Sharp v Bank South Pacific [2009] PGNC 303; N3622 (6 February 2009)

N3622

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

W.S.NO. 471 OF 2008

BETWEEN:

LEAH S. SHARP & PETER ROBERT SHARP
Plaintiffs

AND:

BANK SOUTH PACIFIC
Defendant

Kokopo: Lenalia; J.
2008: 15th December &,
2009: 6th February.

PRACTICE & PROCEDURE – Default Judgment – Application for – Claim consisting of liquidated demand & unliquidated damages. Order 12 Rule 25 (a) & (b), 26, 27 & 28 of the National Court Rules.

PRACTICE & PROCEDURE – Default Judgment – Proof of due service of the Writ of Summons – Default in filing intention to defend and defence – Order 4 Rule 9 & Order 8 Rule 4 of National Court Rules.

PRACTICE & PROCEDURE – Default established – Judgment entered for liquidated amount – Unliquidated portion of claim ordered to be assessed.

Cases cited:
Eliakim Laki and 167 Others v Maurice Aluluku & 2 Others (1998) N2001,
Luke Tai v ANZ Banking Group (PNG) N1979.
Martha Limitopa v Independent State of Papua New Guinea [1988-89] PNGLR 364
Deecroft No.51 Ltd v Neville Seat (2004) N2561
Matiabe Oberia v Chief Inspector Michael Charlie (2005) SC801

Counsel:
E. Takoboy, for the Applicant/Plaintiff
No appearance for the Defendant.

6 February, 2009

1. LENALIA; J. The two plaintiffs commence proceedings against the defendant, Bank South Pacific (the bank) for an over payment of K67, 244.00 for a property in Lae, Morobe Province.

2. In December 1997, the plaintiffs jointly applied to the bank for a loan of K245, 000.00 to assist them purchase the above property. Such property is described as Allotment 2 Section 15, Josey Street, Lae Morobe Province.

3. The bank approved the loan and by a letter dated 16th January 1998 informed the plaintiffs about the banks approval as well as it set out the terms and conditions of the loan for repayment of K4, 000.00 per month. One of the terms of the agreement was that the loan was to be serviced within 7 years. This was calculated on repayment interest of 11.75% per year.

4. By September 1998, the loan was drawn down and the plaintiffs started servicing the loan. In the following February, the plaintiffs increased loan repayments to K5, 000.00 per month. The principal sum and the interest component were fully serviced by about June 2005.

5. The plaintiffs' evidence (refer to Mr. P. Sharp affidavit dated 11th December 2008) shows that, by the time the loan was fully serviced, they had paid a total amount of K445, 000.00 inclusive of the principal sum and the interest. Then after the loan had been fully paid, the second plaintiff says that the bank demanded a further K200, 000.00 from him.

6. That demand alerted the plaintiffs to make inquiries which revealed that, they had made an over payment of K67, 244.44. This amount is the first part of the plaintiffs' claim.

7. When the plaintiffs raised this issue with the defendant, it did not reimburse this amount. The plaintiffs now claim damages for the amount overpaid to the defendant. The second part of this claim consists of an amount of K200, 000.00 for hardship and inconveniences caused as the result of the bank's demand for the additional K200, 000.00.

Law

8. There are two parts of this claim. It is partly liquidated and unliquidated. In case of default for a liquidated amount, O.12 r. 27 of the National Court Rules states:

"27. Liquidated demand.

(1) Where the plaintiff's claim for relief against a defendant in default is for a liquidated demand only, the plaintiff may enter judgement against that defendant for a sum not exceeding the sum claimed in the statement of claim on that demand and for costs.

(2) Where a claim for a liquidated demand includes interest at an unspecified rate, interest accruing after the date of filing the statement of claim to the date of entry of judgement shall, for the purposes of judgement under this Division be reckoned at the rate of 8% yearly."

9. The second segment of the plaintiffs' action is for an unliquidated sum of K200, 000.00 for inconveniences, stress and hardship caused to the plaintiffs during the time they were informed to pay an extra K200, 000.00 when in fact they had fully serviced their loan repayment. Order 12 r 28 of the National Court Rules states:

"28. Unliquidated damages.

Where the plaintiff's claim for relief against a defendant in default is for unliquidated damages only, the plaintiff may enter judgement against that defendant for damages to be assessed and for costs."

10. The law in relation to default in cases where writ of summons or originating summonses have been served is that the plaintiff is entitled to the benefit of a default judgment. If it is a liquidated sum, the court will enter judgment. If it is unliquidated, it enters judgment to be assessed, which means the plaintiff will usually call evidence to substantiate the claim.

11. Under O.12 r.38 of the National Court Rules, the power of this court to enter default judgment is discretionary and the court can either grant or refuse an application for default judgment. The above proviso sates:

"(1) Where, on application by the plaintiff in relation to any claim for relief or any part of any claim for relief of the plaintiff –

(a) there is evidence of the facts on which the claim or part is based; and

(b) there is evidence given by the plaintiff or by some reasonable person that, in the belief of the person giving the evidence, the defendant has no defence to the claim or part, or no defence except as to the amount of any damages claimed,

the Court may, by order, direct the entry of such judgment for the plaintiff on that claim or part, as the nature of the case requires.

(2) Without limiting Sub-rule (1), the Court may under that Sub-rule direct the entry of judgment for the plaintiff for damages to be assessed."

12. The principles in relation to entry of default judgment have been stated in may cases including the following: Eliakim Laki and 167 Others v Maurice Aluluku & 2 Others (1998) N2001, see also Luke Tai v ANZ Banking Group (PNG) N1979, Deecroft No.51 Ltd v Neville Seeto (2004) N2561 and the Supreme Court case of Matiabe Oberia v Chief Inspector Michael Charlie (2005) SC801.

13. The above cases confirm the principle that even where there is proof of due service of the Writ and there is evidence of default on the part of a defendant, the court can refuse to grant default judgment in cases where the pleadings are vague or do not disclose reasonable cause of action, or the default judgment cannot be sustained in law, or where the effect of judgment would prejudice rights of co-defendants or where the pleadings raise serious allegations of fraud or deceit such that in the interest of justice those factors would be required to be proved by evidence at the trial before judgment is delivered.

14. In the instant case, there is evidence that, the defendant defaulted. The court has perused the file and I do find that, the bank defaulted. The Writ of Summons was served on the defendant on 16th May 2008. The Notice of Intention to defend the claim could have been filed by 16th of June last year followed by a formal Defence about end of the same month.

15. An in-house lawyer for Rabaul Shipping Limited, Ms. Elsie Takoboy conducted a file search on the Registry here at Kokopo on 22nd of September 2008 found that, the file only contained the Writ of Summons and the affidavit of Service filed by one Marere Ivaharia.

16. After the search was conducted, Ms. Marubu also of Rabaul Shipping wrote a letter to the Bank's Legal Officer on 23rd September 2008 and advised them that a search had been conducted on the file at Kokopo Registry Office and the defendant had defaulted by not filing an Intention to Defend or defence.

17. Even after such warning notice was given, no Intention to Defend and no Defence have been filed. I find the defendant defaulted in terms of O.4 r.9. Rule 9 of O. 4 of the National Court Rules state:

"(1) Where there is a defendant, an originating process (other than an originating summons under Rule 26) shall bear a note that the defendant is liable to suffer judgement or an order against him unless the prescribed form of notice of his intention to defend is received in the Registry.

(2) The note under Sub-rule (1) shall specify the time limited for the giving of the notice.

(3) Where there is a defendant an originating summons under Rule 26 shall bear a note that—

(a) if there is no attendance before the Court by the defendant or his counsel or solicitor at the time and place stated in the summons, the proceedings may be heard and the defendant will be liable to suffer judgement or an order against him; and

(b) before any attendance at that time the defendant must file in the Registry a notice of his intention to defend the claim."

18. I also find the defendant defaulted in terms of O.8.r.4 (a) of the National Court Rules. It states:

"(1) Subject to Sub-rule (2), a defendant shall file and serve on the plaintiff his defence in Form 1—

(a) where the statement of claim is endorsed on the writ—before the expiry of 14 days after the date of expiry of the time limited for him to give notice of intention to defend; or

(b) where the statement of claim is not endorsed on the Writ—before the expiry of 14 days from the date of service of the statement of claim; or

(c) in the case of a defendant to a cross-claim who is not required to give notice of intention to defend the cross-claim—before the expiry of 21 days after the date of service of the cross-claim on him."

19. That rule is a requirement to file a defence after filing an Intention to defend. The defendant did not comply with the above provisions resulting in the plaintiffs seeking default judgment.

20. From the evidence by Mr. Peter R. Sharp, I am satisfied that there was an overpayment brought about upon the plaintiffs by the defendant for which the defendant ought to reimburse the plaintiffs. The amount overpaid is rightly due to the plaintiffs and since the defendant has not filed any defence, the benefit of failure by the defendant to file an intention to defend and no defence should be given to the plaintiffs.

21. When the Second Plaintiff raised the issue of over payment with the defendant, they never responded favourably. In the course of any dealing in our business world today, where an account is overpaid, it is usually expected that, the overpayments would be reimbursed. This did not happen in the case before me.

22. For the liquidated part of this claim, the court enters default judgment in favour of the plaintiffs in the sum of K67, 244.44. The court will not make any orders for costs as there is still another part of this claim to be assessed.

23. For the second part of the plaintiff's claim on the unliquidated amount the court enters default judgment to be assessed. Costs shall be reserved until the second part of the claim has been assessed.

______________
Ms. Elsie Takoboy: Lawyer for Plaintiffs
No appearance for Defendant