Petrogold International LLC v CSF Pukhet Company Ltd [2012] FJHC 1413; HBC214.2009 (12 November 2012)

IN THE HIGH COURT OF FIJI
AT SUVA
CIVIL JURISDICTION

Civil Action No.: HBC 214 OF 2009

BETWEEN :

PETROGOLD INTERNATIONAL LLC,
a company incorporated and having its registered office at Dubai in the United Arab Emirates.
PLAINTIFF

AND:

CSF PHUKET COMPANY LIMITED,
a company registered in Thailand having its registered office at Moala Street, Samabula, Suva.
1ST DEFENDANT

AND:

PAUL COOPER,
Businessman and Company Director of 52 Mead Road, Nabua, Suva
2ND DFENDANT

COUNSELS : Mr Jiaoji Savou of SAVOU'S BARRISTER & SOLICITOR for the Plaintiff
Mr Hiware N of HM LAWYERS for the 2nd Defendant

Date of Hearing : 15th October, 2012
Date of Order : 12th November, 2012

ORDER

1. Summons filed on the 1st June 2012 and sought the following Orders by the 2nd Defendant:
   
   • (i) that the 2nd Defendant's passport be released forthwith;
   • (ii) that costs be in the cause.
     
2. Inter-parte summons filed on 8th June 2012 and sought the following Orders by the 2nd Defendant:
   
   • (i) That the Plaintiff do deposit with the Court within 7 days of this Order such sum as security for the Defendant costs to the satisfaction of this Court;
     
   • (ii) In the event that such security is not provided within 7 days from the date of the Order herein, the action be struck out against both the Defendants;
     
   • (iii) In the event that the action is struck out upon the failure of the Plaintiff to provide reasonable security for costs on the sum of $139,150.00 (One Hundred and Thirty Nine Thousand, One Hundred and Fifty Dollars), the Defendants counter claim be granted and Orders be made against the Plaintiff for the amount stated therein;
     
   • (iv) That costs of this Application be awarded to the Defendants on an Indemnity basis;
     
   • (v) Further and/or other relief as this Honorable Court may deem just.
     
3. Summons filed on the 1st June 2012 and the inter-parte summons filed on 8th June 2012 by the Defendant are supported by 2 Affidavits dated 1st June 2012 and 8th of June 2012 by the 2nd Defendant.
   
4. Affidavit dated 1st June 2012 filed by the second Defendant submitted:
   
   • (a) On the 29th day of July 2009 Mareva Court Order was made against the 1st and 2nd Defendants restraining them from disposing or dealing with any of their assets within jurisdiction upon a aggregate value of US$80,000;
     
   • (b) The said Mareva Order of the injunction restrained the second Defendant from leaving the jurisdiction and the 2nd Defendant's passport was delivered to the High Court;
     
   • (c) On the 26th of February 2012, the High Court gave a Judgment against the 1st Defendant in the sum of US$80,000;
     
   • (d) Since the Judgment is against the 1st Defendant and the Plaintiff did not enforce the Judgment against the 1st Defendant the 2nd Defendant sought release of his passport.
     
5. By the Affidavit filed on 8th June 2012 in support of inter-parte summons (for security for costs) the second Defendant submitted:
   
   • (a) The 2nd Defendant believes that the Plaintiff has permanent address in Dubai;
     
   • (b) Since the Plaintiff's permanent address is in Dubai in U.A.E., the Court must grant security for costs in order to protect the Defendant's interest;
     
   • (c) The Defendant's had made a counter claim substantial amount of money and costs on an indemnity basis. Further stated if the Defendants are successful they would be awarded millions of dollars and Defendants sought indemnity costs in the sum of $139,000 as evident in the proforma bill of costs;
     
   • (d) If the Plaintiff claim fails as the Plaintiff does not appear to have any assets in Fiji.
     
6. In reply to both Affidavits referred in para 4 and 5, the Plaintiff by his Affidavit dated 2nd of July 2012 submitted:
   
   • (a) The injunction was made in the form of Mareva and disclosure Order on the 29th of July 2009 against both Defendants;
     
   • (b) Under the terms of the Order, the First Defendant and Second Defendant together with their agents, servants or otherwise were:
     
     • (i) Restrained from removing or causing to be removed, or charging or disposing of or dealing with their assets up to the value of USD$80,000 out of Fiji jurisdiction including funds held in Westpac account number 9801979767;
       
     • (ii) Ordered to provide details of all their assets held in bank accounts, with solicitors, accountants together with details of all income and payments made by the First Defendant and Second Defendant respecting such assets;
       
     • (iii) The Second Defendant was ordered to surrender his passport.
       
   • (c) The First and Second Defendants were ordered to make the disclosures Specified in Clause 1 and Clause 2 of the Order (as outlined in clause 3 above) by affidavit filed in Court and served on the Plaintiff;
     
   • (d) The First Defendant and Second Defendant have not complied with the Orders set out under Clause 1 and Clause 2 of the Order and remain in non-compliance todate;
     
   • (e) On 7th August 2009, the First Defendant applied by way of Inter-Parte Motion to dissolve the Order made on 29th July 2009;
     
   • (f) On 28th August 2008, this Court ordered that the Order made on 29th July 2009 remain in force until otherwise ordered by the Court, or the Defendants lodge with the Chief Registrar surety in the sum of USD$80,000 or a bond of that amount;
     
   • (g) The First Defendant and Second Defendant have not complied with the Court Order entered on 2nd September 2009 by providing a surety or paying a bond in the sum of USD$80,000 (Eighty thousand) into Court;
     
   • (h) There was a Judgment entered against the First Defendant in the sum of USD$80,000 as claimed in 2nd Defendant's affidavit dated 1st June 2012;
     
   • (i) The First Defendant had failed to pay the Judgment amount to the Plaintiff;
     
   • (j) The 2nd Defendant had commenced High Court proceedings against Mr Sanjay Kumar personally who sworned the affidavit and against the Plaintiff in Civil Case No. HBC 22 of 2010 which was dismissed by the Court on 24th June 2011.
     
7. In reply to the affidavit dated 2nd July 2012 filed by the Plaintiff the First Defendant filed his affidavit in response and submitted:
   
   • (a) Mr Sanjay Kumar's affidavit dated 2nd July 2012 should be dismissed on the basis he is not Managing Director nor Director have no right to swear the affidavit;
     
   • (b) Para 2 and 3 of the affidavit of Sanjay Kumar was denied by the 2nd Defendant;
     
   • (c) In response to para 4 and 5, 2nd Defendant stated the affidavit of Mr Sanjay Kumar's affidavit was misleading and distorted and raised the issues how the Plaintiff is paying his losses and damages;
     
   • (d) Para 6 was denied;
     
   • (e) Replying to para 7, 8, 9, 10 and 11, Defendant stated Plaintiff should deposit security money to courts for the reasons stated therein.
     
8. Written submissions were filed by the 2 Defendants on 26/9/2012 and submissions in response filed by the Plaintiff on 12th October, 2012.
   
9. The following issues to be decided by this Court:
   
   • (a) As to whether the 2nd Defendant's application for release of the passport is justified?
     
   • (b) As to whether the Plaintiff should deposit a sum as security for the Defendant's cost?
     
   • (c) If the Defendants succeed in (a) and (b), whether the Defendant is entitled for the other orders sought?
     

Submissions

10. In addition to written submissions filed, counsels made their oral submissions on 15th of October 2012.
    
11. The 2nd Defendant Applicant in the present case submitted:
    
    • (a) Application was filed under Order 22 Rule 5 and Order 23 Rule 1 of the High Court Rules 1988 and sought security for costs;
      
    • (b) The Defendant's counsel quoted Sharma vs Registrar of Titles [2007] FJHC 118 HBC 2001 cited in the case of Kellapan vs Karan [2012] JHC 899. It was submitted that in the said case, it was considered that the Order 23 Rule 1(a) was incorporated to protect the risks to which an applicant may be exposed to for recovering in a foreign jurisdiction.
      

I am inclined to accept the position taken up by the 2nd Defendant because the present application and facts are totally different from the said case.

However, as indicated in the submission, I agree in pursuant to Rule 23(1) the unaffected discretion lies with the Court to order security for costs.

12. I wish to quote Hon Justice Finnigan J in the case of Ian Mcleod & Brian Wills vs John Gray & Yvonne Gray [2006] HBC 14/06L Interlocutory Ruling 20/10/2006. Hon. Justice Finnigan stated:
    

"There is no inflexible rule that a Plaintiff or petitioner abroad will be ordered to give security for costs. That power is entirely discretionary. On an assumption that the petitioners have a genuine grievance and may well make out their case. Order must be just, not oppressive ie. Fair to both sides and to consider:

(i) Whether respondents are raising bona fide defence and not a sham;

(ii) Whether respondents have a reasonably good prospect of success;

(iii) Scope of issues revealed by the papers so far filed;

(iv) Whether application is being used oppressively;

(v) Financial situation of the Parties".

13. The principles applied by Justice Finnigan are very important to arrive at a decision in this case.
    
14. The 2nd Defendant also had stated in his submission that the Plaintiff does not have resident address in Fiji and there is an uncertainty of recovering the costs. However, this matter had to be addressed taking into consideration of all circumstances of the case not in isolation.
    
15. The 2nd Defendant submitted that no witness from the Plaintiff's to attend this case in Fiji and presumed that there will be evidence given at the trial which will be speculative. This is not a matter to be taken into consideration at this stage of the case. The second Defendant assumption with regard to the evidence to be led at the trial, is a matter which does not have any merits.
    
16. The matters raised in the submissions of the 2nd Defendant certain allegations were made against Sanjay Kumar who was representing the Plaintiff. All matters raised in the submissions with regard to Sanjay Kumar could be taken up by the 2nd Defendant at the Trial. Certain issues raised by the 2nd Defendant with regard to Sanjay Kumar being already being dealt by the Court and Orders were made in that regard which will be analyzed later in this judgement.
    
17. The second Defendant had submitted that no action being taken on the Judgment delivered against the 1st Defendant and request the Court to release the Passport of the 2nd Defendant.
    
18. The Plaintiff too filed his written submissions on the two issues:
    
    • (a) Security for costs issue;
      
    • (b) Issue of the release of the Passport of the 2nd Defendant.
      
19. Plaintiff had submitted under Order 23(1)(a) two mattes to be considered by the Court:
    
    • (a) The Plaintiff must be ordinarily resident out of the jurisdiction;
      
    • (b) Having regard to the circumstances of the case, court may choose to exercise its discretion whether to award security for costs or not.
      
20. It was submitted that the discretion of the court under the second limb is excusable subject to the following:
    
    • (a) An order for security for costs is not be ordered as a matter of course from a foreign plaintiff;
      
    • (b) The prospects of success for the Plaintiff's claim must be considered by the court and if there is a strong prima facie presumption that the applicant for security for costs may fail in his defence the court may refuse to make an order for security for costs.
      
21. I agree with the submission made by the Plaintiff's counsel that only on the basis that the Plaintiff is not a resident of the country, the court will not make an order on security for costs. It is a fundamental requirement that to use the discretion of the court, the party who applies for security for costs should have a prima facie case. This principle being followed by the courts over the years.
    
22. The Plaintiff had cited the case of Trans Global Supplies LLC vs Omega Corps (Fiji) Limited [2011] FJHC 345 Master Deepthi Amaratunga had extensively dealt with the criteria adopted to decide on security for costs.
    

Discretion of the Court

23. It is important to note page 429-430 (23/3/3) of the white book set out:
    

"Discretionally power to Order (rr 1-3)".

The main and most important change effected by this Order concerns the nature of the discretion of the court on whether to order security for costs to be given. Rule 1(1) provides that the court may order security for costs if having regard to all the circumstances of the case the court thinks it's just to do so. These words have the effect of conferring upon the court a real discretion, and indeed the court is bound, by virtue thereof to consider the circumstances of each case, and in the light thereof to determine whether and to what extend or for what amount a Plaintiff (or the defendant as the case may be) be ordered to provide security for costs. It is no longer for example, and inflexible or rigid rule that the Plaintiff resident abroad should provide security for costs.

24. In the light of the above circumstances, it is material to consider the decision made by the Hon. Justice Calanchini in this case which was delivered on 26th February 2010.
    

It is stated in the decision:

"..............In the Defence filed on 4th August 2009 the Defendants deny that they or either one of them entered into contract with the Plaintiff. The Defence is a blanket denial of the existence of any contract between them and the Plaintiff. The Defence does not plead any facts that may be relevant to the Defence.

However, in its defence, the Defendants admitted the contents of the first three paragraphs of the Plaintiff's statement of claim. The authorization by the First Defendant for the Second Defendant (Applicant in this application) to act on his behalf is therefore admitted..........."

The above finding shows that Plaintiff has a prima facie case against both Defendants and as Justice Finnigan states in the case of Ian Mcleod & Brian Wills vs John Gray and Yvonne Gray (refer to para 12 of this Judgement), the Defendants had not raised a bona fide defence, which shows the Defendant's Defence is a sham.

25. The 2nd Defendant's position that Sanjay Kumar had no status to swear the affidavit was already dealt by Hon. Justice Calanchini in his Order and I cite the relevant paragraph of his decision:
    

"In the opposing affidavits, the deponent (the 2nd Defendant) has raised a number of technical issues concerning the standing of the Plaintiff; the identity of the company that deposited the funds and authority of Mr Sanjay Kumar. These are not issues which constitute a defence to the claim. They are matters which are in my opinion, intended to distract the Court's attention.

On the material that has been placed before me, I am satisfied the Petro Gold International LCC is the contracting party and the proper Plaintiff. I am satisfied that the amount of US$80,000 was paid on behalf of the Plaintiff and was received by the First Defendant. I am satisfied that Mr Sanjay Kumar had the necessary authority as the Plaintiff's agent to sign the agreement on behalf of the Plaintiff and to pursue the delivery of the Sandalwood or recovery of US$80,000 as a result of non delivery".

26. Hon. Justice Calanchini in his decision clearly stated that he was satisfied US$80,000 was paid on behalf of the Plaintiff and I conclude agreeing with Hon. Justice Calanchini and find there is a prima facie case against the 2nd Defendant who was the sole authority of the 1st Defendant company. There are no further materials being submitted to this court by the 2nd Defendant to decide in contrary.
    
27. The second Defendant's amended Statement of Defence and Counter Claim was filed on 18th June 2010 after 10 months of filing of the Statement of Defence jointly by the 1st and 2nd Defendants in August 2009. The delay in filing the Counter Claim did not justify the application for security for costs.
    
28. It is also noted the said amended Statement of Defence and Counter Claim filed did not traverse any of the allegations made by the Plaintiffs statement of claim. Further 2nd Defendant did not specifically rebut any of the allegations made in the Plaintiffs pleadings.
    
29. The 2nd Defendant had made the application for security for costs on 8th June 2012. It is 3 years from the Plaintiff's Statement of Claim the summons for directions was filed on 25th May 2011, which clearly shows the 2nd Defendant's intention to delay the substantive matter being heard and I hold the 2nd Defendant had abused the process of this Court.
    
30. The Order made by Hon. Justice Calanchini on 29th July 2009 and reaffirmed on 25th August 2009. The Orders made were:
    
    • (a) That the Interim Mareva Order granted on 29th July 2009 remains in force until otherwise ordered by the court or alternatively until the Defendants lodge with the Chief Registrar, security by way of surety or bond on an amount equivalent to US$80,000;
      
    • (b) Costs in cause.
      
31. The Mareva Order delivered by the Hon. Justice Calanchini on 29th July 2009 states inter alia:
    
    1. "Pending further Order of this Court, the First Defendant and the Second Defendant (together with their servants or agents or otherwise), be restrained from removing or causing to be removed from the jurisdiction of this Court or otherwise charging or disposing of, or dealing in any manner whatsoever with any of their assets (whether beneficially held or otherwise, real or personal) or any assets of other persons over which they may have the power of disposition or control ("Relevant assets") within the jurisdiction or coming into the jurisdiction, save to the extent that the aggregate value of the Relevant assets exceeds $US80,000 (Eighty thousand United States dollars), and including but not limited to the following assets:
       
       • (a) All funds which are or were held by the First and Second Defendants in accounts held with the Westpac Banking Corporation Limited being:
         
         • (i) Account Number 9801979767;
           
    2. The First and Second Defendants disclose in the manner provided in paragraph 3 below the full nature, extent and value of the Relevant Assets within the Jurisdiction of this Court identifying will full particularity the nature of all such assets, there whereabouts, whether the same be held in either Defendants name or jointly or severally with any other party, or nominee or otherwise howsoever on their behalf, and, without limiting the generality of the foregoing provide particulars of:
       
       • (a) All bank or other accounts whether held in the First or Second Defendants name or jointly held by nominees or otherwise on their behalf and the sums standing to their credit in such accounts;
         
       • (b) All solicitors, accountants, agents or other persons who may have some direct or indirect control over the administration of the First and Second Defendant's affairs;
         
       • (c) The nature and extent of income to be paid to the First and Second Defendant from any source whatsoever;
         
       • (d) All lodgments, transfers or withdrawals of funds into, between or from the bank accounts disclosed pursuant to (a) above over the period 14th April 2009 to the date of disclosure.
         
    3. Disclosure shall be effected by affidavit made by the First and Second Defendant and filed in Court and served on the Plaintiff.
       
    4. Pending Further Order of this Court the Second Defendant is restrained from leaving the Jurisdiction of this Court and is to deliver his passport to the Registry of the High Court at Suva within 24 hours of the service upon him of this Order and the Director of Immigration advised accordingly.
       
    5. Leave is reserved to any party or non party adversely affected to apply to vary or discharge these Orders.
       
    6. The Writ of Summons, Statement of Claim, Ex Parte Summons and affidavit in Support together with Order be served on the First and Second Defendants forthwith.
       
    7. The costs of and incidental to this application be reserved."
       
32. In addition to the reasons given herein before it is evident as submitted by the counsel for the Plaintiff, the Second Defendant had not complied with the Orders made on 29th July 2009 and 25th August 2009. It was an agreed fact that Second Defendant had sole control of the First Defendant's operation in Fiji and was at all material times the sole person engaged in all dealings with the Plaintiff. (Pre Trial Conference minutes dated 11th March 2012). I hold that the 2nd Defendant had not come to this court with clean hands to sought for reliefs since he had not made disclosures and that this action was brought before this Court to delay the substantive matters being heard. If the second Defendant is really interested to conclude this matter expeditiously he would have allowed this matter to be taken up for Trial and no frivolous and baseless applications should have been made to this court.
    
33. In the circumstance the 2nd Defendant had failed to satisfy this court to exercise its discretion on the principles pertaining to exercise the discretion of this court in his favour fails. I further hold there is no strong prima facie presumption that the 2nd Defendant will succeed in his Defence. The delay by the applicant i.e.:
    
    • (a) Filing the Counter Claim after 10 months;
      
    • (b) The delay in bringing this application for three(3) years;
      
    • (c) Not obeying the existing court orders do not warrant this court to use its discretion in favour of the second Defendant.
      
34. As submitted by the counsel for the Plaintiff the only order obeyed by the 2nd Defendant was surrendering his passport to this court.
    

The second Defendant's application to dissolve the injunction order was heard and on 25th August 2009 and the court reaffirmed, the order and further ordered the second Defendant to provide a proper surety or bond for US$80,000.00 to review the injunction order.

As such I hold there is no reason to exercise the inherent jurisdiction of this court to vary the injunctive order in force and release the 2nd Defendant's passport.

I conclude:

(a) The application by the 2nd Defendant to release his passport fails;

(b) The 2nd Defendant failed to justify his application for security for costs to be deposited by the Plaintiff.

Accordingly, I make the following Orders:

(i) Summons filed on 1st June 2012 by the Second Defendant to release of his passport is dismissed;

(ii) Inter-parte summons filed on 8th June 2012 by the 2nd Defendant seeking for an Order for the security for costs and other orders are dismissed;

(iii) The Second Defendant is ordered to pay summarily assessed costs of FJ$2,000.00 to the Plaintiff.

Delivered at Suva this 12th Day of November, 2012.

....................................

[C. KOTIGALAGE]

JUDGE