SCA 140 of 2012; Bank of South Pacific Limited v Robert Tingke (2012) SC1355 and SCA 141 of 2012; Bank of South Pacific Limited v Casper C.S. Apundamatiet (2014) SC1355

• Jurisdiction: Papua New Guinea
• Court: Supreme Court
• Judge: Salika, DCJ; Manuhu, Collier, JJ
• Judgment Date: 03 July 2014
• Citation: (2014) SC1355
• Judgment Number: SC1355
• Year: 2014

Full Title: SCA 140 of 2012; Bank of South Pacific Limited v Robert Tingke (2012) SC1355 and SCA 141 of 2012; Bank of South Pacific Limited v Casper C.S. Apundamatiet (2014) SC1355

Supreme Court: Salika, DCJ; Manuhu, Collier, JJ

Judgment Delivered: 3 July 2014

SC1355

PAPUA NEW GUINEA

[IN THE SUPREME COURT OF JUSTICE]

SCA 140 of 2012

BETWEEN:

BANK OF SOUTH PACIFIC LIMITED

Appellant

AND:

ROBERT TINGKE

Respondent

SCA 141 of 2012

BETWEEN:

BANK OF SOUTH PACIFIC LIMITED

Appellant

AND:

CASPER C.S. APUNDAMATIET

Respondent

Waigani: Salika, DCJ; Manuhu, Collier, JJ

2014: 30 June, 03 July

Cases cited:

Papua New Guinea cases

Augerea v Bank South Pacific (2007) SC 869

National Capital District Commission v Dademo [2013] PGSC 37 at [23],

Keimali v Akema [2010] PGSC 9 at [8],

Kimisopa, Minister for Justice v Paraka [2009] PGSC 29 at [22],

Yer, Secretary for Department of Finance v Yama [2009] PGSC 13 at [31].

National Executive Council v Williams [2005] PGSC 5

Kore v State [2011] PGSC 46

Alina Sarah Bean v Ian Maxwell Bean [1980] PNGLR 307

Jay Mingo Pty Ltd v Steamships Trading Pty Ltd trading as Steamships Property Division [1995] PNGLR 129

Brian John Lewis v. The Independent State of Papua New Guinea Unreported judgment No. SC178

Porgera Joint Venture v Kami [2010] PGSC 11 at [21]

Post PNG Ltd v Yama Security Services (unreported, 26 July 2001, SCA 80 of 2000

Breckwoldt & Co (NG) Pty Ltd v Gnoyke (No 2) [1975] PNGLR 195

Mapmakers Pty Ltd v Broken Hill Proprietary Company Ltd [1987] PNGLE 787

Joseph Peng v Phillip Craig Tangney (2009) SC 969

Hilary Signat v Commissioner of Police (2008) SC 910

Overseas Cases

House v. The King [1936] 55 C.L.R. 499 at pp. 504-5.20

Gronow v. Gronow (1979) 54 A.L.J.R. 243.21

L’Estrange v F. Graucob Ltd [1934] 2 KB 394 at 403,

Counsel:

Mr I Molloy, for the Appellant

No appearance, for the Respondents

03rd July, 2014

1. BY THE COURT: The appeals in SCA 140 of 2012 and SCA 141 of 2012 were heard together by this Court. Both appeals were from the same primary judge, and involve the same appellant, the same principles, and a similar substratum of facts. Indeed, in the Court below in the matter now the subject of appeal in SCA 141 of 2012 (WS No 318 of 2010) Counsel submitted (and his Honour accepted) that

· that application and that case were similar to the application and case now the subject of appeal in SCA 140 of 2012 (WS No 56 of 2012),

· the issues raised and to be determined in those cases were exactly the same, and

· the decisions in both cases should be identical.

2. As a result of this approach of his Honour – which is not disputed in these appeals – the reasons of his Honour in WS No 318 of 2010 were very brief. It followed that, in this Court, the submissions of the appellant were primarily directed toward the decision of his Honour in Tingke WS 56 of 2012 and the grounds of appeal raised by the appellant against the judgment of his Honour in that case.

Where necessary, it is both convenient and appropriate for us to adopt a similar approach.

Background

3. In both cases before us the appellant (“the Bank”) had entered into unsecured contracts of loan with the respondents on similar terms, and both respondents had defaulted on repayment of those loans. The Bank filed a writ of summons in the National Court in both instances seeking recovery of the respective loan amounts plus interest. It is not in dispute that the relevant writ of summons was served on the relevant respondent. Neither respondent filed a Notice of Intention to Defend nor a Defence as required under Order 7 rule 2 and Order 8 rule 4 of the National Court Rules Chapter 38.

4. Order 12 rule 32 (1) of the National Court Rules provides that whatever claims for relief are made by a plaintiff, where a defendant is in default, the Court may, on application by the plaintiff, direct the entry of such judgement against that defendant as the plaintiff appears to be entitled to on his writ of summons. It follows that Order 12 rule 32 (1) contemplates the exercise by the Court of its discretion in determining whether to order default judgment in any particular case. A defendant is deemed to be “in default” pursuant to Order 12 rule 25 where, inter alia, the defendant is required to file a defence and a defence has not been filed by the time nominated by the National Court Rules. Order 12 rule 27 makes provision for default judgements being entered in circumstances where the plaintiff’s claim for relief is in respect of liquidated damages.

5. On 10 July 2012, the Bank applied by way of notice of motion to the National Court for default judgment against Mr Tingke. A notice of motion in similar terms was filed by the Bank in respect of Mr Apundamatiet on 15 August 2012. Evidence filed in support of these notices of motion by the Bank included an affidavit of a bank officer deposing to the transaction, default in repayment by the relevant respondent, and indebtedness.

6. Neither the respondent took any part in the proceedings below, nor in the appeals in this Court. No material was filed by either respondent.

7. The primary judge heard the application in WS No 56 of 2012 on 13 August 2012, and the application in WS 318 of 2010 on 18 September 2012. His Honour gave judgment in both matters on 29 October 2012, and in both cases dismissed the Bank’s application for default judgment.

Consideration

8. The grounds of appeal set out in both notices of appeal are extensive. In summary, the Bank claims that, in declining to order default judgment in both cases pursuant to Order 12 rule 32 (1) of the National Court Rules, the discretion of the primary judge miscarried. Specifically, the Bank claims that his Honour erred in:

1. failing to give effect to the agreement between the Bank and the respondents;

2. finding that the appellant’s statement of claim lacked sufficient particulars explaining “the fairness of the contract at the negotiation, agreement, performance or giving effect to the agreement stages and enforcement following default in repayments by Mr Tingke”

3. refusing to enter default judgment because he considered the respondents had good defences to the claim, namely “unfairness, not being on equal footing with the Bank and not being able to clearly understand the terms of the loan agreement and how they were going to work” (including a finding that the Fairness of Transactions Act 1993 was relevant)

4. finding that the interest rate in the loan agreement between the parties constituted an unenforceable penalty at common law

5. refusing to enter default judgment because the found that the respondent should have been served with the application for default judgment

6. finding that the appellant was at fault for delaying in acting to enforce the loan agreement, and then criticising the appellant for pursuing Mr Tingke when he had been in default for only two months

7. finding that the Bank was required to allow the respondent to seek independent legal advice, or ensure that the respondent had sought independent legal advice

8. relying on the decision of the Supreme Court in Augerea v Bank South Pacific (2007) SC 869 and finding that it supported a refusal to order default judgment in the cases before his Honour

9. It is well-settled that where a Judge at first instance is required to exercise a discretion the Judge must exercise the discretion judicially, that is on proper principles of law : National Capital District Commission v Dademo [2013] PGSC 37 at [23], Keimali v Akema [2010] PGSC 9 at [8], Kimisopa, Minister for Justice v Paraka [2009] PGSC 29 at [22], Yer, Secretary for Department of Finance v Yama [2009] PGSC 13 at [31]. That this principle applies equally to the exercise of judicial discretion to enter default judgment on the application of a plaintiff is clear from the decision of this Court in National Executive Council v Williams [2005] PGSC 5 where their Honours said:

“So the appellants’ argument in this appeal in essence is that, the trial Judge should have refused to exercise his discretion to enter default judgment in favour of the respondent. This Court needs to ask, on what basis should the trial Judge have exercised his discretion in favour of the defendants in not granting default judgment? Whilst we agree with the appellants’ submissions that the trial Judge still has a discretion not to enter a default judgment even though the defendants had defaulted in filing a defence, we say such a discretion must be exercised judicially. The trial Judge must be satisfied that there are convincing or cogent reasons not to exercise his discretion in favour of granting the default judgment.”

10. Further, the approach of an appellate Court towards the prospective disturbance of a primary decision involving the exercise of judicial discretion by the Court is well-settled. As this Court observed in Kore v State...