Lihir Civil and Construction Limited v New Ireland Provincial Government (2005) N2914

• Jurisdiction: Papua New Guinea
• Judge: Lenalia J
• Judgment Date: 24 June 2005
• Citation: (2005) N2914
• Docket Number: WS No 1571 of 2003
• Court: National Court
• Year: 2005
• Judgement Number: N2914

Full Title: WS No 1571 of 2003; Lihir Civil and Construction Limited v New Ireland Provincial Government (2005) N2914

National Court: Lenalia J

Judgment Delivered: 24 June 2005

N2914

PAPUA NEW GUINEA

[IN THE NATIUONAL COURT OF JUSTICE]

WS NO.1571 OF 2003

BETWEEN: LIHIR CIVIL AND

CONSTRUCTION LIMITED.

- Plaintiff

AND: NEW IRELAND PROVINCIAL GOVERNMENT

- Defendant

KOKOPO: LENALIA, J.

2005: 21st January, 24th June.

Practice and Procedure – Application to set aside default judgment – Discretion –

Applicable principles – Promptness of application – Defence on the merits – Explanation for default – Application granted.

CASES CITED.

The following cases are cited

Green & Company Pty Ltd – v – Green [1976] PNGLR. 73

Barker – v The Government of Papua New Guinea & 2 Others [1976] PNGLR. 340

George Page Pty Ltd – v – Malipu Bus Balakau [1982] PNGLR.

Motor Vehicles Insurance (PNG) Trust – v – Viel Kampu (1998) SC587

Dumm v – Sigere & 1 Other (1997) N 1721

Rabaul Shipping Ltd – v – Rita Ruru (2000) N 2022

Peter Donigi – v – Base Resource Ltd [1992] PNGLR. 110

D. Lidgett, for the Plaintiff

T. Boboro, for the Defendant

June 24th 2005

LENALIA, J. The Plaintiff in this claim is a duly incorporated company in accordance with the laws of Papua New Guinea. It sued the New Ireland Provincial Government for damages in relation to breach of a contractual agreement and the consequential loss amounting to a sum of K3, 294, 144. 72.

The Plaintiff was a successful tenderer for a tender by Notice put out by the Defendant Tender No. PGRP – MVVC – 10/2002. The Defendant’s estimated cost for the proposed scope of work was K930,523.00 as provided for in the contract documents. Such contract was agreed to and entered between the Plaintiff and the Defendant on 22nd March 2002. The scope of the contract related to road construction between Metewoi village and the Lavongai Health Centre being a 9.6 kilometers road commonly referred to in the contract as “New Hanover Ring Road Project”.

The contract was executed and was commenced on or about 30th April of 2002 and was completed on 2nd of September of that same year. There were certain variations to the contract for an additional O.6 kilometers of road and such variations were agreed to and endorsed by parties on 14th November of 2002.

The Plaintiff now claims for the balance owing to them under the payment schedule on the contract as agreed amounting to K48,059.57.

They also claim an amount of K59,909.40 for the variation agreed to covering an extra 0.6 km of road. The Defendant also failed to pay the Plaintiff an additional amount for the balance of extra volume of cut/fill in the sum of K409,449.60. It appears form the Plaintiff’s pleading that, under the contract, the Defendant was supposed to meet the cost of transporting the Plaintiff’s equipment machinery to and from the project site. The Defendant did not meet the costs of repatriating equipment back to Lihir Island. The Plaintiff claims K154,054.15 for shipment costs. The biggest component of the claim is K2,622,672.00 being for the loss suffered for working hours for the plant and equipment.

The Writ was filed on 4th of November 2003 and was served on Mr. Robinson Sirambat, the Provincial Administrator on 26th day of the same month. On 12th of February 2004, Mr. Lidgett of counsel for the Plaintiff conducted a search at the Kokopo National Court Registry office found that no Intention to Defend had been filed and not even a Defence.

Following the above search, the Plaintiff’s lawyers filed a Notice of Motion on that same date seeking Default Judgment. On 13th February 2004, the Motion was moved and the Court entered default judgment for the portion of the claim for an aggregated sum of K676,472.72 for liability and quantum. The next portion involving a sum of K2,622,672.00 was entered to be assessed and verified on a latter date.

A little over nine months since the default judgment was entered, the Defendant’s lawyers filed a Notice of Motion on 15th of November of last year in which they sought the following orders:

1. That the default judgment entered against the Defendant on 13th of February 2004 be set aside.

2. That leave is granted to the Defendant to file its Defence out of the time required by the Rules.

3. That the Defendant pays the Plaintiff’s costs thrown away as a result of the defence’ failure to file its Defence within the required time.

The application by the Defendant was argued before this Court on the 21st of January this year and the Court directed counsels to file submissions. The Plaintiff’s counsel filed their written submissions on the 1st of February, but the Defendant’s lawyers only filed theirs on the 9th of March 2005. For all your written submissions, I am so grateful.

Mr. Boboro of counsel for the Defendant argues in his submissions that, the power to set aside a default judgment is discretionary and given the reasons explained in the affidavit of Mr. Robinson Sirambat, the Provincial Administrator of the Defendant Provincial Government and due to the fact that, there is defence on the merits, the Court should set aside its own orders dated and entered on the 13th of February 2004.

For the Plaintiff, Mr. Lidgett submitted that, the current case is distinguishable from cases cited by Mr. Boboro which the Court shall refer to some of them later, in that in the instant case, the Defendant has always been represented by its Provincial Legal Officer and there cannot be any excuses by the Defendant. Secondly, the Plaintiff’s counsel argues that, it is not sufficient to raise evidence of dispute in relation to the terms of the default judgment, but that the defence must have a “fairly and reasonably arguable defence”.

The law in this jurisdiction is well settled which states that, in order for this Court to exercise its discretion in favour of the applicant, the onus is on Defendant/Applicant to satisfy the Court on the balance of probabilities the following factors:

1. There must be evidence to explain the reasons why judgment was allowed to be entered by default.

2. If there has been a long delay in applying to set aside the default judgment, it must be fully explained why there was such a long delay.

3. There must be a defence on the merits which must be supported by affidavit evidence. See, Green and Company Pty Ltd – v – Green [1976] PNGLR 73, see also Barker – v – The Government of Papua New Guinea and Davis and Bux [1976] PNGLR. 340, George Page Pty Ltd – v – Malipu bus Balakau [1982] PNGLR. 140, Map Makers Pty Ltd – v – Broken Hill Proprietary Ltd [1987] PNGLR. 78

The Proceedings in this Court are regulated by the National Court Rules of 1983. My reading of Order 12 r. 8 of the Rules is that this Court has discretion to either set aside or vary its own orders. The exercise of such discretion ought to be exercised according to the principles stated in the cases quoted above which principles I have paraphrased into three basic principles.

Order 12.r.8 of the Rules state:

“(1) The Court may, on terms, set aside or vary a direction for entry of judgment where notice of motion for the setting aside or variation is filed before entry of the judgment.

(2) The Court may, on terms, set aside or vary a judgment –

(a) where the judgment has been entered pursuant to Order 12 Division 3 (default judgment); or

(b) where the judgment 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”.

Rule 35 of Order 12 carries the same idea in that it says that the Court may set aside or vary a judgment entered as it thinks just. In my view, the word “just” in O.12 r.35 makes allowance for the principle that, where an applicant wishes to apply to set aside or vary a default judgment, he must explain by evidence, why he let the judgment to be entered by default. An application to set aside must be made promptly and he must produce evidence to show that he has a defence to the claim.

I distinguish the facts of the instant case with that of Peter Dickson Donigi – v – Base Resource Ltd [1992] PNGLR. 110, since that case concerned a Review and although reference is made to the failure of the applicant’s lawyer in not lodging the notice of appeal on time, it was held that, failure by a lawyer to lodge an appeal within the time required does not provide special circumstances for exercise of discretion to review the decision of the National Court and the merits of a review may establish cogent and convincing grounds and exceptional circumstances in favour of the grant of a review, which consideration may outweigh reasons for failure to lodge a notice of appeal on time.

The above case may be read out of context in the sense that, where there is...