N6785

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS 1214 of 2015

BETWEEN:
GIGIRA DEVELOPMENT 
CORPORATION LIMITED
Plaintiff

AND:
KOMO UMBRELLA JOINT 
VENTURE LIMITED
Defendant

Waigani: Hartshorn J.
         2016: 10th, 16th June

Application to set aside a default judgment

Cases Cited: 
Papua New Guinea Cases

Albright Ltd v Mekeo Hinterland Holdings Ltd (2013) N5774

Overseas Cases

Evans v Bartlam [1937] AC 473

Counsel:

Mr. D. Bidar, for the Plaintiff
Mr. A. Chillion, for the Defendant

16th June, 2016

1. HARTSHORN J. This is a decision on an application to set aside a default judgment. Application is made pursuant to Order 12 Rules 8(2)(a) and 35 National Court Rules. It is opposed by the plaintiff. 

Background

2. On 1st September 2015, the plaintiff commenced this action claiming the amount of unpaid invoices, from the defendant for the supply of diesel fuel and for the hire of an excavator. The defendant did not file a notice of intention to defend or a defence and this court entered default judgment in the sum of K131,765.00 together with interest against the defendant on 17th February 2016. 

This application

3. The defendant submits that the default judgment should be set aside as:

a)	The plaintiff is suing the wrong company. Consequently, the defendant has a meritorious defence;

b)	The statement of claim does not give sufficient particulars of the claim, particularly as it is a verbal contract;

c)	The reason for allowing the default judgment to be entered was because the Chairman of the defendant was not in Port Moresby when the writ of summons and statement of claim was served;

4. It is conceded by counsel for the defendant that there was delay in filing the application to set aside the default judgment. The delay is two months from the time of service of the default judgment to the time of filing the notice of motion to set it aside.

5. The plaintiff submits that the default judgment should not be set aside as;

a)	The correct company has been sued and the plaintiff has dealt with the defendant for many years previously in the Southern Highlands Province, now Hela Province. The reason that the defendant will not pay what is owing is that the present Chairman, Alfred Olonogo, does not recognise arrangements made on behalf of the defendant by its previous chairman Alois Francis;

b)	The defendant has not provided a reasonable explanation why the default judgment was allowed to be entered. The writ of summons and statement of claim were served at the registered office of the defendant and there are other directors who live in Port Moresby, one of whom has the same address as the address of the registered office;

c)	The application to set aside the default judgment has not been made promptly.

Consideration

6. The primary consideration in determining whether a default judgment  previously entered should be set aside, is whether the defendant has a meritorious defence: Evans v Bartlam [1937] AC 473, Albright Ltd v Mekeo Hinterland Holdings Ltd (2013) N5774.

7. As to the contention that the plaintiff has sued the wrong company by suing Komo Umbrella Joint Venture Limited instead of KUJV Limited, reliance is placed upon the copy of the letter dated 13th October 2014 from KUJV Limited to the plaintiff that agrees to settle outstanding debt for equipment hire. It is signed on behalf of the plaintiff and has its stamp on the letter. The letter is noteworthy for what it does not provide.

8. The letter does not state that KUJV Limited takes over responsibility for payment of the debt of Komo Umbrella Joint Venture Limited and does not refer to the debt owing for the diesel supplied. Also, that the Managing Director Alois Francis signed the letter is not evidence that KUJV Limited entered into the contract and incurred the debt.

9. It is the case that one company can agree to pay another company’s debt for whatever reason. This may be more likely when the companies are somehow related or have common shareholders, as is the case here - KUJV Limited and the defendant having the same shareholders. 

10. In this instance however, the agreement by the plaintiff to KUJV Limited agreeing to settle part of the debt of the defendant is not an acknowledgment by the plaintiff that the defendant is no longer liable for the defendant’s debt to the plaintiff, or that liability for part of the debt of the defendant to the plaintiff has been transferred to KUJV Limited. 

11. I am not satisfied that the letter dated 13th October 2014 from KUJV Limited is evidence that the plaintiff is suing the wrong company.

12. I also make reference to the evidence of Paul Kemga in his affidavit sworn 12th May 2016 in which he deposes that among others, that the plaintiff and defendant have been doing business for many years, there is no way the plaintiff could have mistakenly named the defendant instead of KUJV Limited, that Alois Francis was the chairman of the defendant, that Alfred Olonogo now is Chairman and that Alfred Olonogo attended at the plaintiff’s office in April 2016 and indicated that he would not recognise the arrangements between the plaintiff and the defendant.

13. This evidence of Paul Kemga is not rebutted. His affidavit was served on the lawyers for the defendant on 26th May 2016. I refer to the affidavit of service of Jordon Kakaraya in this regard. This is two weeks before the hearing of this motion to set aside, and so there was more than sufficient time for rebuttal evidence to be filed.

14. I also take into account the evidence that Alois Francis and Alfred Olonogo are both directors and shareholders of Komo Tuguba Development Cooperation Limited, a company which owns 50% of both the defendant and KUJV Limited. 

15. I am satisfied that they must know each other, and as directors and shareholders of a parent related company of the defendant and KUJV Limited, would be in a position to give evidence that rebuts Paul Kamga’s evidence. There is no such rebuttal evidence. 

16. Consequently, given the above, I am not satisfied that it has been established satisfactorily that the defendant has a defence on the merits. 

Whether a reasonable explanation has been given for allowing the default judgment to be ordered.

17. A further consideration as to whether a default judgment should be set aside is whether a reasonable explanation has been given for allowing the default judgment to be ordered. 

18. Here, the reason given by the defendant is that the Chairman of the defendant was not in Port Moresby when the writ of summons and statement of claim were served. 

19. Even if this is the case, and in this regard there is no supporting evidence to substantiate that the Chairman was away from Port Moresby, the defendant has five other directors, three of whom live in Port Moresby. The evidence is that one of these directors has the same address as the registered office of the defendant. It is surprising, that there is no evidence from any of these other directors as to their knowledge of the writ of summons and statement of claim. 

20. I concur with the submission of counsel for the plaintiff that the defendant’s failure to maintain a properly staffed registered office to amongst others, receive notices and communications, is detrimental to its operations. This failure however, should not be considered a reasonable explanation for not knowing that a writ of summons and statement of claim has been served at its registered office. 

21. Consequently, I am not satisfied that a reasonable explanation has been given for allowing default judgment to be ordered. 

Whether there has been a delay in applying to set aside the default judgment 

22. The last consideration is whether there has been a delay in applying to set aside the default judgment. Here, there is no contest that the defendant’s notice of motion to set aside was filed just over two months after the default judgment order was served on the lawyers for the defendant. No reason has been given for the delay. A delay of over two months is not inordinate but when compared with the usual time limits to file documents, such as forty days to file an appeal and up to thirty days to file a notice of intention to defend, two months or sixty one days in this instance to be precise, is clearly a delay. 

23. When no reason is given for the delay, this is a factor that weighs against a successful application to set aside a default judgment.

24. As to the defendant’s submission that the statement of claim does not contain sufficient particulars of the plaintiff’s claim, I am satisfied that a reasonable cause of action is disclosed. It is open to a defendant to request further and better particulars of a claim. A belief that insufficient particulars have been provided is not a valid reason to fail to file a notice of intention to defend or a defence, or for a default judgment to be set aside when a reasonable cause of action is disclosed.

25. As I am not satisfied that the defendant has satisfactorily established that it has a defence on the merits, or that it has a reasonable explanation for allowing the default judgment to be ordered or for the delay in filing the setting aside application, I am of the view that it is not unjust to the defendant to allow the judgment to stand.

Orders

26.  The Orders of the Court are:

a)	The application of the defendant for the default judgment entered against it on 17th February 2016 to be set aside, is refused;

b)	The plaintiff’s costs of and incidental to the application to set aside, shall be paid by the defendant;

c)	Time is abridged.
__________________________________________________________________
O’Brien’s Lawyers:  Lawyers for the Plaintiff                                                     
Kuman Lawyers: Lawyers for the Defendant