Demiga Debts Collections & General Consultancy Services Ltd v Kwan [2010] PGDC 22; DC958 (15 June 2010)

DC958

PAPUA NEW GUINEA
IN THE DISTRICT COURT OF JUSTICE SITTING IN ITS CIVIL JURISDICTION

COMPLAINT No. DCC 40 OF 2010

BETWEEN:

DEMIGA DEBTS COLLECTIONS & GENERAL CONSULTANCY SERVICES LTD
Complainant

AND:

HENRY KWAN
First Defendant

BAIDAL MOTORS LTD
Second Defendant

Madang: J Kaumi

2010: 13th 27th 31st May 3rd 10th 15th JUNE

SUMMARY CIVIL PRACTICE & PROCEDURE –Complainant -Application for default judgment-Was Defence filed out of time-preconditions for entry of default judgment-checklist to be satisfied-court has discretion whether to enter default judgment when defendant in default-National Court Rules, Order 12 Rule 32

The complainant in the substantive matter is claiming against the defendants for damages and loss he claims to have suffered as a result of the defendants’ non-payment of a 20% commission in full for debt collections services he rendered to them. The complainant filed a default summons and served it on the defendants, who filed a notice of intention to defend. The complainant submits that the defendant filed the defence late and therefore the defendants are in default of the rules as provided for by ss. 157 and 158 of the District Courts Act. The complainant made an application for default judgment.

Cases cited

The Government of Papua New Guinea and Richard Harold Davis v Stanley Baker [1977] PNGLR 386,

Mapmakers Pty Ltd v Broken Hill, Proprietary Limited Company [1987] PNGLR 78,
Chief Collector of Taxes v Dickson Panel Works Pty Ltd [1988] PNGLR 186, National Court, Bredmeyer J)
Luke Tai v ANZ Banking Group (PNG) Ltd (2000) N1979, National Court, Kapi DCJ
Giru v Muta [2005] N2877 (12 August 2005)

Kunton v Junias [2006] SC929

Tima v Korohan [2006] N3045 (3 April 2006)

Fuliva v Wagambie [2007] WS 1406 of 2006 (22 May 2007)

Kiso v Workers Mutual Insurance (PNG) Ltd [2007] N3210 (6 September 2007)
Singat v Commissioner of Police [2008] SC910 (2 May 2008)

Overseas case cited
Pope v Aderdeen Transport Co [1965] N.S.W.R.1550

Held:

1. The premise on which an application for default judgment is made is that the procedures stipulated by law have not been complied with. Therefore it is incumbent upon the complainant/applicant making the application to strictly prove that these stipulated procedures have not been complied with (e.g. proper service of writ of summons or the giving of the mandatory forewarning etc) by his opponent before he is entitled to judgment. Tima v Korohan [2006] PGNC 21; N3045 (3 April 2006) Kiso v Workers Mutual Insurance (PNG) Ltd [2007] PGNC 100; N3210 (6 September 2007), Giru v Muta [2005] PGNC 83; N2877 (12 August 2005.

2. In determining whether a default judgment should be entered there is a checklist of at least six items that the court should consider:-
(a). Motion must be in a proper form and supported by affidavit;
(b). It must be served in accordance with the rules;
(c).There must be proof that the defendant has not filed a notice of intention to defend;
(d).Or if a notice has been filed that the complainant has warned the defendant of an impeding application for default judgment;
(e).There must be proof of default in filing a defence
(f).Proof of service of writ,
- if one of the items on the checklist is not ticked, the court will refuse the application. Giru v Muta [2005] N2877.
3. If all items on the checklist are satisfied the matter is ripe for entry of default judgment.Giru v Muta [2005] N2877 (12 August 2005).
4. An application of this nature is purely founded on the technicalities, deficiencies or defaults in compliance with the rules of the court, which are only a means to an end and not an end in them as opposed to the normal way of proving one’s claim in the substantive matter in court. It is akin to a shortcut to obtaining judgment and for this reason it is paramount that the applicant strictly prove six preconditions first, though this list is not is not by any means exhaustive. If the applicant fails to prove one of these requirements then default judgment will not be granted or should not be granted. Fuliva v Wagambie [2007] WS 1406 of 2006 (22 May 2007),Giru v Muta [2005] N2877 (12 August 2005), Kiso v Workers Mutual Insurance (PNG) Ltd [2007] N3210 (6 September 2007), Singat v Commissioner of Police [2008] SC910 (2 May 2008)
5. The courts have a duty to ensure that proper submissions are made on all aspects before grant of default judgment (all the preconditions) Fuliva v Wagambie [2007] WS1406 of 2006.
6. The entry of default judgment is not a matter of right. There are certain preconditions that have to be satisfied but even when all are satisfied, the decision whether to enter default judgment is a matter for the discretion of the primary Judge. Kunton v Junias [2006] SC929
7. The applicant must forewarn a defendant who has filed a notice of intention to defend before filing and moving for default judgment. This decision formed the foundation for Practice Direction 1 of 1987 which reads:
"Default judgment-obligation to notify person or lawyer filing Notice of Intention toDefend
In N8588-Mapmakers Pty Ltd v Broken Hill, Proprietary Company, the Chief Justice has laid down the following principle to be followed when entering default judgments, namely that there must be a practice of forewarning lawyers of the opposite side (or the defendant if in person) before entering judgment where there is a Notice of Intention to Defend filed. . Singat v Commissioner of Police [2008] PGSC 10; SC910 (2 May 2008) -Mapmakers Pty Ltd v Broken Hill, Proprietary Limited Company [1987] PNGLR 78, The Government of Papua New Guinea and Richard Harold Davis v Stanley Baker [1977] PNGLR 386, Pope v Aderdeen Transport Co [1965] N.S.W.R.1550.
8. Another requirement that has been built into the Rules has been the requirement for a conduct of a search of the relevant court file to ensure that, there is no defence in the court file before filing and moving for default judgment. Singat v Commissioner of Police [2008], SC910 (2 May 2008)

9. The complainant has not satisfied all six pre-conditions and therefore this proceeding is not ripe for entry of default judgment.

10. The issue of qualification of the complainant to appear in these proceedings or in the National Court is irrelevant to the relevant issue in this application for default judgment proceedings and as such I will not address it.

11. The defendants raise a good defence but whether it is borne out is a matter for the normal evidentiary process of the trial proper.

12. If all the pre-conditions made the application ripe for entry of default judgment this would not have necessarily meant that the complainant would have been entitled to default judgment as of right. The court would still have discretion to exercise whether or not to enter default judgment for the complainant by taking into account first a wide range of considerations. See Giru v Muta [2005] N2877 (12 August 2005).
13. The court in the exercise of its discretion is required to do so with the interests of justice in mind. See Giru v Muta [2005] N2877 (12 August 2005).

14. The application for default judgment is accordingly refused, with no orders to costs.

Relevant Legislation

Constitution of Papua New Guinea
National Court Rules
District Courts Act

Counsel:

Complainant in Person
Mr W. Akuani for the Defendants

15th June, 2010

INTRODUCTION

1. Kaumi, M: The matter before me this morning is an application for default judgment made orally by the complainant for which supporting affidavits were filed later. The complainant filed a default summons and served it on the defendants, who filed a notice of intention to defend. The complainant submits that the defendant filed the defence late and therefore the defendants are in default of the rules as provided for by ss. 157 and 158 of the District Courts Act. The defendants submit that they were not late in filing the defence. They oppose the application.

BACKGROUND

2. The complainant in the substantive matter is claiming against the defendants for damages and loss he claims to have suffered as a result of the defendants’ non-payment of a 20% commission in full for debt collections services he rendered to them.

3. The complainant claims that the defendants engaged him to collect a debt of K42, 023.00 from JKT Lim being the storage charges for six (6) heavy duty earth-moving machines. The first defendant is the owner and managing Director of the Second Defendant. The complainant claims that he recovered the debt of K42, 023.00 but the defendants reneged on a deal to pay him 20% of this recovered debt by paying him only K2, 000.00 with a total of K7, 004.60 still owing.

4. To gain a better understanding and appreciation of the complainant/applicant’s position and the basis of his application for default judgment and also the defendants’ response it is necessary for me at this juncture to set out in chronological order the events that transpired in the District Court

7th April 2010- Default Summons filed
22th April 2010 Defendants filed notice of intention to defend
29th April 2010 Notice of Intention to Defend filed but not served on Complainant. Defendant to serve Notice of Intention to Defend and Defence on Complainant
13th May 2010 Notice of Intention to Defend and Defence not served on Complainant. Matter adjourned for these documents to be served on the Complainant.
27th May 2010 Defendant seek leave of Court to serve copy of Notice of Intention to Defend and Defence on the Complainant at the bar table and leave is granted. Complainant makes a verbal submission objecting to the said service. Parties to file submissions.
31st May 2010 Complainant filed submission, Amended Affidavit in support of Oral Application of 27/05/10 for Default Judgment, Affidavit in support of Oral Application of 27/05/10 for Default Judgment.
3rd June 2010 Defendant did not file submission. Matter further adjourned.
8th June 2010 Defendants file submission.
10th June 2010 Defendants’ submission filed but not served on the complainant. Matter further adjourned to allow service on the Complainant of this document.

RELEVANT ISSUE

5. The relevant issue in this matter is whether or not default judgment should be entered against the defendant.

RELEVANT LAW

6. There is legislation which are pertinent to the outcome of the relevant issue and they are as follows:-

District Courts Act

Sec. 22. GENERAL ANCILLARY JURISDICTION.

Subject to this Act, a Court as regards a cause of action for the time being within its jurisdiction, shall, in proceedings before it–

(a) grant such relief, redress or remedy, or combination of remedies, whether absolute or conditional; and

(b) give the same effect to every ground of defence or counterclaim, whether equitable or legal,

as ought to be granted or given in a similar case by the National Court and in as full and ample a manner.

Sec.157. SERVICE OF DEFAULT SUMMONS.

(4) If the defendant or his legal representative does not give notice of his intention to defend a complaint to which this Division applies by serving notice at least 48 hours before the time appointed for the return of the default summons on the Clerk at the place where the Court sits, and–

(a) personally or by post on the complainant at his address specified in the summons; or

(b) on his legal representative at his address if specified in the summons,

the complainant need not attend personally or otherwise or prove his claim, and an order in his favour may be made by the Court in his absence.

Sec.158. WHERE NO NOTICE GIVEN DEFENCE NOT ALLOWED EXCEPT BY PERMISSION OF COURT.

(1) If a defendant on whom a default summons is served under Section 157 does not give notice to defend within the time specified in that section, he shall not be allowed on the hearing of the complaint to make a defence to the claim except by permission of the Court and then only on such terms as to costs and otherwise as the Court determines.

(2) If permission to defend is given under Subsection (1), the hearing of the complaint–

(a) may be adjourned to some other day to be fixed by the Court–

(i). if the complainant or his legal representative desires; or

(ii). if the Court thinks fit; and

(b). shall be adjourned if the complainant or his legal representative is not present and the Clerk shall give written notice of the adjournment without delay to the complainant by post or otherwise.

PRACTICE DIRECTIONS-NATIONAL COURT RULES

12. Practice Direction NCR 1/87 reads:

"PRACTICE DIRECTION NC 1/87 (Issued 15th June, 1987)

DEFAULT JUDGMENT – OBLIGATION TO NOTIFY PERSON OR LAWYER FILING NOTICE OF INTENTION TO DEFEND

NATIONAL COURT RULES

Order 12 rule 25

"25.default (17/2)

A defendant shall be in default for the purposes of this Division—

(a) where the originating process bears a note under Order 4 Rule 9, and the time for him to comply has expired but he has not given the notice; or

(b) where he is required to file a defence and the time for him to file his defence has expired but he has not filed his defence; or

(c) where he is required under Order 8 Rule 24 to verify his defence and the time for him to verify his defence in accordance with that Rule has expired but he has not so verified his defence."

PREVIOUS CASES

7. The premise on which an application for default judgment is made is that the procedures stipulated by law have not been complied with. Therefore it is incumbent upon the complainant/applicant making the application to strictly prove that these stipulated procedures have not been complied with (e.g. proper service of writ of summons or the giving of the mandatory forewarning etc) by his opponent before he is entitled to judgment. Tima v Korohan (1), Kiso v Workers Mutual Insurance (PNG) Ltd (2), Giru v Muta (3).

8. An application of this nature is purely founded on the technicalities, deficiencies or defaults in compliance with the rules of the court, which are only a means to an end and not an end in them as opposed to the normal way of proving one’s claim in the substantive matter in court. It is akin to a shortcut to obtaining judgment and for this reason it is paramount that the applicant strictly prove six preconditions first, though this list is not is not by any means exhaustive. If the applicant fails to prove one of these requirements then default judgment will not be granted or should not be granted. Fuliva v Wagambie (4),Giru v Muta (5), Kiso v Workers Mutual Insurance (PNG) Ltd (6), Singat v Commissioner of Police (7)
9. If all items on the checklist are satisfied the matter is ripe for entry of default judgment. Giru v Muta (8)
10. It is incumbent upon the courts to ensure that proper submissions are made on all aspects before grant of default judgment (all the preconditions) Fuliva v Wagambie (9).
11. It should be noted that the entry of default judgment is not a matter of right. There are certain preconditions that have to be satisfied by the applicant but even when all are satisfied, the decision whether to enter default judgment is a matter for the discretion of the primary Judge. Kunton v Junias (10).
12. The law relevant to applications for default judgments has been discussed in many cases by the Supreme and National Courts and the principles emerging from them are evident in r.25 and there have been additional requirements built into this rule before default judgment can be entered, all of which necessary in the interest of doing justice on the merits of a case rather than a strict application of the Rules. See Singat v Commissioner of Police (11).
13. The first of these additional requirements is that the applicant must forewarn a defendant who has filed a notice of intention to defend before filing and moving for default judgment. This decision formed the foundation for Practice Direction 1 of 1987 which reads:
"Default judgment-obligation to notify person or lawyer filing Notice of Intention to Defend."
14. In N8588-Mapmakers Pty Ltd v Broken Hill, Proprietary Company (12), the Chief Justice has laid down the following principle to be followed when entering default judgments, namely that there must be a practice of forewarning lawyers of the opposite side (or the defendant if in person) before entering judgment where there is a Notice of Intention to Defend filed. . Singat v Commissioner of Police (13), Mapmakers Pty Ltd v Broken Hill, Proprietary Limited Company (14), The Government of Papua New Guinea and Richard Harold Davis v Stanley Baker (15), Pope v Aderdeen Transport Co (16)
15. Secondly, has been the requirement for a conduct of a search of the relevant court file to ensure that, there is no defence in the court file before filing and moving for default judgment. Singat v Commissioner of Police (17).
THE CHECKLIST

16. In the matter of Giru v Muta (18) Cannings.J succinctly setout the stipulated procedures that have to be proven in a checklist by an applicant before he can be considered a successful candidate for default judgment and if one of the items on this checklist is not satisfied then the court will refuse the application and I indebted to him and adopt as a matter of practice his guidelines as follows:-

No.1 Proper form

Is the notion of motion for default judgment in the proper form and is it supported by affidavit, as required by Division 4.5 (motions) of the NCR, in particular Rules 40 (contents of motion) and 44 (affidavits)?

No.2 Service of notice of motion and affidavits

(a). Has the notice of motion and the affidavit(s) in support and all other documents the plaintiff is relying on, been served on the defendant three days before the motion is heard, and is proof of service provided by an affidavit of service? (National Court Rules, Order 4, Rules 38 (notice necessary), 42 (time for service of notice), 43 (service) and 44 (affidavits) ) OR

(b). Has the defendant expressly or by implication waived compliance with those service requirements, e.g. is the defendant represented in court and ready and willing to argue this motion?

No.3 Default

(a).Has a notice of intention to defend NOT been filed or been filed late?

(b).Has a defence NOT been filed or been filed late?

(c).If the defendant is required to verify it’s defence, has the defence not been verified or has it been verified late?

No.4 Warning

(a).Has the defendant NOT given a notice of intention to defend? Or

(b). If the defendant has given notice of intention to defend, has the plaintiff given the defendant at least seven days notice of the intention to apply for default judgment as required by Practice Direction No.1 of 1987? (See Mapmakers Pty Ltd v BHP Co Pty Ltd (19), Chief Collector of Taxes v Dickson Panel Works Pty Ltd (20), National Court, Bredmeyer J)

No.5 Proof of Service of writ

(a).Has the plaintiff filed an affidavit proving due service of the writ of summons or notice of the writ on the defendant (NCRules Order 12 Rule 34(a)) (proof of service of writ) OR

(b).Has the plaintiff produced a copy of the writ that has been endorsed by the defendant’s lawyer with a statement that the lawyer accepts service of the writ on the defendant’s behalf? (NCRules O.12 Rule 34 (b)) (Proof of service of writ).

No.6 Proof of default

Has the plaintiff filed an affidavit proving the default upon which the plaintiff relies? (National Court Rules, Order 12, Rule 34(c) (proof of service of writ).

APPLICATION OF THE CHECKLIST TO THE IMMEDIATE CASE

17. I will now apply the checklist to the immediate case.

(a).No 1 is NOT OK. A notice of motion pertaining to this application was never filed before the moving of the application and only an affidavit was filed after the application was made verbally. The defendant takes issue with the manner in which the complainant has brought this application to court.

(b).No 2 is NOT OK. No affidavit of service of the motion and supporting affidavit was filed. The defendant takes issue with the mode of service.

(c).No 3 is NOT OK. The defendants filed their notice of intention to defend on 22/04/10 and Defence by leave of court on 27/05/10 and therefore are not in default of the National Court Rules or s.158 of the District Courts Act. (Luke Tai v ANZ Banking Group (PNG) Ltd (21)

(d).No 4 is NOT OK. The complainant has not issued a warning letter in relation to his intention to make an application for default judgment. Mapmakers Pty Ltd v BHP Co Pty Ltd (22)

(e).No 5 is NOT OK. There is no proof of service of the summons sworn and filed.

(f).No 6 is NOT OK. Although the affidavit of the complainant sworn and filed on 31/05/10 deposes to default by the defendants the above considerations show quite the opposite.

DISCRETION

18. The complainant has not satisfied all six pre-conditions by not strictly proving any of them and therefore this proceeding is not ripe for entry of default judgment.

DETERMINATION

19. In the exercise of my discretion I make the following orders:-

(i).The application is dismissed in its entirety.

(ii).Costs to be met by parties.

REMARKS

20. I wish to make the following comments:-

(i).The issue of qualification of the complainant to appear in these proceedings or in the National Court is irrelevant to the relevant issue in this application for default judgment proceedings and as such I will not address it.

(ii) The defendants raise a good defence but whether it is borne out is a matter for the normal evidentiary process of the trial proper.

(iii).If all the pre-conditions made the application ripe for entry of default judgment this would not have necessarily meant that the complainant would have been entitled to default judgment as of right. The court would still have discretion to exercise whether or not to enter default judgment for the complainant by taking into account first a wide range of considerations. See Giru v Muta (23).

(iv). Thme court in the exercise of its discretion is required to do so with the interests of justice in mind. See Giru v Muta (24).

Complainant in Person
Akuani Lawyers for the Defendants

________________________________________
(1). [2006] N3045 (3 April 2006
(2). [2007] N3210 (6 September 2007),
(3). [2005] N2877 (12 August 2005)
(4). [2007] WS 1406 of 2006 (22 May 2007)
(5). Supra Note.3
(6). Supra Note 2
(7). [2008] SC910 (2 May 2008)
(8). Supra Note 3
(9). Supra Note 4
(10). [2006] SC929
(11). Supra Note 7
(12). [1987] PNGLR 78,
(13). Supra Note 7
(14). [1987] PNGLR 78,
(15). [1977] PNGLR 386
(16). [1965] N.S.W.R.1550
(17). Supra Note 7
(18). Supra Note 3
(19). Supra Note 14
(20). [1988] PNGLR 186, National Court, Bredmeyer J
(21). (2000) N1979, National Court, Kapi DCJ)
(22). Supra Note14
(23). Supra Note 3
(24). Supra Note 3