Daniel v Pak Domoi Ltd [2004] PGSC 39; SC736 (2 April 2004)

SC736

PAPUA NEW GUINEA

[IN THE SUPREME COURT OF JUSTICE AT WAIGANI]

SCA NO. 33 OF 1997

BETWEEN:

ALFRED ALAN DANIEL
First Appellant

AND:

SIGFRID DANIEL
Second Appellant

AND:

PAK DOMOI LIMITED
Respondent

WAIGANI: Kapi CJ, Injia Dep. CJ & Jalina, J.
2003 : September 29
2004 : April 2

SUPREME COURT APPEAL – Summary judgment – Declaratory orders and for damages to be assessed in the same summary judgment – Whether part of the summary judgment is final and part interlocutory – Whether leave required – Supreme Court Act, s.14(3)(b), National Court Rules, O12r38.

Cases cited in the judgment:
Curtain Brothers (Queensland) Pty Ltd & Another v The State [1993] PNGLR 284
Joseph Davis v David Tasion SC364 (1998)
Electricity Commission of NSW v Lapthorne [1971] CLR 177
Geyamsoling & Anor v Kadir Contractors Ltd SC599
NCDC v Namo Trading Ltd SC663 (2001)
NCDC Water& Sewerage Ltd v Sam Tasion SC696 (2002)
Prosec Security & 2 Ors v Amalgamated General Workers Union of PNG SC714
Provincial Government of North Solomons v Pacific Architecture [1992] PNGLR 145
Rimbik Pato v Sir Julius Chan SC527 (1997)
Ruma Construction Pty Ltd v William Smith SC600 (1999)
Shelly v PNG Aviation Services [1979] PNGLR 119
The State v Hensi Engineering Pty Ltd SC594 (1998)

Counsel:
R. Bradshaw for the Appellants
M. Titus for the respondent

2 April 2004

BY THE COURT: The respondent objects to the competency of the Notice of Appeal filed on 6 June 1997 against the "summary judgment" given by Salika J on 29 May 1997 in proceedings WS No. 690/94, on the ground that leave to appeal was not obtained to appeal against the "summary judgment" which they say was an "interlocutory judgment". The appellants contest the objection. The issue before us is whether the "summary judgment" in this matter is "an interlocutory judgment", for which leave to appeal is required under s.14(3)(b) of the Supreme Court Act.

The proceedings before the National Court in brief are that on 31 August 1994, the respondent (plaintiff) filed a Writ of Summons seeking certain declaratory orders as to ownership of the registered freehold land known as Pak and Viwlau Islands situated in the Manus Province. The respondent also claimed damages for destruction and loss of property situated on the land. In the Statement of Claim, the respondents alleged lack of authority of one Kaukam Popei and John Walker Habuka to execute a mortgage over the property on behalf of the respondent company in favour of the first appellant. They also disputed the subsequent purported mortgage sale by tender of the property by the First Appellant to the second appellant. On 18 October 1993, the respondent obtained a National Court order restraining the First Appellant from proceeding with the sale. On 21 December 1993, this order was dissolved upon application of the first appellant, thus paving the way for the sale to proceed. As a result the respondent commenced proceedings in the National Court claiming declaratory orders invalidating the purported mortgage sale and declaring itself the registered proprietor of the land. It also claimed damages against the First Appellant for trespass and damage to a house situated on the property and removing properties.

On 13 December 1996, by Notice of Motion, the respondents sought the same declaratory orders sought in the Writ of Summons and a further order that damages be assessed. The Principal basis was that the defendant had failed to file and serve a defence after filing Notice of Intention to Defend. The Motion was dealt with inter partes. Although there is no reference in the Notice of Motion to "summary judgment", the trial judge treated the application as a "Motion seeking declaratory orders by way of summary judgment". It appears the motion was really an application for default judgment but the motion also made no reference to "default judgment". There is some confusion as to whether the application before the Court was for summary judgment or default judgment. Both parties in this appeal do not take issue with His Honour’s approach that this was an application for summary judgment and His Honour granted summary judgment. We accept their position.

The test to be applied when determining whether a judgment is "interlocutory" or "final" is settled. The Court must first look at the nature of the application and not the order eventually made; and second, the Court must look at whether the judgment finally disposes of the substantive rights of the disputing parties: Rimbik Pato v Sir Julius Chan Unpublished Supreme Court Judgment SC527 dated 16 July 1997; Provincial Government of North Solomons v Pacific Architecture [1992] PNGLR 145; Shelly v PNG Aviation Services [1979] PNGLR 119.

The test to be applied in determining whether a summary judgment is final or interlocutory has been developed by the Supreme Court in relatively recent times, on a case-by-case basis commencing with Ruma Constructions Pty Ltd v Christopher Smith, Unreported Supreme Court Judgment SC600 dated 25 March 1999 ("Ruma") followed by National Capital District Commission & Another v. Namo Trading Ltd, Unreported Supreme Court Judgment No. SC663 dated 23 February 2001 ("Namo") and National Capital District Commission Water & Sewerage Ltd trading as Eda Ranu v Sam Maskuman Tasion Unreported Supreme Court Judgment No. SC696 dated 4 October 2002 ("Eda Ranu") Apparently, there seems to be confusion among practitioners as to the consistency in the development of the tests in some of these cases. The appellant in the present case initially appear to have been under the impression that there was a conflict in the tests laid down in Ruma and Namo but the argument was not pursued before us. The respondent maintained that Ruma was wrongly decided. It is for this reason that we wish to re-visit some of the previous decisions and to clarify the principles.

It was first observed by Los J in Joseph Davis & Another v David Tasion & Others, Unreported Supreme Court Judgment No. SC364 dated 27 April 1988 ("Davis"), that default judgment in an unliquidated claim under O12 r28 can only be entered for damages to be assessed and that the judgment is interlocutory. His Honour adopted the following passage from Odgers "Principles of Pleading and Practice", 21st edition at p.56.

"If, however, the plaintiff’s claim is for unliquidated damages, they cannot immediately obtain final judgment since damages have to be assessed. He gets instead what is called an interlocutory judgment which he can afterwards convert to a final judgment."

In Ruma, the summary judgment was a "judgment for plaintiff on liability, the damages to be assessed". The plaintiff’s action was for specific performance of a contract of sale of land and/or damages for breach of contract. The judgment was an ex parte judgment. The issue argued before the Supreme Court was whether the judgment was interlocutory or final, for the only reason that there were avenues open to the appellant under the National Court Rules, for an aggrieved party to apply before the same Court to set aside, or vary the order. The Supreme Court held that the judgment was final. The Court said: "whether or not the law make provision for reviewing that decision and whether or not that decision may be discharged or varied does not change the nature of the order that they are final." The Court was neither invited by the parties nor of itself examine the judgments’ interlocutory or final status to decide the issue, but rather to the "ex parte" status of the judgment.

We have examined the Supreme Court file and ascertained that the plaintiff in that case claimed two relief in the Writ of Summons. The principal relief claimed was specific performance of a contract of sale of land and/or alternatively, damages for breach of contract. The plaintiff obtained an order for specific performance but that was subsequently set aside upon application by the plaintiff because the land had already been sold to a third party. Instead the plaintiff obtained summary judgment on liability for breach of contract and for damages to be assessed. In our view this summary judgment was an interlocutory judgment because it had to return to the Court for assessment of damages. The Supreme Court no doubt would have reached the same conclusion if the point was fully argued before it.

Indeed subsequent Supreme Court decisions on appeals on summary judgments are consistent with this principle. For instance, in Namo, the plaintiff’s principal claim was for damages in tort for destruction of personal property. The National Court granted "summary judgment for damage to be assessed." That claim being an unliquidated claim, the gist of the action being one for damages. Therefore, summary judgment on liability remained an interlocutory judgment until the question of damages was determined. The Supreme Court adopted the principles stated by Barwick CJ in the Australian High Court decision in Electricity Commission of NSW v Lapthorne [1971] CLR 177 at 184 – 185 Barwick CJ said:-

"But the question remains whether so regarding the order of the Court of Appeal as a judgment (entered for the Plaintiff with damages to be assessed) of the Supreme Court, it was a final judgment of that Court. In my opinion, so regarded, it was relevantly to be described as an interlocutory judgment, an appeal from it being competent only by leave of this Court. It did not dispose of the action nor of any part of it. Where damages are of the gist, liability cannot relevantly be divorced from the damages as a separate and independent matter.

Finally, it seems to me that in a common law system such as prevailed at the relevant time in New South Wales, a judgment entered for the plaintiff in default of appearance or of defence in an action for unliquidated damages is the classical example of an interlocutory judgment. Only after assessment of damages could a final judgment, as upon verdict, be entered. I am unable to accept the conclusion, if applied to such a situation, that because an order for the assessment of damages was intended to be a judgment for the plaintiff for damages to be assessed, the order was final order within the meaning of s.35 of the Judiciary Act."

The Supreme Court in Namo said earlier:

"The mere fact that a judgment is expressed to be summary is not conclusive of whether that judgment is final or interlocutory. Summary judgment is granted at two levels, summary judgment in respect of liability and damages. It is necessary to consider the nature and effect of the summary judgment in the light of the whole of the proceedings. In that regard it is also necessary to consider the nature of the Plaintiff’s claim(s) and the issue(s) before the Court.

If for instance, the gist of the Plaintiff’s action is one for damages in say tort or contract, the issues of liability and damages are almost invariably inseparable. In some cases, judgment on liability and quantum of damages may be determined in the same summary judgment, either by consent or in a separate determination funded on the pleadings or the evidence. Liquidated claims fall into this category of cases. There is no question of the finality of this type of summary judgment. In other cases, where for instance summary judgment is entered and it is one of summary judgment for damages to be assessed, then the summary judgment cannot be said to be final for the judgment is strictly one on liability only and damages is yet to be assessed, as a matter of course. Unliquidated claims fall into this category. The summary judgment in this type of case is interlocutory.

There is another practical way of looking at this. In the present case, the gist of the Plaintiff’s action was one for damages in tort. If the appeal were to be successful and the summary judgment were set aside, the claim would have to proceed before the National Court to be tried on both issue of liability and damages. If the appeal were to be unsuccessful then the matter will still have to go before the National Court to be tried on damages. The National Court would then make one final decision, once and for all. A party aggrieved by that one final decision will have a right of appeal. It is inappropriate to split up the summary judgment into one in respect of liability and another in respect of damages of course categorize them as either interlocutory or final, for appeal purposes. And so either way one looks at this summary judgment in this case, in the light of the whole case, it can be said that the summary judgment was not finally dispositive of the Plaintiff’s action."

Similarly, in Eda Ranu, the Supreme Court adopted the same passage in Davis, when deciding whether a summary judgment for damages to be assessed in an action for damages for breach of a Consultancy Agreement, was final or interlocutory. The Court said "it could not be said the judgment was interlocutory because the judgment finally disposed of the matter but it must and will return for assessment of damages."

The apparent confusion amongst practitioners, and understandably so, which was first apparent in Tasion and also before us stems from Ruma. In Ruma, the issues were not fully argued and the Court was simply responding to the only basis on which the objection to competency was taken. As Mr. Bradshaw’s submission that the principles in Ruma must be confined to its own facts. The basic principle enunciated in that case however, which is applicable to ex parte summary judgments, is still good law.

Mr. Bradshaw submits that if Ruma were to be strictly followed, then the whole summary judgment in the present matter is final because it finally disposed of the plaintiff’s action, the gist of the plaintiff’s action being issue of ownership of land. He submits notwithstanding damages is yet to be assessed, the appellant’s liability to the respondent on this part of the claim was not in issue. In the alternative, Mr. Bradshaw submits, new law will have to be created to the effect that in cases of "mixed claims". Leave is not required for parts of judgment which is considered final and leave is required for parts of the judgment which is interlocutory.

Mr. Titus submits the nature of the application before the Court was for declaratory orders and damages, they were indivisible, and when one part of the claim was determined, the other "equally fundamental" part of the claim was not finally disposed of. Therefore, the whole judgment is interlocutory for which leave is required.

The factual situation in the present case is that the application by Notice of Motion was for substantive relief in the same terms as claimed in the Writ of Summons. The principal relief was for declaratory orders over title to land followed by an order for assessment of damages. These orders were granted by His Honour. In our view, on the face of the declaratory orders granted, they are final as they determined the issue of title to the land and disposed of the substantive rights of the parties as to ownership of the disputed land. Also, in our view, on the face of the order for damages, it was interlocutory because the question of damages was to return to the Court for assessment. Both orders however are contained in the same judgment. This is a unique situation quite different to the factual situations in previous cases on summary judgment referred to earlier.

We begin by looking at the nature of summary judgments with its attendant procedure. The procedure for summary judgments is provided by O12 r38. It states:

"Summary judgement. (13/2)

(1) Where, on application by the plaintiff in relation to any claim for relief or any part of any claim for relief of the plaintiff –

(a) there is evidence of the facts on which the claim or part is based; and

(b) there is evidence given by the plaintiff or by some responsible person that, in the belief of the person giving the evidence, the defendant has no defence to the claim or part, or no defence except as to the amount of any damages claim, the Court may, by order, direct the entry of such judgement for the plaintiff on that claim or part, as the nature of the case requires.

(2) Without limiting Sub-rule (1), the court may under that Sub-rule direct the entry of judgement for the plaintiff for damages to be assessed."

The law is settled on when a summary judgment may be entered. Summary judgment is entered in a clear case where there is no defence on the facts or the law: The State v Hensi Engineering Pty Ltd SC594 (1998); Geyamgoling & Anor v Kadir Contractors Ltd SC599 (1999); summary judgment should not be granted where there is serious conflict of fact and law to be determined. Prosec Security & 2 Ors v Amalgamated General Workers Union of PNG SC714 (2003); Curtain Brothers (Queensland) Pty Ltd & Another v The State [1993] PNGLR 284.

Could it be said that the summary judgment could be divisible into parts which are final and interlocutory? The answer is found in the latter part of sub-rule 1 which says, judgment may be entered for "that claim" ("the whole claim) or part" of the claim, as the nature of the claim requires. The plain meaning of this rule is that, it is possible that one part of the summary judgment may be final and the other part interlocutory. One part of the summary judgment may finally disposes of all or some of the issues and rights of the disputing parties in the case. The same summary judgment however, may determine some issues and leave other related issues to be tried. Such is a judgment on liability in favour of the plaintiff for damages to be assessed under subrule (2). In these cases, the whole judgment may be interlocutory, in that a final determination of the whole action is not made until all the outstanding issues are determined.

In the present case, we are of the view that the declaratory orders given by Salika J. were final. They finally disposed of the ownership rights of the parties over the disputed land. The order took immediate effect; it was not dependent on the assessment of damages. No leave to appeal is required for that part of the summary judgment. In relation to the order for damages, this part of the claim was yet to be litigated and determined independently of the declaratory orders. That part of the summary judgment was interlocutory, for which leave to appeal is required.

The Notice of Appeal was filed as of right. The grounds of appeal challenge the procedure adopted by the applicant in applying for and the practice adopted by the trial judge in entering summary judgment. The grounds make no distinction between appeal against declaratory orders and the order on damages. It is difficult for us to isolate those grounds which relate to the declaratory orders and those which relate to damages. We conclude that the appeal must be confined to the declaratory orders. The finding on liability as to destruction and theft of property and question of assessment of damages is an interlocutory order which requires leave to appeal. As no leave to appeal that part of the judgment was obtained, it is not open for the appellant to challenge that part of the judgment on appeal. For these reasons, we dismiss this ground of objection in part.

There is also another objection to competency of grounds (c) - (j) that they raise questions of fact alone for which they require leave. We are of the view that they raise issues of procedural law for which no leave is required. We dismiss this ground of objection.

For these reasons, we dismiss the objection to competency in part, but subject to the proviso that all the grounds of appeal relate only to the three (3) declaratory orders made. The appellant shall have costs of the application.
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Lawyer for the Appellant/Respondent : Blake, Dawson, Waldron
Lawyer for the Respondent/Appellant : Mirupasi Lawyers