Commodity Development Pty Ltd v Karai [1994] PGNC 96; [1994] PNGLR 463 (11 February 1994)

PNG Law Reports 1994

[1994] PNGLR 463 - Commodity Development Pty Ltd v Peter Karai 

[1994] PNGLR 463

N1260

PAPUA NEW GUINEA

[NATIONAL COURT OF JUSTICE]

COMMODITY DEVELOPMENT PTY LTD

V

PETER KARAI

Rabaul

Doherty J

11 February 1994

PRACTICE AND PROCEDURE  - Ex parte judgments - District Courts Act s 25 - Whether National Court precedents properly followed.

Facts

The Rabaul District Court entered ex parte judgment in favour of the respondent, the complainant in the court of first instance. The appellant filed a motion under s 25 District Courts Act seeking to have the ex parte order set aside. The District Court refused the motion on the ground that no defence was shown on the merit, in accordance with the precedents set by the National Court. On appeal, the appellant argued that the defence on the merit is a procedure under s 159 of the District Courts Act and it does not apply to s 25.

Held

Although s 25 District Courts Act and O 12 r 35 National Court Rules are not the same, the wording is sufficiently similar and similar principles apply. Hence, the District Court properly applied the National Court precedents that three conditions had to be met to set aside a regularly entered default judgment viz:

N2>1.       There must be an affidavit stating facts showing a defence on the merits.

N2>2.       There must be a reasonable explanation why judgment was allowed to go by default; and

N2>3.       The application must be made promptly and within a reasonable time.

Cases Cited

Barker v PNG [1976] PNGLR 340.

Fleming v Dau [1983] PNGLR 339.

Green & Co Pty Ltd v Green [1976] PNGLR 73.

Counsel

P Ousi, for the appellant.

The respondent in person.

11 February 1994

DOHERTY J:  The appellant corporation appeals against a decision of the Rabaul District Court, which refused to set aside an ex parte judgment entered in favour of the respondent; that is, the complainant in the lower court.

It appears from the facts that the respondent filed what was called a default summons in the lower court and the matter came for hearing after service. In actual fact, the case was treated not as a default summons, but as an ordinary summons. It was listed for trial and there was an ex parte hearing of the complaint. The complainant gave evidence. He appears not to have called any witnesses.

The appellant, the defendant in the lower court, had been represented initially by counsel. According to the record, he had asked for adjournments in order to try to find the files relating to the case.

There had been a previous adjournment. Then the matter was set for hearing on 22 October 1993 at 8:30 am. Apparently both parties appeared on that day and there is an affidavit from counsel for the company showing that he did appear at 8:30, but the matter was not called, and it was adjourned, apparently awaiting another magistrate to come and deal with it.

It was then heard in the absence of the lawyer. Exactly what time it was heard that day I do not know. The judgment was entered on 25 October, that is on the Monday. The hearing apparently was on Friday 22 October.

In a supporting affidavit, the lawyer for the company explains that he had waited and then he went in and attended the National Court, being unaware that, in fact, a magistrate had arrived and started to hear the case. He applied under s 25 District Courts Act to have the matter set aside, but that application was refused. He appeals against that decision.

Section 25 provides that a conviction or order where one party does not appear may be set aside on the application to the Court, on such terms as to costs or otherwise as a court thinks just; and the court, on service on the other party, and on such reasonable notice as the court directs, may proceed to a hearing.

I notice in passing that provisions of s 159 District Courts Act were not used. I think that was a reasonable procedure because, although the summons was originally a default summons, it was not treated as such in the District Court.

The affidavit in support of the application to set aside stated that the lawyer appeared, and presented a reasonable explanation why he did not actually attend the hearing. He filed his affidavit and his explanation three days after the Order was entered.

The ground for refusing the setting aside of the application was apparently because there was no defence on the merits. There is a court record showing that on 12 November, 1993, the learned Magistrate refused to set the judgment aside. He states, "The Defendant had the case adjourned, he had ample time to find out the information as to the progress of the case, judgment will be properly entered if the defendant wants to set aside he must not only show his reason for non appearance, but also his defence on the merits and he did not do so." (sic)

Counsel for the appellant argues before me that the defence on the merit is for proceedings under s 159 of the District Courts Act, and that does not apply to s 25.

The National Court has considered the provisions in the National Court Rules for setting aside ex parte judgments on several occasions. The leading cases are Barker v PNG [1976] PNGLR 340 and Green & Co Pty Ltd v Green [1976] PNGLR 73. These related to the former National Court Rules but have been followed since the introduction of the new rules in 1983.

The precedents show that three conditions have to be met for the setting aside of a regularly entered default judgment. They are as outlined in Barker's case at p 341:

N2>"(1)     There must be an affidavit stating facts showing a defence on the merits;

N2>(2)      There must be a reasonable explanation why judgment was allowed to go by default; and

N2>(3)      The application must be made promptly and within a reasonable time."

These are the three grounds that have been followed on numerous occasions by the National Court in considering applications under the National Court Rules to set aside a default judgment regularly entered.

The provisions of the National Court Rules are set out in O 12 r 35, and state that a court may, on such terms as it thinks just, set aside or vary a judgment entered in pursuance of the division (that is, the default provisions).

It will be noted the similarity of this rule to the wording of s 25 of the District Courts Act, which provides that an order or conviction may be set aside on application to the court on such terms as to costs or otherwise as the court thinks just.

Mr Ousi argues that there was no order or application made for the filing of defence, provided for in the District Courts Act s 138, that practice having grown up in some District Courts.

Normally, that provision depends first on an application by a plaintiff seeking to have a defence filed. It is not a mandatory provision, and the District Court is not obliged to order filing of a defence on its own volition.

The plaintiff did not seek to have a defence filed. I think this may well be because he is a villager and does not know the rules and the laws relating to courts. I note also that counsel who appeared for the appellant did not volunteer one.

The District Courts, when applying s 25, have consistently and regularly adopted the National Court decisions in Green & Co Pty Ltd v Green and Barker v PNG supra. The National Court Rules and the District Courts Act are two distinct and different pieces of legislation with different provisions. As I have quoted above, they have different but similar provisions relating to the setting aside of ex parte default judgments. As was stated by Kidu CJ in Fleming v Dau [1983] PNGLR 339 at 340, where magistrates are bound by decisions of the National Court and the Supreme Court, they must adhere to any directions given by these courts. I have not been referred to any precedent directing the District Court to follow the ruling in Barker v PNG, nor have I been able to find such a ruling, but given the similarity in the National Court Rules and s 25 District Courts Act, together with the same principles of justice involved, I think it was quite proper for the District Court to adopt the procedures and principles in the Barker ruling.

I cannot find any error on the part of the learned magistrate. I think he was entitled to follow the National Court decisions which have been consistently followed in the application of s 25. I accept that there was a misunderstanding on the part of the counsel for the appellant, and it was not his fault that he did not appear. It was a fault partly of the court. On the face of the record, the judgment was regularly entered, and there is no defence on the merits presented to the District Court. I have gone through the evidence in the lower court to ask myself if there was a bona fide case for setting aside and if the facts themselves show that the learned magistrate erred in finding for the plaintiff.

On the face of the evidence, it is arguable that the respondents failed to check the numbers of the fermentery etc. of cocoa brought and although, if the case was fully argued, the appellants may have been able to convince the magistrate they were not negligent, on the facts before him, he was entitled to find as he did and to enter this judgment. There has been no defence on the merits shown in the application to the District Court, and I consider the learned magistrate properly followed the precedents.

I agree with the findings of the District Court and I do not uphold this appeal.

Lawyer for the appellant: Warner Shand.

Respondent appeared in person.