Singh v Commander Naupoto [2008] FJHC 193; HBC199.2008 (8 August 2008)

IN THE HIGH COURT OF FIJI AT SUVA
CIVIL JURISDICTION

Action No. HBC 199 of 2008

BETWEEN:

CHRISTOPHER JOHN SURENDRA SINGH
Plaintiff

AND:

COMMANDER VILIAME NAUPOTO
1st Defendant

THE ATTORNEY GENERAL
2nd Defendant

THE STATE
3rd Defendant

Coram: Hickie, J

Dates of Hearing: 23 July 2008

Counsel: Mr S Sharma for the Plaintiff
Mr G Bai for the Defendants

Date of Decision: 8 August 2008

DECISION ON COSTS

BACKGROUND

[1] This is an application where the Plaintiff is seeking an Order for indemnity costs.

[2] Such an Order was supported as part of the Plaintiff’s Notice of Originating Motion filed on 18 June 2008 and heard on 27 June, 1 and 2 July 2008.

[3] At the second day of hearing on 1 July 2008, Counsel for the Plaintiff having read the two Affidavits filed on behalf of the Defendants offered to settle the matter by his withdrawing his application with no order as to costs and the Defendants would undertake to remove the Plaintiff’s name from the watch list forthwith as had occurred in a similar recent case (Kumar v CMNDR Naupoto & Ors, High Court, Suva, April 2008).

[4] Counsel for the Defendants obtained instructions which he confirmed in writing to Counsel for the Plaintiff on the afternoon of 1 July 2008 that "we are unable to follow the same course in this matter ... because the facts and scenario ... is [sic] totally different". The major concern was that there was "no guarantee that your client will return to Fiji".

[5] The stance of the Defendants was also confirmed the following morning when the matter came back before the Court on 2 July 2008. Dr Shameem, the Proceedings Commissioner for the Fiji Human Rights Commission, also appeared as Amicus Curiae and agreed to file a short summary of submissions by the following afternoon to assist the Court. The matter was then adjourned until noon on 4 July 2008 for judgment.

[6] After judgment was delivered whereby the Plaintiff was successful in his Application, the matter was put over until 23 July 2008 for hearing on the question of costs. Counsel for the Plaintiff made oral submissions on that date. Counsel for the Defendants was granted his request to file written submissions with Counsel for the Plaintiff being granted liberty to file Submissions in Reply. The matter is now before me again today for judgment on the Plaintiff’s Application for indemnity costs.

[7] The oral submissions of Counsel for the Plaintiff in summary were:

(a) The Plaintiff had no choice but to come before the Court;

(b) On the day of the ruling, Friday, 4 July 2008, the Plaintiff was subsequently apprehended by the Police after the Court’s Order had been served and was detained in custody and charged. He was then called before a Magistrate the following day, on Saturday 5 July 2008, who granted him bail to travel to the USA upon a surety being given;

(c) The Court can, and will, make indemnity costs orders in appropriate cases such as –

(i) Heffernan (See Heffernan v Byrne & Ors, HBM 105 of 2007, Pathik J, 24 October 2007 (Application for Recusal dismissed for want of prosecution) and 11 April 2008 (Application to Strike Out Motion for Constitutional Redress granted); Heffernan v Byrne & Ors, Civil Appeal No.ABU0027 of 2008, Hickie JA, 29 May 2008 (Application for Leave to Appeal withdrawn) (Paclii http://www.paclii.org/fj/cases/FJCA/2008/7.html) ;

(ii) Dewa (See judgment of Pathik J in Dewa v University of the South Pacific [1996] FJHC 125 (High Court of Fiji, No.Hbj0007j.1994s, 4 July 1996) (Paclii: http://www.paclii.org/fj/cases/FJHC/1996/125.html) ;

(iii) Naiveli (See Police Service Commission v Naiveli (1995) HBJ 029 of 1994, 4 September 1995, Scott J; and Civil Appeal No. ABU0052 of 1995S, 16 August 1995, Casey, Ward and Handley JJA);

(iv) Chaudhary (no reference supplied);

(d) What the Court has to be satisfied is that the conduct of the party against whom an indemnity costs order is sought has been "reprehensible" (See EMI Records Ltd v Ian Cameron Wallace Ltd & Anor (1982) 3 WLR 245);

(e) The best which Counsel for the Defendants could say was that "we are restricting his movement overseas but not in Fiji" – they knew (the police, immigration, prosecution) that he could not be detained, that it was a breach of the right of a person to move freely. As for immigration, their argument was "I did it because they asked me to do it". Now whilst that is true, that does not excuse him from following the law.

[8] The written Submissions in Reply by Counsel for the Defendants in summary were:

(a) The Plaintiff has argued that the test is "reprehensible conduct" (as per the two leading case authorities in Fiji being Naiveli and Dewa);

(b) The Defendants submit that by placing the name of the Plaintiff under the "Watch List" is not reprehensible conduct as –

(i) There were genuine reasons for doing so;

(ii) There was no intention to penalise the Plaintiff rather it was because there was a police investigation pending which was not a simple investigation and there was the potential for "the plaintiff to slip out of the country" which would then become "another big task to locate his whereabouts";

(c) For conduct to be reprehensible "it shall be oppressive or vexatious" (as per Naiveli) whereas here the conduct was done in the interests of justice;

(d) Despite being charged, the Plaintiff did not lose his citizenship status with the USA nor did it affect the time limit condition attached to his Green Card visa;

(e) In Naiveli, the Commission adhered to its decision of dismissal even after it had been made aware that there were irregularities in the dismissal and their actions were reprehensible because of the long period of suspension and they went ahead with dismissal despite being informed that judicial review proceedings were being instituted – the Court looked at how the Applicant was forced to resort to unreasonable and unnecessary litigation;

(f) The Plaintiff was only placed on the watch list for five months not since the start of the criminal investigation in 2006;

(g) The conduct of the Defendant was reasonable in the circumstances.

[10] If this Court was to make any indemnity costs order it would not be because of the Defendants simply placing the Plaintiff’s name on the watch list. Rather, it will be of the Defendants’ behaviour in the course of the litigation, that is, AFTER the Plaintiff commenced legal proceedings and AFTER the Defendants had been given the opportunity to file Affidavit material in Reply to the Plaintiff (and thus in support of their stance), the matter came back before the Court and Counsel for the Plaintiff having read the material stated in no uncertain terms that there was not the basis to support continuing his client’s name being on the watch list. Further, he invited the Police to either charge his client or allow him to leave the country.

[11] To recall, the Defendants were:

(a) Given an opportunity to file Affidavits in Reply;

(b) Given the opportunity to withdraw (whilst still leaving the Police limited time to still charge the Plaintiff if he was still in Fiji – which they did); and

(c) On notice that they faced an application for indemnity costs if they were unsuccessful.

[12] Probably one of the best elucidations of the general principles on indemnity costs were set out by Sheppard J in the Federal Court of Australia in Colgate-Palmolive Company and Colgate-Palmolive Pty Limited v Cussons Pty Limited; Cussons Pty Limited v Colgate-Palmolive Company and Colgate-Palmolive Pty Limited (1993) 46 FCR 225; (Paclii: [1993] FCA 536, http://www.austlii.edu.au/au/cases/cth/FCA/1993/536.html) at paragraph 24 as follows:

"It seems to me that the following principles or guidelines can be distilled out of the authorities ... The ordinary rule is that, where the Court orders the costs of one party to litigation to be paid by another party, the order is for payment of those costs on the party and party basis ...This has been the settled practice for centuries in England. It is a practice which is entrenched in Australia ... In consequence of the settled practice which exists, the Court ought not usually make an order for the payment of costs on some basis other than the party and party basis. The circumstances of the case must be such as to warrant the Court in departing from the usual course. That has been the view of all judges dealing with applications for payment of costs on the indemnity or some other basis whether here or in England. The tests have been variously put. The Court of Appeal in Andrews v. Barnes (39 Ch D at 141) said the Court had a general and discretionary power to award costs as between solicitor and client "as and when the justice of the case might so require." Woodward J in Fountain Selected Meats appears to have adopted what was said by Brandon LJ (as he was) in Preston v. Preston ((1982) 1 All ER at 58) namely, there should be some special or unusual feature in the case to justify the Court in departing from the ordinary practice. Most judges dealing with the problem have resolved the particular case before them by dealing with the circumstances of that case and finding in it the presence or absence of factors which would be capable, if they existed, of warranting a departure from the usual rule. But as French J said (at 8) in Tetijo, "The categories in which the discretion may be exercised are not closed". Davies J expressed (at 6) similar views in Ragata.

[13] Sheppard J then went on to set out "some of the circumstances which have
been thought to warrant the exercise of the discretion" they being:

1. "the making of allegations of fraud knowing them to be false and the making of irrelevant allegations of fraud";
   
2. "evidence of particular misconduct that causes loss of time to the Court and to other parties";
   
3. "the fact that the proceedings were commenced or continued for some ulterior motive or in wilful disregard of known facts or clearly established law"
   
4. "the making of allegations which ought never to have been made or the undue prolongation of a case by groundless contentions"
   
5. "an imprudent refusal of an offer to compromise"; and
   
6. "an award of costs on an indemnity basis against a contemnor".
   

He further noted that:

"others to arise in the future will have different features about them which may justify an order for costs on the indemnity basis. The question must always be whether the particular facts and circumstances of the case in question warrant the making of an order for payment of costs other than on a party and party basis ...

Concluding:

It remains to say that the existence of particular facts and circumstances capable of warranting the making of an order for payment of costs, for instance, on the indemnity basis, does not mean that judges are necessarily obliged to exercise their discretion to make such an order. The costs are always in the discretion of the trial judge. Provided that discretion is exercised having regard to the applicable principles and the particular circumstances of the instant case its exercise will not be found to have miscarried unless it appears that the order which has been made involves a manifest error or injustice."

[13] Sheppard J’s judgment in Colgate-Palmolive has been cited in various courts throughout Australia over the past 15 years when considering whether to award indemnity costs. Some more recent examples where indemnity costs orders have been made in that country include:

(a) Wong v Su [2001] FMCA 108 at paragraph 19, Driver FM said:

"The applicant has been wholly unsuccessful in these proceedings. The application was pursued in a desultory way by the applicant and in the knowledge that the allegations made by her were untruthful. Accordingly, the application must be dismissed with costs. In addition, it is appropriate in the circumstances that the Court express its strong disapproval, both of the fact that the application was made at all and also the manner in which it was pursued. Applications of this nature, based upon untruthful evidence, are apt to bring anti-discrimination legislation into disrepute, and do a grave disservice to others wishing to pursue a genuine grievance. The respondents should not be out of pocket in having dealt with this application."

(b) Remely v O'Shea & Anor (Unreported, Supreme Court of Queensland, Court of Appeal, App.No.8395 of 2007, 20 May 2008, McMurdo P, Fraser JA and Mackenzie AJA); (Austlii: [2008] QCA 111, http://www.austlii.edu.au/cgibin/sinodisp/au/cases/qld/QCA/2008/111.html?query=FC%201993%20536%20or%201993%20FCA%20536)

indemnity costs were awarded as the Court agreed with the Respondents’ submission at paragraph 5 that they should have:

"... an indemnity against the costs they have incurred in responding to the unmeritorious litigation so aggressively promoted by the appellant"

(c) Telstra Corporation Ltd v. Ivory Ors; Telstra Corporation Ltd v Solar-Mesh (Australia) Ors (Unreported, Supreme Court of Queensland, Nos. 10536 and 10542 of 2006, 11 June 2008, Lyons J) (Austlii: [2008] QSC 123, http://www.austlii.edu.au/cgi-bin/sinodisp/au/cases/qld/QSC/2008/123.html?query=FCA%201993%20536%20or%201993%20FCA%20536) the Court awarded indemnity costs finding that the Respondent:

" ... has made allegations which ought never have been made and has also unduly prolonged the case by groundless contentions. Given the history of this matter and Mr Ivory’s failure to comply with the orders of the Court on 5 November 2007, costs should be awarded against Mr Ivory on the indemnity basis in respect of both applications. Not only have volumes of material been forwarded which are irrelevant but they are in direct contravention of the orders made on 5 November 2007 as they do not relate to issues arising solely in these proceedings as required by that order. Furthermore, they also contain material of a scandalous nature."

(d) Theden v Nominal Defendant & Anor (Unreported, Queensland Court of Appeal Appeal No 7610 of 2007, Keane, Holmes and Fraser JJA) (Austlii: [2008] QCA 92,

http://www.austlii.edu.au/cgibin/sinodisp/au/cases/qld/QCA/2008/92.html?query=FCA%201993%20536%20or%201993%20FCA%20536) where the Queensland Court of Appeal awarded indemnity costs noting at paragraph 2:

"the appellants' pursuit of "unsupportable allegations of misconduct"

(e) NBLG v Minister for Immigration (Unreported, Federal Magistrates Court of Australia, No.SYG 1073 of 2005, Scarlett FM, 13 May 2005) (Austlii: [2005] FMCA 734, http://www.austlii.edu.au/au/cases/cth/FMCA/2005/734.html) where His Honour explained at paragraphs 18-20:

"This is a matter where the court should consider costs on an indemnity basis. The application before the court today brought by the applicant is one entirely without merit. Her claim to the Refugee Review Tribunal was a false one as she had claimed to be Indonesian instead of Chinese and claimed to fear persecution in Indonesia rather than in China. These proceedings were not commenced until nearly eight months after the applicant had been placed in immigration detention.

The substantive application is, to my mind, an abuse of process and entirely, as I said, without merit. I refer to the decision in Colgate Palmolive Co v Cussons Pty Ltd [1993]536; (1993) 493) [1993] FCA 536; 46 FLR 225; 118 ALR 248 on the subject of indemnity costs. There are five grounds given for indemnity costs in the Colgate Palmolive decision. Two of them appear to be directly relevant to this case. The first reason is where it appears that an action has been commenced or continued in circumstances where a party properly advised should have known that he or she had no chance of success. The second ground, perhaps less relevant, is the making of allegations which ought never to have been made or the undue prolongation of a case by groundless contentions ...

This, to my mind, is a clear case where costs should be awarded on an indemnity basis as it is one of the most blatant examples of abuse of process that I have seen for a number of months ..."

[14] In England and Wales, the issue has also been the subject of a number of judgments in recent years two of which stand out: Reid Minty v Taylor [2001] EWCA Civ 1723; [2002] 1 WLR 2800 and Kiam II v MGN Ltd.(2) [2002] EWCA Civ 66; [2002] 1 WLR 2810 (Bailii: http://www.bailii.org/ew/cases/EWCA/Civ/2002/66.html). A very good application of the principles from those two cases was set out in Carvill v HM Inspector of Taxes (Unreported, United Kingdom Special Commissioners of Income Tax, 23 March 2005, Stephen Oliver QC and Edward Sadler) (Bailii: [2005] UKSPC SPC00468,
http://www.bailii.org/cgi-bin/markup.cgi?doc=/uk/cases/UKSC/2005/SPC00468.html)

[15] In Carvill, Special Commissioners Oliver QC and Sadler explained at paragraph 10 the views of May LJ in Reid Minty v Taylor and Brown LJ in Kiam v M G N Ltd (No.2) as follows:

"We start with the approach predicated by May LJ to the question of indemnity costs for unreasonable conduct in Reid Minty v Taylor [2001] EWCA Civ 1723; [2002] 1 WLR 2800 at 2807, paragraph 28, where he said ...

‘As the very word "standard" implies, this will be the normal basis of assessment where the circumstances do not justify an award on an indemnity basis. If costs are awarded on an indemnity basis, in many cases there will be some implicit expression of disapproval of the way in which the litigation has been conducted, but I do not think this will necessarily be so in every case. What is, however, relevant to the present appeal is that litigation can readily be conducted in a way which is unreasonable and which justifies an award of costs on an indemnity basis, where the conduct could not properly be regarded as lacking moral probity or deserving moral condemnation.’

Brown LJ (as he then was) in Kiam v M G N Ltd (No.2) [2002] EWCA Civ 66; [2002] 1 WLR 2810 cited that passage from May LJ’s decision in answering the question whether it was right that indemnity costs should be awarded if there had been some sort of moral lack of probity or conduct deserving of moral condemnation on the part of the paying party. In paragraph 12 of his judgment he said of the Reid Minty decision that he understood the Court there to have been deciding –

"... no more than that conduct, albeit falling short of misconduct deserving of moral condemnation, can be so unreasonable as to justify an order for indemnity costs. With that I respectfully agree. To my mind, however, such conduct would need to be unreasonable to a high degree; unreasonable in this context certainly does not mean merely wrong or misguided in hindsight. An indemnity costs order ... does, I think, carry at least some stigma. It is of its nature penal rather than exhortatory. ..."

[16] Thus the approach of Special Commissioners Oliver and Sadler in Carvill was (as set out in paragraphs 11-14 of their decision) as follows:

"From those passages it is clear to us that the key consideration is the reasonableness or otherwise of the party's conduct. The party's conduct must be unreasonable, but with the further characteristic that it is unreasonable to an extent or in a manner that it earns some implicit expression of disapproval or some stigma.

In the Costs Decision we were concerned with the question whether the Inland Revenue had acted wholly unreasonably in connection with the hearing. Paragraph 48 of the Costs Decision contains a short summary of the points explained in greater detail in the later part of the decision. Essentially our reason for deciding that the Inland Revenue's conduct had been wholly unreasonable came down to the fact that the decision taken on 18 December 2003 not to resist the appeals could and should have been taken nearly four years earlier: see the concluding words of paragraph 48. The points made in the succeeding paragraphs were, in some cases expressly and in others by implication, so critical of the conduct of the Inland Revenue as to "stigmatise" it; and the factors identified in those paragraphs led us to the conclusion that the Inland Revenue had acted wholly unreasonably in relation to the hearing for the purposes of rule 21.

The Inland Revenue contend that it does not follow from the making of the costs order under regulation 21 that any costs so awarded should be assessed on an indemnity basis. Indeed, they say, were that to be the position, every costs order ever made by the Special Commissioners would necessarily result in an order for assessment on an indemnity basis. That may be so as a matter of fact. But as a matter of law our approach to the question of whether to award costs on an indemnity basis must be grounded on the case law of the courts and, as has been the case here, in the light of the guidelines given recently by the Court of Appeal. Having said that, we point out that the "wholly unreasonably" test in rule 21 is high. In Gamble v Rose [1998] STC 1247 at 1257g, Park J observed that it "will be a very rare case where a Tribunal can say that a party has acted wholly unreasonably"; and he went on to say that the "party must act wholly unreasonably – a very exacting standard". In the very rare cases where a party has acted wholly unreasonably, and so become liable to costs under regulation 21(1), it will be no cause for surprise if his conduct has been "unreasonable to a high degree" in the sense contemplated by Brown LJ in ... Kiam ...

We are, however, concerned with this particular case, and in all the circumstances of this case we are satisfied that the Inland Revenue's conduct was unreasonable to a sufficiently high degree to require us to make the costs award on the indemnity basis."

[17] Thus on the Australian approach, as expressed by Sheppard J in Colgate-Palmolive, the only basis for the Plaintiff to base an argument in the present case in support of his application for indemnity costs would be "an imprudent refusal of an offer to compromise". Normally, the cases in that regard are those involving monetary claims but, in my view, it can be considered applicable to other matters.

[18] The problem for this Court is that such offers are normally made on a formal basis in writing between the legal practitioners for the respective parties. In addition, it is inappropriate to disclose such an offer to a Court during the hearing of a matter and before judgment has been delivered. As Lord Widgery CJ in the Queen’s Bench Division held some 35 years ago, when, at the height of the thalidomide litigation a newspaper published a series of articles before any final settlement of claims had taken place, there is a "public interest in preventing the application of pressure to the parties to pending litigation": Attorney-General v Times Newspapers Ltd (1973) 3 All ER 1136 at 1145h. Indeed, as he concluded at 1146a: "What is not permitted is an attempt to break the deadlock by applying pressure to one party with a view to inducing him to settle." And at 1146c-d, if such "interference is intended" and "would create a serious risk of interference with ... freedom of action in the litigation" then "it would therefore be a clear contempt".

[19] Obviously, I am not saying for a moment that this is not what occurred here. Rather, the case was somewhat unusual to the "run-of-the-mill" say civil damages claim and, if it were not for the urgency of the matter, the Defendant may well have asked me to have considered transferring the file to another judge on the basis that the Plaintiff’s offer could, perhaps, have be seen as naïve to resolve the urgency of the matter, rather than in any way have been an improper attempt to influence my decision. Also, to be fair to the Plaintiff’s Counsel, I believe that those present in Court at the time understood that it was a genuine attempt to resolve the matter rather than based upon any improper motives which could be imputed to him. In addition, my judgment reflects that the reason as to why I granted the Plaintiff’s application had nothing to do with this factor. Indeed, it was for this reason that I openly mentioned the raising of the matter in my judgment (so that it was on the public record) and in the context that the Plaintiff’s counsel having acknowledged that if the matter was settled, then "if the Police wish to charge the Plaintiff before he departs that is a matter for them" (which they subsequently did).

[20] For the future reference of any practitioners, however, who may be involved in similar matters, an offer of compromise should be made on a formal basis in writing between the legal practitioners outside of the Court and only brought to the Court’s attention after judgment has been delivered.

[21] In any event, the Australian case law has been clear that just because a party rejects a confidential offer of compromise is not an automatic basis for the award of indemnity costs. Indeed, there must be something further, that is, it must be "unreasonable for the offeree not to accept". (See for example Commonwealth of Australia v Gretton (Unreported, Court of Appeal, Supreme Court of New South Wales, No. 40174/07, 29 May 2008, Mason P Beazley JA Hodgson JA) (Austlii: [2008] NSWCA 117, http://www.austlii.edu.au/au/cases/nsw/NSWCA/2008/117.html) .

[22] Turning to the English cases the conduct involved would need to be even if it were conduct falling short of misconduct deserving of moral condemnation, but to be so unreasonable to a high degree as to justify an order for indemnity costs: Reid Minty v Taylor and Kiam (Supra).

[23] In relation to the four cases cited from the Fiji Islands, namely Naiveli and Dewa as well as the two Heffernan cases (supra), again, the conduct involved would need to be "reprehensible conduct".

[24] Counsel for the Plaintiff has submitted that the behaviour of the Defendants was "reprehensible" citing (apart from the above cases) in particular, EMI Records Ltd (supra). Counsel for the Defendant has submitted that the conduct of the Defendant was reasonable in the circumstances. On the basis of the written submissions of Counsel for the Defendant, I tend to agree. The conduct of the Defendants was conduct falling far short of misconduct deserving of moral condemnation. Even then, it was not so unreasonable to a high degree as to justify an order for indemnity costs. Further, it has not earned some implicit expression of disapproval or some stigma: Carvill (Supra). On this basis, the application for an order for indemnity costs is refused.

[25] Although I have declined to award indemnity costs in the present application, this does not mean that another judge might not be so inclined to do in a similar matter depending upon the facts before them. Each application will need to be assessed on a case by case basis.

[26] For the above reasons, the formal Order of this Court is:

That the Defendants pay the costs of the matter on a party to party basis to be agreed or assessed within 28 days.

Thomas V. Hickie
Judge

Solicitors:
Patel & Sharma Lawyers, Barristers & Solicitors, Suva
Office of the Attorney General