HBS (PNG) Ltd v China Civil Engineering Construction Corporation (PNG) Ltd [2021] PGNC 157; N8960 (30 July 2021)

N8960

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS NO. 130 OF 2020 (COMM)

BETWEEN:
HBS (PNG) LIMITED
Plaintiff

AND:
CHINA CIVIL ENGINEERING CONSTRUCTION
CORPORATION (PNG) LIMITED
Defendant

Waigani: Anis J
2021: 22^nd June, 30^th July

NOTICE OF MOTION – 2 applications – application seeking to dismiss the proceeding –Order 10 Rule 9A(15) – National Court Rules – application seeking extension of earlier directional orders – Order 1 Rule 15 and Order 10A(16) – National Court Rules – considerations – exercise of discretion

Cases Cited:

Lae Bottle Industries Ltd v. Lae Rental Homes Ltd (2013) SC1230
Mark Philip v. Ken Tliago (2019) SC1783
Korak Yasona v. Castan Maibawa & Electoral Commissioner of Papua New Guinea (1998) unreported, SC 589

Counsel:

E Asigau, for the Plaintiff
E Noki, for the Defendant

RULING

30^th July, 2021

1. ANIS J: I heard 2 applications on 22 June 2021. One was by the defendant seeking to dismiss the proceeding, and the other was by the plaintiff seeking extension of time to file additional affidavits. I reserved my ruling to a date to be advised.

2. This is my ruling.

BACKGROUND

3. The claim by the plaintiff is in contract. The validity of the contract is not in dispute. The contract was entered on 20 March 2018 as a sub-contract to a head contract for the redevelopment of facilities at Port Moresby’s Jacksons International Airport. The contract was worth K92,499,695. It was, however, terminated a few days or weeks afterwards, when the head contract was not signed or had failed to materialize. The plaintiff’s claim is for its invoice issued for work or costs which it says it had incurred under the contract before its termination. The sum claimed for is K3,923,383.90.

4. The defendant denies the claim and says the claim is frivolous and vexatious. One of its main argument is that the contract was subject to the head contract.

APPLICATIONS

5. The defendant’s notice of motion was filed first in time on 24 February 2021. It seeks dismissal of the proceedings for want of compliance with earlier directions of the Court made on 3 December 2020 (Court Directions). The application is made under Order 10 Rule 9A(15) of the National Court Rules (NCR). The plaintiff’s notice of motion was filed on 9 March 2021. The plaintiff, on the other hand, seeks extension of terms 1, 2 and 3 of the Court Directions. It relies on Order 1 Rule 15 and Order 10A(16) of the NCR.

6. The parties do not contest the sources of the applications.

ISSUES

7. The main questions to ask are, (i), whether there had been non-compliant with the Court Directions as alleged, (ii), if so, the reasons for not complying, and whether the reasons are justified or reasonable, and (iii), whether I should exercise my discretion to summarily dismiss the proceeding or whether I should not and whether I should grant extension of time for compliances with terms 1, 2, and 3 of the Court Directions, as requested by the plaintiff.

COURT DIRECTIONS OF 3 DECEMBER 2020.

8. Terms 1, 2, and 3 of the Court Directions read:

1. The Plaintiff shall file and serve its Affidavit(s) for trial by 18 January 2021.
2. The Defendant shall file and serve its Affidavit(s) for trial by 15 February 2021.
3. Any such relevant notices of the parties under the Evidence Act shall be filed and served no later than 22 February 2021.

....

COMMON GROUND

9. It is not disputed that the 3 terms of the Court Direction were not complied with.

LAW

10. The Court’s power to determine the 2 applications remain discretionary.

11. Case law has also stated various considerations, some of which were covered in the submissions of the parties, where the Court may consider before deciding whether or not to exercise its discretion. I make particular reference to what the Supreme Court has stated in Lae Bottle Industries Ltd v. Lae Rental Homes Ltd (2013) SC1230. At paragraph 8, the Court said as follows:

8. Mere failure to comply with Court’s directions may not render a proceeding subject to summary determination or dismissal. Nevertheless, the rules confer broad discretion on the Court in deciding whether to dismiss or to summarily determine a case even in such situations. The relevant principles which the Court should have regard to have been enunciated in many National and Supreme Court decisions. In Curtain Bros (PNG) Ltd and Curtain Bros (Qld) v. University of Papua New Guinea SC788, for instance the Supreme Court said that a default or no-compliance by a party with directions of the Court or requirements of the Rules, should incur or warrant penalty such as dismissal of proceedings if the party in default is the plaintiff, and where such default or non-compliance is repeated and recurrent. The Supreme Court in that case adopted the observations made by the National Court in Ace Guard Dog Security Services Ltd v. Yama Security Services Ltd & Lindsay Lai Lai (2003) N2459. Such default or non-compliance would also incur similar penalty if the other party is prejudiced and its right to a fair trial is denied and where there is no reasonable explanation provided for the default or non-compliance: Kawaso Ltd v. Oil Search PNG Ltd SC1218 and Patric Basa v. Bob Dadae and Andrew Trawen, the Eclectoral Commissioner of Papua New Guinea, N4991.

12. In Mark Philip v. Ken Tliago (2019) SC1783, the Supreme Court said at paragraph 33:

33. We also regard the following principles to be relevant in deciding this appeal:

(1) Court orders and directions must be complied with and non-compliance shows disrespect to the Court and is at the peril of the defaulting party; and

(2) the defaulting party must provide a reasonable explanation for the default.

(Korak Yasona v Casten Maibawa & Electoral (1998) SC552; Hami Yawari v Anderson Agiru & Electoral Commission (2008) N3983).

13. And in Korak Yasona v. Castan Maibawa & Electoral Commissioner of Papua New Guinea (1998) unreported, SC 589, 9th October 1998, the Supreme Court stated:

......And when the court makes an order requiring the attendance of parties at a pre-trial conference or for filing and service of affidavits or witnesses’ statements prior to the hearing date, the court expects total compliance with that order (my underlining). If a party is facing difficulties in fully complying with the order, he should request a further pre-trial conference and seek an extension or variation of that order; not simply turn up on the trial date and expect the court to be engaged in another series of pre-trial conferences.

REASONS

14. With these authorities in mind, I ask myself this. What were the reasons for failure by the plaintiff to comply with the directional orders? I refer to the Affidavit of Eunice Noki filed on 9 March 2021. She gives 2 reasons. The first reason is that given the nature of the claim, that the documents to consider and reduce into evidence were voluminous thus more time was required for the plaintiff to attend to which was why the evidence were filed outside of the required time set in the Court Directions. The other stated reason is that due to the shut-down of the plaintiff’s lawyers’ office during the festive period from 18 December 2020 to 4 January 2021, that had affected the plaintiff’s time for compliance.

15. The defendant relied on the affidavits of Lydia David filed on 24 February 2021 and 2 affidavits of Emmanuel Asigau filed on 24 February 2021 and 25 May 2021.

16. I have considered the evidence of the parties.

17. In my view, I do not find the plaintiff’s second reason as a valid reason for not complying with the Court Directions. Closure of office was an internal administrative decision by the plaintiff’s firm which has nothing to do with the matter or compliance with the Court Directions. To say ‘yes’ to this reason would mean that the Court is condoning the actions of the plaintiff which appears to be in defiance of the Court Directions. However, having said that, I do find the first reason or explanation reasonable. Looking at the pleadings, the claim is based on a written contract which was worth close to a hundred million kina. And it is not unreasonable to expect numerous documentations or paperwork that had to be put in place or sorted out into evidence for tendering.

18. The delay therefore is not intentional. The delayed time had been used by the plaintiff to sort out and file its additional affidavits. These evidence are now in and are before the Court. The reason why the plaintiff is seeking an extension is because the defendant was not inclined to agree and accept the documents that have been belatedly filed and because of the fact that the defendant had gone ahead to file its application to dismiss.

19. One important fact that should be highlighted is this. Consistent with the case authorities, the plaintiff did not just sit there and did nothing. It knew that it was out of time, so it notified the defendant on 11 February 2021 where it had proposed extension of terms 1 and 2 of the Court Directions. In its letter, it also informed the defendant that where required, that it may apply for orders seeking such extension. Then on 16 February 2021, it filed and served its client’s 2 affidavits. On 22 February 2021, the defendant wrote to the plaintiff notifying them of their intention to apply to dismiss the proceeding because of failure by the plaintiff to comply with term 1 of the Court Direction. The plaintiff responded by letter on 23 February 2021 proposing that the matter should be tried instead. The defendant responded by email to the plaintiff that counsel would seek instructions regarding the proposal. The next day, the defendant responded by filing and serving the plaintiff with its present application. The plaintiff, it seems, then knew for sure that the defendant was not going to permit any extension of time, and as such filed its application.

20. Other factors I note are as follows. There is no real prejudice caused to the defendant. There is no real delay in the matter as a whole given that it was commence last year. And despite the failure by the parties to meet the strict deadlines, the evidence are all in now and the matter is ready for hearing. It may be a blatant disregard to the interest of justice and the right to a fair trial if I simply exercise my discretion now and summarily dismiss the proceeding. I also note this. Based on the pleadings, there is admission in regard to the existence of and termination of the sub-contract in question. Pleadings show that permission had been granted for the plaintiff to occupy the site to carry out work as per the terms and conditions of the contract. Then the contract was terminated. There are issues as to when the contract may have been terminated and also whether any work at all had been carried out or cost incurred at the material time, or whether even if work had been incurred, whether the defendant was at all obligated to pay anything. These are matters that may have to be tried at a trial proper. There appears to be valid arguments for and against, and as such, I do not think the claim is without merit and so I am not minded to simply summarily determine it at this juncture.

EXERCISE OF DISCRETION

21. For these reasons, I refuse to summarily dismiss the matter. I will dismiss the defendant’s notice of motion filed on 24 February 2021. In so doing, I will grant in principal the defendant’s notice of motion filed on 9 March 2021.

22. I will also make consequential orders in regard to filing of the statement of agreed and disputed facts and legal issues and order the matter to return for status conference hearing.

COST

23. An order for cost of this nature is discretionary. Both applications were filed, and the parties have come to this hearing all due to or because of the fact that the plaintiff had not complied with the terms of the Court Directions. As such, it is only fair that I order the plaintiff to pay defendant’s costs of the 2 applications, that is, on a party/party basis to be taxed if not agreed.

ORDERS OF THE COURT:

24. I make the following orders:

1. The defendant’s notice of motion filed on 24 February 2021 is dismissed.
   
2. The plaintiff’s notice of motion filed on 9 March 2021 is granted generally, and in so doing, I make the following orders:
   

(i) the times for filing of documents referred to in terms 1, 2 and 3 of the Order of 3 December 2020 are extended forthwith.

(ii) the plaintiff may file and serve any further affidavits (where necessary) before or by 13 August 2021.

(iii) the defendant may file and serve any further affidavits (where necessary) before or by 27 August 2021.

(iv) the parties to settle and file a statement of agreed and disputed facts and legal issues before or by 3 September 2021.

3. The matter shall return for status conference at 9:30am on 9 September 2021.
   
4. The plaintiff shall pay the defendant’s costs for both applications on a party/party basis which may be taxed if not agreed.
   
5. Time for entry of these orders is abridged to the date and time of settlement by the Registrar of the National Court which shall take place forthwith.
   

The Court orders accordingly.

________________________________________________________________
Bradshaw: Lawyers for the Plaintiff
Pacific Legal Group: Lawyers for the Defendant