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More v Coffee Industry Corporation Ltd [2019] PGNC 304; N7981 (26 July 2019)

N7981

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]


WS. N0. 862 0F 2018


BETWEEN:
JACOB MORE
Plaintiff


AND:
COFFEE INDUSTRY CORPORATION LIMITED
Defendant


Kokopo: Susame, AJ
2019: 5th, 26th July


PRACTICE & PROCEDURE – Application for default judgment - Order 12 Rules 25 & 28 of the National Court Rules - Application for extension of time to file defence - Order 1 Rule 15 & Order 7 Rule 6 of the National Court Rules – Considerations applicable -


Cases Cited:


Koral v Kavie [2006] PGNC 60 &Takori v Yagari [2008] PGSC 3; SC905.
Motor Vehicles Insurance Ltd v Joe [2007] PGSC 20; SC863 (2007)
Mapmakers Pty Ltd v BHP Company Ltd [1987] PNGLR 78
Tipaiza v Yali, Governor Madang Province [2005] PGNC 1; N2971 (1 February 2005)
Viritia v Mabep [2011] PGNC 38; N4236 (25 March 2011)


Counsel:


Mr. P Yange, for the Plaintiff
Ms. W Banake, for the Defendant


DECISION

26 July, 2019

  1. SUSAME AJ: There are two motions before me: the one filed by the plaintiff on 12 December 2018 seeking default judgment and the other seeking leave of court for extension of time to file defence filed by the defendant on 4 July 2019.
  2. Arguments on the two motions were heard simultaneously on 5 July 2019. Decision on the motions was reserved which I now deliver.

Application for Default Judgment


  1. First, I deal with the plaintiff’s application seeking default judgment. Application was filed pursuant to Order 12 Rule 25 & 28 of the National Court Rules.

Order 4 Rule 25.


“25. Default (17/2)

A defendant shall be in default for the purposes of this Division –

(a) ...

(b) Where he is required to file a defence and the time for him to file defence has expired but he has not filed his defence;...”


Order 12 Rule 28. Unliquidated damages (17/5)

“Where the plaintiff’s claim for relief against a defendant in default is for unliquidated damages only, the plaintiff may enter judgment against that defendant for damages to be assessed and costs.”


  1. Plaintiff relies on affidavit sworn on 11 December 2018 and other supporting documents annexed to the affidavit.

Issue: Whether pre conditions have been met for entry of default judgment.


  1. The following are chronology of events that transpired. They are in order and are not at issue:
    1. Writ of Summons was filed on 16 July 2018.[1]
    2. Writ was served on the defendant at its Headquarters in Goroka on Wednesday 8 August 2018, at 1.12pm. Affidavit to that effect was sworn on 28 August 2018 and filed on 18 October 2018 by senior constable Andrew Ruipo who effected service. [2]
    3. Notice of intention to defendant was filed on 24 August 2018. [3]
    4. Letter from Mr. Yange dated 26 November 2018 forewarning defendant of their intention to seek a default judgment if no defence was filed. [4]
    5. Affidavit of search of the search conducted on 11 December 2018 at the National Court Registry confirming documents that have been filed was sworn and filed on 12 December 2018.[5]
    6. Notice of motion seeking default judgment was filed on 12 December 2018[6]
    7. Affidavits of Jacob More and Paul Pori Yange.[7]
    8. On 19 December 2018 Marubu lawyers enter appearance as an agent for the defendant. [8]
    9. Ms. Wilma Banake swore an affidavit dated 18 December 2018 and filed on 19 December 2018 seeking adjournment and allow them to file their defence out of time.[9]
    10. Notice of motion with supporting affidavits and other documents filed on 4 July 2019 seeking extension of time to file defence. [10]
  2. What emerges from the above events are the following. Notice of intention to defend was filed on 24 August, 2018 after the service of the Writ of Summons on 8 August 2018. It was filed within the 30 days required period stated on the Writ. There is no issue with that.
  3. Under the rules of practice defendant is required to file its defence within 44 days of the service of the Writ.[11] Outside the 44 days defendant has no right to file and serve a defence without the leave of the court. [12]
  4. No defence had been filed in this case. Ms. Banake concedes to that. The only issue of contention is the forewarning letter. There is no dispute as to the actual receipt of the letter which was emailed. Ms. Banake’s contention is that forewarning should have come before the default occurred and not after.
  5. In support of that proposition she relied on the case of Mapmakers Pty Ltd v BHP Company Ltd [1987] PNGLR 78. This is the leading authority on the requirement to forewarn opposing lawyers by the party seeking default judgment.
  6. 10. Following that decision the requirement for forewarning warning has been adopted and incorporated into the rules of practice in this jurisdiction.
  7. I quote the relevant part of the judgment of Kidu CJ. “Lawyers for the respondent (plaintiff) having been served with the notice of intention to defend were put on notice that a defence was to be filed and when the stipulated time was about to expire or had expired common courtesy required that a caution that a default summons was to be entered ought to have been given to the respondent’s lawyers. I consider that this practice should be adopted by all lawyers.”(Underlining added for emphasis)
  8. Nowhere in the judgment court pronounced forewarning be done prior to default occurring. The decision is crystal is clear. Party seeking default judgment must out of courtesy forewarn the other party of such an intention when the stipulated time is about to expire or had expired. The judgment of the court has been misconstrued. Hence, Ms. Banake’s argument must fail.
  9. From 24 August 2018 when notice to defend was filed 44 days period would have lapsed in the second week of October 2018. Correspondence forewarning defendant was sent about a month after the time had expired.
  10. I am satisfied plaintiff had met all the prerequisites in seeking a default judgment. Defendant had defaulted in filing its defence within the prescribed time. Naturally, default judgment should be entered had it not been for the motion filed by the defendant seeking extension of time to file defence which I now deal with.

Application seeking extension of time to file defence.


  1. Application was moved pursuant to Order 1 Rule 15 and Order 7 Rule 6 of the National Court Rules.
  2. It has been held Order 1 Rule 15 is the general provision in regard to grant of leave for extension of time. Order 8 Rule 23 is more specific provision for defendant to seek leave to file its defence out of time.[13]Be that as it may, the requirement to obtain leave from the court to file a defence out of time is mandatory. This requirement is well settled in this jurisdiction.
  3. Principles in granting of leave to file defence out of time are set out in Tipaiza v Yali, Governor Madang Province [2005] PGNC 1; N2971 (1 February 2005). The considerations are:
  4. Applicant relies on a supporting affidavit of Ms. Wilma Banake sworn on 4 July 2019 [14] and other documents attached to the affidavit. In essence the affidavit is the purported defence against the statement of claim. It does not state reasons for the default in filing the defence within the prescribed time. Proper mode defendant would have offered some explanation for the delay would have been in an affidavit and not orally on the bar table as she did. That was improper.

Extent of the delay


  1. Issue: Whether there was inordinate delay in the filing of the application.
  2. Notice of intention to defend was filed on 24 August 2018. Default would have occurred after the second week of September 2018. Motion seeking leave for extension was filed on 4 July 2019. That was a period of 10months or about 300 days. Ms. Wilma argued that is not ordinate delay. No authority was referred for that proposition. To me delay of 10 months amounts to inordinate delay. What stopped the defendants from acting promptly within reasonably good time? Lawyers taking carriage of matters in court are quite versed with the rules of practices. They are expected to comply with the requirements of the rules towards trial of the matters expeditiously. It baffles me why defendant’s employed lawyer failed to do what she was required to do sooner when she became aware defendant was already in default in filing its defence

Reasons for the delay


  1. In an affidavit sworn on 18 December 2018 [15]Ms. Banake sought adjournment of hearing of the motion seeking default judgment which was set for hearing on 19 December 2018. In that affidavit Ms. Banake conceded defendant was in default but said they had a defence and cross claim to file.
  2. In my view knowing that defendant was already in default the appropriate thing for her to do was to rush a motion seeking leave of court for extension of time to file defence. That was not done until 4 July 2019 which was 10 months after default had occurred. No reasons are given for the 10 months delay in filing this motion.
  3. Consequently, this application should fail for the above reasons. But there are other two remaining considerations which are important.

Whether there is a defence on merit.


  1. Mr. Yange argued defendant had failed to file defence on merits which must be particularized in an affidavit. Defendant does not have a defence and asked for a default judgment.
  2. I have gone through the documents filed in support of the motion. Ms. Banake is the employed lawyer and company secretary. In her affidavit sworn on 4 July 2019 under the head defence on merit she gave particulars of their defence. Defence relied on is dated 2 July 2019. I have also considered other documents annexed to Ms. Banake’s affidavit on plaintiff’s employment history leading up to his termination and payment of his entitlements.
  3. The case involves terms and conditions of plaintiff’s employment, whether there has been any breach thereof, whether plaintiff has been paid all his dues in lieu of his termination, whether there is more owing to the plaintiff. Defendant’s claim is that plaintiff has been paid all his entitlements. There is nothing remaining to be paid.
  4. In my view defendant has an arguable defence which cannot be ignore. For the court to deny the defendant opportunity to argue its defence would be tantamount to denial of the right to be heard by court administrating justice.

Where do interest of justice lie?


  1. Under this consideration circumstances of the case dictates that writ of summons taken up by the plaintiff is properly tried on liability in the interest of justice.

Orders


  1. Plaintiff’s motion seeking default judgment is dismissed.
  2. Defendant’s motion seeking extension of time to file defence is granted.
  3. Defendant is to file and serve its defence within exactly 7 days.
  4. Matter returns to court for directions in expediting hearing of the substantive matter on 14/8/2019 at 9:30 am for directions.

Cost


Cost is discretionary. I order that cost be in the cause.
__________________________________________________________________
Island Legal Services: Lawyer for the Plaintiff
In-House Company Lawyer: Lawyer for the Defendant


[1]document 1
[2]document 3
[3] document 2
[4] letter annexed to Mr. Yange’s affidavit sworn on 12 December 2018 document 7
[5] document 4
[6]document 5
[7]documents 6 & 7
[8] document 8
[9] Document 9
[10] Document 11
[11]Motor Vehicles Insurance Ltd v Joe [2007] PGSC 20; SC863 (2007)
[12]
Koral v Kavie [2006] PGNC 60 &Takori v Yagari [2008] PGSC 3; SC905.
[13]Viritia v Mabep [2011] PGNC 38; N4236 (25 March 2011) Sawong J
[14] Document 12
[15] Document 9

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