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National Court of Papua New Guinea |
PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]
WS (COMM) NO. 192 OF 2018
BETWEEN:
VUKSICH & BORICH (NZ) LIMITED
Plaintiff
V
PACIFIC ENERGY AVIATION (PNG) LIMITED
Defendant
Waigani: Anis J
2020: 18th and 25th September
NOTICE OF MOTION – security for cost – Order 14 Rule 25(1)(a) - National Court Rules – overseas company ordinarily resident outside Papua New Guinea – considerations – whether all considerations necessary – arguable claim and defence – consideration to reflect commitment to abide by jurisdiction of the Court and to complete the matter – what would be the appropriate security? – factors to take into account – exercise of discretion
Cases Cited:
Vuksich & Borich (NZ) Limited v. Pacific Energy Aviation (PNG) Ltd (2020) N8410
Amode HK Ltd v Anitua Housing Solutions Ltd [2020] N8281
In the matter of the Companies Act 1997, In the matter of Re JCA Lumber Co. (PNG) Limited (2015) N6040
Application by David Lambu v Peter Ipatas and Edward Konu (The Provincial Returning Officer) and The Electoral Commission (No. 3)(1999) SC601
Yarlett v. New Guinea Motors Ltd [1984] PNGLR 155
Counsel:
P Lowing, for the Plaintiff
E Asigau, for the Defendant
RULING
25th September, 2020
1. ANIS J: This was a contested application on security for cost. It was moved by the defendant on 18 September 2020. I reserved my ruling to a date to be advised.
2. Parties have been notified so I rule on it now.
BACKGROUND
3. I have set out the background of this matter in an earlier decision, that is, Vuksich & Borich (NZ) Limited v. Pacific Energy Aviation (PNG) Ltd (2020) N8410. I would refer to and quote from paragraphs 3, 4 and 5 herein as follows:
3. The plaintiff’s claim against the defendant is based on restitution for unjust enrichment. The plaintiff says it had been sub-contracted by a third party MRS Guernsey (MRS) to do construction work. Its sub-contract related to a main contract. The main contract was entered between the defendant and MRS, to build an aviation fuel and oil depot (Fuel Farm) at Port Moresby’s Jackson’s International Airport.
4. The plaintiff’s grievance is this. It says it performed its sub-contract within its terms and conditions and within the contractual period. It says MRS later had issues with the defendant in regard to the main contract. As a result, the plaintiff claims that MRS was unable to pay some of its invoices that it had issued to MRS under the sub-contract. MRS has since gone into voluntary liquidation. The Fuel Farm was later completed with third parties that had been engaged by the defendant. The plaintiff claims that because there was no issue with the work that it had performed which was part and partial of the Fuel Farm project, the defendant, it claims, has therefore unjustly enriched itself from the completed Fuel Farm project or from the tasks that the defendant had been engaged to perform in the sub-contract. The plaintiff therefore seeks, amongst others, damages to the tune of AUD572,221.35.
5 The defendant filed its defence on 25 April 2018. It denies the claim. Its defence include its claim that no privity of contract existed between the parties at the material time. The defendant also claims that all moneys that have been claimed by MRS under the main contract or for work on the Fuel Farm, have been fully paid to MRS.
MOTION
4. The defendant’s notice of motion was filed on 19 August 2020. It seeks the following main relief:
ISSUES
5. The issues, in my view, are as follows:
(i) Whether sufficient cause(s) is shown by the defendant which has or have not been satisfactorily explained or disproved by the plaintiff that this Court should exercise its discretion and make an order for security for cost.
(ii) If security for cost is permitted, what would be the appropriate amount under the circumstances of the case; whether it should
be K150,000 or whether it should be an amount that is less than that.
LAW
6. Order 14 Rule 25 of the National Court Rules, reads:
25. Cases for security. (53/2)
(1) Where in any proceedings, it appears to the Court on the application of a defendant—
(a) that a plaintiff is ordinarily resident outside Papua New Guinea; or
(b) that a plaintiff is suing, not for his own benefit, but for the benefit of some other person and there is reason to believe that that plaintiff will be unable to pay the costs of the defendant if ordered to do so; or
(c) subject to Sub-rule (2), that the address of a plaintiff is not stated or is mis-stated in his originating process; or
(d) that a plaintiff has changed his address after the commencement of the proceedings with a view to avoiding the consequences of the proceedings,
the Court may order that plaintiff to give such security as the Court thinks fit for the costs of the defendant of and incidental to the proceedings and that the proceedings be stayed until the security is given.
(2) The Court shall not order a plaintiff to give security by reason only of Sub-rule (1)(c) if it appears to the Court that the failure to state his address or the mis-statement of his address was made without intention to deceive.
7. In this case, the defendant cites sub-rule (1)(a) and submits that the plaintiff is ordinarily resident outside Papua New Guinea.
8. I refer to the case law. Cases cited by both counsel are valid and I have considered them. I must state at the outset that the Court’s power here is discretionary, and its discretion is unfettered. See cases: In the matter of the Companies Act 1997, In the matter of Re JCA Lumber Co. (PNG) Limited (2015) N6040 and Amode HK Ltd v Anitua Housing Solutions Ltd [2020] N8281. I think that the starting point for this case is to note what the Supreme Court has said in the case, Application by David Lambu v Peter Ipatas and Edward Konu (The Provincial Returning Officer) and The Electoral Commission (No. 3) (1999) SC601. On the question of security for costs, it said:
We bear these general principles in mind in considering the question of security for costs pending the determination of a judicial review. However, the ultimate test should be; whether, it is in the interest of justice to make or not to make an order for security for costs having regard to all the circumstances of the case (adopting the words of s 155 (4) of the Constitution). This Court adopted the same test in an application for stay pending the determination of a judicial review in Viviso & Electoral Commission v John Giheno (supra). The onus is on the party applying to demonstrate why the discretion should be exercised in his favour.
(Underlining is mine)
9. In this case, it is not disputed that the plaintiff was incorporated in New Zealand; that it is a foreign company which is ordinarily resident outside Papua New Guinea, and it seems that the contract which it had been engaged to perform was a one-off contract in Papua New Guinea. I say this in light of or after having considered the relevant evidence, namely, the affidavit of Emmanuel Asigau filed on 19 August 2020 and the affidavit of Benard Sinen filed on 15 September 2020. I also note that in Mr Asigau’s affidavit, he refers to an earlier affidavit of the plaintiff, that is, the affidavit of Chris Laqua filed on 20 December 2019. I note in particular what Mr Laqua had said at paragraph 20, that is:
As the Plaintiff had scale down its operations in PNG and had moved most of its records back to New Zealand, I could not instruct my lawyers with certainty to progress to trial until I could obtain draft statements from other personnel involved with the projects, to progress to trial. These statements of evidence have since been obtained and will be made available for trial.
10. In the case, Amode HK Ltd v Anitua Housing Solutions Ltd (supra), I referred to and discussed how the Court should approach or apply its discretion in a situation where Order 14 Rule 25(1)(a) of the National Court Rules is invoked. From part of paragraphs 22 and 23, I stated in part:
......In a case where a plaintiff is an overseas based company, that mere fact alone should, in my view, cause reasonable basis or raise a red flag, so to speak, to reasonably expect that some form of security must be shown or be provided by the plaintiff. Once an applicant has established that a respondent is an overseas based company or is a non-resident, the burden should shift, in my view, and it should be left to the respondent or in this case the plaintiff, who should then be tasked to show that it has assets or means of assets within the country; that it is liquidated; it should provide evidence to show that it is serious and will not abandoned its action or the jurisdiction of the Court until the matter is fully resolved whether it be in Court or otherwise. And one of the measures to show its seriousness would be the very act of committing funds into court like giving security for costs. That may perhaps be the only reasonable way in which the Court and a defendant can be rest assured of the genuine intention of a plaintiff, that is, in commencing an action in a foreign jurisdiction, which is PNG, against a defendant with the aim to obtain judgment or relief in the said jurisdiction.
23. In my view, I would not necessarily regard bona fide and arguable or meritorious claim or defence, as paramount considerations, than the first requirement as discussed or other factors that may arise depending on the circumstances of the case. The obvious example is that a plaintiff may show that it may have an arguable case or one that is likely to succeed. However, there is no absolute guarantee that that will occur in the future. No one can see the future is perhaps a better illustrative way of expressing my view. There are real risks that exist when a plaintiff commences proceedings in a foreign jurisdiction, that is, in addition to or perhaps say other than the 7 factors as stated in Yartlett’s case. For example, it is possible that a party may become insolvent or bankrupt during the course of the proceeding; or a party may decide to withdraw the proceedings at some point in time even if the party may be said to have a meritorious claim; or the Court may make orders in interlocutory hearings that may involve payment of costs, and the list may go on.
11. I find the above relevant and I would adopt them herein.
12. In this case, the burden of proof must now shift to the plaintiff, that is, after the defendant has established that the plaintiff is in fact an overseas based company which is presumably without assets or other business activities or interests in this jurisdiction. I refer to the submissions from counsel and the evidence that is filed. The plaintiff refers to and addresses the 6 considerations that were identified in the case, Yarlett v. New Guinea Motors Ltd [1984] PNGLR 155. They are, (i), whether the claim is bona fide, (ii), whether there is a reasonably good prospect of success, (iii), whether there is an admission on the pleadings or elsewhere that money is due, (iv), whether money has been paid into account, (v), whether the application for security is being used oppressively, or (vi) whether want of means has been brought about by any conduct of the parties. As I have said, my power is discretionary, and I need not tick out all the requirements. For this case, I intend to follow the approaches taken by the Supreme Court in Application by David Lambu v Peter Ipatas (supra) and what I have stated in Amode HK Ltd v Anitua Housing Solutions Ltd (supra), that is, of how I apply my discretion.
13. The argument put forward by the plaintiff which I think requires determination is whether the application for security for cost is being used oppressively by the defendant against the plaintiff; whether it is an attempt by the defendant to suppress the plaintiff from pursuing the matter. Is that the case here? I would answer and say, “no, that is not the case.” The plaintiff refers to an earlier unsuccessful attempt by the defendant to dismiss the proceeding for want of prosecution, as an example to its claim. I, however, do share the same view. The defendant had the right to bring such an application if there had been a delay in prosecuting the matter. Such relief is permitted under the National Court Rules, and the defendant had utilized that when it applied to summarily dismissed the proceeding. As such, it cannot be a good reason or claim, in my view, to support the oppression argument raised by the plaintiff.
14. Under the circumstances, I am satisfied that the defendant has made out its case; that the plaintiff is ordinarily resident outside of Papua New Guinea. Based on what has been adduced before me, I believe and say that it is prudent that I should order security for cost in this matter.
SECURITY AMOUNT
15. The next issue of course is the amount to be ordered for payment into Court. The defendant submits that it should be K150,000. The plaintiff on the other hand submits that if security is ordered then it should be far less than K150,000. It submits that the estimates provided by the defendant is not based on estimates that are founded on a proper draft itemized Bill of Costs. It submits that the defendant’s figure is grossly exaggerated and not based on a valid source.
16. In principal, I uphold the submissions by the plaintiff. In my view, the estimate should be less than K150,000. I note that in my earlier decision, I had noted that the plaintiff’s claim and the defendant’s defence were sound or valid, and I had indicated that the matter should perhaps be properly trialed. In that sense, I have to be considerate, in my view, when I make an assessment on security for cost in this case. In my view, a sum that is more than K10,000 but not more than K20,000 should be sufficient. The sum should not reflect an estimate of the total costs on the basis that the matter may be dismissed. It should rather reflect the genuineness on the part of the plaintiff and its commitment in its pursuit of its claim in a foreign jurisdiction which is Papua New Guinea. In my view, a sum of K17,000 may be regarded as a reasonable amount. I will make an order for the said sum to be paid by the plaintiff as security for cost. Should there be any need for an increase, then that may be addressed on its merits at another time.
17. I propose to make an order for the said sum to be paid into the National Court Trust Account, which will be held pending further orders of the Court. I also propose to order the proceeding to be stayed pending payment of the said sum. I do not propose to give a time frame for payment, but I will note that payment for security for cost within 30 to 60 days may be considered as a reasonable payment period.
SUMMARY
18. In summary, I grant in principal the defendant’s notice of motion filed on 19 August 2020.
COST
19. Cost award is discretionary. I will award cost to follow the event. I will order the plaintiff to pay the defendant’s cost of the application to be assessed on a party/party basis which may be taxed if not agreed.
ORDERS OF THE COURT
20. I make the following orders:
The Court orders accordingly.
________________________________________________________________
Leahy Lewin Lowing Sullivan: Lawyers for the Plaintiff
Pacific Legal Group: Lawyers for the Defendant
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