N7876

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS NO. 987 OF 2017

BETWEEN
B3 HIRE CARS
Plaintiff

AND
KEVIN MING AHIPUM
First Defendant

AND
NATIONAL HOUSING ESTATE LIMITED
Second Defendant

Waigani:  Dingake J
2018: 19 & 26 April, 11 October & 8 November
2019: 14 February & 18 April

PRACTICE AND PROCEDURE –application to set aside default judgment – applicant seeking to set aside default judgment must prove he has defence on the merits, give reasonable explanation why judgment was allowed to be granted by default and application has to be made promptly and within reasonable time – applicant has satisfied all three requirements – application granted – default judgment set aside - Order 12, Rule 8(2) (a) (b) and 3(a) and Order 12 Rule 35 and Order 7 Rule 6(2), Order 1, Rule 15(1) and Order 12 Rule 1  National Court Rules.
Counsel

Mr. Michael Kuma, for Plaintiff
Ms. Jenny Topo, for Defendants

21 May, 2019
1. 	DINGAKE J: This is an application to set aside the default judgment, granted ex parte, in favour of the plaintiff on the 26th April, 2018, and for the second defendant to be granted leave to file defence out of time within 14 days.
2. 	The application is made pursuant to Order 12, Rule 8(2) (a) (b) and 3(a) and Order 12 Rule 35 and Order 7 Rule 6(2), Order 1, Rule 15(1) and Order 12 Rule 1 of the National Court Rules.
3. 	In the alternative the applicant prays that the proceedings be dismissed in its entirety for want of Section 5 Notice pursuant to Section 5 of the Claims By and Against the State Act 1996.
4. 	The facts of this application are that the first defendant, who was at all material times hereto the Executive Chairman of the second defendant, on or about the 29th of February, 2016, entered into a Loan Agreement with the plaintiff, in terms of which the plaintiff advanced to him, on behalf of the second defendant, an amount of K200,000.00 on agreed terms.
5. 	Following allegations of breach by the defendants, the plaintiff instituted proceedings against the defendants and eventually obtained a default judgment that the second defendant now wants to set aside.
6. 	In order to succeed in an application to set aside the default judgment the applicant must satisfy the Court on the following:
(i)	that it has a defence on the merits;
(ii)	give a reasonable explanation why judgment was allowed to be granted, by default.
(iii)	That the application was made promptly and or within reasonable time.
7. 	With respect to the first requirement the second defendant pleads in its draft defence, that the first defendant did not have authority to enter into a loan agreement with the plaintiff. There is no evidence suggesting that the first defendant was authorized to procure the loan in the amount of K200,000.00 from the plaintiff on behalf of the second defendant.
8. 	The applicant avers that it was on account of the difficulty of meeting the first defendant by the second defendant that there was delay in giving the lawyers (for the second defendant) timely instructions to set aside the default judgement, and for leave to be allowed to file the defence out of time.
9. 	With respect to the second and third requirements, the applicant avers that the application to set aside the default judgment was made promptly, and that the delay of about five (5) months was occasioned by the difficulty in getting the first defendant to come and explain the circumstances under which the loan was entered into. 
10. 	I am satisfied, that having regard to the evidence, that this application was made with reasonable time. I am further satisfied on the evidence that the applicant has a strong defence on the merits. The explanation given as to why judgment was allowed to be granted by default is linked to the difficulty of meeting the first defendant as explained earlier. I find the explanation given reasonable and satisfactory. 
11. 	In the circumstances of this case the second defendant has also met the requirements to be allowed to file a defence out of time as indicated above. The interest of justice also requires that this matter should be fully ventilated at a trial where both parties would be entitled to participate in the trial.
12. 	In all the circumstances of the case, the applicant has made out an ease for the default judgment to be set aside and for leave to file its defence out of time.
13. 	Having regard to my conclusion above, it is not necessary for this Court to consider the alternative argument on Section 5 Notice of the Claims By and Against the State Act.
14. 	In the result, it is ordered as follows:
(i)	Pursuant to Order 12, Rule 8(2) (a) (b) and Order 12 Rule 35 of the National Court Rules, the default judgment made ex parte in favour of the plaintiff on 26th April, 2018 and entered on 3rd May, 2018 be set aside forthwith.
(ii)	Pursuant to Order 7, Rule 6(2), Order 1 Rule 15(1) and Order 12 Rule 1 of the National Court Rules, the second defendant be granted leave to file defence out of time within 14 days, from today the 21st of May, 2019.
(iii)	Costs of and incidentals to this proceedings be paid by the plaintiff.
___________________________________________________________
Kuma Lawyers: Lawyers for the Plaintiff
Gagma Legal Services: Lawyers for the Defendant