N1721

PAPUA NEW GUINEA
[In the National Court of Justice]

W.S. 568 OF 1995

BETWEEN:

REUBEN DUMM
Plaintiff

AND:

BEMBI SIGERE
First Defendant

AND:

GOROKA LOCAL GOVERNMENT COUNCIL
Second Defendant

Goroka: Sakora
1995:20 October
1997: 30 June

Practice and Procedure – Application to set aside default judgment – Principles applicable – National Court Rules (NCR), O.12, rr25,2627 & 35., O.7, r.6.

Cases Cited
The following cases are cited in the judgment.
Green & Co. Pty Ltd. –v- Green [1976] PNGLR 73.
George Page Pty Ltd –v- Balakau [1982] PNGLR 140
PNG –v- Barker [1977] PNGLR 386
Mapmakers Pty Ltd –v- Broken Hill Pty Ltd [1987] PNGLR 78

Mr Dumm in person
Mr Kot for the 1st & 2nd Defendants

30 June, 1997

SAKORA, J: This is an application by the second defendant to set aside default judgment entered against it by this court on 22 September, 1995. No order(s) was or were sought nor made in respect of the first defendant.

I heard both the plaintiff (who appeared in person) and Mr Kot of counsel for and on behalf of the defendant council.

The default judgment was entered pursuant to O 12 rr 25 and 27 (1) National Court Rules (NCR). This was a judgment that was regularly entered, in full compliance with the NCRs'. The plaintiff's writ of summons was issued on 11 July 1995, claiming on an oral agreement between him and the first defendant acting on behalf of the second defendant.

The writ of summons was duly served on the second defendant on the date of it's sworn 28 August 1995. A search of the court file by the plaintiff revealed that the defendant council had not filed it's Notice of Intention to defend within the required 30 days after the service of the writ: affidavit of the plaintiff (search) sworn 28 August 1995. Being entitled, therefore, under the NCRs to take the steps necessary on his own part to obtain relief, the plaintiff duly filed a Notice of Motion dated 28 August 1995, applying for entry of judgment in default pursuant to O 12 rr 25,26,27 (1). This notice was duly served on the defendant council: affidavit of service of the plaintiff sworn 4 September 1995.

The plaintiff thus having duly complied with the NCRs on his own part, and in direct consequence of the default by the defendant council, default judgment was regularly entered.

The defendant council now comes to court seeking to set aside this order of the court that was made in full compliance with the NCRs. In support of this application, by Notice of Motion filed 4 October 1995, are filed the following documents:

-	Affidavit of Bob Mikave sworn 4 October 1995 and filed of even date.

-	Affidavit of Emmanuel Tokom sworn and filed 4 October 1995

-	Affidavit of Kui Kot sworn and filed 4 October 1995.

The application seeks, firstly, an order to set aside the default judgment, and, secondly, grant of leave to file Notice of Intention to Defend and the Defence itself, out of time. The first relief or remedy sought is empowered under O 12 r 35 NCR which reads;

35. Setting aside judgment the court may, on such terms as it thinks just, set aside or vary a judgment entered in pursuance of this Division.

The second relief sought, the grant of leave to file out of time, is in pursuance of O 7 r 6 which reads:

6. Late notice

(1)	……..
(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.

The law in this jurisdiction is settled on the serious issue of when is a defendant entitled to have set aside a judgment that has been regularly entered against him. Since the decision of Green & Co. Pty Ltd –v- Green [1976] PNGLR 73, and subsequent decisions of our courts in George Page Pty Ltd –v- Balakau [1982] PNGLR 140., PNG –v- Barker [1977] PNGLR 386., and Mapmakers Pty Ltd –v- Broken Hill Pty Ltd [1987] PNGLR 78, the principles are well-settled. It is incumbent upon the applicant to demonstrate the following to the satisfaction of the court;

1.	Reasonable explanation as to why judgment was allowed to be entered by default.

2.	If there has been delay in making the application to set aside, reasonable explanation as to this delay.

3.	There is defence to the subject claim on the merits.

As the judgment of His Honour Acting Justice O'Leary (as he then was) in Green & Co Pty Ltd (supra) emphasises (pp76-77), the principal matter that must be demonstrated to the satisfaction of the court is that the applicant/defendant has a defence on the merits. Otherwise, it would be a futile exercise in the end, and unfair to the plaintiff, to set aside a judgment regularly entered in full compliance with procedural law.

The learned judge, citing with approval from the Victorian case of Gamble –v- Killingsworth [1970] VR.161, at 168, said this (ibid):

In fact, it has been said that it is an "almost inflexible rule" that the court will not accede to the application unless the applicant does show such a defence.

His Honour went further and noted that (ibid):

Obviously, on any such application, a court would be bound to consider "whether any useful purpose is served by acceding to the application. Plainly no useful purpose is served if it appears that if the judgment were set aside and the action allowed to go to trial, there would be no possible defence": see Bayview Quarries Pty Ltd –v- Castley Bartlam [1937] Ac 473.

The learned judge than stated that after considering and determining the principal matter, the court must go on to consider whether or not the other factors have been satisfied. I respectfully adopt the principles enunciated by Green & Co. Pty Ltd (supra), as have all courts in this jurisdiction.

I have heard Mr Kot of counsel for the defendant council and read very carefully the material put before and urged upon me in support of this application. From the three (3) affidavits filed in support, the following circumstances are specifically noted here as giving rise to the plaintiff's claim and this application. In 1987 the National Government did not remit to the defendant council the sum of K350,000.00 that was due to it as outstanding land rate fees. The council took action, administratively it would seem, to recoup the money. This resulted in the payment of K15,000.00 in 1991. The balance of K200,000.00 was promised to be paid when funds became available.

When the payment of the balance did not eventuate, the council once again became anxious and sought ways and means of getting paid. In early 1994 the Council Manager, a Mr Emmanuel Tokom, approached the plaintiff who said "he knew a person that we could talk to recoup the outstanding balance" (see affidavit of Emmanuel Tokom, supre,para.5). So the Council Manager, the Vice President of the Council and the plaintiff travelled to Mt Hagen to meet with a Yanga Kare, the Regional Manager for the Agriculture Bank. After the meeting necessary documents were left with Mt Kare for him to contact the National Finance Department with a view to getting the council paid. As a direct result of Mr Kare's intervention, the council was paid the outstanding K200,000.00 in July 1994 (see paras.6 and 7 of affidavit of Emmanuel Tokom, supra).

The alleged oral agreement the subject of the plaintiff's claim was entered into between the first defendant and the plaintiff. The first defendant, a councillor with the second defendant, and was at the time of the agreement acting as President of the council in the absence on sick leave of the President, Mr Bob Mikave, purported to act on behalf of the second defendant and exercising powers of the President. The affidavit of the President (supra) asserts that the first defendant had no legal authority to commit the council for such an amount as claimed. It is therefore, the contention of the defendant council that proper financial procedures were not followed and, further, that by law (pursuant to s.27 of the Eastern High Provincial Government Council Act, 10 of 1978), the first defendant had no authority to enter into such an agreement and committing the council for such an amount.

Whilst the President and the Council Manager do not specifically deny such an (oral) agreement, they assert its illegality (procedurally and legislation). The material demonstrate also that these office- holders of the council were not aware of the existence of the agreement and the purported commitment until the plaintiff began pursuing his claim.

The affidavit of Kui Kot (supra) deposes to the steps his law firm took upon receiving instructions from the second defendant on 14 August 1995. He acknowledges default under the NCRs but attributes this (as does the President in his affidavit, supra) to the inexplicable inaction of the council's original lawyers.

In this application, the material before me, as canvassed above, satisfy me that the order of this court made 22 September 1995 should be set aside. Without entering into a discussion of the relative merits of the case and the defence proffered by the defendant council, I am satisfied, firstly, that it has demonstrated a defence on the merits.

Secondly, I am satisfied with the explanation as to why there was default in filing the necessary pleadings to protect it's interest, thereby allowing default judgment to be entered against it. The fault was not the fault of the defendant council, but rather that of the lawyers to whom instructions were given upon service of the writ of summons. And once the consequences of this inexplicable delay or inaction became apparent, the defendant changed lawyers and instructed the present lawyers who, I might add, have taken all available avenues and necessary action to protect the interest of the defendant. It would be patently unfair, in my opinion, to penalise for what, to me, is an obvious case of professional negligence on the part of the original legal advisers. And, under the circumstances of this case, taking legal action against original lawyers would adequately resolve the legal issue (s) raised by the defendant's demonstration of the principal matter or factor here.

Thirdly, I am equally satisfied that there has been no, or no inordinate, delay in bringing this application. Upon being instructed, the defendant's new legal representatives have taken all necessary steps, as described above and as evidenced in the material before me, to bring this application to protect its interests.

………enrichment" when the whole basis of any such entitlement is now a formal legal dispute: lex inter partes

It is my judgment, therefore, that the application be granted and the order of the court made 22 September 1995 be set aside. The court also grants leave to the defendant to file Notice of Intention to Defend and the Defence its self out of time. And these having already being filed (see affidavit of Kui Kot, supra, paras.4 & 5) the court accepts these as having being filed pursuant to grant of leave. The parties, therefore, should take the necessary action(s) to set this matter down for substantive hearing.

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Lawyers for the Applicant: Pryke & Co. Lawyers
Plaintiff in Person