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Teachers Savings and Loan Society Ltd v Kamarefa [2022] PGNC 498; N10024 (14 November 2022)

N10024

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS NO. 553 OF 2021 (IECMS)

BETWEEN:
TEACHERS SAVINGS AND LOAN SOCIETY LIMITED
Plaintiff

AND:
NETI KAMAREFA
Defendant

Goroka: Mugugia, AJ
2022: 8^th &14^th November

PRACTICE AND PROCEDURE – Plaintiff’s application for default judgment – Defendant’s failure to file notice of intention to defend and defence - National Court Rules, Order 12, Rule 25(a) and (b), Rule 27(1) and Rule 32(1) relied on by the Plaintiff – whether default judgment should be entered against the Defendant for the sum claimed – considerations – exercise of discretion - default judgment entered against the Defendant for the sum claimed.

Counsel:

B. Yalehen, for the Plaintiff
No appearance for the Defendant

RULING

14^th November, 2022

1. MUGUGIA, AJ: The Plaintiff filed a Notice of Motion (motion) on 30^th September 2022, seeking default judgment against the Defendant for failure to file his notice of intention to defend and defence. When filed, the motion was set for hearing on 8^th November 2022. I was satisfied that the motion and the supporting affidavit were served on the Defendant and proceeded to hear the application on the hearing date set in the motion. This is my ruling on this motion.
   
2. The Affidavit in Support of Francis Pahun who is the Head of Recoveries for the Plaintiff filed on 30^th September 2022, sets out the facts giving rise to the Plaintiff’s claim against the Defendant. It also sets out the evidence in support of the orders sought in the Plaintiff’s motion for default judgment.
   
3. The Defendant had entered into a Loan Agreement with the Plaintiff. The Loan Agreement is dated 2^nd November 2020. The Plaintiff agreed to loan a gross amount of K36,326.44 to the Defendant. This amount was to be repaid in instalments of K670.00 over 78 fortnights. The Defendant defaulted in repaying the loan. The Plaintiff instituted its claim against him by Writ of Summons at the Waigani National Court on 29^th November 2021, claiming the liquidated amount of K34,388.82, interest and costs of the proceedings. By order of the Court made on 8^th June 2022, the proceedings was transferred to the National Court in Goroka.
   
4. As per its motion, the Plaintiff seeks an order for entry of default judgment against the Defendant pursuant to Order 12, Rule 25(a) and (b) of the National Court Rules. The motion also seeks default judgment against the Defendant for the sum of K31,109.10. The jurisdictional basis relied on is Order 12, Rule 27(1) of the National Court Rules. The Plaintiff also seeks costs of the proceedings under this Rule. At the hearing, Counsel representing the Plaintiff Mr Yalehen submitted that he will rely on Order 12, Rule 32 of the National Court Rules as a means of allowing the Court to exercise discretion in granting orders sought under Order 12, Rule 25 and Order 12, Rule 27(1).
   
5. In support of his client’s motion, Mr Yalehen submitted that the order seeking default judgment against the Defendant for the sum of K31,109.10 pursuant to Order 12, Rule 27(1) is in line with the order for entry of default judgment against the Defendant pursuant to Order 12, Rule 25(a) and (b), given it is a liquidated demand.
   

6. Mr Yalehen referred the Court to the case of Giru v. Muta (2005) N2877, where Cannings J set out the checklist that the court should consider when dealing with an application for default judgment. The six pre-conditions to consider are:

1. Proper Form.

2. Service of notice of motion and affidavits.

3. Default.

4. Warning.

5. Proof of service of writ.

6. Proof of default.
7. In applying the items on the checklist to the present case, Mr Yalehen made these submissions:

• His client’s motion is in the proper form. It has a supporting affidavit.
  
• These documents were served on the Defendant on 6^th October 2022. The Affidavit of Service of Ezekiel Tiripi filed on 5^th October 2022 confirms service.
  
• The Defendant has not file a notice of intention to defend and defence. The time for filing the defence lapsed in January 2022. A search was done on 12^th October 2022. The Affidavit of Search of Ezekiel Tiripi filed on 18^th October 2022 confirms this. Another search was done before making the application. The Affidavit of Search of Benjamin Yalehen filed on 18^th October 2022 confirms this. The Affidavits of Search show that the Defendant has not filed a notice of intention to defend and defence.
  
• The Defendant did not file a notice of intention to defend. As such, there is no need for his client to issue a warning to the Defendant. Mr Yalehen referred to the case of Motor Vehicles Insurance Ltd. v. Nominees Niugini Ltd. (2015) SC1435, and submitted that the principle that “where there is no notice of intention to defend, there is no need to give warning” applies in the present case. Mr Yalehen submitted that in any case, his client’s Notice of Motion and Affidavit in Support were served on the Defendant. The Notice of Motion set out the hearing date (8^th November 2022).
  
• His client’s writ of summons was served on the Defendant on 9^th December 2021. The Affidavit of Service of Ezekiel Tiripi filed on 16^th December 2021 proves service.
  

8. Counsel submitted that his client has a reasonable cause of action. There is a breach of the loan agreement entered into between the parties. His client is exercising its rights. In applications for default judgment, it is a matter of discretion of the Court to grant default judgment.

9. The issues arising from the Plaintiff’s motion for me to determine are whether default judgment should be entered against the Defendant for the sum of K31,109.10, and whether an order for costs should be made.

10. I agree with Mr Yalehen that the case of Giru v. Muta (supra) sets out the six pre-conditions that should be considered in an application for default judgement. In this case, Cannings J held that if all the items on the checklist are satisfied, the matter is ripe for entry of default judgement. However, a plaintiff is not entitled to default judgement as of right. Entry of default judgement is a matter for the discretion of the court.

11. I take note of the items on the checklist, apply them in the present case, and make these findings:

(i) The Plaintiff’s notice of motion for default judgment filed on 30^th September 2022 is in the proper form.

(ii) The Plaintiff has done what is required under Order 4, Rule 44(1) of the National Court Rules.

(iii) The notice of motion and the supporting affidavit relied on by the Plaintiff at the hearing were served on the Defendant. The Plaintiff has done what is required under Order 4, Rules 38(1), 42, 43(2) and 44(1) of the National Court Rules.

(iv) The Plaintiff’s writ of summons was served on the Defendant on 9^th December 2021. The evidence before the Court clearly show that the Defendant is in default.

(v) The Defendant has not given a notice of intention to defend. The Plaintiff’s motion for default judgment set for hearing on 8^th November 2022 was served on the Defendant on 6^th October 2022. The Defendant was well aware of the Plaintiff’s intention to apply for default judgment since 6^th October 2022.

(vi) Order 12, Rule 34 of the National Court Rules relates to the need for proper evidence to prove service. There is affidavit evidence filed on behalf of the plaintiff proving due service of the writ of summons, and proving the default of the Defendant on which the Plaintiff relies.

12. The basis on which the application was made is on account of the Defendant’s default under Order 12, Rule 25(a) and (b) which read:

“25. Default.

A defendant shall be in default for the purposes of this Division

(a) where the originating process bears a note under Order 4 Rule 9, and the time for him to comply has expired but he has not given the notice; or

(b) where he is required to file a defence and the time for him to file his defence has expired but he has not filed his defence;”

13. The Defendant has clearly defaulted. I am convinced that the Plaintiff has made out a case for default judgment to be entered against the Defendant for failure to file his notice of intention to defend and defence.

14. The Plaintiff claims liquidated damages in the sum of K34,388.82, interest and costs of this proceedings in its Prayer for Relief in its Statement of Claim. In its motion, the Plaintiff seeks an order for default judgment against the Defendant for the sum of K31,109.10, and costs of the proceedings. Under Order 12, Rule 27(1) of the National Court Rules, where the plaintiff's claim for relief against a defendant in default is for liquidated demand only, the plaintiff may enter judgment against that defendant for a sum not exceeding the sum claimed in the statement of claim on that demand and for costs.

15. Under Order 12, Rule 32(1) of the National Court Rules, whatever claims for relief are made by a plaintiff, where a defendant is in default, the Court may, on application by the plaintiff, direct the entry of such judgment against that defendant as the plaintiff appears to be entitled to on his writ of summons. Order 12, Rule 32 (General) gives the Court wide discretion to enter default judgment.

16. Entry of default judgment is a matter for the discretion of the court. I am of the view that the Plaintiff’s statement of claim discloses a reasonable cause of action against the Defendant. The Plaintiff clearly pleaded parts of the Loan Agreement relied on, the breaches of the Loan Agreement, and the calculations on which the liquidated sum claimed was sought. There is basis on which to enter judgment for the liquidated sum claimed. The interests of justice lies in favour of granting the Plaintiff’s application for default judgment. I exercise my discretion in this case, and make an order for entry of default judgment against the Defendant for the sum of K31,109.10. I make a further order for the Defendant to pay for the costs of the proceedings.

17. I make these following orders:

1. Default judgment is entered against the Defendant for the sum of K31,109.10.

2. The Defendant shall pay for the costs of the proceedings.

3. Time for entry of these orders is abridged to the date and time of settlement of these orders by the Registrar which shall take place forthwith.

The Court orders accordingly.
________________________________________________________________
B. Yalehen: Lawyer for the Plaintiff