Workers Mutual Insurance (PNG) Ltd (in Liq) v Sivakumaran [2012] PGNC 34; N4646 (16 April 2012)

N4646

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: 3rd & 16th April

Application for stay of proceeding – principles to be considered –whether defendant has disclosed an arguable case of prejudice if stay not granted – delay in making application – no undertaking as to damages – balance of convenience
Application for default judgment – practice direction concerning forewarning letter considered – whether forewarning letter required for default judgment purposes when leave to file defence out of time refused

Facts:

The defendant applies for a stay of this proceeding pending the final determination of a Supreme Court appeal and the plaintiff applies for default judgment to be entered against the defendant.

Held:

1. The Defendant has not disclosed an arguable case that he will be prejudiced if this proceeding is not stayed and there has been inordinate delay on the part of the Defendant in applying for a stay

2. The defendant has not filed an undertaking as to damages and there is no evidence as to his ability to meet an award of damages. This, together with the delay in prosecuting the Supreme Court appeal, the delay in making this application and the difficulty encountered by the plaintiff in serving process upon the defendant suggests that even if damages were considered an adequate remedy, an award of damages would not be satisfied.

3. As the defendant has had his application to file a defence and cross-claim out of time refused, no purpose would be served by refusing an entry of default judgment because a non mandatory forewarning letter was not given.

4. The plaintiff has met the requirements sufficiently pursuant to Order 12 Rule 25 (b) National Court Rules, the rule upon which it relies, for default judgment to be entered. Consequently default judgment is entered with damages to be assessed.

Cases cited:

Mapmakers Pty Ltd v. Broken Hill Proprietary Company Ltd [1987] PNGLR 78
McHardy v. Prosec Security and Communication Ltd [2000] PNGLR 279
Aina Mond & Ors v. John Kumara & Anor (2007) N4639
Ombudsman Commission v. Gabriel Yer & Ors (2009) SC1041
Joseph Peng v. Philip Tangney (2009) SC969

Counsel:

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

16th April, 2012

1. HARTSHORN J. The defendant applies for a stay of this proceeding pending the final determination of a Supreme Court appeal and the plaintiff applies for default judgment to be entered against the defendant. I consider the stay application first.

2. The defendant applies pursuant to Order 12 Rule 1 National Court Rules. This Rule in essence allows the court at any stage of the proceedings on the application of any party to make such orders as the nature of the case requires notwithstanding that the applicant does not make a claim for those orders in the originating process. The plaintiff did not object to the defendant relying on this Rule for his stay application.

3. The defendant seeks a stay of this proceeding as he submits that he is the appellant in a Supreme Court appeal yet to be heard. The defendant submits that this appeal concerns the appointment of a statutory manager to, and the defendant's suspension as the Managing Director of, Workers Mutual Insurance (PNG) Ltd (WMI), the liquidation of WMI, the validity of the notice leading to the suspension of the defendant and the appointment of a statutory manager by the Central Bank of Papua New Guinea. The defendant further submits that it would be unfair and premature to allow this proceeding to continue as the Supreme Court is yet to rule on the liquidation process of WMI. To permit this proceeding to continue would be prejudicial to the defendant he submits, as he would have to defend the proceeding when a likely successful Supreme Court appeal would adversely affect the ability of the liquidator of WMI to prosecute the proceeding.

4. The plaintiff submits that a stay should not be granted as there has been delay in making the application given that WMI was placed into liquidation in July 2006, the Supreme Court appeal referred to by the defendant was commenced in August 2006 and this proceeding was commenced in June 2011. In addition, prejudice will be caused to the plaintiff if a stay is granted. There was difficulty locating the defendant and the originating process documentation had to be served by way of substituted service. In such circumstances, it is likely that any funds the defendant may have will be transferred out of the jurisdiction. There was no evidence that the defendant was able to meet an order for damages, no undertaking as to damages has been filed and the defendant did not dispute borrowing funds as alleged by the plaintiff and only disputed the quantum borrowed.

5. Both counsel referred to the Supreme Court decision of McHardy v. Prosec Security and Communication Ltd [2000] PNGLR 279 as the authority that details the principles to be considered upon an application for a stay. In this regard I refer to my decision in Aina Mond & Ors v. John Kumara & Anor (2007) N4639, as to the principles applicable. I also note that in the case of Ombudsman Commission v. Gabriel Yer & Ors (2009) SC1041, Injia CJ said the following as to the principles to be considered:

"The grant or refusal of stay is discretionary. The principles on grant of stay are set out in McHardy v Prosec Security and Communication Ltd [2000] PNGLR 279 (McHardy case)..... In McHardy the Court said the starting point is the basic premise that the judgment creditor is entitled to enjoy the fruit of the judgment. There are ten (10) other considerations which are enumerated in that case which may be considered. The Court said the list is not exhaustive. In my view, it is not intended that the discretion should be exercised on all or selected consideration(s). The circumstances of a particular case may warrant greater or less or even no weight at all to be given to a particular consideration(s). It is open to the Supreme Court to expound on those considerations or introduce new considerations as necessitated by the circumstances of the case before it. In a case where a number of considerations are relevant, the Court must take into account the totality of those considerations in order to dispense substantive justice in the circumstances of the case before it. The onus is on the applicant to persuade the Court to exercise its discretion in his or her favour."

Arguable case

6. The first consideration in my view, is whether the defendant has an arguable case that he will be prejudiced if a stay is not granted. In this instance, the stay sought is not in respect of an adverse judgment pending the determination of an appeal, but in respect of a proceeding the legitimacy of which it is submitted, could be adversely affected by a successful Supreme Court appeal from another proceeding. This is because if the Supreme Court appeal succeeds, if I understand the defendant's submissions correctly, the liquidation of WMI will be questioned and ultimately overturned and this proceeding will not be pursued by the plaintiff.

7. The Supreme Court appeal in question was commenced by a notice of motion and in it are listed annexed documents that were before the National Court. I am satisfied that it is an appeal commenced pursuant to Order 10 Supreme Court Rules and is an appeal from orders made under Order 16 National Court Rules which concerns judicial review. The grounds of appeal concern a notice issued pursuant to s. 20 and s. 31 Life Insurance Act 2000 by the Central Bank of Papua New Guinea and its Governor. The relief sought concerns a notice and direction issued pursuant to the Life Insurance Act 2000, and an order that named directors, presumably of WMI, remain as directors.

8. From a perusal of the Life Insurance Act 2000, notices that are able to be issued under relevant provisions are notices that are issued by the Central Bank that require the removal of a person for not satisfying relevant standards or are issued for the purposes of implementing or ensuring compliance with the provisions of the Life Insurance Act 2000.

9. Given this, if the Supreme Court appeal is successful it could result in the decision to issue the subject notice and direction being quashed and the notice and decision being declared null and void. There is nothing in the grounds of appeal of the Supreme Court appeal however, that relate to WMI being placed in to liquidation and no orders are sought in the Supreme Court appeal for the liquidation of WMI to be set aside, revoked or terminated. WMI was placed into liquidation by an order of this court. Notwithstanding that it may have been upon the application or petition of the statutory manager of WMI, the court would have made its decision on the evidence before it. The court decision to place WMI into liquidation, over 15 months after the Central Bank's notice and direction were issued, would not have been dependent upon the notice and direction. Further, the Supreme Court appeal is not concerned with the liquidation of WMI and if the Supreme Court appeal was successful, it would not affect the decision of the National Court which placed WMI into liquidation. Consequently it would not affect the status of WMI and its ability to bring this proceeding. It is not the position then that the defendant will be prejudiced by this proceeding continuing as whatever the decision in the Supreme Court appeal, it will not affect the status of the liquidator of WMI and his ability to prosecute this proceeding.

10. For the above reasons I am not satisfied that the defendant has an arguable case that he will be prejudiced if this proceeding is not stayed.

Delay

11. As to whether the defendant has delayed in making his stay application, even when considered only in relation to this proceeding, I am satisfied that there has been inordinate delay. This proceeding was commenced in June 2011. The defendant became aware of the proceeding in August 2011, yet he waited until almost 8 months later to apply for a stay and then that was after the court had refused his application to file a defence and cross-claim out of time.

Other principles

12. As to other principles to be considered on an application for stay that are relevant to this application, the defendant has not filed an undertaking as to damages and there is no evidence as to his ability to meet an award of damages. This, together with the delay in prosecuting the Supreme Court appeal, the delay in making this application and the difficulty encountered by the plaintiff in serving process upon the defendant suggests that even if damages were considered an adequate remedy, an award of damages would not be satisfied.

13. As to the balance of convenience and overall interests of justice, given that the Supreme Court appeal was filed over five and half (5 ½) years ago and still remains to be heard substantively, the fact that there has been delay in bringing this application, that this court has refused to permit the defendant to file a defence and cross claim out of time, and that the defendant has not established that he has an arguable case that he will be prejudiced if a stay of this proceeding is not granted, I am not satisfied that this court should exercise its discretion and grant a stay.

Default judgment application

14. I now consider the plaintiff's application for default judgment to be entered.

15. As referred to, this court has already refused the defendant's application to file a defence and cross-claim out of time. That the defendant is in default in not filing a defence in time is clear. Further, upon a perusal of the statement of claim, I am satisfied that it discloses a reasonable cause of action against the defendant.

16. The defendant submits that the plaintiff has not complied with the practice direction 1/87 that requires a forewarning letter be sent to a defendant in regard to an application for default judgment. As to such a forewarning letter, in Joseph Peng v. Philip Tangney (2009) SC969, the Supreme Court said the following with reference to Mapmakers Pty Ltd v. Broken Hill Proprietary Company Ltd [1987] PNGLR 78 as a consequence of which the practice direction was issued:

"We consider it unfortunate that what the learned Chief Justice had stated as a matter of professional courtesy as between lawyers, has been frequently misunderstood and misquoted not to mention misapplied. It was never intended to be a statement of a principle of law, nor a mandatory rule of practice as subsequently translated into a Practice Direction by the Registrar. One needs only to read carefully what his Honour actually said."

17. In this instance, as the defendant has had his application to file a defence and cross-claim out of time refused, no purpose would be served by refusing an entry of default judgment merely because of the non-provision of a non-mandatory forewarning letter. In my view, a plaintiff should not be precluded from obtaining relief to which he is entitled under the National Court Rules because of the non-provision of a forewarning letter in circumstances where a defendant is in default and has been unsuccessful in an attempt to cure that default. I am satisfied that the plaintiff has met the requirements sufficiently pursuant to Order 12 Rule 25 (b) National Court Rules, the rule upon which it relies, for default judgment to be entered. Consequently default judgment is entered and as submitted by both counsel in the event that default judgment was to be entered, with damages to be assessed. Costs on a party to party basis are to be paid by the defendant.

Orders

18. The formal Orders of the Court are:

a) the relief sought in the notice of motion of the defendant filed 30th March 2012 is refused.

b) as to the notice of motion of the plaintiff filed 20th September 2011, default judgment is entered against the defendant with damages to be assessed.

c) the costs of the proceeding including the above motions are to be paid by the defendant to the plaintiff.

d) time is abridged.
_____________________________________________________________

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