Leo Hannet and Elizabeth Hannet v ANZ Banking Group (PNG) Ltd

• Jurisdiction: Papua New Guinea
• Citation: (1996) SC505
• Date: 16 August 1996
• Court: Supreme Court
• Year: 1996

Supreme Court: Kapi DCJ, Los J, Salika J

Judgment Delivered: 16 August 1996

1 Practice and Procedure—Application to set aside judgment by default—Discretion—Matters going to exercise of discretion—Application under O12 r8(2)(a) and O12 r8(3)(a) of the National Court Rules

2 Practice and Procedure—Distinction between irregularity outside the National Court Rules and a mere irregularity within the Rules—O1 r8 of the National Court Rules

3 National Court Rules, O1 r8, O1 r9, O12 r8

4 Anlaby v Praetorius (1888) 20 QBD 764, Green & Co Pty Ltd (Receiver Appointed) v Green [1976] PNGLR 73, Charles Delavan Smeeton and Grahame Robert Shelley v Davara House Pty Ltd [1979] PNGLR 324, George Page Pty Ltd v Malipu Bus Balakau trading as Kokope Enterprises [1982] PNGLR 140, Bank of South Pacific Ltd v Peter James Spencer [1983] PNGLR 239, Stanley Barker v The State, Richard H Davis and Danis William Bux [1976] PNGLR 340 and In re Pritchard, dec'd, Pritchard v Deacon and Others [1963] Ch502 referred to

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By the Court:

The appellants are husband and wife. They are both directors and shareholders of a company known as Liz and Krist Enterprises Pty Ltd. On 12 January 1989 the appellants executed a guarantee and indemnity deed with the respondent for a credit account and banking facilities to accommodate the management and operations of the said company. This credit facility included an overdraft facility which increased to about K53, 220.47 by the 12 August 1992. The respondent served a Notice of Demand for the payment of the balance owing by the appellants under the guarantee but the appellants did not meet the demand.

Subsequently, the respondent instituted legal proceedings (WS No 670 of 1992) in the National Court on 2 September 1992 to recover the amount of money owing.

The writ of summons was served on the first appellant and subsequently a default judgment was entered against him on 7 October 1992. We are not concerned with the default judgment entered against the first appellant.

A default judgment was entered against the second appellant on 22 March 1994 for the sum of K70, 895.08. On 14 June 1994 an application was made to the National Court to set aside the default judgment on the basis that there was no proper service of the writ of summons on the second appellant.

The motion came on for hearing before the Chief Justice on 20 July 1994. His Honour found that the second appellant was not served personally with the writ of summons in accordance with the National Court Rules, and then further concluded in the following words:

"It is trite that it is strictly unnecessary to show defence on the merits in order to apply to set aside an irregularly obtained judgment. However I support the proposition that it is advisable even in such a case to set out the facts disclosed on the Defence of the merits because there is nothing to be lost and indeed maybe a good deal to be gained by doing so."

His Honour later continued in his judgment:

"The Second Defendant has not filed or deposed to a proposed defence but Counsel has advised that he has instructions to file such defence. I propose therefore in those circumstances to defer ruling and direct that the Second Defendant file Affidavit of Defence and proposed Defence by tomorrow Thursday 21 July 1994 and serve it upon the Applicant Plaintiff. Motion stands adjourned to Friday 22 July 1994 Motions."

Subsequently, the second appellant filed a proposed defence and further submissions were made by the parties. The Chief Justice then handed down his final decision in the matter on 29 July 1994. In his reasons for decision His Honour restated his earlier finding "that technically the default judgment was irregularly entered on the basis of the Writ of Summons not having been properly served upon the second Defendant".

On the question of defence on the merits he finally concluded that:

"So that in the end result I am not satisfied that demonstrated to me prima facie defence on the merits such that this default judgment should be set aside for this matter to proceed to a trial."

The second appellant has...