N7775

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS 725 of 2009

BETWEEN:
CCS ANVIL (PNG) LIMITED
Plaintiff

AND:
EAST SEPIK PROVINCIAL
GOVERNMENT
Defendant

Waigani: Hartshorn J.
2019: 4th February

Application to file a defence pursuant to s. 9 Claims By and Against the State Act

Cases Cited:
Papua New Guinea Cases

Albright Ltd v. Mekeo Hinterland Holdings Ltd (2013) N5774
Gabi v. Nate (2006) N4020
Green & Co Pty Ltd (Receiver Appointed) v. Roger Britain Green [1976] PNGLR 73
Independent Public Business Corporation v. Motor Vehicles Insurance Limited (2017) N6664
Leo Duque v. Avia Andrew Paru [1997] PNGLR 378 
Tom Rangip v. Peter Loko (2009) N3714 
Totamu v. Small Business Development Corporation (2009) N3702 
Workers Mutual Insurance (PNG) Ltd (in Liq) v. Sathasivan Sivakumaran (2012) N4637

Overseas Cases
Evans v. Bartlam [1937] AC 473; 2 All ER 646

Counsel:

Mr. N. Gimaia, for the Plaintiff
Mr. J. Holingu, for the Defendant

4th February, 2019

1. HARTSHORN J. This is a decision on a contested application for leave to file a defence pursuant to s. 9 Claims By and Against the State Act (Claims Act) and s.155(4) Constitution.

Background

2. The plaintiff, CCS Anvil (PNG) Ltd, pleads that on 19th March 2003 it entered into a Project Management Agreement (contract) with the defendant pursuant to which it provided project management services up until the defendant, the East Sepik Provincial Government, breached the contract by unlawfully terminating it on 18th March 2005. The plaintiff seeks amongst others, general and special damages.

3. The plaintiff filed its writ of summons and statement of claim on 25th June 2009 and the defendant filed its notice of intention to defend on 17th September 2009. The defendant should have filed its defence by 18th November 2009. The defendant’s notice of motion seeking leave to file its defence pursuant to s. 9 Claims Act was filed on 14th August 2017.

This application

4. The defendant submits that its application should be granted as:

a)	it has a valid defence on the merits;
b)	the delay in bringing the application is outweighed by the merits of its 	defence;
c)	no prejudice will be caused to the plaintiff;
d)	it is in the interests of justice.

5. The plaintiff submits that the defendant’s application should not be granted as:

a)	the notice of motion containing the application was filed almost 8 years after the date by which the defendant’s defence should have been filed;
b)	a defence on the merits has not been disclosed;
c)	the draft defence does not deny the plaintiff’s cause of action.
Law

6. I reproduce that part of my decision in Workers Mutual Insurance (PNG) Ltd (in Liq) v. Sathasivan Sivakumaran (2012) N4637 that considered the relevant principles concerning an application to file a defence out of time. In my view the same principles apply to an application “upon sufficient cause being shown” to file a defence after the times prescribed in s. 9 Claims Act:

“In the case of Duma v. Hriehwazi (2004) N2526, Kandakasi J. stated that the principles applicable to an application to set aside a default judgment with appropriate modification should apply to an application for leave to file and serve a defence out of time. In the case of Tipaiza v.Yali (2006) N2971, Cannings J. agreed that the factors to be taken into account on an application for an extension of time were: the extent of the delay, the reasons for the delay and does the defendant appear to have a good defence? To those factors he added one further; where do the interests of justice lie? I also make reference to the case of Green & Co. Pty Ltd (Receiver Appointed) v. Roger Britain Green 1976 PNGLR 73. That case involved an application to set aside a default judgment regularly entered. It was held that on such an application, the principal matter that must be shown by the applicant is that he has a defence on the merits. That statement of the law, in my view, is equally applicable to an application seeking an extension of the time in which a defendant may file its defence.”

7. In regard to the exercise of this court’s discretion, as I did in Albright Ltd v. Mekeo Hinterland Holdings Ltd (2013) N5774 and in Independent Public Business Corporation  v. Motor Vehicles Insurance Limited (2017) N6664, I make reference to the House of Lord’s decision of Evans v. Bartlam [1937] AC 473; 2 All ER 646 referred to in Green & Co Pty Ltd (Receiver Appointed) v. Roger Britain Green [1976] PNGLR 73 and recently referred to in the decision of David J in Totamu v. Small Business Development Corporation (2009) N3702.  

8. In Evans v. Bartlam (supra), Lord Wright at 488 quoted with approval the following statement of Bowen, LJ in Gardner v. Jay (1885) 29 Ch 50, at 59:

“When a tribunal is invested by Act of Parliament or by Rules with a discretion, without any indication in the Act or Rules of the grounds upon which the discretion is to be exercised, it is a mistake to lay down any rules with a view of indicating the particular grooves in which the discretion should run, for if the Act or the Rules did not fetter the discretion of the Judge why should the Court do so?”

9. In this instance, the only indication in s. 9 Claims Act of the grounds upon which the discretion is to be exercised is, “upon sufficient cause being shown”.

Consideration

10. As in my view, the principal matter that must be shown on an application such as this in determining whether sufficient cause has been shown, is whether the applicant has a defence on the merits, I will consider this issue first. 

11. 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.”

12. In this instance, Mr. Richard Kombo, the Acting Provincial Administrator of the defendant, purports to depose as to the merits of the defence of the defendant. These defences are non-performance of work, misrepresentation, fraud and failure to comply with the Public Finance Management Act. The draft defence annexed to Mr. Kombo’s affidavit pleads general non-admissions and denials and that the Public Finance Management Act was not complied with.

13. In another affidavit filed on behalf of the defendant, the affidavit of Mr. John Yamboli, a legal officer with the Legal Services Unit, East Sepik Provincial Administration, Mr. Yamboli deposes that Mr. Richard Kombo was appointed the Acting Provincial Administrator in 2014 and, “…. does not have any idea or knowledge about the Contract that was executed with CCS Anvil.” Further, Mr. Yamboli deposes that Mr. Kombo was replaced as Acting Provincial Administrator at the end of 2014 or early 2015 and was appointed Acting Provincial Administrator again in May or June 2017.

14. The evidence of Mr. Kombo therefore, as to the merits of the defence, notwithstanding that he deposes that he has personal knowledge of the facts and information to which he deposes, must be treated with caution. 

15. The evidence of Mr. Yamboli also attempts to depose to a defence on the merits. He in essence, repeats Mr. Kombo’s evidence in this regard. The weight to be given to this evidence is compromised by Mr. Yamboli’s evidence that he was not able to find sufficient materials to file a reply or defence against the plaintiff’s claim and had no instructions in regard to the claim.

16. Given the above, I am not satisfied that the defendant has satisfactorily shown that it has a defence on the merits.

Prejudice

17. The next consideration concerns whether the plaintiff will suffer any prejudice if the application is granted. Counsel for the plaintiff conceded that any prejudice it may suffer if the application is granted may be compensated by a costs order.

Delay

18. As to the next consideration, delay, the plaintiff relies upon the case of Gabi v. Nate (2006) N4020 to the effect that a delay in bringing an application may be outweighed by the breach of a statute. That case was concerned with judicial review. The court found that there was a gross abuse of the law and that the delay of 3 ½ years was outweighed by the breach of the relevant statute. Here, it has not been determined that the Public Finance Management Act has been breached. Further, the delay in this instance is more than twice the period of delay in Gabi v. Nate (supra).

19. The delay by the defendant in filing its notice of motion containing the application to file its defence is about 7 years and 9 months after the time by which its defence should have been filed. To put that in perspective, that is at least 47 times more than the time permitted by the Claims Act. In this regard, it should be remembered that the time prescribed in the Claims Act for the State to file a defence is over four times longer than for a non-State defendant. The delay is also 1 year 9 months longer than the 6 year period of time within which an action founded on simple contract or tort may be brought under the Frauds and Limitations Act.

20. The explanation for the delay is in essence that Mr. Yamboli was not able to obtain any instructions or locate any documents to enable a defence to be filed or an application to be made and that there were numerous changes to the defendant’s personnel, including six different appointments to the position of Acting Provincial Administrator.

21. To my mind, the delay of 7 years 9 months is only able to be described as inordinate. The defendant, through Mr. Yamboli or another lawyer, should have applied for an extension of time to file its defence. There is no evidence that this occurred. Numerous changes in personnel and lack of records or instructions are matters and occurrences within the control of the defendant and are not good or adequate explanations for the delay in filing a notice of motion containing the present application. Similarly, if the delay has been caused by a lawyer’s negligence, which I suggest may not be discounted in this instance, as I said in Tom Rangip v. Peter Loko (2009) N3714, at [41], 

“41. It has been held on numerous occasions in this jurisdiction that the negligence of a lawyer is not a good reason for an extension of time to be granted: Peter Dixon Donigi v. Base Resources Ltd [1992] PNGLR 110.” 

22. I am not satisfied that the explanation given for the inordinate delay is reasonable.

Interests of justice

23. In regard to the interests of justice, the plaintiff submits that this court has a duty not to enforce an illegal contract and relies upon Fly River Provincial Government v. Pioneer Health Services Ltd (2003) SC705 and Taim Waim v. Investment Corporation of Papua New Guinea (2001) N2139. The interests of justice warrant this application being granted on this issue it is submitted.

24. In this instance however, it has not been determined that the contract is illegal. It must be remembered that this application is to file a defence out of time pursuant to s. 9 Claims Act. If the State wishes to question the enforceability and legality of a contract in a proceeding in which it is a defendant, it should file a defence and/or cross claim to that effect within time. Further as to the issue of where do the interests of justice lie, to my mind it is not in the interests of justice to allow the defendant, part of the State, to be able to file a defence after such an inordinate amount of time when a reasonable explanation for not doing so has not been proffered and in circumstances where a defence on the merits has not been properly shown. The plaintiff is entitled to rely upon the defendant, part of the State, complying with a statute that specifically provides that the State shall file its defence by a certain time - that certain time being considerably more than the time allowed for a non-State defendant. The interests of justice in the circumstances of this case do not favour this application being granted.

25. Given that I am of the view that the defendant has not satisfactorily shown a defence on the merits, has not provided a reasonable explanation for the inordinate delay in making the application and that it is not in the interests of justice that the application be granted, the defendant has failed to show sufficient cause for this court to allow this application. The relief sought by the defendant should be refused.

Orders

26. It is ordered that:

a)	All of the relief sought in the notice of motion of the defendant filed 14th August 2017 is refused;
b)	The defendant shall pay the plaintiff’s costs of and incidental to the said notice of motion;
c)	Time is abridged.
_________________________________________________________________
Liria Lawyers: Lawyers for the Plaintiff                                         
Holingu Lawyers:  Lawyers for the Defendant