Madang Timbers Ltd v Wasa [2012] PGSC 28; SC1196 (21 August 2012)

SC1196

PAPUA NEW GUINEA
[IN THE SUPREME COURT OF JUSTICE]

SCA NO. 67 OF 2012

BETWEEN

MADANG TIMBERS LIMITED
Appellant/Applicant

AND

HENRY WASA, Registrar of Titles, Department of Lands & Physical Planning
First Respondent

AND

BENJAMIN SAMSON, Deputy Registrar of Titles, Department of Lands & Physical Planning
Second Respondent

AND

THE INDEPENDENT STATE OF PAPUA NEW GUINEA
Third Respondent

AND

ZHENG ERHUNG
Fourth Respondent

Waigani: Davani J
2012: 23rd, 24th August,

SUPREME COURT – Application for leave to appeal an interlocutory decision - refusal to grant default judgment and leave to file defence out of time - S. 14 (3) (b) of Supreme Court Act

SUPREME COURT – Application for leave to appeal an interlocutory decision – the principles to consider – there must be a proper exercise of discretion before grant of leave

APPLICATION FOR LEAVE – to appeal an interlocutory decision – appellate Court will not intervene in the exercise of discretion unless the applicant can show that the discretion was exercised on a wrong principle of law or a mistake of fact and that the order will result in injustice.

Facts

The applicant/appellant seeks leave to appeal an interlocutory decision of the National Court of 21st May, 2012, which Court refused to grant default judgment to the Plaintiff, applicant now, and which also gave leave to the fourth defendant, fourth respondent now, to file its Defence out of time. The application is made pursuant to s.14 (3) (b) of the Supreme Court Act.

Issue

What are the principles to be considered when deciding on an application to grant leave to appeal an interlocutory decision of the National Court?

Reason

The Courts must be cautious when deciding whether to grant leave to appeal or not in applications under s.14(3) (b) of the Supreme Court Act. Applications for leave to appeal interlocutory decisions of the National Court is a power that is discretionary and one that must be exercised with caution. The Court hearing the leave application;

1. Need only be satisfied that the judgment challenged will or may have little or no bearing on the final determination of the issues between the parties; and
   
2. That leave should not be given where, by the rules of Court, there is obvious recourse for further application in the matter; and
   
3. That leave is within the discretion of the Court and discloses no obvious breach of principles.
   
4. The other reason the Court of appeal should not easily rush to grant leave is that those interlocutory judgments or orders can be vacated or varied by the Court that issued them. This machinery that is available to parties is often found in the rules of Court and in our case in this jurisdiction, it is found at Order 12, Rule 8. For default judgments more particularly, the relevant rule is O. 12 R. 8 (2) (b) and such applications must be filed before entry of judgment. (see Sir Julius Chan v. Ombudsman Commission of Papua New Guinea [1999] PNGLR 240)
   
5. In Re – the Will of Gilbert (1946) (NSW) LR318, Jordan J said:
   

"I am of the opinion that ... there is a material difference between an exercise of discretion on a point of practice or procedure and an exercise of discretion which determines substantive rights. In the former class of case, if a tight rein were not kept upon interferences with the orders of Judges of first instance, the result would be disastrous to the proper administration of justice. The disposal of cases could be delayed interminably, and costs heaped up indefinitely, if a litigant with a long purse or a litigious disposition could, at will, in effect transfer all exercise of discretion in interlocutory applications from a Judge in Chambers to a Court of appeal."(my emphasis)

6. Garrard v. Email [1993] 32 NSWLR 662 at 668 where Kirby ACJ said;
   

"Appellate Courts must pause long and hard before disturbing interlocutory orders and especially in matters of practice and procedure and costs." Kirby ACJ went on to say that what is required is "a manifestly unreasonable exercise of discretion before the appellant Court should intervene."

7. The appellate Courts will not intervene in the exercise of discretion within a jurisdiction unless the applicant can show that such a discretion was exercised on a wrong principle of law or a mistake of fact and that the order will result in injustice. (see Hadmor Productions v. Hamilton [1982] 2 WLR 322 (HL); Metropolitan Properties Co. Ltd v. Purdy [1940] 1ALL ER 188 CA; Bradford Buildings Society v. Borders [1939] 3ALL ER 29 at 33).
   

Held

1. Application for leave to appeal is refused.
2. The applicant shall pay the fourth respondent's costs of the application, to be taxed if not agreed.
   

Counsel:

Mr T. Anis, for the Applicant/Appellant
Ms M. Peipul, for the fourth Respondent
No appearance for and on behalf of the first, second and third Respondents by the Office of the Solicitor General

DECISION
24th August, 2012

1. DAVANI J: Before the Court is Application for Leave to Appeal filed on 20th June, 2012 by Bradshaw Lawyers for and on behalf of the Appellant/Applicant ("Applicant").
   
2. The application for leave is opposed by the fourth Respondent. The first, second and third Respondents did not make appearance either by themselves or by their lawyer, the Office of the Solicitor-General. I should state for the record that the Office of the Solicitor-General was advised in writing of today's hearing but chose not to appear.
   

Affidavits filed

3. The application is supported by the affidavit of Thomas Anis, lawyer, sworn on 15th June, 2012 and filed on 20th June, 2012.
   
4. Also before the Court is the affidavit of Mayambo Piepul, lawyer, sworn on 10th August, 2012 and filed on 14th August, 2012. Ms Peipul, of Ketan Lawyers, appears in this application for and on behalf of the fourth Respondent.
   

Decision appealed against and on which leave is sought.

5. The application for leave to appeal is made against the National Court's decision of 21st May, 2012 in proceedings OS 351 of 2011.
   
6. The proceedings were converted to pleadings by order of the National Court on 23rd December, 2011. Those orders read;
   

"1. Zheng Erhung is given leave to join as a Defendant in the proceedings.

2. The Plaintiff has leave to name other Defendants when the Writ of Summons and Statement of Claim is filed as provided for in Order 3 hereunder.

3. The proceedings are now converted to a Writ of Summons and Statement of Claim to allow the Plaintiff to comply with Orders 1 and 2 herein and which must be filed and served within 21 days on or before 10 January, 2012.

4. Thereafter, the named Defendants have leave to file and serve their Defences within a further 21 days on or before 30 January, 2012.

5. The matter returns to this Court on 7 February, 2012 at 9:30am for the Court to be appraised of the status of the matter."

7. Because the named Defendants did not file their Defences within the time ordered by the Court on 23rd December, 2011, the appellant then applied for default judgment on 25th April, 2012. On 10th May, 2012, the fourth Respondent filed a cross-motion seeking extension of time to file his Defence out of time. On 21st May, 2012, the National Court heard both applications and ordered the following:
   

"1. The Plaintiff's application for default judgment is refused;

2. The fourth Defendant's application for confirmation of his Defence is refused as not proper;

3. The Defendants are allowed a further 14 days in which to file their Defence;

4. Plaintiff's costs to be paid by Defendants;

5. Time for orders to be abridged."

8. The Appellant applies for leave to appeal this decision.
   

Ground of Appeal

9. The grounds of appeal as pleaded in the application for leave to appeal are as follows:
   

"(1) the trial Judge erred in mixed fact and law when he firstly failed to find and rule that the Respondents have defaulted in relation to the Appellant's application for default judgment after default was proven by the Appellant;

(2) the trial Judge erred in mixed fact and law when he rejected the Appellant's application and granted time to the Respondents to file their Defences out of time when the Respondents have failed to discharge their burden of proof with regard to their application, that is, the trial Judge failed:

(i) to consider and find that the Respondents did not promptly apply to seek an extension of time to file their defences out of time;

(ii) to consider and find that the Respondents did not file any evidence giving valid reasons for not filing their defences within time;

(iii) to consider and find that the Respondents did not file any valid evidence whether from themselves or from responsible persons employed by them that showed that they have defence on merits.

(3) the trial Judge erred in mixed fact and law when he failed to consider and find that the Respondents did not file any evidence or alternatively any valid evidence with respect to the Fourth Respondent's application for extension of time to file his defence out of time;

(4) the trial Judge erred in law when he failed to reject or give no weight to the Affidavit of Mr Ketan which was the sole affidavit used to support the Fourth Respondent's application to file his Defence out of time;

(5) the trial Judge erred in law when he failed to consider the submissions made by the Appellant's counsel including settled law principles with respect to an application for extension of time to file defence out of time;

(6) the trial Judge erred in mixed fact and law when he ruled that "in the interest of justice" he was not inclined to grant default judgment in favour of the Appellant when the trial judge had no backing of the law or evidence to support that ruling and infact the law and evidence that were presented before him at that time, if considered well, would go to show that justice would be best served if judgment was entered in favour of the Appellant."

Analysis of Evidence and the Law

10. Mr Anis for the applicant moves this application under s.14 (3) (b) of the Supreme Court Act Chapter No. 37 ('SCA'). This whole provision reads:
    

"14. CIVIL APPEALS TO THE SUPREME COURT.

(1) Subject to this section, an appeal lies to the Supreme Court from the National Court–

(a) on a question of law; or

(b) on a question of mixed fact and law; or

(c) with the leave of the Supreme Court, on a question of fact.

(2) An appeal does not lie from an order of the National Court made by consent of the parties.

(3) No appeal lies to the Supreme Court without leave of the Supreme Court–

(a) from an order allowing an extension of time for appealing or applying for leave to appeal; or

(b) from an interlocutory judgment made or given by the National Court except–

(i) where the liberty of the subject or the custody of infants is concerned; or

(ii) in cases of granting or refusing an injunction or appointing a receiver; or

(iii) in such other cases prescribed by the Rules of Court as are in the nature of final decisions; or

...."

11. It is not disputed that the National Court's decision of 21st May, 2012 is an interlocutory decision. Obviously, an application for default judgment and the decision made upon it, is an interlocutory decision of the Court.
    
12. What is the position at law in relation to applications for leave under s14 (3) (b) of the SCA?
    
13. Mr Anis did not make submissions on the law nor did Ms. Piepul. It appears the both of them were in agreement that because this was an interlocutory decision of the National Court, that the Court did have jurisdiction to hear such an application. The principles on applications for leave to appeal interlocutory decisions as held in Boyepe Pere v. Emmanual Ningi (2003) SC 711; The State v. John Talu Tekwie (2006) SC 843 and Sir Julius Chan v. Ombudsman Commission [1999] PNGLR 240 were not addressed in submissions by counsel.
    
14. These cases all hold that the grant or refusal of leave is discretionary. That the applicant must show that there is an arguable case, that the decision was wrong and if not corrected or reviewed on appeal, will result in substantial injustice.
    
15. However, where an appeal is against an exercise of discretion in a procedural matter in a civil case, as in an appeal in a civil case, the onus is higher, as was held by the majority in Sir Julius Chan v. Ombudsman Commission (supra).
    
16. The law in this jurisdiction on applications under s.14(3) (b) of the SCA as held in Sir Julius Chan v. Ombudsman Commission of Papua New Guinea (supra) emphasizes the need to be cautious when deciding whether to grant leave or not. In that case, Justices Sheehan and Jalina both discussed the principles for the proper exercise of discretion in applications for leave to appeal under s.14 (3) (b) of the SCA.
    
17. The majority in that case, emphasized on two restrictions which are two fold. The first is the need to uphold the functions of the Courts of the National Judicial System to ensure that the tribunal empowered by law with the jurisdiction to hear and determine a matter, is able, within the scope and discretion of that jurisdiction, to conduct and order its own proceedings.
    
18. Secondly, the Latin maxim, "interest rei publicae ut sit finis litium" which means basically that it is in the interest of the State that law suites not be protracted, where the Supreme Court said this:
    

"It is in the interest of the State that law suites not be protracted. There has to be cause shown therefore why the ordinary process of trial and determination of the issues should be interrupted by appeal procedures. Simply put there has to be good reason that the Court empowered by law to try the issues between the parties should not be allowed to do so and that notwithstanding an order made in the National Court is interlocutory only, it is of such a nature that it requires the intervention of the Supreme Court."

19. Sheehan and Jalina .JJ expressed concern that parties or lawyers were appealing interlocutory decisions meaning that matters were not progressed to completion putting parties to a lot of expense and delay, more particularly the party who had obtained the orders.
    
20. I restate the Australian decisions relied on and cited in that decision by the learned Judges which have persuasive value in this jurisdiction. They are:
    
    • (a) In Re – the Will of Gilbert (1946) (NSW) LR318, Jordan J said:
      

"I am of the opinion that ... there is a material difference between an exercise of discretion on a point of practice or procedure and an exercise of discretion which determines substantive rights. In the former class of case, if a tight rein were not kept upon interferences with the orders of Judges of first instance, the result would be disastrous to the proper administration of justice. The disposal of cases could be delayed interminably, and costs heaped up indefinitely, if a litigant with a long purse or a litigious disposition could, at will, in effect transfer all exercise of discretion in interlocutory applications from a Judge in Chambers to a Court of appeal."

(my emphasis)

(b) Garrard v. Email [1993] 32 NSWLR 662 at 668 where Kirby ACJ said that "appellate Courts must pause long and hard before disturbing interlocutory orders and especially in matters of practice and procedure and costs." Kirby ACJ went on to say that what is required is "a manifestly unreasonable exercise of discretion before the appellant Court should intervene." (my emphasis)

21. The learned Judges again referred to English decisions which reflect and echo this concern. There the appellate Courts held that they will not intervene in the exercise of discretion within a jurisdiction unless the applicant can show that such a discretion was exercised on a wrong principle of law or a mistake of fact and that the order will result in injustice. (my emphasis) The cases they relied on were Hadmor Productions v. Hamilton [1982] 2 WLR 322 (HL); Metropolitan Properties Co. Ltd v. Purdy [1940] 1ALL ER 188 CA; Bradford Buildings Society v. Borders [1939] 3ALL ER 29 at 33.

22. The other reason the Court of appeal should not easily rush to grant leave is that those interlocutory judgments or orders can be vacated or varied by the Court that issued them. This machinery that is available to parties is often found in the rules of Court and in our case in this jurisdiction, it is found at Order 12, Rule 8. For default judgments more particularly, the relevant rule is O. 12 R. 8 (2) (b) and such applications must be filed before entry of judgment.

23. I agree with Justices Sheehan and Jalina that after a Court has made an interlocutory decision, it is not functus officio, that it is unable to reconsider and order afresh. The applicant could have had regard to that process or as Lord Denning said in R. v. Lands Tribunal Ex parte City of London [1982] 1 All ER 892, that where there are other machinery available within the jurisdiction, the litigant ought not to go directly to the court of appeal.

24. In this jurisdiction, Prentice DCJ emphasized in Re - Moresby North-East Election Petition, Patterson Lowa v. Goasa Damena [1977] PNGLR 429 and relied on by Sheehan and Jalina .JJ in Sir Julius Chan v. Ombudsman Commission of Papua New Guinea (supra) that;

"that as a general rule the Supreme Court should not interfere with the national Court hearing until it had reached a conclusion...finality should normally be obtained in the National Court before appeal were sought therefrom"

25. In that case, the judges in the majority pointed out the "potentially catastrophic effects" of the too ready intervention by the Court of appeal which will stall and stultify courts or tribunal proceedings. That this can also work towards injustice by frustrating the purposes of the litigation.

26. After consideration of all the decisions referred to above, Sheehan and Jalina .JJ held that leave to appeal should not be given in circumstances were;

i. the judgment challenged may have little or no bearing on the final determination of the issues between the parties

ii. where by the rules of court, there is obvious recourse for further application on the matter

iii. where the ruling is within the discretion of the court and discloses no obvious breach of principle

27. Finally, the Supreme Court held that what must be shown by an applicant seeking leave to appeal an interlocutory judgment is that not only is there a patent error but that the error affects the parties' substantive right. That it will also prevent the proper determination of the issues and that because of that, there is error in the interlocutory judgment that goes to jurisdiction.

28. In this case, Mr Anis submits that the trial Judge did not request the respondent in the Court below to make submissions on the principles at law in relation to applications for leave to file defence out of time.

29. Mr Anis also further submits that the trial Judge failed to consider the fact that the respondent in the Court below had breached well established principles of law by allowing the fourth Respondent's lawyer more particularly, to rely on his affidavit when this is not allowed at law. He referred me to the case, Provincial Government of North Solomon v. Pacific Architecture Pty Ltd [1992] PNGLR 145 and Peter Flynn v. The State (2000) N2006.

For the purposes of the application for leave to appeal, is Mr Anis correct?

30. Applications for default judgment and applications for leave to file defences out of time are of course discretionary matters. Based on the principles decided in the cases referred to above concerning particularly, leave to appeal an interlocutory decision, I need only be satisfied that the judgment challenged will or may have little or no bearing on the final determination of the issues between the parties; that leave should not be given where by the rules of Court there is obvious recourse for further application on the matter; and that leave is within the discretion of the Court and discloses no obvious breach of principles.

31. I discuss the principles outlined above, below;

1. First principle; The judgment challenged will or may have little or no bearing on the final determination of the issues between the parties;
   

In this case, the Court gave leave to the defendants to file their defences out of time, and in so doing refused the application for default judgment. One of the parties has now filed its defence. The judgment does not finally determine the issues between the parties. It is only paving the way for the issues to be properly clarified for the trial Court to consider. The refusal to grant default judgment and for giving leave to file defence out of time, has no bearing at all on the final determination of the issues between the parties.

In exercising his discretion, the trial judge noted, as I can see from the transcripts, that the appellant and the fourth Respondent, both hold title to the property, the subject of the dispute. In its Defence, the fourth Respondent raises serious allegations of fraud having been perpetrated by all named respondents and the appellant before title was issued to the appellant.

32. The other reason why the trial judge refused to grant default judgment was that he could not establish the nexus between the fourth Respondent and the first to the third Respondents. That in my view is a proper exercise of discretion.

33. And again, those findings do not finally determine the matter because the matter will go to trial, where all the issues will be properly and fairly tested.

2. Second Principle – Leave should not be given where, by the rules of court, there is obvious recourse for further application on the matter;
   

34. No doubt, if the applicant was disgruntled by the fact that the trial Judge did not consider the proper processes available to him in the consideration of a defence on the merits or in the granting of default judgment, then they ought to have applied under O. 12 R. 8 of the National Court Rules to set aside that decision or to vary it. However they did not, choosing to file an appeal which is clearly an abuse of process.

3. Third Principle – was the ruling within the discretion of the Court and shows no obvious breach of principle;
   

35. The granting or not of default judgment and the granting of leave to file defence out of time of course is a matter of discretion. The trial Judge acted within his powers by exercising his discretion. In my view, that is a proper exercise of discretion. When exercising this discretion, the trial judge said this:

"...

The Plaintiff has filed a notice of motion seeking default judgment against the Defendant based on the claim that the Defendant have failed to file and serve their defences within the time ordered by this Court. There is no dispute that such a default has occurred, but it still remains a discretionary matter for the Court whether or not to grant the default judgment sought.

It appears that there is a challenge between the Plaintiff and the fourth Defendant who joined as a party to the proceedings towards the end of last year, each claiming that it has valid registered title over the properties. On perusal of the statement of claim and affidavit filed in support of their motions before me today, that there appears to be claims of impropriety, irregularity or improper practice in relation to the issue of titles in respect of the fourth Defendant's title.

Given the serious nature of such allegations and noting that the State has been named as a nominal defendant in a manner which is primarily between the Plaintiff and the fourth Defendant in the interest of justice, I am not inclined to grant default judgment applied for and I decline that application.

In respect of the notice of motion filed by the fourth Defendant, I am in agreement with Mr Anis that the application is not proper in the way in which the fourth Defendant seeks formalization of a defence that is not properly before the Court. But, as indicated in my ruling regarding notice of motion by the Plaintiff, in my view, this matter needs to be properly tried and, therefore, I will allow the Defendants' a further 14 days to file their defences." (see page 14 of transcript of decision of 21 May, attached to Mayambo Piepul's affidavit sworn on 10th August, 2012 and filed on 14th August, 2012 as annexure A).

36. I note the above, to be entirely proper. In my view, I should not be readily intervening in this trial process by granting leave to appeal but to allow all parties to go to trial and for the serious issues of fraud exhibited in the statement of claim and affidavits before the Court, to be properly tested.

37. For that reason, I refuse leave to appeal and order that the applicant pay the fourth respondent's costs of the application.

Formal Orders

38. These are the Court's formal orders;

1. The application for leave to appeal is refused;
   
2. The applicant shall pay the fourth Respondent's costs of the application, to be taxed if not agreed.
   

____________________________________
Bradshaw Lawyers: Lawyers for the Applicant
Solicitor- General's Office: Lawyers for the first, second, third Respondents
Ketan Lawyers: Lawyers for the fourth Respondent