Salamo Elema, Insurance Commissioner v Pacific MMI Insurance Limited (2007) SC1321

• Jurisdiction: Papua New Guinea
• Judge: Batari J, Mogish J, Cannings J
• Judgment Date: 27 June 2007
• Court: Supreme Court
• Citation: (2007) SC1321
• Docket Number: SCA NO 79 0F 2005
• Year: 2007
• Judgement Number: SC1321

Full Title: SCA NO 79 0F 2005; Salamo Elema, Insurance Commissioner v Pacific MMI Insurance Limited (2007) SC1321

Supreme Court: Batari J, Mogish J, Cannings J

Judgment Delivered: 27 June 2007

SC1321

PAPUA NEW GUINEA

[IN THE SUPREME COURT OF JUSTICE]

SCA NO 79 0F 2005

BETWEEN

SALAMO ELEMA, INSURANCE COMMISSIONER

Appellant

AND

PACIFIC MMI INSURANCE LIMITED

Respondent

Waigani: Batari J, Mogish J, Cannings J

2006: 29 June,

2007: 27 June

PRACTICE AND PROCEDURE – application to set aside ex parte order – order for dismissal of proceedings for want of prosecution – duty of lawyer moving motion ex parte to alert primary judge to peculiar background of matter – proceedings before the National Court must take full account of all previous orders.

A National Court Judge made an order setting aside an ex parte order made by another Judge. The ex parte order was to dismiss a case for want of prosecution. The Judge who set aside the order did so as the Judge who made the ex parte order was not alerted to the fact that another, third, Judge had ordered that nothing further be done in the case without the leave of the Court. The Court had not granted leave for the application to dismiss the case, to be made. This was an appeal to the Supreme Court against the decision to set aside the ex parte order.

Held:

(1) The National Court has power to set aside an order it has previously made ex parte, irrespective of whether the ex parte order was made by the Judge hearing the motion to set it aside.

(2) The power to set aside an ex parte order is a matter of discretion. Considerations relevant to the exercise of discretion include whether the judge making the ex parte order was aware of all previous orders concerning the conduct of the proceedings.

(3) A lawyer moving a motion ex parte has a duty to alert the presiding Judge to all facts relevant to the matter, especially whether there are any existing orders concerning the conduct of the proceedings.

(4) In the present case, the lawyer did not alert the presiding Judge to the earlier National Court order that required leave of the Court to be given before the defendant took any further action against the plaintiff; and leave had not been given.

(5) The Judge who set aside the ex parte order properly found that the Judge making the ex parte order was not alerted to the previous order; and that was a good reason to set aside the ex parte order.

(6) The Judge who set aside the ex parte order made no errors of law. The appeal was dismissed and the matter remitted to the National Court for trial.

Cases cited

The following cases are cited in the judgment:

Christopher Smith v Ruma Constructions Ltd (2002) SC695

MVIT v Joseph Bure (1999) SC613

Pacific MMI Insurance Ltd v Salamo Elema, Insurance Commissioner OS No 636 of 2002, 08.07.05

APPEAL

This was an appeal from an order of the National Court setting aside an earlier order of the National Court made ex parte.

Counsel

R Raka, for the appellant

J Aisa, for the respondent

27th June, 2007

1. BY THE COURT: This case concerns orders made by three different judges in the National Court: Kandakasi J, Injia DCJ and Davani J.

2. Kandakasi J’s order was made first, in 2002. Injia DCJ’s order was next, in 2004. Davani J’s order was the last, in 2005. This is an appeal against Davani J’s order (Pacific MMI Insurance Ltd v Salamo Elema, Insurance Commissioner OS No 636 of 2002, 08.07.05).

3. Davani J set aside Injia DCJ’s order, which had been made ex parte (ie in the absence of one of the parties), for two reasons. First, it was contrary to Kandakasi J’s order. Secondly, the principles about setting aside ex parte orders favoured setting it aside. The parties agree that Davani J had power to set aside Injia DCJ’s orders but disagree about whether her Honour properly exercised her discretion to do so. The issues are:

· Did Davani J misinterpret Kandakasi J’s order?

· Did Davani J misapply the principles about setting aside ex parte orders?

4. Before addressing those issues we will explain how the dispute between the parties came to court.

DISPUTE BETWEEN INSURANCE COMMISSIONER AND PACIFIC MMI LTD

5. The appellant is the Insurance Commissioner, Salamo Elema. He is a statutory office-holder and leader, appointed under the Insurance Act 1995. The respondent is Pacific MMI Ltd, an insurance company licensed under the Insurance Act. Pacific MMI has had an ongoing dispute with the Commissioner about the extent of his powers to investigate their business affairs. The events that led to the dispute occurred several years ago when the company that runs the Kanudi Power Station near Port Moresby, Hanjung Company Ltd, made a K20 million insurance claim against Pacific MMI over damage to its generators. Pacific MMI rejected the claim and Hanjung complained to the Commissioner. The Commissioner issued a summons against Pacific MMI under the Insurance Act, requiring information to explain their rejection of Hanjung’s claim. Pacific MMI refused to comply with the summons. Their position was that rejection of Hanjung’s claim was a commercial matter that was none of the Commissioner’s business, ie the Commissioner was acting in excess of his powers.

6. The Commissioner commenced prosecution proceedings against Pacific MMI in the National Court, arguing that Pacific MMI committed an offence by not complying with the summons. Pacific MMI responded by challenging the Commissioner’s power to prosecute and applying for leave to seek judicial review of the Commissioner’s actions. The case then went before three different Judges.

Proceedings before Kandakasi J

7. The matter came before Kandakasi J in the National Court on 25 October 2002. His Honour held that the Commissioner did not have the power to prosecute. As to judicial review, his Honour made the following order:

1 The plaintiff [Pacific MMI] be granted leave to apply for judicial review.

2 The plaintiff’s substantive application be adjourned sine die [indefinitely].

3 The defendant [the Commissioner] be restrained from taking any further action against the plaintiff in respect of the matters the subject of these proceedings without the leave of the court. [emphasis added]

8. The last order is the crucial one. It is the order that Davani J concluded was later not brought to Injia DCJ’s attention.

Proceedings before Injia DCJ

9. After a period of apparent inactivity, the Commissioner in 2004 filed a motion to dismiss Pacific MMI’s application for judicial review, for want of prosecution. Injia DCJ heard the motion ex parte on 18 November 2004. His Honour noted the substantial delay and granted the motion. Pacific MMI’s application for judicial review was therefore dismissed.

Proceedings before Davani J

10. Pacific MMI then brought a motion before Davani J to set aside the order of Injia DCJ. This motion was based on Order 12, Rule 8(3)(a) of the National Court Rules, which states:

The Court may, on terms, set aside or vary an order … where the order has been made in the absence of a party, whether or not the absent party is in default of giving a notice of intention to defend or otherwise in default, and whether or not the absent party had notice of motion for the order. [emphasis added]

11. Davani J upheld the motion on 8 July 2005 and set aside Injia DCJ’s order. Her Honour gave two reasons for doing so. First, Injia DCJ’s order was contrary to the crucial part of Kandakasi J’s order, which was that the Commissioner was restrained from taking any further action against Pacific MMI without the leave of the court. Her Honour pointed out that the lawyer who argued the motion before Injia DCJ, Mr Elemi, did not inform Injia DCJ of the existence of Kandakasi J’s order. The lawyer failed in his duty to inform the court of that important fact. For that reason alone Pacific MMI was entitled to have the order set aside ex debito justitae (as required in the interests of justice). Secondly, her Honour applied the principles that are conventionally taken into account when deciding whether an ex parte order should be set aside. She concluded that Pacific MMI gave a reasonable explanation for their non-attendance before Injia DCJ, that they made their application to set aside Injia DCJ’s order promptly and that they had a good argument for not having the substantive proceedings dismissed.

THE APPEAL

12. The Commissioner argues that Davani J made two errors of law. First, misinterpreting Kandakasi J’s order. Secondly, misapplying the principles about setting aside ex parte orders.

13. The case at this stage has nothing to do with the initial dispute between Pacific MMI and Hanjung. Nor does it have much to do with the nature and exercise of the Commissioner’s powers under the Insurance Act; issues to be resolved in the judicial review that Pacific MMI still wants to pursue. The case at this stage only concerns issues of practice and procedure, things like interpretation of previous orders and the circumstances in which ex parte orders should be set aside. Everyone accepts that the National Court has power to set aside an order it...