Kesno (trading as Kesno Lawyers) v Lucky Lao Ltd [2021] PGDC 7; DC5058 (25 February 2021)

DC5058

PAPUA NEW GUINEA

[IN THE DISTRICT COURT OF JUSTICE

SITTING IN ITS CIVIL JURISDICTION]

CV 463 of 2020
BETWEEN

STEVEN KESNO TRADING AS KESNO LAWYERS
Complainant

AND

LUCKY LAO LIMITED
Defendant

Lae: L Wawun-Kuvi

2021: 3, 17 December 2020, 4, 23, 25 February      

CIVIL LAW- DEBT-Default Summons -Lawyer suing for legal fees

Cases Cited
Umba v Koral [2008] PGDC 113; DC 798

References
Companies Act 1997
District Court Act 1963
Lawyers Act 1989

Counsel
Mr Steven Kesno, for Kesno Lawyers
Defendant no appearance

25 February 2021

1. L Wawun-Kuvi, Magistrate: Unfitting for its name, the defendant has found itself being somewhat unlucky. It sought legal assistance for the purchase of a property here in Lae and decided to try its luck with escaping the legal fees.
2. Well as one would have it, luck has certainly run out for Lucky Yao Limited. Kesno Lawyers has come to Court to once and for all put an end to its so far lucky streak.
3. I am left now to decide whether Lucky Yao owes Kesno Lawyers the sum of K6820.00 for legal fees.

Preliminary Issues

Do I have jurisdiction to determine the matter?

4. Yes.
5. Section 21 (b) DCA permits me as a magistrate to hear amounts up to K8000.00.

Was the Defendant Served?

6. Yes.
7. Both affidavits of one Ronny Lavuvur in the employ of Kesno Lawyers establish that the defendant was served by way of post.
8. Mr Kesno submits that service is in accordance with the law specifically, s157 (1) (b) District Court Act. He says that the service has complied with the Companies Act 1997.
9. Section s157 (1) (b) DCA, provides that service for a company must be done in accordance with the Companies Act. Section 431(1) (d) of the Companies Act 1997 states that a company may be served a summons in a legal proceeding “by posting it to the company's registered office, or address for service, or postal address”.
10. The Company Extract from 11 February 2021 lists the postal address as P.O Box 999, Lae. That is the address in which all documents have been posted.

Is the Defendant a registered company?

11. Yes.
12. Mr Keson attaches the Company Extract from 11 February 2021, which confirms that the Defendant is a registered Company under the Companies Act 1997.

Is the Complainant a registered company?

13. Yes.
14. Mr Kesno in his affidavit dated 20 November 2020 at paragraph 1 states that the Complainant is a registered company.
15. Whilst Mr Kesno has not attached the Complainant’s Company Extract, I take judicial notice of the Company profile which is available online as public records in the Investment Promotion Authority’s website.^[1]
16. Having satisfied myself that I have jurisdiction and both the complainant and defendant are legal entities, I now proceed to determine the process to be applied in a default summons.

What is the process in relation to a default summons?

17. Mandatory requirements under section 157(1) are:
    • (1) The default summons must be in the prescribed form.
    • (2) Two notices of intention to defend in the prescribed form must be attached to the summons.
    • (3) The summons must be served not less than 6 days prior to the hearing.
    • (4) In the case of a company, service must be in compliance with the Companies Act.
    • (5) The person who serves the summons shall depose an affidavit and file it with the Clerk.
    • (6) The Defendant has up until 48 hours before the return of the summons to file his defence.
    • (7) Where there has not been a defence, the complainant need not appear and the Court can proceed in his absence and make an order in his favour.

Was the process complied with in this case?

18. In the present matter, the summons and the notices are in the prescribed.
19. Service as indicated above has been effected in accordance with the law.
20. The matter was made returnable on 4 February 2021. On 21 December 2020, the default summons, affidavit, Complaint and notice of hearing was sent via post to the registered postal address. This evidenced in the affidavit of Ronny Lavuvur dated 22 December 2020.
21. The matter was further adjourned to 23 February 2021. All the same documents were posted to the defendant. The only difference is the change of dates in the Notice. This is evidenced in the affidavit of Ronny Lavuvur dated 22 December 2020.
22. The Defendant had more than sufficient to file a defence. It has not done so.
23. This court is therefore empowered under section 157(4) to proceed in the absence of the defendant and determine the claim.

What is the evidence?

24. The affidavit of Steven Kesno dated 20 November 2020 provides:
    • (1) On or about 1 October 2017, the defendant engaged his services to purchase a property.
    • (2) He proceeded to review the Contract and amend it.
    • (3) The bill was sent to the Defendant on 31 January 2018. This is evidenced by annexure B.
    • (4) The defendant has not settled the bill.

What does the law say?

25. In the present matter because the breach of agreement or contract relates to legal fees, the Lawyers Act 1989 applies.
26. Section 62(1) of the Lawyers Act 1989 provides that a lawyer must not commence proceedings to recover costs until after one month of the date of delivery of the bill of the costs. The delivery must be in accordance with the Act.
27. In the present matter, Kesno Lawyers sent the bill on 31 January 2018 and made attempts to have the defendant settle that bill. The delivery of the bill as indicated above is in compliance with the Companies Act.
28. Section 62(4) of the Lawyers Act 1989 further stipulates that the bill of costs must be signed by the lawyer or a lawyer in the employment of the firm or be enclosed in a letter or accompanied by, “a letter that is so signed and refers to the bill; and be delivered to the party charged personally, by sending it to him by registered post to, or by leaving it for him at, his place of business, dwelling house or last known place of abode.”
29. This has also been complied with as indicated above.
30. Kesno Lawyers has complied with the relevant provisions of the Lawyers Act 1989 as they relate to bills.

Was there an agreement for legal services?

31. I am now left to decide whether there was an agreement between Kesno Lawyers and Lucky Lao Ltd.
32. In Umba v Koral [2008] PGDC 113; DC 798, Umba Lawyers sued the defendant for legal fees that was said to be owed by the defendant. The Court at paragraph 19-21 discussed section 66 of the Lawyers Act 1989. It provides for remuneration by way of an agreement. It states as follows:

“66. Remuneration by agreement.

(1) A lawyer may make a written agreement with his client as to his remuneration in respect of contentious or non-contentious business done or to be done by him.”[Emphasis mine]

33. Section 66 does not make it mandatory for a lawyer to enter into a written agreement.
34. Umba v Koral (supra) was contested. The defendant denied that he owed monies. The Court after consideration of the evidence found that there was no agreement between Umba Lawyers and the defendant.
35. In the present matter, the defendant has not appeared after consecutive service. The evidence of Mr Kesno remains unchallenged.
36. As section 66 of the Lawyers Act 1989 is not mandatory, I accept on the required standard that there was an agreement to provide legal services. That the service was rendered and the bill was not settled.
37. I therefore find that Lucky Star Ltd is indebted to Kesno Lawyers in the sum of K6820.00.

Costs

38. The Complainant seeks costs.
39. The power of the court to order costs in favour of the complainant is found under section 260 (1) DCA.
40. Section 260(2) provides that costs must not exceed the prescribed amounts.
41. Section 48 of the District Court Regulations refer to schedule 4 for the prescribed amounts.
42. Keson Lawyers seeks to recover an amount in excess of K6000, but not more than K8000. According to the schedule , in an undefended default summons under section 156 of the District Court Act, if a legal practitioner is employed the maximum professional cost allowable is K51.00.
43. I therefore order costs in the amount of K51.00.

Interest

44. Mr Keson asks this Court to order interest at 8% per annum.
45. This percentage was derived from the repealed Judicial Proceedings (Interest on Debts and Damages) Act 1962, Ch 52. That interest was the prescribed ceiling for proceedings taken against the State.
46. The Judicial Proceedings (Interest on Debts and Damages) Act 2015 has now repealed the 1962 Act. The ceiling is now 2%.
47. There are further two types of interest which can be calculated. Pre-Judgement interest which is calculated from the date when a cause of action arises, to the date of judgement.^[2] This is discretionary subject to the peculiarity of each case.
48. Whereas the second type of interest, Post Judgement interest, is mandatory. It is applied from the date of judgement until such time the debt is settled.
49. In the exercise of my discretion, I do not grant pre judgement interest but rather order post judgment interest at 2 % per annum until the debt is settled.

Orders

50. The Orders of the Court is as follows:
    1. Lucky Lao Limited is indebted to Kesno Lawyers in the sum of K6820.00.
    2. Post Judgement interest is applied at 2% per annum until the debt is settled.
    3. Lucky Lao Limited shall pay cost to Kesno Lawyers in the sum of K51.00.

Lawyer for the Complainant Kesno Lawyers

No Appearance of Defendant

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^[1] www.ipa.gov.pg
^[2] Section 4 of the Juddical Proceedings (Interest on Debts and Damages)Act 2015.