Stock v Mala [2010] FJHC 134; HPP025.2006 (19 April 2010)

IN THE HIGH COURT OF FIJI AT SUVA
PROBATE JURISDICTION

CASE NUMBER: HPP NO. 25 OF 2006

BETWEEN:

SIMON LESTER STOCK
AS EXECUTOR AND TRUSTEE IN THE ESTATE OF KAILASH PATI STOCK
PLAINTIFF

AND:

RACHANA MALA
DEFENDANT

Appearances: Mr. R. J. Singh for the Plaintiff.
Mr. V. Kapadia for the Defendant.

Date/Place of Hearing: Tuesday, 13th October, 2009.
Date/Place of Judgment: Monday, 19th April, 2010.

Judgment of: The Hon. Acting Justice Anjala Wati.

JUDGMENT

SECURITY FOR COSTS – application by defendant to order plaintiff who is ordinarily resident out of Fiji to deposit a sum of $20,000 as security for costs– the grounds for the application is that the defendant may not be able to recover the costs should she be successful in the proceedings against her-plaintiff contends that there are assets available in Fiji which could be made available and subject to court proceedings to recover costs- unchallenged evidence that the estate has shares in a company which has substantial assets- the nature of the assets are such that they can be converted into cash or made subject to court proceedings for recovery of costs- no need to order security and stultify the proceedings- application refused.

Legislation

High Court Rules, 1988.

Cases referred to

De Bry v. Fitzgerald And Another [1990] 1 W.L.R. 552.
Porzelack K. G. v. Porzelack (U.K.) Ltd. [1987] 1. W.L.R. 420.

The Application

1. On the 18th day of December, 2006, the defendant filed an application for security for costs to be paid by the plaintiff in the sum of $20,000 in cash or such other sum that the court deems just to prosecute the action. The defendant has also sought an order that the cost of the application be paid by the plaintiff.
   
2. The application is opposed by the plaintiff.
   

Grounds in Support

3. The defendant through an affidavit stated the grounds on which she seeks an order for security for costs in the sum of $20,000.
   
4. She states as follows:-
   
   1. She is the intended trustee and beneficiary in the estate of Lester David Stock, who died on the 1st day of May, 2006. A Copy of the will and the death certificate was annexed to the affidavit.
      
   2. Kailash Pati Stock who was initially the plaintiff was the wife of the late Lester David Stock. She resided in New Zealand. (I must now state that Kailash Pati Stock is now deceased and her son Simon Lester Stock has been substituted as the plaintiff in his capacity as an executor and trustee in the estate of Kailash Pati Stock).
      
   100. Pursuant to the will dated the 21st April, 2006, she made an application to the High Court for grant of probate but her application has not been processed. She was advised that the plaintiff has lodged a Caveat No. 16A/2006 on the grant of probate.
        
   4. The plaintiff has filed this proceeding challenging the validity of the will dated the 21st day of April, 2006.
      
   5. The plaintiff is not resident in Fiji. In the event she succeeds, she will not be able to recover any costs incurred in preparing for and proceeding to trial in the matter.
      
   6. She would be required to call 2 witnesses from New Zealand, who witnessed the execution of the will by the deceased Lester David Stock, which will be a costly exercise for her.
      
   7. The original will dated the 21st day of April, 2006 has been lodged with the Probate Registry at the High Court as required by the Rules.
      
5. On the 25th day of August, 2009, the court had ordered the defendant’s counsel to file an estimated bill of costs. The order was complied with. The bill of cost indicates that the total estimated costs until end of trial would be in the sum of $23,997.75.
   

Grounds in Opposition

6. The plaintiff Kailash Pati Stock filed an affidavit in reply, through which she contended the following:-
   
   1. The validity of the purported last will dated the 21st day of April, 2006 of her late husband is being contested.
      
   2. The assets of the estate property of late Lester David Stock comprises of 50% shareholding in Taukei Wines (Fiji) Limited. The balance 50% is owned by her. The shareholding structure is being challenged by her two sons, Philip Stock and Simon Stock.
      
   100. The assets of Taukei Wines (Fiji) Limited comprises of a substantial commercial property with business assets and undertaking for wine making, manufacturing, sales and distribution. The other assets comprises of motor vehicles and 10 freehold residential lots adjoining the commercial property.
        
   4. She is informed and verily believes that the combined value of the assets exceeds $3 million. There are no liabilities.
      
   5. Even if she is not successful in the present proceedings and the defendant is able to propound the last will, the defendant will then only be entitled to 50% share and her entitlement of 50% will remain.
      
   6. Her share is estimated to be worth in excess of $1.5 million.
      
   7. She remains a Fiji citizen by virtue of her birth. She lives in Palmerston North, New Zealand because of her medical condition.
      
   8. She has deposited a bond of $100,000 through a surety in High Court Civil Action Number 315 of 2006 in a related matter in which she was one of the defendants.
      

Defendant’s Submission

7. The defendant’s counsel Mr. V. Kapadia raised the following in his submission:-
   
   1. No bond has been paid as alleged.
      
   2. The application is made pursuant to Order 23 Rule 1 (1) (a) of the High Court Rules, 1988.
      
   100. It is clear from the Writ of Summons that the plaintiff was not a citizen of Fiji and her executors and trustees reside in New Zealand which is outside the jurisdiction of the court. The plaintiff when filing the writ has described her place of residence as Palmerston North, New Zealand. The onus to prove that the plaintiff is ordinarily resident out of the jurisdiction is on the defendant. There is no dispute that the plaintiff is resident out of Fiji. There is no dispute that the plaintiff is resident in New Zealand.
        
   4. The plaintiff has not shown any assets apart from being a shareholder in Taukei Wines (Fiji) Limited. The shares are subject to litigation in the Court.
      

Plaintiff’s Submission

8. The plaintiff’s counsel Mr. R.J Singh submitted as follows:-
   
   1. There is no inflexible or rigid rule that a plaintiff who is resident abroad must provide security for costs. The basis for the application is that the plaintiff is resident abroad. That in itself is not sufficient to order security for costs. Residency abroad is not an automatic trigger for security for costs application.
      
   2. Kailash Pati Stock has stated in her affidavit that she is a 50% shareholder in Taukei Wines (Fiji) Limited. That has not been disputed. There is no dispute regarding Kailash Pati Stock’s shareholding. The shareholding that is being challenged is that of the deceased’s. The Company in which the plaintiff’s estate has shares has substantial assets. These assets are enough to secure the payment of costs if the plaintiff is unsuccessful. The most the defendant will have if she succeeds is 50% of the shares of the company. The balance 50% in favour of the plaintiff will remain as it is not subject to any litigation process. There is no reason to order any security for costs.
      
   100. The payment of sum of $20,000 would cause great injustice to the plaintiff. This is one of the factors that must be considered in favour of the plaintiff.
        

Defendant’s Submission in Reply

9. In his final submission, Mr. Kapadia submitted as follows:-
   
   1. The Court has the discretion in matters of this nature. Defendant should not have to worry about recovering her costs. She should not worry whether the shareholding is disputed or not. She is now put in a situation of doubt as to how she will recover her costs.
      
   2. The amount sought is not a large amount. There would be no injustice as the amount paid would be paid in Court.
      
   100. The bond payment has no bearing on this security for costs application.
        

The Law

10. The application for security for costs is made under Order 23 Rule 1 (1) (a) of the High Court Rules, 1988.
    
11. Order 23 Rule 1 (1) (a) reads as follows-
    

"1 (1) Where, on the application of the defendant to an action or other proceeding in the High Court, it appears to the Court-

(a) that the plaintiff is ordinarily resident out of the jurisdiction, or ...

then if, having regard to all the circumstances of the case, the Court, thinks it just to do so, it may order the plaintiff to give such security for the defendant’s costs of the action or other proceedings as it thinks just...."

12. The use of the words, "having regard to all the circumstances of the case, the Court thinks it just to do so, it may order", confers upon the Court a real discretion on whether or not to order security for costs.
    
13. It is to be noted that residence outside the jurisdiction enables, but does not require, the court to order security for costs of the action. As Sir Nicolas Browne-Wilkinson V.-C. put it in Porzelack K. G. v. Porzelack (U.K.) Ltd. [1987] 1. W.L.R. 420, 422-423:-
    

"The purpose of ordering security for costs against a plaintiff ordinarily resident outside the jurisdiction is to ensure that a successful defendant will have a fund available within the jurisdiction of this court against which it can enforce the judgment for costs. It is not, in the ordinary case, in any sense designed to provide a defendant with security for costs against a plaintiff who lacks funds. The risk of defending a case brought by a penurious plaintiff is as applicable to plaintiffs coming from outside the jurisdiction as it is to plaintiffs resident within the jurisdiction. There is only one exception to that, so far as I know, namely, in the case of limited companies, where there are provisions under the Companies Act for security for costs. Where the plaintiff resident outside the jurisdiction is a foreign limited company, different factors may apply: see DSQ Property Co. Ltd. V. Lotus Cars Ltd. [1987] 1 W.L.R. 127. Under the R.S.C., Order 23, r. 1 (1) (a), it seems to me that I have entirely general discretion either to award or refuse security, having regard to all the circumstances of the case. However, it is clear on the authorities that, if other matters are equal, it is normally just to exercise that discretion by ordering security against a non- resident plaintiff. The question is what, in all the circumstances of the case, is the just answer."

The Determination

14. It is indeed not in dispute that the plaintiff who is the executor and trustee in the estate of Kailash Pati Stock is ordinarily resident in New Zealand. Mr. R. J. Singh has at no point challenged this issue. I therefore hold that the plaintiff is not ordinarily resident in Fiji.
    
15. The defendant’s reason for asking for security for costs is that the defendant will not be able to recover her costs should the action by the plaintiff fail.
    
16. It is not in dispute that the plaintiff’s estate has 50% shareholding in Taukei Wines (Fiji) Limited. The defendant has not disputed that the defendant’s only entitlement if she succeeds, will be the deceased’s share which would be 50% of the shares in Taukei Wines (Fiji) Limited. The defendant has also not challenged the affidavit evidence of Kailash Pati Stock in that the value of Taukei Wines (Fiji) Limited is $3 million and that the company has assets being a commercial property, motor vehicles and 10 freehold lands. If these evidence are not challenged, they are deemed established.
    
17. Lord Donaldson in De Bry v. Fitzgerald And Another [1990] 1 W.L.R. 552 at 558 said:-
    

" ...As I say, attacks were made on the plaintiff’s evidence as to value, but no contrary evidence was forthcoming and, in the absence of such contrary evidence, I think the judge was not justified in disregarding the modello as providing a fund or part of a fund..."

18. The defendant in Civil Action Number HBC 315 of 2006 provided a valuation report of the ten freehold properties owned by the company. This was provided by an affidavit filed by her. The valuation as at July 2006 was $624,000. Valuations of other assets were not provided.
    
19. In my determination, Taukei Wines (Fiji) Limited owns assets like commercial land and building, vehicles and freehold lands. These assets belong to the company in which the plaintiff’s estate has 50% shares. If the plaintiff is unsuccessful in the claim against the defendant, the 50% shares would then go to the defendant. The plaintiff’s estate will retain the balance 50%. The plaintiff’s estate will definitely have to pay the costs of the proceedings. If the trustee refuses to do so, then the defendant can recover the costs in many ways. One simple way would be to retain the share of the profits to be paid to estate. The other way would be to seek an order from the court to sell an asset or assets of the company, from the estate’s entitlement, to recover the costs like sale of a vehicle or land. The company may suffer loss of that asset but this loss to the Company can be levied on the plaintiff’s estate when the time for distribution of shares matures or in any other appropriate way. The assets that the company has can be easily converted into cash to recover the defendant’s costs. I see no reason why the defendant should have insecurities that the costs would not be paid or recovered.
    
20. There is also unchallenged evidence that the assets are unencumbered. I can then see no potential difficulties in having the vehicles and freehold properties being encumbered by the defendant and sold to recover costs, if she succeeds and the plaintiff refuses to pay the costs. The Defendant can easily register the judgment on one of the freehold properties and have it sold to recover her costs. These steps may result in further court proceedings and costs but these are not difficult procedures. These are relatively simple and straightforward steps. Processes of this nature takes place in this jurisdiction so often that I have myself lost count of the number of matters I recall have had judgments registered on the property and then subsequent orders for sale were made by the court.
    
21. The defendant’s counsel has stated that the shareholding structure is in dispute and so the plaintiff cannot rely on the shareholding to say that there are assets within Fiji to recover costs from. The plaintiff’s counsel stated that the deceased person’s 50% shareholding is in dispute and that is what is meant in the affidavit. The plaintiff’s shareholding in the value of 50% in Taukei Wines (Fiji) Limited is intact.
    
22. There is nothing before me to indicate that the plaintiff’s shareholding is in challenge. In absence of any such evidence, I am prepared to hold as per the unchallenged evidence of Kailash Pati Stock that the estate holds 50% shares in Taukei Wines (Fiji) Limited which company has assets which could be used to recover costs.
    
23. Lord Donaldson in De Bry v. Fitzgerald And Another [1990] 1 W.L.R. 552 at 555 said that:-
    

"...Since the purpose of such an order is to have a fund within the jurisdiction which will guarantee that any order for costs in favour of the defendant will be met, it is a complete answer to an application for such an order that a fund already exists, at least if the court can ensure that the fund will not be dissipated..."

24. In Civil Action HBC 315 of 2006 brought by the plaintiff, the deceased plaintiff and her trustee Simon Lester Stock amongst other defendants have been by an order dated the 20th day of July, 2006 restrained from dealing with, transferring, charging, mortgaging, assigning, disposing off or removing from the jurisdiction of Fiji any of their properties or moneys or assets over which they have ownership or control including all assets and properties of the Company Taukei Wines (Fiji) Limited and their shares in the company. I have seen nothing in the file which indicates that these restraining orders have been dissolved. On that basis I must say that the assets of the company are secured and would be available to recover costs from, should the defendant succeed.
    
25. The executor and trustee has been substituted in place of the deceased Kailash Pati Stock. According to the executor and trustee, the estate is not worth anything but the trustee had obtained a grant in order to be able to continue with the proceedings. This information is apparent from the affidavit of the trustee filed in this proceeding when he sought to have the probate resealed in Fiji. Indeed, in light of the restraining orders against the plaintiff’s estate, the trustee cannot use any monies of the estate. An order for payment of security for cost would only burden the trustee to find money on his own and if the trustee is unable to do so, the proceedings would be stultified. I do not wish to create the financial hurdle on the trustee so that he foregoes the claim and the matter is determined without merits.
    
26. The circumstance of this case does not require security for costs to be given and the application shall therefore be declined.
    
27. This application did not require much documentary work and argument. The defendant’s application fails and so the plaintiff must have costs. Assessment of costs after trial will definitely justify the circumstances of the case. There shall therefore be plaintiff’s costs in the cause.
    

Final Orders

28. The application for security for costs is refused.
    
29. Cost of this application shall be plaintiff’s costs in the cause.
    
30. The matter must now take its normal course.
    
31. Orders Accordingly.
    

ANJALA WATI
Acting Judge

19th April, 2010