Wamp NGA Holdings Ltd v KK & Sons Ltd [2011] PGNC 12; N4219 (23 February 2011)

N4219

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS NO. 1292 OF 2009

WAMP NGA HOLDINGS LIMITED
Plaintiff

AND

KK & SONS LIMITED
Defendant

Mt. Hagen: Sagu AJ
2011: 23rd February

CIVIL PROCEDURE - default judgment - liquidated demand - definition - requirement of service of motion and originating process - discretion to refuse even after default establish - circumstances of refusal

Cases Cited

Urban Giru –v Luke Muta & two others (2005) N2877
Kante Mininga -v- The State & Dr Scotty Maclfish (1996) N1458
Bela Kitipa -v- Vincent Auali & 3 Ors (1998) N1773
Dempsey v Project Pacific Pty Ltd [1985] PNGLR 93
Tindiwi -v- Nilkare [1984] PNGLR 191

Counsel

Priscilla Tamutai, for the Plaintiff
No appearance for the Defendant

RULING ON APPLICATION FOR DEFAULT JUDGEMENT

23rd February, 2011

1. SAGU AJ: The Plaintiff applied by motion for Default Judgment under Order 12 Rule 27 and 32 of the National Court Rules. I had reserved my decision which I now hand down.
Background

2. The Plaintiff on the 16th October, 2009, filed a Writ of Summons against the Defendant to recover a fix amount of money being a total sum of K147, 334.89 for services rendered to the Defendant. The Plaintiff Company is a fuel distributor who claims to have supplied fuel to the Defendant on a credit facility basis for the defendant to settle the debit on a mutual understanding. The Plaintiff under this arrangement supplied fuel from his Driveway Service Station in December 2007, January and February 2008 to the total value claimed. The Defendant refused to settle the invoices despite the Plaintiffs many attempts.

Motion for Default Judgment

3. The Plaintiff now seeks Default Judgment under Order 12 Rule 27 on the basis that the Defendant has defaulted in filing either it's intention to defend nor its defence. The motion is supported by the following affidavits:-

1. Affidavit of Service by Post of Priscilla Tamutai sworn on the 31/3/2010 and filed on 7/4/2010,
   
2. Affidavit of Company Search by Priscilla Tamutai sworn on 29/3/2010 and and filed on 7/4/2010
   
3. Affidavit of Search by Jospehine Jureno sworn on 22/2/2010 and filed 5/3/2010.
   
4. Affidavit of Raphael Piel sworn on 23/10/2009 and filed on 26/10/2009
   
5. Affidavit of Camillus Kumbi sworn on 25/2/2010 and filed on 5/3/2010
   

The Law

4. Order 12 Rule 27 of the National Court Rules provide for entry of Default Judgments. Its reads:

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

5. This provides a way of relief to the Plaintiff in the event of a defendant's default. However, the court may enter judgment upon the application by the plaintiff where defendant is in default according to Rule 32 of Order 12 which I state below:-

Whatever, claims for relief are made by a plaintiff, where a defendant is in default, the Court may, on application by the plaintiff, direct the entry of such judgment against that defendant as the plaintiff appears to be entitled to on his writ of summons.

The exercise of this power is discretionary. I will come to that later.

Liquidated Demand Defined

6. Is the claim a liquidated claim since the Plaintiff's application is under Rule 27. The Oxford Dictionary of Law, 6th edition published in 2006 defines the term Liquidated Claim as:-

"A demand for a fixed sum, eg. A debt of $50. Such a demand is distinguished from a claim for unliquidated damages, which is the subject of a discretionary assessment by the court."

7. I apply the definition established by the Supreme Court in 1985 in Dempsey v Project Pacific Pty Ltd [1985] PNGLR 93 Pratt J, Amet J, Woods J where their Honors adopted and applied the definition of " Liquidated demand" provided for in the 1982 Annual Practice in these terms:

"A liquidated demand is in the nature of a debt, i.e. a specific sum of money due and payable under or by virtue of a contract. Each amount must either be already ascertained or capable of being ascertained as a mere matter of arithmetic. If the ascertainment of a sum of money, even though it be specified or named as a definite figure, requires investigation beyond mere calculation, then the sum is not a 'debt or liquidated demand' but constitutes 'damages'."

8. The Plaintiffs statement of claim is for a sum of K147, 334.89. It comprises of three months invoices due for the month of December 2007 at K34,129.35, January 2009 K103,116.01, February 2009 at K12,819.53 making a total of K147,33.89 for the supply of fuel to the defendant. This is a claim in debt for the specific sum of K147, 33.89 due and payable under the parties' mutual understanding. The amounts are based on the supply of fuel dockets issued at the time of the sale of fuel. The amount need not require further investigation other than to consult and add them up by mathematical calculation to arrive at the total sum for the month and eventual grand amount claimed. I am satisfied that this is a claim that falls within the definition for liquidated demand under Rule 27 of Order 12.

9. What is the test to be applied in considering the application for the default judgment? Canning J in Urban Giru v Luke Muta and Two Others (2005) N2877 summarizes or rather provides what he refers to as a check list of 6 conditions to be satisfied when considering default judgments which I find very useful and will apply in this case. This checklist includes whether the originating process and the motion with supporting affidavits were duly served on the Defendant? Has the defendant defaulted in filing its' defence? The Defendant's default does not entitle an entry of judgment in favour of the Plaintiff. It is subject to the exercise of the Courts discretion as per Injia J (as he then was) in Kante Mininga -v- The State & Dr Scotty Maclfish (1996) N1458. I will come to that later.

Service of the Motion

10. Firstly, I must be satisfied that the Plaintiff provided sufficient notice of this motion to the defendant as it is required to do under Order 4 rule 38. The notice of motion was fixed for hearing on the 9/4/2010. Affidavits of Camillus Kumbi and Priscilla Tamutai under cover of a letter were posted to the Defendant's registered postal address for service at P.O. Box 650 Mt. Hagen on the 29/3/2010. The motion was returnable 10 days from the date of service which is more than the 3 days notice required under Order 4 Rule 42. Furthermore, since the defendant is an incorporated company, service of the motion and supporting affidavits were effected in accordance with section 431(1)(d) of the Companies Act where the same were posted to the Defendant's registered postal address as it appears in the IPA documents. I am satisfied that proper service of this application was effected. I also note that Ms. Tamutai wrote to the Defendants on the 16th November 2009 as a warning to remind the Defendant of it's obligations to file it's intention to defend and defence.

11. The defendant is not present however, I will exercise my discretion under order 4 rule 46(b) and proceed to hear and dispose of this motion since I have stated that the defendant has been duly served.

Default

12. The second issue is, has the defendant defaulted in filing its defense? The affidavit of search by Jospehine Jureno deposes to that on the 22nd February 2010 she conducted a search of the file in the National Court Registry which revealed that the defendant had not filed its Notice of Intention to Defend nor it's Defence. I accept Josephine Jurneo's affidavit and hold that no Defenses had been filed.

13. Division 3 of Order 12 provides for the process of obtaining Default Judgments on proceedings commenced by writ of summons. This Division consists of Rules 24 -36A. The defendant is in default if it's conduct, falls into any of the 3 categories provided under Order 12 Rule 25 which states:-

"25. Default

The Defendant shall be in default for the purposes of this Division:-

(a) where the originating process bears a note under Order 4 Rule 9, and the time for him to comply has expired but he has not given the notice; or

(b) where he is required to file a defence and the time for him to file defence has expired but he has not filed his defence; or

(c) Where he is required to verify his defence......................"

14. In this case the writ of summons had on it a note that the Defendant was required to file its notice of intention to defend within 30days and it was to comply with the rules of court relating to defence. Effectively the endorsement on the file read that the defendant was required to file its Notice of intention to defend within 30 days from after service under order 4 rule 11(b)(1) and for the defence to be filed within 44 days as required under Order 8 Rule 4. There is no notice of intention to defend nor a defence been filed.

15. However, whether the defendant is in default or not will depend on the critical issue of whether the Plaintiff effected due service of the originating process which in this case is the Writ of Summons. A Judgment shall not be entered against a defendant unless an affidavit is filed by or on behalf of the Plaintiff proving due service of the Writ of Summons on the Defendant by Order 12 Rule 34. The defendant is a company and the mode of service for them in legal proceedings is provided by the Companies Act. Section 431(1)(a) of the Companies Act provides several modes of services of any document or writ in any legal proceedings may be served on a company. One way of service is that by delivery to a person named as a director or the secretary of the company provided by Section 431(1)(a) Companies Act.

16. The Plaintiff relies on the affidavit of Raphael Piel where he states that he is the HR and the Legal Affairs Manager for the Plaintiff Company. He deposes to that on the 21st day of October 2009 he went to the defendant's place of business located in Renbo Stoa where he was attended to by Mr. Bafike Roika's Secretary. He delivered to her the envelope containing the duly filed and sealed Writ of Summons and cover letter and asked her to hand it over to Mr. Bafike Roika who is the owner of the Defendant company and who was present in his office at that time. The Secretary brought the documents to him however, he refused to complete and sign the service detail form enclosed with the writ.

17. Priscilla Tamutai in her Affidavit of Company Search reveals that Mr. Bafike Roika is a Director and Share holder of the Defendant Company. Therefore the service on Mr. Bafike Roika at his place of business was due service and accordingly proper service on the defendant was effected. I have already ruled that the defendant has failed in filing it's Notice of Intention to Defend and Defence on time but the question of whether the Defendant defaulted would depend very much on whether due service was effected on him. Now that due service was effected on the Defendant, I form the view that it has defaulted in the filing of its intention to Defend and Defense.

Courts Discretion

18. Mere proof of the Defendant's default does not entitle the Plaintiff to a Default Judgment. The court has a wide discretion under Order 12 Rule 32 whether to grant the Default Judgment or not. The use of the word "may " in Rule 32 is the operative word which is interpreted to create a discretion rather than an mandatory obligation in the words of Bredmeyer J in the Supreme Court case of Tindiwi -v- Nilkare [1984] PNGLR 191when His Honor described the meaning of the words "may", "shall" and "must" when commonly used in statues and statutory instruments had this to say:-

"Normally in a statute the word "may" means may; it is permissive and confers discretion. It contrasts with the word "shall" which, when used in a statute, normally means shall or must; it is imperative or mandatory. In some cases the word "may" in a statute will be interpreted to mean "shall" but that is the exception and not the rule."

19. It is settled law that Order 12 Rule 32 provides the court wide discretion to enter Default Judgment even where proof of default is established in the case of Kante Mininga -v- The State & Dr Scotty Maclfish (1996) N1458 when Injia J (as he then was) said:-

"O. 12 R. 32 of the NCR gives the court a wide discretion to enter default judgment. Even when proof of due service of process on a defendant and proof of the default is established by the plaintiff/applicant the court still has discretion to refuse to enter default judgment..."

20. In exercising this discretion there can be those situations where the application for default judgement can be refused. Some of these situations were provided by Injia J (as he then was) in the case of Bela Kitipa -v- Vincent Auali & 3 Ors (1998) N1773 where:-

"1. The effect of the default judgment would prejudice the rights of other co-defendants; or

2. The pleadings are so vague or do not disclose a reasonable cause of action; or

3. The default judgment cannot be sustained in law."

21. The courts have developed additional grounds which Canning J provides a summary in Urban Giru v Luke Muta and Two Others (2005) N2877 to include,

"whether the statement of claim amounts to an abuse of process (Eliakim Laki and 167 Others v Maurice Alaluki and Otehrs (2000) N2001, Whether the defendant has prosecuted its claim diligently (Tiaga Bomson v Kerry Hart (2003 N2428, Kirriwom J)Whether the defendant appears to have a good defense (John Kunkene v Michael Rangsu and the State (1999) N1917,Whether the statement of claim raises serious allegations of fraud or deceit, in which case the interest of justice may require those allegations to be proven by evidence in a trial (Bala Kitip v Vincent Auali, Supply and Tenders Board of Western Highlands Provincial Government and Others (1998) National Court Injia J as he then was Whether the interest of justice would be served by the entry of default judgment. Canning J in Urban Giru v Luke Muta and Two Others N2877"

22. The above list of considerations to refuse a grant of a default judgment is not exhaustive.

23. In most of the cases cited above either a notice of intention to defend was filed or the defence was filed late or in the process of being filed. In this case no intention to Defend or Defense was filed.

24. I am satisfied that the Plaintiff has prosecuted its case diligently and that there are no other defendants to this writ of summons. There is a clear cause of action where the Plaintiff has supplied fuel on credit that the defendant it says has refused to settle the invoices sent to him. I form the view that none of the other considerations above arise for the Plaintiff not to be granted the order it seeks in its notice of motion.

25. This is a case where the Writ of Summons was duly served on the defendant and he is in default in filing its defence. As I have state above I do not see any reasons that I can refuse the grant of the application for the Default Judgment. Accordingly, Default Judgment is entered in terms of the motion for the plaintiff in the amount claimed plus 8 % interest with cost.

____________________________
Tamutai Lawyers: Lawyer for the plaintiff
No appearance for the Defendants