Emirau Marine Products Ltd v Australia and New Zealand Banking Group (PNG) Ltd [2019] PGNC 491; N8949 (24 May 2019)

N8949

PAPUA NEW GUINEA
[IN TH NATIONAL COURT OF JUSTICE]

WS 1678 OF 2016

BETWEEN:
EMIRAU MARINE PRODUCTS LIMITED
Plaintiff

AND:
AUSTRALIA AND NEW ZEALAND BANKING
GROUP (PNG) LIMITED
Defendant

Kavieng: Kangwia J
2019: 19^th March & 24^th May

PRACTICE AND PROCEDURE – application for leave by defendant for extension of time to file defence and counter-claim out of time – Order 1, rule 15 order 12 rule 1 National Court Rules - whether there was a delay in making the application and what the extent of the delay was - whether a reasonable explanation was given for the delay - whether there was demonstrated or present a defence on the merits- a reasonable explanation given for the delay – defendant doesn’t have any defence on the merits – application for leave refused

Cases Cited:

Joe Tipaiza & Ors v James Yali & Ors (2005) N2971

Counsel:

M. Titus, for the Plaintiff
T. Yapao, for the Defendants

24^th May, 2019

1. KANGWIA J: By a notice of motion dated 7 December 2018 the Defendant moved for an extension of time and for leave to file its defence and counter claim out of time pursuant to Order 1 Rule 15 and Order 12 Rule 1 of the National Court Rules (NCR hereon).

2. The brief facts are that the Plaintiff by a Writ of Summons dated 6 December 2016 claimed K48, 000. 00 with costs from the Defendant for honouring a cheque by debiting the Plaintiff’s account with K48, 000. 00 after a stop payment request was made on 24 November 2016.

3. The writ was served on the Defendant on 23 May 2018. The Defendants motion was filed on 7 December 2018.

4. In support of the application the Defendant relied on the affidavit of Ben Kaspar who was the Southern District Manager for Retail with the Defendant bank dated 7 December 2018 and their external counsel Tyson Yapao dated 13 December 2018.

5. The Plaintiff relied on the affidavit of Reinhard Mangels who was the Managing Director dated 19 March 2019.

6. In submissions the defence conceded that they had delayed the filing of its defence by 5 months. Their explanation through the affidavit of Tyson Yapao and Ben Kaspar was that this proceeding was never in the record of the Appellant’s in-house lawyer as is their usual practice. The Defendant had no record of it having been served hence no action was taken on it.

7. However, the Defendant discovered through their external counsel who saw the matter listed on the call-over list when he went to the Court for another case. That information was relayed to the Defendant’s in-house lawyer who gave instructions to file a notice of intention to defend. They submitted that the delay by five months was not undue and leave should be granted. To support their position, they referred to a number of cases where the Court granted leave despite similar delays.

8. It was also proposed that even if there was a delay the Defendant had a defence on its merits that warranted the grant of leave. It was submitted that the proceedings were statute barred by more than 7 years pursuant to the Frauds and Limitations Act.

9. They further claimed that they would seek to cross-claim against a non-party to indemnify the Defendant bank. Therefore, the Cross-Defendant was required to be included in the proceedings for proper resolution of the claim.

10. It was finally submitted that the grant of leave will not prejudice the Plaintiff as they have taken no action to progress the claim since it was filed on 7 December 2016.

11. The Plaintiffs countered that the application was out of time by five months and should be refused. It was submitted that the Defendant had not provided any good reason for the delay except protecting their internal interests which was not a reasonable basis to be granted leave.

12. They argued that their claim was not statute barred as they had filed the claim within the prescribed 6-year time limit under the Frauds and Limitations Act.

13. They further argued that the Plaintiff will suffer prejudice due to the Defendant’s frustration of the proceedings through loss of time and expenses incurred.

14. The grant or refusal of leave is in the exercise of the Court’s discretion.

15. The law relating to an application for leave to file its defence out of time is settled as in the case of Joe Tipaiza & Ors v James Yali & Ors (2005) N2971 where the principles were stated as follows:

1. Whether there was a delay in making the application and what the extent of the delay was.
2. Whether a reasonable explanation was given for the delay
3. Whether there was demonstrated or present a defence on the merits.
   

16. In the present case the Defendant has conceded that they caused a delay by 5 months in filing this application. They have given the common reason to suggest that they were not served the writ. This reason is without foundation.

17. There is strong evidence that the writ was served and acknowledgement of receipt was signed by Lili Benoma who claimed to be a paralegal at the Defendant’s head office. There is no evidence to the contrary. Under those circumstances it is safe to conclude that the Defendant was properly served. It is further concluded that the Defendant’s inhouse lawyers failed to act after due service of the writ.

18. However, it is accepted that despite the doubt as to the service of the summons the information from external counsel to the inhouse lawyers in my view triggered action the subject of this application.

19. On the other hand, it does not lend any support to the Plaintiff when it had failed to progress the claim earlier. They have sat on their rights for up to 6 years before commencing their response in this application. The records show that there was a long period of inaction on the file since it was filed until the Defendant filed its Notice of Motion for leave. They have not even filed any motion for default judgement up to the time of the Defendant’s application. Given those circumstances I am satisfied that the Defendant has provided an explanation that was reasonable for the delay and the delay by five months is not undue.
20. On the requirement for the Applicant to demonstrate that a defence on the merits was present they submitted that the proceeding was statute barred and they had a defence as alluded to in the affidavit of Ben Kaspar.

21. In response the Plaintiff through the affidavit of Reinhard Mangels stated that the Defendant through the affidavit of Ben Kaspar revealed glaring omissions of facts present containing no meritorious defence but a sham. Even though Mangels’ affidavit consist of matters touching on the substance of the matter they are relevant for purposes of determining whether the Defendant has a defence or arguable case.

22. First is the issue of statute bar. The Defendant through the affidavit of Ben Kasper stated that the Plaintiff brought the action after 06 years and served it after more than 07 years. The Plaintiff countered that they were within the time limit prescribed.

23. The undisputed facts are these. The cause of action accrued on 06 December 2010 being the date the Defendant debited the Plaintiff’s account with K48,000: 00. The writ of summons was filed on 06 December 2016. That is exactly 06 years which is the time limit prescribed by the Frauds and Limitations Act. Under those circumstances in the exercise of discretion I consider that the proceeding was filed within the prescribed time period of six years. It was not statute barred.

24. Second issue is whether the Defendant has a defence on its merits. In submissions the Defendant has referred to item 05 of the affidavit of Ben Kaspar as containing its defence.

25. Through the affidavit it was submitted that the Plaintiff breached its duty of care when it failed to take necessary steps to have the cheque dishonoured on 6 December 2010 or recover the money from Gabriella Warvara who was paid the money. As a consequence of their delay it was submitted that the Plaintiff was in breach of its duty to the Defendant, guilty of contributory negligence and failed to mitigate its losses. They then gave various disadvantages open to them as being caused by the Plaintiff’s delay.

26. In response the Plaintiff cited what it claimed were glaring factual omissions in the affidavit of Ben Kaspar. It was highlighted that a stop payment to the cheque number 000000124 in the sum of K48, 000. 00 was made on 29 November 2010. Then on 06 December 2010 the cheque was cashed or withdrawn to the benefit of Gabriella Warvara. They submitted that this information appeared in the account statement from the Plaintiff’s bank records.

27. They also submitted that they had no obligation to make a stop payment or recover the money from Gabriella Warvara.

28. They further contended that the Plaintiff’s attempt to settle with the Defendant were ignored and they refused to return the money. Therefore, the defendant has no meritorious defence and the application should be refused.

29. The Defendant has not provided the defence they are trying to rely on. They have alleged contributory negligence. They have also stated that Gabriella Warvara the person who was paid the money should also be joined as a party in this proceeding.

30. The undisputed facts that stand out are these:

1. The Plaintiff raised a cheque for K45, 000. 00 payable to one Gabriella Warvara.
2. On 29 November 2010 the Plaintiff directed that the cheque be dishonoured. It was recorded as such on the account statement kept by the bank.
3. On 6 December 2010 the amount was debited from the Plaintiff’s account as a withdrawal. That was about 07 days after the stop payment was effectively made.
   

31. From those facts I cannot see negligence on the part of the Plaintiff. The money was paid by the bank seven days after the Plaintiff made a stop payment direction which the Defendant recorded. What is obvious now is that the Defendant erred when it failed to comply with the stop payment by executing the payment. It is unreasonable to suggest that the Plaintiff failed to dishonour the cheque on 6 December. He already did that 7 days earlier on 29 November which the defendant failed to honour. Under those circumstances the Plaintiff would be deemed to have suffered loss.

32. It is also apparent that the Plaintiff owes no duty to the Defendant to make a claim against Gabriella Warvara to recover the amount claimed. It also serves no useful purpose for Gabriella Warvara to be joined as a party in this proceeding. The responsibility lay on the Defendant to protect the Plaintiffs money as best it can. That doesn’t seem to be the case. The defendant paid the money. How it is recovered rests with the Defendant.

33. I conclude that there is no defence or an arguable case for the Defendant in this proceeding.

34. The two grounds relied on by the Defendant to obtain leave have not been satisfactorily met.

35. Application for leave is refused.

36. Each party shall bear its own costs from this application.
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Titus Lawyers: Lawyers for the Plaintiff
Allens Lawyers: Lawyers for the Defendant/Applicant