE 1000 OF 2005

BETWEEN

KB Contractors
Complainant

V

Iriva Kaivei
First Defendant

Koroahio Moreaibi
Second Defendant

MRDC
Third Defendant

Port Moresby: Bidar, Pm
2005: 26th August

District Court – Practice and Procedure – Application by Notice of motion seeking setting aside of Ex parte Judgment (ex debito Justitiae principle) District Court Act, S.25

COUNSEL
F.Z. Lalo for applicant/Third Defendant
T. Kirio for Respondent/Complainant

RULING

26th August, 2005

BIDAR, PM: On the 3rd June 2005, the Third Defendant MRDC, through its lawyers filed Notice of Motion seeking the following Orders:

‘1. Pursuant to S.25 of the District Court Act (Ch No. 40) the ex parte order for default Judgment of 11th May 2005 be set aside ex debitio justitiae on the basis that:

(a) MRDC is not a legal entity that can sue or be sued pursuant to Companies Act 1997

(b) Even if MRDC is a proper party, the complaint does not disclose a reasonable cause of action against MRDC.

2. Alternatively or in addition, the ex parte order for default Judgment of 11th May 2005, be set aside ex debitio justitiae on the basis that the Complainant herein is not a legal entity that can sue and be sued pursuant to the Companies Act 1997
   
3. Even if Complainant is a legal entity that can sue or be sued the Complainants claim is made pursuant to sections 4 and 6 of the Summary Ejectment Act (Ch No 202) and therefore is baseless in law.
   
4. Alternatively or in addition, pursuant to S.22 of the District Court Act, the entire proceedings be struck out or dismissed ex debitio justitiae on the same basis referred to in the preceding paragraphs.
   
5. Complainant pays the costs of these proceedings
   
6. Such further Orders the Court deems fit."
   

To understand the orders sought it is appropriate to state in brief the background of these proceedings:

On the 21st March 2005, Complainant filed summons upon Complainant against the Defendants claiming recovery of K10 000.00 debt owing to it by the Defendants. The claim appears to have been drafted by someone other than a lawyer. For recovery of debt, the provisions of Summary Ejectment Act has no application at all.

On the 11th May 2005, Mr. Romico Gol who appeared for Complainant moved this Court for entry of default Judgment which it did basically due to the fact that the defendants filed no Notice of intention to defend or defense despite being served. Defendants also entered no appearances at all on the date of default Judgment as well as on two previous occasions.

In support of the orders sought the Defendant relies on the affidavit of Imbi Tagune sworn on 2nd June and filed on 3rd June 2005.

Lucas Nilkare and Faye Lalo filed herein. Upon reading the affidavits filed herein which deposed to matters of fact and law.

The principles governing setting aside of ex parte orders or default judgments are settled in our jurisdiction. Basically the principles are that, where ex parte order or Judgment is entered or made irregularly, as a matter of law or interests of justice (exdebito Justitiae) it should be set aside.

Secondly if a Judgment is made regularly, first of all there should be an affidavit evidence setting out defense on merit. Secondly, application should be made promptly and that there should be a reasonable explanation as to why default Judgment was allowed to be entered. These principles can be found in well known cases such as

Green & Co – V – Green and
Government of PNG- V – Barker

SUBMISSION

Counsel for Third Defendant MRDC Miss Lalo made the following submissions:
First of all MRDC is not a legal entity.

Secondly, there is no cause of action against MRDC. Whatever financial arrangements entered into between the Complainant and First and Second Defendants has got nothing to do with the Third Defendant. In fact, MRDC was not a privy to that financial arrangement and as such ex dibitio justitiae the ex parte order should be set aside.

Secondly, she submitted that, KB Contractors, the Complainant in these proceedings is not a legal entity to bring suit under the Companies Act. There is no such entity as KB Contractors registered with Investment Promotions Authority as the company search shows. At this juncture I mention that Counsel for Complainant Mr. Kirio handed to Court a copy of Certificate of Registration which is under Kelly Brothers and not KB Contractors. The effect is that Complainant has no standing to bring this suit.

Counsel submitted that the affidavit show that, application was made promptly, there is reasonable explanation as why ex parte Judgment was allowed to be made and mostly importantly there is meritorious defence. MRDC clearly was not a party to the financial arrangement between the Complainant and First and Second Defendant and therefore Complainant has no action against MRDC.

Mr. Kirio on the other hand submitted that Default Judgment was properly entered by this Court. Since proceedings were filed it took some time for Default Judgment to be entered.

Mr. Kirio conceded that the summons was drafted by a layman and as such proper names and parties could have been mistaken. These could be rectified on application. I mention that this was not so at the time of entry of ex parte Judgment.

On the issue of whether or not MRDC is a proper party, Counsel submitted, that,
there is a connection as MRDC is a fund manager and not a trustee.

I have considered the affidavits filed in support of the orders sought as well as Counsel’ submission. I am satisfied that the application was made promptly, and that there is reasonable explanation given as to why Judgment was allowed to be made ex parte and that facts deposed to show meritorious defence.

In any case, the ex parte Judgment entered on 11th May 2005 was irregularly made on the basis that, Complainant is not a legal entity capable of suing or being sued. MRDC was not a party to the financial arrangement the Complainant had with First and Second Defendant and therefore has no action against it.

In all the circumstances, I grant the motions by the Third Defendant.

I make the following Orders:

1. The ex parte Judgments of this Court dated 11th May 2005 are set aside.

2. The entire proceedings DC 1000/05 and DC10001/05 are struck out.

3. Complainant pays the costs of these proceedings.

Posman Kua, Aisi Lawyers: Complainant
Gubon Lawyers: Defendant