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Supreme Court of Papua New Guinea |
PAPUA NEW GUINEA
[IN THE SUPREME COURT OF JUSTICE]
SCR NO 41 0F 2008
REVIEW PURSUANT TO CONSTITUTION, SECTION 155(2) (b)
APPLICATION BY
JOHN MADDISON AND BANK OF SOUTH PACIFIC LIMITED
Waigani: Mogish J, Cannings J, Manuhu J
2009: 3, 27 July
APPEALS AND REVIEWS – decision of National Court to enter default judgment – no application made to set aside order of National Court – no appeal or application for leave to appeal – whether leave for review under Constitution, Section 155(2)(b) should be granted.
In civil proceedings commenced by the respondent, the National Court ordered default judgment on liability against the applicants, with damages to be assessed. The applicants were not made aware of the order until eight months after it was made, by which time it was too late to appeal or seek leave to appeal against it. Nine months after becoming aware of the order, the applicants applied to the Supreme Court for leave under Section 155(2) (b) of the Constitution for review of it. On the presumption that leave was granted, the applicants also argued the substantive application for review. The respondent applied to have the applicants’ applications dismissed for abuse of process. This is a ruling on those applications.
Held:
(1) The applicants had a right of appeal or at least a right to seek leave to appeal against the decision of the National Court, which was not invoked. Thus three criteria had to be satisfied for leave under Section 155(2)(b) to be granted:
(a) it is in the interests of justice to grant leave; and
(b) there are:
(i) cogent and convincing reasons and
(ii) exceptional circumstances, e.g. some substantial injustice is manifest or the case is of special gravity; and
(c) there are clear legal grounds meriting a review of the decision (Avia Aihi v The State [1981] PNGLR 81 applied).
(2) In deciding whether there are cogent and convincing reasons, the following matters are relevant:
(a) the reasons for not filing an appeal within time; and
(b) the merits of the case sought to be argued.
(3) Here, the applicants had good reasons for not filing an appeal within time and the merits of the case sought to be argued are considerable. Thus there are cogent and convincing reasons warranting a review. Further, there are clear legal grounds meriting a review of the National Court’s decision (in particular due to the absence of reasons for the decision).
(4) However, no substantial injustice is manifest (as the decision was only on liability with damages to be assessed) and the case is of no special gravity.
(5) Further, the applicants had failed to exhaust their rights to apply to have the National Court order set aside (such right being available under National Court Rules, Order 12, Rule 35) and the application for leave was made after an inordinate delay (nine months after the applicants became aware of the National Court order) and no good reason was provided for it. So it was not in the interests of justice to grant leave.
(6) Thus only one of the three criteria was fully satisfied and the Court exercised its discretion to refuse leave.
Cases cited
The following cases are cited in the judgment:
Application by Herman Joseph Leahy (2006) SC855
Avia Aihi v The State [1981] PNGLR 81
Danny Sunu v The State [1984] PNGLR 305
David Toll v The State (1989) SC378
Green & Co Pty Ltd v Green [1976] PNGLR 73
Jeffrey Balakau v Ombudsman Commission [1998] PNGLR 437
NCDC v Namo Trading Ltd (2001) SC663
New Zealand Insurance Co Ltd v Chief Collector of Taxes [1988-89] PNGLR 522
Sam Anonga v Jack Were (2001) N2149
The State v Colbert [1988] PNGLR 138
William Mel v Coleman Pakalia (2005) SC790
APPLICATIONS
This was an application for leave to seek review of a judicial act of the National Court – an order to enter default judgment on liability with damages to be assessed – and an application for substantive review of that act; together with an application that both those applications be dismissed as an abuse of process.
Counsel
D Wood, for the applicants
S Ketan, for the respondent
27 July, 2009
1. BY THE COURT: There are three applications before us, all flowing from a judgment of the National Court made by Hinchliffe J on 6 February 2007. The judgment was a default judgment on liability with damages to be assessed. It was in favour of Wesley Hui in civil proceedings, WS 1580 of 2002, he had commenced against John Maddison and Bank of South Pacific Limited.
2. In this judgment we refer to Mr Hui as ‘the respondent’ and Mr Maddison and the Bank as ‘the applicants’.
3. The three applications before us are:
4. We consider that the respondent’s application can be accommodated when we determine the first application. It is unnecessary to make a ruling on it. The respondent is arguing that leave should be refused as the applicants are guilty of an abuse of process. It is really the other side of the same coin so it makes sense to consider the abuse of process arguments in the course of deciding whether leave should be granted.
5. The primary issue we have to address is whether leave should be granted to review the judgment of 6 February 2007. Only if leave is granted will it be necessary to determine the application for review of that judgment.
JURISDICTION UNDER SECTION 155(2) (b)
6. Section 155(2) (b) of the Constitution states:
The Supreme Court ... has an inherent power to review all judicial acts of the National Court.
7. In the present case the applicants have no right, unless leave is first granted, to have the National Court judgment reviewed. This is because there was a right to appeal or at least a right to seek leave to appeal against the judgment, which was not exercised within the 40-day time limit imposed by Section 17 of the Supreme Court Act. That right having been lost, it is incumbent on the applicants to satisfy the three criteria that the Supreme Court conventionally has regard to in the exercise of its discretion whether to grant leave:
8. The above principles are based on the landmark decision of the Supreme Court in Avia Aihi v The State [1981] PNGLR 81. They have subsequently been developed and applied in many cases, e.g. Danny Sunu v The State [1984] PNGLR 305; The State v Colbert [1988] PNGLR 138; David Toll v The State (1989) SC378; New Zealand Insurance Co Ltd v Chief Collector of Taxes [1988-89] PNGLR 522; Jeffrey Balakau v Ombudsman Commission [1998] PNGLR 437,; Review Pursuant to Constitution, Section 155(2) (b); Application by Herman Joseph Leahy (2006) SC855.
9. We will deal with the three criteria in a different order to what is usually the case. The issues become:
1 ARE THERE COGENT AND CONVINCING REASONS AND EXCEPTIONAL CIRCUMSTANCES WARRANTING REVIEW?
10. There are in fact two requirements under this criterion: cogent and convincing reasons plus exceptional circumstances.
Cogent and convincing reasons
11. In deciding whether there are cogent and convincing reasons, the following matters are relevant:
(a) the reasons for not filing an appeal within time; and
(b) the merits of the case sought to be argued.
Reasons for not filing an appeal or seeking leave to appeal in time
12. The applicants have provided a perfect excuse for not exercising their rights within the time permitted by Section 17 of the Supreme Court Act: they were not notified that the National Court would be handing down its judgment on 6 February 2007 and they and their lawyers were not present (and neither was the respondent or his lawyers) when the judgment was handed down and they were not told that the judgment had been handed down until eight months later (on 26 October 2007). The respondent’s application for default judgment had been heard more than three years beforehand (on 22 October 2003) and the applicants’ lawyers had been following up with the Judge’s associate throughout that period. Whatever the reasons for this state of affairs it is clear that the applicants were not to blame. They had good reason for not meeting the time limits of Section 17.
Merits of the case sought to be argued
13. A cursory examination of the merits of the applicants’ case shows that it appears to have considerable merit for a number of reasons, including the following:
14. Mr Wood, for the applicants, posited a number of other more contentious arguments that the learned primary Judge had erred when entering default judgment. It is not necessary at this juncture to traverse them. It is sufficient to say that the three arguments outlined above appear to have considerable merit and that this weighs in favour of granting leave.
Conclusion re cogent and convincing reasons
15. There are good reasons for the applicants not meeting the time limits in the Supreme Court Act and the merits of the case sought to be argued are considerable. Therefore we are satisfied that there are cogent and convincing reasons warranting a review.
Exceptional circumstances
16. We do not consider that there are exceptional circumstances warranting a review. The case appears to be of no great moment except of course from the points of view of the parties. The case before the National Court was not a test case. It was a claim for damages and losses allegedly sustained by a company, Jimm Trading Ltd (which has since been wound up) of which the respondent claimed to be a director and shareholder. The judgment was not a final judgment. It is properly regarded as an interlocutory judgment (NCDC v Namo Trading Ltd (2001) SC663). The plaintiff, on the trial of assessment of damages, will still be required to satisfy the trial judge that the facts and the cause of action are pleaded with sufficient clarity and to prove his losses and damages, subject to the normal principles of evidence and corroboration (William Mel v Coleman Pakalia (2005) SC790). No substantial injustice is manifest and the case is not of special gravity.
Conclusion re cogent and convincing reasons and exceptional circumstances
17. There are cogent and convincing reasons but no exceptional circumstances warranting a review. This criterion is therefore not fully satisfied.
2 ARE THERE CLEAR LEGAL GROUNDS MERITING A REVIEW?
18. Clearly there are. We pointed to three arguments above that the applicants propose to rely on if they are granted leave, which appear to be strongly arguable. This criterion is fully satisfied.
3 IS IT IN THE INTERESTS OF JUSTICE TO GRANT LEAVE?
19. We do not consider that this criterion is satisfied, for two reasons.
20. First, the applicants had the right under the National Court Rules, Order 12, Rule 35, to apply to have the judgment of 6 February 2007 set aside. This could have been done having regard to the well established criteria in Green & Co Pty Ltd v Green [1976] PNGLR 73 and the prospects of success of such an application, if it had been made, would appear to have been reasonable. They did not exercise this option, however, and therefore appear in that sense to have approached the Supreme Court prematurely. Mr Ketan submitted in support of the respondent’s application for dismissal of the proceedings that this amounted to an abuse of process. We do not agree. The decision not to invoke the National Court Rules before making the Section 155(2) (b) applications appears to have been more of an oversight than a tactic of obfuscation or delay. It is not an abuse of process but it is something that is contrary to the interests of justice.
20. Secondly, the application for leave was not filed until 19 August 2008, more than nine months after the applicants became aware (on 26 October 2007) of the National Court judgment. This was on the face of it an inordinate delay and it was incumbent on the applicants to provide a satisfactory reason for it. Mr Wood provided an explanation. He said that the applicants acted expeditiously upon obtaining a transcript of the proceedings of 6 February 2007. On 19 December 2007 (within two months after becoming aware of the judgment) they filed an application for leave under Section 155(2) (b), in SCR 53 0f 2007. They discontinued those proceedings on 7 August 2008 having realised that the form of the application was defective. They then acted expeditiously again by filing the present application, SCR 41 of 2008 12 days later on 19 August 2008. He conceded that it had taken more than ten months to have the application heard but submitted that the applicants could not be held responsible for the delay.
21. On the last point raised by Mr Wood we can agree. The applicants are not responsible for their application taking more than ten months to be heard. But with the other points of explanation we do not agree. The defect in form was of the applicants own making. It was a procedural error for which they or their lawyers are wholly responsible. As Mr Ketan pointed out SCR 41 of 2008 is in substantially the same form and puts forward the same grounds as SCR 53 of 2007. It has created confusion and been of prejudice to the respondent to have to deal with these two separate applications. Although Mr Wood has candidly explained the nine-month delay we do not think it is a satisfactory explanation. The respondent’s right to prosecute the assessment of damages has been put on hold because of this delay. And there is the public interest in the finality of litigation that needs to be considered also. Parties who are aggrieved by a judgment of the National Court have a duty to agitate their grievance promptly and with all due dispatch. That is why time limits are imposed on Supreme Court appeals. Similar principles must apply when a party wishes to seek leave for review of a National Court judgment. The application must be made within a reasonable period. Here the applicants exceeded what was reasonable and have not provided a satisfactory explanation.
22. It is therefore not in the interests of justice to grant leave.
CONCLUSION
23. Of the three criteria to be considered when deciding whether to grant leave, only one is fully satisfied: there are clear legal grounds meriting a review. The others are not satisfied. Though there are cogent and convincing reasons warranting a review, there are no exceptional circumstances. Furthermore it is not in the interests of justice to grant leave in view of the alternative avenue of redress that the applicants did not avail themselves of and the inordinate and inexcusable delay in filing the application for leave.
24. We therefore exercise our discretion by refusing to grant leave. Costs will follow the event.
ORDER
25. The Supreme Court will order that:
(1) the application by John Maddison and Bank of South Pacific Limited for leave to seek review of the judicial act of the National Court at Waigani on 6 February 2007, in WS 1580 of 2002, entering default judgment and other associated orders in favour of Wesley Hui, is refused; and
(2) costs of the proceedings are awarded to Wesley Hui to be paid by John Maddison and Bank of South Pacific Limited on a party-party basis, to be taxed if not agreed;
(3) time for entry of the order is abridged to the date of settlement by the Registrar which shall take place forthwith.
Judgment accordingly.
____________________________________________
Blake Dawson Lawyers: Lawyers for the Applicants
Ketan Lawyers: Lawyers for the Respondent
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