Motor Vehicles Insurance Limited v Nominees Niugini Limited (2015) SC1435

• Jurisdiction: Papua New Guinea
• Judge: Kandakasi J, Cannings J, Hartshorn J
• Judgment Date: 25 June 2015
• Court: Supreme Court
• Citation: (2015) SC1435
• Docket Number: SCA NO 44 of 2014
• Year: 2015
• Judgement Number: SC1435

Full Title: SCA NO 44 of 2014; Motor Vehicles Insurance Limited v Nominees Niugini Limited (2015) SC1435

Supreme Court: Kandakasi J, Cannings J, Hartshorn J

Judgment Delivered: 25 June 2015

SC1435

PAPUA NEW GUINEA

[IN THE SUPREME COURT OF JUSTICE]

SCA NO 44 OF 2014

MOTOR VEHICLES INSURANCE LIMITED

Appellant

V

NOMINEES NIUGINI LIMITED

Respondent

Waigani: Kandakasi J, Cannings J, Hartshorn J

2015: 30 March, 25 June

PRACTICE AND PROCEDURE – default judgments – circumstances in which a plaintiff must forewarn a defendant of intention to apply for default judgment – whether evidence to prove cause of action must be provided when applying for default judgment – relevance of whether statement of claim discloses cause of action.

The appellant appealed to the Supreme Court against the decision of the National Court to enter default judgment against it. The appellant had only filed and served a notice of intention to defend the day before the hearing of the motion for default judgment and was clearly in default of the National Court Rules. The appellant conceded that formal requirements for entering default judgment were complied with but argued that the primary Judge erred in law by ordering default judgment, in three respects: (1) failing to consider that the respondent did not issue the appellant a letter forewarning its intention to apply for default judgment; (2) failing to consider that there was no evidence to prove the breach of contract apparently pleaded as the cause of action; (3) failing to consider that the statement of claim did not set out the breaches of contract and calculations relied on and thus failed to disclose a cause of action. The respondent argued that the appeal should be summarily determined for two reasons. First, the primary relief sought by the appellant – to “quash” the judgment and order of the National Court – was not a remedy that the Supreme Court could lawfully grant. Secondly, all grounds of appeal were invalid as they only alleged irregularities in the entry of judgment, which should have been, but were not, relied on in support of an application to set aside the default judgment. The respondent further argued that all grounds of appeal lacked merit, the appeal ought to be dismissed and the judgment of the National Court affirmed.

Held:

(1) As to the preliminary points: (a) it is appropriate for an appellant to seek an order quashing an order of the National Court and there is nothing in the Supreme Court Act or any other law to prevent the Supreme Court quashing an order of the National Court; and (b) the appellant was not obliged to apply to the National Court prior to appealing to the Supreme Court and the grounds of appeal were not invalid. The appeal was not summarily dismissed.

(2) Two of the grounds of appeal were without substance in that: (a) the respondent was not obliged to issue a forewarning letter, because at the time of filing the notice of motion for default judgment, no notice of intention to defend had been filed and served; and (b) the respondent was not obliged to present evidence in support of the elements of the cause of action pleaded (which was apparently breach of contract) as to cast such an obligation on an applicant for default judgment would offend against Order 8, Rule 8 of the National Court Rules, which requires that a statement of claim contain only a statement in a summary form of the material facts relied on, not the evidence by which those facts are to be proved.

(3) As to the alleged failure to take into account that no cause of action was disclosed, the National Court properly recognised that entry of default judgment required, after being satisfied as to the formal requirements for entry of default judgment, an exercise of discretion, and that in exercising its discretion it had to be satisfied that a reasonable cause of action was disclosed by the statement of claim.

(4) A proper examination of the statement of claim would have revealed that it was vague and confusing as it failed to plead fundamental aspects of the contract relied on, failed to plead breaches of contract, failed to particularise the calculations on which the liquidated sum of K22,261,650.00 was sought and therefore failed to disclose a cause of action and to provide a proper basis on which to enter judgment, especially a judgment for a liquidated sum.

(5) The National Court erred by not subjecting the statement of claim and notice of motion to a sufficiently rigorous examination, which vitiated the exercise of discretion. The ground of appeal alleging error in that regard was upheld.

(6) The appeal was upheld, the order of the National Court was quashed and the case was remitted to the National Court.

Cases cited

The following cases are cited in the judgment:

Agnes Kunton v John Junias (2006) SC929

Albright Ltd v Mekeo Hinterland Holdings Ltd (2013) N5774

Albright Ltd v Mekeo Hinterland Holdings Ltd (2014) SC1400

Aundak Kupil v The State [1983] PNGLR 350

Avia Aihi v The State (No 1) [1981] PNGLR 81

Bank South Pacific Ltd v Robert Tingke (2012) N4901

Barlow Industries Pty Ltd v Pacific Foam Pty Ltd [1993] PNGLR 345

Bean v Bean [1980] PNGLR 307

Curtain Brothers (PNG) Ltd v UPNG (2005) SC788

David Lambu v Paul Torato (2008) SC953

Dempsey v Project Pacific Pty Ltd [1985] PNGLR 93

Grace Lome v Allan Kundi (2004) N2776

Jeffery Balakau v Sir Arnold Amet (2013) N5313

Kawaso Ltd v Oil Search PNG Ltd (2012) SC1218

Leo Hannet v ANZ Banking Group (PNG) Ltd (1996) SC505

Lerro v Stagg (2006) N3050

Lina Kewakali v The State (2011) SC1091

Muriso Pokia v Mendwan Yallon (2014) SC1336

Nangamanga Ltd v Gold Exports Ltd (2011) N4570

Papua New Guinea v Stanley Barker [1977] PNGLR 386

Ramu Nico Management (MCC) Ltd v Eddie Tarsie (2010) SC1075

Re Section 19 of the Criminal Code [1982] PNGLR 150

Sialis Tedor v PNG Ports Corporation (2011) SC1137

Stettin Bay Lumber Company Pty Ltd v Arya Ship Management Ltd (1995) SC488

Telikom PNG Ltd v ICCC (2008) SC906

The State v Brian Josiah (2005) SC792

Ume More v UPNG [1985] PNGLR 401

Urban Giru v Luke Muta (2005) N2877

Wellcos Engineering Ltd v Hami Yawari (2008) N3443

Yamanka Multi Services Ltd v NCDC (2010) N3904

APPEAL

This was an appeal against the decision of the National Court to order default judgment against the appellant.

Counsel

E Andersen, for the Appellant

S M Littlemore QC & R Mulina, for the Respondent

25th June, 2015

1. BY THE COURT: Motor Vehicles Insurance Ltd, the appellant, appeals against an order of the National Court to enter default judgment against it, in favour of the respondent, Nominees Niugini Ltd.

2. The respondent, as plaintiff, commenced proceedings by writ of summons (WS No 1300 of 2013) against the appellant, as defendant, claiming K22,261,650.00 as a debt due under a contract between the appellant and the respondent. The appellant failed to file a defence within the time allowed by the National Court Rules. The respondent filed and served a notice of motion, and later an amended notice of motion, seeking an order for default judgment.

3. The amended motion was heard on 13 March 2014 by Justice Sakora. His Honour, after hearing Mr Lowing for the respondent and Mr Lindsay for the appellant, gave an ex tempore ruling. His Honour refused an application by the appellant for adjournment of the hearing, which had been filed one day prior to the hearing. His Honour ruled that the appellant was in default of the National Court Rules and that all formal requirements for entry of default judgment were satisfied. His Honour acknowledged that entry of default judgment was a matter of discretion and identified no reason not to exercise the discretion in favour of the respondent. His Honour ordered that default judgment be entered against the appellant in the sum of K22,261,650.00 “plus interest at the rate of 8% per annum from the date of filing of the action to the date of entry of judgment”. That is the order appealed from.

GROUNDS OF APPEAL AND RELIEF SOUGHT

4. The appellant concedes that the formal requirements for entering default judgment were complied with but argues that his Honour erred in law by ordering default judgment, in three respects:

(1) failing to consider that the respondent did not issue the appellant a letter forewarning of its intention to apply for default judgment (ground (a) of the supplementary notice of appeal);

(2) failing to consider that there was no evidence to prove the breach of contract relied on as the cause of action (grounds (c) to (g) of the supplementary notice of appeal);

(3) failing to consider that the statement of claim did not set out the breaches of contract and calculations relied on and thus failed to disclose a cause of action (ground (b) of the supplementary notice of appeal).

5. The primary relief sought by the appellant is an order quashing the order of 13 March 2014.

RESPONSE

6. The respondent has raised two preliminary points. First, that the primary relief sought by the appellant – to “quash” the judgment and order of the National Court – is not a remedy that the Supreme Court can...