Skerlec v Tompkins [2008] FJHC 376; Civil Action 111 of 2008 (13 November 2008)

IN THE HIGH COURT OF FIJI
AT SUVA
CIVIL JURISDICTION

Civil Action No: 111 of 2008

IN THE MATTER of an Application by ANDREW SKERLEC as
sole Executor and Trustee of the Estate of Frank Sebesy Skerlec

AND

IN THE MATTER of an Application by ANDREW SKERLEC as sole
beneficiary of the Estate of Frank Sebesy Skerlec and majority beneficial
shareholder of Union Marketing and Manufacturing Company Limited

AND

IN THE MATTER of an Application by ANDREW SKERLEC
as sole beneficiary of the Estate of Frank Sebesy Skerlec and
majority beneficial shareholder of Somosomo Developments Limited

AND

IN THE MATTER of an Application by UNION MANUFACTURING
AND MARKETING COMPANY LIMITED

BETWEEN:

ANDREW SKERLEC
1^st, 2^nd & 3^rd Plaintiff

AND:

UNION MANUFACTURING & MARKETING
COMPANY LIMITED
4^th Plaintiff

AND:

SOMOSOMO DEVELOPMENTS LIMITED
5^th Plaintiff

AND:

CHARLES DWIGHT TOMPKINS
1^st Defendant

AND:

BARCLAY (PACIFIC) LIMITED
2^nd Defendant

AND:

TIDAL FLOWS LIMITED
3^rd Defendant

AND:

REGISTRAR OF TITLES
4^th Defendant

AND:

REGISTRAR OF COMPANIES
5^th Defendant

AND:

ATTORNEY GENERAL OF FIJI
6^th Defendant

Mr M Sahu Khan for the Plaintiffs
Mr W Archibald with Mr S Parshotam of Counsel for the 1^st, 2^nd and 3^rd Defendants

Date of Hearing: 29 October 2008
Date of Ruling: 13 November 2008

INTERLOCUTORY RULING

[1] This is an Application made on behalf of the First, Second and Third Defendants filed by way of Summons on 29 September 2008 seeking an Order fixing Security for Costs pending the final hearing of the substantive action. The First, Second and Third Defendants also have a Notice of Motion pending the outcome of this Interlocutory Application, which was filed on 26 June 2008 seeking that the Originating Summons be struck out and costs awarded on a Solicitor-Client basis.

[2] Counsel for the respective parties were given the opportunity to file written submissions on the "Security for Costs" Application and the matter was set down for hearing on 29 October 2008.

[3] Order 23 rule 1(a) of the High Court Rules allows for a party to be ordered to provide security for the Defendant's costs where "the Plaintiff is ordinarily resident out of the jurisdiction" and that "having regard to all the circumstances of the case, the court thinks it is just to do so, it may order the plaintiff to give such security for the defendant's costs of the action or other proceeding as it thinks just". (My emphasis)

[4] In support of their Application, the First, Second and Third Defendants filed on 29 September 2008 an Affidavit of GEOFFFREY ALISTAIR OLD an Accountant of Suva who is also a Director and Secretary of Barclay (Pacific) Limited which is named as the Second Defendant in these proceedings wherein he notes that:

"It is apparent on the face of these proceedings that the first plaintiff is not ordinarily resident in the jurisdiction of this Court but is resident at 65Scadding Avenue, Penthouse 13, Toronto, Ontario, Canada ... [and] that the first, second and third plaintiffs named in these proceedings are in reality one and the same person".

[5] GEOFFREY OLD also asserts:

(a) That the claims against the second and Third Defendants appear to derive from what the Plaintiff's late father left to him in a will, that is, a judgment debt payable by the First Defendant who is an American citizen resident in New Zealand;

(b) That upon the basis of information given to the agents of the Second and Third Defendants on 30 March 2006, there were no assets located in the Fiji islands which formed part of the estate of the father of the Plaintiff;

(c) That the estimate of legal costs prepared by the Solicitor for the Second and Third Defendants in defending their respective positions will amount to approximately $100,000.

[6] At the hearing on 29 October 2008, Counsel for the Applicants in support of the Summons tendered a brief outline of submissions drawing the Court's attention to:

(a) Order 23 rule 1(a) of the High Court Rules and that the Court has a discretion that the Plaintiff give such security for costs as it thinks just; and

(b) Procon (GB) Ltd v Provincial Building Co Ltd, and others [1984] 2 All ER 368 where the Court of Appeal spent some time setting out the principles for determining the actual amount of security which should be paid into Court.

[7] In addition, Counsel for the Applicants made brief oral submissions. The parts of those submissions which dealt directly with the Application before me were:

(a) That the estimated costs are currently about $45,000;

(b) That the First Defendant currently resides in New Zealand and it is a case where the Plaintiffs should be looking to take the previous judgment and register it in that jurisdiction;

(c) That from the enquiries which the Defendants made some time back, the Plaintiffs have no assets in the present jurisdiction;

(d) That the Plaintiffs have provided no reasons why a security for costs order should not be made;

(e) That it is questionable whether an Originating Summons was the appropriate way for the substantive matter to proceed and the Applicants also have a Notice of Motion pending the outcome of this Interlocutory Application seeking that the Originating Summons be struck out and costs awarded on a Solicitor-Client basis;

(f) That as the matter concerns a judgment from some nine years ago, not all witnesses are going to be available and further the Plaintiffs are going to have to show actual fraud.

[8] Counsel for the Respondents (that is, the Plaintiffs in the substantive matter) also tendered at the hearing written submissions. The parts of those submissions which dealt directly with the Application before me were:

(a) That estimated legal costs of $100,000 until final hearing are unreasonable and excessive;

(b) That paragraph 23/1-3/29 of the Supreme Court Practice 1985 states that -

"... It is not always the practice to order security on a full indemnity basis. A conventional approach is to fix the sum at about two-thirds of the estimated party and party costs up to the stage of the proceedings for which security is ordered; but there is no hard-and-fast rule" (My emphasis);

(c) That in Sharma v The Registrar of Titles and Another (Unreported, High Court of Fiji at Suva, Civil Action No. HBC351 of 2001, 13 July 2007, Master Udit) (PacLII: [2007] FJHC 118, http://www.paclii.org/fj/cases/FJHC/2007/118.html), Master Udit held that security for costs ought to be tailored to the nature and size of the risk which it is designed to protect and in that case the Plaintiff was ordered to pay a sum of $1,200 for two Defendants making a total of $2,400. Counsel has submitted that a similar amount should be awarded in the present case;

(d) That no substantive pleadings will need to be filed as the Plaintiffs are merely seeking Orders and Declarations arising out of a previous judgment of Fatiaki J in the High Court;

(e) That in certain cases such as where a Plaintiff is forced into proceedings to protect a right, a Plaintiff might be treated as a Defendant such as in Re Travelodge (1978) 21 ACTR 17 where the Court conceded that the Plaintiff was in substance the Defendant in that he was defending his interest against a compulsory acquisition and, in the circumstances the application to provide security for costs was refused. Counsel submits such is the same in the present case.

[9] In addition, Counsel for the Respondents made brief oral submissions:

(a) That the Plaintiffs have not been paid for a judgment awarded in the sum exceeding $900,000 and which has been outstanding since 1999;

(b) That whilst Counsel acknowledged that the Plaintiffs did not reside within the jurisdiction nor had any assets here, they were prepared to pay an amount of $5,000;

(c) That Counsel would expect the total costs for the entire matter to be no more than $20,000, two-thirds of which would be approximately $13,000.

[10] In relation to the submissions by Counsel for the Applicants, I note:

(a) In Procon (GB) Ltd v Provincial Building Co Ltd and others (supra), the Court held -

(i) That "the security should be such as the court thinks in all the circumstances of the case is just";

(ii) That when security is sought at an early stage in the proceedings "one of the features of the future action which is relevant is the possibility that the action may be settled, perhaps quite soon" such that "it may well be sensible to make any arbitrary discount" and this "will depend on the view of the court on consideration of all the circumstances", however, in some cases "where millions of pounds of costs ... have become the subject of fee notes ... there is no reason ... in justice or common sense for any conventional discount ...";

(iii) That "if very little information is put before the court on which it can estimate costs, then again it will be reasonable to make a large discount, particularly when it is borne in mind that, if the security proves inadequate as litigation progresses, it is always possible for a further application to be made for more security";

(b) That the Respondents not only do not reside in the jurisdiction but they have no assets within the jurisdiction and that the estimated costs are about $100,000 but are currently about $45,000 but no copies of any fee notes rendered to their clients were provided;

(c) That the Applicants also have a Notice of Motion pending (the outcome of this Interlocutory Application) seeking that the originating Summons be struck out and costs awarded on a Solicitor-Client basis such that if successful, then the total costs would not be much more than the $45,000 so far allegedly incurred.

[11] In relation to the submissions by Counsel for the Respondents, I note:

(a) In Sharma v The Registrar of Titles and Another (supra) Master Udit noted (amongst other matters) -

(i) At paragraph 20 "... at this juncture I remind myself of the principle that in deliberating upon an application for Security for costs, I am not required to delve in to the meticulous details of the merits or demerits of the claim or defence";

(ii) At paragraph 23 that Halshury's Law of England (4^th edn) Vol. 37 para 307, was appropriate for the Fiji Islands and which states that "... It is not the practice to order security for cost on a full party and party, still less on an indemnity basis. In the case of a plaintiff resident out of the jurisdiction the more conventional approach is to fix the sum at about two-thirds of the estimated party and parry costs up to the stage of the proceedings for which security is ordered, but there is no hard and fast rule";

(iii) At paragraph 24 cited Justice Gault in Mclachlan & Others v. Mel Network Limited [2002] NZCA 215 (29 August 2002) who at paragraph 27 said that "The amount of security is not necessarily to be fixed by reference to likely costs awards: National Bank of New Zealand Ltd v Donald Export Trading Ltd [1980] 1 NZLR 97, at 103. It is rather to be what the Court thinks fit in all the circumstances...";

(b) That Counsel has acknowledged that this case is different to Re Travelodge as the Respondents not only do not reside in the jurisdiction but they have no assets within the jurisdiction and if the court felt that some amount should be paid it should be $5,000 but at most $13,000 to cover the entire proceedings.

[12] Taking into account the above, the Court is of the view as follows:

(a) That where the Respondents not only do not reside in the jurisdiction but they have no assets within the jurisdiction, an Order to provide security for costs is appropriate;

(b) That while the Court notes that the estimated costs of the Applicants are about $100,000, they are currently said to be about $45,000 (copies of any such fee notes rendered to their clients, however, have not been provided for further scrutiny) then the estimate of such costs must be heavily discounted when arriving at an appropriate figure to set as security for costs;

(c) That, in any event, there is a Notice of Motion pending seeking to have the originating Summons struck out and surely the total costs (even on a full indemnity basis) would not be much more than the $45,000 so far allegedly incurred;

(d) That the Master Udit correctly held in Sharma v The Registrar of Titles the Court at this stage is "not required to delve in to the meticulous details of the merits or demerits of the claim or defence";

(e) That as held in Procon where there is "very little information ... before the court on which it can estimate costs, then again it will be reasonable to make a large discount, particularly when it is borne in mind that, if the security proves inadequate", then after the Notice of Motion to have the originating Summons struck out is heard and if the "litigation progresses, it is always possible for a further application to be made for more security";

(f) That presumably the $45,000 allegedly incurred is costs on a full indemnity basis. On a party-party basis it would be two-thirds ($30,000), however, having reviewed the file to date, I question that without specific accounts and/or fee notes how this could be justified on taxation (even allowing for the fact the Plaintiff is overseas and senior counsel has been appearing). Therefore, I consider it appropriate to discount the alleged costs so far incurred by another third to reach a figure of $20,000, but also noting that this has been an estimate, I believe that appropriate figure would be $18,000.00.

[13] The Court makes the following Orders:

(a) That the Plaintiffs provide a sum of $18,000 as security for costs to the First, Second and Third Defendants (being $6,000 to CHARLES DWIGHT TOMPKINS; $6,000 to BARCLAY (PACIFIC) LIMITED; and $6,000 to TIDAL FLOWS LIMITED) such sum to be deposited in the Registry of the High Court of Fiji at Suva on or before 12 Noon on Thursday, 4 December 2008;

(b) That upon the said sum of $18,000 being deposited as security for costs, the Notice of Motion seeking to have the Originating Summons struck out will be fixed for hearing;

(c) The cost of this matter be costs in the cause.

Thomas V Hickie
JUDGE

Solicitors:
M K Sahu Khan & Co, Barristers & Solicitors, Nadi
Wendell Archibald, Barrister & Solicitor, Suva