Erave v Homosi [2020] PGSC 156; SC2121 (27 August 2020)

SC2121

PAPUA NEW GUINEA
[IN THE SUPREME COURT OF JUSTICE]

SCA NO. 69 OF 2016

BETWEEN:
MATHEW ERAVE
Appellant

AND:
FIRST CONSTABLE DAURE HOMOSI
First Respondent

AND:
GARY BAKI – POLICE COMMISSIONER
Second Respondent

AND
THE INDEPENDENT STATE OF PAPUA NEW GUINEA
Third Respondent

Waigani: Yagi, Toliken and Pitpit JJ.
2017: 30^th October
2020: 27^th August

PRACTICE AND PROCEDURE – JUDGMENTS AND ORDERS - Appeal against interlocutory ruling - Motion for default judgment – Issue estoppel – Removal of parties – Affidavit in support of motion – Rejection of – Non-compliance with order to file defence – effect of – Court divested of discretion under the National Court Rules – Entry of default judgment to follow as a matter of course - Appeal allowed – Default judgment entered – Matter remitted to National Court for assessment of damages.

Cases Cited:

Ekapa v Gaupe (2004) N2694
National Housing Corporation v Asakusa (2012) SC1165
David Ande v Nelson Pano (2008) N3271
Giru v Muta (2005) N2877
Motor Vehicle Insurance (PNG) Limited v Sossie Joe (2007) SC863
Curtain Bros (PNG) v University of Papua New Guinea (2005) SC 789

Counsel:

P. H. Pato, for the Appellant
Nil appearance by the First Respondent
T. Mileng, for the Second and Third Respondents

JUDGMENT

27^th August, 2020

1. YAGI and TOLIKEN JJ: This is an appeal against the whole of the orders of the National Court in WS No. 796 of 2007 dated 21 April 2016. The court dismissed an application by the respondents (defendants in the court below) to file their defence out of time and that an application for summary judgment follows the event, and ordered that the second and third respondents are removed as parties to the proceedings as the “cause of action in the nature of the claim as it is, does not lie against [them.]” The orders were:
   

1. An Application made by Defendants on 14th April 2016 to file Defence out of time is dismissed & an Application for default judgment follows this even[t].

2. Second and Third Defendants be removed as parties to this proceedings.

3. Cause of Action in the Nature of the Claim as it is, does not lie against the Second and Third Defendants.
4. Costs be in the cause. (sic.)

BACKGROUND

2. The brief background in chronological order are as follows; On 02 May 2007 the appellant (the plaintiff in the court below) filed a writ of summons and statement of claim (WS 796 of 2007) for damages in negligence against the respondents (the defendants in the court below).
   
3. On 22 March 2011, the appellant filed a notice of motion for default judgment. On 07 April 2011, the second and third respondents filed a notice of motion for leave to file their defence out of time.
   
4. Both motions were heard together by Murray J, who, on 29 April 2014, refused the appellant’s motion for default judgment against all respondents for varying reasons, however, granted leave to the second and third respondents to file their defences out of time but within 14 days from the date of the order. The appellant was also ordered to serve the writ of summons on the first respondent by way of substituted service through advertisement in one of the dailies.
   
5. The second and third respondents did not file their defence within 14 days as ordered. In the meantime, on 03 June 2014, the writ of summons was personally served on the first respondent thus negating the need for substitute service. The first respondent, however, failed to file a notice of intention to defend or a defence within the prescribed period.
   
6. On 22 August 2014 the appellant, through his then lawyers (Nikiuma Lawyers), forewarned the State by letter that he will file for default judgment should the State fail to file a notice of intention to defend and defence within 7 days. The second and third respondents did not heed the warning and did not file their notice of intention to defend or a defence for that matter.
   
7. On 03 October 2014, the appellant filed a notice of motion for default judgment. However, his lawyers failed to move the application for over a year. On 31 March 2016 the appellant changed lawyers to Parker Legal who then subsequently filed an amended notice of motion for default judgment.
   
8. On 08 April 2016, the second and third respondents filed a motion to dismiss the proceeding against them for not disclosing a reasonable cause of action, or alternatively for them to be granted leave to file their defence out of time. The court heard the second and third respondents' motion and dismissed it on the basis that these respondents were vicariously liable. The court then adjourned the appellant's motion for default judgment to 21 April 2016. On 21 April 2016 the primary Judge made the orders appealed against.
   

GROUNDS OF APPEAL

9. The grounds of appeal are:
   

3.1 Her Honour erred in law by removing the Second & Third Respondents as parties in WS 796 of 2007 on the ground that there was no cause of action against them because -

(a) Her Honour already held that the Second & Third Defendants were vicariously liable when she refused an application to dismiss the proceedings for disclosing no reasonable cause of action against the Second & Third Defendants on 14th April 2016.

(b) the issue of whether or not there was a reasonable cause of action against the Second & Third Respondents was res judicata.

(c) Her Honour merely relied on Counsel's oral submissions when there was no formal application before the Court for an order for removal of the Second & Third Respondents.

3.2 Her Honour erred in fact when she refused to accept and rely on the affidavit in support of Nickson Kiuk sworn on 2^nd October 2016 and filed 3rd October 2016 as:

(a) there was no objection raised against the document which he Appellant sought to rely on in his application for default judgment against the Second & Third Respondents, which document had the effect of satisfying the Court of the requirements for a default judgment application; and

(b) the same affidavit was accepted and relied on by Her Honour on 14th April 2016 to refuse the Second & Third Respondents' application to file defence out of time.

3.3 The trial judge erred in law and in fact when she refused to enter default judgment against all the Respondents when it was clear that the Appellant's application met all the criteria for default judgment.

RELIEFS SOUGHT

10. The reliefs sought by the appellant are:
    

i. The appeal be allowed.

ii. The orders of the primary Judge made on 21 April 2016 be quashed.

iii. Default judgment be entered against the respondents with damages to be assessed.

iv. The third respondent pays the appellant's cost of the appeal.

v. Such other or further orders as this Court deems fit.

ISSUES

11. The issues that fall for our determination are:
    

1. Whether the primary Judge erred in law by ordering the removal of the second and third respondents as parties in the proceeding;

2. Whether the primary Judge erred by refusing to rely on the affidavit of Nickson Kiuk filed on 03 October 2014;

3. Whether the primary Judge erred in law and in fact in refusing to enter default judgment against the respondents.

DELIBERATIONS ON ISSUES

Issue 1: Whether the primary Judge erred by ordering that the second & third respondents be removed from the suit.

12. Mr. Pato of Counsel for the appellant submitted that the primary Judge erred in two respects when ordering the removal of the second and third respondents from the suit. These are:
    
    • (a) Having earlier refused the second and third respondent's motion to dismiss the claim for not disclosing a reasonable cause of action, and to file a defence out of time on 14 April 2014, the court was estopped from re-opening and reconsidering the issue of whether or not a reasonable cause of action was disclosed against those respondents.
      
    • (b) There was no formal application before the primary Judge for the removal of the second and third respondents and that the primary Judge did not allow the appellant the opportunity to respond thus denying him natural justice.
      
13. So, was the primary Judge estopped from re-agitating an issue which had been previously ruled on and settled?
    
14. To establish the defence of issue estoppel, a party only has to show that an issue of fact or law or mixed fact and law, has been authoritatively and finally determined in a previous case. The cause of action or the parties need not be the same. (see Ekapa v Gaupe (2004) N2694 per Cannings J.)
    
15. There are three prerequisites to operation of the doctrine of issue estoppel. These are:
    

(a) the issue raised in the second proceedings is the same issue as that raised in prior proceedings;

(b) the issue was finally determined in the prior proceedings; and

(c) the parties in the two proceedings are the same or, if they are not the same, the party against whom the issue estoppel is sought to be applied was a privy of a party to the prior proceedings and reasonably expected to be aware of the prior proceedings and entitled to be joined but failed without explanation to do so.

(National Housing Corporation v Asakusa (2012) SC1165 (1 March 2012, Cannings, Manuhu, Kassman JJ)

16. As to the power of the court to remove a party to a suit or proceeding, Order 5 Rule 9 of the National Court Rules (NCR) relevantly provides:
    

9. Removal of parties. (8/9)

Where a party –

(a) has been improperly or unnecessarily joined; or

(b) has ceased to be a proper or necessary party,

the Court, on application by any party or of its own motion, may, on terms, order that he cease to be a party and make orders for the further conduct of the proceedings.

17. The power to remove a party is not absolute, but rather discretionary. The removal of a party who is wrongly or unnecessarily named is distinct from, but not totally unrelated to the question of liability. The proper naming of parties is to ensure that all matters in dispute between the parties are effectually and completely adjudicated upon by the court. To that end, a party wrongly or improperly named, may be removed by the court on its on motion, or on application by any party.
    
18. So, did the primary Judge properly exercise the court’s discretion when making the order removing the second and third respondents from the suit? What was the basis for ordering so? Was it on the basis that they were improperly or unnecessarily named?
    
19. The relevant facts on this issue are as follows; On 14 April 2016, two motions came before the primary Judge. The first motion was the appellant’s amended notice of motion filed on 31 March 2016. The appellant there sought to have earlier orders of 20 October 2015 and 29 February 2016 set aside and for default judgment to be entered against the respondents.
    
20. The second and third respondents’ motion filed on 08 April 2016 to dismiss the appellant’s claim for not disclosing a reasonable cause of action, in particular, the vicarious liability of the second and third respondents were not pleaded in the appellant’s statement of claim. Alternatively, they asked that they be granted leave to file their defence out of time.
    
21. The primary Judge refused the second and third respondents’ motion. The issue of non-disclosure of a reasonable cause of action essentially turned on the State’s contention that the appellant did not plead that the first respondent was acting in scope of his employment or while performing or purporting to perform his statutory functions as a basis to attach vicarious liability on the State. At page 105 paragraphs 25 – 29 of the Appeal Book the primary Judge ruled as follows:
    

“In relation to the defendant’s application to dismiss the proceedings for [not?] disclosing a reasonable cause of action and to extend time to seek leave to file a defence out of time is dismissed ...” (Underlining supplied)

22. This is reflected in the formal orders that followed (see page 12 of the Appeal Book). The result of that is that the issues of vicarious liability and leave to file a defence out of time were effectively determined. The primary Judge, however, did not hear the appellant’s motion but instead adjourned it to 21 April 2016.
    
23. On 21 April 2016, the appellant abandoned his application to set aside the previous orders of 20 October 2015 and 29 February 2016 which orders directed that the matter goes to trial. Those orders were essentially of no utility after the primary Judge made orders on 14 April 2016 refusing the second and third respondents’ motion for dismissal. The court then heard the appellant’s motion for default judgment.
    
24. It appears that in the course of submissions by Mr. Mileng of Counsel for the second and third respondents, the primary Judge rehashed the issue of vicarious liability. This was the basis of the second and third respondents’ motion, which the primary Judge had previously refused. The court heard full arguments from the parties and ruled against the motion ostensibly on three grounds viz; (1) that there was an inordinate delay, (2) there was no reasonable explanation for the delay and (3) that the nexus between the first respondent and the second and third respondents was not sufficiently pleaded.
    
25. While at that, the primary Judge also brought up the issue of removing the second and third respondents from the suit. The court allowed Mr. Mileng to address it on the issue and heard Mr. Pato for the appellant as well.
    
26. The primary Judge’s brief verbal reasons are found at pages 129 (para. 20 – 41) and 130 (paras. 1 – 41) of the Appeal Book. Relevantly, the primary Judge said:
    

“This is my short ruling on the application by the plaintiff as per the amended notice of motion filed on 31 March 2016 and it is prior to the orders granted on 14 April 2016.

Item 1 of the Notice of Motion, events have since overtaken the terms of this order and is disregarded.

In relation to item 2 pursuant to order 12 rule 25(b) and rule 28 of National Court Rules, default judgment be entered against the defendants and damages to be assessed.

...

And ignoring the fact that notice of intention of defence filed by ... the Solicitor General’s office only relates to the second and third defendants and not the first.

The applicant, plaintiff/applicant has not addressed this court in relation to the non-compliance by the first defendant’s failure to file a notice of intention to defend nor a defence. The plaintiff has relied on his application and moved his application against all defendants, where it is more or less defective. Ask for costs and any further orders the court deems fit.

To address the issue the first defendant is obviously in default, however, the application for default judgment does not address him in anyway. Beside counsel is relying on affidavits that is deposed to on 14 October 2014. Sorry I may just clarify that. On matters that have and has any events that seems superseded that affidavit of service. I mean affidavit filed by Mr Nickson Kuik on 3 October 2014.

Court also notes that the recent application made by the applicants on 14 April a defence out of time was dismissed. And the application for default judgment this court assumes follows the event.

However, having heard counsel for the second and third defendants in relation to their opposition to the application for default judgment, this court is minded and also in consideration of the facts, upon enquiry from this court in relation to whether counsel for the plaintiff had forewarned the defendants in relation to the notice of application and noting Mr. Mileng’s opposition to the application and his references to case law supporting his submission opposing entry of default judgment and for the removal of the second and third defendants as parties to these proceedings, this court is minded to rule that the second and third defendants should be removed as parties to this proceedings and if there is a cause of action available to the plaintiff, then the cause of action lies solely against the first defendant and that cause of action, in the nature of the claim as it is, does not lie against the second and third defendants as it stands.”(Sic,)

27. Having previously refused the second and third respondents' motion for dismissal of the claim for non-discloser of a reasonable cause of action and having consequently declared that they were vicariously liable, if not expressly but implicitly, we find that the primary Judge had no basis to then order their removal as parties in the proceeding. In our respectful opinion the primary Judge was estopped from rehashing an issue which the court had already decided.
    
28. It is perhaps appropriate at this juncture to say something briefly in passing about what “a proper party” and “necessary party” entail. This is important because if the appellant is to succeed in his appeal then he must show that the removal of those parties will have serious implications in terms of attachment of liability by the court and the eventual award and apportionment of damages.
    
29. A “necessary party” is one whose presence in the suit is indispensable to the very existence of the suit and against whom no order can be passed. A “proper party” on the other hand, is one in whose absence an effective order can be passed, but whose presence is necessary for a complete and final decision on the question involved in the suit.
    
30. In the instant case, the State was sued on the basis of vicarious liability, it being alleged that the alleged tort by the principal tortfeasor, the first respondent, was committed in the course of his employment as a servant of the State. The State is therefore a necessary, as well as a proper party. The second respondent is the Commissioner of Police, who in effect and for all practical reasons, is the employer of the first respondent on behalf of the State. The second respondent is therefore a proper party as well as a necessary party. It is through this nexus between the first respondent and the third respondent that liability is to be established.
    
31. In our respectful opinion the primary Judge erred by removing the second and third respondents as parties to the proceeding. The suit alleged vicarious liability on the part of these respondents, particularly the third respondent (State). They are proper as well as necessary parties. Proper, because without them being joined or named, the issue of vicarious liability will have no foundation, and necessary, because no order can be made against them in the event that they are found to have been vicariously liable for the acts of the first respondent.
    
32. As we have alluded to above, having previously refused the respondents' motion for dismissal of the claim for non-discloser of a reasonable cause of action on the basis that vicarious liability was not pleaded pursuant to the Wrongs Act, we find that the primary Judge had no basis to then order their removal. The court was estopped from rehashing an issue which it had already decided.
    
33. On that basis we find that the primary Judge erred in law. This ground of appeal should therefore be allowed.
    

ISSUE 2: Whether the primary Judge erred in refusing to accept the affidavit of Nickson Kiuk.

34. The appellant contended that the primary Judge erred on two fronts when refusing to admit into evidence the affidavit of Nickson Kiuk. First, the State did not raise any objection to the use of the affidavit, and second, the primary Judge had relied on the same affidavit on 14 April 2016 when Her Honour denied the second and third respondents’ motion to file a defence out of time.
    
35. On perusal of the transcript at page 104 of Appeal Book as referred to us by the appellant’s counsel, it is apparent that the primary Judge indeed “relied on” the said affidavit as contended by Mr. Pato. This is evident from the following exchanges between counsel and the primary Judge:
    

MR PATO: “... Your Honour as to whether or not the defendants should be given leave to file defence, your Honour I would like to refer your Honour to affidavit of Nickson Kiuk, document number 28. It is filed on 3 October 2014

HER HONOUR: Yes?

MR PATO: It [affidavit of Nickson Kiuk] was referred to our amended Notice of Motion. We gave notice to my friend that we will be relying on this affidavit but unfortunately I have to rely on it now in response to my friend’s application, your Honour. Your Honour I am looking at paragraph 3 of that affidavit. Your Honour, your sister Judge Justice Murray have the second and third defendants leave to file defence out of time within 14 days from the date of the order. Your Honour that is Annexure A to the affidavit. The order is annexed to Annexure A,

HER HONOUR: Yes, I can see that.

MR PATO: It is very clear. It was taken up during the time Jubilee Tindiwi was Acting Solicitor General. Your Honour, the order is very clear.

HER HONOUR: And counsel chose not to make a reference to it. Is it on the court file, your file? Mr. Akia?

MR AKIA: Yes, your Honour.

HER HONOUR: Was that not disclosed to the court?

MR AKIA: I apologize for not disclosing that your Honour. I was supposed to disclose that but I have not disclosed.

HER HONOUR: Not good enough. [The] least you could have done was, we were given this time to file, we have failed to so but we still seek leave.

MR PATO: Your Honour so from 29 April 2014 they had 14 days to file a defence and the 14 days lapsed on 13 May 2014.

HER HONOUR: It is two years ago. (Sic.)

...

36. After a few more exchanges between counsel and the court, the primary Judge dismissed the second and third respondents’ motion for leave to file a defence out of time or to dismiss the claim for not disclosing a reasonable cause of action. It is apparent to us that the primary Judge clearly relied upon and was persuaded by the facts in Mr. Kiuk’s affidavit, which Mr. Akia somehow did not bring to the court’s attention when moving his clients’ motion.
    
37. Time did not permit the primary Judge to hear the appellant’s amended motion for default judgment and so it was adjourned to 21 April 2016 for hearing. On 21 April 2016, among other things, the primary Judge refused to admit Mr. Kiuk’s affidavit to support the appellant’s motion.
    
38. The matter returned on 21 April 2016 and Mr. Pato moved the appellant’s amended notice of motion for default judgment. The motion sought the following orders:
    
    1. Pursuant to order 12 Rule 8 (1) & (3)(b) of the National Court Rules, the following orders be set aside:-
       • (a) Orders of 20^th October 2015; and
       • (b) Term 2 of the Orders of 29^th February 2016.

Pursuant to Order 12 Rule 25(b) of the National Court Rules default judgment be entered against the defendants with damages to be assessed.

...

...

39. As we said earlier, relief 1 of the motion was abandoned and the court then proceeded only to hear the application for default judgment.
    
40. Apart from his own affidavit filed on 31 March 2016, Mr. Pato sought to also rely upon the affidavit filed by Mr. Nickson Kuik on 03 October 2014 to support the appellant’s motion for default judgment. The primary Judge did not allow the appellant to rely on Mr. Kiuk’s affidavit on the basis that the appellant cannot rely on events that were deposed to two or more years previously and that if the appellant had intended to so rely on such an affidavit then he must depose to new affidavit stating the events that had occurred since then. (See p.128, para. 35 - 42 and p.130, para. 15 – 20 of the Appeal Book) The primary Judge then proceeded to order the removal of the second and third respondents from the proceedings as we have alluded to earlier.
    
41. So, the question is, did the primary Judge err in law in rejecting Mr. Kuik’s affidavit?
    
42. Order 4 Rule 44 of the National Court Rules relevantly provides for affidavits as follows:
    
    43. Affidavits.
        

(1) Where a motion is founded on facts or on facts and documents, unless the Court otherwise orders, an affidavit setting forth those facts and having annexed to it those documents (if any) shall be filed with the notice of motion, and a copy of the affidavit shall be served on the parties sought to be affected by the motion with the notice of the motion.

(2) A respondent may, before the date appointed for the hearing or, by leave of the Court within such further time as may be fixed by the Court, file an answering affidavit and shall on the same day serve a copy of it on the applicant.

44. The stipulation under Sub-rule (1) is very clear. If an applicant is to rely on facts and documents to support his motion, then he must file a supporting affidavit attesting to those facts, and annex to it the documents which he relies upon.
    
45. In the instant case, Mr. Pato did not annex Nickson Kiuk’s affidavit to his own affidavit but merely made reference to it at paragraph 3 of his own affidavit. That to us, does not satisfy the requirement of Order 4 Rule 44 (1), which explicitly provides that any document(s) relied upon must be annexed to his affidavit.
    
46. However, as we have said, the primary Judge clearly relied upon that same affidavit when she ruled against the second and third respondents’ motion. Was it then fair and just for the primary Judge to then reject Mr. Kiuk’s affidavit when Mr. Pato sought to rely on it to support the appellant’s motion for default judgment?
    
47. Procedurally the primary Judge was correct. However, when the same affidavit was the basis upon which the Court dismissed the respondents’ motion on 14 April 2016, it was, in our opinion, unjust and unfair to reject it when considering the appellant’s motion for default judgment.
    
48. Be that as it may, we should stress that the appellant was not entirely faultless here. Counsel ought to have annexed Mr. Kiuk’s affidavit to his own affidavit pursuant to Order 4 Rule 44(1). It is insufficient for him to merely make reference to it, and so the court was quite correct in rejecting the use of Mr. Kiuk’s affidavit.
    
49. Had it not been for the fact that the court had previously relied upon the same affidavit in its earlier ruling, we would have no hesitation in dismissing this ground of appeal.
    
50. However, we uphold this ground on the basis that it was unfair and unjust for the court to reject the affidavit in the circumstances alluded to.
    

ISSUE 3: Whether the primary Judge erred in refusing to order default judgment

51. The appellant argued that the primary Judge erred when refusing to enter default judgment against the respondents particularly in circumstances where the court had dismissed the second and third respondents motions to dismiss the proceedings and for extension of time to file a defence for these reasons:
    

(i) the court did not have the discretion to refuse the entry of the default judgment in so far as it applies to the second and third respondents (David Ande v Nelson Pano (2008) N3271).

(ii) as for the first respondent, the relief for entry of default judgment was sought by the appellant in his notice of motion against all respondents, which included the first respondent.

(iii) the appellant’s application for default judgment satisfied all the prerequisites for a grant of such relief (Urban Giru v Luke Muta (2005) N2877).

52. We will deal quickly with the appellant’s second assertion. A cursory glance at the relief sought by the appellant in his amended notice of motion filed 31 March 2016 shows that the appellant did indeed seek default judgment for all respondents. Item No.2 of the relief sought by the appellant reads “Pursuant to Order 12 Rule 25(b) and Rule 28 of the National Court Rules, default judgment be entered against the defendants with damages to be assessed.” (underlining added) That to us is as inclusive as one can get and so we agree that the primary Judge erred in that regard.
    
53. Of course, whether or not default judgment ought to have been entered against the first respondent or anyone for that matter, depended on the requirements or prerequisites being satisfied which we will now discuss.
    
54. The first aspect of the appellant’s assertion that the primary Judge erred in refusing to enter default judgment against the respondents is that the primary Judge did not have the discretion to refuse default judgment on the basis that the respondents (particularly the second and third respondents) had failed to comply with an order directing them to file their defences within 14 days upon their own motion.
    
55. The appellant relies on Ande v Pano (supra). In that case the plaintiffs sued the defendants which included the State for general and exemplary damages for destruction of properties and livestock during a police raid. After service of the writ of summons on the State and the alleged primary tortfeasors the defendants failed to file and serve their notices of intention to defend and defence within the time stipulated under Order 4, Rule 11 (b)(i) of the National Court Rules and s 9 (1) (a) of the Claims By & Against the State Act 1996.
    
56. The Solicitor General subsequently applied for leave for extension of time to file the State’s Notice of Intention to Defend and Defence out of time. Leave was granted and the State was directed to file within 14 days. The State did file its Notice of Intention to Defend and Defence, but did so more than three months after the expiration of the 14 days directed by the court. In failing to do so, the defendants defaulted a second time.
    
57. The defendants’ failure prompted the plaintiffs to move for default judgment. At the hearing of the plaintiffs’ motion for default judgment Makail J had to decide whether default judgment ought to be entered against the defendants notwithstanding the fact that they had filed their Defence outside the fourteen (14) days ordered by the court.
    
58. His Honour differentiated the nature and consequence of default under the National Court Rules and a court order and held that where a defendant’s default stems from a non-compliance with a court order or direction, the court has no discretion to refuse default judgment.
    
59. His Honour distinguished the case before him from Motor Vehicle Insurance (PNG) Limited v Sossie Joe (2007) SC863 (Injia DCJ (as he then was), Manuhu and Hartshorn JJ). In that case the appellant (MVIL) was sued for damages for personal injury. MVIL filed its Notice of Intention to Defend outside of the time stipulated under Order 4 Rule 11 (b)(i) of the National Court Rules, and its attempt to file its Defence thereafter was, however, refused by the registry on the basis that it required leave of the court to do so. MVIL then sought orders from the National Court to compel the registry to accept the Defence without leave. The National Court held that MVIL indeed required leave. MVIL then appealed that decision.
    
60. The question before the Supreme Court was whether, having filed its Notice of Intention to Defend out of time, MVIL can file its Defence without leave within fourteen (14) days of the expiry of the prescribed time limit. We agree with the sentiments expressed by Makail J in his Honour’s judgement in paragraphs 19 – 24 and 29 where his Honour distinguished the facts of the two cases.
    
61. We agree that where a defendant has failed to file a Defence by a time stipulated in a court order, the court must give effect to the order and enter default judgment as a matter of course. Unless there are no other factors preventing the entry of judgment the court will have no discretion to refuse default judgment. The reason for this is quite simple - the court has a duty to protect its process and authority from being abused.
    
62. In such a situation, would a plaintiff be required to forewarn the defendant? We agree with the appellant that there is no obligation by the plaintiff to forewarn the defendant for the simple reason that the National Court Rules no longer apply. Rather it is a case of non-compliance with a court order or direction and a non-compliant party must face the consequences. In the normal course of things, a court may issue anticipatory self-executing orders to the effect that the matter stands dismissed in the event of non-compliance.
    
63. There may, however, be situations where a defendant may have a very compelling reason or reasons for non-compliance. It may be due to exceptional circumstances beyond the power and control of the party or counsel. For instance, there may be a natural disaster or emergency that prevented the party from complying with a court order. The circumstances are many and varied and so it will not be appropriate for us to enumerate them in any detail here. It is, however, incumbent upon the defendant to persuade the court against making a ruling that is adverse to his interest.
    
64. So, in the circumstances of the instant case, did the primary Judge err in refusing to enter default judgment against the defendants?
    

65. This was an exercise of discretion by the primary Judge. In that regard, the law is settled that an appellate court will not interfere or disturb the exercise of a discretionary judgment on a procedural matter unless it is satisfied that the exercise of the discretion was clearly wrong. A discretionary judgment maybe set aside if an identifiable error occurred in the exercise of discretion. But even where no error has been identified, the judgment may still be set aside if the resulting judgment or order is “unreasonable or plainly” unjust in which case an error may be inferred. (Curtain Bros (PNG) v University of Papua New Guinea (2005) SC 789 (Injia DCJ, Jalina, Sevua JJ). The court there said further:

“These principles are well established. We adopt a passage from Kitto J in the Australian High Court case of Australia Coal and Shale Employees’ Union v The Commonwealth [1953] HCA 25; (1956) 94 CLR 621 at p. 627, which was adopted by Clarkson J in Breckwoldt & Co. (N.G.) Pty Ltd v Groyke [1974] PNGLR 106 at p.112 – 113:

"... the true principle limiting the manner in which appellate jurisdiction is exercised in respect of decisions involving discretionary judgements is that there is a strong presumption in favour of the correctness of the decisions appealed from, and that that decision should therefore be affirmed unless the court of appeal is satisfied that it is clearly wrong. A degree of satisfaction to overcome the strength of the presumption may exist where there has been an error which consists in acting upon a wrong principle, or giving weight to extraneous or irrelevant matters, or failing to give weight or sufficient weight to relevant considerations, or making a mistake as to the facts. Again, the nature of the error may not be discoverable, but even so it is sufficient that the result is so unreasonable or plainly unjust that the appellate court may infer that there has been a failure properly to exercise the discretion which the law reposes in the court of first instance ..."

66. Applying the above principle to the facts of the case before us, it appears plain to us that the second and third respondent’s default was flagrant and inexcusable. They failed to file their Defences within the 14 days allowed by the court. They gave no explanation why they failed to comply but instead sought to have the proceedings dismissed for non-disclosure of a reasonable cause of action which was dismissed by the primary Judge. Undeterred they rehashed the issue on 21 April 2016, which resulted in the primary Judge reversing her ruling, which we have found to be an error, as the primary Judge was estopped from doing so.
67. The primary Judge held that the appellant did not include the first respondent in his notice of motion for default judgment. However, as we have already found the motion indeed covered all respondents, hence, the primary Judge clearly erred in holding otherwise.

68. The first respondent was, therefore also clearly in default. He neither filed a Notice of Intention to Defend nor a Defence for that matter. And there appears to be no good reason why default judgment should not be entered against him.

69. In our opinion, this was a case in which this Court can set aside the discretionary judgment of the primary Judge because an error had clearly been identified.

70. This ground of appeal is therefore allowed.

DISPOSITION OF THE APPEAL

71. Given that we have essentially allowed the appeal, what then should we do? The Supreme Court is vested with Constitutional and statutory powers to not only review decisions of the National Court, but also make such orders as ought to have been made by the National Court in appropriate cases in order to do justice.

72. Section 155 (2) and (4) of the Constitution relevantly provides:

155. The National Judicial System.

(1) ..........
(2) The Supreme Court—
(a) is the final court of appeal; and
(b) has an inherent power to review all judicial acts of the National Court; and
(c) has such other jurisdiction and powers as are conferred on it by this Constitution or any other law.

(3) ..........

(4) Both the Supreme Court and the National Court have an inherent power to make, in such circumstances as seem to them proper, orders in the nature of prerogative writs and such other orders as are necessary to do justice in the circumstances of a particular case.

73. The Supreme Court Act 1975 recognises and gives effect to these powers. Section 6 (1) provides that an appeal to the Supreme Court shall be by way of a rehearing on the evidence adduced in the court below. Where the justice of the case warrants, the Court may allow fresh evidence and of course draw inferences of fact. Subjection (2) of Section 6 then provides that “...... the purposes of hearing and determining an appeal, the Supreme Court has all the powers, authority and jurisdiction of a Judge exercising the jurisdiction of the National Court.”

74. Section 16 of the Supreme Court Act further provides that on the hearing of the appeal and after enquiring into the matter, the Court may do any of the following things:

(a) adjourn the hearing from time to time; or

(b) affirm, reverse or modify the judgement; or

(c) give such judgement as ought to have been given in the first instance; or

(d) remit the case in whole or in part for further hearing; or

(e) order a new trial.

75. The most just and appropriate thing to do, in our view, in the circumstances of this case, is to exercise our powers and give such judgement as ought to have been given by the learned primary Judge, which in this case was to order entry of default judgment against all respondents.

76. In our view, the facts deposed to in the affidavit of Nickson Kiuk aptly supported the appellant’s notice of motion for default judgment. This is the affidavit which we have found the primary judge had erred in rejecting.

77. Thus, the affidavit by Nickson Kiuk provided sufficient evidentiary basis to justify entry of default judgment against the respondents. In other words, it met all the requirements for default judgment (Giru v Muta (supra)). But the most compelling reason to justify the entry of default judgment was the flagrant, inexcusable and reprehensible conduct by the second and third respondents and their lawyer (Solicitor General) in terms of their failure to comply with two court orders. With respect, we consider that the primary Judge ought to have acted accordingly in protecting the process and authority of the Court by having the judgment entered as a matter of course.

78. We therefore uphold the appeal. We quash and set aside the decision and order of the National Court of 21 April 2016. We order that default judgment be entered against all the respondents. And we further order that the matter be remitted to the National Court for assessment of damages.

79. PITPIT J: I have read the joint draft judgment of my brothers Yagi and Toliken JJ and I agree entirely with their reasoning, conclusions and the orders they proposed.

ORDERS OF THE COURT

1. The appeal is allowed.
2. The orders of the National Court made on 21 April 2016 are quashed and set aside.
   
3. Default judgment is entered against all respondents.
   
4. The matter is remitted to the National Court for assessment of damages.
   
5. The third respondent (The Independent State of Papua New Guinea) shall pay the appellant’s cost in this appeal on party-party basis, to be taxed, if not agreed.

________________________________________________________________
Parker Legal: Lawyer for the Appellant
Lawyer for the First Respondent: In Person
Solicitor General: Lawyer for Second & Third Respondents