MD Investments Ltd v Sirifave [2017] PGNC 372; N7071 (1 May 2017)

N7071

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS 801 of 2008

BETWEEN:
MD INVESTMENTS LIMITED
Plaintiff/First Cross Defendant

AND:
SAMUEL SIRIFAVE
First Defendant/First Cross Claimant

AND:
THE REGISTRAR OF COMPANIES
Second Defendant/Second Cross Defendant

AND:
PEPI KIMAS,
Secretary Department of Lands
& Physical Planning

Third Defendant

AND:

THE INDEPENDENT STATE

OF PAPUA NEW GUINEA

Fourth Defendant

AND:
HETURA TRADING LIMITED
Fifth Defendant/Second Cross Claimant

Application to extend the time to file a defence to a cross claim

Waigani: Hartshorn J
2017: 20^th April
: 1^st May

Cases:

Leo Duque v. Avia Andrew Paru [1997] PNGLR 378
Tom Rangip v. Peter Loko (2009) N3714
Workers Mutual Insurance (PNG) Ltd (in Liq) v. Sathasivan Sivakumaran (2012) N4637

Counsel:

Mr. P. Daime, for the Plaintiff Cross Defendant
Mr. B. Lai, for the First and Fifth Defendants
and First and Second Cross Claimants

ORAL DECISION DELIVERED ON

1^st May 2017

1. HARTSHORN J: This is a decision on a contested application to extend the time for the filing of a defence to a cross-claim. It is made by the plaintiff cross defendant MD Investment Limited (MDIL) in respect of the filing of its defence to the cross claim of Samuel Sirifave. The only other parties that appeared on the application were Samuel Sirifave and the second cross claimant fifth defendant Hetura Trading Limited. They opposed the application.

Background

2. In July, 2008 MDIL commenced this proceeding seeking amongst others, general and specific damages for expenses and losses that it incurred. This was as a result of leasing a property from Hetura Trading Limited, finding out that Hetura Trading was not a registered company, the failure of Hetura Trading to pay utilities and taxes and other amounts for which it was liable. The parties sued then were Samuel Sirifave, the State and two other State defendants. MDIL amended its statement of claim twice. The Further Amended statement of claim was filed in May 2013.

3. On 10^th July, 2017 the State supported by Samuel Sirifave successfully applied for the proceeding to be summarily determined. The Court ordered amongst others that the cross-claim of Samuel Sirifave was adjourned to 21^st August 2015 for a directions hearing.

4. Samuel Sirifave filed his verified defence and cross-claim on 30^th November 2009. He also filed a verified defence to amended writ of summons and cross-claim together with the fifth defendant Hetura Trading Limited on 1^st March 2010. The then lawyers for MDIL filed an affidavit on 12^th August 2010 in which it was deposed and acknowledged that amongst others, Samuel Sirifave had filed his cross-claim on 30^th November 2009 and that he had filed a verified defence on 1^st March 2010.

5. In the cross-claim Samuel Sirifave and Hetura Trading claim against MDIL that amongst others, it owes rental to them and damages for loss of business.

The application

6. MDIL submits that it should be granted an extension of time to file its defence to the cross claim as:

a) It has a defence on the merits which is that the cross claimant Samuel Sirifave misrepresented to, and induced MDIL, to enter into contracts that were null and void;

b) It has a valid reason for not filing its defence to the cross-claim. That is that it is MDIL’s previous lawyer’s negligence in not filing its defence;

c) The application was made as soon as possible after the default came to the knowledge of MDIL;

d) The interests of justice lie in the application for an extension of time to file a defence to the cross claim being granted.

7. Samuel Sirifave and Hetura Trading Limited submit that the application should not be granted as amongst others:

a) There has been a substantial delay in MDIL not filing its defence and in making this application – almost seven years, and there is no reasonable explanation for the delay;

b) They have been and are prejudiced by the delay;

c) It is not in the interests of justice for the application to be granted as MDIL’s substantive claim was summarily determined on 10^th July 2015 and by seeking to file its defence to the cross-claim, it is attempting to resurrect its claim.

Law

8. I reproduce that part of my decision in Workers Mutual Insurance (PNG) Ltd (in Liq) v. Sathasivan Sivakumaran (2012) N4637 that considered the relevant principles concerning an application to file a defence out of time:

“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.”

Consideration

9. As the principal matter that must be shown on an application such as this is that the applicant has a defence on the merits, I will consider this issue first.

10. As to a defence on the merits, 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.”

11. In this instance, Mr Merawe Degemba, the Managing Director of MDIL, deposes in his affidavit, upon which MDIL’s counsel relied in support of this application, that amongst others, the cross claimants, at the time of their claim were deregistered and that Hetura Trading was re-registered when the plaintiff’s statement of claim was served. Further, if the cross claim is pursued without MDIL’s defence, this would be prejudicial and unfair to MDIL. There is a draft defence annexed to the affidavit.

12. As to MDIL having a good defence on the merits, it is deposed that MDIL was deregistered and then re-registered. I assume that what is meant by that, is that Hetura Trading Limited was restored to the register of companies kept by the Registrar of Companies pursuant to Section 395 Companies Act.

13. Section 380(2) Companies Act provides that:

“(2) A company that is restored to the register is deemed to have continued in existence as if it had not been removed from the register.”

Consequently, Hetura Trading Limited’s claim is not defeated by it previously being de-registered.

14. As to the purported defences contained in the draft defence, Mr Degembe has not deposed to these or stated material facts concerning these as required in Leo Duque v Avia Andrew Paru (supra).

15. Consequently for the above reasons, I am not satisfied that it has been shown that MDIL has a good defence on the merits.

Delay

16. As to the delay, it is at least about six years and eight months since MDIL should have filed its defence to the cross-claim. To put that in to perspective that is at least 116 times more than the time permitted under the National Court Rules. It is more than the time permitted within which a claim in tort or contract may be commenced before becoming statute barred. It is clearly an inordinate amount of time in my view.

17. The reason given for this delay, is that it is the previous lawyers fault. If this submission is correct and it is the previous lawyers fault, as I said in Tom Rangip v. Peter Loko (2009) N3714, at [41]:

“41. It has been held on numerous occasions in this jurisdiction that the negligence of a lawyer is not a good reason for an extension of time to be granted: Peter Dixon Donigi v. Base Resources Ltd [1992] PNGLR 110.”

18. Consequently, notwithstanding that MDIL may have a claim against its previous lawyers for professional negligence, the previous lawyer’s alleged negligence is not a reasonable explanation and a good reason for an extension to be granted.

19. As to the issue of where the interests of justice lie, to my mind it is not in the interests of justice to allow MDIL to file a defence about six years eight months after the defence was due, in circumstances where its claim was summarily determined at least 18 months ago and where the defence on the merits to be relied upon is unlikely to succeed.

20. In all of the circumstances, I am not satisfied that this application should succeed.

Orders

21. The formal Orders of the Court are:

a) The relief sought in the notice of motion of the cross defendant filed 7^th December 2016 is refused;

b) The cross defendant shall pay the costs of the first and second cross claimants’ of and incidental to the said notice of motion;

c) Time is abridged.
_________________________________________________________________
Gagma Legal Services: Lawyers for the Plaintiff Cross Defendant
B. S. Lai Lawyers : Lawyers for the First and Fifth Defendants
and First and Second Cross Claimants