N10279
PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

OS No 672 of 2016

BETWEEN:
IARE PURARI RESOURCE HOLDINGS LTD
First Plaintiff

AND:
AUA AVAI
Second Plaintiff

AND
IAN IKORO for himself and on behalf of others
Third Plaintiffs

AND
KELLY KAIRI
Fourth Plaintiff

AND
TUNOU SABUIN
First Defendant

AND
PNG FOREST AUTHORITY
Second Defendant

AND
FRONTIER HOLDINGS LTD
Third Defendant

AND
RIBUNAN HIJAU
Fourth Defendant

AND
ANDREW TIONG
Fifth Defendant

AND
JAMES LAU SZZE YUAN
Sixth Defendant

Waigani: Ganaii, AJ
2023:  20th March

CIVIL - Application seeking extension of time to file defence out of time – Order 1 Rule 7 and 15 – Order 7 Rule 6 - National Court Rules 

Held:

1.	In an application seeking to file defence out of time, one of the two 
jurisdictional basis of Order 1 Rules 7 and 15 and Order 7 Rule 6 of the National Court Rules 1983, can be invoked together or on its own as separate sources for relief. Nambawan Super Ltd v Paul Paraka [2020] PGNC 139; N8375 (22 June 2020) and Walaun v Wilson [2016] PGNC 110.

2.	Here is not a case where no jurisdictional basis was invoked at all or that 
a completely wrong jurisdictional basis was relied upon, as distinguished from the case in Nambawan Super Ltd v Paul Paraka [2020] PGNC 139; N8375 (22 June 2020) where no jurisdictional basis was invoked at all. 
 
3.	An oral application seeking an adjournment to add or amend a 
jurisdictional basis for an application seeking to file defence out of time would not have been improper as it would not have affected the substance of the motion but only dealt with the question of the jurisdictional basis of the motion.

4.	There is a danger where compliance of specific rules may overtake or 
become more important or relevant than the actual problem or substance of an interlocutory matter that is before the Court for determination, lodged by an aggrieved party. The Court is to caution or remind itself of this. (Nambawan Super Ltd v Paul Paraka [2020] PGNC 139; N8375 (22 June 2020).

Cases Cited
Luke Tai v ANZ Group (PNG) Ltd (2000) N1979
More v Coffee Industry Corporation Ltd (2019) N7981
Nambawan Super Ltd v Paul Paraka [2020] PGNC 139; N8375 
Pundia v Kiwai (2011) N4472
Walaun v Wilson [2016] PGNC 110

Counsel
Mr. A. Token, for the First and Second Plaintiffs
Mr. A. Ona, for the First and Second Defendants 
Mr. W. Frizzel, for the Third-Sixth Defendants 

RULING ON APPLICATION SEEKING LEAVE TO FILE DEFENCE OUT OF TIME
20th March, 2023
1.    GANAII, AJ.   This is a ruling on an application by the defence seeking leave to file defence out of time. The First and Second Defendants invoked Order 1, Rules 7 and 15 of the National Court Rules (NCR) 1983 as the jurisdictional basis for this application.
Background 

2. 	By way of background, by an order and or judgment of the Court made on the 27 June 2008 in a judicial review proceeding styled as OS (JR) No. 1123 of 2005, the Court ordered that the Defendant and his predecessor Managing Directors give effect to the decision of the Waigani Provincial Land Court of 01 September 2005 by assessing and making royalty payments held in trust by PNG Forest Authority.
3. 	On the 10th of November 2021, the Court made several directional orders in the following terms:
1.	Rimbunan Hijau and Frontier Holdings Ltd are joined as defendants in these proceedings.

2.	The proceedings is converted to pleadings. 

3.	Plaintiff shall file a statement of claim within 14 days of this order. 

4.	Defendants shall file and serve their defence within 14 days of service of the statement of claim. 

5.	Order sought for premium and royalty is adjourned until further notice. 

4.	Pursuant to these orders the plaintiffs filed a statement of claim on the 24th of November 2021, seeking substantive judgment in the sum of K175, 845, 585. 00 amongst other damages sought and had it served on the First and Second Defendants on the 07th of December 2021. 
5. 	The fourteen (14) days ordered by the Court for all the defendants to file their defence expired on the 7th of December 2021. 

6. 	By the 21st of December 2021, the First and Second Defendants were unable to file their defence for various reasons set out in the affidavit of Tobias Dalid and Mr Anave Ona.

7. 	The First and Second Defendants then filed this application seeking extension of time, to file their defence out of time. This was to enable the PNG Forest Authority (PNG FA) to make out its defence against the substantial damages claimed by the plaintiffs of more than K175, 845, 585.

Issue

8.	The issue is whether leave should be granted to the First and Second Defendants to file their defence out of time. 

Law  

9.	Orde 1 Rules 7 and 15 and Order 7 Rule 6 of the National Court Rules 1893 read:
	ORDER 1
Division 2.—General.
7. Relief from Rules. (1/12)
The Court may dispense with compliance with any of the requirements of these Rules, either before or after the occasion for compliance arises.
…
15. Extension and abridgement. (2/3)
(1) The Court may, on terms, by order extend or abridge any time fixed by the Rules or by any judgement or order.
(2) The Court may extend time under Sub-rule (1) as well after as before the time expires whether or not an application for the extension is made before the time expires.
(3) The period within which a person is required by these Rules or by any order to serve, file or amend any pleading may be extended by consent without an order for extension.
“ORDER 7. Notice of Intention to defend 
6. Late notice
(1) A defendant may give a notice of intention to defend at any time without leave.
(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 a defence or do any other thing later than if he had given a notice of intention to defend within that time”.
Submissions 

10.	The defence submitted that they are permitted by the cited rules to make this application and the law is settled in that in order to have the court grant extension of time to file defence out of time, they must fulfil four requirements. 

11.	In Pundia v Kiwai (2011) N4472, the principles are that the applicant must provide a reasonable explanation for the failure to file the defence out of time; if there is delay in bringing the application, reasonable explanation for the delay should be given; the applicant must demonstrate a defence on merits; and there will be no pre-judice if leave is granted. 

12.	On each of these principles, Mr Ona, of learned counsel for the First and Second Defendants submitted as per below. 

First requirement: Whether the applicant provided a reasonable explanation for the failure to file a defence out of time?

13.	Defence submitted that there was a restructure process taking place within the Office of the PNG Forest Authority and personnels holding significant positions who would have provided vital information to assist prepare and file a defence have become unattached from their positions thus they were unable to provide the necessary assistance to the lawyers. These personnel included the Managing Director and the Minister. The Ministerial portfolio was changed 2-3 times between the periods 2019-2022. 

14.	Around this time also, due to the resignation of the in-house lawyer having carriage of this matter and where he did not give a brief on the status of the matter to the incumbent lawyer, there was considerable delay caused which prevented finalization of instructions and filing of a defence. 

Second requirement: Whether there is reasonable explanation given for the delay in bringing the application?

15.	Defence submitted that during the restructure and given the above situations faced by the Office of the PNG Forest Authority, it was difficult to confirm instructions from relevant sources on the validation of the significantly huge amount the plaintiffs were seeking.  For this, the Defendants submit that this is a reasonable explanation as to why they were not able to file their defence within the required time period. 

Third requirement: Whether the applicant demonstrated a defence on merits?

16.	Based on the affidavits of Mr. John Mosoro, the Managing Director of the Office of the PNG FA and Anave Ona, counsel representing the First and Second Defendants, filed on the 07th of September 2022 and 21st of September 2022 respectively, attaching to them a draft defence on merit on behalf of the defendants, this Court is satisfied that the applicant has demonstrated there to be a defence on merit. Defence relied on the case law of More v Coffee Industry Corporation Ltd (2019) N7981 in making this application where leave was granted 10 months out of time, after the Court considered that there was defence on merit and the plaintiff would not be prejudiced if the case went to trial. 

Fourth requirement: Whether there will be no pre-judice if leave is granted?

17.	Alternatively, Defence submitted that the interest of justice favours the grant of extension of time given that a substantial amount of claim is being sought. Defence argue that circumstances of the case dictate that the writ of summons taken up by the plaintiff is properly tried on liability in the interest of justice, relying on the case of More v Coffee Industry Corporation (supra).

18.	I heard Mr. Frizzel of learned counsel for the Third – Sixth Defendants and he did not oppose the application.

Response and submissions by Plaintiff

19.	Mr. Token of learned counsel for the plaintiff made these submissions. 

20.	The applicant had not correctly and with precision invoked the rules. By 
invoking the wrong rule for their motion the application is not properly before the Court. The application is incompetent and should be dismissed in its entirety. 

21.	Mr Token argue that the Defence relied on Order 1 rr 1 and 15 of the NCRs which is not the right jurisdictional basis for this motion. The applicable rule is Order 7 r 6 which refers to late Notice to be given. Mr Token relied on the case of Walaun v Wilson [2016] PGNC 110, which I will discuss below. 

22.	In reply, on the question of delay, Mr Token submitted that there was a delay for more than seven months, which is substantial and is inordinate. For the reasons advanced by the defendants on the delay, there had been no good reasons given as to why steps were not taken by previous lawyers on record to progress the defence case. 

23.	On the restructure within the Office of the National Forest Authority, Mr Token submitted that this has nothing to do with the courts business and is not a valid reason for delay in progressing the matter. Further, the affidavit of Mr Tobias Dalid does not say when exactly the restructure commenced and ended and therefore this ground is not convincing.

24.	The office of the PNG Forest Authority has a legal division that has more 
than one lawyer, at least about five lawyers. The reason provided that there was lack of lawyers which caused the delay cannot be valid.  Mr Ona had only recently been instructed to act for the concerned Defendants. The previous lawyers have done nothing and have failed to progress the case. 

25.	On the question of defence on merit, the plaintiff concedes that there is a 
defence on merit.

26.	Mr Token submitted that the Plaintiff will be prejudiced since this is a 2016 matter and the plaintiffs have filed all supporting affidavits and were ready to secure a trial date.  

Mr Ona’s reply 

27.	Mr Ona submitted that Order 1 r15 can be used alone as a separate source for bringing this application to Court. Caselaw has set the precedent that those rules can be invoked on their own individually or with Order 7 r 6 of the NCR. 
28.	The two cases of Walaun v Wilson (supra) and Nambawan Super Ltd v Paul Paraka (trading as Paul Paraka Lawyers) [2020] PGNC 139; N8375 (22 June 2020) were presided over by Anis, AJ as he then was now Anis J, at different times in 2016 and 2020, respectively. In the latter and the most recent case of Nambawan Super (supra), the court accepted that Order 1 r15 is one of those jurisdictions that can be invoked. Anis J, accepted that in the circumstances of that case, Order 1 r 15 has jurisdictional basis and can stand on its own or can be invoked together with Order 7 r 6.  
29.	Defence submitted that this is not a case where no jurisdictional basis was invoked at all so that application would be defective and incompetent.  Order 1 r15 was invoked and this rule has general application.  

30.	Defence submitted that there can be no prejudice to the plaintiff’s case. The reason is that the plaintiff was allowed by an order of the Court to amend the proceeding by filing a Statement of Claim, only in 2021 and not in 2016 when they commenced action. It therefore is not correct for the plaintiffs to say they have been prejudiced since the commencement of this proceedings in 2016. 

31.	Mr Ona argued that the Defendants have been prejudiced because they were given only 14 days to file their defence against a claim that is significant in amount, and especially after the pleadings were filed and served much later in time in 2021, and not in 2016 when the proceedings commenced.  If an extension of time is granted, the parties will be able to make out their cases in court on equal footing. 

APPLICATION 
JURISDICTION 

32.	In my reading of the two cases cited by counsels, I say this at the outset. In Walaun v Wilson (supra), there was no issue as to which is the proper jurisdictional basis for seeking extension of time to file a defence out of time. The Defendant invoked one source only and that was Order 7 r 6 of the NCR. In citing that provision of the Rules, Anis, AJ (as he then was) said at para 13 that he was satisfied that Order 7 r 6 was the correct rule which set the jurisdictional basis for that motion to be heard. 
33.	In Nambawan Super Ltd v Paul Paraka (trading as Paul Paraka Lawyers) [2020] PGNC 139; N8375 (22 June 2020), although it was unclear, deducing from the facts, it appeared to be the case that the Defendant did not invoke Order 1 rr 7 and 15 nor Order 7 r 6 of the NCR. I say this because the Plaintiff had argued that the correct rule, which is Order 1 r15, was not invoked and after leave was granted to amend the jurisdictional basis of the motion, the defence had invoked Order 7 r 6.
34.	In Nambawan Super, since there were no objections to the defence seeking leave to amend the jurisdictional basis of their motion, the Court had considered that the interest of justice required such a course to be taken so that the matter can progress to a speedy determination of the substantive issues in the motion. The Defendant’s reliance on Order 7 r 6 of the NCR was accepted by the Court. Hence, what is important to note is that the Court in Nambawan Super did not comment that it was not proper to invoke Order 1 rr 7 and 15. It had considered and adopted the legal position in Luke Tai v ANZ Group (PNG) Ltd (2000) N197 and in summing up said this at para 12. 	
“I adopt the above principles herein to the present case. I will add by saying that in an application for extension of time, to file defence out of time, it is sufficient to plead Order 1 Rule 15, or Order 12 Rule 25 (b), or Order 7 Rule 6, that is, together or otherwise as the source or sources to the relief”. (Bold emphasis mine)
35.	In essence, and in my reading, the combined effect of Anis, J’s reasonings in both cases is that any one of the two jurisdictional bases can be invoked on its own as separate sources for relief or together and there can be nothing wrong with that. 
36.	In my respectful view, in the absence of a Supreme Court interpretation of the law on this issue, at the least, these two National Court case law suggests that these sources can be invoked alone or together. 
37.	In this court’s further consideration, it is noted that in the present matter, the Defence was ready to seek leave to file an amended motion and invoke one of the other relevant rules, which would have been Order 7 and r 6 because they have already invoked Order 1 and rr 7 and 15. In my respectful view, it was not necessary for a further adjournment to file a motion because an oral application could have been made, as the amendment would not have affected the substance of the motion but was one just on the question of the jurisdictional basis of the motion. I refused the application for an adjournment but not for an oral application which, nonetheless, was not made. Regardless, Order 1 rr 7 and 15 was still a proper jurisdictional basis which the defence had relied on and that was sufficient. (Nambawan Super).  
38.	In considering the defence’s readiness to amend the jurisdictional basis of their motion, it was demonstrated that the defence understood what the principle in Nambawan Super stood for and was ready to invoke Order 7 r 6 of the NCR. It is not a case where the Defence did not know that they can also invoke Order 7 r 6 of the NCR. 
39.	Further, I must agree with Mr Ona, of learned counsel for the concerned defendants that this is not a case where there was no jurisdictional basis invoked at all or that a completely wrong basis was relied upon, which appeared to have been the case in Nambawan Super (supra). 
40.	Consequently, on the issue of jurisdiction, I am satisfied that invoking Order 1 r 15 of the NCR alone does not make the application incompetent and that, Order 1 r 15 is also a source that can be relied upon to seek orders to be granted leave to file defence out of time.   
41.	Further, I find the Court’s views at para 12 of Nambawan Super (supra) relevant on the use of the different sources of laws including s 155 (4) Constitution as basis for seeking leave to file defence out of time. Anis, J said:
“I will remark that in practice, parties do also ask the Court to invoke its powers under section 155(4) of the Constitution. All these citations, to me, tend to cause Courts to create additional rules and decisions which are evident in recent developments of the National Court Rules and in the case law. Sometimes, these can become cumbersome, confusing and perhaps one may even argue whether Courts are reading too much into these rules when trying to figure out whether a correct source has been cited in an interlocutory matter. There is a danger, in my view, that these may eventually lead to a situation where compliance of specific rules may overtake or become more important or relevant than the actual problem or substance of an interlocutory matter that is before the Court for determination that is lodged by an aggrieved party. I caution or remind myself of these with this remark”. (Underlined emphasis is mine)

42.	To my mind, in the light of what is before me, particularly a case involving a significant amount of money, which is K175, 845, 585. 00, what is crucial is the substance of the interlocutory issue, now before this court, ie the question of whether the defence have a case to file a defence out of time, then, the compliance of specific rules which may overtake the importance of such interlocutory motions. As such, it is only proper that this matter progresses to a consideration on the substance of the motion. 

43.	On the question of delay, a period of more than seven months has passed which is inordinate but whether it is an unusual delay in light of the evidence the Defendant has put before the court, I consider the answer to be no. These are the reasons. Firstly, whilst it is valid that the Defendants did not have good reasons nor did they try to explain why the previous lawyers did nothing to progress this case and file their defence, some explanations were given which included among others, that due to a restructure taking place and the resignation of the lawyer having carriage of the matter and possession of the file, the matter could not be regressed. The Court is mindful of situations where previous counsels having carriage of matters, they do not readily release information or give a proper brief to assist incumbent counsels. Mr Ona, who is the new lawyer on record was not assisted with a brief on the matter so as to understand fully what the previous lawyers have or have not done and the reasons why no work has been done to progress the matter.

44.	Nevertheless, on any lawyer’s availability and ability to progress the case, I accept the affidavit evidence of Mr Ona for the Defendants who said that it was due to the administrative consequences of the restructure that was taking place within the Office of the NFA, that no lawyer was able to do much or any work on the matter until much later. 

45.	I also accept the evidence of Mr Ona on the status of lawyering within the Office of the PNG FA as opposed to Mr Token’s submissions from the bar table that the legal section of the Office of the PNG FA was adequately staffed with legal counsels. Even if that were to be the case that there were enough lawyers, the issues that Mr Ona say the Office of the PNG FA was faced with remained the same which was that the last lawyer who had carriage of the mater had not given a brief on the proper status of the matter to any incumbent lawyers. It is an old matter, and surely, a number of things had transpired requiring the provision of a brief or file sufficient to assist any incumbent lawyers.      

46.	The affidavit of Mr Tobias Dalid does not say when exactly the restructure commenced and ended and therefore may not be convincing, but the fact of the matter is that there was restructure happening that lasted over a certain period of time, during which this matter was on foot. 

47.	The restructure was an in-house matter for the Office of the PNG FA but it cannot be denied that it does affect people’s positions. Lawyers were changed, two-three different Minsters had been appointed and the managing director was also changed. Surely, these had affected the progress of the defence preparation in obtaining and confirming instructions and going to trial on the issue of payment of a significant sum of money of which the plaintiffs are claiming. 

48.	I also further consider that there is no dispute by the plaintiffs that there is a defence on merit, according to the draft defence filed. 

49.	Whilst there would have been some prejudice to the plaintiff prior to an order to amend the mode of commencement and where the defence did not file any Notice of Intention to Defend or any Defence, that position has since changed. The pleadings have been filed after a court order for the conversion of an originating summons to pleadings in 2021. The plaintiffs have not been prejudiced. 

50.	In the interest of justice, given the significantly large amount of money sought by the plaintiffs, an extension of time will enable all the parties to vet out their respective cases in a trial proper. 

51.	For all of the above, this Court will exercise discretion in the interest of justice to grant the application for leave to the First and Second Defendants to file defence out of time. 

Court Orders

52.	I therefore, make these orders:
1.	Pursuant to Order 1 Rules 7 and 15 and Order 7 Rule 6 of the National Court Rules 1983, application is granted for leave for the First and Second Defendants to file their defence out of time.

2.	The First and Second Defendants will file and serve their defence within fourteen days from today, by or before the 03rd of April 2023, 4:06 pm.

3.	Cost be in the cause. 

4.	Matter is adjourned to the registry for further Directions Hearing. 

Orders accordingly. 
________________________________________________________________
Public Solicitors: Lawyers for the Plaintiffs
Ona Lawyers: Lawyers for the First and Second Defendants 
Warner Shand Lawyers: Lawyers for the Third – Sixth Defendants