Boeha v National Research Institute [2010] PGSC 45; SC1059 (2 July 2010)

SC1059

PAPUA NEW GUINEA
[IN THE SUPREME COURT OF JUSTICE]

SCA No. 58 OF 2006

BETWEEN:

DR. BENO BOEHA
Appellant

AND:

NATIONAL RESEARCH INSTITUTE
First Respondent

AND:

THE INDEPENDENT STATE OF PAPUA NEW GUINEA
Second Respondent

Waigani: Gavara-Nanu J, David J & Hartshorn J
2010: 30 June & 2 July

PRACTICE AND PROCEDURE – Appeal – Claims By and Against the State Act, s. 9 – Requirement for Defence to be filed within 90 days – Notice of Intention to Defend filed within time – Warning given to the defendants/respondents to file their Defence – Defendants/respondents filing their Defence outside of 90 days with the consent of the plaintiff/appellant-Plaintiff/appellant obtaining default judgment against the defendants/respondents for failing to file their Defence within 90 days – Defendants/respondents having the default judgment set aside – Whether the default judgment properly set aside – Setting aside of default judgment permitted under Order 1 r 15 (3) of the National Court Rules and s. 9 of the Claims By and Against the State Act – Appeal against order to set aside default judgment dismissed.

Cases cited:

Green v. Green [1976] PNGLR 7
Map Makers Pty Ltd v. Broken Hill Pty Co. Ltd [1978] PNGLR 78
Hillary Singat v Commission of Police (2008) SC910

Counsel:

J. Maingu, for the appellant
G. Elai, for the first respondent
R. Gelu, for the second respondent

1. BY THE COURT: The appellant appeals against the whole of a National Court judgment which set aside a default judgment entered against the respondents. The respondents were the defendants and the appellant was the plaintiff. The default judgment had been entered by another judge.

2. In the National Court, the plaintiff claimed special, general and exemplary damages against the respondents. In special damages, he claimed a liquidated amount of K613, 865.13 in termination benefits.

3. The plaintiff's claims arose out of his termination as the Director of the first respondent on or about 5 December, 2003. The termination was as a result of the appellant investing K300, 000.00 in an investment company.

4. It is noted that the writ of summons was filed on 31 August, 2005. Service was effected on the First Respondent on 8 September, 2005 while the Second Respondent was served on 5 September, 2005. The respondents through the office of Solicitor General filed their Notice of Intention to Defend on 30 September, 2005. The Solicitor General filed the Notice on behalf of both respondents.

5. Under s. 9 of the Claims By and Against the State Act, 1996 ("CBAS Act"), the second respondent was required to file its Defence by 5 December, 2005 and the first respondent by 8 December, 2005, as those are the dates when the 90 days period in which the respondents had to file their Defence expired. However upon becoming aware that the respondents had not filed their Defence by 5 December, 2005, the appellant's lawyers wrote to the respondents and informed them that they would allow a further 7 days for the respondents to serve a copy of their Notice of Intention to Defend on the appellant and to file their Defence. Thus the respondents were given until 12 December, 2005 to comply with those requirements.

6. In accordance with that concession by the appellant, the respondents filed their Defence on 12 December, 2005.

7. On 14 December, 2005, the appellant's lawyers wrote to the respondents' lawyers and acknowledged receipt of a copy of the Defence served on them on 12 December, 2005. They further advised that since the respondents had failed to file their Defence within the 90 days period in which the respondents were required to file their Defence under s. 9 of CBAS Act, the appellant would apply for a default judgment.

8. On 20 April, 2006, the appellant moved his application for default judgment. According to the transcript of the proceedings the judge at first instance entered default judgment against the respondents on the basis that there was no Defence filed within the 90 days period. The Judge held a view that any Defence purportedly filed outside the 90 days period was not a valid Defence, thus there was no Defence in law.

9. It is to be noted that the appellant had earlier filed a Notice of Motion seeking default judgment but that Motion was withdrawn, as respondents had already filed their Defence on 12 December, 2005.

10. So the Notice of Motion that resulted in default judgment being entered was a second Notice of Motion.

11. It is noted that the letter written to the respondents by the appellant's lawyers on 5 December, 2005, in which the appellants had informed them that they would give the respondents until 12 December, 2005, to file their defence, was not brought to the attention of the judge at first instance.

12. On 17 May, 2005, the respondents moved a Notice of Motion filed on 24 April, 2006, in which they sought orders that the default judgment that had been entered on 20 April, 2005, be set aside and that leave be granted for the respondents to file their defence out of time. His Honour granted those orders.

13. The basis on which these orders were granted was that, as the appellant had allowed the respondents to file their Defence by 12 December, 2005, the respondents did not default in not filing their Defence by 5 December, 2005, which as we alluded to earlier was when the 90 days period in which the first respondent had to file its Defence expired. His Honour said, the respondents were warned to file their Defence after they filed their Notice of Intention to Defence on 30 September, 2005, in the spirit of what was said in Map Makers Pty Ltd v. Broken Hill Pty Co. Ltd [1987] PNGLR 78. That is, that if the respondents filed their Defence within the time allowed by the appellant, then the respondents would not be in default. His Honour went on to say that had the respondents filed their Defence, say, on 13 December, 2005, which would have been a day outside the period agreed to by the appellant, then that would have constituted default by the respondents.

14. His Honour held that in the circumstances, the default judgment that was entered had been irregularly entered and had to be set aside.

15. It appears from the transcripts of the proceedings before the judge at first instance, that his Honour was not made aware of the fact that the appellant had allowed the respondents to file their Defence by 12 December, 2005. The lawyer who appeared on behalf of the appellant on the motion to set aside, was questioned by his Honour on this point and the lawyer told his Honour that the matter was mentioned before the judge at first instance. But as we have said, the transcripts show otherwise. The transcripts clearly show that the appellant's lawyer misled the judge at first instance when he told his Honour that the appellant had in "many" correspondences told the respondents to seek leave of Court before they could file their Defence. This cannot be true as the only time the appellant's lawyer told the respondents to seek leave of Court before filing their Defence was on 14 December, 2005, in a letter after the respondents had filed their Defence on 12 December, 2005. The relevant exchanges between the appellant's lawyer and the judge at first instance appear in the last paragraph of page 164 and the first paragraph of page 165 of the Appeal Book.

16. Thus the central issue arises from the interpretation and application of s. 9 of the CBAS Act, which provides as follows:

9. Filing of defence by the State.

Notwithstanding anything in any other law, in any proceedings for a claim against the State, the time within which the State shall be required to file a defence or appear in response to a summons on complaint (as the case may be) shall be—

(a) in a claim commenced by writ in the National Court—

(i) where the statement of claim is endorsed on the writ—before the expiry of 60 days after the date of expiry of the time limited for it to give notice of intention to defend; or

(ii) where the statement of claim is not endorsed on the writ—before the expiry of 60 days from the date of service of the statement of claim; or

(b) where a cross-claim is made against the State—before the expiry of 30 days from the date of service of the cross-claim; or

(c) in an application under Section 57 of the Constitution—before the expiry of 90 days from the date of service of the application; or

(d) in a claim made in the District Court—before the expiry of 90 days from the date of service of the summons,

or such further time as the court before which the action is instituted, upon sufficient cause being shown, allows.

17. It is also appropriate that we should have regard to Order 1 r 15 (3) of the National Court Rules which states:

The period within which a person is required by these Rules or by any order to serve, file or amend any pleading may be extended by consent without an order for extension.

18. The effect of this Rule is that notwithstanding any time limit set by the Rules, if parties agree to dispense with the requirements of the Rules then the parties would be bound by such agreement. As Order 1 r 15 (3) provides, in such a case, an order for extension of time by the Court to serve, file or amend would not be necessary. We consider that this Rule is wide in its application and covers filing of defences as in this case. We also consider that the Rule is consistent with the sentiments expressed by the National Court in Map Makers Pty Ltd –v- Broken Hill Pty co. Ltd (supra) in which Kidu CJ at 80 said:

"...Lawyers for the respondent (plaintiff) having been served with the notice of intention to defend were put on notice that a defence was to be filed and when the stipulated time was about to expire or had expired common courtesy required that a caution that a default summon (sic.) was to be entered ought to have been given to the respondent's lawyers. I consider that this practice should be adopted by lawyers."

19. This practice was approved by the Supreme Court in Hillary Singat v Commission of Police (2008) SC910 and is now incorporated with O 4 r 49 (19) (3) of the National Court Rules.

20. Section 9 of the CBAS Act, is a special provision the purpose of which is to give more time to the State to defend claims made against it. This section extends the time by which a Defence may be filed under the National Court Rules. As a consequence, we are of the view that "shall" where it appears in s. 9 CBAS Act is directory and not mandatory.

21. The question we ask is; is s. 9 of the CBAS Act, inconsistent with Order 1 r 15 (3) of the National Court Rules and the principle applied in Map Makers, both of which we have said apply to the instant case? We do not think so. We find that Order 1 r 15 (3) of the National Court Rules can still be applied to a Defence to be filed under s. 9 of the CBAS Act. The allowance given by the appellant to the respondents to file their Defence by 12 December, 2009, accords with Order 1 r 15 (3). The appellant was therefore bound by that agreement. The appellant had by that agreement abandoned its right to apply for a default judgment. The respondents having filed their Notice of Intention to Defend and the appellant having agreed for them to file their Defence within the extended time by 12 December, 2005, did not default when they filed their defence on 12 December, 2005. In that regard the application by the appellant for a default judgment against the respondents was not made in good faith.

22. For these reasons we would dismiss the appeal, however, there is another reason why we would dismiss the appeal. Section 9 of the CBAS Act gives wide discretion to the National Court to allow a Defence to be filed out of time upon sufficient cause being shown.

23. In this case, there was a Notice of Motion filed by the respondents seeking an order to file their Defence out of time. We find that the orders granted by his Honour were given pursuant to that Notice of Motion and we can find no error in his Honour's exercise of discretion to grant the relief sought by the respondents, sufficient cause having been shown by the respondents for the grant of the order.

24. We note that the requirements to set aside a default judgment as stated in Green v. Green [1976] PNGLR 7 were all satisfied by the respondents, including there being a defence on merit.

25. For the foregoing reasons, the appeal is dismissed with costs.

26. We order that the matter be remitted back to the National Court Registry for the Listings clerk to list the matter for Directions hearing.

__________________________

Narokobi Lawyers: Lawyers for the Appellant
Pacific Legal Group Lawyers: Lawyers for the First Respondent
Solicitor-General: Lawyers for the Second Respondent