Attorney General Iro Ministry of Finance & Economic Development v Global Imports & Exports Ltd [2012] KICA 2; Civil Appeal 2 of 2012 (15 August 2012)

IN THE KIRIBATI COURT OF APPEAL
CIVIL JURISDICTION
HELD AT BETIO
REPUBLIC OF KIRIBATI

Civil Appeal No. 2 of 2012

BETWEEN

ATTORNEY GENERAL IRO MINISTRY OF
FINANCE & ECONOMIC DEVELOPMENT
APPELLANT

AND

GLOBAL IMPORTS & EXPORTS LTD
1ST RESPONDENT

KIRIBATI SUPPLIES COMPANY LTD
2ND RESPONDENT

Before: Muria CJ
Paterson JA
Barker JA

Counsel: Ereta Bruce for appellant
Taoing Taoaba for respondent

Date of Hearing: 10 August 2012
Date of Judgment: 15 August 2012

JUDGMENT OF THE COURT

INTRODUCTION

1. This is an appeal against the decision of the High Court Commissioner ordering the Attorney-General to pay a costs award of $3,702.20 previously made by the Commissioner against the second respondent in favour of the first respondent.
   
2. In the High Court the first respondent, by consent, obtained judgment on 15 June 2010 against the second respondent for A$59,568.80 including interest to date. The order concluded "Costs to be taxed".
   
3. The first respondent filed a notice of motion in the High Court on 10 March 2011 seeking to orally examine the Chairman of Directors of the second respondent and the Permanent Secretary for Ministry of Finance. The second respondent was named as the defendant and the Attorney-General iro Ministry of Finance as "Garnishee".
   
4. The request to orally examine the Permanent Secretary was "to show cause why it should not pay to the plaintiff the debt owed by the defendant from the money meant or set aside by the garnishee for the defendant". Although the relevant documents were not presented to this Court there was presumably an ex parte application pursuant to Order 48 of the High Court (Civil Procedure) Rules 1964 for an attachment order against funds held by the Ministry of Finance and Economic Development (the Ministry).
   
5. There were then a series of High Court appearances over several months. The Permanent Secretary gave evidence. The second respondent, a Government company, was in financial difficulties. The Ministry had taken over its assets and sold them. Initially the purchase moneys had not been received. On 15 June 2010 the order referred to in paragraph 2 above was made by consent. The appellant required an order so that moneys could be paid out.
   
6. In a hearing on 8 June 2011 the first respondent asked for a costs order for A$3,715.71 against the second respondent. The order of 15 June 2010 concluded "costs to be fixed".
   
7. On 17 August 2011 the Commissioner held a costs hearing. The first respondent was represented by counsel. The second respondent was not represented as it no longer had directors or officers. The former Chairman initially appeared at the hearing but because he was no longer a director asked to be, and was, excused. The Commissioner fixed costs payable by the second respondent to the first respondent at $3,702.20. The appellant was not represented at the cost hearing and was not shown as a party in the Commissioner's cost judgment.
   
8. On 12 October 2011 the first respondent filed a notice of motion showing the appellant as the third party and seeking an order that the appellant pay the costs of $3,702.20.
   
9. In her judgment given on 8 November 2011, at which both the appellant and first respondent were represented by counsel, the Commissioner ordered that the appellant pay the costs of $3,702.20.
   
10. The Commissioner's reasons as stated in her judgment were:
    
    • - The applicant had tried to serve the Order on the defendant but could not find their registered office. Their office has been dismantled, and
      
    • - It was established from previous proceedings that the Third Party has control over the sale money, money received as purchase price of the defendant, Kiribati Supply Company Ltd, and
      
    • - That it was established from the oral examination proceedings that the defendant has no means to pay for the judgment debt but relies on the sale money (price of KSCL) that is controlled by the Third Party (MFED), and
      
    • - That it was the Third Party who paid the principal amount of the judgment against the defendant, being $57,630.30 from the sale money.
      
11. The appellant was first named as a third party in a notice of motion filed by the first respondent on 2 May 2011, and appeared as such in the entituling of subsequent court documents. Counsel explained that she called the appellant "third party" because the Ministry was not a party to the proceeding.
    

GROUNDS OF APPEAL

12. The grounds upon which the appellant relies were stated in the notice of appeal as follows:
    
    • (a) The learned Commissioner erred in law in hearing counsel for the 1st respondent on cost without the presence of the appellant who was the third party in the High Court;
      
    • (b) The learned Commissioner erred in law in holding the appellant liable for cost when the appellant was not a named party in hearing for cost taxation;
      
    • (c) Further and in the alternative that the respondent had not taken out a proper third party proceeding and further that the respondent had not effected a proper service upon the third party with regards to cost and proceeded with the hearing;
      
    • (d) That a third party should be a party at all times once it had been invited to join as a third party.
      

FIRST RESPONDENT'S POSITION

13. In summary the first respondent's submissions on the grounds of appeal are:
    
    • (a) The appellant was not a party when it consented to the order of 15 June 2010. That consent order, ordered costs to be taxed. The Commissioner was correct in fixing costs in the absence of the appellant.
      
    • (b) Although not a named party, the appellant consented to the order of 15 June 2010.
      
    • (c) It accepted that the appellant had not been joined as a third party in accordance with the High Court (Civil Procedure) Rules, and it was so named to distinguish it from the parties.
      
    • (d) It accepts this ground but says the order of 15 June 2010 ordered costs against the appellant.
      

DISCUSSION

14. The appellant was not a third party and the term was wrongly applied by the first respondent. This wrong application of the term has led to confusion in this case.
    
15. The obligation of the appellant to pay the judgment in the substantive case arose from the attachment application. The extent of the appellant's liability can only arise from moneys owed by the appellant to the second respondent. Apparently the Ministry acted as an unofficial receiver of the second respondent. As such it had and continues to have an obligation to meet amounts due to creditors of the second respondent before it applies money due to itself as a shareholder. To do otherwise would be misappropriation.
    
16. An order for costs against the appellant, in this Court's view, would need to be based on an attachment application or come within the terms of the consent order of 15 June 2010.
    
17. The Commissioner did not err when conducting the costs hearing on 17 August 2011, without the appellant participating. In usual circumstance costs are awarded against a party. The appellant was not a party. The second respondent was a party but its former chairman sought leave to withdraw. The Commissioner was entitled to proceed as she did.
    
18. The comments in the previous paragraph apply equally to the second ground of appeal. As the appellant was not a party to the proceeding it could not be a party to the hearing on costs.
    
19. As the appellant was not a third party it is unnecessary to consider the other two grounds of appeal.
    
20. The crux of the case is whether the Commissioner erred, on what was in effect an order on an attachment application although not stated by the first respondent to be such, in not satisfying herself that there were funds held by the appellant which were available for attachment. She referred in her decision to the appellant having sale proceeds from which to make the payment. However, that does not mean that there were still sale proceeds which had not been expended on meeting the second respondent's debts. There should have been such an inquiry.
    
21. There is an argument that the appellant committed itself to pay costs when it consented to the order of 15 June 2010. It clearly consented to pay the amount of the substantive judgment. However, the minutes of the Court hearings only indicate consent to the sum of $56,384.15. The order is expressed as being "Ex Tempore". The addition of "Costs to be taxed" does not constitute an agreement unless it be by implication. A formal order was sealed on 21 July 2011. It was a consent order and concluded it excluded costs.
    
22. In the circumstances the appeal will be allowed and the matter remitted to the Commissioner to consider whether the appellant holds funds which are rightly payable to the second respondent and then to the first respondent as a creditor of the second respondent. If there are funds so available she will be able to make a further order to the same effect.
    

DECISION

23. The appeal succeeds and the order of 8 November 2011 is set aside and the matter remitted back to the Commissioner for further consideration.
    

COSTS

24. In the circumstances there will be no order for costs.
    

Muria CJ

Paterson JA

Barker JA