Amene v Togs [2022] PGNC 392; N9917 (21 September 2022)

N9917

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS NO. 392 OF 2017

BETWEEN
JEFFERY AMENE
Plaintiff

AND
PETER TOGS
First Defendant

AND
PUBLIC EMPLOYEES ASSOCIATION OF PAPUA NEW GUINEA
Second Defendant

Waigani: Shepherd, J
2018: 26^th September
2022: 21^st September

PRACTICE & PROCEDURE – Application to set aside regularly entered default judgment - Order 12 Rules 8(2)(a) and 8(2)(b) and Order 12 Rule 35 National Court Rules – matters to be considered – must be reasonable explanation why judgment was allowed to be entered - must be reasonable explanation for delay – must be arguable defence on the merits – whether defence on merits disclosed - respondent must demonstrate prejudice if setting aside of default judgment is opposed.

PRACTICE & PROCEDURE - Application to extend time for filing of defence and cross-claim - Order 1 Rule 15(1) National Court Rules.
Cases Cited:
Papua New Guinean Cases

Albright Ltd v Mekeo Hinterland Holdings Ltd (2013) N5774
Baing and The State v PNG National Stevedores Pty Ltd (2000) SC627
Dempsey v Project Pacific Pty Ltd [1985] PNGLR 93
Duque v Paru [1997] PNGLR 378
George Page Pty Ltd v Balakau [1982] PNGLR 140
Government of Papua New Guinea and Davis v Barker [1977] PNGLR 386
Green & Co Pty Ltd v Green [1976] PNGLR 73
Hagoria v Ombudsman Commission (2003) N2400
Kaseng v The State (2004) N2735
Hannet v ANZ Banking Group (PNG) Ltd (1996) SC505
Magiten v Beggie (2005) N2880
North Solomons Provincial Government v Pacific Architecture Pty Ltd [1992] PNGLR 145
NTN Pty Ltd v Post & Telecommunication Corporation [1987] PNGLR 70
Ole v Papua New Guinea Lawyers Statutory Committee (2002) N2308
Pakomey v Wamo (2004) N2718.
Sapuri v Kolly (2014) SC1310
Smith v Ruma Constructions Ltd (2002) SC695
Yamanka Multi Services Ltd v National Capital District Commission (2010) N3904

Overseas Case Cited

Evans v Bartlam [1937] AC 473

Legislation Cited:

National Court Rules 1983: Order 1 Rule 15(1), Order 12 Rule 8(2)(a) and Rule 8(2)(b), Order 12 Rule 35.

Counsel:

Mr J. Amene, Plaintiff in person
Mr M.C. Ginyaru, for the Second Defendant

DECISION

21^st September, 2022

1. SHEPHERD J: The second defendant, the Public Employees Association of Papua New Guinea, has applied under Order 12 Rule 8 and Order 12 Rule 35 of the National Court Rules to have the plaintiff’s default judgment obtained on 26 October 2017 set aside and for leave to file a defence and cross-claim out of time.
   

FACTS

2. The plaintiff, Mr Amene, was formerly employed as an industrial advocate of the second defendant (PEA). He was given notice of suspension by the President of the PEA on 21 April 2015 with immediate effect “pending investigation and laying of charges to follow later”. Mr Amene was suspended on half pay and instructed to surrender his PEA-allocated vehicle and office keys to the PEA’s Acting General Secretary, the abovenamed first defendant (Mr Togs).
3. Mr Amene, being aggrieved by his suspension, commenced National Court proceeding OS No. 218 of 2015 on 29 April 2015 claiming a series of judicial declarations, including a declaration that the PEA’s notice of his suspension dated 21 April 2015 be quashed and that he be forthwith reinstated to his employment with the PEA without loss of any of his employment-related contractual entitlements.
4. On 7 May 2015 Mr Amene obtained an ex parte order in OS No. 218 of 2015 which stayed his suspension by the PEA and which restrained the PEA from preventing Mr Amene from carrying out his duties pending determination of the proceeding.
5. No return date for any inter partes hearing of Mr Amene’s ex parte application was given by the Court when it granted the stay order of 7 May 2015.
6. The PEA responded to the Court’s ex parte stay order of 7 May 2015 by notifying Mr Amene by internal memo from the President dated 12 May 2015 that the PEA’s suspension notice dated 21 April 2015 was withdrawn. As the Plaintiff’s suspension had been uplifted, Mr Amene was directed by the President’s memo to resume duties on full salary with all entitlements intact.
7. Mr Amene refused to resume work and interpreted the Court’s stay order of 7 May 2015 as enabling him to nevertheless remain on full pay and entitlements without returning to work pending the Court’s final determination of his claims in OS No. 218 of 2015.
8. On 1 June 2015 Tuva Lawyers, on instructions from the PEA, filed a motion in OS No. 218 of 2015 seeking the dismissal of that suit on grounds that no reasonable cause of action was disclosed, alternatively that the proceedings were frivolous, vexatious and an abuse of Court process.
9. By early June 2015 Mr Amene had still not resumed work even though he had been notified by the PEA President’s memo dated 12 May 2015 that he had been substantively reinstated on the PEA’s payroll on full pay with all benefits restored.
10. On 10 June 2015 Mr Togs wrote to Mr Amene and informed him by PEA internal memo that Mr Amene’s continuing absence from duties would be treated as part of his 42 days recreation leave that had been approved prior to his suspension and that he would in addition be granted 20 days furlough leave. Mr Amene had already been paid an amount of K5,091.25 in advance earlier that year in anticipation of future furlough leave. Mr Togs directed Mr Amene in his memo dated 10 June 2015 to resume duties on 10 August 2015. Mr Amene continued to refuse to do so.
11. After a series of adjournments, the PEA’s motion in OS No. 218 of 2105 was heard by Justice Sakora on 29 September 2015 at an inter partes hearing. Mr Amene appeared in person on that occasion. The PEA was represented by Mr Rekana Tuva of counsel. His Honour delivered his reserved decision on the PEA’s motion just over a year later, on 28 October 2016. His Honour dismissed Mr Amene’s suit in OS No. 218 of 2015 on several grounds. His Honour found that Mr Amene had failed to exhaust statutory and PEA internal administrative remedies available to him to challenge his suspension by the PEA, that accordingly the Court had no jurisdiction to interfere in Mr Amene’s suspension and that in any event the PEA had immediately withdrawn Mr Amene’s suspension as soon as Mr Amene had obtained his interim stay order on 7 May 2015. His Honour dismissed OS No. 218 of 2015 and ordered Mr Amene to pay the PEA’s costs of the proceeding.
12. On 20 April 2017 Mr Amene, being as equally aggrieved by the decision of Justice Sakora delivered on 28 October 2016 as he had been by his suspension by the PEA on 21 April 2015, commenced this present proceeding WS No. 392 of 2017, this time pleading breach of his contract of employment with the PEA. Mr Amene has claimed in this present proceeding general damages for contractual entitlements allegedly still owed to him by the PEA as well as damages for “inconveniences, distresses, false imprisonment, frustrations, false allegations and humiliations, and family distresses in city living”. Mr Amene has also claimed statutory interest on damages pursuant to the Judicial Proceedings (Interest on Debts and Damages) Act 2015 and costs.
13. On 1 May 2017 Mr Amene served a copy of his writ and statement of claim in WS No. 392 of 2017 on the head office of the PEA, which was then located at the I.E.A. Building, East Boroko, NCD.
14. On 5 May 2017 the PEA by its in-house lawyer at the time, Mr Martin C. Ginyaru, filed a notice of the PEA’s intention to defend WS No. 392 of 2017. The notice of intention to defend gave the PEA’s address for service as the Office of the PEA at Allotment 1 Section 27 Boroko, NCD, which I take it was one and the same location as where the I.E.A. Building was situated at East Boroko, NCD.
15. At some point in late August 2017, Mr Togs instructed an external law firm, named by Mr Togs in his affidavit material, to defend the PEA in this proceeding. However, according to Mr Togs, that law firm did not promptly action the instructions it had received from him. The principal of the law firm concerned did not immediately file any notice that he had been appointed to represent the PEA in this proceeding. Mr Togs also says that the law firm concerned failed to file any motion seeking an extension of time from the Court for the PEA to file its defence and cross-claim.
16. On 26 October 2017 Mr Amene obtained default judgment against the PEA with damages to be assessed. The default judgment ordered that the case be referred to the Registrar for a directions hearing to be fixed for allocation of a trial date for assessment of damages. The default judgment was against the PEA alone. It was not ordered against Mr Togs as he had never been formally served with a copy of Mr Amene’s writ of summons in WS No. 392 of 2017.
17. For reasons unexplained, after Mr Amene obtained his default judgment against the PEA on 26 October 2017, the case was not thereafter set down by the Registrar for a directions hearing for allocation of a trial date for assessment of the damages claimed by Mr Amene. The case remained in limbo.
18. On 6 November 2017 the external law firm instructed by the PEA’s Mr Togs in late August 2017 finally filed a notice of appearance for the PEA, which unnecessarily also included an appearance for Mr Togs as well. The law firm in question thereafter took no steps at all to apply on motion to seek to have Mr Amene’s default judgment against the PEA set aside or to apply to the Registrar for the case to be set down for trial for assessment of Mr Amene’s claim for damages.
19. Nine months later, in mid-August 2018 Mr Togs withdrew the PEA’s instructions from the external law firm concerned and instructed Ginyaru Lawyers to represent the PEA in this proceeding instead.
20. On 23 August 2018, almost 10 months after Mr Amene’s default judgment had been granted, Ginyaru Lawyers, having only been instructed by Mr Togs to represent the PEA in this proceeding earlier that month, filed the PEA’s present notice of motion in WS No. 392 of 2017 seeking orders to have Mr Amene’s default judgment set aside and for the defendants to be granted an extension of time within which to file a defence and cross-claim to Mr Amene’s statement of claim.
21. The PEA’s motion filed on 23 August 2018 was heard by me on 26 September 2018, at which time Mr Amene appeared in person. Mr Ginyaru appeared for the PEA. The PEA’s motion was amended at the hearing on oral application by Mr Ginyaru such that the PEA became the sole applicant seeking to set aside the default judgment as that judgment had only been obtained by Mr Amene against the PEA, not Mr Togs. On hearing the evidence and submissions for Mr Amene and the PEA, the Court’s decision on the PEA’s motion to set aside Mr Amene’s default judgment was reserved.

LAW

22. The relief which the PEA is seeking by its motion filed on 23 August 2018 is for the default judgment entered against it on 26 October 2017 to be set aside under Order 12 Rule 8 and/or Order 12 Rule 35 of the National Court Rules (NCR) and for a consequential order that the PEA be allowed an extension of time pursuant to Order 1 Rules 7 and 15 and Order 12 Rule 1 NCR to file its defence and cross-claim.
23. The law on setting aside a judgment entered by default is well settled. The jurisdiction of the Court to do so in respect of a default judgment obtained in the absence of the other party is exercised by the Court under Order 12 Rules 8(2)(a) and 8(2)(b) and/or Order 12 Rule 35 NCR.
24. Order 12 Rules 8(2)(a) and 8(2)(b) NCR provide:

8. Setting aside or varying judgement or order

...

(2) The Court may, on terms, set aside or vary a judgement—

(a) where the judgement has been entered pursuant to Order 12 Division 3 (default judgment);

(b) where the judgement has been entered pursuant to a direction given in the absence of a party, whether or not the absent party had notice of trial or of any motion for the direction.

25. Division 3 of Order 12 NCR relates to the procedure by which a party can obtain judgment by default in a proceeding that has been commenced by writ of summons. The procedure does not apply to a proceeding that has been instituted by originating summons or other forms of originating process: Order 12 Rule 24 NCR, and see Magiten v Beggie (2005) N2880 (Cannings J).
26. Division 3 of Order 12 NCR comprises rules 24 to 36. Order 12 Rule 35 is in succinct terms:

35. Setting aside judgement

The Court may, on such terms as it thinks just, set aside or vary a judgement entered in pursuance of this Division.

27. When application is made to set aside a default judgment, a general distinction is made by the Court between a judgment that has been regularly obtained under the Rules in contrast to a judgment that has been irregularly obtained.
28. A default judgment is regularly obtained when the applicant has fully complied with the default procedures set out in Division 3 of Order 12 NCR and Order 4 Rule 49(19)(3) NCR. A default judgment is irregular when those default procedures have not been properly complied with or there are other vitiating factors.
29. The circumstances which can give rise to an irregularly obtained default judgment are manifold. For example, a default judgment will be found to have been irregularly obtained where post-entry it is ascertained that service of the motion seeking to set aside the default judgment was defective for not having been properly served on the other party pursuant to the 3-days service rule in Order 4 Rule 42 NCR. Other instances of a default judgment irregularly obtained are where it is found that notice of forewarning of intention to apply for default judgment had not been given under Order 4 Rule 49(19)(3)(a)(4) NCR or where judgment by default had been entered on the basis of a defective affidavit of search filed prematurely: see Dempsey v Project Pacific Pty Ltd [1985] PNGLR 93 (Pratt J, Amet J. Woods J).
30. If a default judgment has been obtained irregularly, then the defendant is entitled to have it set aside as of right ex debito justitiae (as required in the interests of justice). This principle was approved in Green & Company Pty Ltd v Green [1976] PNGLR 73 (O’Leary AJ) and George Page Pty Ltd v Balakau [1982] PNGLR 140 (Greville Smith J).
31. However, if a default judgment has been obtained and entered regularly, different considerations apply. The leading Supreme Court case is Government of Papua New Guinea and Davis v Barker [1977] PNGLR 386 (Frost CJ, Prentice DCJ, Kearney J) where it was held that for the Court to exercise its discretion to set aside a regularly judgment obtained in default of filing a defence, there must be affidavit evidence from the applicant of:

(1) a reasonable explanation as to why judgment was allowed to go by default;

(2) an explanation for the delay in bringing the application to set aside the default judgment; and

(3) material that shows a defence on the merits.

32. There is an abundance of cases that have repeatedly approved and confirmed these principles: see for example North Solomons Provincial Government v Pacific Architecture Pty Ltd [1992] PNGLR 145; Hannet v ANZ Banking Group (PNG) Ltd (1996) SC505; Duque v Paru [1997] PNGLR 378; Smith v Ruma Constructions Ltd (2002) SC 695; Yamanka Multi Services Ltd v National Capital District Commission (2010) N3904.
33. There is no dispute in the present case that the default judgment which Mr Amene obtained on 26 October 2017 was regularly entered against the PEA.
34. The PEA must therefore satisfy the Court that, in the exercise of the Court’s discretion, the PEA has reasonable explanations as to why the judgment was allowed to go by default, why there was a 10 month delay in the filing of the PEA’s application to set aside the default judgment and why it is contended for the PEA that it has an arguable defence and cross-claim on the merits.
35. In Albright Ltd v Mekeo Hinterland Holdings Ltd (2013) N5774 Hartshorn J considered what must be shown by an applicant for the Court to exercise its discretion under Order 12 Rule 8(2)(a) and Order 12 Rule 35 NCR to set aside a default judgment regularly obtained. His Honour cited with approval the following statement of Lord Wright in Evans v Bartlam [1937] AC 473 at p. 489:

“ A discretion necessarily involves a latitude of individual choice according to the particular circumstances, and differs from a case where the decision follows ex debito justitiae once the facts are ascertained. In a case like the present there is a judgment, which, though by default, is a regular judgment, and the applicant must show grounds why the discretion to set it aside should be exercised in his favour. The primary consideration is whether he has merits to which the court should pay heed; if merits are shown the court will not prima facie desire to let a judgment pass on which there has been no proper adjudication. ”

36. As to what the Court can consider as sufficient to show an arguable defence on the merits, there must be an affidavit setting out statements of material facts which demonstrate that the applicant has a prima facie defence and that it is reasonable that the applicant should be allowed to raise a defence: Government of Papua New Guinea v Davis v Barker (supra).

ISSUES

37. Based on applicable law and the arguments presented by the parties at the hearing of the PEA’s subject motion, I consider that the issues for the Court to determine are these:
    • (1) Has the PEA given a reasonable explanation as to why the judgment of 26 October 2017 was allowed to go by default?
      • (2) Has there been a reasonable explanation by the PEA for its delay in making application to set aside the default judgment of 26 October 2017?
      • (3) Does the PEA have an arguable defence and cross-claim on the merits?
      • (4) Should the default judgment be set aside in the exercise of the Court’s discretion?
      • (5) If the default judgment is set aside, what orders should the Court make?

EVIDENCE

38. The PEA relies on the following affidavits in support of its motion filed on 23 August 2018:

(1) Affidavit of Peter Togs sworn 15 August 2018 and filed 23 August 2018.

(2) Affidavit of Peter Togs sworn 14 September 2018 and filed 18 September 2018.

39. Mr Amene relies on his affidavit sworn 23 November 2017 and filed 30 November 2017. This is Mr Amene’s affidavit in response to the affidavit of PEA’s Mr Togs filed 23 August 2018.

ISSUE 1: WHY WAS THE JUDGMENT OF 26 OCTOBER 2017 ALLOWED TO GO BY DEFAULT?

40. The PEA’s explanation as to why Mr Amene was able to obtain default judgment against it on 27 October 2017 is largely contained in paras. 15 to 25 of Mr Togs’ affidavit filed 23 August 2018 (Mr Togs’ first affidavit) and is augmented by material facts deposed to by Mr Togs in his supplementary affidavit filed 18 September 2018 (Mr Togs’ second affidavit). There are certain matters on the Court’s own record that also support the PEA’s explanation. The salient aspects of the PEA’s evidence on this issue are set out below.
41. As already noted, the writ and statement of claim was filed by Mr Amene on 20 April 2017. It was served on Racheal Gobu, a member of staff of the PEA at the PEA’s office at East Boroko, NCD on 1 May 2017. At that time Mr Ginyaru was the PEA’s in-house lawyer. It was in that capacity that Mr Ginyaru filed formal notice of PEA’s intention to defend this proceeding on 5 May 2017.
42. The 44-day period allowed by the Rules for the filing of the PEA’s defence expired on 14 June 2017. The PEA did not file its defence within time because of a range of administrative upheavals that the PEA was experiencing in mid-2017. Mr Togs asserts that as at June 2017 he was not aware of this proceeding.
43. On 1 August 2017 Mr Amene filed a notice of motion with supporting affidavit material seeking orders pursuant to Order 12 Rules 25, 28 and 32 NCR that judgment by default with damages to be assessed be entered against both Mr Togs and the PEA.
44. Mr Amene’s notice of motion and supporting affidavit material filed 1 August 2017 was served on Patricia Dala at the PEA’s office on 9 August 2017.
45. Mr Togs says that upon his receipt of Mr Amene’s motion for default judgment on 7 August 2017 (but which motion Mr Amene’s evidence shows was served on the PEA’s office on 9 August 2017), Mr Togs made enquiries of staff in the PEA’s Technical Division as to the whereabouts of Mr Amene’s writ of summons. It was at that point that Mr Togs says Mr Amene’s writ was located and first came to the attention of Mr Togs in his capacity as Acting General Secretary of the PEA.
46. Mr Togs deposes in para. 22 of his first affidavit to the effect that after becoming aware of Mr Amene’s writ in August 2017, he instructed a named external law firm to defend this proceeding on behalf of the PEA. I infer that those instructions must have been given by Mr Togs to the law firm concerned on a date in late August 2017 because it seems from the evidence that by that stage Mr Ginyaru had left the PEA and had set up legal practice on his own account at Allotment 108 Section 228, June Valley, Tokarara. NCD.
47. Mr Togs deposes in para. 23 of his first affidavit, in connection with the instructions he says he gave to the external law firm in August 2017:

“ 23. [The] Lawyers indicated their willingness to act for us and during the course of the year when I inquired as to the progress of the case, they ... verbally advised that appropriate application[s] have been filed and they will proceed to defend the case. ”

48. Mr Togs amplified this evidence by deposing in para. 13 of his second affidavit, in response to allegations made by Mr Amene in his affidavit filed 4 September 2018:

“ 13. As for paragraph 17 of the Plaintiff’s affidavit I stand by and reiterate paragraphs 15 to 25 of my Affidavit sworn on the 15 and filed on the 23 of August 2018:

a) I was not aware of the court proceeding until I was served the application for default judgment together with the supporting court documents on the 7 of August 201[7] even though the proceeding was served on us on the 1 of May 2017 as indicated by the Plaintiff. Our Technical Division which oversee[s] the legal section did not bring the matter to my attention even though we may have filed the Notice of Intention to Defend on the 5 of May 2017.

b) When I became aware of the matter after being served the default application by the Plaintiff on the 7 of August 2017, I instructed our in house lawyer to attend to the matter and as a result our in house lawyer appeared on the 17 and 18 August 2017.

c) Despite our appearances in Court we were not able to file a defence on time due to the reasons I stated in my affidavit sworn on the 15 and filed on the 23 of August 2018. ”

49. According to Mr Togs’ evidence, by the end of August 2017 or early September 2017 the external law firm he had instructed for the PEA should have filed with the Registry: (1) a notice that the principal of that law firm was now acting for the PEA, and (2) a cross-motion seeking extension of time to file a defence and cross-claim for the PEA.
50. Mr Amene’s motion seeking default judgment came before Justice Kandakasi (as he then was) on 17 August 2017, on which occasion Mr Amene appeared in person. Mr Ginyaru appeared for the PEA. His Honour disqualified himself from dealing with the matter and transferred this proceeding to me, Justice Shepherd, to be listed for the next day, 18 August 2017 at 9.30 am.
51. On 18 August 2017 this proceeding was mentioned before me. Mr Amene and Mr Ginyaru both appeared in Court. Mr Amene’s motion seeking default judgment was adjourned to 26 October 2017 at 9.30 am for hearing. I infer that it was shortly after Mr Ginyaru’s appearance before me on 18 August 2017 that he departed the PEA as its in-house lawyer to commence legal practice at Tokarara on his own account.
52. When Mr Amene’s motion for default judgment filed 1 August 2017 came on for hearing before me on 26 October 2017, Mr Amene appeared in person. However, there was no appearance on that occasion by any counsel for the PEA, nor was there any appearance by any other representative for the PEA. There was nothing on the Court’s file to indicate that an external law firm had been appointed to act for the PEA. As Mr Amene’s affidavit material in support of his motion complied in all respects with the requirements of the Rules for obtaining default judgment, on 26 October 2017 judgment by default was ordered to be entered, with damages to be assessed.
53. The Court’s record shows that the law firm instructed by Mr Togs to represent the PEA in this proceeding back in August 2017 eventually filed a notice of appearance for the PEA on 6 November 2017. That notice of appearance for the PEA, which included a superfluous appearance for Mr Togs as well, should more properly have been a notice of change of lawyers filed under Order 2 Rule 35 NCR. The notice of appearance gave notice that all court process in this proceeding was to be served on the street address of the office of the law firm concerned. However, the law firm’s notice of appearance was too late as by the time it was filed on 6 November 2017, Mr Amene had already obtained his default judgment against the PEA on 26 October 2017.
54. Given this fact situation, I am satisfied that the reason why Mr Amene was able to obtain his default judgment against the PEA on 26 October 2017 was because of the failure of the law firm concerned to promptly act on the instructions to act for the PEA which Mr Togs had given that law firm in late August 2017. If, having received those instructions, the law firm had shortly thereafter filed a notice of change of lawyers under Order 2 Rule 35 NCR and a cross-motion seeking extension of time under Order 1 Rule 15 NCR to enable the PEA to file a defence and cross-claim, both Mr Amene’s motion and the PEA’s cross-motion would have been before the Court when Mr Amene endeavoured to move his motion for default judgment on 26 October 2017, in which event the PEA’s cross-motion would have been heard first. The Court would at least have been informed at that stage of the substance of the PEA’s proposed defence and cross-claim. That did not happen because of inaction on the part of the law firm instructed by Mr Togs, and there was nothing to alert the Court at the ex parte hearing of Mr Amene’s motion for default judgment on 26 October 2017 that the PEA was represented by any lawyer other than in-house lawyer Mr Ginyaru, who by that stage was no longer employed by the PEA.
55. I am accordingly satisfied that the PEA has given a reasonable explanation as to why default judgment with damages to be assessed was entered against it on 26 October 2017. Issue 1 is resolved in favour of the PEA.

ISSUE 2: HAS THERE BEEN A REASONABLE EXPLANATION BY THE PEA FOR ITS DELAY IN MAKING APPLICATION TO SET ASIDE THE DEFAULT JUDGMENT OF 26 OCTOBER 2017?

56. As noted, Mr Amene’s default judgment was ordered and entered on 27 October 2017. Ginyaru Lawyers filed PEA’s present motion to set aside default judgment on 23 August 2018. There was therefore a delay of almost 10 months before PEA’s application seeking to have the default judgement set aside was filed.
57. Mr Togs contends that the PEA’s delay in causing its present motion to set aside the default judgment to be filed is largely attributable to the law firm he had instructed in August 2017 not actioning his instructions given on behalf of the PEA. Even after default judgment had been obtained by Mr Amene on 26 October 2017, the only step taken by the instructed law firm was to file its notice of appearance for both defendants on 6 November 2017. No further action at all for the PEA was taken by that law firm in this proceeding, despite, according to Mr Togs, the assurances he continued to receive from the law firm concerned that everything was under control.
58. By August 2018 Mr Togs had finally become aware that Mr Amene had obtained a default judgment against the PEA and that the law firm he had instructed a year earlier had done nothing by way of application to the Court to apply to set aside that default judgment. It was this realization that prompted Mr Togs on behalf of the PEA to withdraw the instructions he had given to the law firm concerned a year before and to instruct Mr Ginyaru in legal practice with his own law firm at Tokarara, to resume the carriage of the PEA’s defence in this proceeding WS No. 392 of 2017. It was that action taken by Mr Togs on behalf of the PEA in August 2018 which resulted in Ginyaru Lawyers on 23 August 2018 filing its notice of change of lawyers for the PEA together with the present motion for the PEA.
59. There is one curious omission from Mr Togs’ evidence. He does not depose in his affidavit material as to the date, or approximate date, on which he first became aware of the default judgment which Mr Amene had obtained against the PEA on 26 October 2017. However, I observe in this regard that there was insufficient proof adduced by Mr Amene at the hearing of the PEA’s present motion as to when the default judgment of 26 October 2017 was actually served on either the law firm which had filed notice of appearance for the PEA on 6 November 2017 or on the office of the PEA at East Boroko, NCD. Mr Amene did not file any proof of service of his default judgment. The only reference in Mr Amene’s evidence as to the date of service of the default judgment is a bare assertion by Mr Amene in para. 17(d) of his affidavit filed 4 September 2018 that the default judgment was “delivered” to the office of the PEA on 13 November 2017. Mr Amene did not, however, depose as to the circumstances of that delivery, nor was any proof of service or acknowledgement of delivery of the default judgment signed by any member of staff of PEA annexed to Mr Amene’s affidavit which could confirm his assertion in this regard.
60. Furthermore, Mr Amene’s response at the hearing of the PEA’s present motion for orders to set aside the default judgment and for the Court to grant an extension of time for the PEA to file a defence and cross-claim was to generally oppose the motion. I observe that at the hearing of the PEA’s motion, Mr Amene made no submission to the Court, either written or oral, which challenged the reasons given by Mr Togs for the PEA’s delay in the filing of its present motion by Ginyaru Lawyers. Instead, Mr Amene’s submissions were directed towards a misconception on his part that it was Mr Togs who was seeking to have the default judgment set aside, when that was not the situation at all. In his written submissions filed 25 September 2018, court document no. 30, Mr Amene states at para. 3.1 that the first of the legal issues which the Court should consider is “whether or not Peter Togs [as a party in WS No. 392 of 2017 can] file an application to set aside the Court order of 26 October 2017”. The other two legal issues advanced in Mr Amene’s written submissions were related to his first misconceived legal issue. Mr Amene simply did not address the issue of the PEA’s delay in applying to set aside the default judgment.
61. The orders which were made at the hearing of the present motion before me on 26 September 2018 clarified that the PEA’s motion filed 23 August 2018 was amended such that the PEA was deemed to be the sole applicant, thereby excluding Mr Togs as co-applicant. The reason for this order of the Court for amendment of the motion filed by Ginyaru Lawyers for the PEA on 23 August 2018 was straightforward. Mr Amene accepted that he had never formally served a copy of his writ of summons on Mr Togs. Service of the writ of summons had only been effected by Mr Amene on the office of the PEA on 1 May 2017. The default judgment which Mr Amene obtained on 27 October 2017 was only against the PEA, not against Mr Togs. Therefore only the PEA had standing to apply to seek to have the default judgment of 27 October 2017 set aside. Mr Togs had no such standing as he was not affected by the default judgment.
62. Having considered all of these circumstances, I am satisfied that the PEA by its General Secretary Mr Togs, in both his acting and substantive roles, has given a reasonable, if somewhat disjointed, explanation as to why it took the PEA almost 10 months to cause its present motion to be filed by Ginyaru Lawyers instead of by the law firm that was initially instructed in August 2017 to defend the PEA. Issue 2 is resolved in favour of the PEA.

ISSUE 3: DOES THE PEA HAVE A DEFENCE AND CROSS-CLAIM ON THE MERITS?

63. Mr Amene’s statement of claim, endorsed on his writ of summons in WS No. 392 of 2017 filed 20 April 2017, pleads that his contract of employment by the PEA commenced on 13 March 2013 for a term of 3 years but that his contract was breached by the PEA. The statement of claim alleges that the PEA wrongfully removed Mr Amene from the PEA’s payroll as from 21 April 2015, the date of PEA’s suspension of Mr Amene’s employment. Mr Amene claims that at the time of filing of his writ, he was owed unpaid salary, gratuity and other entitlements from 21 April 2015 through to 13 March 2016 which is when Mr Amene’s contract of employment would in the normal course of events have terminated. Mr Amene pleads unlawful dismissal in that he alleges his contract of employment was breached and prematurely terminated by the PEA on 21 April 2015 by reason of his suspension from employment without cause. He claims unliquidated damages in respect of alleged unpaid salary and entitlements. He also claims additional damages for inconvenience, distress, false imprisonment, frustration and other sequelae. Statutory interest pursuant to the Judicial Proceedings (Interest on Debts and Damages) Act 2015 and costs are also claimed. No special damages or particulars of alleged unpaid salary and entitlements were pleaded.
64. The PEA, in answer to Mr Amene’s statement of claim, relies on the two affidavits of Mr Togs filed on 23 August 2018 and 18 September 2018 as setting out the material facts in connection with the PEA’s proposed defence and cross-claim.
65. Paragraphs 3 to 14 of Mr Togs’ first affidavit set out the history of Mr Amene’s employment with the PEA and the background for Mr Amene’s self-requested termination of his own employment which, according to the PEA, occurred on 15 October 2015, not on the date of Mr Amene’s suspension on 21 April 2015. Mr Togs’ second affidavit is an amplification of matters already deposed to by Mr Togs in his first affidavit.
66. Set out below are the material facts on which the PEA relies in support of its position that it has an arguable defence and cross-claim on the merits.
67. On 7 May 2015 Mr Amene obtained an ex parte stay of his suspension pending determination of his substantive claim for relief. A copy of that stay order is annexure “B” to Mr Togs’ first affidavit. The full text of the stay order which the Court granted on Mr Amene’s application on 7 May 2015 is as follows:

“ 1. The requirements for service of this notice of motion is dispensed with and leave is granted to the Plaintiff to proceed with this application ex parte; and

2. In the interim, the Notice of Suspension dated 21^st April 2015 is stayed pending determination of the substantive matter.
3. The defendants by themselves or by their servants and agents are restrained from interfering with or preventing the plaintiff from carrying out his normal duties with the second defendant as per his contract of employment pending determination of the substantive proceeding; and
4. Time is abridged, and
5. Costs are in the cause. ”
68. By internal memo dated 12 May 2015, the President of the PEA gave notice to Mr Amene that the PEA had withdrawn its suspension notice of 21 April 2015 as per the interim Court order of 7 May 2015 which Mr Amene had obtained ex parte in earlier proceeding OS No. 218 of 2015. The memo, which was served on Mr Amene on 13 May 2015, directed Mr Amene “to resume duties with full salary, and all other benefits of the Industrial Advocate position shall be accorded to you as the substantive incumbent”.
69. According to the PEA, the letter dated 12 May 2015 from the PEA’s President to Mr Amene should have been the end of the story as the PEA’s suspension notice of 21 April 2015 had been withdrawn and the PEA had cancelled its investigation into whether any disciplinary action against Mr Amene was warranted. Mr Amene had achieved what he wanted by his suit in OS No. 218 of 2015. All that was required of Mr Amene at that juncture was for him to discontinue or withdraw the proceeding in OS No. 218 of 2015 that he had instituted against the PEA.
70. However, Mr Amene interpreted the Court’s ex parte stay order of 7 May 2015 as allowing him to remain on full pay and benefits but that he was not required to return to work pending the outcome of the PEA’s investigation referred to in the PEA’s notice of suspension to him of 21 April 2015. On receipt of the PEA President’s memo of 12 May 2015, Mr Amene wrote a letter dated 13 May 2015 to the PEA’s human resource manager stating to the effect that the ex parte stay order of the Court meant that he could not attend work “to avoid interference” while an investigation by PEA into the cause of his suspension was being conducted. Mr Amene requested in his letter of 13 May 2015 that he be placed back on the PEA’s payroll on full pay with all entitlements restored while he waited for the PEA’s investigation to take place. Mr Amene concluded his letter by stating:

“ I cannot take leave now in the middle of the investigations and the court proceedings. I will have to wait for the substantive issues to begin and also the full process to complete and then we will sort out me and the office. Meanwhile work on my pay and other entitlements please. ”

Mr Amene signed his letter as “Suspended Officer”

71. In view of Mr Amene’s failure to resume duties, on 1 June 2015 the PEA by its external lawyers at the time, Tuva & Associates, filed a notice of motion in OS No. 218 of 2015 seeking an order, among others, that the proceeding be dismissed on the grounds that no reasonable cause of action had been disclosed, alternatively that the proceeding was frivolous, vexatious and an abuse of process. The motion was allocated a hearing date for 6 August 2015.
72. On 3 June 2015 Mr Togs, in his capacity as the Acting General Secretary of the PEA, responded by an internal memo to Mr Amene’s letter of 13 May 2015. Mr Togs said in his memo to Mr Amene dated 3 June 2015 to the effect that the PEA had complied with the Court’s interim stay order of 7 May 2015 which Mr Amene had obtained in that there was no longer any investigation or disciplinary action being taken against Mr Amene by the National Executive of the PEA. Mr Togs did say, however, that Mr Amene was now “officially on leave” which had been approved by PEA’s general secretary Mr Guise Kula on 4 May 2015, that approval having been given prior to the Court’s interim order of 7 May 2015.
73. On 10 June 2015 Mr Togs followed up with a further internal memo to Mr Amene. Mr Togs’ memo to Mr Amene dated 10 June 2015, which is annexure “F” to Mr Togs’ first affidavit, stated:

“ MEMORANDUM

TO: MR. JEFFERY AMENE

DATE: 10/06/15

RE: ADMINISTRATION OF YOUR APPROVED LEAVE

As you are very much aware, you were to proceed on your recreational leave and pro-rata leave as of May 4^th 2015. This leave as approved by the General Secretary and my arrangement for Mr. Kutapae to relieve [as industrial advocate in your absence] was based on the approved leave.

I have verified with Accounts that your 42 days recreation leave was not paid but your pro-rata of 20 days was paid in February this year. Given the situation you were in with the NEC suspension and the court orders you took, I have to administer what the General Secretary approved in terms of your due leave.

You are to proceed on the approved leave as of 4^th May 2015, and resume on the 10^th of August 2015. Your absence at work since the stay order has prompted me to act on the approved leave. You would note from the 4^th of May, two paydays have been administered already, which means that you will still be on payroll for the next two fortnights to complete your recreation leave entitlements. After the next two fortnights, you will be on 20 days pro-rata leave without pay, as payment has been made already. You will officially resume work on the 10^th August 2015 as per you[r] application and approval by the General Secretary.

Your rental allowance and vehicle allowance will be paid upon request or when the allowances are due during the duration of your leave.

You are now directed to proceed on your leave to comply with the administrative process of staff leave.

[signature]
Peter Togs
A/General Secretary ” [underlining added]

74. Mr Amene failed to resume duties on 10 August 2015 despite having been directed by Mr Togs to do so.
    
75. On 24 August 2015 Mr Togs wrote to Mr Amene again, a copy of which is annexure “G” to Mr Togs’ first affidavit, reminding Mr Amene that he was supposed to have resumed duties on 10 August 2015 as per Mr Amene’s own leave application, which had already been approved by PEA’s general secretary Mr Guise Kula prior to commencement of Mr Amene’s court case in OS No. 218 of 2015. Mr Togs expressly stated in his letter to Mr Amene dated 24 August 2015:

" You are therefore advised to resume duties immediately upon receipt of this letter. However, if you continue to be absent, I will consider this as abscondment from duties without prior approval and will be treated as leave without pay. ”

76. Mr Amene continued to ignore Mr Togs’ directives for him to resume duties for a further 2 months.
    
77. In early October 2015 Mr Amene presented himself at Mr Togs’ office at the PEA. Mr Amene produced to Mr Togs a draft internal memo on PEA letterhead which Mr Amene had prepared for Mr Togs to sign. According to Mr Togs, Mr Amene explained to him that he, Mr Togs, wished to be formally terminated from his employment with the PEA so that he could access his long term savings with NASFUND. Mr Togs read the draft memo and then signed it at Mr Amene’s request. A copy of the memo, which was dated by Mr Amene as at 15 October 2015, relevantly states:
    

“ MEMORANDUM

To: Jeffery Amene

Date: 15^th October 2015

RE: NOTICE OF YOUR TERMINATION

Mr. Jeffery Amene, this notice serves to inform you that, the management has decided to terminate you from your employment with the Association based on the following grounds:

1. As part of the Court Order of 7^th May 2015, the President withdrew your suspension on the 12^th May 2015. But you have failed to report to work since.

2. Because you failed to report to work for the last 4 months, your Contract of employment with the Association is terminated effective from the date of your suspension.

3. [content drafted by Mr Amene is unintelligible]

4. If there be any entitlements in allowances and [leave] to this date, you may liaise with the Human Resource Division and the Manager Finance and have it paid to you.

5. We also take this opportunity to thank you for your years of service to the Association and wish you and your family all the best.

Thank you.

[original signed]

Peter Togs

Acting General Secretary ”

A copy of this memo dated 15 October 2015 is annexure “H” to Mr Togs’ first affidavit.

78. The PEA’s position is therefore that Mr Amene was, at his own request, officially terminated from his employment with the PEA on 15 October 2015 and that there was no breach by the PEA of Mr Amene’s contract of employment with the PEA. This is the crux of the PEA’s defence.
79. Mr Togs reiterates in para. 26 of his first affidavit that Mr Amene’s termination of his employment with the PEA on 15 October 2015 was voluntary. Mr Togs then deposes that the PEA has good grounds for a cross-claim against Mr Amene in WS No. 392 of 2017 amounting to a total of K10,971.25 comprising:

a) K2,000, being the value of a laptop owned by PEA which, despite demand, was never returned by Mr Amene to the PEA;

b) K3,800 in housing allowances paid by the PEA for the months of October, November and December 2015 which Mr Amene allegedly wrongfully persuaded finance officers of the PEA to pay to him; and

c) K5,091.25 for pre-paid furlough leave which Mr Amene was not entitled to retain following his own voluntary termination of employment on 15 August 2015.

80. Mr Togs concludes his first affidavit by stating at para. 34:

“ 34. From the foregoing I verily believe that the Defendants have good reasons for failing to file their defence on time and the delay in bringing this application Furthermore, the Defendants do have a defence on the merits and a cross claim against the Plaintiff ... ”

81. A copy of the PEA’s proposed defence and cross-claim which pleads the material facts presented by Mr Togs and outlined above is annexure “I” to Mr Tog’s first affidavit.
82. In Sapuri v Kolly (2014) SC1310 (Sakora, Yagi and Logan JJ) the Supreme Court elaborated on the importance of a defence on the merits when application has been made to set aside a regularly entered default judgment. The Supreme Court said this at para. 12:
    

“ ... Insofar as the defence relies on facts, evidence as to those facts must be provided by an affidavit from a person who can attest to those facts. A mere assertion by a lawyer as to the existence of facts is not sufficient. There must be evidence which, if accepted, would ground a defence on the merits. The court does not try a case on an application to set aside a regularly entered default judgment but must be satisfied that, prima facie, having regard to the evidence furnished by the defendant, there is a defence on the merits. ”

83. I am satisfied in the present circumstances that Mr Togs is a person who has knowledge of the material facts of this case and that he is competent to depose to those facts on behalf of the PEA. I am further satisfied that the two affidavits of Mr Togs disclose a sufficiency of material facts to demonstrate that the PEA has, prima facie, an arguable defence and cross-claim on the merits in answer to Mr Amene’s statement of claim. It follows that Issue 3 must be resolved in favour of the PEA.

ISSUE 4: SHOULD THE DEFAULT JUDGMENT BE SET ASIDE IN THE EXERCISE OF THE COURT’S DISCRETION?

84. I have found that the PEA has given reasonable explanations as to why default judgment was ordered against it and also why it took 10 months for a motion to be filed for the PEA to set the default judgment aside. I have also found that the PEA has an arguable defence and cross-claim on the merits.
85. The PEA has therefore demonstrated that the three criteria referred to in the leading case of Barker v The Government of Papua New Guinea which guide this Court’s determination of an application to set aside a regularly obtained default judgment have been met. However, the PEA must go one step further. The PEA must still convince the Court that it should exercise its discretion to grant the orders sought.
86. In Baing and The State v PNG National Stevedores Pty Ltd (2000) SC627 (Sheehan J. Sawong J Kirriwom J) the Supreme Court, was confronted with an appeal against the refusal by the primary judge to set aside the striking out of a defence and entry of judgment for the plaintiff where the application by the defendant to set aside was made 16 months after entry of judgment. The Supreme Court said this, in relation to the setting aside of judgments:

“ ... it is quite settled law that in considering whether to set aside judgment, the paramount consideration is whether there is a disclosure of a good defence on the merits of the plaintiff’s claim. It is quite clear from his Honour’s reasoning that he gave little or no consideration to this issue, that is whether the defence disclosed a defence on the merits of the plaintiff’s claims ... In our view, the defence pleaded clearly went to the merits of the plaintiff’s claim. ”

The Supreme Court upheld the appeal, quashed the primary judge’s refusal order and reinstated the defendants’ defence.

87. In Sapuri v Kolly the Supreme Court stressed the overriding importance of a defence on the merits when the Court, in the exercise of its discretion, is called upon to determine whether to set aside a regularly entered default judgment. The Supreme Court said this at para. 16:

“ It is undoubtedly a serious step to shut out a defendant who wants a trial on the merits from having such a trial. In some cases, even when an explanation as to why a judgment was allowed to go in default appears thin, the existence, verified as to its actual foundation by affidavit, of a defence on the merits may well persuade a judge that the default judgment ought to be set aside. The court has a discretion to exercise.”

88. A further consideration that the Court must take into account in the exercise of its discretion in cases such as this is whether the applicant’s delay has caused substantial prejudice to the respondent.
89. It was held by Wilson J in NTN Pty Ltd v Post & Telecommunication Corporation [1987] PNGLR 70 in the context of an application for leave for judicial review under Order 16 NCR that if undue delay in making application would be likely to cause substantial hardship or prejudice the rights of any person or would be detrimental to good administration, then this is a matter which is relevant to the exercise of the Court’s discretion. This proposition has been endorsed in many subsequent cases: see for instance Ole v Papua New Guinea Lawyers Statutory Committee (2002) N2308: Hagoria v Ombudsman Commission (2003) N2400; Pakomey v Wamo (2004) N2718.
90. In Kaseng v The State (2004) N2735, a case which involved an application to set aside two certificates of judgment, Kandakasi J (as he then was) said that if a party opposing an application that is out of time can demonstrate a case of prejudice, that might serve as an impediment to the grant of an application. However, his Honour balanced this by saying at p. 26:

“ In the present case, if I were satisfied that there were inordinate delay, the respondents would still have to satisfy the Court that the delay has resulted in prejudice to them. The respondents have not established a case of prejudice because of delay ... In any case, I note that the error, mistake or misapprehension, the subject of these proceedings, resulting in the issuance of the certificates of judgment is so fundamental. Hence, in my view, the issue of delay should not step in the way of correcting that error or mistake to set the Court’s record straight and to do justice in the public interest, which is one of the twin brothers to the need to ensure finality in litigation. In the absence of any evidence to the contrary, the only thing the respondents will or may have suffered, are costs, which is easily compensable by an order for costs. ”

91. I observe that Mr Amene, in his general opposition to the PEA’s motion to set aside the default judgment, adduced no evidence and made no submission to the effect that he would sustain any degree of prejudice if the default judgment were to be set aside.
92. I am satisfied that the PEA has disclosed that it has an arguable defence and cross-claim on the merits and that this is the primary consideration in an application to set aside a regularly obtained judgment by default. Taken in conjunction with the findings I have made that the PEA has given reasonable explanations as to the issues why the judgment was allowed to go by default and why there was delay in the PEA’s application to set the default judgment aside, coupled with the absence of evidence from Mr Amene going to any prejudice that he might sustain, I therefore conclude that it would be unjust to the PEA to allow the default judgment to stand. Any notional prejudice caused to Mr Amene by allowing the default judgment to be set aside can be compensated by a costs order against the PEA.
93. For these reasons the Court, in the exercise of its discretion, will set aside the default of judgment which Mr Amene obtained on 26 October 2017. The Court will also grant leave to the PEA to file and serve its defence and cross-claim.

ISSUE 5: WHAT ORDERS SHOULD THE COURT MAKE?

94. The PEA by its notice of motion filed on 23 August 2018 relies on the Court’s dual jurisdiction under Order 12 Rule 8 and Order 12 Rule 35 NCR to set aside the subject default judgment.
95. The Court has express power under Order 12 Rule 8(2)(a) NCR to set aside a default judgment entered under Order 12 Division 3. The Court also has power under Order 12 Rule 8(2)(b) to set aside a judgment entered pursuant to a direction of the Court given in the absence of a party irrespective of whether the absent party had notice of any motion for the direction.
96. The Court has co-existing power under Order 12 Rule 35 to set aside, on such terms as it thinks just, a default judgment entered under the provisions of Order 12 Division 3 NCR.
97. The default judgment, regularly obtained by Mr Amene on 26 October 2017, was entered in circumstances which nevertheless come squarely within the Court’s jurisdiction, in the exercise of its discretion, to set aside that judgment under Order 12 Rule 8(2)(a) and Rule 8(2)(b) NCR as well as under Order 12 Rule 35 NCR. The default judgment will accordingly be set aside pursuant to those provisions.
98. As to the PEA’s application in its notice of motion for an extension of time within which to file its defence and cross-claim, this can be granted by the Court pursuant to Order 1 Rule 15(1) NCR, which provides:

15(1) The Court may, on terms, by order extend or abridge any time fixed by the Rules or by any judgment or order.

99. The pleadings for this case must be put back on track. The PEA will therefore be ordered to file and serve its defence and cross-claim by Friday 30 September 2022.
100. An order will then be made for this proceeding to return before the Court on Wednesday 12 October 2022 at 1.30 pm for the Court to make such directions or orders as to the conduct and future of this proceeding as the Court thinks fit. This timing will enable the PEA, in addition to the filing of its defence and cross-claim, to also file and serve any motion with supporting affidavit material which the PEA on legal advice considers appropriate to now be made in the circumstances of this case.
101. As to costs, as the default judgment was regularly obtained by Mr Amene, I consider it only fair and just that the PEA be ordered to pay Mr Amene’s costs of and incidental to the PEA’s present motion on a party/party basis, such costs to be taxed if not agreed.

ORDER

102. The terms of the formal Order of the Court are as follows:

1. The default judgment entered against the Second Defendant on 26 October 2017 is set aside.

2. Leave is granted to the Second Defendant to file and serve a defence and cross-claim, together with any motion and supporting affidavit material it considers appropriate, no later than Friday 30 September 2022.

3. This proceeding shall return before the Court on Wednesday 12 October 2022 at 1.30 pm for the Court to make such directions and/or orders as it thinks fit concerning the conduct and future of this proceeding.

4. The Second Defendant shall pay the Plaintiff’s costs of and incidental to the Second Defendant’s motion filed on 23 August 2018 on a party/party basis, such costs to be taxed if not agreed.

5. The time for entry of this Order is abridged to the time of signing by the Court which shall take place forthwith.

____________________________________________________________

Plaintiff: In person
Ginyaru Lawyers: Lawyers for the Second Defendant