Wo'otong v Kamuli [2008] PGDC 34; DC698 (10 October 2008)

DC698

PAPUA NEW GUINEA
[IN THE DISTRICT COURT OF JUSTICE AT VANIMO]

CI NO: 143/2006

BETWEEN

JOHN WO’OTONG
Complainant

AND

MARTIN KAMULI
Defendant

VANIMO: A. ARUA
2008: 7 & 10 October

RULING

Notice of Motion - Application to commit defendant to prison for non payment of judgement debt - Imprisonment the last resort - Applicant to prove to the satisfaction of the court that defendant a fraudulent, deceitful or dishonest person who deliberately neglected or refused payment when he had the means to pay - Defendant recently showing real commitment to pay by making deposits – Amount now reduced significantly - Extension of time to pay appropriate in the circumstances.

Legislation.

District Courts Act, S. 192
Judicial Proceedings (Interest on Debts and Damages) Act.

Cases cited. Nil

10 October, 2008

A. ARUA. This is a motion filed by John Wo’otong (complainant/applicant), who is the judgement creditor against Martin Kamuli (defendant/respondent), who is the judgement debtor seeking the following orders:

1. That the respondent/defendant immediately pays me my outstanding default judgement order dated August 9, 2006, in the sum of K 4, 000.00 plus 8% interests.

2. That the respondent/defendant further pay damages for suffering and loss of business.

3. Pay costs in pursuance of this proceeding in the sum of K504.00.

4. In the alternative to orders 1 – 3, send the respondent/defendant to jail for none compliance with a court order for a period prescribed by the District Courts Act.

The facts which gave rise to this application are as follows.

On August 20, 2004, the parties entered into a written agreement between them for the complainant to sell his Toyota Hiace 15 seat bus and the defendant to purchase the same for K 10,000.00. However, after paying only K 2,000.00, the defendant defaulted, citing financial difficulties as his reasons for the non payment of the balance.

As a result of the default, the complainant sued the defendant on July 18, 2006, by registering a default summons to recover the balance of the agreed sale price which at that time stood at K 8,000.00.

On August 9, 2006, the matter came before Vanimo District Court and a default judgement was entered against the defendant to pay the remaining K 7, 700.00 by or, before October 30, 2006. However, after the order was made, the defendant failed to satisfy the order, again citing lack of money as his reason for the non compliance.

A warrant of execution was then issued on November 2, 2006, against the goods and chattels of the defendant but it was returned unexecuted on December 1, 2006, after the police found no sufficient goods and chattels belonging to the defendant to confiscate.

Having being unsuccessful in executing the warrant of execution the complainant on December 13, 2007, commenced proceeding by issuing summons to debtor against the defendant for oral examination.

It is at the oral examination stage that I took charge of the case upon my posting to Vanimo at the end of March this year.

Since I took charge of the matter on 26 March, this year, it had come before me several times and had been adjourned about nine times, at the request of the defendant and, with the consent of the complainant. The court also noted that the defendant had started to show some real commitment by starting to pay by making occasional deposits. Therefore, the adjournments were necessary to allow the defendant time to find money to complete the payment of the remaining amount, which now stands at K 3, 700.00.

After consenting to several adjournments the complainant filed a motion on 19 September, 2008, seeking to move the court on 22 September, for orders stated above. The court could not entertain the motion on 22 September, 2008, because it amounted to an abuse of process for the following reasons.

1. The substantive enforcement proceeding was still on foot and had been adjourned to 7 October, 2008, for check and for further deliberation. Whatever the complainant was seeking in his motion could be properly entertained at that hearing.

2. Furthermore, the complainant had not raised any objection to the adjournment. In fact he had consented to the adjournment and therefore could not come back to the court via a notice of motion to have the matter brought forward. If he wanted to present anything to the court, he would have to wait until the adjourned date when he would be afforded the opportunity to do so.

At the hearing on 7 October, 2008, the complainant was given that opportunity to present his arguments. In his presentation, he submitted for the same orders he had sought in his aborted notice of motion and relied on the same grounds he had stated in his affidavit.

The complainant told the court that he had been patient to the defendant’s requests long enough and had given enough time to the defendant to settle in full the remaining amount. The defendant had had almost five years from the date of the order up to now but had simply ignored the order.

He further told the court that the defendant was not honest enough and therefore could not be trusted any further by the court. That the defendant was only playing delay tactics to divert the court’s attention and the court had been too lenient to him. The delay had caused him, as the judgement creditor more suffering, loss of business and, further costs in following up on the outstanding payment.

In response to the complainant’s application, the defendant through his affidavit stated that he was still facing financial difficulties and could not complete the payment. At the date of this hearing he had managed to pay K300.00 only and requested more time to find some money to complete the payment.

He also told the court that the outstanding court order had placed too much burden on his family to the extent that he had to withdraw their elder daughter from her studies in Lae due to non completion of tuition fees because whatever little money he made occasionally had been used to pay the outstanding court order.

In considering the complainant’s motion, I wish to make it clear at the outset that it is not the business of this court to go back and ponder on the pros and cons of their initial agreement.

The fact as it stands is that there was an order made by Vanimo District Court on August 9, 2006, for the defendant to pay the complainant K 8, 000.00. That order remains unsatisfied to this date, although by a reduced amount of K 3,700.00.

Whether the court erred in making the initial order or, whether the order as it stands now is bad in law was a matter the defendant could have corrected by;

1. Applying to set aside the order pursuant to S. 159 of the District Courts Act; or

2. Appealing to the National Court pursuant to S. 219 of the District Courts Act.

The defendant failed to pursue the above options which were available to him at that time thus, the matter has now come this far.

Having said the above, I also wish to state here that the court had not been too lenient to the defendant in allowing the adjournments. In fact, the adjournments had been granted after giving equal consideration to the interests of the complainant and with his consent. For the complainant to suggest that the court had been lenient on the defendant is incorrect.

Furthermore, the court had been going along with the wishes of the parties because, after all the years of non payment the defendant had started showing commitment in paying up by making occasional deposits. For the court to disregard such payments and the defendant’s situation would not have been the correct option.

Most importantly, imprisoning the defendant would have affected the complainant’s interests as it would have delayed the payments by additional months or even years. It would have resulted in another long wait for the complainant again because the defendant would have been in prison rather than be out there looking for money to settle the judgement debt.

Having said the above, I would answer the complainant’s request for the orders he is seeking as follows.

For the first order that he is seeking, I do agree that the complainant is entitled to have the default judgement enforced. When considering the defendant’s reasons for the delay in payment, I agree that five years to settle the judgement debt is far too long than any reasonable wait. Any prolonged wait in my view would be unreasonable and unfair. It would also be a mockery of the court order; especially where judgement debtors may take it for granted that they can delay complying with a valid court order as they wish. Such a practice would undermine the rule of law and erode trust and confidence in the lower judiciary. Therefore, the court has a duty to have the outstanding order enforced in accordance with the set procedures of the District Courts Act.

However, for the claim for 8% interests to be awarded on the judgement debt from the date of the order up to now, I think that the Judicial Proceedings (Interest on Debts and Damages) Act leaves me with discretion in deciding whether to allow interests or not at the rate claimed by the complainant.

Section 3 of the Act states that;

3 Interest on debt under judgement or order

1. Subject to Subsections (2) and (3), where judgement is given or an order is made for the payment of money, interest shall, unless the court otherwise orders, be payable at the prescribed rate from the date when the judgement or order takes effect on such of the money as is from time to time unpaid (emphasis mine).

Section 3 in my view presents me with two options.

Firstly, where the original judgement or order states a rate of interest that a court should apply when awarding interest, the court shall apply that rate.

Secondly, where no rate is prescribed in the original order or judgement, the court may use its discretion to award interest on a rate it thinks is appropriate.

The Judicial Proceedings (Interest on Debts and Damages) Act, to my understanding also means that the 8% interest limit only applies to suits against or involving the State, S.3 (4). In any other cases where the interest rate is not prescribed, the court has discretion to decide on a rate that it thinks is appropriate.

In view of the above discretion, I note that the original order does not have a prescribed rate. It is therefore my view that where no rate is prescribed or, where payment of interest is not mentioned in the original order the court may exercise its discretion, firstly, in deciding whether to award interest or not, where interest is claimed by the judgement creditor and, secondly, if it has decided to award interest, the appropriate rate of interest to apply.

Due to the above and, with regard to the circumstances of this case, I have decided to exercise my discretion by deciding not to award any interest on the judgement debt. I note that the actions of the complainant may have contributed to the default judgement and the delay in payment by the defendant. I also note that the defendant may have had an arguable defence which was not considered properly or, which he may have presented to the court for its consideration had he been given the opportunity to present them properly before the court.

The original action was for a breach of contract and not a claim for a liquidated amount. It is therefore my view that the court should have proceeded to trial proper to interpret the terms of the contract and the reasons for the default, rather than proceeding to award default judgement even if the action was commenced by default summons. Due to the foregoing reasons, I think it is not appropriate to award interest in the circumstances. I therefore refuse to award interests on the outstanding judgement debt.

On the claim for damages for suffering and loss of business I think that it is not appropriate for me to make orders for such at this stage. I think that this part of the claim while arising from an outstanding judgement debt forms the basis for a separate and independent claim. The complainant will have to file formal and proper court proceedings and prove his claim through the normal process. He has not done that and therefore it would be an abuse of process and premature for this court to grant him the order.

On the alternative order for imprisonment I am of the view that it is not necessary at this stage. While Division 5 of the District Courts Act, provides for imprisonment of fraudulent debtors, Section 192(1) provides that an order for the payment of a debt or an installment of the debt;

"shall not, in default of distress or otherwise, be enforced by imprisonment –

(e) Unless it is proved to the satisfaction of the Court that the person making default in payment............etc" (emphasis mine).

The complainant didn’t prove to my satisfaction that the defendant is or, had been a fraudulent, deceitful or dishonest person in failing to pay up the judgement debt. In fact the defendant has now shown real commitment to satisfying the amount after all the years of delay for the reasons he himself has stated. To imprison him when he has now started paying up the judgement debt may not be the correct option and would not help the complainant’s cause either. It would result in another long wait for the complainant before he can recover the outstanding judgement debt. The appropriate option would be to give the defendant further extension of time to pay but, this time with a definite deadline.

As to the claim of K504.00 by the complainant for costs, again I do have discretion whether to award costs or not. Section 260 (1) gives me that discretion. The complainant has not established clearly how he had arrived at the costs of K504.00. No evidence such as receipts etc, have been produced. Accordingly, I do not propose to award it. I think that it is not appropriate in the circumstances.

In conclusion, the court orders as follows;

1. The defendant is hereby ordered to settle the remaining judgement debt of K 3, 700.00 on or before December 31, 2008.

2. Should he default on order No. 1, he be produced before the court to be sentenced in accordance with Section 192 (3) of the District Courts Act.

3. Parties meet their own costs.

Orders accordingly.

Complainant: In person
Defendant: In person