Areng v Babia [2005] PGNC 74; N2928 (11 November 2005)

N2928

PAPUA NEW GUINEA

[IN THE NATIONAL COURT OF JUSTICE]

WS NO 501 OF 2003

ALBERT ARENG
Plaintiff

V

GREGORY BABIA
First Defendant

NATIONAL HOUSING CORPORATION
Second Defendant

MADANG: CANNINGS J
9, 11 NOVEMBER 2005

RULING ON MOTION

PRACTICE AND PROCEDURE – motion to set aside default judgment – previous motion to set aside the same default judgment refused – whether res judicata applicable – circumstances in which a default judgment can be set aside – whether a default judgment can be regarded as a nullity on the ground that the statement of claim failed to disclose a reasonable cause of action.

The plaintiff commenced proceedings against the first defendant, who was then the regional manager of the National Housing Corporation, and the second defendant, the National Housing Corporation. He is seeking an order that title to a property in Madang town be transferred to his father and damages for negligence. The basis of the claim is that he is the son of the legal purchaser of the property who has not been able to secure title to the property due to the defendants’ negligence. The plaintiff obtained default judgment and more than a year later the defendants applied unsuccessfully to have the default judgment set aside. The defendants then filed another motion to set aside the default judgment, this time relying on different grounds to those advanced in support of the first motion. This is a ruling on the second motion to set aside the default judgment.

Held:

(1) Notwithstanding that the present application is based on different grounds the cause of action constituted by the application is the same as the previous application, involving the same parties, so the principle of res judicata applies.

(2) This application is therefore an abuse of process as the previous application to set aside the same default judgment was refused.

(3) The motion to set aside the default judgment was accordingly refused, with costs.

Cases cited:
The following cases are cited in the judgment:

Grace Lome v Allan Kundi (2004) N2776
Leo Hannet and Elizabeth Hannet v ANZ Banking Group (PNG) Ltd (1996) SC505
Lucas Roika v Minister for Provincial and Local-level Government and National Executive Council OS No 339 of 1994, 06.10.94, unreported
Mark Ekepa v William Gaupe (2004) N2694
Otto Benal Magiten v Bernadette Beggie and Benedict Wahiginim Magiten (2005) N2908
PNG National Stevedores Pty Ltd and Bank of South Pacific Ltd v The Honourable Andrew Baing, PNG Harbours Board and The Independent State of Papua New Guinea (1998) N1705

NOTICE OF MOTION

This was an application on notice seeking an order to set aside a default judgment.

Counsel:
W Akuani for the plaintiff
L Vava for the defendants

CANNINGS J:

INTRODUCTION

This is an application to set aside a default judgment. The feature of this case is that there has already been an unsuccessful application to set it aside.

BACKGROUND

On 24 April 2003 the plaintiff, Albert Areng, commenced proceedings against the first defendant, who was then the Regional Manager of the National Housing Corporation, and the second defendant, the National Housing Corporation. He is seeking two remedies:

(a) an order that title to a property in Madang town be transferred to his father; and

(b) damages.

The basis of the claim is that he is the son of the legal purchaser of the property who has not been able to secure title to the property due to the defendants’ negligence.

On 16 July 2003 the plaintiff obtained a default judgment, with damages to be assessed.

More than a year later, on 19 August 2004, the defendants applied to have the default judgment set aside on grounds that the plaintiff lacked standing, that the plaintiff had not complied with the notice requirements in Section 5 of the Claims By and Against the State Act and that accordingly the default judgment had been irregularly entered. That application was argued on 15 October 2004. On 22 June 2005 Sawong J delivered a written ruling, dismissing the application.

On 5 September 2005 Sawong J conducted a pre-trial hearing and set down the trial on assessment of damages for half-a-day in November 2005.

On 9 September 2005 a notice of change of lawyers was filed. The National Housing Corporation’s in-house lawyers were replaced by Paul Paraka Lawyers of Madang.

On 4 November 2005 the defendants filed and served notice of the motion presently before the court. It was supported by an affidavit of Luke Vava Jnr, of Paul Paraka Lawyers, deposing to his belief that the plaintiff’s statement of claim failed to disclose a reasonable cause of action, that the entry of default judgment was therefore irregular and that accordingly the proceedings are a nullity and the court has no discretion but to set aside the default judgment as a matter of right.

On 9 November 2005 the motion was argued.

THE MOTION

The defendants seek three orders:

1. the default judgment of 16 July 2003 be set aside, as being irregularly entered, pursuant to Order 12, Rule 8 of the National Court Rules and Section 155(4) of the Constitution; or
   
2. the entire proceedings be dismissed for disclosing no reasonable cause of action, being frivolous and vexatious and an abuse of process, pursuant to Order 12, Rule 40 of the National Court Rules; or
   
3. the plaintiff to file an amended statement of claim within 21 days.
   

THE DEFENDANTS’ SUBMISSIONS

The defendants are the applicants for the purposes of this motion.

Mr Vava asserts on their behalf that the default judgment should be set aside as it is a nullity. He refers to the distinction between judgments that are a nullity and those that are a mere irregularity. The former must be set aside as of right while the latter can be set aside at the discretion of the court (Leo Hannet and Elizabeth Hannet v ANZ Banking Group (PNG) Ltd (1996) SC505). He argues that the default judgment in the present case is a nullity as the statement of claim is too vague and does not disclose a cause of action.

He also submits in support of the second ground that the entire proceedings should be dismissed for being frivolous, vexatious and an abuse of process. This argument is advanced in the event that the court refuses to set aside the default judgment, as it is claimed that the court will not be able to assess damages as no particulars have been pleaded. It is the pleadings that drive the evidence, Mr Vava argues. There will be nothing to assess. Therefore, it is a frivolous claim.

As to the third order sought, this is based on the presumption that neither of the first two orders are granted. The plaintiff should be required to disclose all relevant particulars of the claim, so that the defendants will be able to file a defence.

PLAINTIFF’S SUBMISSIONS

The plaintiff’s counsel, Mr Akuani, submits that the issue of the validity of the default judgment was settled by the judgment of Sawong J of 22 June 2005, refusing the previous application to set it aside. The principle of res judicata applies. The case has moved on. It is set down for trial on assessment of damages. He refers to Sheehan J’s judgment in Lucas Roika v Minister for Provincial and Local-level Government and National Executive Council OS No 339 of 1994, 06.10.94, unreported, in support of that proposition. His Honour indicated that when a matter is brought back to the same court by the same party they cannot be heard to argue points of law which could have been raised the first time around or on appeal.

As to the three distinct arguments advanced by the defendants, Mr Akuani submitted that the defendants have not shown that they have a defence on the merits. Nor is there any other good reason to set aside the default judgment.

THE ISSUES

I propose to deal first with the res judicata issue. If it is decided in favour of the plaintiff it will not be necessary to go any further.

RES JUDICATA

As I pointed out in a recent Kimbe case, Otto Benal Magiten v Bernadette Beggie and Benedict Wahiginim Magiten (2005) N2908, res judicata is a common law principle or legal doctrine that has been adopted as part of the underlying law of Papua New Guinea. It was initially expressly recognised by Schedule 2.8(1)(d) of the Constitution. It is now set out in Section 18 of the Underlying Law Act 2000. It is a principle that says ‘this dispute has already been resolved by a court and cannot be pursued further by the same parties’. In Tok Pisin: Dispela hevi em Kot i stretim pinis.

Res judicata applies when all the following conditions are met:

• The cause of action (ie the basis of the remedies being sought) in one court case is the same as that relied on in an earlier case. (It does not matter whether the earlier case was decided in the same court or by the same Judge.)
  
• The earlier case was between the same parties or their "privy". (A privy is someone so closely connected to one of the earlier parties that they have the same interests that are sought to be enforced in the later case.)
  
• In the earlier case the court made a final determination of the issues between those same parties or their privies.
  

(Also see Mark Ekepa v William Gaupe (2004) N2694, National Court, Cannings J.)

For the purposes of the present motion the ‘cause of action’ is the defendants’ claim that the default judgment of 16 July 2003 was wrongly entered and should be set aside. That cause of action has already been adjudicated on and resolved by Sawong J’s order of 22 June 2005. That order was made in relation to the same parties who are involved in the present motion. The order of 22 June 2005 was a final order. The present motion is based on different grounds but that does not alter its status. It is, in substance, the same motion as the one already dealt with. Mr Akuani has correctly cited the dicta of Sheehan J in the Roika case to show the common sense and justice behind these principles.

Even if the court were to regard the arguments now sought to be advanced by the defendants as extremely sound, the fact remains that the validity of the default judgment has been finally determined by Sawong J’s order of 22 June 2005. The defendants could have appealed against that order; as they could have appealed against the entry of default judgment itself. The fact that they have not done so, and instead come back to the court to have a second, or third, bite at the cherry – and waited several months after the event – confirms that this is an abuse of process. Therefore, the motion will be refused.

THE OTHER ISSUES

In the event that I had not refused this motion as being res judicata I would have, in any event, refused all the orders sought, for the following reasons.

First, the argument that the statement of claim does not disclose a good cause of action, is not an irregularity of a kind upon which an application to set aside a default judgement can be founded. If the defendants wanted to argue the point about the statement of claim not disclosing a reasonable cause of action, that should have been done much earlier, before default judgment was entered. Alternatively, they could have appealed against the entry of default judgment and relied on that as a ground of appeal. They have taken neither of those steps. There is a judgment; the case has moved on; and they must live with the consequences of their conduct of this case. (Grace Lome v Allan Kundi (2004) N2776, National Court, Lay J; PNG National Stevedores Pty Ltd and Bank of South Pacific Ltd v The Honourable Andrew Baing, PNG Harbours Board and The Independent State of Papua New Guinea (1998) N1705, National Court, Kapi DCJ.)

Secondly, it is far too late in the day to be arguing that the proceedings should be dismissed for the reasons advanced in support of the second order sought by the defendants.

Thirdly, it would not be just or proper to require the plaintiff to plead further particulars at this stage of the proceedings. On the face of it, there is some validity in Mr Vava’s submission that the pleadings drive the evidence. And it must be said that the statement of claim is rather scanty. However, the defendants’ predicament is of their own making. Nothing in the way that the defendants have been dealing with this case warrants the exercise of the court’s discretion in their favour.

ORDER

The order of the court will be that:

1. the defendants’ application to set aside the default judgment is refused; and
   
2. costs of these proceedings shall be paid by the defendants to the plaintiff on a party-party basis, to be taxed if not agreed.
   

____________________________________________________________________
Lawyers for the plaintiff : William Akuani Lawyers
Lawyers for the defendants : Paul Paraka Lawyers