State v Josiah [2005] PGSC 18; SC792 (1 March 2005)

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PRACTICE AND PROCEDURE – Judgment by default – Amount specified in Statement of Claim but amount to be awarded requiring assessment – whether claim is a liquidated claim.
Practice and Procedure – Judgment by default – Claim against the State - Amount specified in Statement of Claim but amount to be awarded requiring assessment – whether order for specified sum can be made against the State – Claims by and Against the State Act, s. 12 (3).

National Capital District Commission v Yama Security Services Pty Limited (SCA 24 of 2004)
Karl Paul v Awai Kispe (2001) N2085
Kante Miringa v The State & Ors (1996) N1458
Ludger Mond v Kerenga Ben Okoro & Ors [1992] PNGLR 501.
Dempsey –v- Project Pacific Pty. Ltd [1985] PNGLR 93

BY THE COURT: This is an appeal against an order of the National Court dated 17th October 2003 whereby default judgment was entered against the Appellants for K4,673,420.73 amongst other orders.

The Plaintiff and 81 others are serving members of the Papua New Guinea Defence Force (PNGDF) who are employed at the Air Transport in various capacities.

For reasons that will become clearer later in this judgment, we reproduce the particulars of each Plaintiff and his claim as set out from pages 13 and 14 of the Appeal Book:

LSN	SERVICE NO	RANK	NAME	TYPE OF COURSE	YEAR	YEAR	AMOUNT
				ATTENDED	ATTND	COMPLTD	CLAIMING
1	810181	L/CPL	BRIAN JOSIAH	AIRCRAFT TECH	1992	1994	K73, 697.00
2	89392	LT	LINUS KREWANTY	INST FITT	1987	2000	K133,527.00
3	87595	WO	VAGUIA NAO	INST FITT	1983	1985	K68, 046.69
				HELI/TER CON	1991	1991	K2, 510.46
4	86831	WO2	GAIAM MAGUN	ENG FITER	1977	1977	K18, 241.04
5	86277	WO	PERRY MUNDI	ENGINE FITT	1974	1974	K51, 093.53
6	86320	WO	BEN MANOI	ELECT FITT	1974	1976	K78, 542.51
7	86472	WO	GODFERY KUMBULI	AIRFRAME FITT	1984	1984	K63, 471.37
8	86528	WO	LEO MARIKIA	AIRFRAME	1977	1979	K69, 924.46
9	870510	WO	KAMA R DAWA	ENGINE FITT	1977	1981	K69, 520.70
10	86408	WO	RAVERU JULLIAN	AIRFRAME FITTER	1978	1979	K60, 945.54
11	88501	WO	KOMBE PETER	ENGINE FITT	1982	1983	K62, 001.20
12	87176	WO	AKUILA TATI	ELECT FITT	1980	1982	K71, 291.62
13	87554	WO	SERI PETER	LOAD/MASTER	1992	1992	K29, 301.07
14	87105	WO	AGUADI CONRAD	RADIO TECH	1984	1986	K105,398.11
15	89722	WO	PEA FELIX MALAGAU	ENGINE FITT	1979	1979	K95,382.00
16	87981	SGT	ALBERT DOPETA	SUPPLY	1992	1992	K10,236.73
17	88769	SGT	JOHN ILAILO	SUPPLY	1991	1991	K21,650.26
18	86660	SGT	MATHEW GIOWEN	AIRFRAME FITTER	1982	1983	K38,053.54
19	86816	SGT	ISMAEL KOPOE	AIRFRAME FITTER	1979	1979	K80,247.19
20	88221	SGT	HIBUYA JOHN	AIRFRAME FITT	1983	1984	K43,369.00
21	87002	SGT	MUNDI HENRY	AIRCRAFT ENG	1981	1982	K62,726.85
22	87057	SGT	MOALEY RODNEY	AIRCRAFT ELECT	1982	1984	K56,673.54
23	88497	SGT	TOMANA JAMES	AIRFRAME FITT			K68,619.07
24	88500	SGT		AIRFRAME FITT
25	88350	SGT	YASING FRANK	ENGINE FITT	1985	1985	K57,274.31
26	89150	SGT	SOWI CAMILUS	AIRCRAFT INST	1986	1987	K57,350.99
27	86990	SGT	YAKUMA JOHN	AIRCRAFT ELECT	1980	1984	K118,587.89
28	88745	SGT	UTAH FRANCIS	ENGINE FITT	1985	1985	K56,266.54
29	87340	SGT	REUBEN POSMAI	AIRFRAME FITTER	1981	1982	K67,687.45
30	89424	CPL	TAGAGAU BALAGUAN	AIRFRAME FITTER	1987	1988	K47,404.00
31	89671	CPL	RONNY MIRO	AIRFRAME FITTER	1993	1993	K62,974.97
32	89691	CPL	TONY KIMBULE	ELECT FITT	1988	1989	K66,891.89
33	89513	CPL	AMOS DAVID	RADIO TECH	1987	1988	K52,888.79
34	89432	CPL	SITION LAPAMBANGS	SURFACE FINISHER	1994	1994	K21,890.98
				AIRFRAME FITTER	1987	1988	K45,807.90
35	88091	CPL	KAWIA MIKE	AIRCRAFT ENG	1985	1985	K43,689.32
				CASA CONVERT	1991	1991	K8,786.61
36	89141	CPL	TITUS YAGUR	AIRCRAFT INST	1986	1987	K40,297.81
				HELI/TER ELECT	1991	1991
				HELI/TER CON	1998	1998	K2,791.99
37	89154	CPL	TASMAN DOTAONA	AIRCRAFT ENG	1986	1986	K42,942.08
38	89155	CPL	AO JOHN	AIRCRAFT ENG	1986	1986	K42,942.08
39	89165	CPL	AMETA VANO	INST FITT	1986	1987	K57,350.99
40	89632	CPL	ANUMA JOHN	A/CRAFT ENG	1989	1990	K45,716.80
41	89462	L/CPL	MOASING HERTZY	RADIO TECH	1987	1988	K51,792.65
				HELI/TER ELECT	1991	1991	K4,521.58
				HELI/TER CON	1998	1998	K4,521.58
42	87073	CPL	JOSEPH KAHU	LOADMASTER	1983	1983	K5,770.13
43	89686	CPL	MORRIS YAUBIHI	AIRFRAME FITTER	1988	1989	K50,728.86
44	89653	CPL	STEWARD KANDAWE	AIRFRAME FITTER	1988	1989	K48,353.99
45	88538	L/CPL	JOHN NERE	AIRFRAME FITTER	1983	1984	K58,638.51
46	88666	L/CPL	JOE VATATA	AIRFRAME FITTER	1987	1987	K80,314.96
47	89508	L/CPL	MARAI FRED	RADIO TECH	1987	1988	K49,955.95
48	89027	L/CPL	ARUGANI JEFFREY	AIRFRAME FITT	1989	1990	K80,803.76
49	89077	L/CPL	RAPHAEL WAKIAWA	ELECT FITT	1988	1989	K62,682.54
50	89279	L/CPL	SINGAS JOHN	ENGINE FITT	1989	1990	K75,710.20
51	89361	L/CPL	ELLION BILL	A/ELECT	1989	1990	K53,199.10
52	89822	L/CPL	JOE KORU	ENGINE FITT	1989	1990	K45,576.29
53	89873	L/CPL	MARK FRED	AIRFRAME FITT	1989	1990	K53,116.00
54	89886	L/CPL	BINA BINATO	INST FITT	1989	1990	K56,616.49
55	89229	L/CPL	NAIME ROBERT	AIRFRAME FITT	1987	1987
				STRUCTURAL FITT	1994	1994	K57,794.32
56	89992	L/CPL	LEO AKA	AIRFRAME FITT	1990	1991	K55,240.98
57	810171	L/CPL	KILA VAINA	AIRCRAFT TECH	1992	1992	K73,697.00
58	810107	L/CPL	ORIM SAMUEL	AVIONICS TECH	1992	1994	K62,502.76
59	89512	L/CPL	REX KAKOLO	ENGINE FITT	1988	1989	K60,489.25
60	811592	L/CPL	ELIZAH SELAN	HELICOPTER L/M	1993	1993	K25,088.00
61	810006	L/CPL	KAPORE LUCAS	AIRFRME FITT	1990	1991	K55,240.98
62	810032	L/CPL	TURIKANA RAYMON	A/CRAFT ELECT	1990	1991	K40,297.81
63	810176	L/CPL	TOWE DAVID	AIRCRAFTTECH	1992	1994	K73,697.00
64	810122	L/CPL	KANAU WILLIE	AVIONIC TECH	1992	1994	K43,834.34
65		L/CPL	PAWE ANDREW	AVIONIC TECH	1992		K62,365.12
66	89288	L/CPL		AVIONIC TECH	1992		K25,088.00
67	811185	L/CPL	RIMA ANDREW	HELI L/M	1993	1993	K25,088.00
68	89875	L/CPL	KUNAT GAI	HELI L/M	1993	1993	K25,088.00
69	811591	L/CPL	LINUS RAYMOND	HELI L/M	1993	1993	K25,088.00
70	89865	L/CPL	PATRICK ALEX	AVIONIC TECH	1993	1994	K63,126.98
71	810170	L/CPL	SCHIWY SCHADRICK	AVIONIC TECH	1993	1994	K63,126.98
72	810027	L/CPL	NASO MATHIAS	AVIONIC TECH	1993	1994	K63,126.98
73	810140	L/CPL	ILU ROBERT	AIRCRAFT TECH	1994	1996	K82,316.67
74	810173	L/CPL	GEORGE LECKSON	AVIONICS	1992	1994	K63,021.40
75	89562	L/CPL	VANINARA PADIK	HELI L/M	1996	1996	K22,579.22
76	89958	L/CPL	KUMBU JOHN	AIR FRAME	1990	1991	K57,717.66
77	89949	L/CPL	TUVUI DOUGLAS	A/CRAFT ELECT	1990	1991	K40,297.81
78	811469	L/CPL	ROGER ILALAK	AVIONIC TECH	1993	1994	K63,126.98
79	89698	L/CPL	ABUN TAGI	RADIO TECH	1990	1990	K77,129.02
80	810022	L/CPL	GRAI ALOIS	AIRFRAME FITT	1990	1991	K54,638.73
81	810032	PTE	ESPIE EIGEN	AIRFRAME FITTER	1990	1991	K55,240.98

As stated in paragraphs 17 – 22 of the Statement of Claim, the Respondents instituted the proceedings in the National Court following the continued refusal or lack of response from the Appellants. In paragraph 21 in particular, the Respondents allege that on 30th April 2003 they gave notice to the Solicitor General of their intention to make a claim as required by the Claims By and Against the State Act 1996.

Following service of the Writ upon the Appellants, they failed to file both the Notice of Intention to Defend as well as the Defence within the time prescribed by the National Court Rules. So the Respondents filed a motion on 17th July 2003 seeking summary judgment against the Appellants with damages to be assessed. The motion went before Kandakasi J on 26th September 2003. His Honour refused the Respondents’ application and granted the Appellants a further seven (7) days up to 3rd October 2003 to file their Defence.

The Appellants again failed to avail themselves of the second opportunity the National Court had accorded them to file their Defence so on 6th October 2003 the Respondents filed a motion seeking not summary judgment for damages to be assessed but default judgment for K4,673,420.73. That motion went before Sakora J on 17th October 2003. His Honour, after hearing Mr Dataona of Counsel for the Respondents and Mr Cherake who stood in for Mr Kumura of Counsel for the Appellants granted orders in terms of the Notice of Motion.

At the hearing before Sakora J, Mr Chrake who appeared for the Solicitor General on behalf of the Appellants conceded that Defence had not been filed within the extended time. No issue was raised as to either short service of the Order from Kandakasi J or the mandatory requirement for giving notice of claim to the Solicitor General.

The Appellants grounds of appeal are set out in paragraph 3, page 5 of the Appeal Book:

(1) The learned trial judge erred in law and erroneously exercised the Court’s discretion in assuming jurisdiction and dealing with the National Court proceedings WS No. 759 of 2003 when:

(a) the proceedings was commenced without giving any or any proper notice under Section 5 of the Claims Act,

(b) or alternatively, if such notice was given, no evidence of it was produced at the hearing of the application.

At the hearing, Mr Dataona withdrew the Respondents’ Objection to Competency so we proceeded with hearing of the appeal.

The submissions by Mr Walelia of Counsel for the Appellants evolved around the failure of the learned trial judge to properly consider the Statement of Claim and exercise his discretion pertaining to the application of s.5 of the Claims by and Against the State Act 1996 and s.16 of the Frauds and Limitations Act 1988. Section 5 of the Claims By and Against the State Act provides:

(1) No action to enforce any claim against the State lies against the State unless notice in writing of intention to make a claim is given in accordance with this section by the claimant to -

(a) the Departmental Head of the Department responsible for justice matters; or

From s.16 of the Frauds and Limitations Act 1988 which we referred to above, only subsection (1) is relevant for present purposes. It provides:

shall not be brought after the expiration of six years commencing on the date on which the cause of action accrued".

Section 17 and 18 deal with actions within the admiralty jurisdiction and claims for specific performance respectively which have no relevance to the issues before us.

Counsel for both parties did not address each ground of appeal in their respective submissions but dealt with all the grounds in a general way. Counsel for the Appellants has submitted that in an application for default judgment against the State, the Court has a duty to facilitate a proper hearing of the substantive matters raised by the pleadings. He relied on National Capital District Commission v Yama Security Services Pty Limited (SCA 24 of 2004) where the Supreme Court in a case involving the payment of public monies by a public body in the said judgment delivered on 6th June 2003 said at p 10:

"The higher the public office involved, the greater the amount of public money involved, the greater the public interest, and therefore the grater the onus on the courts to facilitate a full fair, and proper hearing and decision made on the merits. As part of the court’s constitutional duty and mandate as the guardian of the laws of the State, the court has a public duty to protect he public interest sought to be protected by relevant statutes; by ensuring that contracts entered into involving a public body complies with the relevant statutory requirements. It is not proper for the merits of a disputed "public contract" to be summarily and prematurely determined, based purely on the untested affidavit evidence of witnesses and submissions of counsel".

He also referred us to Karl Paul v Awai Kispe (2001) N2085, a National Court judgment of Injia J (as he then was) dated 17 April 2001 where the learned trial judge said at pages 7 and 8:

"there is a wide discretion vested in the Court by the NCR to screen and weed out claims which do not disclose a reasonable cause of action, are frivolous and vexatious or an abuse of process of the Court, (O12 r40) or the documents filed in Court is scandalous, irrelevant or otherwise oppressive (O2r29), or on the ground of irregularity. That discretion is normally exercised upon application by an interested party. Nevertheless, it goes without saying that the Court may exercise that discretion on its own initiative. It is open to the Court to raise and determine questions covering the regularity (O1 r1-9) or competency of proceedings at any stage of the proceedings with or without application by an interested party.

The above passage was applied by Davani J in Paul and Mary Bal v Kenney Taiya (2003) N2481 at pages 10 and 11 when considering the mandatory requirements for notice of claim to be given under s.5 of the Claims By and Against the State Act 1996 within 6 months from the time the cause of action arose. Hence it was submitted that the Court should have on its own initiative raised and determined issues concerning the regularity or competency of the proceedings with or without the application by an interested party. The Court has a wide discretion to refuse to grant a motion for default judgment even where there is proof of service and even where the defendant is guilty of default (see Kante Miringa v The State & Ors (1996) N1458 dated 24th May 1996 by Injia J (as he then was). He submitted that in the present case most of the claims specified in paragraph 13 of the Statement of Claim were statute barred under s.16 of the Frauds and Limitations Act 1988 or were incompetent and were not sustainable at law for failure to give notice under s.5 of the Claims By and Against the State Act 1996.

It has been submitted by Mr Dataona for the Respondents that the learned trial judge correctly entered default judgment against the Appellants. They were well and truly in default not only after the writ was served on them but even after an extension of time for them to file their Defence was granted by Kandakasi J on 26th September 2003. At the hearing of the motion before the learned trial judge, they were represented by a lawyer but he raised no objections to the claim by reference to the provisions of the Frauds and Limitations Act 1988 and/or the provisions of s.5 of the Claims By and Against the State Act 1996. As they were statutory defences, O 8 r 14 of the National Court Rules required the Appellants to specifically plead them in their Defence. It would have enabled both parties to determine the scope of their dispute with some precision which is the purpose of pleadings (see Ludger Mond v Kerenga Ben Okoro & Ors [1992] PNGLR 501.

In the course of argument, we raised with both counsel the issue of whether or not the Respondents claims were liquidated claims or unliquidated claims. Mr Walelia for the Appellants submitted that, because specific amounts were claimed they appeared to be liquidated claims. Mr Dataona on the other hand submitted that the amounts claimed were entitlements and were therefore liquidated claims. Neither Counsel referred us to any case authorities either from this jurisdiction or other common law jurisdictions relating to claims that can properly be categorized as "liquidated claims " and those that can properly be categorized as ‘’ unliquidated claims " From our research however we note that the distinction between the two types of claims were clearly set out by this Court in Dempsey –v- Project Pacific Pty. Ltd [1985] PNGLR 93. In that case a claim for k169, 625, being the amount alleged to be owing as a result of the defendant, a director of the plaintiff company, being involved in dealings in shares in property owned by the plaintiff company in breach of his fiduciary duty was made in the National Court. Judgment in default of pleadings was entered for the amount claimed. Following refusal of an application by the defendant to set aside the default judgment, the appellant appealed to the Supreme Court. In allowing the appeal on the basis that it was difficult for their honours to see the claim in terms of a simple money count or of one which would involve a mere arithmetical calculation with only superficial investigation, the court held inter alia, that:

"(1) For purpose of signing judgment by default, a claim is liquidated when it is ascertained or is capable of being ascertained by a simple calculation, as when there is no element of assessment on judgment.

"(2) A claim for a specified sum of money alleged to be owing as a result of the defendant, a director of the plaintiff company, being involved is dealings, in breach of fiduciary duty in shares in property owned by the plaintiff company, was not a claim for liquidated damages."

With respect to the issue of whether or not the claims were statute barred under s.16 of the Frauds and Limitations Act 1988, Mr Dataona submitted that the claims were mixed claims and as such they were not statue barred.

We have considered the grounds of appeal as well as the Statement of Claim in the light of the submissions by both parties, and note that much emphasis has been placed by Mr. Walelia on the alleged error by the trial judge to properly consider and exercise his discretion on the failure by the Respondents to give notice of claim pursuant to s.5 of The Claims by and against the State Act. He referred us to a number of cases in this jurisdiction relating to the discretionary power of the Court.

Whilst we accept the requirement to give notice of intention to make a claim against the State to be mandatory, we do not consider that the learned trial judge made any error in that regard for the simple reason that it was for the appellant to have raised the issue through the pleadings. The Appellant failed to do so even though it had had more than ample opportunity to have done so. The first opportunity was during the ordinary course of pleadings after the writ was served on it through the office of the Solicitor General and secondly, after an extension of time of 7 days was granted to it by Kandakasi J. It cannot now complain that the learned trial judge failed to properly consider the provisions of that Act.

Notwithstanding what we have just said above regarding s. 5 of the Claims by and Against The State Act, we are of the opinion that the learned trial judge, with respect, made some fundamental errors when exercising his discretion whether or not to grant the application by the Respondent for default judgment. His Honour’s mind appears to have been influenced by the continuous default of the Appellant to file its Defence even though it had had the benefit of an extra 7 days to file its Defence such that he just granted the orders sought by the Respondents without directing his mind to the writ and to the statement of claim to determine whether or not it was sustainable at law.

The first error relates to the claim itself. It would appear from the particulars of claim specified under paragraph 13, that a large number of claims dated back to the 1970’s and 1980’s which were more than 20 years ago. They clearly raise issues as to whether or not the court had jurisdiction at the outset to entertain the claims in view of s.16 of the Frauds and Limitations Act. We therefore cannot accept Mr. Dataona’s submissions that it is a statutory defence which should have been raised in the pleadings. If a claim is not sustainable at law which most of the claims herein appear to be, what difference would pleading of statute of frauds and limitations make? Can failure to plead cure a clear defect in law? Certainly not. We find, with respect, that the Respondents lawyer had not directed his mind to the possibility that most of the Respondents claims may be statute barred before he instituted proceedings herein.

The second error relates to the issue of whether or not the claim was a "liquidated claim" as determined by this Court in Dempsey –v- Project Pacific Pty Ltd (supra). The claim in our view was not a liquidated claim but an unliquidated one. This is evident from a number of pertinent aspects in this claim. For instance in paragraph 13 of the Statement of Claim which contains the list of claimants, that there are a number of claims where specific amounts of money are indicated without the name of the claimant. If those names are deleted it would create the need for assessment. This obviously affects the correctness if not the validity of the actual amount ordered by the learned trial judge.

Also in paragraphs 13 and 14 of the Statement of Claim, reference is made to a submission by the Office of the Defence Commander to the Defence Council to adopt and approve the Department of Personnel Management Circular Instruction No. 2 of 1992 dated 4th February 1992 relating to the daily rates of overseas allowance of short term missions for public service officers for inclusion in the PNGDF Manual of Personnel Administration. Then by a memorandum dated 13th February 1998 to the Chief of Personnel, Chief of Logistics and Chief of Operations copied to the Commander of PNGDF, the then Secretary for Defence, Isaac Lupari, directed that the relevant Public Service General Orders and the Department of Personnel Management Circular Instructions would apply to all travel in the country and overseas for both long and short missions and that from the date of that direction, all other rates were invalid. This obviously raises issues as to the validity of the rates prior to 13th February 1998 if not prior to 1992 when the Department of Personnel Management Circular Instruction was issued. Hence the need to prove the rates upon which the Respondents’ calculations were based bearing in mind that normally rates of allowances vary depending on the level of the position occupied.

We therefore cannot accept the submission by Mr. Dataona that the claims were mixed claims and as such were liquidated claims. From our perusal of the statement of claim there can be no doubt that the claim was not a mixed claim. This is because each claimant is separately named together with the period (years) for which he was claiming and the specific amount he alleged he was entitled to. A mixed claim to our mind would be one where different heads of damages are claimed through a single writ.

Although not referred to by counsel, particularly counsel for the Appellants, the third error relates to the amount of K4, 673,420.73 ordered by the learned trial judge against the Appellants in default of pleadings. As we have indicated earlier in our judgment, the claim was not for a liquidated demand. It was also not a claim for a debt only. Consequently, in granting an order for the amount claimed in default of pleadings, the learned trial judge acted contrary to the provisions of s. 12 (3) of the Claims by and Against the State Act. That section provides:

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

3. Leave is granted to the Appellants to file their defence within 7 working days.

4. The matter is remitted to the National Court for further conduct of the proceeding.

5. The Appellants cost of this appeal shall be paid by the Respondents to be taxed if not agreed.
___________________________________________________________________________
Lawyer for the Appellants: Posman Kua Aisi
Lawyer for the Respondents: Dataona Lawyers

Supreme Court of Papua New Guinea

State v Josiah [2005] PGSC 18; SC792 (1 March 2005)