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National Court of Papua New Guinea |
PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]
WS NO. 988 OF 2017
BETWEEN:
NATION BUILDERS LIMITED
Plaintiff
AND:
DR. UKE KOMBRA PHD, in his official capacity as the Secretary, Department of Education
First Defendant
AND:
THE DEPARTMENT OF EDUCATION
Second Defendant
AND:
THE INDEPENDENT STATE OF PAPUA NEW GUINEA
Defendant
Waigani: Bre, AJ
2023: 15th November
2024: 29th May
CIVIL PRACTICE AND PROCEDURE – Default Judgment against the State - applications to set aside a certificate of judgement and vary default judgement - whether default judgement ordered liquidated damages - certificate of judgement reflects court's judgement – cannot revisit liability –principles for varying Court order considered- variation provides clarity and continuation of order- change of circumstances warrants setting aside of order.
Cases Cited
Coecon Ltd (Receiver-Manager Appointed) v National Fisheries Authority of Papua New Guinea [2002] N2182
Cragnolini v Leia [2023] SC2464
Inugu v Maru [2019] SC1873
Kaseng v Debege [2004] PNGLR 45
Mainland Holdings Ltd v Stobbs [2003] N2522
Mel v Pakalia [2005] SC790
Smith v Ruma [2002] SC695
Legislation
Claims By and Against the State Act 1996, ss 12 (3), 13 and 14.
Counsel
Mr C Sumba, for the Plaintiff
Mr R Kebaya, for the Defendants
RULING
29th May 2024
1. BRE, AJ: INTRODUCTION: There are two contested applications from each party. The defendant seeks orders to void a Certificate of Judgement issued by the Registrar dated 9 June 2022, while the plaintiff seeks to vary default judgement orders of the Court issued on 19 October 2022.
2. The plaintiff filed similar applications for related matters WS 855 of 2017, WS 856 of 2017 and WS 857 of 2017. The application for variation for this proceeding was heard with the others respectively pending as the outcome of this application will affect the plaintiff’s applications in these related proceedings.
3. The defendant proceeded with his application first followed by the Plaintiff’s application.
BACKGROUND
4. The parties disagree on the terms of the Court Order of 19 October 2022, which was granted extempore'.
A Certificate of Judgement in the amount of K1,200,000.00 was issued by the Registrar on 09 June 2023 as reflecting the Court order
of 19 October 2022. This is disputed by the State on grounds that it does not reflect the Court Order of 19 October 2022.
It is worth setting out the key timelines to clarify the background.
| Time | Event |
| 11 May 2022 | His Honour Justice Makail directed the defendant apply for default judgement application after being persuaded about the defendants'
lack of progress to defend or settle the claim. |
| 24 May 2022 | Plaintiff files Notice of Motion seeking default judgement, the terms of which are reproduced below. |
| 19 October 2022 | His Honour Justice Makail issued Orders that 'the motion for default judgement is upheld' and 'default judgement is entered against the defendant with damages to be assessed'. Plaintiff filed Court Order to this effect on 27 October 2022. |
| 09 June 2023 12 June 2023 | Registrar issues Certificate of Judgement for K1.2million indicating damages were to be assessed with costs to the plaintiff. Plaintiff files a second Court Order for the order entered on 19 October 2022 reflecting the terms of the plaintiff's Notice of Motion
filed 24 May 2022 replacing term one of the Court Order of 19 October 2022 to reflect term 1 of the Notice of Motion and maintaining
term 3 stating loss of business to be assessed with interest at 8% and term 3 for costs. |
| 28 August 2023 6 Sept 2023 30 October 2023 | Plaintiff files a Notice of Motion seeking variation of the Orders of 19 October 2022. The Solicitor General writes to the Registrar expressing concern about the Certificate of Judgement alleging that it was issued in
error of the Court Order of 19 October 2022. The State filed a Notice of Motion to set aside the Certificate of Judgement. |
The Applications
5. The defendant’s application filed on 30 October 2023 seeks the following orders:-
6. The Plaintiff’s Notice of Motion filed on 28 August 2023 seeks the following relief:-
EVIDENCE
7. The defendant relies on the:-
The plaintiff relies on:
8. Most of the following four documents are contained in Robbie Kebaya's affidavit filed on 30 October 2023 and their contents are reproduced below:-
"Certificate Of Judgement
I certify that Nation Builders Limited of 19 (b) Suit, First Floor, Ori Lavi Building, Turumu Street within Boroko, National Capital District (NCD), P O Box 4577, BOROKO, NCD on 19 October 2022 did obtain a judgement of the National Court in its favour and that by such judgement the sum of One Million and Two Hundred Thousand Kina (K1,200,000.00) and damages to be assessed with costs was awarded to Nation Builders Limited.
Dated the 9 June 2023
By The Court
..............................................
Ian Victor Augerea
Registrar
9 June 2023"
The Court Order of 19 October 2022 filed by plaintiff a second time by the plaintiff on 12 June 2023:-
"The Court Orders that:
1. Pursuant to Order 12 Rules 25(a)(b), 28 and 32(1) the National Court Rules Default Judgement be entered against the Defendants for failing to file their Defence in sum of One Million and Two Hundred Thousand Kina (K1,200,000.00).
2. The Defendants shall pay to the plaintiff;
3. The defendants to pay costs of the motion, to be taxed if not agreed.
4. Time be abridged.
ORDERED the 19 day of October 2022
Entered the day of May 2023."
The Court Order of 19 October 2022 filed by the plaintiff the first time on 27 October 2022:-
"The Court Orders That:
Ordered the 19 day of October 2022
Entered the 27 day of October 2022"
The plaintiff’s Notice of Motion filed 24 May 2022 which gave rise to the default judgement
"
3. Such further or Other(s) costs as the Court deems fit.
4. Time be abridged.
Dated the 23 day of March, 2022."
SUBMISSIONS
9. The defendants’ submissions are that the order for liquidated amount of K1,200,000.00 is an error of law on two fronts, one;
the default judgement must be assessed and not certified for judgement as a liquidated amount. Two; the jurisdictional basis for
the relief sought for default judgement relied on the unliquidated damages relief under Order 12 rule 28 NCR and not Order 12 rule 27 NCR. Further, Section 12(3) of the Claims By and Against the State Act 1996 demands that all judgements against the State be assessed unless the claim is a clear debt claim. Mr Kebaya submitted that
given these factors the Certificate of Judgement is premature and void.
10. The plaintiff submitted that the Certificate of Judgement reflected the plaintiff’s application and the Court's default judgement order found default and granted the plaintiff's relief as sought in its Notice of Motion for a fixed sum of K1,200,000.00 plus the relief for loss of business to be assessed.
11. In terms of it's application for variation, Counsel for the plaintiff Mr Sumba submitted that the award arising from default judgement was based on the plaintiff’s Statement of Claim for restitution of K1,200,000.00 and loss of business to be assessed. However, in this application, the plaintiff is seeking to forego its loss of business award and instead seek variation of the orders to maintain only the fixed sum award of K1,200,000.00
ISSUE
12. The issues for determination concerns whether the Certificate of Judgement is void, and if not whether the Court Order of 19 October 2022, filed 27 October 2022 should be varied?
13. This all comes down to whether the Order of 19 October 2022 ordered liquidated damages, whether the issue of jurisdictional basis for the default judgement application should be entertained at this stage after judgment has been entered, whether the default judgement should proceed to assessment of damages and what if any, is the impact of Section 12(3) CBASA on the default judgement.
14. Issues of liability and restitution were raised by counsels during submissions, to which I required further submissions on whether restitution for quantum meruit can be extended to contract value apart from the traditional approach to restore a party for actual costs incurred. Counsel filed written submission a week after as directed. I have considered this, to an extent, in my deliberations.
LAW
"12. Judgements Against The State.
(3) Where in a claim against the State the State is in default within the meaning of the National Court Rules, then notwithstanding that a plaintiff’s claim for relief is for a liquidated demand, judgement shall not be entered against the State for the sum claimed unless the claim relates to a debt only, and in all other cases judgement shall be entered for damages to be assessed and, where appropriate, for costs."
( Emphasis added)
16. The Plaintiff relies on Order 12Rule 8(4) of the National Court Rules ( 'NCR') to set aside or vary the Court Order of 19 October 2022. Order 12Rule 8NCR reads: -
"8. Setting aside or varying judgement or order.
(1) The Court may, on terms, set aside or vary a direction for entry of judgement where notice of motion for the setting aside or variation is filed before entry of the judgement.
(2) The Court may, on terms, set aside or vary a judgement—
(a) where the judgement has been entered pursuant to Order 12 Division 3 (default judgement); or
(b) where the judgement has been entered pursuant to a direction given in the absence of a party, whether or not the absent party had notice of trial or of any motion for the direction;
or
(c) when the judgement has been entered in proceedings for possession of land pursuant to a direction given in the absence
of a person and the Court decides to make an order that the person be added as a defendant.
(3) The Court may, on terms, set aside or vary an order—
(a) where the order has been made in the absence of a party, whether or not the absent party is in default of giving a notice of intention to defend or otherwise in default, and whether or not the absent party had notice of motion for the order; or
(b) where notice of motion for the setting aside or variation is filed before entry of the order.
(4) In addition to its powers under Sub-rules (1), (2) and (3), the Court may, on terms, set aside or vary any order (whether or not part of a judgement) except so far as the order determines any claim for relief or determines any question (whether of fact or law or both) arising on any claim for relief and excepting an order for dismissal of proceedings or for dismissal of proceedings so far as concerns the whole or any part of any claim for relief.
(5) This Rule does not affect any other power of the Court to set aside or vary a judgement or order."
(Emphasis added)
17. The Defendant relies on the following law in support of its application and Section 13 and 14 of Claims By and Against the State Act 1996.
Order 1 rule 7 NCR:-
"7. Relief from Rules.
The Court may dispense with compliance with any of the requirements of these Rules, either before or after the occasion for compliance arises."
Order 12 rule 1 NCR:-
"1. General relief.
The Court may, at any stage of any proceedings, on the application of any party, direct the entry of such judgement or make such order as the nature of the case requires, notwithstanding that the applicant does not make a claim for relief extending to that judgement or order in any originating process."
Section 155(4) of the Constitution: -
"(4) Both the Supreme Court and the National Court have an inherent power to make, in such circumstances as seem to them proper, orders in the nature of prerogative writs and such other orders as are necessary to do justice in the circumstances of a particular case."
ANALYSIS
18. The parties' applications are a result of seemingly contradictory views about the Court Order of 19 October 2022. A Certificate
of Judgement reflects the Court's judgement and orders. The State disputes the default judgement ordered a fixed sum of K1.2million.
The plaintiff counters by submitting that the relief it sought in its Notice of Motion for default judgement filed on 24 May 2022
was granted for the fixed sum of K1.2million with loss of business to be assessed.
19. The Certificate of Judgement is not a requirement of the Court rules but a necessary formality requiring the Registrar to certify
the judgement by reflecting its terms on the Certificate. See Kaseng v Debege [2004] PNGLR 45.
Here, the defendant denies the Certificate of Judgement correctly reflected the terms of the Court Order of 19 October 2022. I will
therefore consider the plaintiff's application for variation first since the terms of the Certificate depends on the terms of the
Court Order.
Variation
20. The plaintiff's application relies on Order12 rule 8 (4) NCR. Order12 rule 8 (4) NCR is an additional power to the other powers of the National Court under Order12 rule 8 NCR. Order12 rule 8 NCR provides authority for the Court to exercise its discretion to vary or set aside an order made exparte or in the absence of a party, on grounds of procedural fairness. Order 12 rule 8 (4) NCR has been held to grant jurisdictional basis to a party from an inter-parte application to vary or set aside any order of the Court except summary judgement orders that finally disposes of the entire proceedings. See Cragnolini v Leia [2023] SC2464, Inugu v Maru [2019] SC1873 and Pins Construction Ltd v Tkatchenko [2023] N10504.
21. Order12 rule 8 (2) (a) NCR provides jurisdictional basis to vary or set aside a default judgement order awarded exparte or in the absence of a party. My view is that Order12 rule 8 (4) NCR is in addition to Order 12 rule 8 (2) (a) NCR . To me, this provides me the appropriate jurisdiction under Order 12 rule 8(4) NCR to consider and determine the plaintiff's application.
22. I now turn to consider the plaintiff's application. The law concerning the Court's discretionary power to vary its earlier decision is discussed in the cases of Smith v Ruma Constructions Ltd [2002] SC695 and Mainland Holdings Ltd v Stobbs [2003] N2522 and other cases from which I summarise the relevant considerations: -
23. In exercising my discretion, the foremost consideration is not to impinge on the earlier Court's exercise of discretion. See Smith v Ruma (2002) SC695. Instead, a variation should result in the continuation of the Order of 19 October 2022 so it gives effect to, complements or enforces the original order.
24. Here, the Court granted default judgement to the plaintiff. The Court's decision followed its earlier directions of 11 May 2022 that default proceedings be filed. The default judgment order per se is not contested by the parties, what is contested are the terms of the default judgement. The terms of the order upholds the notice of motion and orders that damages be assessed. This can present the meanings contended by both parties. Hence, I must consider the terms of the Notice of Motion.
25. The State contended that the Court order correctly ordered for assessment of damages and not liquidated damages which is consistent with the jurisdictional basis of the application which relied on Order 12 rule 28 NCR. In support of its contention the defendants rely on the plaintiffs' submissions attached to Robbie Kebaya's Affidavit and Dr Kombra's evidence. The defendant also relied on the directive in the CBASA section 12(3) to submit that this was not a clear debt case coming within the exception of section 12(3) and the plaintiff must prove its loss at an assessment of damages hearing. On making this point, counsel raised issues on liability. I note from the plaintiffs' written submissions for the default judgement that it made a case for default judgement and stated that the plaintiff's claim is for a fixed sum of K1.2million. Dr Kombra's evidence disputes liability and the merits of the plaintiff's claim.
26. I find that the defendants' submissions require the Court to revisit liability and challenges the exercise of jurisdiction by the earlier Court. In my view the issue of liability is not a relevant consideration in deciding these applications. I adopt the principle of proven liability as applied when assessing damages in cases where default judgement has been obtained as established in Coecon Ltd (Receiver-Manager Appointed) v National Fisheries Authority of Papua New Guinea (2002) N2182 and Mel v Pakalia (2005) SC790. These cases are authorities that a default judgement confirms that liability has been established against the defendants and is not open for re-visiting unless upon a cursory inquiry by the Court, it appears that the Statement of Claim discloses no reasonable cause of action and if so, the Court can revisit liability. Otherwise, the plaintiff is entitled to the benefit of the default judgement. I consider these principles relevant and adopt it.
27. Further in Kaseng v Debege the Court considered the pleadings in deciding whether a Certificate of Judgement contained the terms of a Court order. I apply the same approach and note that both the plaintiff's Statement of Claim and Notice of Motion seek relief for a liquidated sum of K1.2million and for loss of business to be assessed.
28. I find that the defendants seeks to rehass arguments it may have made during the earlier inter-parte hearing on the application
by the plaintiff for default judgement. I find it is too late at this advance stage of the proceedings to be challenging liability.
The State's opportunity to challenge liability was lost when it failed to file its Defence. The State made its submissions against
the default judgement but it was obviously not considered by the Court who granted default judgement against the State. The plaintiff
is entitled to the benefit of the default judgement. Where the defendants are still aggrieved, the right forum to re-visit liability
is the Supreme Court.
29. I find the State's arguments tend to impinge on the exercise of discretion by the Court in granting the default judgement and
one which I am devoid of jurisdiction to consider. To me the plain reading of the order filed on 27 October 2022 as reflected in
the Court file endorsement note is that it refers to the Notice of Motion.
I am therefore not convinced by the defendants' submissions and disregard them.
30. As to the variation application, when the Court Order of 19 October 2022 is read together with the Notice of Motion filed 24 May 2022 it produces a result, that in my view results in the following view as contended by the plaintiff:-
1) default judgement is entered for a specified sum of K1.2million, and
2) loss of business is to be assessed.
The plaintiff's application for variation seeks to :-
1) change the terms of the Court Order of 19 October 2022, and
2) set aside the order for 'loss of business to be assessed''.
31. The plaintiff's reasons for setting aside the loss of business order is that it would serve no purpose to proceed to assessment of damages because the pleading does not disclose the cause of action for loss of business and the plaintiff does not wish to further prolong litigation. Evidence to this is contained at annexure “CT 45” to Charles Tipi’s Affidavit filed 28 August 2023.
32. In considering whether I should exercise my discretion to grant a variation of the Court Order of 19 October 2022, I remind myself about the principles of variation outlined earlier and also take into account the following factual considerations: -
33. The issue for my consideration is then whether the variation sought by the plaintiff to:-
1) specify the liquidated judgement of K1.2million, and
2) set aside the order for assessment of damages for the loss of business; will substantially change the earlier Court orders of 19 October 2022 or seek to continue and give effect to it or that a change in circumstances has occurred that would render the continuation of the order unnecessary.
34. A variation should not substantially change an order unless there is a change in circumstances which would render the order's continuation unnecessary or inappropriate. The Court order clearly upheld the Notice of Motion which contains a relief for a liquidated sum of K1.2million with loss of business to be assessed. The variation sought for term one of the Order will provide clarity, continue or give effect to it and not substantially change it.
35. As to the plaintiff's application to set aside term two of the orders of 19 October 2022. The evidence of the plaintiff is that it is no longer interested in pursuing its loss of business because of the time and resources spent in recovering its costs since 2012, a period of twelve years. The defendants do not counter the loss of business award. I accept the plaintiff's evidence and consider its change of position in following legal advice to forego assessment of damages on the loss of business award, a change in circumstances that will render the continuation of term two of the order unnecessary. The outcome benefits all parties. Hence, I am inclined to grant the orders sought by the plaintiff to set aside the order relating, to loss of business.
36. After carefully considering the evidence, submissions and the principles, it is my ruling that:-
37. In terms of the defendant's application to set aside the Certificate of Judgment, the State was represented and made submissions
at the default judgement application. The Court order indicates it exercised its discretion against the State to grant default judgement
to the plaintiff. I am not satisfied on the evidence adduced that there was any improper practice with the issuance of the Certificate
of Judgement. The evidence of the plaintiff is that the Registrar made inquiries of the plaintiff when the Certificate of Judgement
was presented to clarify where the specific liquidated sum was ordered. I find, the plaintiff, correctly referred the Registrar to
its Notice of Motion filed 24 May 2022 as the Court Order upheld the plaintiff’s notice of motion for default judgement. I
also accept the plaintiff's evidence that the second order filed on 12 June 2022 was to clarify the initial Court order of 19 October
2022 whose terms reflect the Notice of Motion. However, I find that this second filing is improper. The proper course for the plaintiff
would have been to apply for variation of the Orders of 19 October 2022 rather than to simply file a second time. Having said this
there is nothing contentious in the order filed, I find it does reflect the terms of the Notice of Motion filed on 24 May 2022.
38. Further, in Kaseng v Debege the court clarified that a Certificate of Judgement was not a court order but a necessary requirement of the State pursuant to the
CBASA, to pay judgement debts ordered against it. Thus a variation should provide clarity as to its terms and enable a new certificate
of judgement to be issued by the Registrar which will give effect to the default judgement.
39. For added consideration, I required written submissions on restitution as Counsels based most of their arguments on liability rather than in addressing the principles of variation or the jurisdictional basis to set aside the Certificate of Judgement. The caselaw cited by Counsels in their submissions point to the Courts applying equity to award damages on quantum meruit based on the invoice issued despite contracts with the State being void or voidable for lack of compliance with the public finance procurement or tender laws and processes.
The plaintiff's evidence is that it has invoiced the first defendant K1.2million since 2013 and payment of this invoice remains outstanding to date. The invoice is produced in annexure "CT 19" of the affidavit of Charles Tipi filed on 28 August 2023. Further, the plaintiff's evidence in annexure "CT 25'' of the affidavit of Charles Tipi filed on 28 August 2023 reflects that its total claim, inclusive of loss of business comes to K4.7million. This to me confirms the order of default judgement for the specified sum of K1.2million and the variation to term 1 of the Orders of 19 October 2022 gives effect to the Order and ensures its continuation. The State has the option to appeal if it is still aggrieved with the decision of 19 October 2022 or may consider settling with the plaintiff.
40. Given my findings and conclusions, I grant the plaintiff's application and refuse the defendant's application. The Orders of 10 October 2022 are varied accordingly and the terms of the Certificate of Judgement dated 09 June 2023 are set aside to be re-issued to reflect the terms of this order.
INTEREST
41. A case for variation of the interest award was not argued but interest generally follows an award and is discretionary. I note interest was a relief claimed in the plaintiff’s Notice of Motion filed 24 May 2024 I exercise my inherent jurisdiction under s155 (4) Constitution to grant interest at 2% pursuant to sections 4 and 6 of the Judicial Proceedings (Interest on Debt and Damages Act Chapter 52. Judgements against the State attract 2 % per annum according to sections 4 and 6.
ORDERS
42. The formal Orders of the Court are:-
Orders accordingly;
Nation Builders In-house Lawyer: Lawyer for the Plaintiff
Solicitor General by his employed Lawyer: Lawyer for the Defendants
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