N4637

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS 690 OF 2011

BETWEEN:

WORKERS MUTUAL INSURANCE
(PNG) LIMITED (in Liq)
Plaintiff

AND:

SATHASIVAM SIVAKUMARAN
Defendant

Waigani: Hartshorn J.
2012: 15th & 19th March

Application to file defence and cross claim out of time

Facts:

This is an application by the defendant for an extension of the time by which he may file his defence and cross claim or alternatively for leave to be granted to him for his defence and cross claim to be filed out of time. The plaintiff opposes the application.

Held:

The defendant has not provided a reasonable explanation for not filing his defence and cross claim in time. Further, the defendant has not established to the requisite standard, that he has a defence on the merits or a good defence, or in respect of the proposed cross claim, that he has a claim with a solid foundation that gives rise to a serious dispute against the plaintiff. In addition, given the lack of evidence, it is not in the interests of justice that the defendant be granted the relief that he seeks. The relief sought in the notice of motion of the defendant filed 6th October 2011 is refused. The defendant shall pay the plaintiff's costs of and incidental to the notice of motion.

Cases cited: 

Green & Co. Pty Ltd (Receiver Appointed) v. Roger Britain Green [1976] PNGLR 73 
Leo Duque v. Avia Andrew Paru [1997] PNGLR 378 
Duma v. Hriehwazi (2004) N2526 
Tipaiza v. Yali (2006) N2971
Wilfred Pake Giru v. POSB (2007) N3155

Counsel:

Mr. A. Chillion, for the Plaintiff 
Mr. N. K. Magela, for the Defendant

19th March, 2012

1. HARTSHORN J. This is an application by the defendant for an extension of the time by which he may file a defence and cross claim or alternatively for leave to be granted to him for his defence and cross claim to be filed out of time. The plaintiff opposes the application.

2. As to the application for an extension of time made pursuant to Order 1 Rule 15 National Court Rules, the defendant submits that the time for him to file his notice of intention to defend and defence should begin from 14th September 2011, the date that the writ of summons and statement of claim were served on the lawyers for the defendant, and not from 4th August 2011, which is the date that the writ of summons and statement of claim were published in the Post Courier newspaper. The writ of summons and statement of claim were published pursuant to an order of this court dated 1st August 2011. Pursuant to clause 3 of the order, the publishing of the writ of summons in the Post Courier newspaper is deemed as sufficient service of the writ on the defendant.

3. The defendant submits that when the writ of summons and statement of claim were published, the National Court reference number, "WS 690 of 2011" was omitted. When the writ of summons and statement of claim were served personally on the lawyers for the defendant after they had raised the issue of the missing reference number, the reference number was on the writ. This was the first time they had seen the reference number, it is submitted.

4. The plaintiff submits that notwithstanding that the reference number was inadvertently omitted from the publication, a notice of intention to defend was filed by the defendant within time following the publication and with the correct reference number. Further, the defendant in his affidavit deposes that he had long hours going through his possessions, "Since the publication of the Writ of Summons and the Statement of Claim. 

5. In this regard, I note that the front page of the notice of intention to defend is stated as being dated 6th August 2011, two days after the publication, and on the second page is dated 19th August 2011. The notice was not filed however, until 31st August 2011.

6. Given the above, I am satisfied that the defendant was aware of the publication and was not prejudiced by the omission of the reference number in the publication. Further, no application has been made to set aside the court order of 1st August 2011. Consequently, the time within which the defendant was required to file a notice of intention to defend and defence began from the date of publication of the writ of summons and statement of claim on 4th August 2011. The relief sought in paragraph 1 of the defendant's notice of motion is refused.

7. As to the alternate relief sought, being leave to file a defence and cross claim out of time pursuant to Order 12 Rule 1 National Court Rules, the defendant submits that he has a meritorious defence, that there has not been any delay in filing this application and that he could not file his defence and cross claim within time as he was forced to vacate his office in 2004 and his relevant documentary evidence has not been readily available. Further, it was submitted that the defendant is a party to a Supreme Court proceeding that challenges the liquidation of the plaintiff and as a consequence this proceeding should be stayed or struck out as it is premature.

8. First, in regard to the Supreme Court proceeding issue, counsel for the defendant concedes that no order staying this proceeding has been made and there is no application before me that seeks to stay or strike out the proceeding. Given this, it is not necessary for me to consider this issue further.

Principles – leave to file a defence out of time

9. In the case of Duma v. Hriehwazi (2004) N2526, Kandakasi J. stated that the principles applicable to an application to set aside a default judgment with appropriate modification should apply to an application for leave to file and serve a defence out of time. In the case of Tipaiza v. Yali (2006) N2971, Cannings J. agreed that the factors to be taken into account on an application for an extension of time were; the extent of the delay, the reasons for the delay and does the defendant appear to have a good defence? To those factors he added one further; where do the interests of justice lie? I also make reference to the case of Green & Co. Pty Ltd (Receiver Appointed) v. Roger Britain Green [1976] PNGLR 73. That case involved an application to set aside a default judgment regularly entered. It was held that on such an application, the principal matter that must be shown by the applicant is that he has a defence on the merits. That statement of the law, in my view, is equally applicable to an application seeking an extension of the time in which a defendant may file its defence.

Explanation for not filing defence in time

10. As to the reason why the defence and cross claim were not filed in time, the defendant in his affidavit states that since the publication of the writ of summons and statement of claim he has had long hours going through his possessions in search of relevant documentary evidence or materials to defend the allegations. He further states that he could not have readily available documentation as he was forced to vacate his office in 2004. The defendant does not state that these are the reasons why he could not file a defence and cross claim in time and why, during the time that these documents were supposed to be filed, he did not make the appropriate application for an extension of time.

11. As previously referred to, the defendant was aware of the writ of summons and statement of claim being published and had filed a notice of intention to defend in time. He or his lawyer would have been aware of when a defence and cross claim had to be filed. I am not satisfied that the defendant has provided a reasonable explanation for not filing his defence and cross-claim in time.

 Defence on the merits

12. To satisfy the Court that it has a defence on the merits, or a good defence to a plaintiff's claim, the defendant or a responsible person on its behalf should disclose the basis of a draft defence. The Supreme Court in Leo Duque v. Avia Andrew Paru [1997] PNGLR 378 said:

"It is clear to us from the authorities we have set out earlier in our judgment and subsequent cases in this jurisdiction that as a matter of practice, an applicant must in an affidavit state material facts showing a defence on the merits." 
"A proposed defence prepared by the lawyer is not capable of serving this purpose. The expression of opinion by the lawyer that there is good prospect of success can only amount to a legal opinion. It is not capable of raising the material facts."

Although this case concerned an application to set aside a default judgment, I am of the view that the principles enunciated apply equally here.

13. As to whether the defendant has shown that he has a good defence on the merits, the defendant in his affidavit deposes as to his defence that the claim is premature because of the Supreme Court proceeding. The defendant deposes that in the Supreme Court proceeding he is challenging the liquidation of the plaintiff. The claim against the defendant here though is for recovery of money advanced. The defendant has not stated material facts concerning a defence to that claim. I note further that there is no evidence before the court as to the progression of the Supreme Court proceeding notwithstanding that it was commenced about five years and six months ago. The defendant also annexes to his affidavit a draft defence and a draft cross-claim.

14. The defendant does not state in his affidavit material facts showing a defence on the merits and there is no expression of opinion by him that he has a good defence. There is also no expression of opinion by anyone else including the defendants lawyer, that the defendant has a good or meritorious defence.

Cross claim

15. As to the cross-claim, counsel for the defendant submitted that pursuant to s. 298 (1) (c) Companies Act, the court can order that a person can continue or commence legal proceedings against a company in liquidation.

16. In Wilfred Pake Giru v. POSB (2007) N3155, I stated that in my view, the appropriate test to be satisfied before the court will permit a proceeding against a company in liquidation to continue or commence is that the claim has a solid foundation and gives rise to a serious dispute - a serious question to be tried.

17. In this instance, without considering whether an application for leave under s. 298 (1) Companies Act is necessary as submitted by the plaintiff, the defendant has not stated anything in his affidavit about his cross-claim apart from that a draft of it is annexed to his affidavit.

18. After considering the evidence filed and taking into account the submissions of counsel, as previously mentioned I am not satisfied that the defendant has provided a reasonable explanation for not filing his defence and cross claim in time. Further, I am not satisfied that the defendant has established to the requisite standard, that he has a defence on the merits or a good defence, or in respect of the proposed cross claim, that he has a claim with a solid foundation that gives rise to a serious dispute against the plaintiff. In addition, given the lack of evidence, I am not satisfied that it is in the interests of justice that the defendant be granted the relief that he seeks. Given this, it is not necessary to consider the other submissions of counsel.

19. The relief sought in the notice of motion of the defendant filed 6th October 2011 is refused. The defendant shall pay the plaintiff's costs of and incidental to the notice of motion.
____________________________________________________________

Allens Arthur Robinson: Lawyers for the Plaintiff 
Nikiuma Lawyers: Lawyers for the Defendant