PNG National Stevedores Pty Ltd v Baing [2000] PGLawRp 447; [2000] PNGLR 365 (1 June 2000)

[2000] PNGLR 365

PAPUA NEW GUINEA

[NATIONAL COURT OF JUSTICE]

PNG NATIONAL STEVEDORES PTY LIMITED; AND
BANK OF SOUTH PACIFIC LIMITED

V

THE HONOURABLE ANDREW BAING;
THE INDEPENDENT STATE OF PAPUA NEW GUINEA; AND
BANK OF SOUTH PACIFIC LIMITED; CROSS-CLAIMANT AND
PNG NATIONAL STEVEDORES PTY LIMITED; CROSS-DEFENDANT

WAIGANI: SEVUA J
19 April; 1 June 2000

Facts

This is an application by the first plaintiff for an order that the defence of the first and second defendants be struck out and judgment entered for the plaintiff pursuant to O 9 r 15(1)(b) National Court Rules for failure by the first and second defendants to file and serve a verified list of documents in compliance with an earlier order of the court. Order 9 r 15(1)(b) reads:

"Where a party makes default in filing or serving a list of documents or affidavit or other document, or in producing any document as required by or under this Division, the court may make such order as it thinks fit, including –

(a) ...

(b) if the proceedings were commenced by writ of summons and the party in default is a defendant - an order that his defence be struck out and that judgement be entered accordingly."

The first plaintiff filed and served notice of discovery pursuant to O 9 r 2(1) of the National Court Rules on 5 August 1996. The defendants defaulted. Then on 9 September 1996, the first plaintiff moved seeking an order that the defendants file their list of documents within 48 hours and the order was accordingly made. Yet again the defendants failed to comply with this order, but filed and served their list of documents on the first plaintiff on March 24 2000, soon after a Supreme Court ruling that reinstated their defence arising from an appeal against an earlier decision by the Registrar of the National Court that purported to strike out their defence pursuant to O 9 r 15(1)(b).

Held

1. In view of the fact that the Supreme Court has restored the defendants’ defence and they have now filed and served their list of documents, the matter should proceed to trial, even though there was apparently lack of interest by the defendants and their former lawyers, and they failed, initially, to take positive steps soon after judgment by default was entered against them.
   
2. To strike out the defendants’ defence and enter judgment for the plaintiff, when a verified list of documents was already filed and served, although belatedly, would be unreasonable. Shutting out a party so that he suffers judgment without a trial is a serious decision. Closing the door of justice to one party for failure to give discovery can only be justified when that party’s failure is seen as a factor intended to abort the trial and waste the Court’s time or when such failure was without justification and wholly unacceptable.
   

Counsel

G Sheppard, for first plaintiff.
C Davani, for second plaintiff.
I Molloy & L Igo, for first & third defendants.

1 June 2000

SEVUA J. This is an application by the first plaintiff for an order that the defence of the first and second defendants be struck out and judgment entered for the plaintiff pursuant to O 9 r 15(1)(b) of the National Court Rules for failure by the first and second defendants to file and serve a verified list of documents in compliance with the order of the Court. The plaintiff’s application is opposed.

I think the factual background of this matter should be mentioned, if only briefly, so that one appreciates the context in which the plaintiff’s application is made.

The writ of summons in this action was filed on 15 May 1995. On 13 September 1996 Justice Salika granted the following "Consent Orders":-

"1. That the first and second defendants make, file and deliver a list of documents verified by affidavits within forty eight (48) hours of the making of this Order.

2. That in default of compliance with the Order and on the filing of an affidavit of non-compliance, the defence be struck out and interlocutory judgment be entered for the plaintiff against the first and second defendants."
   

The orders were entered on 19 September 1996.

Then on 16 March 1998, an application to set aside the judgment entered on 19 September 1996 was heard by Kapi, DCJ, who delivered his judgment on 9 April 1998. In his judgment, the Deputy Chief Justice dismissed the application with costs.

The defendants appealed to the Supreme Court, which heard the appeal on 23 November 1999 and delivered its judgment on 23 February 2000. The Supreme Court made several orders, one of which, was that, the order of the National Court dated 9 April 1999 be quashed. I think there is an error in that order, in that 9 April 1999, should have been 9 April 1998, since the National Court order was made on 9 April 1998, not 9 April 1999.

One of the reasons for the Supreme Court decision was that the National Court had jurisdiction to set aside judgments entered irregularly because the Registrar had no jurisdiction to make orders under O 9 r 25(1). That jurisdiction remains with the National Courts.

I wish to traverse briefly from this application to the judgment of the learned Deputy Chief Justice, because I consider that some factual background information in that judgment are relevant in understanding this application, especially, where the orders of 19 September 1996, are said to be "consent orders".

The first plaintiff brought a claim against the defendants, claiming it had suffered loss as a result of changes in the Government’s policy in relation to the granting of stevedoring licences. The plaintiff had a stevedoring licence in pursuance of an amendment to s 192 of Harbours Board (General) (Amendment) By Law (Chapter 40), which amendment was contained in Statutory Instrument No.1 of 1994. The effect of the amendment in that provision was that only citizen-owned stevedoring companies were to engage in stevedoring operations. The first plaintiff was incorporated as a 100% citizen-owned stevedoring company for purposes of carrying out stevedoring operations in Port Moresby and Lae, having been granted a stevedoring licence on 1 July 1994.

In January 1995 the Harbours Board changed its policy. Section 192 of the Harbours Board (General) By Law (Chapter 40) was repealed by Statutory Instrument No. 2 of 1994. The effect of that policy change was that stevedoring operations was now open to foreign-owned companies.

Following the filing of defence by the defendants, the first plaintiff served notices of discovery on the first and second defendants on 5 August 1996. I should say at this juncture that, the second defendant, PNG Harbours Board, is no longer a party to these proceedings. When the first and second defendants failed to respond to the notice of discovery, the first plaintiff filed a motion on 22 August 1996 for orders for discovery of documents. An order was granted on 30 August 1996 and entered on 11 September 1996. That order required the first and second defendants to file and deliver documents within seven (7) days of that order. The first and third defendants were served with that order on 12 September 1996, a day after entry.

By the seventh day, the first and third defendants had not complied with the order entered on 11 September 1996. The first and third defendants’ failure led to the granting of the consent order on 13 September 1996, and entered on 19 September 1996. It is important to highlight, firstly, that the first order required the first and third defendants to file and serve a list of documents verified by affidavits within forty-eight (48) hours. Secondly, if the first and second defendants did not comply with that order, their defence would be struck out and judgment entered against them.

This Court notes that the entry of interlocutory judgment by the Registrar on 17 September 1996, was not mentioned by Kapi, DCJ., however, counsel for the first and third defendants referred to it in his submission, and that fact has not been refuted by the first plaintiff. It is obvious that the Registrar entered judgment against the first and third defendants following their default in complying with the conditional consent orders entered on 19 September 1996.

There is one salient feature of this case that appears to be of some significance. When interlocutory judgment was entered by the Registrar on 17 September 1996, the first and third defendants did virtually nothing until some sixteen or seventeen months later when they decided to make an application to set aside the conditional consent order of 19 September 1996. That application was made on the 10 February 1998 and heard by the Deputy Chief Justice on 16 March 1998. As I have already adverted to, the Deputy Chief Justice refused to set that order aside on 9 April 1998, because he considered that the application to set aside was not made within a reasonable time. That refusal led to the appeal to the Supreme Court by the first and third defendants.

The first and third defendants lodged their appeal on 14 April 1998, and following interlocutory applications, the appeal was eventually upheld by the Supreme Court on 23 February 2000. The first and third defendants’ defence were reinstated by order of the Supreme Court, so in essence, we are back to the stage of discovery in the National Court.

From the evidence of Mr Kassman on behalf of the respondents in this application, the first plaintiff had filed its notice for discovery on 5 August 1996. By r 2(1) of O 9 National Court Rules, the defendants had 14 days after service on them, to give discovery by filing and serving a list of documents required by the notice of discovery. There is no evidence as to why they defaulted. Again, on 9 September 1996, the first plaintiff, filed another motion seeking an order that the defendants file their list of documents within forty eight (48) hours. The order for discovery was made on 30 April 1996 and I am assuming that this only relates to the plaintiffs motion filed on 22 August 1996.

It seems to me that the first and second defendants are the cause of all these applications. Mr Kassman made no mention in his affidavit as to the reason his client defaulted. There is no evidence why they failed to file a list of documents following the order of 30 August 1996, and there is no evidence as to why they consented to the conditional order, but failed to comply with the 48 hours time limit. Whilst I accept that Monday, 16 September 1996, was Independence day anniversary therefore a holiday, there is no explanation as to why nothing was filed on 17 September despite the first plaintiff’s application resulting in the irregularly entered judgment of the Registrar.

When this application was made, I asked if the entry of judgment against the first and third defendants had prevented them from filing their list of documents. Mr Sheppard for the applicant said no because the time limit stipulated was 48 hours. Given the accepted fact that Monday 16 September was a public holiday thus the registry was closed, I consider that the defendants could still have filed their list of documents on Tuesday 17 September, or Wednesday 18 September 1996 by virtue of the time of reckoning in O 1 r 14(2) and (4) National Court Rules. As the conditional order was made on Friday 13 September the 48 hours excluded Saturday 14, Sunday 15 and Monday 16. The 48 hours therefore expired on Wednesday, 18 September 1996. The time reckoning under this rule therefore excluded those days because the registry was closed. I do not think both defendants could sit back and blame the plaintiff for entry of judgment irregularly. In my view, the defendants directly contributed to the irregular entry of judgment against them. They failed to allow discovery when required to do so.

However, that is not the issue in this application. Mr Kassman said in his affidavit that from 17 September 1996 until the Supreme Court decision on 23 February 2000, the default judgment went against the first and second defendants. I do not accept that. As I have already adverted to, they just did not do anything to set it aside until 10 February 1998. There can be no doubt in anyone’s mind that the entry of default judgment by the Registrar was irregular, because he is not the Court or a Judge therefore he cannot exercise that judicial function. I am aware that prior to this present case, there has been, at least, two National Court decisions on that issue, one of which was my own decision in Lae and the other was Doherty, J’s decision. Had the first and third defendants’ previous lawyers read the rules and those judgments, they might have taken positive steps to have the judgment set aside within a reasonable time.

Despite what I have adverted to above, I am of the view that when the appeal was pending in the Supreme Court between 14th April, 1998 and 23 February 2000, the first and third defendants were not in a position to do anything in the National Court. However, from the affidavit of Mr Kassman, they filed and served their list of documents on the first plaintiff on 24 March 2000; a month after the Supreme Court decision.

In view of the fact that the Supreme Court has restored the defendants’ defence and they have now filed and served their list of documents, I consider that the matter should proceed to trial, even though there was apparently lack of interest by the defendants and their former lawyers and they failed initially, to take positive steps soon after judgment by default was entered against them.

The amount of damages claimed by the first plaintiff is not specified, however, in the original statement of claim, the sum of K3,000,000.00 is mentioned and that is quite a substantial claim. In my view, to strike out the defendants’ defence and enter judgment for the first plaintiff, when a verified list of documents has already been filed and served, although somewhat belatedly, because of an appeal pending in the Supreme Court, would be unreasonable. I consider that with a substantial claim like this, the matter should proceed to trial and shutting out a party so that he suffers judgment without a trial is quite a serious decision. It is my view that closing the door of justice to one party for failure to give discovery can only be justified when that party’s failure is seen as a factor intended to abort the trial and waste the Court’s time or when such failure was without justification and wholly unacceptable.

I would therefore decline the first plaintiff’s application, but make no order for costs as I am of the view that the plaintiff has been forced into making the application because of the attitude and failure by the defendants prior to the lodging of the Supreme Court appeal. I therefore order that costs be in the cause.

Lawyer for first plaintiff: Maladinas Lawyers.
Lawyer for second plaintiff: Blake Dawson Waldron.
Lawyer for first & third defendants: White & Kassman.