Kumagai Gumi Co Ltd v National Provident Fund Board of Trustees (2005) SC776

• Jurisdiction: Papua New Guinea
• Judge: Kapi CJ
• Judgment Date: 04 February 2005
• Citation: (2005) SC776
• Docket Number: SCA 145 of 2003
• Court: Supreme Court
• Year: 2005
• Judgement Number: SC776

Full Title: SCA 145 of 2003; Kumagai Gumi Co Ltd v National Provident Fund Board of Trustees (2005) SC776

Supreme Court: Kapi CJ

Judgment Delivered: 4 February 2005

SC776

PAPUA NEW GUINEA

[In the Supreme Court of Justice at Waigani]

SCA 145 of 2003

BETWEEN:

KUMAGAI GUMI CO LTD

Appellant

AND:

NATIONAL PROVIDENT FUND

BOARD OF TRUSTEES

Respondents

Waigani: Kapi CJ.

10th, 26th June 2004, 4th February 2005

Appeal – Application to stay pending appeal under s 19 of the Supreme Court Act – Proper principles discussed.

Appeal – Interim Orders to prevent prejudice to the claims of the parties, s 5(1(b) of the Supreme Court Act – The principles enunciated under s 19 of the Supreme Court Act in the decided cases is consistent with criteria under s 5(1)(b) of the Supreme Court Act.

Practice and Procedure – Application for default judgment – Denial of natural justice on the issue of verified defence – Arguable ground of appeal.

Practice and Procedure – Denial of natural justice in determining summary judgment – Arguable ground of appeal.

Cases cited:

Gary McHardy v Prosec Security and Communications Ltd Trading as Protect Security (Unreported Judgment of the Supreme Court dated 30th June 2000, SC646)

Hornibrook Constructions Pty Ltd v Kawas Express Corporation Pty Ltd [1986] PNGLR 30.

Motor Vehicles Insurance (PNG) Trust MVIT v Nand Waige & 2 Others [1995] PNGLR 202.

Micahel Newal Wilson v Harold Rosser Howard [1994] PNGLR 418).

Akipa & Others v Lowa & Others [1990] PNGLR 502.

Brian Curran v PNG [1997] PNGLR230

Peter Peipul Ipu v Pila Ningi & Electoral Commission (Unreported Judgment of the Supreme Court dated 28th October 1998, SC580.

Gillette Australia Pty Ltd v Energizer Pty Ltd 56 IPR 1 (Federal Court of Australia).

Papua New Guinea Legislations cited:

Constitution

Supreme Court Act

O 12 r 38 of the National Court Rules

O 8 r 25 & r 27 of the National Court Rules

O 8 r 28 of the National Court Act

O 8 r 27(b) and (c) of the National Court Rules

O 12 r 38 of the National Court Rules

O 12 r 37(b) of the National Court Rules

O 8 r 24(1) of the National Court Rules

O 8 r 27(1)(b) of the National Court Rules

O 8 r 21(2) of the National Court Rules

O 12 r 25 of the National Court Rules

Counsel:

Mr. Webb Q.C with R. Bradshaw for the Appellant

Mr. E. Anderson for the Respondents

4th February 2005

KAPI CJ: This is an application made under s 19 of the Supreme Court Act for an order to stay the judgment of the National Court (Kandakasi J) dated 5th December 2003 pending the determination of appeal to the Supreme Court.

The circumstances giving rise to this application may be summarized as follows. The National Provident Fund Board of Trustees (Respondent) sued Kumagai Gumi Co Ltd (Appellant). It is not necessary for the present purposes to set out the full details of the claim. The Respondent’s claim is based on an alleged fraudulent second acceleration claim by the Appellant for an increased cost claim where it is alleged that there was in fact no such acceleration work and no right to an increased cost claim and no consideration for the additional money other than the performance of the original contractual obligations.

The Appellant filed a defence and generally denied the claim.

The Respondent filed a notice of motion in the National Court for default judgment under O 8, r 25 © and r 27 and alternatively, for summary judgment under O 12 r 38 of the National Court Rules. The trial judge struck out the Appellant’s defence and entered default judgment and alternatively, entered summary judgment for the Respondent in the sum of K5, 805, 000.00 plus interest.

The Appellant has filed an appeal against the decision of the National Court on the following grounds:

“3 Grounds

(a) His Honour erred in law in determining the application before him on the basis that at the hearing on 11 September 2003 he had before him as evidence the affidavits of Erastus Kamburi made 16July and 10 September 2003 when in fact no evidence was adduced by the Respondent before him.

(a) His Honour erred in law by proceeding on the basis that all of the claims for relief in the Respondent’s notice of motion filed 25 June 2003 had been before himn at the hearing on 11 September 2003 when in fact the application before him was confined to the issues:

(i) Whether the defence of the Appellant pleaded the general issue contrary to Orders 8, Rule 28 of the National Court Act;

(ii) Whether the form of the defence filed by the Appellant had a tendency to cause prejudice, embarrassment or delay in the proceedings or was otherwise an abuse of the process of the Court within the meaning of Order 8, Rule 27(b) and (c) of the National Court Rules; and

(iii) Whether the Respondent was entitled to apply for summary judgment pursuant to Order 12, Rule 38 of the National Court Rules despite Order 12, Rule 37(b) and the nature of the claims made by the Respondent in its Statement of Claim.

(a) His Honour erred in law in failing to find that the defence filed by the Appellant in the National Court proceedings was not a denial of the general issue.

(a) His Honour erred in law in finding the claim made by the Respondent in the statement of Claim was a claim made against the Appellant for a liquidated demand within the meaning of Order 8, Rule 24(1) of the National Court Rules and that the Appellant was required by the said rule to verify its defence.

(a) His Honour erred in law in failing to find that the claim made by the Respondent in its Statement of Claim was a claim based on fraud within the meaning of Order 12, Rule 37.

(a) His Honour erred in law in finding that the Appellant was not entitled to plead its defence as it did given the nature of the allegations against it.

(a) His Honour erred in law in finding that the defence of the Appellant did not specifically answer any of the allegations made in the Statement of Claim against it.

(a) His Honour erred in law I finding that the Appellant’s defence:

(b) was not in good faith; and

(ii) was evasive.

(a) His Honour erred in law in finding that the deence of the Appellant had a tendency to cause prejudice, embarrassment or delay within the meaning of Order 8, Rule 27(1)(b).

(a) His Honour erred in law I finding that the Respondent could make application for summary judgment under Order 12, Rule 38 despite Order 12, Rule 37 of the National Court Rules.

(a) His Honour erred in law in making the determination in the proceedings based on the fact that the fact Appellant had not verified its defence.

(a) His Honour erred in law in making a determination that in the application heard before him that the Respondent had satisfied the requirements for summary judgment set out in Order 12, Rule 38 of the National Court Rules.

(a) His Honour erred in law in making orders for:

(i) a strike out of the Appellant’s defence;

(ii) an order for judgment against the Appellant

(iii) an order for costs against the Appellant

(a) His Honour erred in law in exercising his discretion to order:

(i) a strike out of the Appellant’s defence;

(ii) an order for judgment against the Appellant

(iii) an order for costs against the Appellant.

The law with regard to stay of proceedings pending an appeal is now well settled in Gary McHardy v Prosec Security and Communications Ltd Trading as Protect Security (Unreported Judgment of the Supreme Court dated 30th June 2000, SC646). After setting out the development of the law in this area in the decided cases, the Court said at page 7- 9:

“Because this Court is the highest of unlimited jurisdiction in this country, vested with inherent discretionary power to do justice, and because it must necessarily exercise such discretionary power on proper principles justly and reasonably, according to natural justice to all parties before it, it can consider and enunciate what factors and circumstances are to be appropriate or relevant for it is to take into account when exercising that discretion. The stipulation by the Court of the kinds of factors and circumstances it may consider taking into account cannot be exhaustive. They must necessarily vary from case to case and from time to time depending on different circumstances. These, in our view, must only be guidelines to assist both the Court and the parties making application before it. They cannot be exhaustive or hard and fast preconditions.

To conclude that the test for a successful application for stay should be whether there are ‘special. Or ‘exceptional’ or that there is a ‘good reason’ or that it is an ‘appropriate case’ is restrictive. We think what is important to articulate are the factors and circumstances that may be relevant or appropriate in differing cases from time to time.

We distil from the precedent cases the kinds of factors and circumstances that the Court will consider, amongst others, in the exercise of the discretion whether or not to grant a stay order. We start with the principle premise that the judgment creditor is entitled to the benefits of the judgment. The other factors include the following:

· Whether leave to appeal is required and whether it has been obtained.

· Whether there has been any delay in making the application.

· Possible hardship, inconvenience or prejudice to either party.

· The nature of the judgment sought to be stayed.

· The financial ability of the applicant.

· Preliminary assessment about whether the applicant has an arguable case on the proposed appeal.

· Whether on the face of the record of...