K92 Mining Limited v David Towe as Both Collector of Customs and Commssioner of the Papua New Guinea Customs Service and Others

• Jurisdiction: Papua New Guinea
• Judge: Anis J
• Judgment Date: 27 February 2023
• Neutral Citation: N10139
• Citation: N10139, 2023-02-27
• Counsel: P Smith, for the Plaintiff,D Mark, for the First Defendant,Nil appearance for the 2nd Defendant
• Hearing Date: 05 December 2023,27 February 2023,05 December 2022
• Docket Number: WS (COMM) NO 49 OF 2021 (IECMS)
• Court: National Court

N10139

PAPUA NEW GUINEA

[IN THE NATIONAL COURT OF JUSTICE]

WS (COMM) NO 49 OF 2021 (IECMS)

Between:

K92 Mining Limited

Plaintiff

v.

David Towe as Both Collector of Customs and Commssioner of the Papua New Guinea Customs Service

First Defendant

and

The Independent State of Papua New Guinea

Second Defendant

Waigani: Anis J

2022: 5^th December

2023: 27^th February

NOTICE OF MOTION — application to set aside default judgment and for leave to file defence out of time — Order 12 Rules 8(2)(a) and 35 — National Court Rules — whether sufficient cause shown as per the requirements — reasons for not filing defence within time — whether there is a defence on merit — whether the application was made promptly — other considerations — exercise of discretion

Cases Cited:

Papua New Guinean Cases

New Zealand Insurance Ltd v Chief Collector of Taxes (1988–89) PNGLR 522

Lorma Construction Ltd v The State (2012) N4636

in Nivani Ltd v Independent State of Papua New Guinea (2020) SC 1945

National Capital District Commission v Internal Revenue Commission and Ors (2022) N9592

Maps Tuna Ltd v. Manus Provincial Government (2007) SC857

Habolo Building & Maintenance Ltd v. Hela Provincial Government (2016) SC1549

Green & Co v Green [1976] PNGLR 73

PNG v Barker [1977] PNGLR 386

Christopher Smith v Ruma Constructions Ltd (2002) SC13

Leo Hannet v ANZ Banking Group (PNG) Ltd (1996) SC50

Overseas Cases Cited:

Grimshaw v Dunbar (1953) 1 QB 408 at 415

Evans v Bartiam (1937) AC 473

Counsel:

P Smith, for the Plaintiff

D Mark, for the First Defendant

Nil appearance for the 2nd Defendant

O'Brien's Lawyers: Lawyers for the Plaintiff

PNG Customs Services: In House Lawyers

RULING

27^th February, 2023

1. Anis J: This was a contested hearing on whether I should exercise my discretion and set-aside a default judgment, and further, whether I should grant leave to the first defendant to file its defence out of time. I heard the first defendant's notice of motion (NoM/application) filed on 11 November 2022, on 5 December 2022, and reserved my ruling thereafter to a date to be advised.

2. This is my ruling.

BACKGROUND

3. Between 2019 and 2020, the plaintiff imported 3 items, that is, 2 mining vehicles and one mining vehicle body part (tray). The first item (mining vehicle) arrived in Lae on 16 May 2019. It was described as CATAD45B UAT. The first defendant classified it, which attracted nil duty, before it released it to the plaintiff. The second item (mining vehicle) arrived in Lae on 28 March 2020. It was described CATAB45B UAT. The first defendant classified it, which also attracted nil duty, before it released it to the plaintiff. And the third item (mining vehicle tray) arrived in Lae on 4 July 2020. It was described as CAT truck body. Again, the first defendant classified the item, which attracted nil duty, before it released it to the plaintiff.

4. The dispute started, when the plaintiff received notifications from the first defendant in February and April of 2021, that the 3 items had been re-classified and based on that, that they each attracted excise duties. Separate requests for their payments were made by the first defendant to the plaintiff. In response, the plaintiff engaged its lawyers to try to resolve the matter with the first defendant. The plaintiff disputed the first defendant's assessments and re-classifications of the 3 items.

5. The first defendant, however, rejected the plaintiff's disputes and issued various demands to the plaintiff to pay the calculated duties that it had imposed on the 3 items. The total sum assessed for the 3 items was K1,748,441.69.

6. On 9 August 2021, the plaintiff paid, under protest, the final portion of the full K1,748,441.69 to the first defendant. The plaintiff afterwards, and on 9 November 2021, filed this proceeding. It is not disputed that the writ of summons and statement of claim (Writ) was served on the first defendant on 22 November 2021. It is also not disputed that the first defendant was required to file its defence before or by 5 April 2022. And it is not disputed that the first defendant had defaulted in filing its defence. As a result, default judgment was entered against it as well as against the second defendant, by Kandakasi DCJ on 19 August 2022.

7. The NoM was filed on 2 September 2022. The first defendant submitted, which was not denied by the plaintiff, that it had tried to file an earlier similar application in April of 2022, however, that sealed copies were never uplifted by the Registry and consequently His Honour the Deputy Chief Justice refused to deal with it at the time of hearing of the default judgment application on 12 August 2022. I note that His Honour's reasoning for refusing to deal with the said application is captured under term 1 of the Court Order for default judgment of 19 August 2022. It reads, The First Defendants Notice of Motion filed on the 29th April 2022 has not been served on the Plaintiff and will not be heard. His Honour then entered default judgment in favour of the plaintiff with further orders for damages to be assessed.

8. I now deal with the NoM.

SOURCE

9. The relied source is Order 12 Rules 1, 8(2)(a)(b) [amended with leave of the Court] and 35 of the National Court Rules (NCR). Relief 1 and 2 in the NoM read:

1. That Pursuant to Order 12 Rule 8(2)(a) and 35 of the National Court Rules, the Default Judgment entered against the First Defendant on the 19th of August 2022 be set aside.

2. That Pursuant to Order 12 Rule 1, leave be granted to the First Defendant to file his Defence out of time.

……

10. Order 12 Rules 1, 8(2)(a) and 35 read:

1. General relief. (40/1)

The Court may, at any stage of any proceedings, on the application of any party, direct the entry of such judgement or make such order as the nature of the case requires, notwithstanding that the applicant does not make a claim for relief extending to that judgement or order in any originating process.

……

(2) The Court may, on terms, set aside or vary a judgement —

(a) where the judgement has been entered pursuant to Order 12 Division 3 (default judgement)

……

35. Setting aside judgement.

The Court may, on such terms as it thinks just, set aside or vary a judgement entered in pursuance of this Division.

……

11. The plaintiff challenges the source and jurisdiction of the Court. Its complaint is this. It submits that the first defendant has invoked incorrect jurisdictional powers of the Court. As a state entity, it submits, the correct source to invoke should have been s 9 of the Claims By and Against the State Act (CBASA). In this case, it submits, the correct source is s 9 of the CBASA. The plaintiff relies on cases authorities, namely, New Zealand Insurance Ltd v Chief Collector of Taxes (1988–89) PNGLR 522 and Lorma Construction Ltd v The State (2012) N4636. In the former case, Bredmeyer J (others, Amet J and Barnett J), makes a clarity between timeline imposed by statute or an Act of Parliament as opposed to timeline imposed under the National Court Rules. On this matter and if I may paraphrase, His Honour was saying that the 40 days appeal period that is imposed by the Supreme Court Act is unaffected by (or overrides) Order 2 Rule 3(i) of the National Court Rules which regulates reckoning or computation of time for filing documents during a court vacation. In the Lorma Construction case, Hartshorn J, held:

The State cannot rely upon Order 1 Rule 15 (1) National Court Rules to either extend the time within which it is required to file its defence, which time is fixed by s. 9 Claims By and against the State Act, or to be given leave to file its defence after that time. The relief sought to file its defence out of time is therefore refused.

12. The ruling in Lorma Construction was sanctioned by the Supreme Court in Nivani Ltd v Independent State of Papua New Guinea (2020) SC1945.

13. Section 9 of the CBASA states:

9. Filing of defence by the State.

Notwithstanding anything in any other law, in any proceedings for a claim against the State, the time within which the State shall be required to file a defence or appear in response to a summons on complaint (as the case may be) shall be—

(a) in a claim commenced by writ in the National Court—

(i) where the statement of claim is endorsed on the writ—before the expiry of 60 days after the date of expiry of the time limited for it to give notice of intention to defend; or

(ii) where the statement of claim is not endorsed on the writ—before the expiry of 60 days from the date of service of the statement of claim; or

(b) where a cross-claim is made against the State—before the expiry of 30 days from the date of service of the cross-claim; or

(c) in an application under Section 57 of the Constitution—before the expiry of 90 days from the date of service of the application; or

(d) in a claim made in the District Court—before the expiry of 90 days from the date of service of the summons,

or such further time as the court before which the action is instituted, upon sufficient cause being shown, allows.

(Underlining mine)

14. I note the submissions of the parties.

15. Section 9 states the various timelines and situations where the State is required to file its defence. It also expressly permits exercise of Court's discretion to extend time beyond those timelines that are prescribed therein, that is, where it reads in the end, or such further time as the court before which the action is instituted, upon sufficient cause being shown, allows. However, the discretion, I note, is limited by the use of the phrase “upon sufficient cause being shown”.

16. The first defendant may be regarded as a state entity or part of the State. However, I observe that the first defendant is not the State as defined under statute and the Constitution. Section 9 of the CBASA only applies to the State meaning the Independent State of Papua New Guinea. As such and in my view, it does not apply to the first defendant. I have addressed...