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National Court of Papua New Guinea |
PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]
WS NO. 53 OF 2023 (IECMS) – (COMM)
BETWEEN:
BSP FINANCIAL GROUP LIMITED
Plaintiff
V
THE INDEPENDENT STATE OF PAPUA NEW GUINEA
Defendant
Waigani: Anis J
2024: 8th & 13th March
DEFAULT JUDGMENT – notice of motion – Order 12 Rule 28, Order 12 Rule 32(1) and Order 12 Rule 26(a) – National Court Rules – whether correct source invoked – whether default application premature due to alleged want of proper forewarning - Order 4 Rule 49(19)(3)(a)(i)(4) – National Court Rules - whether claim is a debt within the requirement of s.12(3) – Claims By and Against the State Act 1996 – whether there was default – whether default judgment should be entered – consideration – ruling
Cases Cited
Motor Vehicles Insurance Ltd v. Nominees Niugini Ltd (2015) SC1435
Hilary Singat v. Commissioner of Police and the State (2008) SC910
Bluewater International Ltd v. Roy Mumu and the State (2019) SC1798
Counsel:
T Injia, for the Plaintiff
L. A. Jurth with counsel assisting D Mel, for the Defendant
DECISION
13th March, 2024
1. ANIS J: I heard an application by the plaintiff for default judgment on 8 March 2024. The application was contested. I reserved my ruling to a date to be advised.
2. This is my ruling.
BACKGROUND
3. In the writ of summons and statement of claim (SoC) filed, the plaintiff claims breach of contract. The contract concerned, premised on the SoC, is a Deed of Guarantee (DoG). The Plaintiff asserts that it signed the DoG with the defendant on 9 July 2020, for the defendant to guarantee a loan facility agreement (LFA) that was entered between the plaintiff and a third party called Central Dairy Limited (the 3rd party). The limit put on the LFA was K112,000,000. The plaintiff alleged in the SoC that the 3rd party had defaulted, so on 18 May 2023, the plaintiff issued a notice of default for payment of a sum of K3,247,887.19 within 7 business days. The default by the 3rd party, as alleged by the plaintiff, continued, so on 31 May 2023, the plaintiff issued a notice in writing to the defendant demanding full payment premised on the terms and conditions of the DoG. The plaintiff demanded the defendant to pay, within 7 business days, a total sum of K110,614,511.99 plus interest and costs.
4. The plaintiff claimed that its demand had not been met by the defendant and filed this proceeding.
MOTION
5. The notice of motion filed 20 February 2024 (NoM) seeks various relief. Relief 2 was abandoned so I will not address that. The main relief sought is relief 1 which states:
PRELIMINARY MATTERS
6. The defendant raised a number of preliminary matters. First, it claims that the sources of the NoM relied upon by the plaintiff to seek default judgment are incorrect.
7. The defendant also claims that the plaintiff did not comply with the forewarning notice requirements before it filed the NoM. The claim is made premised on Order 4 Rule 49(19)(3)(a)(i)(4) of the National Court Rules (NCR).
8. Counsel also makes submissions in general that it is incumbent on an applicant to state concise reference to the Court’s jurisdiction in a notice of motion. This submission is made pursuant to the requirement under Order 4 Rule 49(8) of the NCR.
9. I note the submissions of the parties in regard to the above.
10. Order 4 Rule 49(8)(19)(3)(a)(i)(4) and Order 12 Rules 27 and 28 read:
ORDER 4 Rule 49(8)
8. Form of Motions.
All Motions must contain a concise reference to the Court’s jurisdiction to grant the orders being sought. Motions not containing such reference will not be accepted for filing.
If accepted by the Registry staff without such reference, and it goes before the motions judge, the Court may strike out the motion for being incompetent and for lack of form.
The motion must state the following;
"...move the Court for Order pursuant to (e.g. section 5 of the Claims By and Against the State Act...) ...".
......
ORDER 4 RULE 49(19)(3)(a)(i)(4)
(i) An applicant for Default judgment shall file the following documents:
(Underlining mine)
......
ORDER 12 RULE 27 & 28
27. Liquidated demand. (17/4)
(1) Where the plaintiff's claim for relief against a defendant in default is for a liquidated demand only, the plaintiff may enter judgement against that defendant for a sum not exceeding the sum claimed in the statement of claim on that demand and for costs.
(2) Where a claim for a liquidated demand includes interest at an unspecified rate, interest accruing after the date of filing the statement of claim to the date of entry of judgement shall, for the purposes of judgement under this Division be reckoned at the rate of 8% yearly.
......
28. Unliquidated damages. (17/5)
Where the plaintiff's claim for relief against a defendant in default is for unliquidated damages only, the plaintiff may enter judgement against that defendant for damages to be assessed and for costs.
......
11. What stands out to me when observing relief one is the manner in which the sources are pleaded. They are pleaded with use of phrases namely “and/ or”. In my view, the use of such phrases or terminologies, clouds or confuses the other party and the Court, on what concise rule a plaintiff may intend to use or invoke in a filed notice of motion. It appears to breach the purpose and requirement of Order 4 Rule 49(8) of the NCR. When one looks at it, the question to ask will be, which precise jurisdiction is the plaintiff invoking? But I also note that this is not a type of case where no source at all was invoked, or where there was partial or vague pleading of a source, or in a case where a party was not given advance notice of an applicant’s intention to file a notice of motion to seek a specific relief. The parties herein know of the issues and the intended relief, in regard to the NoM. As such, I am not minded to exercise my discretion to dismiss the NoM premised on this ground of objection.
12. Let me address the next issue, that is, concerning the forewarning notice. It is not disputed that the defendant did file a notice of intention to defend before the plaintiff filed its NoM. The notice of intention to defend was filed on 10 October 2023. What this means, pursuant to Order 4 Rule 49(19)(3)(a)(i)(4), is that the defendant was entitled to receive a forewarning notice: See case: Motor Vehicles Insurance Ltd v. Nominees Niugini Ltd (2015) SC1435. However, the issue, which is centered around Order 4 Rule 49(19)(3)(a)(i)(4), is this. The defendant complains that although the plaintiff may have given a ‘forewarning notice’ to it, the plaintiff did so without also allowing time for the defendant to take steps and instead proceeded to file the NoM on the first day of default which was on 20 February 2024. By doing so, the defendant submits, the requirement for giving the forewarning notice has not been met which is mandatory under the NCR thus the NoM should be refused. The defendant also complains that the ‘forewarning letter’ was given at the time when the defendant was not yet in default. As such, the defendant submits that the ‘forewarning letter’ was issued prematurely and therefore cannot constitute a ‘forewarning notice’ thus the NoM should be dismissed.
13. I note the submissions of the parties in this regard.
14. The ‘forewarning letter’, which was issued by the plaintiff’s lawyers, is dated 16 February 2024 (the Letter). It is contained in the affidavit of service of Victor Maka filed 20 February 2024, and it is marked as annexure “VM4”. The Letter reads in part:
“We act for BSP Financial Group Limited, the Plaintiff in the above proceeding.
The Plaintiff’s Statement of Claim filed on 5 October 2023 was served at the Solicitor General’s Office located at Level 6, West New Briain Haus, Waigani Drive, Port Moresby, on 6 October 2023.
The Plaintiff is yet to be served the State’s Notice of Intention to Defend and its Defence. The State will be in default should it fail to file and serve its Notice of Intention to Defend and its Defence after close of business on Monday, 19 February 2024.
In the event the Defendant fails to file its Defence on Monday 19 February 2024, we have instructions to file an application for entry of default judgment on 20 February 2024 without further notice.
......”
15. The immediate question that comes to my mind is this. Does the Letter constitute a ‘forewarning notice’ within the meaning of the rules or under Order 4 Rule 49(19)(3)(a)(i)(4) of the NCR? The considerations I take into account are as follows. First, the Letter was sent to the defendant before the default period or before the time the defendant was in default of filing its defence. Secondly, I note that the Letter did not give a time frame within which the defendant should take steps and apply for relief such as an application for leave to file defence out of time. Thirdly, the Letter expressly states that the plaintiff would immediately apply for default judgment on the day after the time for filing the defence expires, and I note that the plaintiff did that, that is, it filed its NoM on 20 February 2024, which was on the day after 19 February 2024, the latter date being the final day for the defendant to file its defence.
16. I now turn to case law for assistance. I have considered various cases in this jurisdiction that have considered the issue. The Supreme Court in Hilary Singat v. Commissioner of Police and the State (2008) SC910, is one that is on point and in my view, resolves the issue at hand. At para 40, the Court stated:
40. The requirement for a forewarning before filing and applying for default judgment is an important one. A proper and reasonable forewarning letter would have two parts. In the first part it would draw to the defendant’s attention that the time of the defendant to file and serve his or her defence has expired without a defence being filed and served. Then in the second part, it would give the defendant additional but limited time for him or her to file and serve his or her defence. The aim of the forewarning letter is thus, to give a defendant who might have inadvertently overlooked the need for filing and serving its defence within the prescribed time limits the opportunity to do so. This ties in well with the Courts usual desire to do justice on the substantive merits of a case as opposed to a judgment based purely on technicalities and deficiencies or defaults in compliance with the rules of the Court, which are only a means to an end and not an end in them.[13] At the same time, the requirement also ensures that, a defendant is not taken by surprise by a default judgment and thereby avoids the possibility of an application to set aside a default judgment, with the associated costs and the Court’s time issues.
[Underlining mine]
17. I will add that Hilary Singat was regarded and followed by the Supreme Court in Bluewater International Ltd v. Roy Mumu and the State (2019) SC1798.
18. In agreeing with Hilary Singat, I must add that the underlying reasons given by the Supreme Court is fundamental to the administration of justice when Courts are dealing with default judgment applications of this nature.
19. It is therefore my view that the Letter firstly cannot constitute or be regarded as a valid ‘forewarning notice’. A forewarning letter is supposed to be issued after a default has occurred. The purpose is to forewarn the defaulting party to take steps to correct the default within a specific time frame, with a warning that if nothing is done and the default continues past the stated period, that the non-defaulting party will apply for default judgment. In the present matter, not only was the Letter sent earlier or before the default had occurred, but no time was permitted or given to the defendant to take steps after the default period before the plaintiff took steps to file its NoM.
SUMMARY
20. Having made this finding, I will uphold this preliminary objection and dismiss the NoM. I will order costs to follow the event on a party/party basis to be taxed if not agreed.
21. Given these, it is not necessary to proceed further and consider the other matters raised by the parties herein.
ORDERS OF THE COURT
22. I make the following orders:
(1) The plaintiff’s Notice of Motion filed 20 February 2024 is refused.
(2) The plaintiff to pay the defendant’s cost of the application on a party/party basis to be taxed if not agreed.
(3) Time for entry of these orders is abridged to the date and time of settlement by the Registrar of the National Court which shall take place forthwith.
The Court orders accordingly
________________________________________________________________
Ashurst: Lawyers for the Plaintiff
Mel & Henry: Lawyers for the Defendant
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