Nivani Ltd v Independent State of Papua New Guinea [2020] PGSC 32; SC1945 (28 May 2020)

SC1945

PAPUA NEW GUINEA
[IN THE SUPREME COURT OF JUSTICE]

SCA NO 127 OF 2018

NIVANI LIMITED
Appellant

V

THE INDEPENDENT STATE OF PAPUA NEW GUINEA
Respondent

Waigani: Cannings J, Toliken J, Tamate J
2020: 25^th, 28^th May

PRACTICE AND PROCEDURE – motion seeking leave to file defence out of time –whether party seeking leave must provide evidence that it has a defence on the merits – whether the State as a defendant has to seek leave under the Claims By and Against the State Act, s 9.

The appellant, which was the plaintiff in civil proceedings against the State, appealed against an interlocutory order of the National Court to grant leave to the State to file a defence out of time. The appellant argued that the primary Judge erred in law in two respects: (1) failing to enforce the requirement that the party seeking leave provide detailed evidence in support of the proposition that it has a defence on the merits; and (2) allowing the State to rely on the National Court Rules to invoke the Court’s jurisdiction when it ought to have sought leave under s 9 of the Claims By and Against the State Act.

Held:

(1) One of the primary considerations to be taken into account when determining an application for leave to file a defence out of time is whether the defendant has a defence on the merits. This consideration is only properly satisfied if the defendant, in addition to providing a draft defence, provides detailed evidence in support of the defence. The primary Judge erred by not insisting on this requirement.

(2) Civil claims against the State are subject to rules of practice and procedure in the Claims By and Against the State Act, s 9 of which enables the State to apply to the Court to be allowed further time to file a defence. Section 9 was the proper source of jurisdiction for the State to invoke. Reliance on Order 7, Rule 6 of the National Court Rules was inadequate and inappropriate. The primary Judge erred by not insisting on this requirement.

(3) The appeal was allowed, the order of the National Court granting leave was quashed and the proceedings were remitted to the National Court.

Cases Cited

The following cases are cited in the judgment:

Pena v J's Motors Ltd (2006) SC961
Lorma Construction Ltd v The State (2012) N4636

APPEAL

This was an appeal against an interlocutory order of the National Court to grant leave to the State to file a defence out of time.

Counsel

G K Norum, for the Appellant
R Kebaya, for the Respondent

20^th May, 2020

1. BY THE COURT: Nivani Ltd, the appellant, was the plaintiff in civil proceedings against the State in the National Court, WS No 76 of 2018. It appeals against an interlocutory order, which granted leave to the State to file a defence out of time. The appellant argues that the primary Judge erred in law in two respects: (1) failing to enforce the requirement that the party seeking leave provide detailed evidence in support of the proposition that it has a defence on the merits; and (2) allowing the State to rely on the National Court Rules to invoke the Court’s jurisdiction when it ought to have sought leave under s 9 of the Claims By and Against the State Act.

GROUND 1: PARTY SEEKING LEAVE TO PROVIDE EVIDENCE OF DEFENCE ON MERITS

2. One of the primary considerations to be taken into account when determining an application for leave to file a defence out of time is whether the defendant has a defence on the merits. This consideration is only properly satisfied if the defendant, in addition to providing a draft defence, provides detailed evidence in support of the defence. This issue was settled by the Supreme Court in Pena v J's Motors Ltd (2006) SC961:

To show a defence on the merits a proposed draft defence is not sufficient. The applicant must “condescend upon particulars”, that is, not just plead but set out statements of material fact by affidavit evidence which supports the pleading and is sufficient to satisfy the Court that the applicant has a prima facie defence and that it is reasonable that the applicant should be allowed to raise that defence. And that affidavit evidence must be sworn by persons with knowledge of the facts and not the lawyer for the applicant.An affidavit sworn by a lawyer that there is a good defence is generally not sufficient.

3. In this case the State provided affidavit evidence in support of its motion, but there were only vague particulars as to the defence it claimed to have on the merits: that money due to the plaintiff had in fact been paid.

4. The primary Judge, with respect, erred by not insisting on the requirement that there be detailed evidence to support the proposed defence, to demonstrate that it is a good defence. Ground 1 is upheld.

GROUND 2: NOT PROPERLY INVOKING THE COURT’S JURISDICTION

5. Civil claims against the State are subject to rules of practice and procedure in the Claims By and Against the State Act, which put the State in an advantageous position in comparison to non-State defendants by, for example, under s 9, allowing the State a longer time than is available to non-State defendants to file a defence, and allowing the State to apply to the Court under s 9 to be allowed further time to file a defence.

6. Section 9 states:

Notwithstanding anything in any other law, in any proceedings for a claim against the State, the time within which the State shall be required to file a defence or appear in response to a summons on complaint (as the case may be) shall be—

(a) in a claim commenced by writ in the National Court—

(i) where the statement of claim is endorsed on the writ—before the expiry of 60 days after the date of expiry of the time limited for it to give notice of intention to defend; or

(ii) where the statement of claim is not endorsed on the writ—before the expiry of 60 days from the date of service of the statement of claim; or

(b) where a cross-claim is made against the State—before the expiry of 30 days from the date of service of the cross-claim; or

(c) in an application under Section 57 of the Constitution—before the expiry of 90 days from the date of service of the application; or

(d) in a claim made in the District Court—before the expiry of 90 days from the date of service of the summons,

or such further time as the court before which the action is instituted, upon sufficient cause being shown, allows.

7. We uphold the appellant’s argument that s 9 is, as pointed out by Hartshorn J in Lorma Construction Ltd v The State (2012) N4636,the proper source of jurisdiction for the State to invoke in cases where it applies for leave to file a defence out of time. In this case, the State’s notice of motion referred to Order 7, Rule 6 of the National Court Rules, which states:

(1) A defendant may give notice of intention to defend at any time without leave.

(2) Where a defendant gives a notice after the time limited for doing so, he shall not, unless the Court otherwise orders, be entitled to file a defence or do any other thing later than if he had given a notice of intention to defend within that time.

8. This provision of the Rules is, we are informed, often relied on by the State without objection, and leave is granted under this rule as a matter of course. That may well be so. If there is no objection, the judge dealing with the motion can let the issue pass.

9. However, where an objection is raised, as it was in this case, the judge shouldinsist on the clear and correct source of jurisdiction being invoked. Section 9 was the proper source of jurisdiction for the State to invoke. Reliance on Order 7, Rule 6 of the National Court Rules was inadequate and inappropriate. We find, with respect, that the learned primary Judge erred by not insisting on this requirement. Ground 2 is upheld.

CONCLUSION

10. Both grounds of appeal have been upheld, so the appeal will be allowed. We will remit the matter to the National Court with the appropriate orders. Costs will follow the event.

ORDER

(1) The appeal is allowed.

(2) The order of the National Court of 6 July 2018 in WS No 76 of 2018 is quashed.

(3) The defence filed 13 July 2018 in WS No 76 of 2018 is struck out.

(4) WS No 76 of 2018 is remitted to the National Court for further conduct of those proceedings.

(5) The respondent shall pay the appellant’s costs of the appeal on a party-party basis, which shall, if not agreed, be taxed.

Judgment accordingly.
________________________________________________________________
G K Norum, in-house counsel, Nivani Ltd: Lawyer for the Appellant
Solicitor-General: Lawyer for the Respondent