Urban Giru v Luke Muta, West Farm Resources Ltd and West New Britain Provincial Government (2005) N2877

• Jurisdiction: Papua New Guinea
• Judge: Cannings J
• Judgment Date: 12 August 2005
• Court: National Court
• Citation: (2005) N2877
• Year: 2005
• Judgement Number: N2877

Full Title: Urban Giru v Luke Muta, West Farm Resources Ltd and West New Britain Provincial Government (2005) N2877

National Court: Cannings J

Judgment Delivered: 12 August 2005

N2877

PAPUA NEW GUINEA

[IN THE NATIONAL COURT OF JUSTICE]

WS NO 826 OF 2004

URBAN GIRU

Plaintiff

V

LUKE MUTA

First Defendant

WEST FARM RESOURCES LTD

Second Defendant

WEST NEW BRITAIN PROVINCIAL GOVERNMENT

Third Defendant

KIMBE : CANNINGS J

24 JUNE, 12 AUGUST 2005

RULING ON MOTION

Practice and procedure – application for default judgment – defence filed out of time – whether parties can agree to late defence being filed – preconditions for entry of default judgment – checklist to be satisfied – court has discretion whether to enter default judgment when defendant in default –National Court Rules, Order 12, Rule 32.

The plaintiff, a former employee of the second defendant, commenced proceedings against the three defendants, claiming damages for their negligence in not securing sufficient capital for him to properly manage the copra operations of the second defendant. He claimed that he was forced to resign and suffered loss of face and pain and suffering. The defendants filed a notice of intention to defend but were eight weeks late in filing a defence; then failed to serve the defence for several months after that. The plaintiff brought a motion for default judgment.

Held:

(1) In determining whether a default judgment should be entered there is a checklist of at least six items that the court should consider.

(2) If all items on the checklist are satisfied the matter is ripe for entry of default judgment.

(3) However a plaintiff is not entitled to default judgment as of right. Entry of default judgment is a matter for the discretion of the court.

(4) In the circumstances the plaintiff had established that all items on the checklist were satisfied and the defendants were in default.

(5) However the statement of claim did not clearly disclose a reasonable cause of action. Therefore the court refused the application for default judgment.

Cases cited

The following cases are cited in the judgment:

Andrew Kerowa and Securimax Security Limited v Gilbert Som Keke (2004) N2756

Bala Kitipa v Vincent Auali, Supply and Tenders Board of Western Highlands Provincial Government and Others (1998) N1773

Beecroft No 51 Ltd trading as Ronnie's Hot Bread v Neville Seeto and Others (2004) N2561

Chief Collector of Taxes v Dickson Panel Works Pty Ltd [1988] PNGLR 186

Christopher Smith v Ruma Constructions Ltd (2002) SC695

Eliakim Laki and 167 Others v Maurice Alaluku and Others (2000) N2001

Grace Lome v Allan Kundi (2004) N2776

John Kunkene v Michael Rangsu and The State (1999) N1917

Kante Mininga v The State & Others (1996) N1458

Las Korowa v Koi Kala and Pai Wai (2004) N2760

Luke Tai v ANZ Banking Group (PNG) Ltd (2000) N1979

Mapmakers Pty Ltd v BHP Co Pty Ltd [1987] PNGLR 78

Tiaga Bomson v Kerry Hart (2003) N2428

NOTICE OF MOTION

This was an application on notice seeking entry of default judgment.

Counsel

G Linge for the plaintiff

S Lupalrea for the defendants

CANNINGS J:

INTRODUCTION

This is an application for default judgment. The plaintiff filed a writ of summons. He served it on the defendants, who filed a notice of intention to defend and a defence. The plaintiff says the defence was filed late and therefore the defendants are in default of the National Court Rules. He says the other requirements for entry of default judgment are satisfied. The defendants concede that they were late in filing the defence but say it was not a lengthy delay and the plaintiff’s lawyer agreed that it could be filed late. They oppose the application.

BACKGROUND

In the substantive case the plaintiff is claiming damages against the defendants for losses, pain and suffering he claims to have incurred because of, it appears, the negligence of the three defendants. The plaintiff’s cause of action is not immediately clear from the pleadings and I will address the significance of that later.

The plaintiff claims that he was previously the manager of copra trading for the second defendant, West Farm Resources Ltd. The first defendant, Luke Muta, is the managing director of that company and the third defendant, the provincial government, is its major shareholder and owner. The plaintiff claims that each of the defendants negligently failed to secure and provide sufficient funds to enable the plaintiff to manage, run and operate the copra operations of the second defendant. As a result of cash flow problems and the lack of capital injection, the plaintiff was unable to run the copra trading operations effectively, eg cheques were bounced, workers went unpaid, shipowners and businesses demanded payments, he was abused and called a thief and his reputation was tarnished by events beyond his control. Consequently he was forced to resign from his position with the second defendant, he spent money from his family business to save face, his life was put at risk and he was admitted to hospital because of the stress.

On 6 July 2004 the plaintiff filed a writ of summons, with a statement of claim endorsed on it. On 20 July 2004 he served the writ on the defendants. On 26 July 2004 the defendants filed a notice of intention to defend.

The date by which the defendants should have filed and served a defence was 3 September 2004, being the date 44 days after the date of service of the writ. (See National Court Rules Order 8, Rules 4(a), 23(1); Order 4, Rule 11(b)(i).)

On 29 October 2004 the first and second defendants filed a defence, eight weeks late. Leave of the court was not sought or granted to file the defence out of time. No defence was filed by the third defendant.

The defendants say that in the meantime, on 20 August 2004, the plaintiff’s then lawyer, Mr Paisat, of Epita TT Paisat Barristers and Solicitors, had agreed with the defendants’ lawyer, Mr Gileng, of Blake Dawson Waldron Lawyers, that the defendants’ defence could be filed out of time.

Though the defence was filed on 29 October 2004 it remained un-served for a considerable period.

On 8 November 2004 Epita TT Paisat sent a letter to Blake Dawson Waldron warning that if they did not receive the defence within seven days they would apply for default judgment.

Blake Dawson Waldron responded the next day, 9 November 2004, saying that they had dispatched the defence to the National Court Registry in Kimbe on 23 September 2004 and had been following up the matter without success.

On 24 February 2005 the plaintiff changed lawyers from Epita TT Paisat to Linge & Associates.

On 14 March 2005 Linge & Associates wrote to Blake Dawson Waldron, notifying them that the defence was filed out of time and had not been served and therefore an application would be made for default judgment.

On 21 March 2005 the defence was served on Linge & Associates. That was six months and 18 days late (see National Court Rules, Order 8, Rule 4). Blake Dawson Waldron also wrote to Linge & Associates on that day, giving reasons for the delay and asking that the application for default judgment not be pursued. They said that the plaintiff had commenced proceedings in the name of his company, Kivulo Ltd, against the second defendant for breach of contract in WS No 698 of 2004, and Lupalrea Lawyers were acting for his company. The second defendant was preparing to apply to have those proceedings dismissed because of the plaintiff’s failure to respond to a request for further and better particulars. Epita TT Paisat had agreed in August 2004 to allow the defence to be filed out of time, on condition that the application to dismiss WS No 698 of 2004 not be pursued.

On 31 March 2005 the plaintiff filed the notice of the motion presently before the court. It was supported by an affidavit of Gerhard Linge, of Linge & Associates, deposing to the defendants’ default.

On 1 April 2005 the notice of motion and affidavit were served on the first defendant.

On 4 May 2005 Mr Gileng of Blake Dawson Waldron swore and filed an affidavit deposing to the above matters.

On 23 June 2005 Mr Paisat swore and filed an affidavit deposing to the agreement he made with Mr Gileng on 20 August 2004 to allow the defence to be filed out of time.

On the same day, 23 June 2005, the plaintiff filed and swore an affidavit deposing that Mr Paisat had not told him of the agreement to allow the defence to be filed out of time and that he had not consented to Mr Paisat agreeing to that course of action.

On 24 June 2005 the motion was argued. Mr Linge appeared for the plaintiff. Mr Lupalrea, of Lupalrea Lawyers, was briefed by Blake Dawson Waldron and appeared for the defendants. Mr Linge objected to Mr Lupalrea’s appearance on the ground that Lupalrea Lawyers is acting for the plaintiff’s company in the related matter, WS No 698 of 2004. I acknowledged that there was a prima facie conflict of interests but found that the parties were different legal entities. I dismissed the objection and heard argument on the motion from Mr Linge and Mr Lupalrea.

THE ‘CHECKLIST’

In most cases where the court deals with an application for default judgment, there is a checklist of at least six pre-conditions to consider. All the items on the checklist must be satisfied or ticked ‘OK’ before the court can exercise its discretion to enter default judgment. If one is...