Pena v J's Motors Ltd [2006] PGSC 35; SC961 (28 April 2006)

SC961

PAPUA NEW GUINEA
IN THE SUPREME COURT OF JUSTICE

SCA No. 4 of 2003

PETER PENA
Appellant

AND

J's MOTORS LTD.
First Respondent

AND

MASOKOMAI BOTTLE DEALERS LTD.
Second Respondent

KIRROWOM J., BATARI J., LAY J.

WAIGANI
2006: 24th and 28th April

SUPREME COURT- appeal- appeal from refusal to grant leave to file defence out of time- considerations- requirement to demonstrate a defence on the merits- delay of almost 2 years not adequately explained- employed lawyer's affidavit not sufficient.

Facts

The Appellant filed a Notice of Intention to Defend National Court proceedings. Almost 2 years 9 months later the Appellant applied for leave to file a defence out of time, and for an order that a motion for default judgment, heard and reserved, be struck out, which were both refused.

Held

1. An applicant to file a defence out of time should explain his delay and show an arguable defence on the merits;

2. The affidavits relied upon should be sworn by persons with knowledge of the facts. The affidavit of a lawyer acting for the applicant is generally inadequate;

3. There was no error shown in the approach taken by the trial judge.

Cases Cited:

Luke Tai v Australia & New Zealand Banking Group (PNG) Ltd. N1979;
Robin Kipane v Felix Anton N2429;
Wallingford v Directors of the Mutual Society (1880) 5 AC 685;
Green & Co Pty Limited (In Liquidation) v Green [1976] PNGLR 73;
The Government of Papua New Guinea & Davis v Barker [1977] PNGLR 386;
North Solomons Provincial Government v Pacific Architecture Ltd SC422 [1992] PNGLR 145;
Sharples v Northern Territory [1988] NTSC 20; (1988) 55 NTR 35.

Counsel:

D.Koeget for the Appellant
M.Muga for the Respondent

1. BY THE COURT: The Appellant appeals from a decision of Kandakasi J made 8th December 2003 refusing an application for leave to file a defence out of time.

2. The writ was served on the 4th of December 2000 and the Appellant filed a Notice of Intention to Defend on the 11th December 2000. On the 19th September 2003 the first respondent filed Notice of Motion to enter default judgment which was heard by Sakora J on 22nd October 2003 and a decision was reserved pending hearing of an application by the Appellant.

3. The Appellant filed a notice of motion for orders that he be granted leave to file defence out of time and that the First Respondent's motion for default judgment be dismissed. It is the decision refusing that application from which this appeal is brought.

4. There were four grounds of appeal, the first three challenged the trial judge's finding that service of the writ had been proven. As there was affidavit evidence before the trial judge of personal service of the writ on a person in the employee of the Appellant at the offices of the Appellant where he carried on practice as a lawyer, and as the Appellant had entered an appearance to the writ and Order 6 rule 2 (3) provides:

"Where a defendant to any originating process serves notice of intention to defend under Order 7, the originating process shall be taken to have been served on him personally on the date on which that notice is filed or on such earlier date as may be proven."

5. Counsel for the Appellant quite properly conceded he could not advance the grounds challenging service of the writ.

6. The other ground of appeal advanced was that "the learned trial judge erred in the exercise of his discretionary powers in failing to give due consideration and weight to the seriousness of merits of the defence in that:..."

7. The evidence before the trial judge of the merits of the defence was a draft defence, a photocopy of a cheque and the affidavit of an employee lawyer of the Appellant which deposed that:

"12. The cheque clearly belongs to PNG Bottle Industries Ltd., a different legal entity, and not the Plaintiff nor of the First Defendant.

13. The Second Defendant has no legal relationship with the plaintiff.

14. The Second Defendant has not received any monies from the Plaintiff.

15. The second defendant has endeavored to assist the Plaintiff and has asked for the Plaintiffs lawyers to obtain Trust Authorities from PNG Bottle Industries Ltd. and Mr. Michael Yai Pupu in accordance with the Lawyers Trust Account Rules."

8. In the court below the judge proceeded on the basis that the proper test for the exercise of his discretion pursuant to Order 1 rule 15 to extend the time for filing a defence, limited to 14 days by Order 8 rule 4 (b) (and see N1979 Luke Tai v Australia & New Zealand Banking Group (PNG) Ltd. (Kapi DCJ as he then was) and N2429 Robin Kipane v Felix Anton (Kirrowom J.)- leave must be obtained to extend the 14 days), was to consider whether the applicant had adequately explained his delay and secondly whether he had demonstrated that he had a defence on the merits. We agree with that approach. A litigant who is simply careless regarding the requirements of the Court Rules with respect to filing pleadings ought not, in most cases, to have the discretion of the court exercised in his favor. Nor in our view should a defendant who has not filed his defence within the time prescribed be able to file a form of defence with the leave of the court unless he can show there is some substance to that defence or as is usually said he has "a defence on the merits".

9. No ground of appeal was brought from the judge's finding that there was no adequate explanation for the delay in filing the Appellant's defence, and on the facts nor could there be.

10. The authorities dealing with demonstrating a defence on the merits when resisting an application for default or summary judgment or when making an application to set aside such judgments are relevant in considering whether the Appellant has made out a defence on the merits for the purpose of being granted leave to file defence out of time.

11. This Court observed in the case of Provincial Government of North Solomons v. Pacific Architecture Pty. Limited [1992] PNGLR 145:

"We think the same principle applies in these cases as applies in the case of a defendant resisting an application for summary judgment. As Lord Blackburn said in Wallingford v Directors of the Mutual Society (1880) 5 AC 685 at p 704, the defendant must "condescend upon particulars". It is not enough to swear, "I say I owe the man nothing". Doubtless, if it was true, that you owed the man nothing, as you swear, that would be a good defence. But that is not enough. You must satisfy the Judge that there is reasonable ground for saying so."

12. To show a defence on the merits a proposed draft defence is not sufficient: The State v Barker (supra). The Applicant must "condescend upon particulars": Wallingford v Directors of the Mutual Society (1880) 5 AC 685 at p 704, Lord Blackburn; first referred to in this jurisdiction in Green & Co Pty Limited (In Liquidation) v Green [1976] PNGLR 73 O’Leary AJ., that is, not just plead but set out statements of material fact by affidavit evidence which supports the pleading and is sufficient to satisfy the Court that the Applicant has a prima facie defence and that it is reasonable that the Applicant should be allowed to raise that defence: The Government of Papua New Guinea & Davis v Barker [1977] PNGLR 386 per Frost CJ and Prentice DCJ. And that affidavit evidence must be sworn by persons with knowledge of the facts and not the lawyer for the applicant: North Solomons Provincial Government v Pacific Architecture Ltd SC422 [1992] PNGLR 145 Amet,Woods and Doherty JJ.. An affidavit sworn by a lawyer that there is a good defence is generally not sufficient:. Sharples v Northern Territory [1988] NTSC 20; (1988) 55 NTR 35, Asche C.J.

13. In this case all the judge had before him was the draft defence and the few paragraphs cited above in the affidavit by the employed lawyer. This is wholly inadequate in circumstances where almost 2 years delay is unexplained. It is not adequate in those circumstances that the particulars of the defence should come from anyone other than the defendant (or where the defendant is a company an officer of the company). The trial judge rightly concluded that the material presented was not sufficient to demonstrate a defence on the merits.

14. In our view it has not been shown that the trial judge fell into any error. Therefore the appeal is refused.

The Appellant shall pay the Respondents costs of the appeal.

________________________________________

Lawyers for the Appellant: Peter Pena and Associates
Lawyers for the Respondents: Pacific Legal Group