Seeto Kui (Holdings) Ltd (trading as Bowmans-Lae) v Poiou [2022] PGSC 71; SC2270 (29 July 2022)

SC2270

PAPUA NEW GUINEA
[IN THE SUPREME COURT OF JUSTICE]

SCA 65 OF 2021

BETWEEN:
SEETO KUI (HOLDINGS) LIMITED
trading as BOWMANS – LAE
Appellant

AND:
HANNS POIOU
Respondent

Waigani: Cannings J., Hartshorn J., Miviri J.
2022: 25^th, 29^th July

APPEAL -Appeal against refusal to strike out defence and to enter default judgment

Cases Cited:
State v. Central Provincial Government (2009) SC977
Mango v. Passismanua Inland Resource Ltd (2009) SC1163
Ron Napitalai v. PNG Ports Corporation Ltd & Ors (2010) SC1016
James Marape v. Peter O’Neill (2016) SC1493

Counsel:

Mr. J. Kais, for the Appellant

29^th July, 2022

1. BY THE COURT: This is a decision on an appeal against an interlocutory National Court Judgment which refused to strike out a defence and to enter default judgment.

2. The Court permitted the appeal to proceed in the absence of the respondent or representation on his behalf as we were satisfied that the lawyers for the respondent were appropriately and adequately aware of the hearing date and time of the appeal.

Background

3. The appellant commenced a proceeding by writ of summons and statement of claim to seek to recover against the respondent under a purported guarantee.

4. The appellant made application by notice of motion and sought amongst others that:

a) the respondent’s defence be struck out for being filed out of time without leave being sought and for amongst others being an embarrassment;

b) judgment by default be entered for failure to verify the defence and to file a defence in time.

5. The primary judge declined the application to strike out the defence and to enter judgment. The appellant appeals that refusal. The requisite leave to appeal an interlocutory judgment has been granted.

Appeal

6. The appellant’s grounds of appeal are amongst others that the primary judge fell into error in his consideration of the application including in:

a) failing to consider and find that the defence was filed out of time without leave, the defence was embarrassing and that the defence was not verified.

b) failing to strike out the defence and failing to enter default judgment.

c) considering whether summary judgment should have been entered when summary judgment was not sought

Consideration

7. This appeal is against the exercise of discretion by the primary judge in an interlocutory judgment.

8. This Court’s role in an appeal from an exercise of judicial discretion is considered in Curtain Bros (PNG) Ltd v. UPNG (2005) SC788. We respectfully agree with and reproduce the following passage from that decision:

“The appellate Court will not interfere with a discretionary judgment on a procedural matter within its jurisdiction, except where the exercise of that discretion is clearly wrong. A discretionary judgment may be set aside if an identifiable error occurred in the exercise of discretion. Alternatively, it may be set aside where there is no identifiable error, but the resulting judgment or order is “unreasonable or plainly unjust” and such that an error can be inferred. 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 C.L.R. 621 at p.627, which was adopted by Clarkson J. in Breckwoldt& Co. (N.G.) Pty Ltd v. Gnoyke [1974] PNGLR 106 at p.112 – 113:

“The decision by the primary judge to stay the action was made in exercise of a judicial discretion and I accept that in those circumstances the principles on which this Court should act are as described by Kitto J. in Australian Coal and Shale Employees’ Union v The Commonwealth ... 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...”

9. This passage has been agreed with and adopted by this Court in amongst others, the decisions of State v. Central Provincial Government (2009) SC977; Mango v. Passismanua Inland Resource Ltd (2009) SC1163; Ron Napitalai v. PNG Ports Corporation Ltd & Ors (2010) SC1016 and James Marape v. Peter O’Neill (2016) SC1493.

10. In considering whether the primary judge fell into error in the exercise by him of the court’s discretion in refusing to strike out the defence and enter default judgment, from a perusal of the reasons given by the primary judge as recorded in the transcript, the primary judge is primarily concerned with whether a case for summary judgment has been made out and with purported non-compliance by the plaintiff with orders of the court concerning a settlement proposal that should have been given.

11. It is clear that default judgment and not summary judgment was being sought by the plaintiff and so the primary judge has fallen into error in considering otherwise.

12. In regard to the purported non-compliance with orders concerning a settlement proposal, the primary judge refers to a requirement for a person to come to court with clean hands. This is a reference to the maxim that an applicant for equitable relief must come to court with clean hands. In this instance however, the plaintiff was not seeking equitable relief, such as an injunction or a stay. The primary judge fell into error in his consideration of this point in our respectful view.

13. Further, the primary judge in his reasons does not take into account that it was conceded by counsel for the defendant that the defence filed was out of time, that the primary judge had previously stated that the defendant had no right to bring the defence in, had stated that the defence does not exist and had stated that the defendant had not performed and brought the defence into court properly. Moreover, the primary judge in his reasons does not consider that he had already stated that a purported defence based on the Fraud and Limitations Act did not exist. We are satisfied that the primary judge fell into error in not considering these further points in his determination of the application before him.

14. In conclusion, in circumstances where a reasonable cause of action is disclosed in the statement of claim, where the primary judge had previously stated that the defence did not exist and that the defence disclosed did not exist, that the defendant conceded that the defence was filed out of time, that it is not a requirement in the National Court Rules or at all that a settlement proposal be made by a plaintiff before default judgment may be entered and that the plaintiff was not seeking equitable relief, for the primary judge to order otherwise and not enter default judgment in our respectful view, he fell into error.

15. Given the above the appeal should be upheld. The defence should be struck out and default judgment entered with damages to be assessed. It is not necessary to consider the other submissions of counsel.

Orders

16. The Court orders that:

a) This appeal is upheld.

b) The decision and orders in WS No. 475 of 2020 made by the National Court on 10^th June 2021 at Lae, Morobe Province appealed against, are quashed.

c) The defence filed 28^th May 2021 is struck out, judgment is entered for the plaintiff against the defendant with damages to be assessed and the costs of the National Court proceeding are to be paid by the defendant to the plaintiff.

d) The respondent shall pay the costs of the appellant of and incidental to this appeal.
__________________________________________________________________
Huon Lawyers: Lawyers for the Appellant
Daniels and Associates: Lawyers for the Respondent