Motor Vehicle Insurance Ltd v Niugini Nominees Ltd [2014] PGSC 18; SC1334 (15 April 2014)

SC1334

PAPUA NEW GUINEA
[IN THE SUPREME COURT OF JUSTICE]

SCA NO 47 OF 2014

BETWEEN

MOTOR VEHICLE INSURANCE LIMITED
Appellant

AND

NIUGINI NOMINEES LIMITED
Respondent

Waigani: Makail, J
2014: 14th & 15th April

PRACTICE & PROCEDURE – Application for leave to appeal – Proposed appeal against refusal to grant adjournment of application for default judgment – Principles of – Arguable case – Reasons for adjournment – Whether satisfactory – Whether proposed grounds are arguable - Substantial injustice – Substantial monetary judgement – Supreme Court Act – s. 14(3)(b) – Supreme Court Rules – O 7, rr. 1, 2, 3 & 4.

Cases cited:

Joseph Nandali v. Curtain Brothers Limited: SCA No 14 of 2011 (Unnumbered & Unreported Judgment of 04th May 2012).
Paul Amaiu v. Sir Albert Kipalan & Ors (2009) SC991
Mudge v. Secretary for Lands [1985] PNGLR 387
Pacific Rim Constructors–Singapore Pty Ltd v. Huala Hire & Construction Ltd (2012) N4710
Matiabe Oberia v. Chief Inspector Michael Charlie (2005) SC 801

Counsel:

Mr R Lindsay & Ms D Gavara-Nanu, for Appellant
Mr P Lowing & Mr G Geroro, for Respondent

RULING

15th April, 2014

1. MAKAIL, J: There are four applications for ruling. They are:

1.1. The appellant's application for leave to amend the names of the parties.

1.2. The respondent's objection to competency.

1.3. The appellant's application for leave to appeal.

1.4. The appellant's application for stay.

2. As I informed counsel at the hearing, for convenience reasons, I decided to hear all applications and reserve to rule on them at one go. In that way, it would save parties time and costs to move each application.

3. First, I deal with the appellant's application for leave to amend the names of the parties. Mr Lindsay of counsel for the appellant submits that leave be granted to the appellant to amend the names of the parties to correct the error in the names of the parties. He was unable to refer the Court to the relevant provision in the Supreme Court Rules vesting power in the Court to amend documents filed in the Supreme Court but his attention was drawn by the Court to O 8, rr. 50 and 51 of the National Court Rules and O 2, r. 1(h) of the Supreme Court Rules which when read together, vest power in the Supreme Court to grant an amendment.

4. He further submits that the proposed amendments will not adversely prejudice the respondent as the appellant seeks to correct typographical errors in the name of the parties and that they are relevant and necessary to the issues raised in the proposed appeal. The proposed changes are the name of the appellant by adding letter "s" to the word "Vehicle" and deleting the word "Limited" and replacing it with the letters "Ltd". As to the respondent, it is the swapping of the word "Niugini" with "Nominees" to read "Nominees Niugini Limited". These errors, he submits, were a result of the short and rush preparation of the application by the lawyers given the urgency to file the application for leave to appeal and application for stay.

5. Finally, Mr Lindsay submits that the proceeding has just been commenced and the Court has yet to decide the question of leave. The respondent suffers no prejudice at this stage and will be given an opportunity to be heard if leave is granted. For these reasons, he submits that leave be granted to amend the names of the parties.

6. Mr Lowing and Mr Geroro of counsel for the respondent objected to the application as being misconceived and an abuse of process. They submit that firstly, the appellant did not cite the jurisdictional basis of the application and secondly, it moved the application without notice, in that, it did not file and serve a notice of motion for the application. In any case, there is provision in the Supreme Court Rules, O 7, rr. 25 and 26 for amendments and the appellant was required to file a supplementary notice of appeal. It did not and to bring an application for leave to amend is an abuse of process.

7. This submission received a strong submission in reply from Mr Lindsay who submitted that O 7, rr. 25 and 26 have no application in this case because they apply to appeals commenced by notice of appeal. In this case, it is an application for leave to appeal.

8. The Supreme Court Rules, O 13, r. 15 requires that all interlocutory applications must cite the jurisdictional basis of the application and must be made in Form 4. The appellant did not file and serve an application in Form 4 and I accept the submission of the respondent that the appellant has failed to give notice of the application to amend to the respondent and of course the Court. In addition, without an application, there would be no Form 4 application for the appellant to cite the jurisdictional basis of the application. The application suffers from these procedural flaws or defects and stands the risk of being dismissed on these grounds alone if O 13, r. 15 (supra) were to be strictly applied: see Joseph Nandali v. Curtain Brothers Limited: SCA No 14 of 2011 (Unnumbered & Unreported Judgment of 04th May 2012).

9. But that is not all. I consider that a party, such as the respondent, who objects to the application for leave to amend, must show how it is being prejudiced by the failure to give notice and citation of the jurisdictional basis of the application. I say this because, in my view, these procedural requirements are designed to ensure that parties are given opportunity to be heard before a decision is made. This is a fundamental principle of natural justice which the Court Rules seek to preserve. In this case, both sides were heard on the application and the respondent did not show how it has been prejudiced by the failure to give notice nor has it been shown that it has been prejudiced by the failure to cite the jurisdictional basis of the application.

10. Indeed, I note that Mr Lowing and Mr Geroro were cognisance of the fact that the appellant was seeking to amend its name and that of the respondent. They ably made submissions by advancing the argument that the whole application was misconceived and an abuse of process because the appellant failed to comply with O 7, rr. 25 and 26 of the Supreme Court Rules. These rules, they submit, permit the appellant to amend the name of the parties without the need to file an application. They suggested that the appellant should simply file a supplementary notice of appeal. These rules state:

"Division 8.—Amendment by supplementary notice

25. A notice of appeal may, before the date of appointment to settle under Rule 42 be amended without leave by filing a supplementary notice.

26. A party who files a supplementary notice under Rule 25 shall file and serve it in accordance with Rule 13. The addition of a new ground of appeal shall not be made after the expiry of 40 days after the date of the judgment in question, or such further period as has been allowed by a Judge within those 40 days."

11. For these reasons, I am not satisfied that the belated application to amend will and has prejudiced the respondent and I refuse the respondent's objection to dismiss the application for leave to amend. I now consider whether to grant leave to amend. In opposing the application for leave to appeal and the application for leave to amend, the respondent filed an objection to competency. Mr Lowing and Mr Geroro asked me to consider this objection, submitting that in an application for leave to appeal, a single judge of the Supreme Court has jurisdiction to determine an objection to competency together with the application for leave to appeal. They cite the case of Paul Amaiu v. Sir Albert Kipalan & Ors (2009) SC991 as authority for this proposition. Mr Lindsay does not take issue with this submission.

12. I have considered the respondent's submission and cited the case and I am satisfied that this Court has jurisdiction to hear an objection to competency, although I should point out that, the cited case was decided based on the old Supreme Court Rules O 7, r. 16 which is identical to the current Supreme Court Rules, O 7, r. 17. I will therefore, consider it with the application for leave to appeal.

13. In the respondent's objection, Mr Lowing and Mr Geroro submit that the proper person who ought to be named as the appellant is "Motor Vehicles Insurance Ltd". The typographical error, omitting the letter "s" from the word "Vehicles" is fatal to the proposed appeal. The proper person who ought to be named as the respondent is "Nominees Niugini Limited" and not "Niugini Nominees Limited". The incorrect naming of the respondent is also fatal to this proposed appeal.

14. They further submit that the named appellant and the named respondent are not natural persons or corporate entities, thus having no legal capacity to sue or being sued under ss. 14, 15, 16 and 17(1) of the Companies Act, 1997 or any other law, to appeal under s. 17 of the Supreme Court Act. To appeal in the name of the named appellant against the named respondent would be appealing by a non-existent entity against a non-existent entity. The appeal is therefore, incompetent. They cite the cases of Mudge v. Secretary for Lands [1985] PNGLR 387 and Pacific Rim Constructors–Singapore Pty Ltd v. Huala Hire & Construction Ltd (2012) N4710.

15. I accept the respondent's submission and on the authority of the Companies Act, ss. 14, 15, 16 and 17(1) and the decided cases cited by counsel for the respondent, the application for leave to appeal should be dismissed as being incompetent. But there is the appellant's application to amend which must be considered as well. There is no dispute that parties in the National Court proceedings WS No 1300 of 2013 were "Nominees Niugini Limited" as plaintiff and "Motor Vehicles Insurance Ltd" as defendant. The company extracts obtained from the Companies Office which may be found at annexures "D" and "F" of the affidavit in support of Mr Robert Lindsay sworn on 10th April and filed on 11th April 2014 also confirms that the registered name of the entity of the plaintiff as "Nominees Niugini Limited" and likewise, "Motor Vehicles Insurance Ltd" as defendant.

16. Same counsel and same law firms represented the parties in the National Court proceedings and were well aware of the names of the parties in the conflict. The conflict is about the money which was allegedly due and payable under a contract called Equity Monetization Contract entered between them back in 2009. Following commencement of proceedings in November of 2013, on 13th March 2014, Nominees Niugini Limited obtained default judgment in the sum of K22, 261, 650.00.

17. In addition, I accept the appellant's submission that the proceeding in the Supreme Court is still at its infancy stage because the Court has yet to decide whether leave should be granted. In my view, the respondent will have the opportunity to respond to the appeal, if leave is granted, at the substantive hearing.

18. In the proposed appeal, the lawyers for the appellant in their haste to prepare the documents for filing and bringing the application for leave and application for stay to the attention of the Court for determination, incorrectly named the parties in the application for leave to appeal and the subsequent documents. While the appellant's lawyers may be forgiven for the errors, they, as lawyers, were obliged to be diligent in the preparation of the proposed appeal for the appellant. By not being diligent, the consequence may be fatal, and as the respondent's lawyers submitted, by pleading the incorrect names of the parties, there are no such entities in existence in law and the entire proceedings before this Court is incompetent and should be dismissed.

19. But the matters I mentioned earlier (paras 15, 16 and 17) have led me to accept the appellant's submission that the proposed amendments are simple amendments as they do not change the cause of action and nor introduce new proposed grounds of appeal such that the respondent could be adversely prejudiced in its defence of the appeal. By allowing the amendments to be made, the correct names of the parties will be pleaded and will allow the parties to move towards resolving the conflict between them in relation to the money. For the same reasons given in paras 15, 16, and 17 (supra), I am satisfied that the respondent has not been prejudiced by the incorrect naming of the parties and if leave were to be granted to the appellant to amend the names of the parties, I am further satisfied that the proposed amendments will not be adverse to the defence of the respondent.

20. As to the power of the Court to amend, I am satisfied that the Court has power to amend proceedings. That power is found in the general powers of the Court under O 11, r 11 of the Supreme Court Rules which states; "The Court or a Judge may order that any person be added as a party to proceedings under these rules or that the proceedings be amended and may impose such conditions as appear just, and give all consequential directions." In view of this provision, I consider, it is not necessary to resort to O 8, rr. 50 and 51 (supra) and O 2, r 1(h) (supra) to "fill in the gap" so to speak and grant leave to amend. I also accept the appellant's submission that as O7, rr. 25 and 26 (supra) on amendments by supplementary notice of appeal apply to appeals commenced by notice of appeal, they are inapplicable in this case.

21. For the foregoing reasons, in the exercise of my discretion under O 11, r. 11(supra). I dismiss the respondent's objection to competency and grant leave to the appellant to amend the names of the parties.

22. The third application is the application for leave to appeal. The relevant principles on grant of leave are set out in the case of Matiabe Oberia v. Chief Inspector Michael Charlie (2005) SC 801. Essentially, an appellant bears the onus of establishing that there is a prima facie case that the decision was wrong and that substantial injustice will be done by leaving the erroneous decision unrevised. The Court set out the relevant considerations stated in question form as follows:

"1. Is there an arguable or prima facie case demonstrated that the trial judge was wrong?

2. Does the appellant have recourse in the Court below?

3. Was the ruling within the discretion of the Court? Has it been shown that its exercise was manifestly unreasonable, exercised on wrong principle or a mistake of fact?

4. Does the decision have any bearing on the final determination of the issues between the parties? Will it affect the primary rights of the parties or prevent the determination of the issues?

5. Will substantial injustice be caused by allowing the decision to stand?

6. Has cause been shown that the trial process should be interrupted by an appeal?"

23. As the appellant seeks to appeal the decision to refuse its application for adjournment, that decision is an interlocutory one and leave is required under s.14(3)(b) of the Supreme Court Act and O 4, rr. 1, 2, 3, and 4 of the Supreme Court Rules. The purpose of seeking leave is, in my view, three fold. First, it enables the Court to screen at the very beginning of the proceedings, all purposed appeals and allow only meritorious ones to go to substantive hearing. Secondly, it allows the Court to determine if there is other recourse available to the appellant in the National Court to seek redress. Thirdly, it enables the Court to determine whether substantial injustice will be caused to the appellant if the decision is allowed to stand.

24. Mr Lindsay took the Court through the background facts of the proceedings in the National Court where the respondent sued the appellant for breach of contract based on the Equity Monetization Contract. A related proceedings WS No 1252 was commenced prior to that proceedings where the Independent Public Business Corporation of Papua New Guinea ('IPBC") sued the appellant and sought orders to declare invalidate, the Equity Monetization Contract as parties failed to comply with s. 46B of the IPBC Act and s. 110 of the Companies Act, 1997 (failure to obtain approval for sum of money in excess of K1 million as it was a major transaction).

25. He submits that given the background of the case, the propose grounds of appeal are arguable as they raise the issue of prejudice. The prejudice is that the trial judge failed to take into account that the appellant will be faced with a judgment in excess of K22 million if an adjournment was not granted. As the trial judge had refused the appellant's application for an adjournment, there is now a judgment of more than K22 million against the appellant and for the appellant to settle. This is a substantial amount of money which the appellant must settle.

26. He further submits that the proposed grounds also show that the respondent will not be prejudiced had the trial judge granted the appellant's application for an adjournment with an appropriate order for costs of the day's appearance "knowing full well WS 1252 was pending hearing and determination on legality of the EMC and legal mortgage." (see para 14(c) of the application for leave to appeal).

27. In opposing the application for leave to appeal, Mr Lowing and Mr Geroro strongly submit that in terms of evidence, there is no evidence from a responsible officer of the appellant setting out the relevant facts and explaining the mischief and prejudice to be suffered in the event that leave is not granted. Save for the background and events that have transpired since, the affidavit of Mr Lindsay of counsel does not depose to any facts as to mischief and prejudice but mere speculation. Counsel objected to the admissibility of the statements in paragraphs 6, 7, 9 and 10 of Mr Lindsay's affidavit as being hearsay, opinions, speculations and irrelevant such that they ought to be struck out. Simply put, there is no evidence to support the application.

28. Secondly, as the onus is on the appellant to establish a case for the grant of leave, it has failed to establish that the decision of the trial judge was wrong. It failed to show how the trial judge erred in the exercise of his discretion when he refused the application for adjournment.

29. Based on the case of Matiabe Oberia, (supra), I consider that the exercise of discretion depends largely on whether the appellant has demonstrated an arguable or a prima facie case to warrant a further and detailed consideration of the proposed appeal at the substantive hearing. I also consider that the other consideration relevant to the exercise of discretion is whether substantial injustice will be caused by allowing the decision to stand. But, in my view, this consideration depends largely on whether the appellant has an arguable or prima facie case.

30. It must be borne in mind that the trial judge's refusal to grant the adjournment was an exercise of discretion. Thus, the onus was on the appellant to establish that the discretion should be exercised in its favour. In that respect, it was incumbent on the appellant to establish firstly, the reasons for the adjournment, secondly, there will not be any prejudice that will be caused to the respondent if the adjournment is not granted and finally, reasons why the appellant denies the claim (demonstration of a defence on merits). In my view, these are matters pertinent to the exercise of discretion.

31. There is no evidence to enable to the Court to determine the reasons put forward by the appellant for the adjournment. An attempt to tender an affidavit apparently by the Chief Executive Officer of the appellant was objected to by the respondent's counsel and was upheld. In addition, the Court upheld the respondent's objection and struck out the paragraphs 6, 7, 9 and 10 of Mr Lindsay's affidavit. But based on the remaining parts of Mr Lindsay's affidavit of 11th April 2014, and the background facts set out on the application for leave to appeal, the appellant's lawyers were retained (two days before the hearing of the application for default judgment) to represent the appellant. They also generally explained that the appellant will be prejudiced if an adjournment was not granted in light of an impending application for default judgment of more than K22 million.

32. The refusal to grant an adjournment has now reached a state where it has adversely prejudiced the appellant; it has become a huge financial burden on the appellant as not only has a judgment of more than K22 million been entered against the appellant and for it to settle but also an enforcement order by way of a garnishee order absolute issued by the National Court on 10th April 2014 against its funds held at Bank of South Pacific Limited ("BSP Bank"). There is no dispute that a cheque for the stated sum has been raised and delivered to the respondent's lawyers. But there is no evidence that funds have been cleared for remittance to the respondent.

33. But, there is no evidence that the appellant drew the trial judge's attention to the related proceedings WS No. 1252 of 2010, when making the application for adjournment. I accept the respondent's submission that there is no evidence that the appellant drew the related matter to the attention of the trial judge. Thus, it would be wrong and certainly unfair to suggest that the trial judge erred when the appellant was at fault in not directing his Honour's mind to that matter. Even if it were that the related proceedings was brought to his Honour's attention, there is evidence based on the affidavit of Mr Lindsay and affidavit of Mr Lowing sworn on 13th April and filed on the 14th April 2014 that following the filing of the proceedings on 11th November 2013 and serving of the writ of summons on the appellant on 13th November 2013, the appellant made no attempt to defend the proceedings.

34. A total of 44 days prescribed by the National Court Rules for the appellant to file a defence was allowed to go by, time having expired on or around 11th February 2014. This prompted the respondent to avail itself of the summary process of the Court to obtain judgement; a process readily available and frequently used by parties, especially, plaintiffs to obtain a quick and cheap disposition of proceedings under O, 12 rr. 24, 25, 25, 27 and 28 of the National Court Rules.

35. A further 23 days lapsed and on the 06th March 2014, the respondent served its application for default judgement. It was at this time that the appellant realised that it stood the risk of having a default judgement entered against it for a substantial sum of money. It took urgent remedial action by engaging lawyers to defend the proceedings and when the lawyers came on board, the application for default judgment was already fixed for hearing on 13th March 2014. On the date of hearing, the lawyers belatedly appeared and sought an adjournment in an attempt to stop the Court from hearing the application for default judgment.

36. What all these means is that, these matters, which are undisputed, do not show how the trial judge erred when he refused the appellant's application for adjournment. On the other hand, they support the respondent's submission, which I accept, that the appellant has failed to establish where the apparent error is when the trial judge refused to grant an adjournment. With respect, simply put there is nothing in the proposed grounds to support the appellant's submission that there is an arguable or prima facie case.

37. For these reasons, I am not satisfied that the appellant has established an arguable or prime facie case which would warrant further consideration at the substantive hearing.

38. Where the appellant has not established an arguable or prima facie case, in my view, the consideration on the substantial injustice that will be caused to it, (now that it has a judgement of more than K22 million to settle) is of no consequence. The respondent as the judgement creditor is entitled to the fruits of the judgment and must be given that benefit.

39. Accordingly, I refuse the application for leave to appeal. Having so ruled, it is not necessary for me to consider the remaining application for stay.

Ruling and orders accordingly.
________________________________________________________
Gadens Lawyers: Lawyers for Appellant
Leahy Lewin Nutley Sullivan Lawyers: Lawyers for Respondent