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Provincial Government of North Solomons v Pacific Architecture Pty Ltd [1992] PGSC 13; [1992] PNGLR 145 (27 February 1992)

Papua New Guinea Law Reports - 1992

[1992] PNGLR 145 - Provincial Government of North Solomons v Pacific Architecture Pty Ltd 

[1992] PNGLR 145

SC422

PAPUA NEW GUINEA

[SUPREME COURT OF JUSTICE]

PROVINCIAL GOVERNMENT OF NORTH SOLOMONS

V

PACIFIC ARCHITECTURE PTY LTD

Waigani

Amet Woods Doherty JJ

28 November 1991

27 February 1992

APPEAL - Definition of final and interlocutory judgments.

PRACTICE AND PROCEDURE - Principle applicable in application to set aside default judgment - Defence on merits is to be particularised.

Facts

This is an appeal from an order of the National Court dismissing appellant's application to set aside a judgment for default in filing a Notice of Intention to Defend.

A summons was issued by Pacific Architecture Pty Ltd against the Provincial Government of the North Solomons claiming monies due under a contract to provide architectural services. After service of the summons, judgment was ordered by the Registrar of the National Court for default as specified above. The lawyer for the defendant filed an application by motion seeking to have the default judgment set aside and for leave for the defendant to file a defence. The application was heard and refused by the National Court. The appellant (defendant) here appealed against that refusal.

Counsel for respondent submitted that the decision of the National Court is an interlocutory judgment; leave to appeal is, therefore, required. The issues raised were:

N2>(i)       whether the decision of the National Court holding that the order of the Registrar was valid was a final or interlocutory judgment;

N2>(ii)      whether leave to appeal to the Supreme Court from that decision was required under s 14(3) of the Supreme Court Act; and

N2>(iii)     the circumstances in which an appellate court will set aside a default judgment.

Held

N1>1.       Two tests have been used to determine whether a judgment is final or interlocutory. The first is that the court will look to the nature of the application rather than to the nature of the order. A judgment will be considered final, under this test, only if the disposition of the application will operate to dispose of the controversy between the parties. The second test is that the Court will look at the order made by the court below, rather than at the nature of the application; if the order finally disposes of the rights of the parties, it is final. Otherwise, the judgment is interlocutory.

N1>2.       No leave of appeal was necessary as the order constituted a final judgment.

N1>3.       The Court in hearing an application to set aside a default judgment is given wide discretionary power. An applicant must show evidence that he has a prima facie defence. The National Court acted within its powers to find that the application disclosed no defence on the merits and that there was no reason to set aside the judgment. The Court exercised no wrongful degree of discretion.

Cases Cited

Papua New Guinea cases cited

Green & Co Pty Ltd v Green [1976] PNGLR 73.

Shelley v PNG Aviation Services Pty Ltd [1979] PNGLR 119.

State v Barker [1977] PNGLR 386.

Other cases cited

Bozson v Altrincham UDC [1903] UKLawRpKQB 44; [1903] 1 KB 547.

Evans v Bartlam [1937] AC 473.

Haron bin Mohd Zaid v Central Securities (Holdings) Bhd [1982] 2 All ER 481.

Wallingford v Directors of the Mutual Society (1880) 5 AC 685.

Counsel

R Pato, for the appellant.

B Curran, for the respondent.

27 February 1992

AMET WOODS DOHERTY JJ: This is an appeal from an order of the National Court dismissing an application by the appellant to set aside a judgment entered against the appellant for default in filing a Notice of Intention to Defend.

The sequence of events was that on 10 October 1990 Pacific Architecture Pty Ltd issued a summons against the Provincial Government of the North Solomons claiming monies owing under a contract to provide architectural services. This summons was duly served. On 28 November 1990, judgment was ordered by the Registrar of the National Court upon the default of the defendant in filing a Notice of Intention to Defend. On 19 December 1990, the lawyer for the defendant filed an application by way of motion for the default judgment to be set aside and that the defendant be granted leave to file a defence. An affidavit in support was deposed by the lawyer for the defendant. The application was heard by the National Court on 8 February 1991, and on 15 February the Court refused the application. The Appellant is now appealing against that refusal.

As a preliminary matter, Counsel for Pacific Architecture Pty Ltd submitted that, as the decision of the judge of the National Court is an interlocutory judgment, leave to appeal is required under s 14 (3) of the Supreme Court Act, and Counsel refers to the case of Shelley v PNG Aviation Services Pty Ltd [1979] PNGLR 119.

Whether a judgment or order is final or interlocutory is not always clearly defined, and decisions on the subject are sometimes difficult to reconcile. Generally, two tests have been propounded as to whether a judgment is final or interlocutory. The first test is that the court will have regard to the nature of the application not to the nature of the order made. Thus, a judgment or order must be interlocutory in character unless it is made on an application which must operate in such a way that whatever judgment or order is given or made on it, it must finally dispose of the dispute or the controversy between parties. The other test is that the court will look at the order made by the court below and not at the nature of the application so that if the order finally disposes of the rights of the parties, it is final; but if it does not, then it is interlocutory.

The Privy Council in Haron bin Mohd Zaid v Central Securities (Holdings) Bhd [1982] 2 All ER 481 sets out some of the conflicts that have arisen in the past in other common law jurisdictions. Their Lordships agreed that the sound and convenient test is that advanced by Lord Alverstone CJ in Bozson v Altrincham UDC [1903] UKLawRpKQB 44; [1903] 1 KB 547, namely:

"Does the judgment or order, as made, finally dispose of the rights of the parties? If it does, then I think it ought to be treated as a final order; but if it does not, it is then, in my opinion, an interlocutory order"

Their Lordships noted at page 486 that that test has been approved as a real and practical test by the Malaysian Court of Appeal. We feel that it can be safely adopted here.

In the authority the counsel has referred to, namely Shelley's case, the appeal was against a decision of the National Court striking out a defence and counterclaim and giving leave to enter judgment. On the above test, that order is clearly interlocutory. As there is still an order to come for judgment, the order striking out is merely steps in the proceedings, it is not the final resolution. However, the case before us now involves a judgment made by the Registrar and then an order by the National Court finally determining that the judgment is valid and cannot be set aside. We are satisfied that this is not interlocutory but is a final judgment and, therefore, the appellant here does not come within s 14(3)(b) of the Supreme Court Act and, therefore, does not have to seek leave to appeal. Therefore, this objection by the respondent to the appeal is overruled.

The appellant's application to set aside the judgment was supported by an affidavit of the lawyer for the appellant explaining why the judgment was allowed to be entered by default and this affidavit also annexes a draft defence. So what is the role of the court in hearing such an application. It is quite clear that the court has an unfettered discretion to set aside a regularly entered default judgment. This must be so to mitigate the otherwise draconian features of the default judgment procedure. Order 12 rule 35 of the National Court Rules states as follows: "The Court may, on such terms as it thinks just, set aside or vary a judgment entered in pursuance of this division". This rule clearly allows the court to set aside any order or judgment on such terms as the court thinks fit, but this rule does not set out any clear rules which must be applied. However, whilst there are no hard and fast rules, there are general principles that have been applied by courts over the years. One of those is that the application to set aside should show a defence on the merit, otherwise, as Lord Russel pointed out in the case Evans v Bartlam [1937] AC 473 at 484, "No useful purpose will be served if there was no possible defence to the action". Disclosing a defence on the merits means that the applicant must produce to the court evidence that he has a prima facie defence. This was discussed in detail in the case of The Government of Papua New Guinea and Davis v Barker [1977] PNGLR 386, and I refer here in particular to the judgment of Prentice Dep CJ at 394, where he says, "An affidavit to be considered as showing a defence on the merits must set out statements of facts". His Honour then goes on to quote O'Leary AJ in Green & Company Pty Ltd v Green [1976] PNGLR 73:

"In a case such as this the onus is on the applicant to show that he does have a defence on the merits, and I do not think it is sufficient for him merely to say, in effect, 'I was not the agent of the plaintiff, and I therefore did not receive the moneys claimed to his use'."

We think the same principle applies in these cases as applies in the case of a defendant resisting an application for summary judgment. As Lord Blackburn said in Wallingford v Directors of the Mutual Society (1880) 5 AC 685 at p 704, the defendant must "condescend upon particulars". It is not enough to swear, "I say I owe the man nothing". Doubtless, if it was true, that you owed the man nothing, as you swear, that would be a good defence. But that is not enough. You must satisfy the Judge that there is reasonable ground for saying so.

So, has the defendant in the case before us condescended upon particulars? In truth, the defendant in actual fact has done nothing. His lawyer has explained why the delay occurred and then annexed the proposed document of defence, but the defence is not verified by an affidavit from an officer of the provincial government as required by the writ of summons. The lawyer for the defendant has merely listed some probable area for argument for a defence, but he has not presented the implications of the statement as set out in defence which might suggest that there may be an argument on the merits. Further, it is only the lawyer's belief, not affirmed by an officer of the defendant. The court was entitled to so consider that the application discloses no defence on the merits. The power of the court in such applications is discretionary, so it was clearly open to the National Court judge to so act and find, in his discretion, that there was no good reason to set aside the judgement. Therefore, as the judge was entitled to so find, this court cannot interfere in the discretion as there is nothing to show that the discretion has been wrongly exercised. Rather, it is clear that His Honour has appropriately considered the principles set out in the case.

This court, therefore, cannot interfere with the order of the judge, and the appeal is, therefore, dismissed.

Lawyer for the appellant: Steeles.

Lawyer for the respondent: Blake Dawson Waldron.