Livuan v Telikom PNG Ltd [2021] PGNC 431; N9232 (24 September 2021)

N9232

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS No 1216 OF 2018 (CC4)

BETWEEN:
MICHAEL LIVUAN
Plaintiff

AND:
TELIKOM PNG LIMITED
Defendant

Waigani: Wurr AJ
2021: 22^nd & 24^th September

PRACTICE AND PROCEDURE –Application for default judgment– Notice of Intention to Defend and Defence not filed- preconditions for entry of default judgement- checklist to be satisfied- court has discretion whether to enter default judgement even when defendant in default- Order 12 Rule 25 (a)(b), Rule 28, and Rule 32 of the National Court Rules

Cases Cited

Giru v Muta (2005) N2877
Kunton v Junias (2006) SC929
William Mel v Coleman Pakalia (2005) SC790)

Counsel

W. Stephen, for the plaintiff
No Appearance, for the defendant

RULING

1. WURR AJ: Before me is an application by the plaintiff seeking default judgment against the defendant pursuant to Order 12, Rule 25(a)and (b) and Rule 32 of the National Court Rules.
   
2. Upon being satisfied that the application was duly served, and notice was given to the defendant advising it of the date of hearing of the motion, I proceeded to hear the application ex parte. (See Affidavit of Service of Willard Stephen filed 17 September 2021)
   
3. The plaintiff relied on the following documents in support of his application;
   
   1. The Affidavit in Support of Willard Stephen filed on 30 August 2021
      2. The Affidavit of Search of Willard Stephen filed 24 August 2021
   100. The Affidavit of Service of Willard Stephen filed 17 September 2021
   4. The Affidavit of Willard Stephen filed 17 September 2021

BACKGROUND

4. On 09 October 2018 the plaintiff filed a writ of summons endorsed with a statement of claim claiming general damages for wrongful termination from employment, special damages for hardship, anxiety and frustration, out of pocket expenses, costs incurred for legal services, exemplary damages, and interest.
   
5. The plaintiff claims he was employed with the defendant since 1990 and held various positions working his way up until he was promoted to Team Leader Integrated Services, Access Network in June 2012. He held that position until he was terminated on 13 May 2014. He claims he was served a termination letter by the defendant’s human resource manager and the letter contained several charges against him. However, after the termination letter was issued, a meeting was held, and in that meeting the decision to terminate his employment was reversed by the human resource manager. He claims he was put back on payroll after that meeting however the defendant did not serve him anything in writing informing him of its decision. The plaintiff therefore claims his termination from employment was harsh and oppressive and unfair.
   
6. On 24 November 2018 the writ of summons was served on the defendant. The date by which the defendant should have filed a notice of intention to defend is 24 December 2018, and the date by which it ought to have filed its defence is 07 January 2019. The defendant failed to file both documents within the time stipulated under the National Court rules resulting in this application before the Court.
   

ISSUE

7. The only issue for consideration is whether or not default judgment should be entered against the defendant
   

THE LAW & LEGAL PRINCIPLES

8. Order 12, Rules 25 (a)(b), 28 and 32 of the National Court Rules provide:
   

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

(a)where the originating process bears a note under Order 4 Rule 9, and the time for him to comply has expired but he has not given the notice; or

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

28. Unliquidated damages

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

32. General.

(1) Whatever claims for relief are made by a plaintiff, where a defendant is in default, the Court may, on application by the plaintiff, direct the entry of such judgement against that defendant as the plaintiff appears to be entitled to on his writ of summons.

(2) Notwithstanding Sub-rule (1), the Court shall not, under that Sub-rule, direct the entry of judgement for the possession of land unless satisfied of the matters mentioned in Rule 30(2) and (4).

9. In Giru v Muta (2005) N2877, Justice Cannings held:
   

“In most cases where the court deals with an application for default judgment, there is a checklist of at least six pre-conditions to consider. All the items on the checklist must be satisfied or ticked ‘OK’ before the court can exercise its discretion to enter default judgment. If one is not satisfied, the Court will refuse the application, unless there are special circumstances. (See generally National Court Rules, Division 12.3 (default judgment).)”

10. The items on the checklist are:
    
    1. Proper form – Motion must be in proper form and supported by relevant affidavits
    2. Service of notice of motion and affidavit
    3. Defendant must be in default
    4. Warning- At least seven days’ notice to be given before filing default judgment application if defendant has filed a notice of intention to defend
    5. Proof of service of writ of summons
    6. Proof of default
       
11. In Kunton v Junias (2006) SC 929, the Supreme Court held that entry of default judgment is not a matter of right. There are certain preconditions that have to be satisfied; but even when all are satisfied, the decision whether to enter default judgement is a matter of discretion of the primary judge.
    
12. At paragraph 21 of the judgment, the Supreme Court held that in deciding how to exercise its discretion the court can take into account a wide range of considerations, including:
    
    1. whether the statement of claim raises serious allegations of fraud or deceit, in which case the interests of justice may require those allegations to be proved by evidence in a trial before judgment is given on the merits

(Bala Kitipa v Vincent Auali, Supply and Tenders Board of Western Highlands Provincial Government and Others (1998) N1773)

2. the extent of the default by the defendant

(John Kunkene v Michael Rangsu and The State (1999) N1917)

3. whether the defendant appears to have a good defence

(John Kunkene v Michael Rangsu and The State (1999) N1917)

4. whether the statement of claim amounts to an abuse of process

(Eliakim Laki and 167 Others v Maurice Alaluku and Others (2000) N2001)

5. whether the pleadings are vague, ie whether the statement of claim discloses a reasonable cause of action

(Eliakim Laki and 167 Others v Maurice Alaluku and Others (2000) N2001, Urban Giru v Luke Muta & Others (2005) N2877) )

6. whether the plaintiff has prosecuted his case diligently

(Tiaga Bomson v Kerry Hart (2003) N2428)

7. whether the entry of judgment would prejudice the rights of co-defendants

(Kante Mininga v The State & Others (1996) N1458, Beecroft No 51 Ltd trading as Ronnie's Hot Bread v Neville Seeto and Others (2004) N2561)

8. whether the interests of justice would be served by the entry of default judgment

(Urban Giru v Luke Muta and Others (2005) N2877).

13. When exercising the discretion the range of relevant considerations is not closed (Kunton v Junias (supra).
    

CONSIDERATION

14. In applying the checklist to the present case:
    
    1. Proper form
       

OK. The notice of motion filed 30 August 2021 is in the proper form and accompanied by an affidavit in support of Willard Stephen sworn and filed same day, affidavit of search by Willard Stephen, and Affidavit by Willard Stephen filed 17 September 2021.

2. Service of notice of motion and affidavit
   

OK. An affidavit of service of the motion and all supporting documents was filed on 17 September 2021 deposed by Willard Stephen.

3. Defendant must be in default
   

OK. The Writ of Summons was served on the defendant on 24 November 2018. The date by which the defendant should have filed a notice of intention to defend is 24 December 2018, and the date by which it ought to have filed its defence is 07 January 2019. It has not filed a notice of intention to defend nor defence. It has defaulted.

4. Warning of default judgment application
   

OK. Seven days warning before filing of application is not required as the defendant has not filed a notice of intention to defend.

5. Proof of service of writ of summons
   

OK. Proof of service of the writ of summons is contained in the affidavit of service of Willard Stephen filed 09 May 2019.

6. Proof of default

OK. In the Affidavit of Willard Stephen, he deposed that he sought extension of time to institute these proceedings against the defendant. Extension was granted and Section 5 notice was issued before commencing proceedings against the defendant on 09 October 2018. He also deposes that a search was conducted which revealed that the defendant failed to file its notice of intention to defend and defence within three months as per Claims By and Against the State Act.

However there is no requirement under the law for the plaintiff to comply with section 5 of the Claims By and Against the State Act because the defendant is a company duly incorporated under the Companies Ac, not subject to the Claims By and Against the State Act. Three months to file a defence only applies to the State therefore the defendant has 30 days to file its notice of intention to defend and 44 days to file its defence. Regardless of this misconception, it is evident that the defendant has defaulted hence I will check this item.

15. Upon being satisfied that all the items on the checklist have been checked, I will now consider how to exercise my discretion by taking into account the following considerations;
    
    1. whether the statement of claim raises serious allegations of fraud or deceit, in which case the interests of justice may require those allegations to be proved by evidence in a trial before judgment is given on the merits
       
       2. the extent of the default by the defendant
          
       3. whether the defendant appears to have a good defence
          
       4. whether the statement of claim amounts to an abuse of process
          
       5. whether the pleadings are vague, ie whether the statement of claim discloses a reasonable cause of action
          
       6. whether the plaintiff has prosecuted his case diligently
          
       7. whether the entry of judgment would prejudice the rights of co-defendants
          
       8. whether the interests of justice would be served by the entry of default judgment
          
16. The plaintiff has proved that the defendant defaulted by 2 years, 8 months and 3 weeks in filing its notice of intention to defend and defence. However instead of filing this application promptly after the default, he waited until more than 2 years and 7 months have passed to file this application. The plaintiff has not been diligent in prosecuting his case hence the entry of default judgment may prejudice the defendant’s right.
    
17. Upon perusal of the plaintiff’s claim, I find that the statement of claim does not amount to an abuse of process or raise serious allegations of fraud. However I am concerned about how the statement of claim was pleaded. The plaintiff claims that a meeting took place concerning his termination and a decision was made to have him reinstated. However it is not clearly pleaded in the statement of claim as to who advised him of this and the dates and details of that meeting. Even particulars of his employment including his terms and conditions are not pleaded. Circumstances surrounding and leading to his termination are not particularized and pleaded with sufficient clarity. In such instances, even if default judgment was entered, it would amount to being irregularly entered, and can be set aside at trial on damages. (See William Mel v Coleman Pakalia (2005) SC790).
    
18. Furthermore the plaintiff makes a claim for out of pocket expenses and costs incurred for legal services however those claims are not pleaded. The law is clear; a claimant cannot claim what is not pleaded, and pleadings must be clear and concise.
    
19. As to whether or not the defendant has a good defence, there is nothing before this court to make this assessment. I therefore make no comment on this consideration.
    
20. The concerns I have raised in relation to the plaintiff’s pleadings, contribute to the vagueness of the statement of claim, which can be easily corrected through an amendment.
    
21. I am not making a finding that there is no cause of action or that it is very poorly pleaded. There may be a cause of action for unlawful termination as claimed by the plaintiff however the pleadings need improvement. It is therefore in the interest of justice that default judgment should not be entered.
    

Orders

22. These are the formal orders of the Court:
    
    1. The plaintiff’s application seeking default judgment filed 30 August 2021, is refused.
    2. Parties to bear their own cost.

_____________________________________________________________
Taito Lawyers: Lawyers for the Plaintiff
Telikom PNG Ltd In-house Lawyers: Lawyer for the Defendant