Kumagai Gumi Co Ltd v National Provident Fund Board of Trustees (2006) SC837

• Jurisdiction: Papua New Guinea
• Judge: Embarrassing, pleadings,: etc O8 r27.
• Judgment Date: 22 May 2006
• Citation: (2006) SC837
• Docket Number: SC Appeal No 145 of 2003
• Court: Supreme Court
• Year: 2006
• Judgement Number: SC837

Full Title: SC Appeal No 145 of 2003; Kumagai Gumi Co Ltd v National Provident Fund Board of Trustees (2006) SC 837

Supreme Court: Injia DCJ, Salika J & Davani J

Judgment Delivered: 22 May 2006

SC 837

PAPUA NEW GUINEA

[IN THE SUPREME COURT OF JUSTICE]

SC APPEAL NO. 145 OF 2003

BETWEEN:

KUMAGAI GUMI CO. LTD

Appellant

AND:

NATIONAL PROVIDENT FUND BOARD OF TRUSTEES

Respondent

Waigani: Injia, DCJ,

Salika & Davani, JJ.

2005: April 27

2006: May 22

CIVIL – Practice and procedure – Summary judgment – Not available on a claim based on fraud – National Court Rules, O.12 r.37(b).

COURTS –National Court – Jurisdiction – Repeal of delegated legislation - A single judge has no power to repeal a rule of the National Court Rules and develop a new rule of the underlying law to replace it – National Court Rules, O.12 r.37(b) & r.38; Constitution, s.184, Sch. 2.3; National Court Act (Ch. No. 38), s.8.

CIVIL – Practice and procedure – Liquidated demand – A claim for a specified sum including claim for punitive damages for civil fraud is not a liquidated demand – National Court Rules, O.8 r.24, O.12 r.25(c), O.12. r.27.

CIVIL – Practice and procedure – Liquidated demand – Default Judgment on liquidated demand – Sum claimed in the Statement of Claim – Consequential relief – For costs and interest is allowed – A claim for punitive damages is not allowed – National Court rules, O.8 r.27.

Cases cited in the judgment:

Dempsy v Project Pacific Ltd [1985] PNGLR 93

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

Kappo No. 5 Pty Ltd and Ors v James Chi King Wong & Another (1997) SC 520.

Stettin Bay Lumber Company Pty Ltd v Arya Ship Management Ltd (1995) SC 488,

Tau Gunu v PNGBC Ltd (2002) N2251

R. Webb, SC for the Appellant

E. Endersen, for the Respondent

1. BY THE COURT: This is an appeal from the judgment of the National Court given on 5 December 2003 in which the Court granted the Respondent’s application for summary judgment and default judgment.

2. There are fifteen (15) grounds of appeal and they are as follows:

“(a) His Honour erred in law in determining the application before him on the basis that at the hearing on 11 September 2003 he had before him as evidence the affidavits of Erastus Kamburi made 16 July and 10 September 2003 and an affidavit by Roger Michael Dalton made 28 July 2003 when in fact no evidence was adduced by the Respondent before him.

(b) His Honour erred in law by proceeding on the basis that all of the claims for relief in the Respondent’s notice of motion filed 25 June 2003 had been before him at the hearing on 11 September 2003 when in fact the application before him was confined to the issues:

(i) whether the defence of the Appellant pleaded the general issue contrary to Order 8, Rule 28 of the National Court Rules,

(i) whether the form of the defence filed by the Appellant had a tendency to cause prejudice, embarrassment or delay in the proceedings or was otherwise an abuse of the process of the Court within the meaning of Order 8, Rule 27(b) and (c) of the National Court Rules, and

(i) whether the Respondent was entitled to apply for summary judgment pursuant to Order 12, rule 38 of the National Court Rules despite Order 12, Rule 37(b) and the nature of the claims made by the Respondent in its Statement of Claim.

(b) His Honour erred in law in failing to find that the defence filed by the Appellant in the National Court proceedings was not a denial of the general issue.

(b) His Honour erred in law in finding the claim made by the Respondent in the Statement of Claim was a claim made against the Appellant for a liquidated demand within the meaning of Order 8, Rule 24(1) of the National Court Rules and that the Appellant was required by the said rule to verify its defence.

(b) His Honour erred in law in failing to find that the claim made by the Respondent in its Statement of Claim was a claim based on fraud within the meaning of Order 12, Rule 37.

(b) His Honour erred in law in finding that the Appellant was not entitled to plead its defence as it did given the nature of the allegations against it.

(b) His Honour erred in law in finding that the defence of the Appellant did not specifically answer any of the allegations made in the Statement of Claim against it.

(b) His Honour erred in law in finding that the Appellant’s defence:

(b) was not in good faith; and

(ii) was evasive.

(b) His Honour erred in law in finding that the defence of the Appellant had a tendency to cause prejudice, embarrassment or delay within the meaning of Order 8, Rule 27 of the National Court Rules.

(b) His Honour erred in law in finding that the Respondent could make application for summary judgment under Order 12, Rule 38 despite Order 12, Rule 37 of the National Court Rules.

(b) His Honour erred in law in making the determination in the proceedings based on the fact that the Appellant had not verified its defence.

(b) His Honour erred in law in making a determination that in the application heard before him that the Respondent had satisfied the requirements for summary judgment set out in Order 12, Rule 38 of the National Court Rule.

(b) His Honour erred in law in making orders for:

(i) a strike out of the Appellant’s defence;

(ii) an order for judgment against the Appellant;

(iii) an order for costs against the Appellant.

(b) His Honour erred in law in exercising his discretion to order:

(i) a strike out of the Appellant’s defence;

(ii) an order for judgment against the Appellant;

(iii) an order for costs against the Appellant.”

3. The background to this appeal is as follows. On 3 June 1997, the Appellant (“Kumagai Gumi”) and the Respondent (“NPF”) entered into a Contract for the Appellant to construct a multistory building in Port Moresby at a cost of K45 million.

4. Due to increased cost of construction during the construction phase, parties engaged in further negotiations resulting in a settlement reached whereby parties agreed to increase the cost to around K54 million. Pursuant to the settlement agreement, the NPF board approved certain payments to be made to Kumagai Gumi. The project was completed. NPF was unhappy with the additional payment and filed a liquidated claim in WS No. 83 of 2001, against Kumagai Gumi and certain board members of NPF and other consultants and parties involved in negotiating the settlement, payment and distribution of the additional funds. In its Statement of Claim, NPF alleged fraud and conspiracy between Kumagai Gumi and NPF board members.

5. The Appellant filed its Defence generally denying the allegations of fraud and conspiracy. The Appellant did not verify its Defence as required by the Writ. NPF moved for judgment in the alternatives under O.8 r.27 (Embarrassment, etc in pleadings), r.28 (Pleading general issue) and/or under O.12, r.38 (summary judgment). NPF also moved for default judgment under O.8 r.24 and O.12 r.25(c) (Verification of Defence). Both parties filed affidavits in support of their respective positions on the motion.

Threshold issue: Denial of Natural Justice.

6. It is not contested by both parties before us that in the National Court, both parties agreed to make submissions on only two (2) legal issues and these were whether summary judgment was available on a claim based on fraud (O.12 r.37(b)). Whether the Appellant’s Defence should be struck out and judgment entered for hearing. O.8 r.27 (embarrassing pleadings, etc) O.8 r.28 or for pleading the general issue (O.8 r.28). O.8 r.24 and O.12 r.25 (c) (for failing to verify defence). The parties chose not to address the Court on the affidavit evidence relevant to these three (3) legal issues and this was accepted by the Court. If the Respondent failed to obtain a ruling in its favour on the three (3) legal issues, parties were to return to argue the balance of the orders sought in the Motion which would involve arguments on the evidence.

7. It is also not contested between the parties before us that the National Court instead proceeded to consider the evidence in various affidavits on file and made certain findings of fact based on which it proceeded to determine application for judgment under O.12 r.38 and O.8 r.27 and r.28 and granted judgment in favour of the respondent. The Court delivered a written judgment which appears in the Appeal Book (AB) at pages 499 to 527. The

Court’s findings of fact and application of principles to the facts appear at AB-pages 502(a) to 505 and 525 to 525(a).

8. We accept submissions by Mr Webb of counsel for the Appellant, that there was a denial of natural justice to both parties, in particular the Appellant, in that they were denied the opportunity to address on the evidence. The right to be heard on the evidence before the Court considers the evidence is a fundamental requisite of the judicial process and the Court’s failure to afford this right to the parties is a fundamental error. We are satisfied that the Court erred in that regard. For this reason alone, we allow those grounds of appeal relating to grant of summary judgment granted under O.12 r.38 and default judgment under O.8 r.27 and 28 and quash those orders.

9. Mr. Webb made a further threshold submission which we consider to be vital and critically important and determinative to all the grounds of appeal. He submitted that the Court’s consideration of all the legal issues were affected by the erroneous findings of fact made earlier. We reproduce Mr. Webb’s submissions which appear at paras. 21 to 27 of his written extract of submissions, as...