Johnston v Munro [2001] PGNC 133; N2089 (19 May 2001)

N2089

PAPUA NEW GUINEA

[IN THE NATIONAL COURT OF JUSTICE]

CIA NO. 273 OF 1999

BETWEEN:

TIM JOHNSTON
-First Appellant-

AND:

JOHNSTON PHARMACIES LIMITED
-Second Appellant-

AND:

WELLESLEY J.D. MUNRO
-Respondent-

WAIGANI: LENALI, J
2001 : 11, 19 May

PRACTICE AND PROCEDURE – Appeal – Appeal from decision of District Court – Refusal to grant application to set aside – Ex parte order – Proceedings conducted ex parte – District Courts Act Ss 25 and 143 – (Ch. No.40).

PRACTICE AND PROCEDURE – Appeal from decision refusing to set aside ex parte order – Defence – Defence on merit – Reasonable explanation not given – Application to set aside be made within reassemble time.

PRACTICE AND PROCEDURE – District Court – Application to set aside – Ex parte order – Ex parte order obtained by application at s.143 District Courts Act – Defence on the merit – Contract of Employment – Mode of resolution of dispute – An Arbitrator as required by contract in writing – Ex parte orders may have been made without jurisdiction.

Held: (1) Although Order 12 r 35 of the National Court Rules and s.25 of the District Courts Act are not the same, the wording of the two provisions are sufficiently similar and the same principles enunciated in Green and Company Pty v. Green [1976] PNGLR 73, Banker v. The Government of Papua New Guinea [1976] PNGLR 340, The Government of Papua New Guinea and Davies v. Banker [1977] PNGLR 386 and George Page Pty Ltd v. Malipu Bus Balakau [1982] PNGLR 40 do apply.

(2) When terms of a contract are contained in writing no evidence should be allowed to be added to or subtracted from, vary or qualify the written contract. Curtain Bros. (Qld) Pty Ltd v. Independent State of Papua New Guinea [1983] PNGLR 285.

(3) On proper analysis of all evidence put before the District Court hearing the application to set aside, the defence on the merit laid in the interpretation of the Contract of Employment.

Cases Cited:
The following cases are cited in the judgment.
Green & Co. Pty Ltd v. Green [1976] PNGLR 73

Banker v. The Government of Papua New Guinea [1976] PNGLR 340.

The Government of Papua New Guinea and Davies v. Banker [1977] PNGLR 386.
George Page Pty Ltd v. Malipu Bus Balakau [1982] PNGLR 140.

Commodity Development Pty Ltd v. Peter Karai [1994] PNGLR 463.
Curtain Bros. (Qld) Pty Ltd v. The Independent State of Papua New Guinea [1993] PNGLR 285.
Mapmakers Pty Ltd v. Broken Hill Pty Ltd [1987] PNGLR 78.

Counsel:
M. Titus, for the Appellants
T. Dawidi, for the Respondent

19 May 2001

LENALIA, J.: The appeal arose from the decision of the Port Moresby District Court on which the said Court on 15 September 1999 refused and dismissed an application to set aside an ex parte judgment entered in favour of the Respondent on 20 July of the same year. In order to fully comprehend the reasons why the Respondent obtained the ex parte order, I set out hereunder the brief facts of the case.

Facts:

The Respondent instituted proceedings against the two Appellants for two fortnight salaries due to him for pay periods between 6 January to 2nd February 1999. The total sum due to the Respondent for the two fortnights was K5,737.00.

The evidence on which the Presiding Magistrate relied on is contained in the Respondent’s affidavit evidence sworn on 30 June 1999 (see pages 13-16) A/B) and other documentary evidences (see pages 17-33 A/B) to substantiate what he had deposed to in his affidavit. The Respondent entered into a contract of employment with the first and second Appellants (see 17-19A/B) to be employed as a Manager of the second Defendant being the Johnstons Pharmacies Pty for an indefinite period. As the result of this agreement, the Respondent was granted a temporary visa but was merely valid for three months from 5 October 1998 to 5 January 1999. According to the Respondent such arrangement was solely done by the management of the 2nd Defendant.

On 2 December, 1998, the Respondent was granted a work permit which was and is valid until 10 November this year. However the temporary visa granted to the Respondent was to expire on 5 January 1999 and given to the fact that no extension of such visa was being arranged, the Respondent departed PNG to his country of origin being New Zealand. By the time he got to New Zealand, he found out that the PNG High Commission Office in New Zealand had been closed for the Christmas vacation.

The Respondent all that time was relying on the services rendered to the 2nd Appellant by the Pacific Management Ltd to expeditiously facilitate acquisition and issuance of both his work permit and the visa. It is the Respondent’s evidence that, he himself had to privately enquire with appropriate authorities to obtain his visa. By the time he was granted the visa, the Respondent had been away in New Zealand for a little over one month.

Upon return to PNG, the Respondent enquired with the two Appellants why his salaries for the two pay days, during which time he was away in his country of origin could not be paid to him. It took some times for the First Appellant to reply. It was the Respondent’s evidence before the trial Magistrate that a normal fortnightly salary payable to him by the Second Appellant was about K2,868.66. The Respondent waited for a response from the administration of the Second Appellant, wrote a letter to the First Appellant on 11 May 1999 giving notice of his termination of his contract (see Clause 9 of the Agreement).

The First Appellant subsequently replied to the Respondent on a letter dated 4 June of that year that the Respondent would not be paid his two fortnight salaries for the period of absence and that such period of absence would be classified as leave for which the Respondent could not be paid. It was from these dealings that the Respondent took out a Summons Upon Complaint suing the two Appellants for what he believed to be due to him.

When the Respondent appeared before the Trial Magistrate on 16 July 1999 he applied for a default judgment. It seems, such application was refused because the Magistrate commented on the worksheet (see 37 A/B) that, the summons was not a Default Summons so that the Respondent would not be entitled to a Default Judgment under Division 3 of Part VIII of the District Courts Act. The Court then directed that the case be proceeded with ex parte and by affidavit evidence. On 20 July 1999, the same Magistrate after having accepted the affidavit evidence filed by the Respondent entered an ex parte order against the two Appellants.

From the above decision, the two Appellants applied pursuant to s.25 of the District Courts Act to set aside the ex parte order. That section provides –

"25. Ex parte order may be set aside.

A conviction or order made when one party does not appear may be set aside on application to the Court on such terms as to costs or otherwise as the Court thinks just, and the Court, on service on the other party of such reasonable notice as the Court directs may:-

(a) proceed to hear and determine the information or complaint in respect of which the conviction or order was made; or

(b) adjourn the hearing and determination of the hearing to such time and place as it thinks fit and direct such notice of the adjourned hearing as it thinks fit to be given to a party".

The evidence put before the Magistrate hearing the motion to set aside are contained in two affidavits, that of Mr Peter Kuman sworn and filed on 7 and 8 September, 1999 and the other by Mr Goye Gileng filed on 7th of the same month. Basically the evidence reveals that on 16 July 1999 he appeared before His Worship Mr Passingan and noted that the matter had been mentioned in his absence because Mr Gileng attended to the another matter in the other Court room.

The presiding Magistrate who made the ex parte order informed Mr Gileng that, the case had been called and the Complainant applied for a default judgment but was refused on the basis that the case was not the subject of a Default Summons which is quite proper but indicated to Mr Gileng that, the case had then been set to 20 July for an ex parte hearing. Mr Gileng then indicated to His Worship that the two Defendants have not filed a defence as yet and they were to file one in due course. The Presiding Magistrate then directed Mr Gileng to file a defence by the hearing date (20.07.99) so that the trial date would have been vacated and rescheduled for hearing on a later date.

Mr Gileng further deposes that on 20th July 1999, he appeared in Court and saw Mr Arnold Amet (Jr) outside the Court room and informed him that, he (Mr Gileng) was attending to another case in the other Court room and thus requested the lawyer for the Plaintiff to ask the Presiding Magistrate to temporarily stood-over the case until Mr Gileng finished from Court No.1. As it turned out, as Mr Gileng was coming out from Court No.1, he saw the Plaintiff’s lawyer and the Plaintiff coming out from the other Court room.

Mr Gileng inquired with Mr Arnold Amet (Jr) what had happened to their case. The response he received was that the matter had been summonly determined and that an ex parte order had been entered in favour of the Complainant. Mr Gileng inquired further if, the Complainant’s lawyer had informed the Court about the convenient arrangement made between him and the lawyer for the Plaintiff. The Plaintiff’s lawyer answered that the Magistrate did not give him time to talk but went ahead to pronounce the decision which decision became the subject of an application to set aside.

I am grateful for the lawyer’s submission and your well researched extracts of submissions and the convenient statements on the law appropriate to the principles requiring that in an application to set aside an order entered by default an applicant must satisfy the Court that he has a defence on the merit and such defence must be supported by evidence on affidavit as well as an application to set aside must be made within a reasonable time.

Mr Dawidi for the Respondent argued that the Magistrate who made the ex parte order proceeded pursuant to s.143 of the District Court Act, and was quite proper to which I agree. This section provides:-

"143.Where defendant does not appear.

Where, in the case of a complainant, the defendant does not appear at the place and at the time specified in the summons, or at the place and time to which the hearing was adjourned or postponed, as the case may be, if –

(a) it appears to the Court on oath that-

• (i) the summons was duly served at least 72 hours before the time appointed in the summons for appearing; or
  
• (ii) an order for substituted or other service or for the substitution for service of notice by advertisement or otherwise was duly complied with; and
  

(b) no sufficient grounds are shown for an adjournment.

the Court may proceed ex parte to hear and determine the complaint or may adjourn the hearing to a future day".

Dispute what the section above stipulates, s.25 of the same Act provides that where an order has been made against a party who had not appeared in the hearing, an application may be made to set aside an order made ex parte and the Court is empowered to give notice to the party or parties to whom the order was made in favour to appear before it to hear the matter afresh.

Mr Dawidi in his extract of submission at pages 5-6 submitted that Mr Peter Kuman’s affidavit and the defence (40-44 AB) was a bare statement which does not particularise the defence at all. There are two instances on the instant appeal whereby defences were required to be filed. First on the preliminary stages in preparation for trial and pursuant to s.145 of the District Courts Act which says:-

"145.Statement of defence, etc, to be in writing.

(1) Where the defendant is required to give, and gives, a statement of his defence an the points on which he relies, the Court shall –

• (a) cause the statement and points to be taken down in writing; and
• (b) preserve the writing.
  

(2) The Court shall cause –

• (a) the evidence to be taken down in writing and signed by the respective witnesses; and
  
• (b) all exhibits put in evidence to be marked so as to be clearly identified as those exhibits; and
  
• (c) the Clerk to make and preserve a list of the exhibits marked.
  

(3) The Court may order the exhibits or any of them to be retained by the Clerk until the further order of the Court.

(4) On an appeal from an order of the Court, it shall be deemed –

• (a) where the statement and points were taken down in writing under Subsection (1) – that no other defence and points were replied on at the hearing; and
  
• (b) where the evidence was taken down and signed and the exhibits marked –
  
  • (i) that no evidence other than that so taken down in writing and signed was given at the hearing; and
    
  • (ii) that no exhibits other than those so marked or specified in the list were put in evidence at the hearing".
    

The requirement of the above provision was complied with (see 35 AB) and in my view quite proper for purposes of proceedings before the District Court.

The second instance on which the Appellants were required to file a defence and which requires that there must be a defence on the merit is what I believe was conveniently addressed by the lawyer for the Respondent in their extract of submissions.

It is trite law that in order for a Court to exercise its discretion in favour of an Applicant to set aside an order entered by default, he must by affidavit evidence establish that, there is a defence on the merit, and there must be a reasonable explanation as to why the judgment was allowed to go by default and thirdly an application to set aside ought to be made within reasonable time and that is to say there must not be any delay! Green & Company Pty Ltd v. Green {1976} PNGLR 73 see also Barker v. The Government of Papua New Guinea and Davies v. Barker {1977} PNGLR 386, George Page Pty Ltd v. Malipu Bus Balakau [1982] PNGLR 140.

The Magistrate before whom the application to set aside the ex parte order of 20 July 1999, was made said in his hand written notes on the worksheet (53 AB) that, he adopted the view that the Applicants had been allowed sufficient time to file their defence prior to 20 July and that the Magistrate who entered the ex parte order would have to set a new trial date. This is my view was beside the point as the requires the Judge or Magistrate to find out from the evidence before him or her if there is a defence on the merit. He also further held that, both parties had filed affidavit evidence before the Trial Magistrate when in fact there was no such affidavit evidence from the two Appellants.

What actually occurred to the Lawyers in charge with carriage of the instance case before the Magistrate’s Court was similar to the facts of the case cited by the Lawyer for the Respondent that of Commodity Development Pty Ltd v. Peter Karai [1994] PNGLR 463 where the matter had been adjourned several times and on the date on which the trial was to proceed, the Lawyer for the Appellant waited for the matter to be called but went into the Court room to attend to the National Court Sittings being unaware that the Magistrate who had come to deal with the matter was actually hearing the case and gave an ex parte order against the Appellant. It was held in that case that the Magistrate had properly exercised his discretion to refuse an application to set aside the ex parte order. It was also held that, although s.25 of the District Courts Act and Order 12 r 35 of the National Court Rules are not the same, the wording of these two provisions are sufficiently similar and the principles applicable to setting aside an order entered by default in the National Court are also applicable to District Court procedures on application to set aside either pursuant to s.25 or 159 of the District Courts Act.

In the application to set aside the ex parte order before His Worship Mr Gauli was evidence of what transpired between Mr Gileng and His Worship Mr Passingan on 16 July and secondly, what transpired between Mr Gileng and Mr Arnold Amet (Jr) on the date the ex parte order was entered. There was an affidavit by Mr Kuman with an annexure proposed defence which defence the Lawyer for the Respondent says was not particularised. I do not see the Appellant’s defence in that context and I will return to that shortly a little later.

When applying the principles of law to the facts and grounds of the instant appeal, before His Worship Mr Gauli was an application to set aside an ex parte judgment entered pursuant to s.25 of the District Court Act, was there a defence on the merit? This was a case where the Court had made an ex parte order against the Appellants for salaries due to the Respondent pursuant to the terms of their contract of employment (see 17-19 AB). In order for the Magistrate hearing the application to set aside the ex parte order, he was required by law to make a detail assessment of the evidence that was put before him.

Two distinguishing factors appear from the evidence of the Respondent. First, in the annexure to his affidavit exhibit "G" (31-32AB) was a copy of a letter from the First Appellant to the Employer’s Federation of Papua New Guinea on which the Appellants expressed reservations as to whether or not the Appellant’s would pay the amount claimed by the Respondent. That question to this Court, was and is regarding the legality and interpretation of the terms of their contract. Another such piece of evidence was the letter by the First Appellant to the Respondent expressing concerns as to whether the Appellants were at all liable to pay the two salaries suppposedly due to the Respondent who was away in New Zealand and was not physically present in Port Moresby where his work place was located.

The second piece of evidence which needed to be carefully analysed in context of the application to set aside was that according to the agreement entered into between the Respondent and the two Appellants (17-19AB) Clause 14 of their agreement provided that in the event that there was any dispute between the parties such dispute would have to be referred to an arbitrator appointed by the President for the time-being for the Papua New Guinea Association of Accountants". The Respondent did not follow this course.

It is a principle of law that where the Courts construe a contract, the following factors should be borne in mind:-

(a) Words are presumed to have their literal meanings, but legal terminologies are presumed to have their technical meanings.

(b) Where terms of a contract are ambiguous so that they may have either a legal or illegal meaning, the legal meaning will be preferred.

(c) Where the meanings of words are not clear or two terms cannot be reconciled, the intention of the parties will prevail, indeed oral terms may prevail over contradictory written terms as was held in Couchman v. Hill [1947 K.B. 554.

See also "The Law of Contract" by W.T. Major 58-50.

Where a contract has been printed or in writing in a specially printed document and where the Court finds that they conflict with a standard form, the Court should then resort to parties printed documents to find out the parties intentions, see "The Law of Contract" (59-50) (supra). In this jurisdiction, the Supreme Court has held that when terms of a contract are contained in writing, no evidence should be allowed to either add or subtract from or vary to qualify the written contract. Curtain Bros. (Qld) Pty Ltd and Kinhill Kramer Pty Ltd v. The Independent State of Papua New Guinea [1993] PNGLR 285.

Applying the principles enunciated in Green & Co. Pty Ltd v. Green (supra) Mapmakers Pty Ltd v. Brother Hill Proprietary Company Limited [1987] PNGLR 78 and George Page Pty Ltd v. Malipu Bus Balakau (supra) was there a defence on the merit? I must answer, yes there was and whether there was a reasonable explanation as to why the judgment was allowed to be entered ex parte. I would also answer yes, there was a reasonable explanation given by Mr Gileng to establish why he or the First Appellant were not present when the ex parte judgment was pronounced.

Having said the foregoing and by exercising the powers given this Court by s.230 of the District Courts Act, I uphold the appeal in its entirely and quash the decisions of the District Court at Port Moresby both in relation to ex parte order and the one on the application to set aside and I do further order that the case be remitted to the Port Moresby District Court and direct the parties to complete their pleadings within 14 days and the matter be rescheduled for trial before another Magistrate. I order that the costs of this appeal shall be paid by the Respondent within 21 days to be taxed if not agreed and such payment shall be made to the Registrar of the National Court.

Ordered accordingly.
_____________________________________________________________________
Lawyer for the Appellants : Blake Dawson Waldron Lawyers

Lawyer for the Respondent : Pato Lawyers