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Kilip Goi Corporation Ltd v WR Carpenter (PNG) Ltd [2008] PGNC 310; N4004 (2 July 2008)

N4004

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS 879 OF 2007

BETWEEN:

KILIP GOI CORPORATION LIMITED
First Plaintiff

AND:

PURI GOI on his own behalf and as representatives of members of the Tongamp Clan
Second Plaintiff

AND:

WR CARPENTER (PNG) LIMITED
First Defendant

AND:

PACIFIC EQUITIES & INVESTMENTS LIMITED
Second Defendant

AND:

MELANESIAN TRUSTEE SERVICES LIMITED
Third Defendant

Waigani: Hartshorn, J.
2008: 19th March,
: 2nd July

Application for Default Judgment – Extension of time to file Defence

Cases cited:

Duma v. Hriehwazi (2004) N2526
Green & Co. Pty Ltd (Receiver Appointed) v. Roger Britain Green [1976] PNGLR 73
Mapmakers Pty Ltd v. Broken Hill Proprietary Company Ltd [1987] PNGLR 78
Leo Duque v. Avia Andrew Paru [1997] PNGLR 378
Tipaiza v. Yali (2006) N2971

Counsel:

Mr. G. Muroa, for the Plaintiffs
Mr. R. Menrai, for the Defendants
Mr. S. Javati, for the Second Plaintiff

2nd July, 2008

1. HARTSHORN J: The plaintiffs, a company incorporated by the Tongamp Clan of Banz and the Clan's representative (collectively referred to as Kilip Goi), are suing the defendants for alleged breaches of management agreements concerning the operation of a Coffee Estate.

2. Kilip Goi applies for default judgment against the first and second defendants. The second defendant, Pacific Equities & Investments Ltd (PEIL) applies to be granted leave to file its defence. This application was heard first.

Leave to file defence
Principles

3. In the case of Duma v. Hriehwazi (2004) N2526, Kandakasi J. stated that the principles applicable to an application to set aside a default judgment with appropriate modification should apply to an application for leave to file and serve a defence out of time. In the case of Tipaiza v. Yali (2006) N2971, Cannings J. agreed that the factors to be taken into account on an application for an extension of time were; the extent of the delay, the reasons for the delay and does the defendant appear to have a good defence? To those factors he added one further; where do the interests of justice lie? I also make reference to the case of Green & Co. Pty Ltd (Receiver Appointed) v. Roger Britain Green [1976] PNGLR 73. That case involved an application to set aside a default judgment regularly entered. It was held that on such an application, the principal matter that must be shown by the applicant is that he has a defence on the merits. That statement of the law, in my view, is equally applicable to an application seeking an extension of the time in which a defendant may file its defence.

Delay

4. The time for filing the defence by PEIL expired on 8th October 2007. Mr. Paul Mawa deposes inter alia, that he is the lawyer who has carriage of the matter on behalf of PEIL, that since filing a notice of intention to defend, he was not able to focus his attention on this particular proceeding and prepare a defence as PEIL was involved in a number of other legal proceedings before the National and Supreme Courts, that no notice forewarning that Kilip Goi was to apply for default judgment was received, and that PEIL has a meritorious defence.

5. The application to file a defence out of time was not filed until 14th February 2008, over 4 months after the time for PEIL to file its defence had expired.

6. I am not satisfied that the reason given for the delay is adequate. If a lawyer cannot file a defence in time because he is too busy, he should either immediately file an application for an extension of time in which to file a defence, or have another lawyer in his firm takeover carriage of the matter, or with the consent of his client, brief the matter to another firm of lawyers, or inform the client that it should instruct another lawyer.

Defence on the merits

7. To satisfy the Court that it has a defence on the merits, or a good defence to a plaintiff's claim, the defendant or a responsible person on its behalf should disclose the basis of a draft defence. The Supreme Court in Leo Duque v. Avia Andrew Paru [1997] PNGLR 378 said:

"It is clear to us from the authorities we have set out earlier in our judgment and subsequent cases in this jurisdiction that as a matter of practice, an applicant must in an affidavit state material fact showing a defence on the merits."

"A proposed defence prepared by the lawyer is not capable of serving this purpose. The expression of opinion by the lawyer that there is good prospect of success can only amount to a legal opinion. It is not capable of raising the material facts."

Although this case concerned an application to set aside a default judgment, I am of the view that the principles enunciated apply equally here.

8. As to PEIL having a good defence on the merits, Mr. Ruimb, The Managing Director of PEIL, deposes in 3 affidavits inter alia, that PEIL denies liability as it contends in essence, that:

a) the Kilip Goi Project was not an investment of the Investment Corporation Fund of PNG (ICFPNG), but of the Investment Corporation of PNG (ICPNG).

b) PEIL is not responsible for any obligations or liabilities of ICPNG and is therefore not liable as alleged by Kilip Goi.

c) PEIL should not have been named as a defendant in these proceedings.

9. Mr. Ruimb's affidavit of 12th February 2008 has annexed to it a draft statement of defence which contains the defence outlined above in more detail.

10. The affidavits filed on behalf of PEIL in my view, do disclose material facts which show a good defence on the merits. They address specific claims with particularity. Three of the affidavits are by the Managing Director of PEIL.

11. In the circumstances, although the explanation for the delay in filing a defence is not satisfactory, I am satisfied that PEIL has properly shown that it has a good defence on the merits. This is the principal matter that must be shown on an application such as this. I am also satisfied that the interests of justice lie in extending the time in which PEIL should file its defence. Accordingly, I order that PEIL file its defence within 7 days of today. I order costs of the application to the plaintiffs. Consequently, the application of the plaintiffs' for default judgment against PEIL is refused. Costs of that application are to be in the cause.

Application for default judgment against first defendant

12. It is contended on behalf of Kilip Goi that the first defendant, W.R. Carpenters Ltd (Carpenters) has not filed its defence.

13. A search of the Court file does not show that a defence has been filed on behalf of Carpenters. A defence on behalf of Carpenters is not entered on the list of documents on the front cover of the Court file.

14. Carpenters contend that they filed their defence and in time on the 8th October 2008 and that a copy was served on the offices of the lawyers for Kilip Goi on that day.

15. A copy of the sealed copy of the defence of Carpenters is annexed to 2 affidavits filed on Carpenters behalf. The National Court Waigani seal and date stamp showing 8/10/08 are on the front page of the defence. There is not a document number on the front page but a number sign has been written.

16. I am satisfied that the defence was filed, but was then mislaid within the Registry before it was able to be entered and filed in the Court file.

17. In any event, the lawyers for Kilip Goi had received a copy of the defence on 8th October 2007, which is 2 days before the time limit by which Carpenters had to file its defence. This is not disputed.

18. Notwithstanding this, the lawyers for Kilip Goi continued with their application for default judgment on the basis that a Court file search revealed that no defence had been filed. To my mind this is unnecessarily attempting to take advantage of a situation. The lawyers for Kilip Goi had the defence but did not withdraw their default judgment application when called upon to do so.

19. In addition, the lawyers for Kilip Goi concede that they had not given the requisite notice that they would apply for default judgment pursuant to the often quoted case of Mapmakers Pty Ltd v. Broken Hill Proprietary Company Ltd [1987] PNGLR 78.
20. In all the circumstances, I dismiss the application for default judgment against the first defendant and award costs of and incidental to the application to the first defendant on a solicitor client basis.

Orders

21. The orders sought in paragraph 2 of the notice of motion of the second defendant filed on 14th February 2008 are granted. The costs of and incidental to that notice of motion are to be paid by the second defendant to the plaintiffs.

22. The orders sought in the notice of motion of the plaintiffs filed on 23rd January 2008 are refused. The costs of and incidental to that notice of motion in respect of the second defendant are costs in the cause and in respect of the first defendant are to be paid by the plaintiffs on a solicitor client basis.

_____________________________________________________________
Nonggorr & Associates Lawyers: Lawyers for the Plaintiffs
Warner Shand Lawyers: Lawyers for the First Defendant
Mawa Lawyers: Lawyers for the Second Defendant