Wamp NGA Holdings Ltd v MMK Transport Ltd [2014] PGNC 246; N5664 (22 May 2014)

N5664

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS NO. 648 OF 2013

BETWEEN

WAMP NGA HOLDINGS LIMITED t/as WESTERN STAR TRUCKS PACIFIC
Plaintiff

v

MMK TRANSPORT LIMITED
Defendant

Lae: Sawong, J.

2014: 16th April & 22nd May

JUDGMENTS AND ORDERS – setting aside default judgment - criteria for setting aside default judgment discussed – consideration of - applicant has met all requirements to set aside default judgment – default judgment set aside - Order 12 Rule 8 or Order 12 Rule 35 of the National Court Rules

Case Cited:

Christopher Smith v Ruma Constructions Ltd (2002) SC695,
Grace Lome v her next friend Jack Lome v Allan Kundi (2004) N2776
Government of PNG v Barker [1977] PNGLR 386,
Green & Co (in liquidation) v Green [1976] PNGLR 76,
Leo Hannet & Elizabeth Hannet v ANZ Banking Group (PNG) Ltd SC 505,
Pansat Communications Pty Ltd v David Mai & Authur [1995] PNGLR 438,
.

Counsel:

R. Yallon, for the Plaintiff
S. Kesno, for the Defendant

22nd May, 2014

1. SAWONG, J.: This is an application by the Applicant/Defendant seeking orders that:
   
   1. The default judgment made against it be set aside pursuant to Order 12 Rule 8(3)(b) and Rule 35 of the National Court Rules.
      
   2. Leave be granted to the applicant to file its defence out of time.
      
2. In support of its application, it relies on the affidavits of Chris Kandenge and David Pyaso.
   
3. The respondent opposes the application. It relies on the following affidavits filed in support of the Notice of Motion seeking default judgment, namely:
   
   1. Affidavit of Service of Writ of Summons by Daphney Ulam filed on 9th of September 2013
      
   2. Affidavit in Support of Mr Kesno filed on 6/12/2013
      
   3. Affidavit of Service of Notice of motion of Daphney Ulam filed on 21/01/2014.
      
   4. Affidavit of Search of D. Dan filed on 6/12/13
      
   5. Affidavit of Search of Steven Kesno 5/02/2014
      

Background

4. This is a dispute between the parties regarding an alleged debt owed to the respondent by the applicant. The applicant has several trucks and vehicle which have been serviced and repaired by the respondent at its workshop on credit. The debt reached a certain level, which resulted in, amongst other things, the parties entering into arrangement, by which the applicant was to pay off its debt to the plaintiff. This was done in 2012. However, the respondent claimed that the applicant still owed it a large sum of money.
   
5. Accordingly on 26th June 2013, the respondent instituted the current proceedings to recover some K500,000.00.
   
6. On 23rd August 2013 the Writ of Summons was served by registered post on the applicant at its registered postal address.
   
7. On 19th November 2013, the applicant filed its Notice of Intention to Defend.
   
8. On 6th December 2013, respondent filed Notice of Motions and supporting affidavits for default judgment. It was returnable on 11th December 2013 but was short served so the Motion was adjourned to 5th February 2014.
   
9. On 5th February 2014, default judgment was entered against the applicant.
   
10. On 18th March 2014, the present application was filed and it was argued on 16th April 2014.
    
11. The issue is whether the default judgment ought to be set aside and leave be granted to the applicant to file its defence out of time.
    
12. The principles governing this type of applications are now settled in this jurisdiction. Those principles arise from either Order 12 Rule 8 or Order 12 Rule 35 of the National Court Rules and the principles are the same. These rules have been interpreted and applied in numerous cases such as Government of PNG v Barker [1977] PNGLR 386, Green & Co (in liquidation) v Green [1976] PNGLR 76, Pansat Communications Pty Ltd v David Mai & Authur [1995] PNGLR 438, Christopher Smith v Ruma Constructions Ltd (2002) s 695, Leo Hannet & Elizabeth Hannet v ANZ Banking Group (PNG) Ltd SC 505, Grace Lome v her next friend Jack Lome v Allan Kundi (2004) N2776.
    
13. To set aside a regularly entered default judgment the applicant must satisfy the following criteria:
    
    1. The applicant or in the case of a Corporation by a responsible person, such as a Managing Director, Director or Company Secretary and, must state in an affidavit facts showing a defence on the merits.
       
    2. The application is made within reasonable time of the judgment being known to the defendant.
       
    100. There must be a reasonable explanation as to why default judgment was allowed to be entered.
         
14. Counsel for the applicant submitted that the evidence from the Managing Director of the applicant as set out in his affidavit shows a defence on its merits. It was submitted that the deponent had set out facts in his affidavit that shows that the defendant does in fact have a defence on its merits.
    
15. It is submitted that, the applicant through its Managing Director has stated in his affidavit that the invoices and claims of debt relates to another vehicle, which was held by the respondent as a lien and the applicant did not authorize the respondent to carry out any repairs or service to that vehicle. Secondly he deposes that, the applicant has paid off its debt and that the respondent has not given or provided it with an accurate statement of how much it is alleged to have owed to the respondent.
    
16. As to the other criteria, it is submitted that the application was filed within a reasonable time and that applicants Managing Director has offered an explanation.
    
17. Mr Kesno on the other hand submits that the applicant has not disclosed a defence on the merits. He submits that the application was not made promptly and that there has been no explanation as to why default judgment was allowed to be entered.
    
18. As to the promptness of the application, this should be determined on a consideration of, amongst other things, the time lapse between the date of making of the order for default judgment and the filing of the application to set it aside. In this case the order for default judgment was made on 5th February 2014. The application to set aside was filed 18th March 2014, a period of approximately over a month. In my view this is not an unreasonable period. In other words, in my view there was no delay in filing the application. This factor favors the applicant.
    
19. As to the explanation for allowing default judgment, the applicant through its Managing Director, stated in his affidavit that the applicant was not aware of the proceedings until the 16th October 2013. This was so because it did not receive the Writ of Summons. In any case Mr Kandenge deposes that he became aware of the proceedings upon receipt of the fax message from the lawyers for the respondent on 16th October 2013. He says that by then it was late but he instructed his lawyer to take the necessary steps to protect the interests of the applicant.
    
20. I accept the explanation. When the Notice of Motion for default judgment was filed (6/12/13) the defendant had already filed its Notice of Intention to defend on 19th November 2013. The Notice of Intention to defend was filed late but this is permissible under Order 7 Rule 6(1) of the Rules. The only qualification is that in such a situation, a defendant would have to seek and obtain leave before filing its defence out of time. When the defendant filed its late Notice of Intention to Defend, the lawyers for the plaintiff ought to have served the Notice of Motion for default judgment on the lawyers for the defendant. The Notice of Motion was served on the defendant per se, as the affidavit of Service of Daphney Ulam of 17th January 2014 confirms. The service of the Notice of Motion on the defendant per se was quite improper. This factor also favors the applicant.
    
21. As to defence on merits, as I have alluded to earlier, the defendant's Managing Director has, in my view, set out material facts, which shows a defence on the merits. He has stated several facts in his affidavit showing a defence on the merits. First he states that as far as the applicant is concerned it had paid off quite a large part of its debt with the respondent and that there was only a small part left.
    
22. Secondly he deposed that the applicant did not authorize the respondent to do any repairs or service on the other vehicle which gave rise to this claim.
    
23. Third he deposes that the respondent has not provided particulars of the debts, as particulars that have been relied on relates to a vehicle which the respondent was in possession of as a lien and to which it had not authorized the respondent to repair or service it.
    
24. In the end, in my opinion the applicant has met all the requirements to set aside the default judgment.
    
25. Accordingly I make the following orders:
    
    1. That the Default Judgment made on 5th February 2014 and entered on 12th February 2014 be set aside.
       
    2. Leave is granted to Applicant to file and serve its defence within twenty one (21) days from today.
       
    3. The plaintiff is to pay the defendant's costs, to be agreed, if not taxed.

_____________________________---_____________________________________
Warner Shand Lawyers: Lawyers for the Plaintiff
Yallon & Associate Lawyer: Lawyers for the Defendant