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August v Hargy Oilpalm Ltd [2006] PGNC 18; N2966 (20 January 2006)

N2966

PAPUA NEW GUINEA

[IN THE NATIONAL COURT OF JUSTICE]

WS 747 OF 1995

BETWEEN:

JACK AVU AUGUST
First Plaintiff

AND:

EWASSE LANDOWNERS ASSOCIATION INCORPORATED (As representative of those persons whose names appear in the first schedule to this writ) ("the represented persons")
Second Plaintiff

AND:

HARGY OILPALM LIMITED
First Defendant

AND:

BARON THEO, JOHN WINJAND, DAVID JAMES BOARDMAN, BERNARD DE GERLANCHE DE GOMERY, KLAUS OVERBECK, UTULA SAMANA
Second Defendant

Waigani: Davani, .J
2005: 22 December
2006: 20 January

PRACTICE AND PROCEDURE – civil – application for default judgment – deed of release executed by parties – refusal of default judgment – cannot be sustained in law.

PRACTICE AND PROCEDURE – civil – service of writ of summons and statement of claim – Served Writ incomplete – irregular – irregularity can be cured – Court to exercise discretion – O. 1 R. 7 and 8 of National Court Rules; S. 155 (4) of Constitution.

PRACTICE AND PROCEDURE – civil – service of writ of summons and statement of claim – service within time – served writ incomplete – irregular – court to exercise discretion – extend time to reserve writ – O. 4 R. 13 of National Court Rules – O. 1 R. 7 and 8 of National Court Rules; S. 155 (4) of Constitution.

Cases cited:
Anthony John Polling v Motor Vehicle Insurance (PNG) Trust & Others [1986] PNGLR 228;
The South Pacific Post Pty Ltd v Ephraim Ikkena Maduabuchi Nwokolo [1984] PNGLR 38;
Mapmakers Pty Limited v. Broken Hill Proprietary Ltd [1987] PNGLR 78;
Kante Mininga v the State & 2 ors (1996) N1458;
Belta Kitipa v Vincent Uali and 3 others N1773;
POSF v Silas Imanakuan (2000) SC677;
Niugini Mining Limited v Joe Bumbandy for himself and on behalf of Customary Landowners of Mt Victor Gold Mine Area (2005) SC804

Counsel:
V. Narokobi, for the plaintiffs
E. Anderson, for first defendant

20 January 2006

RULING

1. DAVANI J: Before me are two (2) applications filed by both the plaintiffs and the first defendant. The plaintiffs' Notice of Motion was filed on 11 November, 2005 for default judgment to be entered against the first defendant and for damages to be assessed.

2. The application is opposed by the first defendant.

3. The first defendants move by Notice of Motion filed by Gadens Lawyers on 5 December, 2005 seeking leave to file its Defence out of time and also for proceedings to be dismissed for want of prosecution.

4. The application is opposed by the plaintiffs.

5. There is no appearance for and on behalf of the second defendants.

6. I heard the both applications together and reserved for ruling. This is my ruling.

Background

7. The plaintiffs are landowners, members of the Kabulubulu clan whose land is adjacent to watercourses near the first and second defendants palm oil project near Bialla in the West New Britain Province of Papua New Guinea, located on the shores of the Bismark Sea in Stettin Bay. Their claim to the court is for damages for environmental damage, trespass, nuisance, breach of constitutional rights and negligence over the use of their land. They claim that by the defendants' conduct in the manner in which it runs its palm oil plantations, that the defendants have since 1980, discharged into the sea, waste and poisonous products which have damaged their land. This has affected their hunting and fishing grounds, amongst others.

8. I will deal with both applications together.

Applications

9. The application for default judgment by the plaintiff is moved pursuant to O.12 r.25 (b) of the National Court Rules (NCR).

10. The plaintiffs previously had another law firm acting for them, who filed the Writ of Summons and Statement of Claim on 25 August, 1995. The Writ of Summons was allegedly served on the first defendant by effecting service upon one Cosmas Kaue, lawyer/company secretary for the first defendant. This was done on 21 January, 1997 at Portion 1044 Milinch of Ulawun Fourmil of Talasea, Bialla, West New Britain Province. This is deposed to in the Affidavit of Service of one Isaac Joe Voku sworn on 27 January, 1997 and filed on 17 February, 1997.

11. The first defendant filed its Notice of Intention to Defend on 18 February, 1997.

12. The plaintiffs' former lawyers then filed Notice of Change of Address for Service on 20 April, 1998. No further steps were taken on the file until 11 November, 2005 when Narokobi Lawyers filed Notice of Change of Lawyers together with this motion for Default Judgement.

13. Mr Narokobi submits that the first defendant had fourteen (14) days until 4 February, 1997 (from 21 January, 1997 when the Writ of Summons was served on it) to file its Notice of Intention to Defend. It did so but was fourteen (14) days late, filing it on 18 February, 1997. He submits that the first defendant then was to have filed its Defence by 4 March, 1997, thirty (30) days after the due date for filing Notice of Intention to Defend. However it did not do so. Mr Narokobi referred the court to the requirement set in Mapmakers Pty Limited v. Broken Hill Proprietary Ltd [1987] PNGLR 78 which case established the principle that where a defendant has entered his Notice of Intention to Defend, that he must be forewarned before an application for Default Judgement is moved. Such a letter of forewarning was not given to the plaintiff. However, Mr Narokobi submits that Mr Eric Anderson, the first defendant's lawyer, was aware of this requirement. He referred the court to Mr Anderson's affidavit filed on 5 December, 2005 at par (14), par (15) and par (16) where Mr Anderson deposes that he was awaiting a forewarning letter from the plaintiffs' lawyers. Below are extracts from Mr Anderson's affidavit;

14. "At that time, Practice Direction No. NCR 1/87 was already in force and a copy is annexed and marked "D". This Practice Direction was well known to me, and I would expect to have been well known to the plaintiffs then lawyers. It was the practice at that time that Defences could be filed out of time without leave upon receiving a notice pursuant to the Practice Direction.
    
15. At no point were we ever served with a notice pursuant to the Practice Direction, requiring us to file a Defence.
    
16. By the practice at that time, the defendant could have immediately filed a Defence if there was a letter of warning by the plaintiffs."
    

14. Mr Anderson submits that the reason he did not file a Defence was because the Writ of Summons and Statement of Claim did not have annexed to it the coloured map referred to in the summons. This map delineates the area in dispute. Mr Anderson submits that this map is necessary to enable the first defendant to properly plead a Defence to the Statement of Claim. Mr Anderson deposes in his affidavit that on 29 January, 1997 at about 11.06 am, he spoke with the plaintiffs' lawyer and requested a coloured copy of the map. He was advised by the lawyer that he would send him a copy. Attached to the affidavit is a copy of his file note showing his notation of the telephone conversation between the plaintiff's former lawyer and himself. He deposes that he has since, not received a coloured map. The coloured map is referred to in par (2) of the Statement of Claim which states that the land and affected waters are represented by the area coloured on the map and marked as second schedule to the Statement of Claim. The first defendant's response to this paragraph, in its draft Defence, is that although admitting that the first plaintiff has traditional rights in land and waters, that it is unable to identify the location, area and extent of such land and water and that therefore it is unable to determine the extent of the plaintiff's claim.

15. The purpose of a letter of forewarning is to place the other side on notice, that application will be made for Default Judgement if Defence is not filed. Such a letter of forewarning should have been given if the plaintiff's intention was to move for default judgement. If first defendant's counsel was awaiting letter of forewarning, then that was his prerogative. Or he could have also filed his clients Defence. But I have heard that he did not do so because he was awaiting the map. And if the letter of forewarning was issued, then the first defendant's lawyer most probably, would have applied for leave to file his clients Defence out of time.

16. As to the application to dismiss for want of prosecution and the issue of delay, it appears both parties did not take any steps since the plaintiff's filing and service of the Writ of Summons and Statement of Claim and the first defendant's filing of its Notice of Intention to Defend. In my view, the both parties are responsible for the delay that has occurred. I can understand why Mr Anderson has filed the application to dismiss for want of prosecution and for leave to file his clients Defence out of time because the plaintiffs have filed an application for Default Judgement. That may be tactical on the part of the lawyers but it does not assist the court in reaching a fair decision. Which then takes me to the defendant's application for leave to file its Defence out of time. It has taken Mr Anderson nearly nine (9) years to file this application i.e. since filing his clients Notice of Intention to Defend on 18 February, 1997 the reason being that Mr Anderson had yet to receive a map showing the delineated area in dispute. Although I accept Mr Anderson's submissions that without knowing the land area that is in contention and in dispute, that the defendant is unable to properly plead its Defence, I consider the nine (9) year period to be too long a wait.

17. But the Writ of Summons and Statement of Claim that was served is irregular in form because it is incomplete. This court has the option to strike out the proceedings but such an application is not before me. Furthermore, the nature of the plaintiff's claim is such that the matter must continue. Therefore, the orders I will make must ensure that the pleadings are progressed.

18. However before doing that, there is the issue of the Deed of Release which has not been pleaded in the plaintiffs' Statement of Claim. And I do not know if they wish to do so or whether they intend to challenge the legality of this document. That is a matter for them. But the Deed of Release speaks for itself, which states that the plaintiff's forever release and discharge the first defendant from and against all actions, suits, claims, costs and demands which it then had or may have had in respect to the discharge of effluent by the first defendant and the discharge of any human waste together with sludge waste or oil waste into waters about the lands occupied by the villages comprising the Ewasse Landowners Association from 1980 to 5 April, 1995. Which means then that if default judgement is entered, the issue of the existing Deed of Release remains. And of course, that in effect means that the default judgement cannot be sustained in law. In Belta Kitipa v Vincent Uali and 3 others N1773, Injia .J categorized situations where applications for default judgement can be refused.

These were;

1. "The effect of the default judgement would prejudice the rights of other co-defendants; or
   
2. "The pleadings are so vague or do not disclose a reasonable cause of action; or
   
3. "The default judgement cannot be sustained in law".
   

19. The Deed of Release is a valid document. Effectively, the default judgement cannot be sustained in law, whilst the Deed of Release remains a "good" document. And the court has a very wide discretion under O.12 r.32 to enter default judgement. As Injia .J said in Kante Mininga v the State & 2 ors (1996) N1458;

"O. 12 R. 32 of the NCR gives the court a wide discretion to enter default judgement. Even when proof of due service of process on a defendant and proof of the default is established by the plaintiff/applicant the court still has a discretion to refuse to enter default judgement..."

20. The ruling I ought to make should cure the defect in relation to correcting service of the Writ of Summons and Statement of Claim. Can I do that? The writ has been served. But there is an irregularity in the writ which is that the map is not attached. An irregularity can be cured and such powers are available to me under O.1 r.7 and r.8 of the NCR and s.155 (4) of the Constitution, to ensure that justice is done. In this case, it is not a situation where the writ has become stale because of non-service (see O.4 r.13). In this case, the writ was served, but that the writ was defective or irregular in form and that the first defendant at no time challenged the form of that writ.

21. National Court Rules, O.1 r.7 and r. 8 states;

7. "Relief from Rules (1/12)

The Court may dispense with compliance with any of the requirements of these Rules, either before or after the occasion for compliance arises.

8. Non-compliance with Rules not to render proceedings void.

Non-compliance with any of these Rules, or with any rule of practice for the time being in force, shall not render any proceedings void, unless the Court so directs, but the proceedings may be set aside, either wholly or in part, as irregular, or may be amended or otherwise dealt with, in such manner, and on such terms, as the Court thinks fit."

NCR, O.4 r.13 states:

13. "Validity for service. (7/7)

(1) For the purpose of service an originating process shall be valid for two years from the date on which it is filed.
(2) The Court shall not extend the period of two years mentioned in Sub-rule (1).
(3) This rule does not prevent the plaintiff from commencing fresh proceedings by filing another originating process."

Constitution, s.155(4) states:

"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".

22. The court is expressly prohibited from extending time for service of a writ which has gone stale (see O.4 r.13). In the recent Supreme Court decision of Niugini Mining Limited v Joe Bumbandy for himself and on behalf of Customary Landowners of Mt Victor Gold Mine Area (2005) SC804, the Supreme Court discussed this issue and held that the interests of justice was a paramount consideration in exercising the discretion given by O.1 r.7 and r.8 of the NCR "...but that the discretion must be exercised in favour of granting the relief with restraint, for to do otherwise would make a complete mockery of the rules and introduce double standards in dealing with compliance issues.

23. The discretion under the rules must be exercised sparingly, in appropriate cases where it is shown by an applicant that there exists good reasons for failing to serve the writ within time..." (pg.16). In that case, the respondent served an amended writ outside the two (2) year period on the correct registered office of the appellant. Prior to that, it served on the wrong address but within the 2 year period. So in the trial court, the appellant applied to have the writ struck off for serving a stale writ, application under O.4 r.13. The trial judge exercised his discretion under O.1 r.7 and r.8 of the NCR by accepting service of writ on the earlier address as proper service and for pleadings to take their course. The appellant appealed and which appeal was dismissed based on the above reasoning.

24. The Supreme Court in that case, then entered into extensive discussion on the history and background of O.1 r.7 and r.8 and O.4 r.13 of the NCR and also referred to common law cases which decided on this issue i.e. whether O.1 r.7 and r.8 of the NCR gives the court the power to dispense with the requirements for service or to review or extend a writ for purpose of service. The Supreme Court held that it had power under O.1 r.7 and r.8 to extend time for service of writ which has expired notwithstanding the express provision in O.4 r.13 (2). It held that such a writ is not a nullity but an irregularity which can be cured under O.1 r.7 and r.8 of the NCR.

25. The Supreme Court referred to POSF v Silas Imanakuan (2000) SC677 which discussed strict adherence to a code of practice when the rules in that code can be dispensed with.

It said:

"It is now settled law that, the Rules of the Court are not an end in them but a means to an end in all matters going before the Courts. They are only a code of practice and there is no doubt where justice so requires, strict adherence to the rules can be dispensed with in the circumstances of a particular case. For more discussion: see Anthony John Polling v Motor Vehicle Insurance (PNG) Trust & Others [1986] PNGLR 228 at page 230 and The South Pacific Post Pty Ltd v Ephraim Ikkena Maduabuchi Nwokolo [1984] PNGLR 38 at page 46. It should be borne in mind that, the Rules are designed to guide and assist the courts and the parties to reach a fair, orderly and expeditions resolutions of matters before the courts. Their application was thus intended to be flexible."

26. This court is faced with a similar situation, that a writ was served within time, but which was irregular in form. But this irregularity can be cured exercising my discretion under O.1 r.7 and r.8 of the NCR. The first defendant's lawyer did not address the court on the issue of why an application was not made to have the writ struck out for irregularity but I assume that was not his concern then because he was awaiting the map to then file his clients Defence. And the plaintiff also did not take any steps to correct this irregularity, which irregularity remains and will remain unless corrected or the proceedings are dismissed or struck out. And of course where costs are concerned, both parties did not take any steps to correct this anomaly.

27. The nature of this claim is such that it must be properly tried on both issues of liability and quantum. At this time, it is appropriate for this court to rule that it need not consider the merits of the draft Defence filed by Mr Anderson and the propriety of that document because the core issue now is not the Defence but the regularity of the proceedings before me. It is imperative that the whole writ is re-served on the proper address for service and pleadings take their course.

28. Furthermore, issues over the Deed of Release, may then be properly dealt with. Although it has been nearly nine (9) years since the writ was first served on the first defendant, that the both parties have by their actions or inactions, contributed to this stalemate. I am of the view that because a writ was served, albeit irregular in form, that the writ should be re-served, but in its entirety. And of course, the parties must pay their own costs as the circumstances warrant that this be so.

29. Of course, there will be issues about certain parts of the claim being statute-barred but these are matters the plaintiffs lawyers must consider and to take the appropriate steps available to them, after the writ is re-served.

Formal orders

30. I will, in exercising the wide powers available to me under O.1 r.7 and r. 8 of the NCR and s.155 (4) of the Constitution, order the following;

1. Within fourteen (14) days from today, the plaintiff shall re-serve, upon the first defendant's lawyers, a sealed copy of Writ of Summons and Statement of Claim to which shall be attached a copy of the map containing the delineated coloured area of land that is in dispute;
   
2. Within fourteen (14) days thereafter, the first defendant shall file and serve its Notice of Intention to Defend and Defence, after which the pleadings shall take their normal course;
   
3. Each party shall pay their own costs of this application;
   
4. Time is abridged to time of settlement which shall take place forthwith.
   

____________________________________________________________________

Narokobi Lawyers: Lawyer for the plaintiffs
Gadens Lawyers: Lawyer for first defendant