Small Business Development Corporation v Totamu [2010] PGSC 55; SC1270 (22 January 2010)

SC1270

PAPUA NEW GUINEA
[IN THE SUPREME COURT OF JUSTICE]

SCA No. 64 of 2008

Between:

SMALL BUSINESS DEVELOPMENT CORPORATION
Appellant

And:

DANNY TOTAMU
Respondent

Waigani: Injia, CJ
2010: 22nd January

SUPREME COURT – Appeal – Application for leave to appeal – Appeal against interlocutory judgment of National Court to dismiss application to set aside default judgment - Principles on grant of leave - Applicant must show there is prima facie case or an arguable case, that the decision was wrong and that substantial injustice will be done by leaving the erroneous decision unrevised on appeal - Grounds have merit and are arguable - Leave is granted

Counsel:

A Karl, for the Appellant
R William, for the respondent

22nd January, 2010

1. INJIA, CJ: This is an application for leave to appeal against an interlocutory judgment of the National Court given on 7th May 2009 in which the Court dismissed the appellant's application to set aside a default judgment entered in favor of the respondent. The application is contested by the respondent. I heard arguments of counsel on 20th October 2009 and reserved my decision which I now deliver. I have considered the submissions and the material placed put to me on behalf of the parties represented in this application.

2. The brief facts are that on 11 November 1994 the respondent's motor vehicle was damaged in a motor vehicle accident involving a motor vehicle owned by the appellants. On 18th August 1998 the respondent filed WS proceedings in the National Court claiming damages. On 6th November 1999 he obtained default judgment in his favor for damages to be assessed. The matter did not proceed to trial on assessment of damages. On 21 October 2003 the appellants through Paul Paraka Lawyers filed an application to set aside the default judgment. On 13th June 2008 the application was dismissed for want of prosecution. On 4th October 2008 the appellants through Ketan Lawyers filed a fresh motion to set aside the default judgment. On 7 May 2009 the National Court dismissed the application. The appellant seeks leave to appeal the ruling.

3. The principles on grant of leave to appeal from interlocutory judgments in a civil matter is that the applicant must show that there is a prima facie case or an arguable case that the decision was wrong and that substantial injustice will be done by leaving the erroneous decision unrevised on appeal. Other relevant considerations include whether the appellant have recourse in the Court below; whether the decision has any bearing on the final determination of the issues between the parties; whether the decision affects the primary rights of the parties or prevent the determination of the issues; and whether cause has been shown that the trial process should be interrupted by an appeal.

4. In the application for leave to appeal the appellant in para. 3 sets out five (5) questions involved which are framed in terms of grounds of appeal. None of the grounds of appeal challenge the trial judge's finding and conclusion that the Writ was duly served, the defendant failed to file Notice to Defend and Defence and therefore the default judgment was regularly entered.

5. The law on setting aside of a regularly entered judgment in the absence of the defendant is settled. Where a judgment is obtained regularly, the court may in the exercise of its discretion set the judgment on it being shown three (3) things as follows: there must be an affidavit setting out the facts showing a defence on the merits; there must be reasonable explanation why the judgment was allowed to go by default; and the application must be made promptly and within a reasonable time: Green & Co. Pty Ltd v Green [1976] PNGLR 78 and subsequently affirmed and applied in numerous cases including the Supreme Court decisions in The Government of PNG & Davis v Barker [1977] PNGLR 386; George Page Pty Ltd v Balakau [1982] PNGLR 140; Provincial Government of North Solomons v Pacific Architecture Pty Ltd [1992] PNGLR 145; Leo Hannet v ANZ Banking Group (PNG) Ltd (1996) SC 505 & Leo Daque v Avia Andrew Paru [1997] PNGLR 378. The onus is on the applicant to establish all three requirements. The three requirements are all equally important however there are Supreme Court decisions which say that of the three considerations defence on the merits is the paramount consideration: Andrew Baing v The Independent State of Papua New Guinea and Papua New Guinea Stevedores and Bank of Papua New Guinea (2000 ) SC 627, and Christopher Smith v Ruma Construction Ltd (2002 ) SC 695. The court in exercising its discretion must consider material and submissions placed in support of these requirements.

6. I have considered the submissions and the materials put to me by or on behalf of the parties represented in this application. I have also read the written ruling of his Honor which is before me. The trial judge made determination with respect to the second and third requirements. The appellants essentially do not challenge these findings in the grounds of appeal. I am satisfied that he reached the correct findings and conclusions on the material before him with respect to the first and second requirements. In relation to the first requirement the judge did not deal with the affidavits filed by the appellants and submissions of counsel showing a defence on the merits - that the claim was a bogus one. The judge briefly dealt with the question of prejudice but did not deal with the evidence on the merits of the defence. The trial judge also did not consider the case authorities which were cited to him that defence on the merits was the paramount consideration. The grounds of appeal raise these very issues. The appellant will suffer substantial injustice if it is not permitted to challenge the interlocutory judgment. I am satisfied that these grounds have merit, they are arguable. For these reasons I grant leave to appeal. Costs of the application shall be in the cause.

_______________________________________________
Ketan Lawyers: Lawyer for the Appellant
Warner Shand Lawyers: Lawyer for the Respondent