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Feflo Plantation (PNG) Ltd v Lolo Development Corporation Ltd [2013] PGNC 242; N5065 (27 February 2013)

N5065

PAPUA NEW GUINEA
IN THE NATIONAL COURT OF JUSTICE

WS. NO. 1436 OF 2010

BETWEEN

FEFLO PLANTATION (PNG) LTD
Plaintiff

V

LOLO DEVELOPMENT CORPORATION LTD
First Defendant

AND

UNI RISE LTD
Second Defendant

Waigani: Sawong, J.
2013: 07th & 27th February

JUDGMENTS – default judgment – application to set aside default judgment – applicant must show 3 criteria - application must be made promptly and within reasonable time, applicant to provide reasonable explanation as to why judgment was allowed to go by default and there must be an affidavit by the defendant/applicant personally stating facts showing a defence on the merits – application is incompetent – application dismissed

Case Cited:

Barker v. PNG Government [1976] PNGLR 340,
PNG Government & Davis v. Barker [1977] PNGLR 386,
Green & Co. Pty Ltd (In liquidation) v. Green [1976] PNGLR 76,
Commodity Development Pty Ltd v. Peter Karai [1994] PNGLR 438,
Grace Lome by her next friend Jack Lome v. Alland Kundi & Others [2004] N2776.
Whitecorner Investments Limited & Anor v Hamamas Food Ltd & Anor (Unnumbered)

Counsel:

R. Mann'rai, for the Applicant
A. MacDonald, for the Respondents

27th February, 2013

RULING

1. SAWONG, J.: Introduction: By a Notice of Motion filed on the 18th of October 2012, the first and second defendants sought the following orders:

1. Pursuant to Order 12, Rule 8(1) or Rule 8(2)(a) or Rule 8(3)(b) or Rule 8(4) of the National Court Rules and Section 155(4) of the Constitution, the court orders made on the 13th of July be set aside forthwith.
   
2. Pursuant to Rules 7, 8,9,10 and 11 of the Listing Rules 2005, the court issue directions forthwith.
   

3. Costs be in the cause unless contested.

2. In support of the application, the applicant relies on the affidavit of Victor Eu also filed on the 18th of October 2012.

3. The Respondent opposes the application
   

Background

4. There has been an on-going dispute and litigation between the parties. In the cause of litigation the parties were involved in the discovery process. The discovery process was not smooth. As a consequence, the plaintiff filed a notice of motion to have the first and second defendant's defence and amended defence struck out and judgments be entered. On 3rd July 2012, I heard full arguments.
   
5. On the 13th of July 2012, the Court ordered inter alia that the First Defendant's defence and amended defence be struck out and judgment be entered for the Plaintiff. I also ordered that the First Defendant's cross claim be struck out.
   
6. Since then, 1st and 2nd defendants took issue with the terms of the orders. As a consequence the plaintiffs filed a further notice of motion to correct the orders that were made on the 13th July and entered on the 1st of August 2012. I heard the notice of motion on this aspect on the 7th of February 2013 and after hearing both parties accepted the application for corrections. The orders of the 13th of July 2012 were finally corrected and entered on the 07th of February 2013.
   
7. The present application is therefore to set aside the orders of the 13th of July 2012.

Issue

8. The issue in this case is whether the orders of the court made on the 13th of July 2012 should be set aside?
   
9. The first thing I want to comment is that the motion is confusing to say the least. The applicant relies on several different grounds to set aside. The applicant does not state "- concise reference to the Court's jurisdiction to grant the orders being sought." see Rule 8 Motions Amendment Rule (2005). It follows that, pursuant to rule 8, this motion could be incompetent and for that reason alone it should be dismissed. However, I now consider the merits of the application.
   
10. The law on setting aside judgments is now well settled. Recently in Whitecorner Investments Limited and Dafa Co. Ltd v Hamamas Food Ltd and Serah Wong (Unnumbered National Court Judgment dated 22nd February 2013, I said at pp3-4:
    

"The law on setting aside a judgment entered by default is well settled. The jurisdiction to do so is exercised under either Order.12 r.8, or Order.12 r.35 of the National Court Rules. The principles are the same in either case.

The National Court has considered the provisions of the National Court Rules for setting aside ex parte judgments on many occasions. The leading cases are:

Barker v. PNG Government [1976] PNGLR 340, PNG Government & Davis v. Barker [1977] PNGLR 386, Green & Co. Pty Ltd (In liquidation) v. Green [1976] PNGLR 76, Commodity Development Pty Ltd v. Peter Karai [1994] PNGLR 438, Grace Lome by her next friend Jack Lome v. Alland Kundi & Others [2004] N2776.

11. These and many other cases show that an applicant must satisfy three (3) criterias. These are:
    
1. The application must be made promptly and with reasonable time.
   
2. There must be a reasonable explanation as to why judgment was allowed to go by default.
   
3. There must be an affidavit by the defendant/applicant personally stating facts showing a defence on the merits. In the case of a corporation that affidavit must be deposed to by its proper authorized officer, who has personal knowledge of the facts, such as Company Secretary, Managing Director and the like. A draft defence annexed or attached to a lawyer's affidavit or annexed to a party's affidavit is not sufficient.
   
12. These are the three (3) grounds that have been followed on numerous occasions by the National Court in considering applications under the National Court Rules to set aside a default judgment regularly entered.
    
13. The applicant has relied on O.12 r 8(1), O. 12 r.8 (a) (b) 8(3)(b) or r.8(4) of the National Court Rules. I do not wish to analysis these rules in any great detail.
    
14. As to O.12 r. 8(1), it relates to an application to set aside before entry of judgment. The judgment was made on 13th July 2012 and time was abridged to that date. Consequently this sub rule is irrelevant and does not apply.
    
15. As to O.12 r 8(2)(a), this provision only applies if a default judgment had been made on default under O.12 Division 3, which relates to default judgments. That is not the case here. This ground is misconceived. The same reason applies to ground 8(2)(b).
    
16. As to O.12 r. 8(3)(b), again this ground in misconceived. This ground relates to setting aside a judgment before entry of judgment. My comments relating to o.12 r. 8(1) applies.
    
17. As to Order 12 Rule 8(4), this is a general discretion but the provision especially does not extend to orders that determine an order for dismissal of proceedings or for dismissal of proceedings so far as concerns the whole or any part of any claim for relief. In other words, Order 12 Rule 8(4) does not apply to a final determination. If a defendant is dissatisfied with a ruling which finally determines a proceeding, it should lodge an appeal. The judgment sought to be set aside was entered in July 2012, as time was abridged and therefore the first defendant had no standing to contest or rely on the National Court rules to set aside the orders that were made against it. Its' remedy was to lodge an appeal against that decision to the Supreme Court.

Prompt Application

18. The judgment sought to be set aside was made and entered on 13th July 2012. The present application was 18th October 2012, some 3 months after the judgment was made and entered. It could not be said that the application was made promptly or within reasonable time.
    

Explanation for Default

19. As I understand, here the applicant submits that there is reasonable explanation for the default. The explanation being that the relevant and appropriate officers of the First Defendant were not easily available to sign the list of documents. Secondly, it has been submitted that, it was only discovered recently, after the judgment, the existence of a Power of Attorney given to Victor Eu, who was authorized to sign the list of documents.
    

Defence on Merit

20. I do not accept the explanations offered. The power of Attorney was given, probably many months ago. That document was in the control and possessions of the defendants – it was not something new. The directors and or proper officials of the first defendant could have signed the list of documents.
    
21. There is no affidavit evidence from the proper officer of the first Defendant deposing to a defence.
    
22. The application is made by the second defendant on behalf of the first defendant. The question then arises as to whether the application is competent.
    
23. The notice of motion reads that the first and second defendants have filed this application to set aside the orders. The notice of motion is incompetent in that, there was no judgment entered against the second defendant. The judgment and orders of the 13th of July was made against the first defendant only. To that extent the application by the second defendant is misconceived and is mischievous.
    
24. Further the applicants rely on the affidavit of Victor Eu. Victor Eu is not a Director or an officer of the first defendant. The Power of Attorney is in the name of Victor Eu personally and is not a general Power of Attorney given to the second defendant to act on behalf of the first defendant. There is no evidence from the first defendant, deposing a defence on the merits.
    
25. In those circumstances the whole application is mischievous and is misguided. In my view, this application is without merit.
    
26. I make the following orders:
    
    1. The application to set aside is dismissed.
       
    2. The Applicant/Defendants shall pay the plaintiffs costs, to be taxed if not agreed.

_____________________________---______________
Warner Shand Lawyers: Lawyers for the Applicants
Young & Williams Lawyers: Lawyers for the Respondent/Plaintiff