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Kenilogo Consumables v Kiama [2019] PGNC 358; N8127 (1 November 2019)

N8127

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]


WS NO. 456 OF 2019


BETWEEN:
KENILOGO CONSUMABLES
First Plaintiff


AND:
REBECCA KIAMA & MALCOLM KIAMA (Owners of Kenilogo Consumables Distributors)
Second Plaintiff


AND:
ROBERT ASA
Defendant


Kokopo: Susame, AJ
2019: 5th September & 01st November


SUMMARY JUDGEMENT– Notice of Motion –Order 12 Rule 38 (1)(a)(b) National Court Rules –Late Defence – Requirement for leave of Court – Order 7 Rule 6(2) National Court Rules.


Cases Cited:
Papua New Guinea Cases


Bruce Tsang v Credit Corporation (PNG) Ltd [1993] PNGLR 112
Philip Leli Takori v Simon Yagari (2010) N3823


Overseas Cases


Bumstein v Lynn (1953) 73 WN (NSW) 111


Counsel:


Ms. Natasha A Rainol, for the Plaintiff
Mr. Kenneth Pora, for the Defendant


DECISION

01st November, 2019


  1. SUSAME AJ: By notice of motion filed on 9 August 2019 plaintiff prays for entry of summary judgment for K94 000.00. It further seeks an order for removal of the defence as being void for lateness of its filing without the leave of court. Motion was filed pursuant to Order 12 Rule 38(1) of the National Court Rules (NCR).
  2. Application is supported by affidavit evidence of Rebecca Kiama sworn on 29 April 2019 and Malcolm Kiama sworn on 8 August 2019.
  3. Motion was challenged on two grounds. First, writ of summons and statement of claim was not properly served. It does not satisfy the mandatory requirements of Order 6 Rule 1 & 2 of NCR which requires personal service. It argued documents were served on Warner Shand Lawyers who is not a party to this proceeding. It argued unless service was proper defendant is not required to file Notice of Intention to Defend and statement of defence. Hence there can be no default.
  4. Second, mandatory requirement of a forewarning notice seeking summary judgment had not been dispensed with. It relies on authority of Philip Leli Takori v Simon Yagari (2010) N3823.

Facts


  1. Second plaintiffs are conducting consumable business trading under the name ‘Kenilogo Consumables’, the first plaintiff. A personal loan of K20 000.00 was advanced to the defendant on 1 July 2018. Loan was not repaid with accumulated interest of K49 000.00, necessitating proceedings filed on 29 April2019 seeking recovery of the monies due under the loan agreement.

Issues


  1. Whether service of writ of summons was proper?
  2. Whether defence was filed out of time?
  3. Whether summary judgment should be entered?

Whether service of writ of summons was proper?


  1. According to the affidavit of service of Malcolm Kiama sworn and filed on 9 May 2019 he effected service on Wednesday 8 May 2019 at about 3:26pm by leaving copies of the writ of summons and affidavit in support with Ms. Wulila Maiap, Legal Secretary with Warner Shand Lawyers at their Kokopo Branch Office.
  2. Defendant took issue on that arguing that did not constitute proper service as required by Order 6 Rule 1 & 2 of the National Court Rules.
  3. Ms. Rainol argued that is sufficient service by authority of Order 6 Rule 13 on informal service arrangements.
  4. Let me refer to the rule in regard to service.

Order 6 Rule 1. Mode of service (9/1)


  1. Any document required or permitted to be served in any proceedings may be served personally, but need not be served personally unless personal service is required by these Rules or by order of the Court.

2. Originating process (9/2)(1) Subject to any Act, and these Rules, originating process shall be served personally on each defendant.

(2)...

(3) Where a defendant to any originating process serves a notice of intention to defend under Order 7, the originating process shall be taken to have been served on him personally on the date on which that notice is filed or on such earlier date as may be proved.


  1. Order 6 Rule 2 (1) makes it clear originating process must be served personally on each defendant, natural person or a legal entity. Originating process includes Writ of Summons or Originating Summons by definition provided in Order 1 Rule 6 of NCR.
  2. Rule 2 is more specific. It makes it mandatory for an Originating Process to be served on each defendant personally.
  3. In the present case defendant was away on duty travel. Copy of the Writ of summons was not served on him personally but left with the receptionist at the defendant’s employed office. It appears to me he was privy to the documents upon his return.
  4. No formal Notice of Appearance was filed by Warner Shand Lawyers, as lawyers on record acting for the defendant as a matter of professional practices under the rules.
  5. Nonetheless defendant’s colleague Mr. Kenneth Pora working for the same law firm after receiving instructions from the defendant went on to file Notice of Intention to Defend on 28 June 2019, followed by filing of Defence two months after on 9 August 2019.
  6. In her submission, Ms. Rainol referred me to Order 6 Rule 13 of NCR on Informal Service which is set out:

“13. Informal service: Confirmation (9/11)


Where the service of any document on any person is required or permitted in any proceedings and it is impracticable for any person to serve the document or to serve the document in the manner required by or under the Act or by these Rules, but steps for the purpose of bringing, or having a tendency to bring, the document to the notice of that person have been taken, the Court may, by order, direct that the document be taken to have been served on that person on a date specified in the order.”


(Underling added for emphasis)


  1. Ms. Rainol argued service that was effected is sufficient service and should be accepted as valid on informal arrangements by authority of Order 6 Rule 13.
  2. I accept defendant was never personally served the copy of the Writ of Summons. When he became aware of the Writ of Summons upon his return he gave instructions to his colleague Mr. Pora to act on his behalf. Mr. Pora proceeded to file Notice of Intention to defend followed by filing of Defence two months later.
  3. I hold that is evidence defendant has accepted service of Writ of Summons by authority and application of Order 6 Rule 2 (3) which states:

“Where a defendant to any originating process serves a notice of intention to defendant under Order 7, the originating process shall be taken to have been served on him personally on the date on which that notice is filed or on such earlier date as may be proved.”

(Underlining added)


  1. The conclusion reached is that by authority of Order 6 Rule 2 (3) and Order 6 Rule (13) service of documents in the manner served upon the defendant is sufficient and valid. Thus, defendant’s argument must fail on this issue.
  2. Whether Defence was filed out of time?

21. On this issue plaintiff relies on Order 7 Rule 6 (2) of NCR


“6. Late notice (11/6)

(1)...

(2) Where a defendant gives a notice after the time limited for doing so, he shall not, unless the Court otherwise orders, be entitled to file defence or do any other thing later than if he had given a notice of intention to defend within that time.


Notice of intention to defend


  1. Relevant to the issue is Order 4 Rule 11. In regard to service of Writ of Summons within PNG Notice of Intention to Defend must be filed not less than 30 days after service, on any day not later than expiry of 30 days. That is prescribed in O 4 R 11 (b) (i).
  2. In the present case Service was effected on the defendant on 8 May 2019. Counting 30 days from there on time prescribed for filing of Notice to Defend lapsed on 8 June 2019. Notice to Defend was filed late on 28 June 2019, 20 days passed the expiry date.

Defence


  1. Rules regulating defence apply to Writ of Summons. Relevant Rule is found in Order 8 Rule 4 of NCR. Defendant is required to file and serve on the plaintiff his defence in form 16:\

“(a) Where a statement of claim is endorsed on a writ, the defendant is required to file defence before the expiry of 14 days after the date of expiry of the time limited to give notice of intention to defend(O 8 r 4 (1) (a)).

(b) Where a statement of claim is not endorsed on the writ, a defendant is required to file defence within 14 days from the date of service of the statement of claim (O 8 r 4 (1) (b)).”


  1. Applying the Rule in the present case. Statement of claim is endorsed on the Writ of Summons. In the Writ defendant was warned he would suffer judgment within 30 days after service unless he filed and served Notice of Intention to Defend in the prescribed form.
  2. Defence was filed and served on the plaintiff on 9 August 2019, two months after on 8 June 2019. By then 30 days to file Notice to Defend had expired. There is no question defendant had breached the requirements of O 8 R 4 (1) (a).
  3. If Notice to Defend is filed late, the Rules stipulates defendant shall not file a defence unless court otherwise orders. That is prescribed by O 7 R6 (2).
  4. Defendant had the liberty to seek an order of court for extension of time to file defence by motion pursuant to O 1 R15 and 7 R6. Instead, he proceeded to file his defence on 9 August 2019 without the leave or order of the Court.
  5. The resultant effect of the defendant’s failure is that defence cannot be accepted and must be struck out. Plaintiff’s argument on this issue is upheld.

Whether summary judgment should be entered?


  1. Affidavit of service of motion by the server Alois Walmax has been sworn and filed on 5 September 2019. There is no issue on that.
  2. Motion seeking Summary Judgment and motion seeking Default Judgment are two distinct and separate procedures under the National Court Rules. The latter procedure arises on account of defendant’s default in filing his defence or if defence is filed defendant does not attend proceedings to be heard of his defence. That is the requirement in O 12 R25 & 26. In such a situation the interim defence filed is never considered. (Telikom PNG Ltd v Tulin (2004) SC 74, Injia DCJ, Sakora J, Batari J.)
  3. Question is should there be a forewarning notice from the mover of the motion to the defendant seeking summary judgment? Mr. Pora argued there is a requirement for a forewarning notice based on the judgment of Davani J in Philip Leli Takori v Simon Yagari (supra). There was no argument from Ms. Rainol on this point.
  4. With respect, I do not accept Mr. Pora’s argument. I endorse the decision of the Supreme Court in Telikom PNG Ltd v Tulin (supra) because decisions of the Supreme Courts are binding on the National Court. Principles applicable in Summary Judgments are separate and distinct from those applicable in Default Judgments. Forewarning notice is one of the basic requirement in a Default Judgment application. That is not a requirement in an application for Summary Judgment. With respect decision of the court in Philip Leli Takori v Simon Yagari is not binding on this court.

Guidelines/ Law on Summary Judgments


  1. The law on Summary Judgment is well settled in this jurisdiction. Order 12 Rule 38 of NCR is the starting point.
  2. It has been held jurisdiction conferred by this particular Rule should only be invoked in a clearest of case. Power to enter summary judgments must be exercised sparingly with great care and should not deny the defendant’s right to be heard unless there are serious issues of fact and law to be properly tried based on the facts pleaded.(see Bumstein v Lynn (1953) 73 WN (NSW) 111.
  3. The guiding principles were settled by the Supreme Court in Bruce Tsang v Credit Corporation (PNG) Ltd [1993] PNGLR 112. They have since been followed and applied in subsequent decisions of both National and Supreme Courts.
  4. There are two elements:

“(a) Evidence of facts proving the essential elements of the claim, and

(b) that the plaintiff or some responsible person gives evidence that in his belief there is no defence.”


  1. With regard to the second element plaintiff is required to show in the absence of any defence or evidence from the defendant that in his belief, there is no defence on merits. Even if a defence is filed plaintiff is required to show on the facts pleaded and or the law defendant does not have a defence. (see notes under Order12 Rule 38, pp 278-280 Civil Procedure in the National Court (PNG) Sir Salamo Injia Kt and Gregory Lay)
  2. The motion is support by affidavit evidence of defendants Malcolm Kiama and Rebecca Kiama sworn and filed on 29 April 2019 and 9 May 2019 respectively.

First element


  1. Based on the facts pleaded claim arose out of a personal loan agreement entered between the parties. Terms of the agreement was that defendants advance a loan of K20 000.00. He was expected to repay the loan with interest of K6, 000.00 (ie 30 %) within 14 days.
  2. As long as the principle remains outstanding 30% interest accrues every 14 days. That is a big percentage markup borrower risk paying by default every 14 days.
  3. From Malcolm’s affidavit paragraph 9.5 at page 5 defendant has paid a total of K30, 000.00 in eight installments. Defendant would have settled the principle amount borrowed with interest of K10 000.00. Plaintiffs think otherwise. Defendant is still in default and principle amount borrowed remains outstanding attracting a further interest of K49 000.00. That is the amount he is claiming together with claim for loss of business and for anxiety.
  4. In my respective view facts pleaded are not so clear and are arguable. They require further scrutiny in such loan agreements particularly involving private money lending businesses which is becoming a lucrative business in this country.

Second element


  1. On this element I have struck out the defence that was filed. There is no defence on foot for consideration. Consistent with my ruling above defendant has the liberty to consider filing an application seeking extension of time to file his defence.
  2. This is not a clearest of case justice will be served if summary judgment entered. There are serious issues of fact and or law to be tried.
  3. Upshot of the discussions is that application for summary judgment is refused. Case to be properly litigated.
  4. With regard to cost it is discretionary. I order that plaintiff to pay cost of this application to be taxed if not agreed. Time is abridged.
  5. Matter to return to the registry for list and directions

Orders accordingly


Natphil & Associate Lawyers: Lawyer for the Plaintiffs
Warner Shand Lawyers : Lawyer for the Defendant


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