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National Court of Papua New Guinea |
PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]
WS (COMM) NO 195 OF 2019
BETWEEN:
KINA BANK LIMITED
Plaintiff
AND:
THE ESTATE OF LATE BONNY KAPAU
(ADMINISTRATOR, ELIZAH ANGA)
Defendant
Waigani: Anis J
2021: 16th & 30th July
NOTICE OF MOTION – seeking to set aside default judgment and writ of possession – Order 12 Rule 8(2)(a) – National Court Rules - leave to file defence out of time – Order 1 Rule 15 – National Court Rules – order for defendant and his family to continue to reside on the property – exercise of discretion
Cases Cited:
Makop v. Billy Parako (2004) N2593
Bank of South Pacific Ltd v. Robert Tingke (2014) SC1355
Danny Totamu v. Small Business Development Corporation (2009) N3702
Court’s PNG Ltd v. Michael’s and Michael’s Ltd (2019) N8050
Barker v The Government of Papua New Guinea, Davis & Bux [1976] PNGLR 340
Arman Larmer Surveys Ltd v. Chan Consolidated Ltd (2013) SC1253
Mirebean Enterprises Ltd v. Nathan (2020) SC1984
Tom Rangip v. Peter Loko (2009) N3714
MD Investments Ltd v. Samuel Sirifave (2017) N7071
Peter Dixon Donigi v. Base Resources Ltd [1992] PNGLR 110
Counsel:
B. Yalehen, for the Plaintiff
K. Makeu, for the Defendant
RULING
30th July, 2021
1. ANIS J: The defendant’s notice of motion was filed on 31 May 2021 (NoM). He sought orders, amongst others, to set-aside the default judgment which had been granted by the Court on 18 July 2019. The NoM was contested at its hearing on 16 July 2021. I reserved my ruling thereafter to a date to be advised.
2. I rule on it now.
BACKGROUND
3. On 26 June 2013, the plaintiff and late Bonny Kapau (deceased) entered into a loan agreement. The loan sum advanced was K959,512. The purpose of the loan was for the deceased to purchase a property described as Allotment 66, Section 445, Hohola, National Capital District (the property). The property was provided as security to the plaintiff and the parties also executed a Mortgage Deed (Mortgage) on 4 April 2014. Shortly after, the deceased passed away, that is, on 21 April 2014. On 24 September 2014, the Elizah Anga was granted with the Letters of Administration to administer the estate of the deceased. The plaintiff was notified and Mr Anga (the defendant/Mr Anga) as the Administrator to the estate of the deceased, continued with the loan repayment. The loan repayments had been inconsistent since then. After a default of 14 month, on 12 November 2018, the plaintiff issued a Notice of Demand to the defendant for the full loan repayment of K730,299.34. Following that, the plaintiff sent a Notice of Default dated 7 December 2018, where it demanded payment of K735,469.44.
4. On 14 March 2019, the plaintiff commenced the present proceeding and served the defendant with the originating process. At the material time prior to the grant of default judgment, the defendant did not file a notice of intention to defend and defence. On 18 July 2019, default judgment and vacant possession of the property was ordered in favour of the plaintiff and against the defendant.
NOTICE OF MOTION
5. The defendant’s NoM stems from that. The defendant seeks to set-aside default judgment, leave to file his defence out of time, and interim orders to permit occupation of the property pending determination of the matter. The sources of the NoM are Order 12 Rule 8(2)(a), Order 1 Rule 15 and Order 12 Rule 1, of the National Court Rules (NCR). No challenge is raised on the relied sources, so I will proceed on that basis.
ISSUES
6. The issues, in my view, are as follows, (i), whether there is any utility in the NoM given the present state of events, (ii), subject to the first issue, whether judgment was irregularly entered, (iii), if not, then (a) whether the defendant has a defence on merit, (b) whether there is a reasonable explanation explaining why the defendant did not file his defence within time, and (c),whether there is a reasonable explanation for the delay in filing the NoM.
STATUS QUO
7. At the hearing, I queried counsel on the status of the property since the Court Order of 18 July 2019 which was made some 2 years ago.
8. The plaintiff, in response, referred to the affidavit of Francis Waranduo filed on 17 June 2021. Mr Waranduo deposes, amongst others, that the plaintiff has already sold the property to third parties, namely, a Kingston Albert and a Maria Apural, on 5 May 2021. Mr Waranduo deposes that settlement of the mortgage sale occurred on 28 May 2021, and the new owners have since taken possession of the property.
9. The defendant responded by challenging the veracity of the affidavit of Mr Waranduo generally. Counsel submits that Mr Waranduo cannot be the appropriate person to depose such evidence; that the relevant bank employee charged with the file of the property should be the correct or reliable person who could depose such evidence. Counsel also submits that the affidavit fails to attach the relevant contract for sale or the mortgage document to support the deposition that the property had been sold. In support, the defendant relies on his affidavit filed on 24 June 2021. The evidence shows request made by the defendant to the plaintiff to furnish information regarding the mortgage sale and the plaintiff’s refusal to disclose the information.
10. The plaintiff, in reply, submits that the evidence filed were sufficient. Counsel submits that Mr Waranduo was the responsible person of the plaintiff who had information where he could depose upon. Also, counsel submits that the contract and mortgage documentation for the mortgage sale with the third parties were confidential which was why they could not be disclosed through the affidavit of Mr Waranduo filed on 17 June 2021. Counsel submits that in any event, by deposing to the fact that the property had already been sold was sufficient for this purpose.
11. In considering the arguments, I note the following. Mr Waranduo had deposed an earlier affidavit which had been relied upon to support the plaintiff’s default application. The affidavit was filed on 20 June 2019. Mr Waranduo is the Manager for Asset Recoveries with the plaintiff. At paragraph 1 of his affidavit of 20 June 2019, he states, I am Manager of Asset Recoveries for the Plaintiff Company. My duties include, amongst others, overseeing the asset the asset recovery aspects of the Plaintiff and as such I have access to the Defendant’s records and knowledge to the facts giving rise to this matter. I therefore, depose to this Affidavit in that capacity. I note that no notice of objection was filed by the defendant in regard to Mr Waranduo’ recent affidavit nor a notice for cross-examination. It therefore becomes a matter of what weight I should add or subtract from the plaintiff’s evidence. I also note that the deal between the plaintiff and the third parties in this instance was a private one. As such, I dismiss the defendant’s claim that it is entitled to information or documents that had resulted from the said dealing. There are of course court processes for that if the defendant wishes to pursue, to try to obtain such information. It has not done that in this instance.
12. In the end, I see no reason why I should doubt the evidence of Mr Waranduo. He is the Asset Manager with the plaintiff. He holds such an important role within the commercial or business affairs of the plaintiff, and I note that he has given his evidence under oath on various occasions. He was involved in giving evidence for the plaintiff from the beginning. I also note that it is not unusual for persons who hold Mr Waranduo’s position in financial institutions such as banks, to depose to or disclose facts and information of a customer. The information deposed to is based on a customer’s file and on information that is within the area of the plaintiff’s business where a responsible bank officer, such as Mr Waranduo, would have had access to or control of, for the customer in question, namely, the defendant.
13. I therefore accept as good evidence the depositions contained in Mr Waranduo affidavit filed on 17 June 2021. In so doing, I find as a fact that the property had been sold to third parties as of 5 May 2021.
14. The immediate effect of this finding is that relief 3 and part of relief 1 where Writ of Possession is sought be set-aside, are refused. I find no utility for these relief given the present status quo of the property and its mortgage sale.
IRREGULARITY
15. I note that counsel for the defendant did not make clear submissions or distinction in regard to the whether the judgment was irregularly or regularly entered. See case: Makop v. Billy Parako (2004) N2593. What is certain is that counsel made submissions on the basis or assumption that default judgment was regularly entered.
16. However, the submissions that caught the Court’s attention was submissions and reference by counsel, to a Court Order of 3 July 2019. The order was made by Hartshorn J at the first return date of the default application. It reads in part,
......
17. It is not disputed that the plaintiff had complied with the said Court’s direction before the return date on 18 July 2019. However, the defendant submits that the order was issued contrary to requirements of service upon him as the duly appointed Administrator to the estate of the deceased. Therefore, counsel submits that there was no due service of the application documents upon the defendant prior to the hearing of the default application. The plaintiff submits as follows. It says there was no requirement to serve the default application on the defendant because at the time, the defendant, despite it being served with the writ of summons and statement of claim which is not denied, had failed to file a notice of intention to defend and defence. The plaintiff submits that it had wanted to move the application ex parte on 18 July 2019 when the Court issued the directions which it had to comply with.
18. I uphold the plaintiff’s submission in this regard. Service upon the defendant at that time was not necessary or required after it had failed to file its notice of intention to defend and defence. See cases: Bank of South Pacific Ltd v. Robert Tingke (2014) SC1355, Danny Totamu v. Small Business Development Corporation (2009) N3702, and Court’s PNG Ltd v. Michael’s and Michael’s Ltd (2019) N8050. I note that the defendant recently filed a notice of intention to defend together with the NoM, on 31 May 2021. That is permitted under the rules and case law, but it must be noted that the said notice was filed well after the grant and entry of default judgment.
19. So, with that, I must say that I do not find any irregularity in the Court’s Order of 18 July 2019.
REGULAR ENTRY OF JUDGMENT
20. Given my findings, the next issue is to consider whether judgment was regularly entered. To do so, I will consider (i), whether the defendant has filed an affidavit that discloses a valid defence, (ii), whether there was any valid reason given for not filing a defence within time, and (iii), whether there were valid reasons disclosed on why the defendant had delayed in filing the NoM for about 2 years. See cases: Barker v The Government of Papua New Guinea, Davis & Bux [1976] PNGLR 340, Arman Larmer Surveys Ltd v. Chan Consolidated Ltd (2013) SC1253 and Mirebean Enterprises Ltd v. Nathan (2020) SC1984.
21. In regard to the first requirement, I refer to the evidence filed by the defendant. Of relevance is his affidavit filed on 31 May 2021. He applied for and was granted Letters of Administration on 24 September 2014, to administer the estate of the deceased. He appeared to also have a personal interest in the matter because he openly states that he was intending to purchase the property for himself. It is therefore arguable whether he as the Administrator was acting in the best interest of the estate of the deceased. That aside, in his evidence, he makes general assertions that he did not receive loan statements, notices of default or letters of demands from the plaintiff. I find these claims or assertions made as too general. I also note the evidence of the plaintiff, and I make particular reference to Mr Waranduo’s affidavit filed on 20 June 2019. The affidavit, in my view, gives detailed account of the steps that had been taken by the plaintiff, that is, in regard to notices that had been issued on defaults and the letter of demand. The plaintiff had established that the defendant was the Administrator of the estate of the deceased, not long after his death in 2014. The plaintiff had been dealing with the defendant or Mr Anga since, and notices that had been sent were sent to the address of the defendant for the estate of the deceased. I make particular mention of annexure E to Mr Waranduo’s affidavit. Shown there is a textfile and it gives an impressive detail log of various attendances to the loan affairs of the deceased and of his estate, from 16 November 2011 right up to 18 January 2019. Perusing them, I note the numerous defaults and arrears to the loan account and the various attendances between the plaintiff and the defendant in terms of addressing the loan arears, loan statements, notices, various letters of defaults, meetings and discussions, to name a few. What is certain with this timeline piece of evidence, is that it shows a clear pattern of the defendant’s inability to honour the loan account and pay his dues as agreed to under the terms of the loan agreement, that is, soon after the death of the deceased. The evidence filed by the defendant does not show how he is or will be able to fully repay the total loan sum together with the arears, interest and costs.
22. I do not find any valid defence deposed to or which is demonstrated by the defendant in his evidence that has been filed. There is also a further reason. The defendant’s defence is premised on the condition that he would retain the property to rent out or derive monies from to meet his obligations under the loan agreement. This condition no longer exists given the delay with this application and given the fact that the property has now been sold to a third party.
23. I turn to the next issue, which is whether the defendant has disclosed a valid reason for not filing his defence within time. Mr Anga admits being personally served with the writ of summons and statement of claim. There is also evidence that he was personally served. Mr Anga blames his lawyers for not taking steps to file the defence. Failure by a lawyer to act for a client’s interest and file court documents such as a defence, cannot itself be a good reason in an application for leave to file a defence out of time. See cases, Tom Rangip v. Peter Loko (2009) N3714, MD Investments Ltd v. Samuel Sirifave (2017) N7071 and Peter Dixon Donigi v. Base Resources Ltd [1992] PNGLR 110. The defendant may have a cause of action for negligence against the lawyers which may be an immediate relief that is available to him. However, it has no relevance in this instance without proper or exceptional cause being shown. The defendant, in my view, has fallen short of establishing that.
24. The third issue of course is whether there had been a delay in filing the defence, and if so, consider the disclosed reasons to determine whether they are valid.
25. I note the submissions of the parties on this issue. There is no issue that the defendant had delayed for about 1 year 10 months after default judgment was ordered, before he filed the NoM. Mr Anga said in his evidence that he only became aware of the default judgment after he had read in the papers in August of 2019 that the property was being advertised. If I compute time from there, the delay would be about 1 year 9 months. Evidence disclosed shows that the defendant had on 2 occasions filed 2 Supreme Court review applications during the delayed period. Both Supreme Court reviews did not proceed beyond the leave stages, so I also take that into account herein. To me, the Court processes for setting aside a default judgment where judgment is entered in the absence of a defendant, are expressed in the NCR and case law, and that they have been in practice for many years. The defendant had counsel acting for him and the estate of the deceased at the material time. Whether it was because of bad legal advice received from his lawyers or upon his own instructions, was a matter for him. For this purpose, the delay has actually had serious consequences to the status of this proceeding and the property in question. I will elaborate. Before the filing of the NoM, enforcement had occurred where the occupants of the property including Mr Anga were evicted from the property, and the property has been sold to third parties who now occupy it for their own purposes. So, I ask myself this. Would it be in the best interest of justice that I should set-aside the default judgment and re-active this matter by granting leave to the defendant to file his defence out of time? Who will suffer real prejudice if I grant the relief sought in the NoM? To me, the answers to these questions favour the plaintiff, for the reasons and findings in my decision.
26. In the end, I do not find any valid reasons disclosed by the defendant for the delay in making the application. I also find that interest of justice and prejudice, as two other significant factors that also favour the plaintiff.
OTHER MATTERS
27. The defendant also submits that he intends to argue as its defence, breach of s. 41 of the Constitution, and he pleads that in his proposed defence which is attached his affidavit. Section 41 states:
41. Proscribed acts.
(1) Notwithstanding anything to the contrary in any other provision of any law, any act that is done under a valid law but in the particular case—
(a) is harsh or oppressive; or
(b) is not warranted by, or is disproportionate to, the requirements of the particular circumstances or of the particular case; or
(c) is otherwise not, in the particular circumstances, reasonably justifiable in a democratic society having a proper regard for the rights and dignity of mankind,
is an unlawful act.
(2) The burden of showing that Subsection (1)(a), (b) or (c) applies in respect of an act is on the party alleging it, and may be discharged on the balance of probabilities.
(3) Nothing in this section affects the operation of any other law under which an act may be held to be unlawful or invalid.
28. The defendant argues that the actions by the plaintiff to foreclose on the property would be termed as harsh and oppressive. I asked counsel to draw the Court’s attention to a relevant case on point that will support such a defence. Counsel was unable to assist the Court in that regard.
29. I refuse this argument for 2 reasons. Firstly, counsel was unable able to meaningfully assist the Court on the matter. A party who wishes the Court to consider his or her argument on a matter or point of law, must, in my view, do so with valid support or backing from authorities including case authorities. Unsubstantiated arguments or submissions made by counsel or a party on a matter or point of law must be discarded and should not warrant considerations or ruling by a Court. The other reason is this. The argument may be termed as a new claim or cause of action rather than as a possible defence. As such and if the defendant so wishes, he may be at liberty to file that as a separate claim.
EXERCISE OF DISCRETION
30. I therefore decline to grant the defendant’s NoM.
COST
31. An award for cost in this case is discretionary. I will order cost to follow the event on a party/party basis to be taxed if not agreed.
ORDERS OF THE COURT
32. I make the following orders:
The Court orders accordingly.
________________________________________________________________
O’Brien’s: Lawyers for the Plaintiff
Niuage: Lawyers for the Defendant
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