Albright Limited v Mekeo Hinterland Holdings Limited and Lucas Dekene, Minister for Lands and Physical Planning and Romilly Kila Pat, Secretary for Lands and Physical Planning and Independent State of Papua New Guinea (2014) SC1400

• Jurisdiction: Papua New Guinea
• Judge: Salika, DCJ; David, Yagi JJ
• Judgment Date: 02 May 2014
• Court: Supreme Court
• Citation: (2014) SC1400
• Docket Number: SCA 150 OF 2013
• Year: 2014
• Judgement Number: SC1400

Full Title: SCA 150 OF 2013; Albright Limited v Mekeo Hinterland Holdings Limited and Lucas Dekene, Minister for Lands and Physical Planning and Romilly Kila Pat, Secretary for Lands and Physical Planning and Independent State of Papua New Guinea (2014) SC1400

Supreme Court: Salika, DCJ; David, Yagi JJ

Judgment Delivered: 2 May 2014

SC1400

PAPUA NEW GUINEA

[IN THE SUPREME COURT OF JUSTICE]

SCA 150 OF 2013

Between:

ALBRIGHT LIMITED

Appellant

And:

MEKEO HINTERLAND HOLDINGS LIMITED

First Respondent

And:

LUCAS DEKENE, MINISTER FOR LANDS AND PHYSICAL PLANNING

Second Respondent

And-:

ROMILLY KILA PAT, SECRETARY FOR LANDS AND PHYSICAL PLANNING

Third Respondent

And:

INDEPENDENT STATE OF PAPUA NEW GUINEA

Fourth Respondent

Waigani: Salika, DCJ; David, Yagi JJ

2014: 29 April; 02 May

SUPREME COURT – Practice and Procedure – setting aside of default judgment – Order 12 Rule (2)(a) and Rule 35 of National Court Rules – Default judgment regularly entered – circumstances in which regularly entered default judgment may be set aside.

Cases Cited:

Lerro v Stagg (2006) N3050

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

Barker v The Government of Papua New Guinea & Ors [1976] PNGLR 340;

The Government of PNG & Davis v Barker [1977] PNGLR 386;

George Page Pty Ltd v Malipu Bus Balakau [1982] PNGLR 140;

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

Hannet and Hannet v ANZ Banking Group (PNG) Ltd (1996) SC505;

Leo Duque v Avia Andrew Paru [1997] PNGLR 378;

Danny Totamu v Small Business Development Corporation (2009) N3702

Yamanka Multi Services Ltd v National Capital District Commission (2010) N3904.

Counsel:

Mr R Saulep, for the Appellant

Mr K O’gut, for the First Respondent

Mr E Geita, for the Second, Third and Fourth Respondents

02nd May, 2014

1. BY THE COURT: Introduction: The appellant was the plaintiff in Proceedings WS N0 258 of 2012 – Albright Limited v Mekeo Hinterland Holdings Limited and Others (“the primary proceedings”).

Background

2. On or about 30th November 2007, the Second, Third and Fourth Respondents, their agents and or servants, issued to the First Respondent, a Certificate of Title for a Special Purpose Agriculture and Business Lease (“SPABL” or “Portion 45C Omeri”) over 116,400 hectare of rural customary land known as Portion 45C, Omeri, Yule, in the Central Province, pursuant to Section 11 and 102 of the Land Act 196 (hereinafter referred to as the Lease).

3. On account of the Certificate of Title being indefeasible, the Appellant and the First Respondent entered into various written agreements to enable the Appellant to develop to the lease, giving exclusive rights to the Appellant to conduct agro-forestry projects within the said lease for a period of 98 years.

4. On or about 21st December 2010, the National Court of Justice in another Court Proceedings OS (JR) No 400 of 2009 declared that the Certificate of Title over Portion 45 Omeri, Yule, Central Province, issued to the First Respondent as the Landowner Company was null and void ab initio and was therefore illegal.

5. On 22nd March 2012, Albright Limited (as Plaintiff) as a result of National Court proceedings in OS 400 of 2009 commenced legal proceedings in WS No 258 of 2012 seeking damages against Mekeo Hinterland Holdings Limited (First Defendant), Lucas Dekene as Minister for Lands and Physical Planning (Second Defendant), Romilly Kila-Pat as Secretary for Lands (Third Defendant) and The Independent State of Papua New Guinea (Fourth Defendant).

6. The appellant alleged that prior to the issue of the Lease, and unknown to the Appellant, the First, Second, Third and Fourth Respondents, their servants and agents failed to comply with the requirements of Section 10, 11 and 102 of the Land Act 1996, in that no proper land investigation report (“LIR”) was done or conducted prior to or immediately before the grant of the lease to the First Respondent.

7. The Appellant further alleged that before it entered into the various written agreements to develop the SPABL it had no knowledge that the Certificate of Title issued was defective. It relied upon the indefeasibility of the Title to its detriment. Furthermore, it was argued that the “guarantee” given by the fourth respondent (State) under clause 1.10 of the Instrument of Lease dated 16th November 2007 that the Lease instrument was issued in accordance with all relevant laws induced the Appellant into investing substantial amounts of money in the project. It argued the inducement was negligent misrepresentation and otherwise false.

8. In its statement of claim the appellant Albright Limited alleged that the second, third and fourth respondent owed it a duty of care in ensuring that the Certificate of Title it issued to the First Respondent (which the Appellant/Plaintiff relied upon to its detriment and which the State, through its various entities knew the Appellant would be relying upon) was legal and not defective, by complying with Sections10, 11 and 102 of the Land Act 1996.

9. The appellant alleged that the failure to comply with Sections 10, 11 and 102 of the Land Act 1966 constituted a breach of Statutory Duty owed to the Appellant by the Respondents individually or jointly. It alleged that as far as the State was concerned, it was liable for the negligent acts of its instrumentalities and persons therein.

10. The appellant alleged that by reason of the Court declaration of 21st December 2010 that the transactions in relation to Portion 45C Omeri was a nullity, the various Legal Agreements entered into between the Appellant as the Developer and the First Respondent as the Landowner Company, could not be performed and were therefore rendered unenforceable, resulting in significant loss of business to the Appellant as the investor. It sued for damages exceeding K129 million in WS 258 of 2012.

11. The proceedings were duly served on all the defendants in accordance with the rules of the National Court pertaining to Service. Proof of such service were filed by way of Affidavits of service.

13. The respondents failed to file their defences in accordance with the National Court Rules and Claims by and against the State Act 1996. They did not provide any reasons or excuses. As a consequence, and following the Rules of the National Court, the appellant applied for default judgment.

14. On 24th October 2012, after an inter partes hearing, His Honor Sawong, J held that the relevant grounds were made out and granted Default Judgment.

15. On 11th July 2013, some 9 months after the granting of the Default Judgment, the Fourth Defendant, through the Office of the Solicitor General (appearing for the Second, Third and Fourth Respondents) applied to set aside the default judgment granted by Sawong, J.

16. On 24th July 2013, the parties argued inter partes the motion to set aside the default judgment. Amongst other grounds, the appellant argued that:

(a) There was no reasonable explanation why the State its servants and agents did not file a defence.

(b) The default judgment hearing was heard inter partes and the State defendants were required to present their whole case concerning a defence on the merits and the delay in filing a defence. If they did not argue those points at the default judgment hearing, they were stopped from arguing those points now. Further, if they did argue those points they were stopped from arguing them now.

(c) The default judgment hearing was inter parte and the court had given its decision. Such a decision could only be challenged on appeal to the Supreme Court and not by way of an application to set aside the default judgment.

(d) The setting aside application was not made promptly but some 9 months later, which the State admitted to and gave no reasons in any supporting affidavit why it took so long or why they failed to file the defence in the first place.

(e) The State and its servants and agents did not disclose a defence on the merits.

17. On 30th September 2013, Hartshorn J ruled in favour of the Motion to set aside the default judgment of Sawong J granted 24th October 2012, holding that:

(a) The default judgment of Sawong J granted 24th October 2012 be set aside.

(b) He did have the jurisdiction to hear the matter and thus the discretion to hear and set aside the default judgment , even though the default judgment itself was obtained regularly; and

(c) Granted leave to the State, its servants and agents to file a defence within 14 days of the granting of leave to do so; and

(d) The fact that the claim involved such a large sum of money was a relevant consideration for the exercise of his discretion.

18. The Appellant was aggrieved by His Honor Hartshorn J’s decision and sought leave to appeal that decision. Leave was granted by Makail J on 22 November 2013, thus giving clearance for this appeal to be heard...