N4268

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS 1445 OF 2009

BETWEEN:

INCHCAPE SHIPPING SERVICES
(PNG) LIMITED
Plaintiff

AND:

T G HOLDINGS LIMITED trading as
FREEWAY MOTORS
Defendant

Waigani: Hartshorn, J.
2010: 23rd September,
: 11th October

Application to set aside default judgment

Facts:

This is an application to set aside a default judgment. The plaintiff as sub- bailee and agent commenced this proceeding seeking amongst others, the value of 13 vehicles that had been improperly taken by the defendant. Default judgment was entered for failure to file a defence. The defendant has applied to set aside the default judgment and to file its defence out of time.

Held:

1.	In setting aside a judgment entered regularly, the defendant must:

a) show that it has a defence on the merits,
b) provide a satisfactory explanation as to why the judgment was allowed to go by default,
c) show that the application is made within a reasonable time of the judgment becoming known:

Green & Co. Pty Ltd (Receiver Appointed) v. Roger Britain Green [1976] 	PNGLR 73 followed. 

2.	The affidavit of the General Manager of the defendant does not disclose a reasonable defence on the merits.

3. 	As for allowing the judgment to go by default, the negligence of a lawyer is not generally a good reason for granting an extension of time: See Peter Dixon Donigi v. Base Resources Ltd [1992] PNGLR 110. Similarly, the negligence of a lawyer should not constitute a satisfactory explanation on behalf of a defendant as to why a judgment was allowed to be entered against it by default.

4. 	An application to set aside an order should be made as soon as possible after it comes to the defendant's knowledge: Rosing v. Ben Shemesh [1960] VR 173, North v. Shierlaw (1897) 13 WN (NSW) 163. Any delay in making the application must be satisfactorily explained: Term Sales Pty Ltd v. Joseph (1949) 67 WN (NSW) 44. A period of just under one month taken to file a notice of motion to set aside is not excessive.

5. 	The defendant has not shown that it has a defence on the merits and that it has a satisfactory explanation as to why default judgment was allowed to be entered. The application of the defendant to set aside the default judgment is refused. The costs of the application are awarded to the plaintiff.

Cases cited:

Papua New Guinea cases

Peter Dixon Donigi v. Base Resources Ltd [1992] PNGLR 110

Overseas Cases

North v. Shierlaw (1897) 13 WN (NSW) 163
Term Sales Pty Ltd v. Joseph (1949) 67 WN (NSW) 44 
Rosing v. Ben Shemesh [1960] VR 173
Green & Co. Pty Ltd (Receiver Appointed) v. Roger Britain Green [1976] PNGLR 73 

Counsel:

Mrs. G. T. Elai, for the Plaintiff 
Mr. S. Liria, for the Defendant

11th October, 2010

1. HARTSHORN, J: The Plaintiff, Inchcape Shipping Services (PNG) Ltd (Inchcape), alleges that the defendant, T. G. Holdings Ltd trading as Freeway Motors (Freeway), improperly took possession of 13 vehicles that had been shipped to Port Moresby. Inchcape is the sub-bailee of the vehicles. Demand was made for the return of the vehicles but to no avail. Inchcape commenced this proceeding seeking amongst others, the value of the vehicles. Default judgment has been entered against Freeway for failure to file its defence.

2. Freeway now applies to have the default judgment set aside and to be given leave to file its defence out of time.

Preliminary

3. Counsel for Inchcape objected to the application proceeding as leave had not been obtained by Freeway to proceed on its amended notice of motion, as is required by Order 8 Rule 50 National Court Rules. Counsel for Freeway submitted that as Counsel for Inchcape had previously indicated that she was ready to proceed, no objection had been taken until after he had moved upon the amended notice of motion and as Inchcape was not prejudiced by the amendments to the notice of motion, leave should be granted. I agree with the submission of Counsel for Freeway on this point.

4. Counsel for Inchcape further objected to the Rules under which application is made by Freeway, but I find no merit in that objection.

Setting aside a judgment entered regularly – principles

5. The law on a setting aside application where a judgment is entered regularly, which counsel for Freeway concedes that this is, is well settled: Green & Co. Pty Ltd (Receiver Appointed) v. Roger Britain Green [1976] PNGLR 73. 

6. The defendant must:

a) show that it has a defence on the merits,
b) provide a satisfactory explanation as to why the judgment was allowed to go by default,
c) show that the application is made within a reasonable time of the judgment becoming known.

Defence on the merits

7. As to a defence on the merits, 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 facts showing a defence on the merits." 

8. The General Manager of Freeway, Mr. Teddy Tasion deposes amongst others that:

a)	Freeway has an existing business arrangement with Sanyu Co Ltd, the owner of the subject vehicles, whereby if Freeway imports vehicles from Sanyu, Freeway pays Sanyu directly,

b)	Inchcape is an agent of NYK Shipping which is engaged by Sanyu to ship vehicles. Inchcape does not own the vehicles and is not entitled to receive payments from the sale of the vehicles. Inchcape is only entitled to payment for services rendered as agent, which have been paid.

9. Mr.Tasion also annexes a draft defence to his affidavit. The draft defence contains a general denial and then pleads amongst others, that Inchcape does not own the vehicles and does not have any claim against Freeway as payment for the vehicles is to be paid to Sanyu.

10. In essence, the defence is that Inchcape has no title to the vehicles. In the statement of claim it is pleaded that Inchcape is the sub-bailee for the vehicles as well as being the agent of Nippon Yusen Kaisha Line. The issue of Inchcape being sub-bailee has not been addressed by Mr. Tasion and the draft defence does not specifically answer the allegations pleaded in the statement of claim. Further, the annexure concerning other vehicles, relied on as evidence of an existing business relationship with Sanyu, whereby Freeway pays by direct transfer of funds into Sanyu's account upon the sale of a vehicle, does not show such a relationship. Rather, the annexure appears to evidence a debt repayment agreement dated June 2009. One would have thought that if Sanyu had title and did not concur with Inchcape prosecuting this proceeding, appropriate evidence would have been filed in support of Freeway's application. The affidavit of Mr. Tasion to my mind, does not disclose a reasonable defence on the merits.

Judgment entered by default – reasons

11. As to why judgment was allowed to be entered by default, the only evidence given on behalf of Freeway in this regard is that Mr. Tasion gave instructions to Freeway's previous lawyers to file a defence, but they did not. It has been held on numerous occasions that the negligence of a lawyer is not generally a good reason for granting an extension of time; Peter Dixon Donigi v. Base Resources Ltd [1992] PNGLR 110. Similarly in my view, the negligence of a lawyer should not constitute a satisfactory explanation on behalf of a defendant as to why judgment was allowed to be entered against it by default.

12. On an examination of the e-mail annexure upon which Mr. Tasion relies in support of his contention that he instructed his lawyers to file a defence, the e-mail is dated 2nd May 2010. However the time by which a defence was to be filed expired on 8th February 2010 and an extension of time until 24th February 2010 was given by the lawyers for Inchcape. Further, there is no mention in the e-mail of any instruction to file a defence, as deposed. I am not satisfied on the evidence that Mr. Tasion did instruct his lawyers to file a defence as he deposes. Rather, the evidence in this regard in my view, is of a defendant sitting on its rights.

13. There is no explanation as to why Freeway's lawyers did not appear on the hearing of the default judgment application notwithstanding that they had been served with a notice of motion and affidavit in support and were further served with a letter informing them of the date to which the default judgment application had been adjourned.

14. I am not satisfied that the explanation as to why the judgment was allowed to be entered by default is satisfactory.

Timing of application to set aside

15. A setting aside application should be made as soon as possible after it comes to the defendant's knowledge: Rosing v. Ben Shemesh [1960] VR 173, North v. Shierlaw (1897) 13 WN (NSW) 163. Any delay in making the application must be satisfactorily explained: Term Sales Pty Ltd v. Joseph (1949) 67 WN (NSW) 44. 

16. The order of default judgment was served upon Freeway's lawyers on 12th August 2010. The first notice of motion to set aside the default judgment was filed on 10th September 2010 and an amended notice of motion was filed on 21st September 2010.

17. Counsel for Inchcape submitted that Freeway's notice of motion to set aside was prompted by Inchcape's notice of motion filed 3rd September 2010 seeking leave to file a garnishee notice. That's as may be, however I do not consider a period of just under one month taken to file a notice of motion to set aside, excessive.

Conclusion

18. I am not satisfied that Freeway has shown that it has a defence on the merits and that it has a satisfactory explanation as to why default judgment was allowed to be entered.

19. In the circumstances I am not satisfied that this is an appropriate case for the court's discretion to be exercised to set aside the default judgment. The application of the defendant is refused. The costs of the application are awarded to the plaintiff.

___________________________________________________________
Pacific Legal Group: Lawyers for the Plaintiff 
Liria Lawyers: Lawyers for the Defendant