F & M Engineering Ltd v Komasa [2014] PGSC 25; SC1351 (14 June 2014)

SC1351

PAPUA NEW GUINEA
[IN THE SUPREME COURT OF JUSTICE]

SC REVIEW NO 07 OF 2014

APPLICATION UNDER SECTION 155(2)(b) OF THE CONSTITUTION

BETWEEN

F & M ENGINEERING LTD
Applicant

AND

TUSIA KOMASA
Respondent

Waigani: Makail, J
2014: 04rd & 16th June

SUPREME COURT – PRACTICE & PROCEDURE – Application for leave to review – Review of National Court decision – Entry of default judgment and judgment of K347,800.00 – Subsequent application to set aside judgments refused – No appeal sought against refusal to set aside these judgments – Reason for delay – Failure by respondent to serve writ of summons and notice of application for default judgment – Default judgment and judgment of K347,800.00 superseded by decision to refuse to set them aside – Application an abuse of process – Leave refused – Constitution – s. 155(2)(b).

Facts

This is an application for leave to review the decision of the National Court sitting at Goroka to enter firstly, default judgment with damages to be assessed and secondly, judgment in the sum of K347,800.00 pursuant to s. 155(2)(b) of the Constitution. The default judgment was entered on 24th August 2012 and the latter judgment on 12th October 2012. Default judgment was entered on the grounds that the applicant failed to file and serve a notice of intention to defend and defence. Subsequently, the applicant twice applied to set aside both judgments and the National Court refused to set them aside. It did not appeal against these rulings.

Held:

1. The course the applicant took to set aside the default judgment and judgment in the sum of K347,800.00 was entirely proper as it was within the jurisdiction of the Court to determine whether the judgments should be set aside as a matter of right, if irregularly entered, or as a matter of discretion, if regularly entered. O 12, r. 8 of the National Court Rules.

2. After the Court refused to set aside the judgments, the applicant had a right to appeal against them. If it was out of time, it may seek review of those rulings. But it was not open to it to seek review of the judgments because they had been superseded by the rulings. To ask the Court to review the judgments was tantamount to having a "second bite of the cherry" and amounted to an abuse of process.

3. The application for leave to review was refused and the whole proceedings were dismissed for being an abuse of process with costs.

Cases cited:

Avia Aihi v. The State [1981] PNGLR 81
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

Counsel:

Mr J Apo, for Applicant
No appearance, for Respondent

RULING

16th June, 2014

1. MAKAIL, J: This is an application for leave to review the decision of the National Court sitting at Goroka to enter firstly, default judgment with damages to be assessed and secondly, judgment in the sum of K347,800.00 pursuant to s. 155(2)(b) of the Constitution. The default judgment was entered on 24th August 2012 and the latter judgment on 12th October 2012.

Background Facts

2. The National Court constituted by Ipang, AJ entered default judgment with damages to be assessed on the grounds that the applicant failed to file a notice of intention to defend and defence within the time prescribed by the National Court Rules. Following that, the matter was set down for trial on assessment of damages, damages was assessed and judgment was entered in the sum of K347,800.00.

3. Following this, on 06th May 2013, the applicant applied to set aside the judgments. It alleged that one of the grounds it advanced to show that it had a defence on merits was that it was deregistered at the time the judgments were entered, hence it had no capacity to be sued. On 23rd August 2013, Yagi, J heard the application and on 11th September 2013 refused it. On 14th February 2014, it filed a second application to set aside the judgments on the ground that fresh evidence had been received to establish that it was deregistered at the time the judgments were entered against it. On 21st February 2014, again, Yagi, J refused it on the ground that it was an abuse of process.

Applicant's Submissions

4. The applicant did not appeal against these rulings and the time limit of 40 days to appeal expired on 21st October 2013 and 31st March 2014 respectively. Neither does it explain why it did not appeal against them except Mr Apo's submission that it was of the view that they were correct and there were no appealable grounds to mount an appeal.

5. However, Mr Apo submitted that the failure to appeal does not stop the applicant from exercising its right of review to review the original judgments. He submitted that it took this course to exhaust all possible avenues available before seeking a review. He further submitted that the reason for the delay is that the respondent failed to serve the writ of summons and application for default judgment on the applicant. The applicant was not aware of the judgments until seven months later when the Sheriff's Office in Goroka informed it. He relied on the affidavit of Edgar Flores filed on 09th April 2014 to back these submissions.

6. Mr Apo further submitted that the proposed grounds of review disclose that the applicant has an arguable case because in addition to it not being served the writ of summons and the application for default judgment, it was deregistered at the time the judgments were entered against it.

Principles of Leave

7. Where there is a right of appeal but it has not been invoked (eg due to expiry of the statutory time limit of 40 days under the Supreme Court Act, Sections 17 (civil appeals) or 29 (appeals by persons convicted in criminal cases), three criteria have to be satisfied before leave can 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, eg 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.

8. In deciding whether there are cogent and convincing reasons, the reasons for not filing an appeal within time and the merits of the case sought to be argued, should be considered: see Avia Aihi v. The State [1981] PNGLR 81 and subsequently cases of 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; and Jeffrey Balakau v. Ombudsman Commission [1998] PNGLR 437.

Application of Principles to Facts

9. The question is, has the applicant established a case for grant of leave? From the date of default judgment of 24th August 2012 to date of filing of the application for leave of 09th April 2014 is a period of about one year and eight months of delay and from date of judgment on assessment of damages of 26th October 2012 to 09th April 2014 is a period of about one year and six months of delay.

10. In my view the delay is inordinate. Where the delay is inordinate, the applicant is obliged to explain it and it must be a reasonable explanation. One of the reasons for the delay is that the respondent did not serve the writ of summons and the application for default judgment on it. As a result, it was not aware of the judgments until seven months later when the Sheriff's Office informed it.

11. The other reason is that it had applied to set aside the judgments. This took much of the time as the most recent ruling of the Court refusing the application was on 21st February 2014. About a month and a half later, the applicant filed this application. As noted above, except for Mr Apo's submission that the applicant was of the view that the rulings were correct and that there were no appealable grounds to mount an appeal, it does not explain why it did not file an appeal against these rulings within time. It would seem the applicant had accepted Yagi, J's rulings but the undeniable fact is, the applicant took no steps to file an appeal against them. It leads me to conclude that it did nothing to appeal against these rulings.

12. I consider the course the applicant took to set aside the judgments is entirely proper as it was within the jurisdiction of the Court to determine whether the judgments should be set aside as a matter of right, if irregularly entered, or as a matter of discretion, if regularly entered. O 12, r. 8 of the National Court Rules. I further consider that after the Court refused to set aside the judgments, it had a right to appeal against them. If it was out of time, it may seek review of those rulings.

13. But it is not open to it to seek review of the judgments because they have been superseded by the rulings. I hold this view because from the reasons for the rulings, in the first ruling, one of the reasons was that the Court found that service of the writ of summons and the application for default judgment was properly effected on the applicant as they were served on the registered address of service of the applicant and therefore, default judgment was entered regularly. The applicant relies on the same ground in this application.

14. As it was a regularly entered default judgment, the applicant was required to show that it had a defence on merits. The claim was based on a breach of contract for the use of the respondent's wokabout sawmilling machine. The respondent alleged that the applicant failed to return it and claimed among others, loss of business income.

15. The applicant denied the claim and raised in its defence, estoppel by relying on a Deed of Indemnity which it alleged barred the respondent from making any claim against it as a result of loss of the sawmilling machine. The Court further found that the applicant had not demonstrated that it had a defence on merits because the indemnity was subject to the release of the sawmilling machine to the respondent by a certain date (02nd February 2001). The applicant does not rely on this ground in this application.

16. In relation to the second ruling, the applicant relied on the ruling of the Court in the first application and applied to set aside the judgments on the ground that it was deregistered at the time the judgments were entered. The Court refused the application because it was an abuse of process and in reaching that conclusion found that the ground was misconceived because the deregistration issue was not the reason for refusing the first application to set aside the judgments.

17. From my perusal of the first ruling, the applicant raised the issue of its deregistration in support of its submission in relation to the question of service of the writ of summons and application for default judgment, that is, as it was deregistered, it contended that service of those documents should have been effected on the Registrar of Companies and not on its registered address of service. For this reason, with respect, contrary to Mr Apo's submission that deregistration of the applicant was raised as a defence to the claim, it was not.

18. Taking the applicant through the reasons for the Court's rulings again is to reiterate the point that the issue of non-service of the writ of summons and application for default judgment have been raised and decided by the Court. The issue of deregistration was not raised as a defence. In my view to ask the Court to review the judgments on the same ground is tantamount to having a "second bite of the cherry" and amounts to an abuse of process. The applicant should seek review of the Court's rulings refusing to set aside the judgments, if it was out of time to appeal.

19. For these reasons, I am not satisfied that the application is properly before the Court. It is an abuse of process and is dismissed. In light of this conclusion, it is not necessary to consider the remaining issue or submission of the applicant.

Order

20. The orders of the Court are:

1. The application for leave to review the decisions of the National Court of 24th August 2012 and 12th October 2012 is refused.

2. The whole proceedings are dismissed for being an abuse of process.

3. The applicant shall pay the respondent's costs of the proceedings, to be taxed, if not agreed.
_____________________________________________________________
Ame Lawyers: Lawyers for Applicant
Koningi & Associates: Lawyers for Respondent