Independent Public Business Corporation of Papua New Guinea v Motor Vehicles Insurance Ltd [2017] PGNC 47; N6664 (6 January 2017)

N6664

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS No.1252 OF 2010

BETWEEN:

INDEPENDENT PUBLIC BUSINESS CORPORATION
OF PAPUA NEW GUINEA

Plaintiff

AND:
MOTOR VEHICLES INSURANCE LIMITED
First Defendant/First Cross Claim Defendant/Second Cross Claimant

AND:
NOMINEES NIUGINI LIMITED
Second Defendant/First Cross Claimant/First Cross Defendant to Second Cross Claim

AND:
NATIONAL SUPERANNUATION FUND LIMITED

Third Defendant

AND:
BENJAMIN TERENCE O’DWYER. TERENCE JAMES O’DWYER and BACKWELL LOMBARD CAPITAL PTY LTD
Second Cross Defendants to Second Cross Claim

AND:
DR JOHN MUA

Third Cross Defendant to Second Cross Claim

AND:

BERNARD FONG

Fourth Cross Defendant to Second Cross Claim

Waigani: Hartshorn J
2016: 7^th May
2017: 6^th January

Application for leave to file defence out of time

Cases:
Albright Ltd v. Mekeo Hinterland Holdings Ltd (2013) N5774
Evans v. Bartlam [1937] AC473; 2 All ER 646
Green & Co Pty Ltd (Receiver Appointed) v. Roger Britain Green [1976] PNGLR 73
Leo Duque v. Avia Andrew Paru [1997] PNGLR 378
Totamu v. Small Business Development Corporation (2009) N3702
Workers Mutual Insurance (PNG) Ltd (in Liq) v. Sathasivan Sivakumaran (2012) N4637

Counsel:

Mr. K. Imako, for the Plaintiff
Ms. J. Nigs, for the First Defendant/Second Cross Claimant
Mr. J. Brooks, for the Third Defendant
Mr. C. Raurela, for the Third Cross Defendant to the Second Cross Claim

6^th January, 2017

1. HARTSHORN J: This is a decision on a contested application for leave to file a defence to a second cross claim out of time. It is made by Dr. John Mua, the third cross defendant to the second cross claim in this proceeding. The second cross claim was filed by Motor Vehicles Insurance Limited (MVIL). MVIL opposes the application, the National Superannuation Fund Ltd (Nasfund), the third defendant, supports it, while the Independent Public Business Corporation (IPBC), the plaintiff, does not take a position.
2. The application is made pursuant to Order 1 Rule 7 and Order 12 Rule 1 National Court Rules.

3. Order 12 Rule 1 National Court Rules is a general Rule and in essence allows the court at any stage of 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.

4. Order 1 Rule 7 provides for the court to dispense with compliance with any of the requirements of the Rules either before or after the occasion for compliance arises, as distinct from Order 1 Rule 15 which provides for amongst others, an extension of time to be granted. As no objection was taken to the reliance upon Order 1 Rule 7, I will proceed on the basis that Dr. Mua is entitled to rely upon this Rule for the relief that he seeks.

Background

5. This matter concerns a claim by IPBC against MVIL and Nominees Niugini Limited (NNL), the second defendant, to set aside an Equity Monetisation Contract (EMC) which had been entered into between MVIL and NNL in breach of statutory requirements. On 27^th April 2015, MVIL filed a second cross claim claiming against individuals and entities that it claims are responsible for MVIL entering into the EMC which resulted in significant losses to MVIL. Dr. Mua is named as the third cross defendant to the second cross-claim.

This application

6. Dr. Mua applies to be granted leave to file his defence out of time as amongst others:
a) He denies the allegations in the second cross claim;

b) He did not file his defence in time as he has not been employed by MVIL since 2010, and has not been able to access relevant documentation to enable him to prepare his defence;

c) He has given evidence in detail of his proposed defence and has a defence on the merits;

7. Nasfund supports Dr. Mua’s application as amongst others:

a) If default judgment is entered against Dr. Mua, it would prejudice the defence of Nasfund;

b) Although Nasfund is not a cross defendant to the second cross-claim, many of the allegations contained therein are against Nasfund;

c) MVIL consented to the second cross defendants to the second cross-claim filing their defence out of time and Dr. Mua is in a similar situation;

d) The second cross-claim was not filed until five years after this proceeding was commenced and so any delay by Dr. Mua in filing his defence should be considered accordingly;

e) The subject of this proceeding including the cross claims therein are complex.

8. MVIL submits that Dr. Mua’s application should not be granted as amongst others:

a) no explanation is provided for the delay in filing a defence in time;

b) there has been undue delay in making this application and no explanation is provided for that delay.

The law

9. 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

10. 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.

11. 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.”

12. In this instance, Dr. Mua has given evidence in an eight page affidavit as to his tenure as Chief Executive Officer of MVIL and to what he deposes occurred before, leading up to and at the time that MVIL entered into the EMC. Annexed to his affidavit is his draft defence to the second cross claim.

13. Counsel for MVIL did not take issue with Dr. Mua’s evidence as to his proposed defence or that he had disclosed a defence on the merits.

14. I am satisfied that Dr. Mua has disclosed that he has a defence on the merits.

15. As to the issues of why a defence was not filed in time and that there had been undue delay in making this application with no explanations provided, Dr. Mua has referred in his evidence to being in a disadvantaged position as relevant records are within the custody of MVIL and that he no longer has access to that information, making the preparation of his defence extremely difficult. The court is able to consider this evidence in lieu of the explanations that should have been provided.

16. As to the exercise of this court’s discretion, as I did in Albright Ltd v. Mekeo Hinterland Holdings Ltd (2013) N5774, I make reference to the House of Lord’s decision of Evans v. Bartlam [1937] AC473; 2 All ER 646
referred to in Green & Co Pty Ltd (Receiver Appointed) v. Roger Britain Green [1976] PNGLR 73 and recently referred to in the decision of David J in Totamu v. Small Business Development Corporation (2009) N3702.

17. In Evans v. Bartlam (supra), Lord Wright at 488 quoted with approval the following statement of Bowen, LJ in Gardner v. Jay (1885) 29 Ch 50, at p59:

“When a tribunal is invested by Act of Parliament or by Rules with a discretion, without any indication in the Act or Rules of the grounds upon which the discretion is to be exercised, it is a mistake to lay down any rules with a view of indicating the particular grooves in which the discretion should run, for if the Act or the Rules did not fetter the discretion of the Judge why should the Court do so?”

18. Taking that statement into account and in the circumstances, I am satisfied that the court should exercise its discretion and permit Dr. Mua to file his defence out of time. As he has not however provided proper explanations for the delay in not filing a defence in time and as to why there was delay in filing this application, MVIL is entitled to its costs. Given the above, it is not necessary to consider the other submissions of counsel.

Orders

19.

a) The relief sought in paragraph 1 of the notice of motion of the third cross defendant to the second cross claim filed 1^st April 2016 is granted;

b) The costs of the second cross claimant of and incidental to the said notice of motion shall be paid by the third cross defendant to the second cross-claim;

c) Time is abridged.
_________________________________________________________
Allens Lawyers: Lawyers for the Plaintiff
Gadens Lawyers: Lawyers for the First Defendant
Leahy Lewin Lowing Sullivan Lawyers: Lawyers for the Second Defendant
Ashurst Lawyers: Lawyers for the Third Defendant
Lawyers for the Third Cross
Raurela Lawyers: Defendant to the Second Cross claim