N7588
PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS 543 OF 1999

BETWEEN:
MT. HAGEN LOCAL LEVEL GOVERNMENT
Plaintiff

AND:
STEVEN MARK
Defendant

Mt Hagen:	Frank, J
2018: 23rd November

CIVIL – Practice and Procedure – Assessment of damages on an Undertaking as to Damages following dismissal of action- Application to set aside ex parte assessment  – considerations – National Court Rules, O. 12 r. 8 (3) (a).

Cases Cited:
Papua New Guinea Cases 

General Accident Fire & Life v Ilimo Farm [1990] PNGLR 331
Smith v Ruma Construction (2002) SC695
Lee & Song Timber (PNG) Co. Ltd v Burua (2005) N2836
White Corner Investments Ltd v Regina Waim Harro (2006) N3089
Wei Xiang Cheng v Agmark Ltd (2008) N3338
Pastor James Molu v Dokta Pena (2009) N3817
The Government of PNG & Davis v Barker [1977] PNGLR386
Yema Gaiapa Developers Pty Ltd v Lee (1995) SC484
Toll v The State (1989) SC378
Wallbank v The Independent State of Papua New Guinea [1994] PNGLR 78
Chief Collector of Taxes v BCL (2007) SC 853 

Overseas Cases

Abbey Forwarding Ltd (In Liquidation) v Hone [2012] EWHC 3525 (Ch.)
Cameron v Cole (1944) 68 CLR 571 
Nicholson v Nicholson [1974] 2 NSWLR 59

Counsel:

Mr. D. Gonol, for the Plaintiff
Ms. A. Inia, for the Defendant

23rd November, 2018 

1	FRANK, J:  The plaintiff applies by notice of motion dated 16 December 2014 and filed 29 May 2015 (“Motion”) for orders under Order 12 rule 35 of the National Court Rules that the orders of this Court made on 13 April 2012 (“2012 orders”) and on 22 November 2013 (“2013 orders”) be set aside. The Motion is supported by the affidavits of Wai Rapa sworn 16 December 2014 and filed 29 May 2015 and John Kagl sworn 22 May and filed 29 June 2015.

2	The 2012 orders dismissed this proceeding for want of prosecution. The 2013 orders awarded damages in the sum of K149,150.00 for the loss and damage the defendant suffered as a result of injunctive orders issued pending trial over a dispute between the parties as to title to a piece of land the subject of this proceeding being Section 42 Allotment 22 Mt. Hagen (“Property”), comprised in state lease Volume 42 Folio 62. Title to the Property is registered in the name of the defendant and of which the plaintiff was the predecessor in title.

Summary of the Facts

3	A brief summary of the facts  is as follows:

3.1	Pursuant to a contract for sale and purchase of land (“Contract”) and transfer instrument stamped and dated 29 June 1998, the defendant was registered as proprietor of the Property;
3.2	The sale and purchase under the Contract is said to be the result of a decision of the plaintiff to settle employment entitlements due to the defendant, which Contract and decision are challenged by the plaintiff;
3.3	On 25 February 1999, the plaintiff instituted proceeding by originating summons in OS 105 of 1999, between the parties and in the capacities in which they stand in this proceeding, challenging the validity of the Contract (“Claim”);
3.4	On 21 May 1999 injunctive orders were issued by this Court on the plaintiff’s application restraining the defendant from dealing (including leasing) with his interest as proprietor of the Property;
3.5	The injunctive orders were supported by an undertaking as to damages signed by Mr. Rapa on behalf of the plaintiff;
3.6	on 2 June 1999, this proceeding was filed in which the Claim was prosecuted and the injunctive orders continued;
3.7	on 10 February 2003, the trial in this proceeding commenced before the late Justice Jalina in respect of which a decision was not delivered at the time of his Honour’s passing;
3.8	On 31 May 2010, the defendant filed a notice of motion to dismiss this proceeding (“motion for dismissal”);
3.9	On 2 July 2010, this motion for dismissal was served on Warner Shand, the plaintiff’s lawyers;
3.10	On 13 October 2011, Warner Shand filed a notice of ceasing to act, although, it appears from the Court file, this notice of change was filed without a supporting affidavit as required under Order 2 rule 39 (3);
3.11	On 10 April 2012, the motion for dismissal was served on the plaintiff at its office on one Felix Punum, an officer of the plaintiff, with a note of it being returnable on 13 April 2012;
3.12	On 13 April 2012, on the application of the defendant, this Court granted the 2012 orders;
3.13	On 25 June 2012, a minute of the 2012 orders was served on the plaintiff;
3.14	On 15 March 2013, the defendant filed a notice of motion for damages pursuant to the plaintiff’s undertaking as to damages (“motion for damages”);
3.15	On 29 April 2013, the motion for damages was served on the plaintiff;
3.16	On 10 May 2013, when the motion for damages came before this Court, the plaintiff was represented by Mr. Gonol, when the motion for damages was fixed for hearing on 17 May 2013;
3.17	On the morning of 17 May 2013, Mr. Gonol of counsel, appeared for the plaintiff, and Mr. Mathew Tamutai appeared for the defendant. I will return to what might have occurred on this date and subsequently;
3.18	On 29 November 2013, a minute of the 2013 orders was served on the plaintiff at its office;
3.19	On 30 April 2014, the defendant’s lawyers received a letter from the plaintiff’s lawyers enquiring as to the status of the motion for damages; and
3.20	On 7 May 2014, the plaintiff’s lawyer was served with an advice and a minute of the 2013 orders.

The 2012 orders - should these be set aside

4	With respect to the 2012 orders, the requirements which the plaintiff must satisfy for this Court to favourably consider the relief it seeks against it are: 

4.1	An explanation why the 2012 orders were made in its absence;
4.2	The Motion is filed promptly or a reasonable explanation for any delay in so doing; and
4.3	Where there has been delay, it will not give rise to a substantial risk of a fair trial that it is not possible to have a fair trial of the issues in the action or is such as is unlikely to cause or has not caused serious prejudice to the defendant: General Accident Fire & Life v Ilimo Farm [1990] PNGLR 331, 333.

5	As to why the 2012 orders were allowed to be sought and granted in the plaintiff’s absence, the plaintiff says that in 2012 and 2013, Mr. Rapa had been on the campaign trail for the Local Level Government (“LLG”) elections and so was not served with the documents upon which those orders were sought and granted. Mr. Kagl does not address this issue. Even if Mr. Rapa had not been served, it is clear from the defendant’s evidence (see [3.9] to [3.11]), which I accept, that the plaintiff had been served with the motion for dismissal and thus was aware of it. There is therefore no explanation for allowing the 2012 orders to be sought and made in its absence.

6	As to delay, a period of about 11 months had lapsed (see [3.13] and [3.16]) since a minute of the 2012 orders was served on the plaintiff before it reacted by its counsel’s appearance in Court on 10 May 2013 for the defendant’s motion for damages. The plaintiff says that in this period it was not able to do anything as the 2013 LLG election results were declared as having failed and the Provincial Government controlled all its functions and funding until the Minister responsible for it directed that the pre-2013 LLG election officers of the plaintiff were to remain in the positions which they held and perform the functions associated with those positions. The evidence in this respect is vague with reference to the period of campaign, polling, declaration of results, declaration of the elections as having failed and the resumption of duties. Further, there is no evidence of any communication with the Provincial Government concerning assistance the plaintiff might have required to prosecute its Claim or of any exchange with the defendant pointing out its predicament. There is no evidence of such options having been considered and taken. In these circumstances, I am not satisfied that a reasonable explanation has been provided.

7	As to a fair trial not being possible or serious prejudice having been caused or is likely to be caused, neither counsel addressed this. The facts, matters and circumstances upon which the plaintiff seeks to challenge the defendant’s title to the Property go back to 1999. At the time of the filing of the Motion, a period of 15 years had lapsed. The Contract was allegedly part of an agreement by which the employment entitlements of the defendant arising from his employment with the plaintiff for about 18 years since 1979 had been settled. A substantial period has lapsed since the events of those periods of delay, during which witnesses will have moved on and memories will have deteriorated. 

8	Oral evidence was called at the trial. From the date of passing of the trial judge to the time the motion for dismissal was filed, the plaintiff took no steps to re-activate this proceeding and have it set down for trial. The plaintiff does not suggest that if the dismissal order is set aside, it is able to list the matter for trial without difficulty and delay.

9	In support of the Motion, Mr. Rapa says that:

9.1	an employee of the plaintiff occupied but later vacated one of the duplexes;
9.2	the defendant did not return the keys to the Property to the plaintiff; 
9.3	the defendant occupied the Property; and
9.4	the defendant, he believes, leased the Property and received rentals.

10	The plaintiff’s evidence is vague; no particulars are provided and for this reason I can only take the matters deposed to as assertions. Given the time it has taken for the plaintiff to file the Motion and the fact that evidence supporting these assertions would also point to the defendant’s non-compliance or breach of the injunctive orders, one would have expected particulars of the plaintiff’s employee who was in occupation of one of the duplexes with the dates of occupancy and vacation and his or her observations whilst being a resident on the Property, and some evidence of the tenancies which the defendant is alleged to have entered into. No evidence has been adduced touching on these for the 13 year duration of the injunctive orders. Was this because it was having difficulty in doing so on account of the unavailability of its witnesses? Without such particulars and any explanation for the long delay, that is the conclusion I infer from the state of the plaintiff’s evidence. It follows from this, in my view, that it would not be possible for a fair trial to be conducted and that the defendant, and for that matter the plaintiff, is likely to be seriously prejudiced by the delay thus far.

11	For these reasons, the plaintiff has not demonstrated to my satisfaction that it would be just for the 2012 orders to be set aside. I refuse this relief.

The 2013 orders - should these be set aside

12	With respect to the 2013 orders, the defendant challenges the jurisdiction invoked by the plaintiff. Ms. Inia argues that Order 12 rule 35 is not the correct jurisdictional basis for the relief sought in the Motion to set aside the 2013 orders. The basis on which the plaintiff should seek this relief, she submits, is Smith v Ruma Construction (2002) SC695. Mr. Gonol did not address this objection.

13	The practice and procedure with respect to the enforcement of an undertaking as to damages has been considered previously by this Court in Lee & Song Timber (Png) Co. Ltd v Burua (2005) N2836; White Corner Investments Ltd v Regina Waim Harro (2006) N3089; Wei Xiang Cheng v Agmark Ltd (2008) N3338; Pastor James Molu v Dokta Pena (2009) N3817. I note that Mr. Gonol was counsel for the defendant in Molu v Pena (supra), where his client applied to enforce the plaintiff’s undertaking as to damages.

14	None of the cases cited at [13] concerned an application to set aside an assessment of damages made by this Court. In the absence of arguments from counsel on this point, I consider that the plaintiff must satisfy the requirements in Smith v Ruma Construction (supra), which are that it must-

14.1	provide an explanation why the 2013 orders were made in its absence;
14.2	provide, where there is delay in making the application, a reasonable explanation for it; and
14.3	demonstrate a defence on merits.

15	With respect to orders made in the absence of a party, it is a fundamental principle that persons likely to be affected by orders have a right to be heard: Cameron v Cole (1944) 68 CLR 571. Even the person who had applied for the ex parte orders may apply under the rule: Nicholson v Nicholson [1974] 2 NSWLR 59. So can a person who is not a party but is likely to be adversely affected by the orders: Cameron v Cole (supra). These observations were made in respect of Part 36.16 of the Uniform Civil Procedure NSW, a provision similar to that of our Order 12 rule (8) (3) (a). 

16	As was expressed in Chitty v Mason [1926] V.L.R 419 at 423, cited in The Government of PNG & Davis v Barker [1977] PNGLR 386 at 390 –

Judgments given by Courts of justice in the absence of one of the parties may be set aside for a variety of reasons, and, generally speaking, the principles upon which they are set aside are well settled. There is a great difference between judgments which are regularly obtained in good faith and judgments which are irregularly obtained or obtained in bad faith. The first class are not in general set aside save upon an affidavit of merits. The second class are set aside ex debito justiciae (as required in the interests of justice) irrespective of the merits of the party applying.

17	Even in a trial for assessment of damages, which is conducted in the absence of the defendant under Order 10 rule 12 (1) (b), where it is aggrieved by the judgment following that trial, the defendant is entitled under sub-rule 12 (2) to apply to set that judgment aside. Order 10 rule 12 provides -
12.    Absence of party. (34/5)
(1)     If, when a trial is called on, any party is absent, the Court may, on terms—
(a)  	order that the trial be not held unless the proceedings are again set down for trial, or unless such other steps are taken as the Court may direct; or
(b)	proceed with the trial generally or so far as concerns any claim for relief in the proceedings; or
(c)  	adjourn the trial.
(2)     Where the Court proceeds with a trial in the absence of a party, and at or at the conclusion of the trial a verdict is given or a finding or assessment is made, the Court, on motion by that party, may, on terms, set aside or vary the verdict, finding or assessment, and may give directions for the further conduct of the proceedings.
(3)     A motion under Sub-rule (2) must be made on notice and the notice must be filed and served not more than seven days after the giving of the verdict or the making of the finding or assessment.

18	It is apparent from these, that these rules are not focused on the nature of the proceeding which resulted in the ex parte orders under challenge but the requirement to afford the right to be heard so that the justice of the case is determined on merit whilst at the same time observing the public interest to bring to an end litigation expeditiously and with minimal cost. See Davis v Barker (supra); Yema Gaiapa Developers Pty Ltd v Lee (1995) SC484; Toll v The State (1989) SC378; Wallbank v The Independent State of Papua New Guinea [1994] PNGLR 78; Chief Collector of Taxes v BCL (2007) SC 853.

19	For these reasons, I consider that Order 12 rule 8 (3) (a) and the considerations I have outlined at [14] are the jurisdictional basis and grounds upon which I should and will determine the application to set aside the 2013 orders.

20	As to why the hearing which resulted in the 2013 orders was allowed to proceed and the 2013 orders made ex parte, no explanation has been offered by the plaintiff. One would have expected that evidence providing an explanation for the absence of the plaintiff would come from Mr. Gonol who appeared for the plaintiff with respect to the motion for damages on 10 and 17 May 2013, however, none has been provided by him and his client.

21	As to delay (see [3.17] and [3.18]), going by 29 November 2013, when a minute of the 2013 orders was served on it, it took the plaintiff until about 29 May 2015, a period of 1 year and 6 months, to react to it.

22	I note that under Order 12 rule 12 (3), reproduced at [7], a party aggrieved by an assessment following an ex parte trial is required to file and serve a notice of motion to set aside the assessment within 7 days. 

23	No reasonable explanation has been provided by the plaintiff for its delay in taking steps to challenge the 2013 orders. The only explanation it offered is that set out at [6] to which, the observations I made also at [6] apply.
24	As to a defence on merit, following the assessment of damages arising from the undertaking as to damages, this Court assessed the defendant’s damages in which the trial judge found that the defendant’s loss was K1000 per month. Mr. Gonol argues that during the term of the injunctive orders, the defendant had total control of the Property. The issue, however, is not one of control but whether the defendant had been prevented from doing that which he was by right entitled to do? Clearly, the injunctive orders had that effect. I therefore reject this argument.

25	I have already set out at [9] the evidence on which the plaintiff relies to demonstrate that it has a defence on merit. And, as I have also noted at [10], as assertions without any factual detail, they do not disclose a defence on merit.

26	The end result - the plaintiff’s Claim having been dismissed and its Motion to set that dismissal aside refused - is that the defendant’s title to the Property stands unchallenged. 

27	In enforcing an undertaking as to damages by the party enjoined by it, the steps and some of the considerations which apply are noted in Wei Xiang Cheng v Agmark Ltd (supra), at [6], in these terms –

… it was for the first defendant to apply to the Court and invoke its powers to enforce the undertaking for damages.  Such application had to be supported by evidence, either by way of affidavit or orally substantiating the damages suffered. Third, the Court then had to consider whether the undertaking was of a kind which could be enforced.  In exercising its discretion, the Court had to consider and take into account various factors such as whether the substantive action had been concluded and if it had been concluded, whether it was concluded by a decision of the Court and whether there was an appeal pending against the decision; whether there had been a delay by the first defendant in making the application for the undertaking to be enforced; whether the injunctive orders were obtained in the interest of the public to maintain the status quo pending the determination of the rights of the parties, this is an important factor to take into account, where the party obtaining injunctive orders is a public body; whether the conduct of the first defendant as the party seeking to enforce the undertaking would make the enforcement inequitable and so on. See, Vieweger Construction Co. Ltd v. Rush & Tompkins Construction Ltd (1965) 48 DLR (2d) 509; Griffin v. Blake (1884) 27 Ch. D 474; F Hoffmann- La Roche & Co. AG v. Secretary of State for Trade and Industry [1975] AC 295 at 361; Air Express Ltd v. Ansett Transport Industries (Operations) Pty Ltd (1981) 146 CLR 249; Grant McLeary & Ors v. The Commonwealth Director of Public Prosecutions & Or [1998] WASCA 181.

28	With respect to the delay factor, the Court in Abbey Forwarding Ltd (In Liquidation) v Hone [2012] EWHC 3525 (Ch.), at [127], said:

But I agree with Ms Mulcahy that the authorities do not go so far as to impose promptness as a mandatory condition.   The approach to delay was authoritatively established by the Court of Appeal in Re Hailstone; Hopkinson v Carter (1910) 102 LT 877.    In deciding whether to refuse an inquiry on the grounds of delay, regard must be had to all the circumstances of the case:  see Cozens-Hardy MR at p.880.  At p.881, Farwell LJ said: 

“Then it also follows, I think, from what I have said, that, as the undertaking was given to the court, it is within the judicial discretion of the court whether, and to what extent, and when it shall be enforced.   Each case must depend in a great measure on its own circumstances; and it may be that the delay – which is certainly a circumstance to be considered – might be so great … as to preclude the success of the application at all.  But that is for the court to determine.” 

29	According to the endorsements on the Court file, the notice of motion for direction or an order that the undertaking be enforced came before this Court on 10 May 2013 when it was adjourned to 17 May 2013. The Court endorsement for 17 May 2013 noted that Mr. Gonol for the plaintiff and Mr. Tamutai for the defendant appeared in the matter when it was adjourned to 17 June 2013 at 1:30 p.m. for hearing of the assessment of damages with directions for parties to file and serve the affidavits to be relied on before that appointment. Presumably, the Court on 17 May 2013 also directed for the assessment to proceed, as it is not recorded in the endorsement. After 17 May 2013, the reasons for judgment on the damages assessed and the Court file endorsements do not show whether a hearing for the assessment of damages did take place and if it did, whether it occurred on 17 May 2013 or 17 June 2013, and if it occurred on 17 June 2013, whether the plaintiff was given notice of that appointment. If the assessment hearing occurred on 17 May 2013 at 1:30 p.m., as Mr. Tamutai had deposed to, it would be inconsistent with the direction issued also on that day for parties to file and serve affidavits for that assessment hearing. These were not covered or clarified in the affidavits filed on behalf of the defendant. In any event, counsel for the plaintiff has not addressed these matters or taken issue with the defendant’s version of the steps taken and orders issued up to the making of the 2013 orders.

30	In these circumstances, a defence on merit has not been demonstrated. In the result, the plaintiff has not satisfied any of the requirements upon which I could favourably consider the relief it seeks against the 2013 orders. For all of the reasons given, I refuse this relief.

31	There being no other circumstances which warrant the award of costs otherwise than as it is provided for in Order 22 rule 11, it follows from the outcome of my determination of the Motion that the plaintiff should pay the defendant’s costs of the Motion which costs will, if not agreed, have to be taxed.

32	 The orders are:

32.1	The Motion is dismissed;
32.2	The plaintiff shall pay the defendant’s costs of the Motion to be taxed if not agreed.
_________________________________________________________
Danny Gonol Lawyers:  Lawyers for the Plaintiff
Tamutai Lawyers: Lawyers for the Defendant