Tanga v National Development Bank [2025] PGNC 94; N11201 (26 March 2025)

N11201

PAPUA NEW GUINEA

[NATIONAL COURT OF JUSTICE]

WS NO. 777 OF 2021

BETWEEN:

FRANCIS NEIL TANGA

Plaintiff

AND:

NATIONAL DEVELOPMENT BANK

Defendant

WABAG: COATES J
26 MARCH 2025

PRACTICE AND PROCEDURE – death of primary judge – submissions and evidence heard in application – considerations - parties agree that another judge may consider materials and deliver judgment.
Default judgment – setting aside – requirements.

Held:

1. The law recognises that when a primary judge, for whatever reason cannot deliver a decision on a case heard, that another judge may deliver such decision.
   
2. That a default judgment obtained irregularly will be set aside as a matter of course.
   

Cases cited
Arman Larmar Surveys Ltd v Chan Consolidated Ltd [2013] 1 PNGLR 66
Bank of South Pacific v Spencer [1983] PNGLR 140
Green & Co Pty Ltd (Receiver appointed) v Green [1976] PNGLR 73
Ikian Lyanga v The Independent State of Papua New Guinea SC1635
Page Pty Ltd v Malipu Balakau [1982] PNGLR 140
Smeeton v Davara House Pty Limited [1979] PNGLR 324
Urban Giru v Luke Muta & Ors (2005) N2879

Counsel
Mr E. Minok for plaintiff
Mr M. Pauli for defendant

DECISION

1. BY THE COURT: The following decision follows the procedure laid down in Ikian Lyanga v The Independent State of Papua New Guina SC 1635, for the delivery of judgment in circumstances where the trial judge has become incapacitated or died.
   
2. His Honour Judge Lindsay heard the matter on 17 May 2024 and died before he could deliver his decision.
   
3. The Lyanga decision considers and sets out a procedure to determine the matter so that justice is done for the parties.
   
4. The decision states that parties must be afforded natural justice, or procedural fairness, when a matter has been heard and there is an impossibility of the primary judge delivering a decision.
   
5. As required by the the Lyanga decision, I raised with the parties whether they sought a new hearing or whether they would consent to me listening to the recording or reading the transcript, with of course the filed material relied on, and deliver judgment.
   
6. I sought any new evidence or submissions as well.
   
7. Both counsel agreed that I should proceed to listen to the recording or read the transcript and court file and deliver judgement.
   

SUBSTANTIVE MATTER

8. Although I am dealing here with Notices of Motion from both parties, I will simply refer to the plaintiff and defendant as such, rather than the applicant and respondent to the Notices of Motion, for ease of understanding.
   
9. The plaintiff by Writ of Summons filed 9 November 2021 in Wabag, sought orders in relation to a failed contract for the sale of land.
   
10. He sought orders for specific performance, special damages, general damages, interest and costs.
    
11. The particulars of loss and damage set out were K37,000 for loss of deposit, unstated incurred costs incidental to the alleged breach of contract and K267,185 as the loss of the final payment.
    
12. The context of the claim is that the plaintiff and the defendant executed a contract for the sale of the land (Portion 2329, Fourmile, Granville, NCD) on 23 December 2005 for K351,000.
    
13. Many years went by with general assertions as to the plaintiff seeking to have the defendant complete the contract, although the particulars of such efforts and context of the delays are not given a great deal of particulars in the originating material.
    
14. By 16 December 2020 the plaintiff, according to the Statement of Claim, paid K267,185 to the defendant, but claims the defendant could not complete the transaction – that being I assume transfer of title and handover of vacant land – despite the defendant terminating the contract in writing on 6 July 2020.
    
15. Pleaded in the Writ is the plaintiff’s position that he did not “realize that the property was subject of a National Court proceeding” between the defendant and another person.
    
16. Other than to put the status of the land into context, the defendant under its former name of the Rural Development Bank Limited, held a mortgage for a loan to one Samuel Aiye Nema and upon his default, the defendant tendered for the property, the plaintiff here entering the disputed contract stated above.
    
17. No affidavit was filed with the Writ, so that was the only information before the court.
    
18. Upon being served, the defendant bank did not file its Defence within time, being two days late.
    
19. By Notice of Motion filed 17 February 2022, the defendant sought leave to file out of time.
    
20. By Notice of Motion filed 31 October 2022, the plaintiff sought judgment in default.
    
21. By Notice of Motion filed 16 January 2024, the defendant sought that its application to file out of time be heard forthwith and for a transfer of the matter to Port Moresby.
    

COURT EVENTS

22. There are claims that the parties have corresponded with each other, but whatever the outcome of those negotiations, the plaintiff’s Notice of Motion filed 31 October 2022, sought K287,185 as the cost of the land, as well as K37,000 for loss of deposit.
    
23. On 26 January 2024, the default judgment application was determined in the plaintiff’s favour with costs, and the defendant’s application to file its Defence out of time and transfer the matter to Port Moresby was refused by Kangwia J.
    
24. In his reasons, his Honour referred to the criteria to be considered for a default judgment as set out in Urban Giru v Luke Muta & Ors (2005) N2879, as well as aspects of the proposed defence, which did not provide evidence of the monetary figures allegedly paid by the plaintiff to the defendant for the land, and named those figures as being K37,000 for the deposit and K267,185.
    
25. Considering that the money had been paid to the defendant, his Honour stated “the unverified defence favours the entry of default judgment” for the plaintiff.
    
26. On 22 March 2024, and 3 April 2024, the defendant filed Notices of Motion seeking that the default judgment be set aside pursuant to O12 r 8(2)(a) and O12 r 35 of the National Court Rules, as it was irregularly obtained.
    
27. The last of these Motions were relied on and heard on 17 May 2024, and this is the decision the parties have agreed that I deliver after considering the submissions made before His Honour Judge Lindsay.
    
28. The directions given in the Lyanga case referred to above, of affording parties natural justice, giving them the opportunity of making further submissions, clarifying submissions made or giving them the opportunity to have a rehearing, does all that is possible to remedy any shortcomings which may occur when another judge takes over a part-heard matter.
    
29. In the usual course of a hearing, the judge who heard the matter is taken to be aware fully of facts and submissions and evidence - and so is the judge who makes the decision.
    
30. In taking over a case in these circumstances, the judge must, in my view, adopt the course of the absent judge on issues such as rulings made during the course of a hearing so as to obtain consistency of decision making.
    
31. I have noted His Honour refused to grant an oral adjournment application and to proceed with the hearing of the Motion to set aside the default judgment.
    

THE RULES

32. Counsel for the defendant set out the considerations necessary to set aside a judgment given in default.
    
33. Properly, this application relies on Orders 12 r 8(2)(a) and r 35.
    
34. Those rules empower the court to set aside default judgments and, in this case, an irregularly entered judgment.
    
35. Counsel said the test for whether a judgment was obtained irregularly may be applied whether the judgment was given ex parte or whether both parties were present, and in this case, judgment was entered, with reasons, with both parties represented.
    
36. As to case law, reference was made to Arman Larmar Surveys Ltd v Chan Consolidated Ltd [2013] 1 PNGLR 66, where Injia, J at paragraph 8, stated that the court has a discretion to set aside a regularly entered judgment but a “default judgment irregularly entered is set aside as of right, regardless of a defence on the merits: Green & Co Pty Ltd (Receiver appointed) v Green [1976] PNGLR 73; Smeeton v Davara House Pty Limited [1979] PNGLR 324, Page Pty Ltd v Malipu Balakau [1982] PNGLR 140, Bank of South Pacific v Spencer [1983] PNGLR 140”.
    
37. In light of that, I keep in mind that this is not an appeal, but a fact-finding exercise.
    

THE SUBMISSIONS

38. The defendant’s submission rely on:
    
    1. A denial of natural justice in that there were two applications before the court, the plaintiff’s application for default judgment as well as the defendant’s application to file a defence out of time, and that the defendant’s Motion was not properly considered;
    2. the judgement entered was irregular because the plaintiff’s claim that he paid K267,185 was never supported by evidence and the plaintiff later admitted that the money had not been accepted by the defendant; and
    100. the defendant had a cross-claim, again, not considered.
         
39. In explaining irregularity, the submission was that paragraphs 7 to 13 of the Statement of Claim were so poorly drafted that there was no case to be gleaned from them.
    
40. An examination of those paragraphs is a question of fact and may be undertaken now as they would be on a similar submission made at trial.
    
41. The paragraphs are as follows:
    

“7. The Plaintiff has on numerous occasions contacted the Defendant to complete the purchase during which time the Defendant requested the Plaintiff to pay the balance of the purchase price which the Plaintiff paid by way of bank cheque in the sum of K 267,185 on 16^th December 2020.

8. Despite receiving almost the full payment for the property, the Defendant could not complete the transaction without any basis, if any unknown to the Plaintiff [sic].

9. By letter dated 6^th July 2020, the Defendant purportedly terminated the contract without any forewarning notice to the Plaintiff but, more so after a considerable period of delay

10. The Plaintiff made almost the full and final payment for the purchase of the property without the knowledge of the purported termination letter referred to at paragraph 9 hereof.

11. The Defendant failed forewarn or requested the Plaintiff for the balance of the payment as there has been a lengthy period of delay in getting the property vacant and available for the completion of the transaction.

12. Despite the considerable delay by the defendant, abrupt action to terminate the agreement was in breach of the contract.

Particulars of breach

(1) Failing to have the land vacant and available to complete the contract.
(2) Failing to disclose to the Plaintiff at the time of the execution of the contract of the court proceeding over the same property.
(3) Accepted the deposit but refused to complete the sale.
(4) Failing to inform the Plaintiff to pay the balance of the purchase price.
(5) Failing to accord natural justice as delay [15 years] was substantial after the deposit of 10%.

13. By reasons of the breach of the contract the Plaintiff suffered loss and damages.”

42. To understand the defendants submission that those paragraphs are too poorly pleaded to be understood, the Statement of Claim as a whole must be read.
    
43. The Statement of Claim seeks damages for breach of contract made 23 December 2005 and the preceding paragraphs claim that the total cost of the land to be purchased was K351,000 and that the deposit was K37,000, which had been paid.
    
44. The Plaintiff then pleads that he requested the defendant to complete the contract.
    
45. So much is understood.
    
46. However, from paragraph 7 a claim is made that the defendant requested the plaintiff to pay the balance and – although no date is given as to when the request was made – the plaintiff “paid by way of bank cheque in the sum of K267,185 on 16 December 2020.
    
47. That is well after, as stated in paragraph 9, the defendant terminated the contract, and further, at paragraph 10, the plaintiff states that he paid “almost the full and final payment”, which reflects the same claim made in a different way as stated in paragraph 8.
    
48. That admission alone indicates that the plaintiff had not paid the amount he was supposed to and is an admission against interests.
    
49. But while the Statement of Claim appears to lead the reader to the conclusion that at least a large amount of money had been paid by the plaintiff to the defendant, the court was then taken to the plaintiff’s affidavit filed 3 May 2024, in response to the Notice of Motion to determine the granting of leave out of time and transferring the matter to Port Moresby, the Plaintiff stating there that his cheque was not accepted by the defendant, see paragraphs 36 and 37.
    
50. What has occurred is a play on words, with the Plaintiff saying he paid the money using the word “paid” to mean the money was accepted and taken by the defendant.
    
51. There is no other meaning which can be attributed to that statement in the context of this matter.
    
52. However, as is now apparent, that he “paid” the money does not mean that he has paid pursuant to the contract, because payment was not accepted and there is no evidence that it was on that the Plaintiff has lost his K267,185.
    
53. The submission then is that the Statement of Claim may be an attempt at fraud, giving a false picture of what had actually occurred and what money actually passed.
    
54. That this material exists is at the heart of the submission that the judgment was irregularly obtained.
    
55. Irregularity has a general meaning – the definition given in Mosley & Whitely’s Law Dictionary 11th Edition, Butterworths, 1993, is useful and similar to other recorded definitions, being: “a departure from a rule, or a neglect of legal formalities.”
    
56. The rules of pleading are that facts not evidence are stated and a fact is an occurrence which can be proved.
    
57. Given the plaintiff’s own admission in the 3 May 2024 affidavit, he has not pleaded fact in relation to the asserted payment of a large amount of money being K267,185, and so those paragraphs 7 to 13 do not go to the basis of any claim, and such is a breach of the rules requiring facts to be pleaded so that the dispute can be identified.
    
58. Taking further the cases referred to by Injia, J above in the Arman Lamar matter, the principle that a defendant is entitled to set aside an irregularly entered judgement is required in the interest of justice was further explained, and in the Bank of South Pacific v Spencer, it was said that on acceptance that the judgement was entered irregularly, the Court’s discretion would normally be exercised in favour of the applicant without conditions. The Smitten v Devara matter required the application of irregularity to state the grounds of objection and that has been done in this case.
    
59. While the decision to grant the default judgment was quite properly done on a discretionary basis, despite the fact that the defendant had filed a Notice of Motion for the Defence to be filed out of time, it appears that the court did not have evidenced of the relevant discrepancy between the Statement of Claim and the plaintiff’s sworn evidence pertaining to the K267,185.
    
60. That leads to the conclusion that judgement was entered irregularly, the rules pertaining to the requirements of facts to be stated in a Statement of Claim not being followed.
    
61. Following Injia, J’s statement in the Arman Lamar matter above, the default judgment will be set aside as a matter of course.
    
62. Having said that, the Arman Lamar judgment states that the judgment will be set aside as a matter of course despite any defence filed or for which leave is sought to be filed.
    
63. In examining the proposed Defence, the court was being asked to consider that the plaintiff knew of the proceedings between Mr Samuel Aiye Nema and the defendant and these were resolved in the defendant’s favour on 8 December 2011, when the Defendant issued a Notice to Complete the Contract of Sale which the plaintiff refused to complete.
    
64. The Defence then is that the plaintiff has breached the contract by refusing to complete it in December 2011, did not take necessary steps to mitigate his losses and delays were outside the control of the plaintiff.
    
65. In relation to alleged breach the Defence refers to clause 3(c) of the contract which sets out a process and time frame for the balance of the sale price, stated as K279,000 in clause 3(a), to be paid, otherwise under clause 12, the deposit may be forfeited.
    
66. The defendant says there is a cross claim which gives entitlement to retain the deposit paid and also claims unspecified damages.
    
67. As well, the Defence pleads that the plaintiff’s action is time barred by s.16 of the Frauds Limitation Act 1992.
    
68. The results then seem apparent, but I must refer to the plaintiff who appeared represented at the hearing.
    
69. I should state that the plaintiff attended court before late Lindsa w, before only to seek an adjournment, his legal representative stating he had only been briefed for an adjournment and did not know what the case was about.
    
70. Some hours of time were wasted on his futile oral application which was dismissed with reasons given.
    
71. The plaintiff’s lawyer did say that should the decision go against the plaintiff there was an intention to file an amended Statement of Claim and also that the plaintiff would be prejudiced because an adjournment was not granted.
    
72. Such misses the point made by Injia, J in Arman Lamar, that a judgement entered irregularly will be set aside as a matter of course.
    
73. On the facts here, I conclude that paragraph 7 to 13 of the Statement of Claim cannot be reconciled with what the plaintiff states in his affidavit of 3 May 2024, and such caused the court to enter the default judgement irregularly.
    
74. I do not need to consider then whether the cross-claim of the defendant or the time-bar should be taken further for this application, as the cross-claim is a trial issue and the time-bar was not argued.
    
75. The orders will then be that the judgement given by default on 26 January 2024 be set aside as it was irregularly entered, that the defendant be given leave to file the defence out of time and I will also observe that being two days late is really a de minimis matter, and that the plaintiff pay costs to the defendant as agreed or as assessed.
    
76. For the benefit of the parties so that the case may now be properly considered I will make this observation, on the material now before the court it appears that much of the plaintiffs’ case has disappeared and that the defence has a strong case in which to proceed.
    

ORDERS

1. The judgment given on 26 January 2024 is set aside as it was entered irregularly.
2. The Defendant has 14 days in which to file and serve its defence.
3. The Plaintiff will pay the costs of the Defendant as agreed or as assessed.

Judgment accordingly

Lawyers for the plaintiff: Minok & Company Lawyers
Lawyers for the defendant: Strategic Legal Services