Sapuri v Kolly [2014] PGSC 5; SC1310 (28 February 2014)

SC1310

PAPUA NEW GUINEA
IN THE SUPREME COURT OF JUSTICE

SCA No 111 of 2013

BETWEEN

DR YVONNE SAPURI
First Appellant

AND

PETER KENNEDY – Chief Executive Officer, Pacific International Hospital
Second Appellant

AND
PACIFIC INTERNATIONAL HOSPITAL
Third Appellant

AND:

PETER KOLLY
Respondent

Waigani: Sakora, Yagi and Logan JJ
2014: 26 February, 28 February

APPEAL – Practice & Procedure – Appeal from National Court – Where judgment in default of appearance as required by earlier court order – principles applicable to setting aside regularly entered default judgement – where no evidence tendered on application to set aside showing prima facie defence on the merits – HELD No error of principle in refusal by primary judge to set aside default judgement

Cases Cited:

North Solomons Provincial Government v Pacific Architecture Pty Ltd [1992] PNGLR 145 (applied)
The Government of Papua New Guinea and Davis v Barker [1977] PNGLR 386 SC 123 (applied)

Counsel:

Mrs Nii, for the Appellants
Mr Talopa, for the Respondent

Reasons for judgement

28th February, 2014

1. BY THE COURT: Mr Peter Kolly instituted proceedings in the National Court on 27 June 2012 for personal injuries and other loss and damage allegedly suffered by him as a result of what was said to be the negligent treatment given to him when he attended as a patient earlier that year at the Pacific International Hospital (the hospital). The original defendants were the treating practitioner, Dr Yvonne Sapuri and the hospital's chief executive officer. The hospital itself was later added as a defendant pursuant to a court order.
   
2. All three defendants have, by leave, appealed against an order made in the National Court on 3 September 2013 by which that court dismissed an application to set aside a judgement in default in respect of liability with damages to be assessed, which had been granted on 7 August 2013. For continuity, we refer to the appellants as "the defendants" throughout these reasons for judgement.
   
3. The circumstances in which default judgement came to be entered were these. By 24 July 2013, the proceedings had reached the stage where, as originally instituted, pleadings had closed. On that day, the primary judge granted leave to Mr Kolly to file and serve an amended writ of summons adding the hospital as a third defendant. His Honour adjourned the matter to 7 August 2013 at 9:30 am. He also made the following directions:
   
   • (a) the defendants are required to appear in court at 9:30 am to be heard in their defence before the court gives further directions for the progress of the matter;
     
   • (b) failing appearance for or by the defendants will result in judgement made for the plaintiff with damages to be assessed.
     
4. On 31 July 2013 Mr Kolly, who at that stage was acting for himself, served a copy of the amended writ of summons and the order both on the hospital at its registered office and on the other defendants at the office of their solicitors, Greg Manda Lawyers. He filed an affidavit deposing to service in the National Court the following day.
   
5. On 7 August 2013, Mr Kolly appeared but there was no appearance by or on behalf of any of the defendants. In response to questions directed to Mr Kolly by the primary judge concerning the present state of the proceeding, further submissions came to be made on Mr Kolly's behalf by a member of the Public Solicitor's office who informed the Court that he had assisted Mr Kolly in the preparation of various court documents. With the benefit of these submissions and upon an examination of the court file, his Honour was satisfied that the assertion which Mr Kolly had made that day about service was proved by affidavit. He thereupon made the orders to which we have referred above.
   
6. The defendants brought an application to set aside the default judgement. That application was heard on 3 September 2013 by the same judge who had constituted the court on 7 August 2013. No question was raised then or before us as to whether the court should have been so constituted and rightly so, for there was no reason why in the circumstances the court should not have been so constituted on each occasion.
   
7. In the interval between when default judgement was entered and when the application to set it aside was heard the defendants purported to file and serve an amended defence on the merits in respect of both liability and quantum of damages to which Mr Kolly filed and served an amended reply. We use the qualification, "purported" because, in the absence of the setting aside of the default judgement, the defendants were no longer entitled to contest liability. As will be seen, the explanation for the filing of this amended defence inferentially probably lay in a misapprehension by the defendants that this was both necessary and sufficient to meet one of the criteria considered by a court when deciding whether or not to set aside a default judgement such as that entered in this case.
   
8. The application to set aside the default judgement was supported by an affidavit from Mrs Pane Nii, a lawyer in the employ of Greg Manda Lawyers, which firm by then acted for each of the defendants. In his affidavit, Mrs Nii, with all of the candour the court expects in such circumstances, detailed how on 24 July 2013, all of the lawyers in the firm were otherwise engaged such that there was no-one to attend court in respect of this matter. On 29 July 2013, the lawyer who had hitherto had the carriage of the matter within Greg Manda Lawyers abruptly resigned. He did not leave a written handover brief but did mention briefly to Mrs Nii in conversation that this matter "might come up" on 9 August 2013. On 8 August 2013, acting on this assumption, Mrs Nii tasked another lawyer in the firm to appear that day. Of course, not only was this assumption incorrect but the means of confirming that incorrectness had been in the firm's possession for a week as a result of Mr Kolly's service of a copy of the order made on 24 July 2013. Thus, the error made by the departing lawyer in conversation with Mrs Nii was compounded by a failure in internal communications within the firm after the service of that order.
   
9. Apart from detailing the misunderstanding as to the date fixed for directions, Mrs Nii also deposed, "Our client's have filed their Defence and they have a Defence on merit" [sic].
   
10. This was a default judgement which was regularly entered. The court had power on 24 July 2013 to give the directions requiring an appearance on 7 August and providing for the prospect of judgement in default in the event of a failure to appear. These directions fell within the power conferred by O 4, r 21(2) of the National Court Rules to "give such directions as are convenient for the just, quick and cheap disposal of the proceedings". The court was also empowered to fix a time for compliance with these directions which was less than 14 days: O 12, rr 4(1) and 4(2). The court was also entitled upon the default of the defendants in appearing on 7 August 2013 to direct the entry of judgment for Mr Kolly with damages to be assessed: O 12, r 1.
    
11. In the face of a regularly entered default judgement, it was necessary, in order to enliven a discretion to set that judgement aside, for the defendants to satisfy the court that:
    
    • (a) there was a reasonable explanation for the judgement being allowed to go in default;
      
    • (b) the application to set aside the default judgement had either been made promptly or, if not, that there was a reasonable explanation for the delay; and
      
    • (c) there was a defence on the merits either in fact or in law (or both).
      
12. That these are relevant considerations is settled by longstanding authorities: The Government of Papua New Guinea and Davis v Barker [1977] PNGLR 386 at 394 per Prentice DCJ; North Solomons Provincial Government v Pacific Architecture Pty Ltd [1992] PNGLR 145. These same authorities establish that, in order to demonstrate a defence on the merits, a defendant must condescend to particulars. Insofar as the defence relies on facts, evidence as to those facts must be provided by an affidavit from a person who can attest to those facts. A mere assertion by a lawyer as to the existence of facts is not sufficient. There must be evidence which, if accepted, would ground a defence on the merits. The court does not try a case on an application to set aside a regularly entered default judgement but must be satisfied that, prima facie, having regard to the evidence furnished by the defendant, there is a defence on the merits. Insofar as the defence entails a question of law, the factual foundation for that defence must either be verified by affidavit by a person with knowledge of the facts or require no factual foundation other than that apparent on the face of admissible documents already on the court file or apparent from a document admissible in evidence upon its mere production and tendering.
    
13. The primary judge directed himself to each of these three relevant considerations. He was satisfied that the setting aside application had been made promptly but not that there was an acceptable explanation as to why judgement in default had been allowed to go or, more importantly as his Honour quite understandably saw it in the circumstances, that there was a defence on the merits acceptably shown. These were conclusions reasonably open to his Honour.
    
14. On the appeal, the defendants submitted that they had been denied natural justice. This is not so. The order of 24 July 2013 offered them, expressly, an opportunity to be heard on 7 August 2013. An opportunity to be heard was also offered by the court on 3 September 2013 when the application to set aside the default judgement came on for hearing. A denial of natural justice is not found either in a failure to take up at all an opportunity to be heard or, if that opportunity is taken up, in making inadequate use of it. That is this case.
    
15. Contrary to another submission made on behalf of the defendants on the appeal, it was not sufficient in the circumstances of this case just to point to the existence of a filed defence and the bald assertion by Mrs Nii that there was a defence on the merits. Mrs Nii had no knowledge as to what those factual merits were. Ironically, an affidavit from a medical practitioner attesting to facts which may have amounted to a defence on the merits was for some reason filed by the defendants some two weeks after the application to set aside the default judgement had been heard and determined. This was too late. Whether, in this case, there was a miscarriage of justice, as the defendants also submitted, is to be judged by reference to the material which was before the primary judge at the time when the application was heard. This is not a case where, for example as a result of the court not being informed that a company had been placed in liquidation, judgement was allowed to go in default in circumstances where the law forbade the taking of any further step in the case without the leave of the court.
    
16. It is undoubtedly a serious step to shut out a defendant who wants a trial on the merits from having such a trial. In some cases, even when an explanation as to why a judgement was allowed to go in default appears thin, the existence, verified as to its factual foundation by affidavit, of a defence on the merits may well persuade a judge that the default judgement ought to be set aside. The court has a discretion to exercise. In this case, there was no error of principle in the exercise of that discretion. The primary judge applied himself to the considerations which were relevant and, as we have stated, reached a conclusion which was reasonably open to him. Indeed, so inadequate was the attestation to a defence on the merits that it may well have been an error of principle for the primary judge to have found that the default judgement ought to be set aside.
    
17. This case then entails an unremarkable application of settled principle by the primary judge. Its facts and outcome do offer some timely and salutary reminders to the legal profession and those they represent. The rules of court and its other practices and procedures are designed to ensure that litigants are afforded a reasonable opportunity to be heard. The finite nature of the judicial resources of the Nation is such that that opportunity is not and cannot be unlimited. The parties to this case had a claim to those finite resources but so did all other litigants. More particularly, the case offers reminders that:
    
    • (a) directions and orders made by the National Court are not aspirational statements;
      
    • (b) systems of internal communication within legal firms must be tailored and implemented so as to ensure that required appearance dates do not pass unnoticed;
      
    • (c) a breach of the rules of natural justice is not established by a failure to take any or any adequate advantage of an opportunity to be heard; and
      
    • (d) bald assertion by a person ignorant of the facts does not show that there is a defence on the merits.
      
18. The appeal must be dismissed, with costs.

________________________________________________________
Greg Manda Lawyers: Lawyers for the Appellants
Public Solicitor: Lawyers for the Respondent