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Supreme Court of Papua New Guinea |
PAPUA NEW GUINEA
[IN THE SUPREME COURT OF JUSTICE IN WAIGANI]
SCA NO. 107 of 1999
BETWEEN:
PUBLIC OFFICERS SUPERANNUATION FUND BOARD
-Appellant-
AND:
SAILAS IMANAKUAN
WAIGANI: AMET CJ, GAVARA-NANU, KANDAKASI, JJ.
2001: FEBRUARY 23rd
NOVEMBER 9th
NATIONAL COURT - PRACTICE & PROCEDURE – Application for substitution not on formal notice of motion – Dispensation of requirements of the Rules to do justice – Provisions of s.155 of the Constitution are in addition to powers to dispense under the Rules - Purpose of the Rules is to facilitate fair and prompt determination of disputes – No injustice to party which knew of the basis for the application – Failure to apply for substitution of a party following death of original party does not entitle party liable to a dismissal of action – Constitution s. 155 - National Court Rules (Chp. 38) O.5 rr. 10(1), 11(1) and (2) and 12(1) and (2), O.1 r. 7.
Notice to Admit facts and authenticity of documents critical for the case in the possession of party required to answer - Answer to denying but admit in defence and undertake to produce at trial – National Court Rules (Chp. 38) O. 9 r. 29 and 32.
Notice of Discovery - List of documents omitting documents admitted in defence - Default within the meaning and purpose of rules on discovery - No need to apply for orders for specific or further discovery - Purpose of the Rules of the Court is to facilitate a fair and prompt determination of disputes - Judgement in default properly entered on the issue of liability but not for undamages [sic] not liquidated - National Court Rules (Chp. 38) O. 9 r. 15 and O.12 r. 38.
APPEALS - Appeals to the Supreme Court - Hearing de novo - Power to make such orders as the National Court would have but on the records - Conduct of Appellant amounting to abuse of process and most unfair - Ordered to pay all the costs of the other party on solicitor-client basis for both the National and Supreme Court proceedings - Appellant directed to settle claim
CONDUCT OF PARTIES - Purpose and function of the Appellant considered - Established to facilitate prompt pay outs to contributors ceasing employment - Technicalities should not be allowed to step in the way of contributors right to prompt pay outs unless fully explained to the satisfaction of the contributors of the technical requirements and they understand them - Any document signed in ignorance of the technical and or legal requirements can not operate against the contributor
STATUTORY INTERPRETATION - Public Officers Superannuation Fund Act – Established to provided for prompt payment on retirement or ceasing employment.
CONTRACT - Contract between a Statutory Corporation and an individual - Parties on unequal bargaining power - Party with more power obliged to ensure disadvantaged party fully understands the terms of the agreement and effects of words used - A failure to discharge that obligation operates against that party
Cases Cited:
Anthony John Polling –v- Motor Vehicle Insurance (PNG) Trust & Others [1986] PNGLR 228
The South Pacific Post Pty Ltd –v- Ephraim Ikenna Maduabuchi Nwokolo [1984] PNGLR 38
Andrew Kimberi of Paulus & Dowa Lawyers –v- The State SC 545
Aisip Duwa –v- Ronald Moyo Senge [1995] PNGLR 140
Credit Corporation (PNG) Ltd –v- Gerald Jee [1988-89] PNGLR 11
Elkum v- The State and Genbi v. The State [1988-89] PNGLR 662
Kora Gene v. Motor Vehicles Insurance (PNG) Trust [1995] PNGLR 344
Bruce Tsang –v- Credit Corporation (PNG) Ltd [1993] PNGLR 122
Counsel:
Mr. A.MacDonald for the Appellant
Mr. S. Tedor, for the Respondent
9th NOVEMBER, 2001
BY THE COURT: This is an appeal by the Appellant ("the Fund") against orders of the National Court in Lae given on the 20th October 1999. The National Court ordered a substitution of the then named plaintiff, Mrs. Taelabuo Imanakuan ("the contributor") by her husband, Mr. Sailas Imanakuan for himself and on behalf of the contributor's children following her death. It also ordered a strike out of the Fund's Notice of Intention to Defend and Defence and ordered judgement in the sum of K48, 658.50. Also interest at 8% per annum (or K10.66 per day), from the date of the issue of the writ (28th May 1997) to the satisfaction of the judgement together with costs were awarded. That was for failure to give full and proper discovery. The failure principally was this. Documents asked to be admitted by a notice to admit facts, which were denied but subsequently admitted in the fund’s formal defence with an undertaking to produce them at the trial, were not listed in the list of documents for discovery in answer to a notice of discovery.
No formal or written judgment with reasons for the judgement and or orders was delivered. A transcription of the oral judgment appears at page 124 – 125 of the Appeal Book. It is very brief and is only a restatement of the formal orders. Thus, it is necessary to set out the nature of the case and the chronology of events and facts to appreciate the appeal and the background to it as well as the judgement or orders appealed against.
Nature of the Case and Chronology Events
The contributor was a teacher employed by the Teaching Services Commission ("TSC"). She made contributions from the 14th of February 1974, to the Fund initially to the predecessor to the Fund and later the Fund upon succeeding from its predecessors which were abolished and replaced by the Fund. She ceased contributing in January 1997 when she ceased her employment with the TSC. She rendered about 25 years of service to the TSC and contributed to the Fund during the currency of her employment. Her employment ended because of medical conditions and on the basis of medical advice for her to retire or be retrenched. Soon after ceasing her employment, she lodged a claim with the Fund for a reimbursement or pay out of her entitlements consisting of her own contributions, the State’s contributions and the interest accrued on those funds. She made a claim for K48,658.50, which was inclusive of K7, 753.55 being her contributions and the State’s contribution plus interests accrued on those funds.
At the time of lodging her claim, she furnished all the relevant documents including the medical reports and or advises recommending her to retire or be retrenched dated 1st May 1996, by Dr. Alphonse B. Rongap. She also included a letter from the TSC dated 29th October 1996, which indicted that she resigned from her teaching position because of her serious medical condition. The Fund took a strict and technical approach coupled with delays caused either by deliberate design or inadvertence. Her case was treated as merely a case of a contributor resigning. That was almost in total disregard of the fact that her medical condition forced her to leave her employment and a publication in the Post Courier on the 22nd of June 1994 ("the 1994 publication") that retirement in situations similar to hers would be regarded as invalid pension. This was significant because the formula to calculate the pay out would be similar to that of a normal retirement which is higher than an early resignation.
The Fund paid a sum of K3, 126.39, which it calculated as the amount the contributor had contributed to the Fund and refused to entertain any other claims save for the State's contribution of about K2, 263.00. Failing an out of court settlement, the contributor issued National Court proceedings to recover what she claimed was her contributions and what was due to her from the State and the Fund in terms of interest on the amounts due and owing.
On the 28th of May 1997, the contributor filed her writ of summons claiming a total of K48, 658.50. The writ of summons was served on the Fund on the 2nd of June 1997. The Fund filed its Notice of Intention to Defend on the 19th June 1997. The Contributor then filed a Notice to Admit Facts and Authenticity of Documents on the 4th July 1997 ("Notice to Admit") and served it on the Fund. The Notice to Admit listed and attached mainly copies of documents, which were lodged with the Fund in early 1997 and the Fund’s 1994 publication. On the 23rd July 1997, the Fund filed a Notice Disputing the Authenticity of Documents ("Notice Disputing"). Then some 22 days after the expiry of the time limits for filing of its defence, the Fund filed its defence on the 7th of August 1997. It pleaded inter alia, an admission that all the documents furnished by the contributor in support of her claim were received by the Fund and it undertook to tender into evidence and specified some of them. The Contributor then filed on the 9th April 1998 a Notice for Discovery and serviced it on the Fund on the 25th of June of 1998. The Fund responded by filing a List of Documents on the 3rd July 1998 and had it served on the contributor on the 24th of August 1998. The List of documents did not list any of the documents admittedly received and partly in the possession, care or control of the Fund as well as the 1994 Post Courier publication. Consequently, on the 9th September 1998, the contributor filed a Notice of Motion seeking, a strike out of the Fund's Notice of Intention to Defend and Defence and for judgement in the sum of K48,658.50 plus interest and costs against the Fund. That was supported by an affidavit sworn by Mr. Sialis Tokalula Tedor on the 8th and filed on the 9th of September 1998.
The Fund responded by filing a motion on the 1st of October 1998, seeking a dismissal of the action on the basis that the contributor had died and no application for substitution was made within 3 months pursuant to O.5 rr. 10 and 11 of the National Court Rules (Chp. 38)("NCR"). In support of that, the Fund filed two affidavits, one sworn by Mr. John Ban, the then acting general manager. The second one was by Mr. Bernard Tomer, the then principle legal officer of the Fund. Parties then appear to have agreed to file written submissions for the Court to consider and made a decision. The submissions for the contributor were filed on the 22nd October 1998. The Fund filed an additional affidavit on the 5th November 1998, sworn by Bernard Tomer on the 2nd November 1998 together with its submissions. The contributor's lawyer replied to that on the 9th November 1998. On the 20th October 1999, the National Court made the orders, the subject of this appeal.
Grounds of Appeal
The grounds of appeal are set out in paragraph 3(a) to (k) of the Notice of Appeal. They read as follows:-
(a) That the Learned Judge in giving final judgement for the Plaintiff, erred in law and fact in that he found that the Defendant had failed to make discovery to the Plaintiff and that such default entitled the Plaintiff to default judgement.
(b) That the Learned Judge in giving final judgement for the Plaintiff erred in law and fact in that he found that the Defendant not having made adequate or full discovery of all relevant documents was thereby in default thus entitling the Plaintiff to default judgement.
(c) That the Learned Judge erred in law in that he entered final judgement for the Plaintiff when he had no power so to do.
(d) That the Learned Judge erred in law in that he should have ordered discovery of particular documents and/or a supplementary Affidavit or List of Documents.
(e) That the Learned Judge erred in law in that he failed to allow the Defendant to present its defence at trial and failed thereby to accord due process of law to the Defendant.
(f) That the Learned Judge in giving final judgement for the Plaintiff erred in law in that he failed to give any or any adequate weight to the Affidavit of Bernard Tomer sworn on the 21st September 1998.
(g) That the Learned Judge in giving final judgement for the Plaintiff erred in fact and law in that he purported to exercise a judicial discretion to enter final judgement for the Plaintiff but proceeded upon findings which were wrong in law, thereby vitiating the purported discretion.
(h) If default on the part of the Defendant could be found as a matter of law (which is denied by the Appellant) the Learned Judge erred in law in that he held the Plaintiff’s claim to be for a liquidated sum and wrongly thereby entered final judgement for the Plaintiff.
(i) That the learned Judge failed to exercise his discretion in accordance with the weight of the evidence and acted thereby in a manner both unlawful and unreasonable such that the decision can and should be quashed.
(j) That the Learned Judge erred in law in that he resolved in matters of fact and law in interlocutory proceedings when such matters should properly be reserved for trial and failed thereby to exercise his discretion upon a consideration of relevant matters and/or exercised his discretion upon consideration and findings which were irrelevant.
(k) That the Learned Judge erred in law in that he failed to consider and adjudicate upon a Notice of Motion filed by the Defendant on the 2nd October 1998 or failed to consider that Notice of Motion adequately or in accordance with law.
These grounds of appeal can be grouped into three broad issues. First, whether the Fund defaulted in giving full, fair and proper discovery of documents relevant for the proceedings within the meaning, intend and purpose of giving discovery and the relevant rules and practice on it (grounds (a), (b) and (d))? Secondly, whether the trial judge was entitled to enter final judgment on the material placed before him (grounds (c), (e), (f), (g), (h), (i), and (j))? Thirdly, whether the learned trial judge adequately and or properly dealt with the funds motion, which concerned substitution of parties following the death of the contributor (ground (k))?
The first issue concerns the intent and purpose of the discovery procedure. The second issue concerns a consideration of what was or were the issues for trial and whether the learned trial judge was right in proceeding to enter judgement in the particular circumstances of this case having regard to the principles governing the entry of summary or judgement in default of discovery. The main issue in the substantive proceedings was whether the contributor resigned or retired on medical grounds. Parties agree this was the main issue in the proceedings and the Fund argues that should have been allowed to go to trial instead of resolving it in a summary judgement or order. The third issue concerns the timing of applications for substitution of parties following the death of a party. Of these issues we consider the third issue is the easiest. We therefore deal with that first.
Substitution of the Contributor to Mr. Imanakuan
The NCR in O.5, rr. 10 (1), 11 (1) and (2) and 12 (1) and (2) provide for the substitution of a party following the death of an original party to any proceedings pending before the Court. These rules in relevant parts read: -
"10. Death, Transmission, etc. (8/10)
(1) Where a party dies ... but a cause of action in the proceedings survives, the proceedings shall not abate by reason of the death ...
(1) where –
(a) a party dies but the cause of action in the proceedings survives his death; and
(b) an order under Rule 10 of this Rule for the addition of a party and substitution for the deceased party is not made within three months after the death,
the Court may, on application by a party or by a person to whom liability on the cause of action survives on the death, order that, unless, within a specified time after service of the order in accordance with sub-rule (2) of this Rule, a party is added in substitution for the deceased party, the proceedings be dismissed so far as is concerns relief on the cause of action for or against a person to whom the course of action or the liability thereon, as the case may be, survives on the death.
(2) On making an order under sub-rule (1) of this Rule, the Court shall give such directions as it thinks fit for service of the order on the persons (whether parties or not) interested in continuing the proceedings."
(Emphasis supplied)
For the purpose of these rules, there is no dispute that the Court does have the power to order substitution of parties following the death of an original party. There is also no dispute that the cause of action survived the death of the contributor. The issue taken by the Fund before the National Court, which is not vigorously taken up in any manner before us, is the fact that the application for substitution of the contributor to Mr. Imanakuan was made after three months from the date of the death of the contributor. The question than is, whether the National Court was entitled to order a substitution of the contributor to Mr. Imanakuan after the passage of three months following the death of the contributor. There can be no room for any controversy on that in view of the provisions or O.5 r.12 (1) more particularly in view of the words underlined above. In our view, these words give a party who is liable on a cause of action which survives the death of a party to apply for a dismissal order if no application is made for substitution within a period of three months from the date of the death of the original party. When such an application is made, the Court is not obliged to dismiss the proceedings but may make orders requiring the deceased party to be replaced within a specified period after the service of the order. In other words, the Court could order a dismissal of an action on account of the death of a party but that is not automatic. Instead, it is conditional on a party not substituting the deceased party within a period to be specified by the Court.
In the present case, following the death of the deceased on the 11th March 1998, a fact the Fund was aware of, no application was made under O.5 r.12 by the Fund for a dismissal of the proceedings. The need to substitute the contributor deceased therefore remained open and the Respondent quite rightly applied for a substitution at the time of his application for judgment against the Fund. In any case, we note that the Fund concedes that this issue cannot be taken any further save only to show that the application may have been brought irregularly because there was no formal application for substitution as such.
In relation that aspect, we note that the trial judge referred to the provisions of s.155 of the Constitution and said that, in the interest of doing justice in the circumstances of the case Mr. Imanakuan should be ordered to substitute his deceased wife.
We find nothing wrong with that. In any case, O.1 r.7 of the NCRs, compliments s. 155 of the Constitution by giving the Court the power to dispense with a non-compliance of the rules either before or after the need to do so has arisen in the interest of justice. It is now settled law that, the Rules of the Court are not an end in them but a means to an end in all matters going before the Courts. They are only a code of practice and there is no doubt where justice so requires, strict adherence to the rules can be dispensed with in the circumstances of a particular case. For more discussion on this see Anthony John Polling –v- Motor Vehicle Insurance (PNG) Trust & Others [1986] PNGLR 228 at page 230 and The South Pacific Post Pty Ltd –v- Ephraim Ikenna Maduabuchi Nwokolo [1984] PNGLR 38 at page 46. It should be borne in mind that, the Rules are designed to guide and assist the Courts and the parties to reach a fair, orderly and expeditious resolution of matters before the Courts. Their application was thus intended to be flexible: See Andrew Kimberi of Paulus & Dowa Lawyers –v- The State (Unreported Judgement of the Supreme Court delivered in 1988) SC 545 at page 22. This compliments the provisions of s. 155 of the Constitution.
In this case, the Fund knew of the contributor’s death and that the claim was being pursued by her husband following the death of the contributor. It was therefore, incumbent upon the Fund to apply for a dismissal of the proceedings but it failed. Accordingly, the objections and the application to dismiss were only technical which stood in the way of administering and doing justice in the circumstances of the case. The appellant caused a delay in a prompt and amicable resolution of the contributor’s claim. This saw to the contributor's death without fully receiving what she was entitled to receive from the Fund. That was grave injustice to the contributor, her husband, children and relatives who are yet to see a resolution of the claim one way or the other all because of an insistence upon compliance of technical requirements. Then eventually when the contributor died, and the Respondent failed to immediately apply for substitution under O.5 r.11, the Fund could have made use of the provisions under O.5 r. 12 but failed to do so. Only in the light of an application for substitution, it applied for a dismissal of the action. Clearly, the Fund did not approach the problem with sensitivity, fairness and human touch. Monies were rightly due to the contributor at the first place and following her death, to her husband and her children and other dependents.
Considering all of the above, we find no error on the part of the trial judge in ordering a substitution of the contributor by the contributor’s husband, Mr. Sailas Imanakuan. We find that was arrived at after considering the meaning and effect to be given to the relevant rules and the provisions of s. 155 of the Constitution and the relevant rules and practice before the National Court. This then leads to the first issue of whether the Fund defaulted in giving discovery within the meaning of the relevant rules and the intents and purposes for discovery.
Whether the Fund defaulted in giving discovery
Counsel for the respondent both before the National and this Court has argued that the Fund defaulted in giving fair and full discovery
within the meaning, effect and purpose of the discovery process by having regard to the Funds conduct. First, he points out to the
filing and serving of the notice requiring the Fund to admit facts and authenticity of documents which enumerated a number of documents
with copies attached thereto. Those documents were earlier submitted and received by the Fund when the contributor applied for a
refund of her contributions together with the State's contribution and interest accrued on those funds. Included in that was the
Funds own 1994 publication. These documents, he submits, and we accept were critical to determining the threshold question of whether
the contributor resigned or retired on medical grounds which was the main issue in the proceedings.
The Fund by way of answer to the notice denied the facts and authenticity of those documents. Subsequently, however, in its formal
statement of defence which was filed way out of time but with the indulgence of the plaintiff’s lawyers did admit to receiving
all documents forwarded to it by the contributor at the time of lodging her claim. It then stated it had in its possession some of
the documents and undertook to tender them in court at the trial of the matter. Those were documents the Fund relied on to argue
that, the contributor resigned, on the basis of which, it refused to the entertain the contributors claim of having retired on medical
advice.
This necessitated the filing and serving of the Notice of Discovery on the 9th of April 1998. Through that process, the Respondent
hoped to get the Fund to list those documents on its List of Documents in answer to the Notice. To the Respondent's disappointment,
none of those documents were listed on the Funds List of Documents despite its defence. This in turn led to the Respondent filing
and serving the motion for judgement. It was argued both before us and the National Court that, the Fund failed to give a fair and
full discovery of its documents especially having regard to the position it took in its defence. By reason of that, the Fund defaulted
in giving discovery within the meaning of O.9 r.15 of the NCRs and the whole intends and purpose of the discovery process. It further
argued that the way in which the Fund conducted its pleadings and its response to the discovery process amounted to an abuse of process
if it did not amount to default in giving discovery. The Respondent argued in effect therefore that, default judgement was properly
called for and that the National Court made no mistake in ordering judgement against the Fund.
The Fund in response submits from page 3 – 4 of its written submissions that: -
"We work under an adversarial process and I submit there is no legal obligation to admit a document or fact. But parties often do
on the basis of commonsense, costs and credibility of counsel. There is no legal obligation to do so. ......, there is no abuse in
the defendant not admitting a document. In fact a document was expressly admitted and another admitted by default."
(Underling ours)
Aisip Duwa –v- Ronald Moyo Senge [1995] PNGLR 140 at 149-150 discusses and sets out the principles governing the pre-trial procedure of discovery. That is done after noting that,
the function of pleadings is to clearly define the issues for trial in a case and to eliminate where possible any element of surprise
at a trial so that each party is then aware of the case he has to meet. We quote from that judgment and adopt the discussions on
the purpose and function for discovery before trial in terms of the following: -
"And one of the most important processes of the pre-trial procedure employed in an endeavour to achieve those aims is that of discovery.
In ordinary parlance, discovery is the ascertainment of that which was previously unknown. In procedural law, it is one of those
pre-trial 'devices that can be used by one party to obtain facts and information about the case from the other party in order to
assist the party’s preparation for trial'. See: Black’s Law Dictionary. In actions begun by writs, lists of documents
must be served by each party after the close of pleadings, and any party entitled to have discovery may serve a notice requiring
an affidavit verifying the list of documents. See: Osborn’s Concise Law Dictionary. This is, of course, reflected in our NCR’s,
and O 9 rr. 6 (contents of list) and 9(3)(b) further reflect an accommodation between full and open discovery, and safeguard against
unwarranted intrusions into the opponent’s files.
In the South Australia case of Donaldson v. Harris (1973) 4 SASR 299, Wells J took the opportunity to trace briefly the origins of the development of procedural rules on discovery from the old common
law emphasis on 'the system of litigation by antagonists'. Thus, one of the essential features of discovery, deriving as it does
from the equitable rules of the former Court of Chancery, is fairness. Its function is to ensure, not only that so far as possible
there should be no surprises at the trial, but also that, before the trial, each party should be informed or be capable of becoming
informed of all the relevant material evidence, whether in the possession of the opposite party or not, so that he can make an intelligent
appraisal of the strength or weakness of the respective cases of the parties either for the purpose of the trial or for the purpose
of arriving at a fair or favourable settlement or compromise. See: M I Aronson, M S Reaburn Weinberg, Litigation: Evidence and Procedure
(2nd Ed) (Sydney: Butterworths 1976), ch 8. The learned authors add that the process of discovery also has the effect of producing
procedural equality between the parties, which may perhaps be, as they say, another aspect of fairness. I respectfully adopt these
principles.
They go on to say that since, perhaps naturally, neither party would willingly or voluntarily make such disclosure to its opponent,
the obligation to do so must be imposed upon them either by the rules or by orders of the court. As discussed earlier, this is very
much reflected in our NCRs: automatic discovery (O 9 r 1) and order for general discovery (O 9 r 5). Thus, the procedural requirements
in this respect should make it difficult for parties to withhold relevant information from each other until the trial. This system
of pre-trial procedure is intended to prevent a trial being, or continuing to be somewhat of a chance or a game because the parties
are left in ignorance of each other. See: Jacob (Supra, 37)."
(Underlining supplied)
Earlier on Mr. Justice Woods in Credit Corporation (PNG) Ltd –v- Gerald Jee [1988-89] PNGLR 11 at p.12 also elaborated on the purpose or function for discovery in these terms:
"The function of the discovery of documents is to provide the parties with the relevant documentary material before the trial so as to assist them in appraising the strength or weakness of their respective cases, and thus to provide the basis for the fair disposal of the proceedings before or at the trial or to adduce in evidence at the trial relevant documentary material to support or rebut the case made by or against them, to eliminate surprise at or before the trial relating to documentary evidence and to reduce the costs of litigation. Discovery should not be confused with the process of obtaining further and better particulars, nor with the process of interrogatories, nor of subpoena duces tecum.
Discovery is therefore to help the parties and, in the end, the court to obtain a proper examination of the issues and a party is therefore entitled to discovery of any documents that relate to the issues. A document is discoverable if it throws light on the issues: Donaldson v. Harris (1973) 4 SASR 299.
A party is obliged to disclose all documents in his possession, custody or power, which relate to the matter in question. The rules quite clearly cover this.
... Discovery is not a matter of bargaining or compromising or demanding an exact list of the documents sought. It is the obligation on a party to supply a list of all the documents, which might have any bearing on the subject matter in dispute. Of course, there is provision to allow for claims of privilege and these needs to be set out in the affidavit verifying the list.
Order 9, r 15, of the National Court Rules provides that when a defendant is in default the court can order that his defence be struck out and judgment be entered accordingly. There is no prerequisite here that a party must first seek a court order to enforce discovery before the default provision can be availed of.
The rules quite clearly prescribe automatic discovery, see O 9, r 2, which requires a party to give discovery if a notice is served on him. Of course, there are specific rules providing for the court to order discovery in other causes of action or for particular discovery but these are only in addition to the rule requiring automatic discovery. These rules clearly accord with the rules in other common law jurisdictions, for example in the United Kingdom, and I refer to the comments of Pennycuick J in the case Chipchase v. Rosemond [1965] 1 All ER 145 where, in answer to the suggestion that default action can only be taken following an order for discovery, he said (at 147):
'I did not think that that argument is well founded. Rule 2(1) prescribes automatic discovery. Rule 3(1) gives a party the right, if he is so minded, to obtain an order for discovery including, if thought fit, an affidavit verifying the list. He may or may not take that course, but [whether he does so or not] the fact that he has the right to take the course does not, I think, preclude him from applying under r 17(1) to have the action dismissed. Merely on the ground of failure to comply with the automatic obligation to make discovery under r 2(1) he can if he likes apply, it seems to me, for dismissal under 4 17(1), without first taking the optional step of obtaining an express order for discovery.'
Whilst the English rules referred to are worded differently, I am satisfied that the intent of our rules is similar. Our r 15 clearly provides that in an action commenced by writ of summons default action can be sought and there is no precondition that a court order must first be sought; the wording in the rule is ‘as required by or under this Division’ and the words in the rule make no reference to ‘as ordered’"
(Underlining supplied)
We adopt those words as a correct representation or interpretation of the rules governing discovery and the consequence that should follow where a party defaults in giving full and complete discovery.
The rule under consideration is O.9 r 15, which reads: -
"15. Default (23/15)
(1) where a party makes default in filing or serving a list of documents or affidavit or other document, or in producing any document as required by under this division, the court may make such order as it thinks fit, including –
- (a) if the party in default, is a plaintiff, an order that the proceedings to be stayed or dismissed as to the whole or any part of the relieved claimed by him in the proceedings;
- (b) if the proceedings were commenced by a writ of summons and the party in default is a defendant, an order that its defence shall be struck out and that judgment be entered accordingly."
(Underlining supplied)
A closer look at the wording in sub-rule 1 of r.15 of O. 9, makes it is clear that, a party would be in default and therefore be liable
for a judgment or order against him if he fails to file a list of documents or affidavit or other document or produce any document
as required under this division. In our view, that does not restrict a default in terms of filing and serving a list of documents
but also includes default of a party required to give discovery failing to list any document whether it be in its original form or
a copy and is relevant to the proceedings unless it is privileged from production. In the present case, the Respondent had filed
and served on the Fund a notice to admit facts and authenticity of documents on the 4th July 1997. That notice attached copies of
the relevant documents. Prior to that, those documents were lodged with the Fund at the time of the contributor lodging her claim
for reimbursement of her contribution and a pay out of the State's share under the relevant Act and interest accrued on it. One of
the documents was a copy of the Funds own publication in 1994.
Despite the above, the Fund filed a notice disputing those documents and facts contained therein on the 23rd July 1997. Subsequently, it filed a statement of defence on the 7th August 1997, admitting to having in its possession all of the documents lodged with it by the contributor and specified some of them in paragraph 5, which was almost all of the documents referred to in the Notice to Admit and went on to state that those documents will be produced at a trial. The Respondent responded by filing and serving a Notice of Discovery on the 9th April 1998. The Fund filed and served a list of documents on the 8th July 1998. That list of documents failed to list any of the documents the Fund admitted receiving and having in its possession which it undertook to produce at the trial in support of its defence as well as its own 1994 publication. This led to the filing and serving of the application for a strike out of the Fund's defence and for judgement to be entered.
Following on from the Fund’s argument that it was not legally obliged to admit the documents, it argues that, if the Respondent
considered it necessary that those documents should be given in discovery then, application should have been made for specific or
further discovery pursuant to O. 9 rr. 5 and 7. It then argues that, if that process failed to get the Fund to give discovery then,
further application could have been made for judgement on the basis of such default. Only then could judgement be properly signed
in default of discovery.
In effect the Fund is arguing for a strict application of the rules regardless of the costs to the parties. This, in our view is to
use the words of Brunton A.J., (as he then was) in Elkum v- The State and Genbi v. The State [1988-89] PNGLR 662 at page 665: -
"... is a tactic of litigation by attrition: a corporate defendant such as the State [the Fund here], with its lawyers on fixed salaries
digs in its toes and forces the plaintiff’s to prove their case. The plaintiff’s, who have to pay private lawyers their
solicitor–client costs, are thus pressured to discontinue or curtail their action or make concessions on purely economic grounds,
irrespective of the legal merits of their cases."
As we said already, it is now settled law that, the Rules of the Court are not an end in them but a means to an end in all matters
going before the Courts. They are only a code of practice and there is no doubt where justice so requires, strict adherence to the
rules can be dispensed with in the circumstances of a particular case. It should be borne in mind that, the Rules are designed to
guide and assist the Courts and the parties to reach a fair, orderly and expeditious resolution of matters before the Courts. Their
application was thus intended to be flexible.
The documents asked in discovery in this case were critical and determinative of the dispute between the parties. Indeed, the Fund
relied on those documents (except for its own 1994 publication) to say that the contributor resigned as opposed to retiring on medical
grounds. The Fund was required to admit their existence and authenticity when it was served with the Notice to Admit. Instead of
doing that, it denied the documents. Then not long after, it filed and served a defence, which made a complete roundabout turn. Then
yet again, when it was required to give discovery, it failed to list those documents. This was consistent with its view that, it
was not required to admit any of those documents and that the plaintiff was required to go to her prove. Consequently, it was prepared
to see the plaintiff applying for an order requiring it to give particular discovery of those documents rather than volunteering
despite having admitted to having in its possession those documents and undertaking to produce them in court at a trial of the matter.
In our view, this amounted to an abuse of process and in any event, it amounted to default within the meaning of O.9 r.15 (1) of the
NCR. We therefore, find that judgment was correctly due under that provision and as such, the learned trial judge did not err in
giving judgment for the Respondent.
Although our above finding would render it not necessary to consider the other grounds of appeal, we consider it appropriate for completeness to consider whether or not the National Court was, in the interest of doing justice was entitled to sign judgment for the Respondent as it did. As mentioned above, the main or threshold issue for determination, if the matter went to a trial was, whether the contributor resigned or retired on medical grounds.
The Fund relied on an affidavit by John Ban, the then acting managing director of the Fund, more particularly, annexures C, D and F. They were respectively, the advice from the TSC to the contributor dated 29th October 1998 (document listed No. 6 on the Notice to Admit), a Separation Authority Form signed by the contributor (document No. 2 on the Notice to Admit) and the Remittance Advice and copy of cheque paid to the contributor in the sum of K3, 126.39. The list of documents did not list annexures D and F. On the basis of those documents, the Fund argued that the contributor resigned on medical grounds and did not retire.
The Fund did not raise in its defence or in the arguments at all that, the contributor was advised of the options opened to her,
either to resign or retire on medical grounds depending on the benefits she would receive from the Fund following a termination of
services to the TSC because of her medical condition. Through the 1994 publication (document No.8 on the Notice to Admit –
page 32 of the Appeal Book) the Fund advised that, contributors ceasing employment due to medically proven inability would be treated
in much the same way has normal retirement at the age of retirement. The medical evidence before the National Court and now this
Court on appeal, clearly show that the contributor was recommended to retire or be retrenched on medical grounds. That fact was before
the Fund from the date the contributor's claim for pay out was lodge in early 1997.
The Fund was established by the Public Officers Superannuation Fund Act of 1990 (hereinafter "the POSF Act") to provide for a scheme
of superannuation benefits and rights. That was for citizen officers and employees of the National Public Service, the Parliamentary
Services, the National Judicial Staff Services and other approved authorities as well as citizen members and employees of the TSC
and amongst others, the Police Force and the Correctional Service. This is apparent from the preamble to the Act. The Act also repealed
all previous funds and transferred all the funds held under those funds to the Fund. The Fund was therefore, intended to be for the
benefit of all the contributors and the Fund Board was established to see to that benefit being accorded to those who were entitled
under the Act.
There is no argument that the contributor in the present case was entitled to the benefits under the Act and upon her death, Mr. Imanakuan
and the contributor’s remaining dependents. The only dispute was, how much should be the benefit depending on whether the contributor
resigned or retired on medical grounds.
Rather than taking an approach, which accorded well with the intend and purpose of establishing the Fund, the attitude and steps taken
by the Fund made it so complicated for the contributor to fully benefit from her entitlements. Eventually, she died from the very
condition medical advice recommended her retirement or retrenchment. She was thus prevented from fully enjoying her benefits before
her death. Through the Notice of Motion filed by the Fund on the 2nd of October 1998, the Fund sought to benefit from the death of
the contributor rather than seeking ways and means to assist the contributor’s dependents from getting to their benefits without
further unnecessary costs and delay. We find the conduct of the Fund was contrary to its legislative function and duty and in any
event most unfair and unjustified. Here was a contributor from the 14th February 1974 up until the 17th of January 1997, who ceased
her employment on medical advice. She was denied the opportunity to benefit from her savings without unnecessary delay. Eventually,
she died without receiving her entitlements. We are of the view that, the intent and purpose of the Fund amongst other was to enable
persons like the contributor to receive their entitlements without unnecessary delay. That includes a refund of their contributions
together with the State’s contributions and interests accrued on those funds. Instead of facilitating that, the Fund in the
present case employed a conduct that forced the contributor to go to Court. Even then, the Fund continued with its conduct which,
in our view, was litigation by attrition.
There is no evidence of the Fund explaining the legal consequences that would follow depending on what option a contributor takes
when ceasing from his or her employment and that being brought to the notice and understanding of the contributor in this case. It
is trite law that, a person who does not have the benefit of proper legal services as the contributor in the present case could not
be said to have fully understood and accepted the possible legal consequences when entering into a transaction with a corporation
such as the Fund. Consequently, any transaction entered into in such a setting can not bind the disadvantaged party. This is so because
of lack of understanding and the inequality in the bargaining power: see Kora Gene v. Motor Vehicles Insurance (PNG) Trust [1995] PNGLR 344 at page 348 (in the context of a deed of release which was held not binding on the plaintiff). In line with that principle, we find
that the Fund was not entitled to insist upon the contributor resigning and insist upon its calculations as to how much the contributor
was entitled to receive from the Fund. In other words, the use of the term "resign", "resignation", or "resigned" in the documents
accompanying her claim did not legally and in equity, prevented her from being paid on the basis that she effectively retired from
her employment because of her medical condition and therefore an "invalid pensioner".
Indeed, the Fund chose to deny by its conduct and by expression in its defence, the existence after having published its 1994 publication.
That publication informed all contributors amongst others, under the heading "Invalidity Pensions" that, contributors who ceased
employment due to medically supported inability are entitled to be treated in much the same way as those who retire in the normal
way. That publication then provided the following formula to calculate the appropriate pay out figures:
(a) amounting standing to the member (contributors) account x 2.4 (the State’s contribution); plus
(b) annual salary x 3; plus
(c) 10% of salary for each completed year
In the circumstances, we find that the learned trial judge did not err in ordering judgement against the Fund.
Further, we note that the Respondent could have applied for judgement under O. 12 r. 38 of the NCR. That rule provides for summary
judgment to be entered against a defendant if a plaintiff is able to meet two requirements. Firstly, show by affidavit evidence that
the defendant's defence can not be sustained. Then secondly, the plaintiff or a responsible person depose to in an affidavit that,
in his believe, the defendant does not have a defence on the merits: see Bruce Tsang –v- Credit Corporation (PNG) Ltd [1993] PNGLR 122 at page 117. Although the application was not strictly speaking pursuant to the provisions in question, the effects of what transpired
in the Court below did demonstrate a case of the Fund not having a defence on the merits especially on the liability issue.
The appellant in its written submissions at page 10 acknowledges that position in these terms (the obvious spelling and grammatical errors not ours): -
"I submit a determination on the above issue is important because upon Your Honours finding and favour of this submission. Namely, Mrs. Imanakuan resigned and did not retire for her health. I submit then that is effectively the end of the claim. The quantum of the plaintiff’s claim is based upon entitlements arising from retirement for her health and not of her resignation. And they do not appear to dispute the amount paid upon her resignation there’s nothing to argue over. As it is found, it did resign and there is no purpose in them pursuing their claim. In factual terms she has been paid the POSF portion upon resignation and they are still waiting for State portion upon completion of this litigation.
Thus, and the court is asked to make a finding and declaration that Mrs. Imanakuan resigned and is entitled to those benefits granted to a person upon termination of employment by resignation. By way of final submissions, the appellant submits and that if not withstanding its earlier submissions, the court finds that the contributor did not resigned but resigned as an invalid and was entitled to a invalid pension (by way of a lump sum under POSF Act s.44 (4), there remains a clear error in simply granting the amount claimed without setting the matter down for assessment of damages. The appellant submits this is so because the period for which the plaintiff paid contributions, which sets out the payout figure and to the plaintiff’s pleaded method or formula of calculation of entitlements is defective and there’s no legal basis."
The Fund then points out to the statement of claim and the defence and argues that, there is a serious dispute that needs to be tried. Reference is then made to ss. 37, 38, 41, and 44 of the POSF Act. On the facts and relevant case law, we have already found that the contributor retired on medical grounds or as an invalid pensioner. We agree with the submission that the formula prescribed by the relevant provisions of the POSF Act provisions is somewhat complicated and there has to be some agreement on the correct formula to use before there could be a judgment, which finally determines the matter. Nevertheless, the Funds own publication in 1994 specified the formula to be applied, which we have set out above and have been pleaded in Plaintiff’s statement of claim endorsed to the writ of summons. We also find that the calculation of the benefits due to the Respondent is dependent on an ascertainment of how much the contributor contributed to the Fund. The Plaintiff pleads at paragraph 7 (a) of the statement of claim that the contributions stood at K3, 230.63. The Fund per its defence and the affidavits of Mr. Tormer and Mr. Ban claim that the contributor was entitle to receive from the Fund a sum of K3, 126.39 (excluding the State’s contribution of K2, 173.42), based on a contribution of K2, 594.88. Clearly there is a dispute as to how much did the contributor contribute to the fund at the time of her retirement as an invalid. This requires the calling of relevant evidence and assessing them. Once that is ascertained the amount due and owing to the contributor can easily be calculated using the formula published by the Fund in 1994.
The principles of law are very clear as to the circumstances in which summary judgements can be entered. There must be clear affidavit evidence showing that the defence pleaded cannot be sustained and the plaintiff or a responsible person believes the defendant does not have any defence. Only when this is done, can there be summary judgement signed against a defendant: see Bruce Tsang –v- Credit Corporation (PNG) Ltd (supra). In this case, we find that there was a dispute as to the exact amount to be paid to the Respondent, which depended upon an ascertainment of the amount the contributor had contributed to the Fund up to the date of her retirement as an invalid. Once that was done, it would then have been easy to work out and arrive at the pay out figure. We would therefore, uphold the appeal only in so far has it concerns the actual amount due and payable to the Respondent less any payments already made. That amount has to be arrived at, using the formula published in the Fund’s 1994 publication and pleaded in the statement of claim.
In the view of our above finding, we would uphold the appeal in part and order that the issue of damages be assessed only as a last resort, if parties are not able to reach an agreement. We would thus direct and order that the Fund sincerely and seriously take the appropriate steps to facilitate an out of court settlement. If no such agreement is reached within twenty-one (21) days from today, the matter should then return to the National Court for an ascertainment of the contributors contribution as at the time of her retirement and determine what is due and owing to her now, using the formula pleaded in the statement of claim based on the Fund’s 1994 publication as noted above.
Finally, may we venture to say that, the Courts are there only to help resolve or determine disputes that can not be resolved by the parties themselves despite their best endeavors to do so. All human conflicts and disputes are capable of settlement without the need for court action. That is possible only if the parties are prepared to allow for a compromise of their respective positions. People in other jurisdictions are already recognising the benefits of settling out of court as it brings huge savings to the parties in terms of costs and delay and help maintain good relations between the parties. This is why in other jurisdictions, out of court settlements are actively being pursued through what has become known as Alternative Dispute Resolutions or ADRs. We in Papua New Guinea have briefly talked about it in workshops and seminars but have not formerly embraced that into our court process and procedures. Work is now being undertaken to do that.
We are of the view that, this case could have settled out of Court had it not been for the Fund’s conduct resulting in lengthy delays. The delay denied the contributor her right to a full enjoyment of the benefits due to her under the POSF Act. This was injustice to the contributor who has since died and is now replaced by her husband and other surviving dependents. This as earlier noted, was contrary to the real intend of the POSF Act to help contributors to retire well by getting to their savings and entitlements speedily. The injustice that has been caused against the contributor should not be allowed to continue now as against the contributor’s dependents. The Fund should therefore, take all the steps necessary to facilitate an out of court settlement without the need for further unnecessary court appearances, costs and delay. It should be guided by our above comments and findings.
The Fund's conduct has in our view, forced the Respondent to incur costs up to this time. It is therefore only fair, reasonable and appropriate that the Fund should be and we so order that the Fund pay all of the Respondent’s costs both before the National Court and this Court on a solicitor-client basis.
In summary, we find as follows: -
Following on from the above findings, we make the following orders:
_______________________________________________
Lawyers for the Appellant: Fiocco Posman Kua Lawyers
Lawyers for the Respondent: Sialis Tedor & Associates Lawyers
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