Konny (trading as Mama Kia Contractors) v Komra [2023] PGNC 466; N10607 (1 December 2023)

N10607

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE

WS NO. 21 OF 2020 (CC1) IECMS

BETWEEN:
JIM MARTIN KONNY
Trading as Mama Kia Contractors
Plaintiff

AND:
Dr. UKE KOMRA
Department of Education
First Defendant

AND:
THE INDEPENDENT STATE OF PAPUA NEW GUINEA
Second Defendant

Waigani: Bre, AJ
2023: 09^th November, 01^st December

CIVIL PRACTICE AND PROCEDURE – Application for summary disposal or alternatively default judgment – non-compliance of directions orders – self executing terms – No Defence filed – three years late.

LIQUIDATED DAMAGES –Order 12 rule 27 NCR – Section 12(3) CBASA – exclusion applies to debt claims for fixed sum - Restitution - 2% interest on judgment debt.
Cases Cited
Aweto v Tobias [2020] PGNC 284; N8480 (28 July 2020)
Bani Investment Ltd v Parkop [2021] PGNC 199; N9050
Fly River Provincial Government v Pioneer Health Services Ltd [2003] PGSC 4; SC705
Giru v Muta [2005] PGNC 83; N2877
Kave v Yakaso [2014] N5693
Lomai v Seal (Manus) Ltd [2008] PGSC 57; SC1326
Pins Construction Ltd v Tkatchenko & State [2023] N10504
Tuka v Toyota Tsusho (PNG) Ltd (trading as Ela Motors) [2023] PGNC 178; N10419
Wasis v Elias [2016] PGSC 5; SC1485

Legislation
Claims By and Against the State Act 1996, S 29(a) (i) and s13(3)
Judicial Proceedings (Interest on Debts and Damages) Act 2015 ss4 and 6
National Court Rules, O10r9A(2)(c ); O12 r 25(a),(b), 27 and 32

Counsel
Mr R Obora, for the Plaintiff
No Appearance by the Defendants

RULING

01 December 2023

1.BRE, AJ: INTRODUCTION: Jim Martin Konny applies to summarily dispose of the proceedings for non-compliance with directions by the Defendants of two Court Orders of 15 November 2022 and 12 December 2023 or alternatively, for default judgment against the Defendants for failing to file its Defence.

2. The Application was served on the Defendants' lawyer, the Solicitor General on 22 June 2023, with notice of the hearing of the application relayed by the Plaintiff to the Defendant by letters dated 03 October 2023 and 30 November 2023. The letters were relayed by Counsel from the bar table which I accepted. On 27 September 2023, the matter was fixed for special fixture hearing which was attended by the State who took note of the special fixture date of 9 November 2023 but was not in attendance. I proceeded to hear the application upon being satisfied the Defendants lawyers had sufficient notice of the application.

BACKGROUND

3. The claim arises from work performed in 2013 by the Plaintiff to construct concrete seats and tables for the Office of Library and Archives in Waigani, NCD following an agreement with the Education Department on 10 March 2013.

4. The Plaintiff completed the works which was certified on 07 May 2013 by the TVET Wing of the Education Department. The payment for the works was to be sourced from the Government's RESI programme to rehabilitate educational infrastructure managed by the Education Department.

However, the Plaintiff had not been paid for the work done due to issues faced with management of RESI funds by the Education Department, there was a stop to processing payments and contractors were directed to prove their claim in Court.

5. The Plaintiff commenced proceedings on 21 May 2020. The State filed its Notice of Intention to Defend on 01 June 2020. The Plaintiff filed its Notice of Motion on 02 June 2023 seeking dismissal of the proceedings.

EVIDENCE

6. The Plaintiff relies on the following Affidavits:

1) Supplementary Affidavit of Jim Martin Konny sworn on 23 May 2023 and filed on 02 June 2023.

2) Affidavit of File Search of Ere Seneka sworn on 23 May 2023 filed on 02 June 2023

3) Affidavit of Service of Ere Seneka sworn on 26 September 2023 filed on 28 September 2023.

4) Affidavit on assessment of work done of Jim Martin Konny sworn on 20 December 2020 and filed on 29 December 2023, and

5) Affidavit of Jim Martin Konny sworn on 22 November 2021 filed on 24 December 2021.

SUBMISSION

7. Counsel for the Plaintiff, Mr Obora, referred to the evidence and submitted that the Defendants had failed to comply with specific directions contained in the Orders of 15 November 2022 and 12 December 2022 to expedite the matter to trial and has failed to file its Defence after three years from when the occasion to file arose.

8. Mr Obora submitted that non-compliance of Court's orders must be treated as a serious breach and that the default in filing a Defence appears intentional because of the Defendants lawyers ignoring several reminders issued over three years with their Defence still remaining outstanding. He submitted, the Plaintiff has a valid claim on merit and should be restituted for the costs incurred in carrying out the works.

ISSUES

9. The issues concerns whether there was non-compliance with the Court Orders of 15 November 2022 and 12 December 2022 and whether the Defendants defaulted in filing its Defence and if so, whether the plaintiff should be restituted for liquidated damages claimed.

LAW

10. The applicable laws are Order 10 rule 9A (15)(2) (c ) and Order 12 rules 25(a), 27 and 32 of the National Court Rules ('NCR').

Order 10 rule 9A (15)(2)(c ) NCR reads:-

"(2) The Court may summarily dispose of a matter in the following situations: ...
(c). for non-compliance of any order or directions previously made or issued by the Court at any of the listing processes."
Order 12 rules 25(a), 27 and 32(1) NCR reads:-

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

...

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

"27. Liquidated demand.

(1) Where the plaintiff's claim for relief against a defendant in default is for a liquidated demand only, the plaintiff may enter judgement against that defendant for a sum not exceeding the sum claimed in the statement of claim on that demand and for costs.

(2) Where a claim for a liquidated demand includes interest at an unspecified rate, interest accruing after the date of filing the statement of claim to the date of entry of judgement shall, for the purposes of judgement under this Division be reckoned at the rate of 8%^[1] yearly.
“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.”

ANALYSIS

11. The jurisdictional basis of the orders sought requires the exercise of discretion by the Court. Discretion is to be applied considering proper principles. In stating that, I will address the issues of non-compliance with Court Orders first, followed by the issue of default and liquidated damages.

1. Whether there was non-compliance with the Court Orders of 15 November 2022 and 12 December 2022

12. Court Orders must be adhered to. In determining whether the proceedings should be summarily disposed pursuant to the Listing Rules, I must be satisfied that there was non-compliance, and no good reason has been furnished by the Defendant of its non-compliance. A finding in that regard is subject to discretion and must be exercised judiciously on proper principles. These principles were set out by David J in Tuka v Toyota Tsusho (PNG) Ltd (trading as Ela Motors) [2023] PGNC 178; N10419 (14 July 2023) at [12] as follows:-
"Has there been a failure to comply?
What is the nature and extent of the failure to comply?
Is there a good explanation for the failure to comply?
How have the parties and their lawyers conducted the proceedings?
Do interests of justice favour a dismissal?"

13. The Court issued comprehensive directions to progress the matter to settlement or trial and required both parties to file certain documents within specific timeframes including undertaking efforts to reach settlement as the Court found the matter could be settled amongst the parties. The Court Orders were issued a month of each other on 15 November 2022 and 12 December 2022.

14. The incidences of non-compliance by the Defendants pointed out by Mr Obora to which I agree, and am satisfied no effort was made by the Defendants to comply with are:

A. Orders of 15 November 2022

1) Failure to file a defence by 21 November 2022.

2) Filing and serving of all Affidavits by the Defendant by 28 November 2022.

3) Direction for settlement and settlement proposal by 28 November 2022

4) Failing settlement, parties are to address points in contention

B. Orders of 12 December 2022

1) The Defendant to respond to the Plaintiff's Affidavit on work ` done and expenses incurred by 13 January 2023.

15. I find from the Plaintiff's evidence that numerous efforts were made to communicate with the Solicitor General's Office to remind them about the directions orders and the requirement to reach a settlement. I find that these efforts were met with silence. Evidence of this is contained in the Affidavit of Jim Martin Konny filed on 02 June 2023.

16. The Plaintiff's Affidavit on work done was filed on 24 December 2022 and was not responded to by the Defendants as directed by the Court.

17. The Defendants have not filed its Defence after three years from the service of the Writ of Summons on 22 May 2020, neither, have they actively attended to any of the Court hearings nor filed any Affidavits nor taken any action to defend the proceedings.

18. I find that the Plaintiff expended his funds entirely to fund the project. He was not paid any start-up costs nor any payments while the works were underway nor after the completion of the works.

19. The Defendants through the Education Department issued a certificate of completion dated 07 May 2013 to the Plaintiff certifying that the construction of concrete benches and tables at the old archives building was completed satisfactorily. The Plaintiff claims K263,065.00 for costs incurred in performing and completing the job. The Plaintiffs evidence is that he was excited to secure a government contract soon after his retrenchment from Telekom and sourced the funds from his final entitlements to complete the job, in the hopes of impressing the First Defendant to securing further jobs.

20. I find that the Plaintiff has been hard done by the Defendants. He has satisfactorily proved non-compliance of the Court Orders by the Defendants.

21. I find the Defendants attitude in not complying with Court orders contemptuous. Court orders are not made for the convenience of parties to be complied with at leisure. The Court must guard against abuse of its process.

22. I adopt the Court's decision regarding the seriousness of obeying Court orders in Lomai v Seal (Manus) Ltd [2008] PGSC 57; SC1326 (31 October 2008) at [14] as follows:-

"Litigants ... must take heed of court orders and comply with them. Orders or directions given by the court are to be obeyed by all parties who seek redress through the courts and all persons to whom the order relates. A party may not like an order made but as long as it remains in force, he must obey its command. “

23. Further, term 12 of Court Order of 15 November 2022 is a self-executing order which dismisses proceedings for non-compliance with any of the eleven directions issued. Term 12 is in the following terms:-
“Failing any non-compliance of any of these will result in the proceeding standing dismissed with costs if the defaulting party is the Plaintiff or judgment shall be entered for the Plaintiff with the relief sought or such other relief the Court considers appropriate with costs shall be granted if the defaulting party is the Defendant.”
(emphasis mine)

24. The Court in Kave v Yakaso (2014) N5693 and Aweto v Tobias [2020] PGNC 284; N8480 (28 July 2020) held that non-compliance of Court Orders are serious matters that should result in a decision against the defaulting party.

25. The order speaks for itself. It is not vague but couched in plain and mandatory terms. Also see Tumbiako v Kaiyo [2023] PGSC 142; SC2493(3 November 2023). In Wasis v Elias [2016] PGSC 5; SC1485 (23 February 2016) the Court held at [13]in terms of self-executing orders that-

“...a conditional or self-executing order is not one that should be treated lightly.....the order itself puts the party subject of the order on notice that a certain consequence will occur at a specified date in the future if the conditions of the order are not met. Thus, it is of utmost priority that the party required to comply must adhere to its terms. Failure may result in an unfavorable consequence.”

26. There has been non-compliance by the Defendant, therefore default judgment must be entered for the Plaintiff consistent with the self-executing order of 15 November 2022. The case for summary disposal has successfully been made against the Defendants.

2. Whether the Defendants defaulted in filing a Defence

27. A finding of default depends on the evidence. The evidence is the Writ of Summons was filed on 21 May 2020. The Second, Third and Fourth Defendants filed its Notice of Intention to Defend on 01 June 2020 within time. The State had 60 days to file its Defence under Section 9 (a) (i) of the Claims By and Against the State Act 1996 (‘CBASA').

28. The Affidavit of File Search by Ere Seneka deposes to a Court file search on 23 May 2023 revealing no Defence filed by the Defendants. The timeline of 60 days for the State to file its Defence has long passed. The Defence remains outstanding to date. Order 12 rules 25(a) and (b) provides that a default occurs when the Defendant does not file its Defence within the time allowed for it to file a Defence.

29. Term 2 of the Court Orders of 15 November 2022 clearly fixes 21 November 2022 for the Defendants to file their Defence. The Defendants did not file its Defence by the 21 November 2022 nor seek extension of time to file their Defence.
30. The discretionary principles to guide the Court in ordering default judgement against the Defendants have been established by Cannings J in Giru v Muta [2005] PGNC 83; N2877 (12 August 2005) who listed six tests for consideration in exercising the discretion to consider whether or not to grant default judgement. These are:-

1. Proper form
2. Service of notice of motion and affidavits
3. Default
4. Forewarning
5. Proof of Service of Writ of Summons
6. Proof of Default

31. Considering the evidence of the Plaintiffs, I am satisfied that the requirements of the six tests have all been met and the Plaintiff has succeeded in making his case for default judgement to be entered against the State.

3) Whether the plaintiff should be restituted in liquidated damages.
33. Order 12 rule 27 NCR authorises entry of a liquidated demand, costs and interest where there is a finding of default and where these remedies are claimed by the Plaintiff in its Statement of Claim. The Plaintiff claims the following relief in his Statement of Claim:

- K297,310.00 fixed amount for work done

- general damages

-interest pursuant to the Judicial Proceedings

(Interest on Debts and Damages) Act

-Costs and other orders as the Court deems fit.

34. The fixed sum amount of K297,310.00 has been reduced by about K30,000.00 to K263,065.00 following evidence submitted by the Plaintiff in his Affidavit for assessment of work done and per submissions from Counsel he is foregoing general damages and other damages claimed, given the length of time, funds expanded and the lax attitude of the Defendants. I accept this evidence as the Defendants have neither opposed nor responded to this Affidavit.

35. The case of Bani Investment Ltd v Parkop [2021] PGNC 199; N9050 (19 May 2021) supports the application of equitable remedy of restitution for quantum meruit, and unjust enrichment to a person that has rendered services or performed a job without payment due to the agreement the subject of the services being void through no fault of the person. Sheppard J carefully examined the PNG and foreign caselaw and summarised the principles at [106] as follows:-

1. “A contract which is void for illegality is void ab initio and is unenforceable as to its terms and conditions.
2. However, where such a contract has been performed in part, a remedy for goods supplied or services rendered by a party under the void contract is available to that party based on the principle of quantum merit, provided that party is innocent of the cause of the illegality of the contract.
3. Where a party has a mistaken but genuine belief that a contract exists and has supplied goods or rendered services to another party under that misapprehension, a remedy by way of unjust enrichment is available to that party, provided that the first party is innocent of the cause of non-existence of the contract.
4. Innocence or otherwise of the cause of the illegality or non-existence of a contract is in each case a matter for evidence on the civil standard of proof.”

36. In Fly River Provincial Government v Pioneer Health Services Ltd [2003] PGSC 4; SC705 (24 March 2003) the Supreme Court held that a party to a contract that is null and void because it has not complied with the Public Finances (Management) Act 1996 can rely on the remedy of restitution to seek relief for costs incurred or work performed.

37. The Defendants failed to comply with the clear directions of the Court to respond to the Plaintiff's Affidavit by 13 January 2023. I accept the evidence of the Plaintiff that his quote of K297,310 was accepted by the Defendant's employed Corporate Service Manager as the total value for the job. That the Plaintiff later adjusted his costs to K236,065.00 .

38. In terms of interest, Sections 4 and 6 and the Judicial Proceedings (Interest on Debts and Damages) Act 2015 provides for pre and post judgement interest to be applied at a rate of 2% per annum to judgement debt against the State from the time when the cause of action arose to the time when the debt is fully paid.

39. In the end, the combined effect of a finding of default under Order 12 rule 25(b) NCR, Bani Investments v Parkop and the specific nature of the Plaintiff's claim for restitution applied to Order 12 rule 27 NCR and Order 12 rule 32 NCR produces a result for liquidated judgement in the amount of K263,065.00 to be entered by default of the Defendants in favour of the Plaintiff. The Plaintiff must be restituted to this amount.

40. However, the Defendants are the State and have the protection of Section 12(3) CBASA which requires default judgment to be awarded for ‘damages to be assessed’ even where the claim is for a liquidated demand. Regardless, there is an exclusion clause in Section 12(3) CBASA which does not preclude the entry of a fixed sum judgement for a debt.

Section 12(3) CBASA reads:-

" (3) Where, in a claim against the State, the State is in default within the meaning of the National Court Rules, then notwithstanding that a plaintiff’s claim for relief is for a liquidated demand, judgment shall not be entered against the State for the sum claimed unless the claim relates to a debt only, and in all other cases judgment shall be entered for damages to be assessed and, where appropriate, for costs.” (emphasis mine)

41. Debt is defined as monies or obligations owing. Debt in the context of Section 12(3) CBASA has been clarified in several cases to mean an ascertainable sum that could be easily worked out by a simple mathematical calculation. See Pins Construction Ltd v Tkatchenko & State [2023] N10504.

44. The Plaintiff is entitled to be restituted for the work performed. The Plaintiff’s claim is a liquidated demand of K263,065.00 for work performed with no payments received. The Defendants have unjustly enriched themselves and the Plaintiff is entitled to be restituted. The Plaintiff’s evidence is uncontested. The Defendants were provided the opportunity to respond to the Plaintiffs Affidavits, which they failed to do. The Defendant owes an obligation in equity to restitute the Plaintiff for the work done. On that basis, the Plaintiff is indebted to the Plaintiff for the liquidated damages of K263,065.00 and judgement is granted to the Plaintiff.

CONCLUSION

45. The Defendants have not complied with the terms of Directions Orders of the Court of 15 November 2022 and 12 December 2022. The Defendants have also defaulted by not filing their Defence.

46. The Plaintiff is entitled to restitution for quantum meruit for the amounts incurred in performing work for the Defendants. I accept the evidence of the Plaintiff in quantifying his costs and the work performed. This results in indebtedness by the Defendant to the Plaintiff of the uncontested fixed amount of K263,065.00.

47. Default Judgement is entered for the Plaintiff in the liquidated sum of K263,065.00.

INTEREST

48. The Plaintiff is entitled to 2% interest pursuant to the Judicial Proceedings (Interest on Debts and Damages) Act 2015 given the length of time it has taken to litigate the matter and the Defendant's defiant attitude in not defending the proceedings or in settling what is a simple quantum meruit claim.

49. I find the Plaintiff demonstrated genuine efforts to complete the works he was contracted to do by expending his own funds despite not receiving any payment by the Defendants during the course of the work. That is unusual these days.

50. Pursuant to Order 12 rule 27(2) and Order 12 rule 6 NCR, and the Judicial Proceedings Act interest of 2% on the pre and post judgement debt of K263,065.00 is to be calculated from the time when the cause of action arose to the time when payment is made.

COST

51. Costs are discretionary. The Plaintiff incurred legal costs in commencing his action and in diligently prosecuting it. He has been represented by a law firm since he commenced his action. The Plaintiff is entitled to reasonable costs, to be taxed if not agreed.

ORDERS

52. The formal Orders of the Court are:

1. Default Judgement is entered against the Defendants for a liquidated sum of K263,065.00 plus 2% interest pre and post judgment according to the Judicial Proceedings (Interest on Debts and Damages) Act 2015 to be calculated from the time when the cause of action arose to the time when full payment of the principal sum of K263,065.00 is made.

2) Pursuant to Order 10 rule 9A (15)(2) (c) NCR, the proceedings are summarily disposed in favour of the Plaintiff from the Defendants non-compliance with the Court Orders of 15 November 2022 and 12 December 2022.

3) The Proceedings stand dismissed, with the file to be closed and archived after the appeal period expires.

4) The Plaintiff's reasonable costs are to be paid by the Defendants, to be taxed if not agreed.

5) Time is abridged for the entry of these Orders to the time of Settlement by the Registrar which shall take place, forthwith.

Orders Accordingly.
Obora Lawyers: Lawyers for the Plaintiff
Solicitor General: Lawyers for the First and Second Defendants

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^[1] 8% interest has been repealed to 2% for judgement entered against the State by s4(2) and(3) of the Judicial Proceedings (Interest on Debts and Damages) Act 2015. This Act overrides the 8% as the Act prevails over the NCR in the hierarchy of laws per s9 Constitution.