N4236

PAPUA NEW GUINEA
IN THE NATIONAL COURT OF JUSTICE

WS NO. 603 OF 2010

BETWEEN:

GEORGE VIRITIA
Plaintiff

AND:

ALOIS MABEP
First Defendant

AND:

JAG ENTERPRISES LIMITED
Second Defendant

Kokopo: Sawong, J.
2011: 15 September
2011: 25 March

PRACTISING PROCEDURE – Application to file defence out of time

Cases Cited:
Dennys Sunu –v- The State [1984] PNGLR 305, 
Independent State of Papua New Guinea –v- Colbert [1988] PNGLR 138,
Thomas Koral –v- Alex Kawi & Petrus Alex [1999], Unreported and Unnumbered National Court Judgment, WS 286 of 1998, 
Luke Tai –v- Australia and New Zealand Banking Group (PNG) Ltd (2000), N1979,
Joseph Kupo –v- Steven Raphael and Others (2004) SC751.

Tiaga Bomson –v- Henry Hart, N2428, 
Motor Vehicles Insurance PNG Limited –v- Sossie Joe (2007), SC863, 
David Ande & Others –v- Nelson Pane & Others (2008) N3271, 
Thai Itao –v- Elias Kamara (2009) N3757, 
Michael Varapik –v- Penias Tadap & Others (2010), (Unreported and Unnumbered National Court Judgment, WS 140 of 2010, Sawong J, Kokopo, 15th September 2010).

Counsel:
P. Yange, for the Applicant/Defendant
D. Wesley, for the Respondent/Plaintiff

RULING

25 March, 2011

1.	SAWONG, J.:	By a notice of motion the defendant sought leave to file their defences out of time. The motion was moved pursuant to Order 1 Rule 15 (1) of the National Court Rules. The plaintiff opposes the application.

2.	The application is supported by the affidavits of Levi ToVilliran dated 13th September 2010 and filed on 15th September 2010, the affidavit of Mr. Yange dated and filed 9th September 2010, the affidavit of George Pirman dated, sworn and filed 9th September 2010 and the affidavit of Alois Mabep, sworn and filed 9th September 2010.

3.	The substantive material going to the substance of the application are contained in the affidavits of Mr. Yange and Alois Mabep. Mr. Yange's affidavit sets out the background to his involvement and obtaining instructions. In particular, in paragraph two, he deposes that the first defendant gave full instructions and information on the claim. After the initial discussions with his clients he advised them that he would not file any documents in the proceedings as the parties were going to negotiate the matter out of court. Consequently, he wrote on the 15th of June 2010 to the plaintiff's lawyers suggesting a settlement of the proceedings. The terms of the proposed settlement were that his client returned the vehicle to the plaintiff and that each party met their own costs.

4.	Subsequently, by a letter dated 16th of June 2010, the plaintiff's lawyer advised that they would agree to the return of the vehicle but that the defendants should pay the plaintiff's costs as it was their conduct which had led to the plaintiff instituting the proceedings.

5.	In any case, negotiations progressed but without any success. In the meantime while the parties were attempting to negotiate a settlement the time for the defendants to file their defence had run out.

6.	Alois Mabep's affidavit does not address the issue of why time was allowed to expire. His evidence relates to the substantive issue and raises material, which he says demonstrate that the defendants have a defence on the merits. The only material in relation to why time was allowed to expire was that of Mr. Yange. He makes that quite plain in his affidavit.

7.	Order 1 Rule 15 (1) of the National Court Rules reads;

"15. 	Extension and Abridgement.

(1)	The court may, on terms, by order extend or abridged any time affixed by the rules or by any judgment or order.

(2)	The court may, extend time under sub rule (1) as well after as before the time expires whether or not the application for the extension is made before the time expired.

(3)	The period within which a person is required by these Rules or by any order to serve, file or amend any pleading may be extended by consent without an order for extension."

8.	This is a general provision. The specific provision for a defendant seeking leave to file its defence out of time is Order 8 Rule 23 of the National Court Rules. Be that as it may, the principle for the need to obtain leave of the court to file a defence out of time is now well settled in our jurisdiction. The need to obtain leave of the court to file a defence out of time is mandatory. See Thomas Koral –v- Alex Kawi & Petrus Alex [1999], Unreported and Unnumbered National Court Judgment, WS 286 of 1998, Luke Tai –v- Australia and New Zealand Banking Group (PNG) Ltd (2000), N1979, Tiaga Bomson –v- Henry Hart, N2428, Motor Vehicles Insurance PNG Limited –v- Sossie Joe (2007), SC863, Thai Itao –v- Elias Kamara (2009) N3757, David Ande & Others –v- Nelson Pane & Others (2008) N3271, Michael Varapik –v- Penias Tadap & Others (2010), (Unreported and Unnumbered National Court Judgment, WS 140 of 2010, Sawong J, 15th September 2010).

9.	The defendants had filed their notice of intention to defend pursuant to Order 7 r.2 of the National Court Rules. Although the notice of intention was filed late, nevertheless that is permissible pursuant to Order 7 r.6 of the Rules. It reads:

"6.	Late Notice

(1)	A defendant may give notice of intention to defend at any time without leave.

(2)	Where a defendant gives a notice after the time limited for doing so, he shall not, unless the Court otherwise orders, be entitled to file a defence or do any other thing later than if he had given a notice of intention to defend within that time."

10.	Thus a defendant may file its notice of intention to defend at anytime, that is even if it files its notice outside the time limit set out for such a notice to be filed. (O.7 r.6(1)). However, such a defendant cannot file its defence, without leave of the Court. (O.7 r.6(2)).

11.	From those authorities several principles emerge. First is that, a defendant who seeks leave to file his defence out of time must give a reasonable explanation as to why he or she did not file his defence within time. Secondly the applicant must show or demonstrate that he or she has a defence on the merits. A draft defence should be annexed to the affidavit in support of the application for leave. Thirdly, he or she must make the application for leave promptly.

12.	I now turn to the submissions. Counsel for the plaintiff submits that the defendants have not explained why time was allowed to lapse. He submits that the reasons given are not supported by the evidence. He further submitted that in trying to negotiate a settlement out of court is not in itself a sufficient reasons or a reasonable explanation when it became obvious that settlement was unlikely. He further submitted that evidence contained in Mr. Yange's affidavit does not amount to any defence with any merit. He therefore submitted that the application should be dismissed.

13.	Mr. Yange on the other hand submitted that the proposed defence is set out in the affidavit of the first defendant. He further submitted that the explanation that he has given in his affidavit amount to reasonable explanation as to why time was allowed to expire without him filing a defence. He submitted that the fault if any does not lie with the defendants but with himself.

14.	It is settled that counsel's failure to file a defence within time is not a reasonable explanation. Such a mistake is not in itself a convincing reason for a court to exercise discretion in favour of such an applicant. See Dennys Sunu –v- The State [1984] PNGLR 305, Independent State of Papua New Guinea –v- Colbert [1988] PNGLR 138, Joseph Kupo –v- Steven Raphael and Others (2004) SC751.

15.	In this case, whilst Mr. Yange was genuine in his attempts to resolve the dispute between the parties, who are related, unfortunately due to his over sight, time ran out on him to file a defence. That of course does not amount to a reasonable explanation. Whilst correspondences were being exchanged, counsel had the opportunity of filing a defence within time, particularly in view of the fact that counsel he been fully briefed and instructed on the matter. He ought to then have filed a defence within time. As it is, he was well and truly out of time. Negotiations to settle a matter does not act as a time bar. In other words, time does not stop while parties are negotiating.

16.	On that note, I note that the Writ was served on the defendant on the 9th of June 2010. The defendant had 30 days to file its notice of intention to defend. The notice of intention to defend was filed on the 9th of September 2010. That was a period of two months had lapsed before the defendant's filed their notice of intention to defend..

17.	Secondly, the onus is on the defendant to demonstrate that the defendants have a defence on the merits. The proposed defence is not in draft form. It is in an evidentiary form as set out in the affidavit of the first defendant. Nevertheless, the matters set out in the affidavit does demonstrate to my mind that there is a defence on the merits. The defendants raise arguments that clearly demonstrate that the defence they intend to raise has some merit. I think that it would be just to allow the defendants to file their defence.

18.	Finally, I note that the present application was filed on the same day as the notice of intention to defend and the application was heard on 15 September 2010. To my mind, whilst a month and a half had lapsed, this was not an undue delay. 

19.	If one calculates the time period from 10 July 2010, (being the last day of filing the notice of intention to defend) the defendant had a further 14 days to file their defence, that is, by 24 July 2010. From that day to 9 September, 2010, is a period of 47 days. In other words, a period of just over one and a half months has lapsed, before the present application was filed. But even the Plaintiff and his counsel did not do anything when the time period for filing of the notice of intention lapsed. They did not for instance apply for default judgment.

20.	When I consider all the circumstances, I would prefer to exercise my discretion in favour of the defendants. In the circumstances, I consider that it would be just and fair to grant leave to the defendants to file their defences out of time, but they must pay the plaintiff's costs.

21.	For those reasons, I am reluctant to dismiss the application. I therefore make the following orders:

1)	I grant leave to the defendants to file and serve their defence within seven days from today.

2)	The defendants pay the plaintiff's costs, to be taxed, if not agreed.

_____________________________________________
Donald Wesley Lawyers: Lawyers for the Plaintiff
Warner Shand Lawyers: Lawyers for the Defendants