Nerau v Kumul Consolidated Holdings Ltd [2023] PGNC 372; N10534 (20 October 2023)

N10534

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS 176 OF 2020

BETWEEN:
PAUL NERAU
Plaintiff

AND:
KUMUL CONSOLIDATED HOLDINGS LTD
First Defendant

AND:
THE INDEPENDENT STATE OF PAPUA NEW GUINEA
Second Defendant

Waigani: Bre, AJ
2023: 20^th September, 20^th October

CIVIL PRACTICE AND PROCEDURE - Application under O12r8(4) and (5) NCR and s155(4) Constitution - set aside order granting leave to file defence and in any event summarily dismiss proceedings - slip or mistake -inter-party hearing - jurisdictional basis of O12r8(4) NCR considered.

Cases Cited
Areng v Babia [2005] PGNC 74; N2928
Lady Ni Cragnolini v Teddy Tasion (2023) SC2464
Christopher Smith v Ruma Constructions Ltd (2002) SC695
Kundi v Minimbi [2019] PGNC 284; N8003
Wamena Trading Ltd v Civil Aviation Authority of Papua New Guinea [2009] PGNC 123; N3715

Reference
National Court Rules O12r8(4) and (5)

Counsel:
Mr E Tolabi, for the Plaintiff
Mr B Nutley, for the Defendants

RULING

20^th October 2023

1. BRE, AJ: INTRODUCTION: Paul Nerau is a former Chairman of Kumul Consolidated Holdings Ltd (KCHL). He commenced these proceedings for compensation of lost salaries from his previous Australian employment when he took up chairmanship of KCHL from 2014 to 2017.

2. On 05 May 2022 two critical orders were made, one granted leave to the Defendants to file its Defence late and the other, summarily dismissed Mr. Nerau's proceedings for not disclosing a reasonable cause of action, being frivolous and vexatious.

3. Mr. Nerau applies to set aside the Order of 05 May 2022. I heard the application on 20 September 2023 and reserved my ruling which I hand down now.

BACKGROUND

4. The history of the case according to the Court file indicates the Plaintiff filed a Notice of Motion on 22 December 2020 seeking default judgment against the Defendants for failing to file their Notice of Intention to Defend and Defence.

5. Nearly a year later, the Defendants filed a Notice of Motion on 30 November 2021 seeking leave to file their Notice of Intention to Defend and Defence out of time or alternatively, dismiss the Plaintiff's claim in its entirety for not disclosing a reasonable cause of action. The reasons offered included Covid 19 staff work restrictions.

6. Both motions were finally heard on 05^th May 2022. Counsel for both parties were present at the hearing and argued their respective applications. The Court made the following Orders on 05^th May 2022:

“ The Court Orders that:

1. The application by the Plaintiff for Default Judgement is refused.
2. Leave is granted to the First to Fifth Defendants to file their defence within 14 days as of the Order.
3. In any event, the proceeding is dismissed for failure to disclose a reasonable cause of action, being frivolous and vexatious pursuant to Order 12 Rule 40(1) of the National Court Rules.
4. The Plaintiff to pay the Defendants’ costs of and incidental to the proceedings to be taxed if not agreed.”

(Emphasis mine)

7. On 05^th August 2022, the Plaintiff filed an application seeking the same orders to this current application. That application was withdrawn with the Plaintiff's lawyers giving notice to the Defendants lawyers of re-filing the application. There is no explanation for the withdrawal. See Affidavit of Nelson K Kopunye.

8. On 25^th July 2023, the Plaintiff re-filed its application of 05 August 2022 which is in the following terms:-

1. "Pursuant to Order 12 Rules 4 and 5 and pursuant to this Honourable Court’s inherent jurisdiction to correct its own slip or mistake, term 3 and 4 of the orders made on 5 May 2022 be set aside.
   
2. Pursuant to Order 12 Rule 5 of the National Court Rules, the Defendants have a further 7 days to file and serve their Defence
   
3. Such further or other orders this Honourable Court deems fits"
   

9. Before proceeding, I note some clerical errors in the terms of the motion in the jurisdictional reference and the term of the order sought to be set aside. Counsel for the Plaintiff's submission is based on NCR Order 12 Rule 8(4). Order 12 Rules 4 and 5 relate to unrelated matters while term 4 relates to costs. I therefore proceed on the basis that the motion is based on NCR Order 12 Rule 8(4) and (5) and Term 2 of the order of 05 May 2022. Counsel should be paying attention to details of legal references which can prove fatal at times.

EVIDENCE

10. The Plaintiff relies on the following Affidavits-
1) Affidavit of Nelson Kopunye sworn on 02 August 2022 filed on 05 August 2022.
2) Affidavit of Paul Nerau sworn on 02 August 2022 filed on 05 August
2022.
3) Affidavit of Nelson Kopunye sworn on 19 July 2023 filed on 25 July 2023.
The Defendant relies on the Affidavit of Ranga Sawong sworn on 22 November filed on 28 November 2022.

LAW

11. Order 12 Rule 8(4) National Court Rule ('NCR'), Section 155(4) Constitution and related caselaw.

Order 12 Rule 8 (4) and (5) NCR is in the following terms:

“8. Setting aside or varying judgement or order. (40/9)

(4) In addition to its powers under Sub-rules (1), (2) and (3), the Court may, on terms, set aside or vary any order (whether or not part of a judgement) except so far as the order determines any claim for relief or determines any question (whether of fact or law or both) arising on any claim for relief and excepting an order for dismissal of proceedings or for dismissal of proceedings so far as concerns the whole or any part of any claim for relief.

(5) This Rule does not affect any other power of the Court to set aside or vary a judgement or order.”

(emphasis mine)

Section 155(4) Constitution on the National Judicial System reads:
“(4) Both the Supreme Court and the National Court have an inherent power to make, in such circumstances as seem to them proper, orders in the nature of prerogative writs and such other orders as are necessary to do justice in the circumstances of a particular case.”

ISSUE

12. The principle issue concerns whether the Court Order of 05 May 2022 should be set aside.

CONTEST

13. Counsel for the Plaintiff, Mr Tolabi, submitted that the Order of 05^th May 2022 was irregularly entered because it granted leave to the Defendants to file their Defence and at the same time summarily dismissed the proceedings. He bases his submission on two grounds. First, the Plaintiff’s cause of action should have been allowed to proceed to pleadings for proper arguments. Second, the Order is a slip or mistake that can be corrected using the Court’s power to set aside or vary the order under Order 12Rule 8(4) and (5) of the National Court Rule (“NCR”).

14. Mr Tolabi relies on Order 12 Rule 8(4) and (5) of the National Court Rule (“NCR”) and the cases of Areng v Babia [2005] N2928, Tedor v PNG Ports Corporation [2011] SC1137 and Wamena Trading Ltd v Civil Aviation Authority of Papua New Guinea [2009] N3715.

15. Mr Nutley, Counsel for the Defendant, objected to the application on the grounds of issue estoppel and res judicata. He pointed out that the arguments pertaining to the cause of action were heard on the 05^th of May 2022 and the Plaintiff was estopped from raising the same arguments again. He relies on Smith v Ruma (2002) SC695 to submit that to consider the Plaintiff's arguments will result in a review of the decision of the earlier Court's decision which the Court is devoid of jurisdiction to do.

ANALYSIS

16. Order 12 Rule 8 NCR was the subject of a recent five-member Supreme Court decision in Lady Ni Cragnolini v Teddy Tasion (2023) SC2464, which the Chief Justice convened to address conflicting views on setting aside a summary dismissal order.

17. The Supreme Court considered each of the terms of Order 12 Rule 8 NCR and observed in terms of Order 12 Rule 8(4) NCR that it granted additional powers to the National Court to exercise pursuant to its terms. It remarked at [17] that Order 12 Rule 8 (4) NCR is more specific to its nature and stands apart from Order 12 Rule 8(1), (2) and (3) NCR. The Court relied on Inugu v Maru (2019) SC1873.

18. The three-member Supreme Court bench in Inugu, noted the following about Order 12 Rule 8 (4) at [71]:
We note the terms of Order 12 rule 8 (4), which appears to prevent the National Court, inter alia, setting aside an order for dismissal of proceedings. However this rule is specifically qualified by the preamble “In addition to its powers under Sub-rules (1), (2) and (3)”. To that extent Order 12 rule 8(4) does not apply to setting aside of any orders, including orders for dismissal of proceedings, which are made in the absence of a party (which is the subject of powers under sub-rule (3).

19. In both Cragnolini and Inugu, the Supreme Court clarified that summary dismissal orders made in the absence of a party can be set aside under Order 12 Rule 8 (3) NCR. The impact of this is that default judgment and summary judgment orders made inter-parties could potentially be set aside under Order 12 rule 8(4) NCR.

20. In this case, the summary dismissal order appears to be in addition to granting leave to file a Defence. These orders were made in an inter-party hearing. It was not made ex parte. On the face of the order it appears contradictory to grant leave to the Defendants to file a Defence and 'in any event,' dismiss the proceedings in its entirety.

21. In terms of understanding the background to the Order, I note from the Defendants written submission filed 04^th May 2022 at paragraph 2, that it sought alternate orders, either for leave to be granted to file its Defence late or, dismiss the Plaintiff's cause of action for not disclosing any reasonable grounds.

22. To address the issue of slip or mistake as contended by the Plaintiff will require a review of the earlier Court's reasons on why both reliefs were granted. A slip or a mistake connotes an accidental or unintended consequence on the face of the order. The Court Order of 05 May 2022 is open to several interpretations on the record per se. Either to file a defence within the time allowed or not file it and the proceedings stand dismissed or to file the Defence and the proceedings still stand dismissed. Either way, a consideration of the merits of the cause of action and the Court's decision will be required.

23. I am reminded by the caution in Smith v Ruma to not venture to any review of the exercise of the earlier Court's discretion, which is what Mr Tolabi's submission on the cause of action is leading me into. That is a matter for the Supreme Court.

24. Mr Tolabi relies on the cases of Areng, Tedor and Wawena to support his submission that the summary dismissal order can be set aside where the cause of action is not fully argued before the dismissal order was made.

25. In considering this argument, I examined the the cases relied on by Mr Tolabi and the long list of authorities in Thomas Barry v Joel Luma (2017) SC1639, Inugu, Smith v Ruma, Wawoi Guavi Timber Company Ltd v Molu (2016) SC1514 and Cragnolini and conclude that most of the case authorities relate to Order 12 Rule 8(2) and (3) NCR and cover two situations where the National Court can set aside default judgement or summary dismissal orders obtained ex parte or in the absence of a party under Order 12 Rule 8(2) and (3) NCR:

1) on grounds of procedural fairness, and
2) where the Court hearing the setting aside application does not rely on the principles guiding the exercise of discretion or commits an error of law.

26. In terms of Order 12 Rule8 (4) NCR there are obiter remarks from some of these case authorities that it is an additional rule to Order 12 Rule 8 (1), (2) and (3) NCR but limits the Court's power to set aside summary dismissal orders.

27. The circumstance of this case is distinguished from these case authorities as the present case comes within Order 12 Rule8 (4) NCR not Order 12 Rule 8 (2) and 3)NCR. This case concerns an alleged slip or mistake in the summary dismissal order made in an inter-party hearing which is now sought to be set aside. Procedural default and absence of a party is not an issue. The case comes down to whether I have jurisdiction under Order 12 Rule 8(4) or (5) of Section 155(4) Constitution to set aside the summary dismissal order.

28. I find the Court's deliberations on Order 12 Rule 8(4) NCR Wamena and Kundi v Minimbi [2019] N8003 useful and adopt them. In Wamena at [67] the Court described summary dismissal orders as a 'class of order' that is excluded from being set aside under Order 12 Rule 8(4)NCR.

29. Order 12 Rule 8(4) NCR provides general authorisation to set aside or vary on terms, orders not covered in Order 12 Rule 8 (1), (2) and (3) NCR. Order 12 Rule 8(4) NCR expressly excludes summary dismissal orders from being set aside. See Inugu (supra) and Kundi v Mininbi at [16] that:

" Order 12 Rule 8 (4) provides that in addition to its power under Rule 8 (3), the court can set aside any order except, relevantly, an order for dismissal of proceedings. The effect of this sub-rule is that the court has power to set aside any interlocutory order made inter partes, except an order for dismissal. "

30. To my mind, Order 12 Rule 8(4) NCR generally allows non-summary disposal orders entered inter-party to be set aside. Summary dismissal orders are clearly excluded from being set aside. There is no discretion in Order 12 Rule 8(4) NCR to set it aside. The exclusion of summary dismissal orders in Order 12 Rule 8(4) renders an inter-party summary dismissal order a final order that has brought an end to the proceedings.

31. On the other hand, Order 12 Rule 8 (5) applies to any other Order granting the Court power to set aside and brings that other order into the general scheme of Order 12 Rule 8 NCR. Counsel for the Plaintiff submitted that I rely on this rule to set aside the summary dismissal order but has not referred me to ‘any other power’ apart from Order 12 Rule 8 NCR.

32. In terms of Section 155(4) Constitution, the Court held in Wamena at [11], [12] and [13] that it could not protect the right of a party when the primary right is not available, in this case the primary right to set aside a summary dismissal order is not available under Order 12 Rule 8(4) NCR.

33. The Plaintiff has not relied on Order 8 Rule 59 NCR which provides for a clerical slip in the minute of the order to be corrected. However, it is obvious the Plaintiff's submission is for the substantive orders to be set aside not for a clerical correction which would maintain the orders.

34. In any case, if I vary the order granting leave to file a Defence and grant another seven days to the Defendants to file its Defence as submitted by the Plaintiff, the summary dismissal order remains.

35. The terms of Order 12 Rule 8(4)NCR clearly exclude summary dismissal orders from being set aside. There is no discretion. I do not see how I can set aside what is a final dismissal order.

36. For the foregoing reasons, I do not have jurisdiction under Order 12 Rule 8(4) NCR to set aside the summary dismissal Order of 05 May 2022. The Order falls short of being a slip or mistake as it affects the substantive proceedings.

37. The proper course of action is to seek a review of the orders of 05 May 2022 by an appeal to the Supreme Court.

38. Given my views on jurisdiction, I do not need to proceed further to address the plaintiff's arguments on the cause of action or the Defendant's submissions on issue estoppel.

CONCLUSION

39. The summary dismissal order of 05 May 2022 is of a class excluded from being set aside in Order 12 Rule 8(4) NCR and in that regard, I am precluded from granting the Plaintiff's application to set aside the Order of 05 May 2022.

40. To revisit arguments on merits of the case following an inter-party hearing will mean treading into the Supreme Court's mandate. Generally, the proper course in a setting aside application, is to apply the principles in exercising discretion to set aside the order. However, in this case, there is no discretion provided in Order 12 rule 8(4) NCR for summary dismissal orders obtained inter-party to be set aside. Summary dismissal orders under Order 12 rule 8(4) NCR are essentially final orders.

COST

41. Costs are discretionary. I make no order as to costs given the delays on both sides, the capacity of the parties and the nature of the proceedings.

ORDERS

42. The formal Orders of the Court are:

1. The Plaintiff's notice of motion filed on 25^th July 2023 is refused for lack of jurisdiction.
2. Each party bears its own cost.
3. Time of entry is abridged to the date of settlement by the Registrar of the National Court which shall take place forthwith.
   

Orders accordingly.
________________________________________________________________
Kopunye Lawyers: Lawyers for the Plaintiff
Goodwin Bidar Nutley Lawyers: Lawyers for the Defendants