Reef Pacific Trading Ltd v Price Waterhouse [1999] SBHC 132; HC-CC 164 of 1994 (12 November 1999)

HIGH COURT OF SOLOMON ISLANDS

Civil Case No. 164 of 1994

REEF PACIFIC TRADING LTD & JOAN MARIE MEINERS

V

PRICE WATERHOUSE,
RICHARD ANTHONY BARBER & WILLIAM DOUGLAS McCLUSKEY

In the High Court of Solomon Islands
(FRANK KABUI, J)

Hearing: 29^th October 1999
Judgment: 12^th November 1999

J. Katahanas for the Defendants
Plaintiffs not in Court

RULING

(Frank Kabui J) I delivered my judgment in Reef Pacific Trading Limited and Joann Marie Meiners v Price Waterhouse, Richard Anthony Barber and William Douglas McCluskey (Civil Case No. 164/94) on 26^th July, 1999. In that Judgment I said I would leave the matter of costs to be argued before me at a later date. On 9^th September 1999, the matter of costs was raised before me by Mr. McQuire, Counsel for the Defendants, together with security for costs regarding an appeal from my judgment of 26^th May, 1999. Mrs Meiners protested against the matter of costs being raised by Mr. McQuire on the ground that she had not been notified of the hearing of costs. She was only prepared to meet the argument by McQuire on behalf of the Respondents on the matter of security for costs regarding her appeal. I proceeded to hear the application for security for costs under the Court of Appeal Rules 1983 and made a ruling on it. The matter of costs was not pursued by Mr. McQuire because Mrs Meiners objected to it being heard. Mrs Meiners also pointed out that the matter of costs had already been decided by me in an appendage to the judgment I delivered on 26^th May, 1999. I said to her that the appendage was unofficial and did not bear my signature and was not part of my judgment. I further said to her the matter of costs was to be further argued before me and so far the matter had not been argued before me. The matter was then left at that subject to being heard on another date to be fixed. However, I could notice that Mrs Meiners was not happy about my explanation. I do not blame her. I would have been the same if I were Mrs Meiners. I, as the judge whose impartiality was at stake, would have withdrawn from any further dealing with Defendants’ application for costs. However, I felt that being the trial judge in Civil Case No. 164/94, I was the obvious judge to deal with the Defendants’ application for costs, despite this administrative bungle by the Secretaries in the High Court Registry.

The matter of costs was finally set down for hearing before me on 29^th October 1999. Mr. Katahanas appeared for the Defendants but the Plaintiffs were not in Court. Two matters arose. The first being that whether or not I should proceed to hear the matter of costs in the absence of the Plaintiffs. Mr. Katahanas called out the names of the Plaintiffs three times but they were not within the precinct of the Court. As a matter of fact, the Notice of Hearing on 29^th October, 1999 was served on 25^th October 1999 at House No. 5, Ngossi Ridge by Mr. Kingmele, an employee of Sol-Law being town agents for Allen, Allen and Hemsley, the principal solicitors in Brisbane, Queensland, Australia for the Defendants. This was the Plaintiffs’ address for service for the purposes of their appeal arising from my judgment of 26^th May, 1999. At the time of service, Mrs Meiners was not at that address but a Caucasian male was in that house. The Caucasian man said that although he had taken possession of the envelope containing a letter and a copy of the Notice of Hearing in Civil Case No. 164/94, Mrs Meiners had not been served. Also, Francis Taloni, an employee of Sol-Law, on 25^th October 1999 served Mr. Suri personally with copies of the relevant documents at his Office at Top Floor, Quan Shang Wing building at Honiara. Mr. Suri is still the solicitor on record for the Plaintiffs. Francis Taloni also posted a letter from Sol-Law and a Notice of Hearing to the Plaintiffs at their address P.O. Box 1193, Honiara. However, a deportation order against Mrs Meiners under the Emergency Powers (Island of Guadalcanal) Regulations 1999 was made by the Prime Minister on 27^th August, 1999.

The Plaintiffs have not changed their addresses for service since 8^th September, 1999. By letter dated 18^th October, 1999, a man identifying himself as Ron Thomas told Sol-Law that Mrs Meiners had been “shanghaied” and was not in the country. By letter dated 25^th October, 1999, that same man identifying himself as Ron Thomas told Mr. McQuire of Sol-Law and the Registrar of the High Court that Mrs Meiners had been deported on 24^th September, 1999. He said Sol-Law should attempt to find her in Australia. However, according to a letter of 7^th April 1999 Mr. Suri is still the Plaintiff’s solicitor on record. I have searched the relevant Court File and have found nothing to the contrary. It may be that Mr. Suri is no longer unofficially the solicitor for the Plaintiffs. This will not however do until Mr. Suri complies with Order 7, rule 2 of the High Court (Civil Procedure) Rules 1964. Rule 2 states:-

“(1) A party suing or defending by an advocate shall be at liberty to change his advocate in any cause or matter, without an order for that purpose, but unless and until notice of any change of advocate is filed the former advocate shall be considered the advocate of the party till the final conclusion of the cause or matter.

(2) Notice of any change of advocate shall be filed with the Registrar of the Court.

There is no evidence that Mr. Suri has so complied with this Order. As far as I am aware, Ron Thomas who wrote the above letters to Sol-Law used to be Mrs Meiners very close friend. Furthermore, Mrs Meiners used to contact Mr. Smith at his Office at Allen, Allen & Hemsley at Brisbane by telephone and fax in the time leading up to the commencement of the trial of Civil Case No. 164 of 1994. There is clearly evidence to suggest that Mrs Meiners is able to find out about the progress of the hearing of the matter of costs if she wishes to do so and be able to tell Ron Thomas, Mr. Suri, Mr. McQuire of Sol-Law or the Registrar of the High Court of her address in Australia for the purpose of service of documents. Her apparent lack of concern may however be due to the following reasons. Firstly, there may be lack of financial ability to persue her Court cases in Solomon Islands. Secondly, her priority is the Plaintiffs’ appeal to the Court of Appeal so that costs in the High Court trial becomes a secondary matter in her priority listing. Thirdly, the unofficial appendage to my judgment was indeed my view on the matter of costs and so was pointless for her to say more on it. Fourthly, the combination of these reasons may be enough to cause her to feel disgusted about the justice system in Solomon Islands. These suggested reasons are however not conclusive than being a guess. I will not however be surprised if Mrs Meiners does not connect her deportation with the manner in which I dealt with her case and thus coming to the conclusion that all the negative events are evidence of some sort of conspiracy against her which culminated in her deportation on 24^th September, 1999. This is a possible conclusion in the light of the number of cases she had lost in the High Court since she first litigated in 1991. However, I do accept that Mrs Meiners is a lay person and may not just be aware of her obligation to reveal her new address in Australia. Mrs Meiners has however litigated in this jurisdiction in more than ten cases and is not totally ignorant of the rules of service of documents. The current difficulty in locating her in Australia for purposes of serving her with the Notice of Hearing would be an injustice to the Defendants in their attempt to secure a court hearing to secure costs against the Plaintiffs in the High Court trial. The Defendants had won their case in the High Court. The rule is that cost follows the event. Cost is a matter for the discretion of the Court. I am of the view that it is possible that Ron Thomas does know the whereabouts of Mrs Meiners in Australia but is not prepared to tell the Defendants about it. This is not far from being accurate because today Ron Thomas delivered a photocopy of a letter to the Registrar of the Court of Appeal about the conduct of Appeal Case No. 11 of 1999 Civil Case No. 164 of 1994. This letter was signed by Mrs Meiners, the Appellant. Her address is c/- 20/8 Bortfield Drive, CHISWICK 2046, New South Wales, Australia. This is obvious from his conduct on the date of service of the Notice of Hearing by Kingmele on 25^th October, 1999 and his subsequent letters to Sol-Law. That is to say, he was not happy with how the authorities in Solomon Islands treated Mrs Meiners including the High Court and the Defendants, and that finding her address in Australia was not his business. Taking into account all the circumstances of this case, I am satisfied that the Plaintiffs had been served with the Notice of Hearing of this case and the Defendants’ application can therefore be heard in the absence of the Plaintiffs. I cannot now reverse my ruling on the discovery today of Mrs Meiners’ new address in Australia.

The second matter is the appendage to my judgment delivered on 26^th July 1999. That appendage was not my final view on costs in this case. It was unsigned, unargued unannounced and appended to my judgment by mistake by the Secretaries. It is unfortunate that it happened. It causes me much embarrassment and I do apologise for it. However, it does not prejudice the interest of the Plaintiffs’ in this case. The reason is that in this case, costs going to the Defendants is a foregone conclusion because they won their case against the Plaintiffs. As I have said, cost follows the event. The only matter that I should decide is whether or not costs in favour of the Defendants should be on an indemnity basis in this case and certification of overseas Counsel. After listening to Mr. Katahana’s arguments on this issue of indemnity, I am satisfied that this is a case where the Defendants are entitled to costs on an indemnity basis against the Plaintiffs. I would also certify overseas Counsel in this case. The reasons for my view are set out hereunder.

Leave of the Court was obtained by the Plaintiffs on 14th June, 1994 in order to serve the Writ of Summons upon the Defendants in Australia. It is only logical that the Defendants have retained Australian Solicitors and a Barrister to represent them in this Court in this case. Local law firms could not really have been retained in such a case as this in this circumstance.

This is however not to say that local law firms cannot possibly handle the case. The choice in this case lies with the Defendants who had easy access to lawyers in Australia in their own country. The Defendants would obviously be aware and are expecting, I suppose, to be billed by their lawyers according to the Australian scale of costs. They probably do not mind as they are not local litigants for that matter. But if I order costs against the Plaintiffs who are resident in Solomon Islands, higher cost would possibly be a matter of concern to them. They may well say that it was not necessary for the Defendants to retain overseas lawyers in this case. Against that argument is the fact that often the clients choose their lawyers and more so in this case where the clients and lawyers are both residents and nationals of Australia. For what it is worth, I would grant certification for overseas counsel in this case.

The Defendants have also requested costs in their favour on indemnity basis. That is, the Plaintiffs should meet all the costs incurred by the Defendants in defending this action. The reason advanced by the Defendants for this request is that the Plaintiffs had wasted the Defendants’ time and money in defending claims doomed to failure from the start. The Plaintiffs’ claims of fraud had been misconceived and presumptive without any merit in law and fact.

The starting point on costs in this jurisdiction is Order 65 of the High Court (Civil Procedure) Rules, 1964 (the High Court Rules). Apart from this being a general provision on costs it does stipulate that “the costs of and incident to all proceedings in the Court, including the administration of estates and trusts, shall be in the discretion of the Court.” Order 65 does not however stipulate the various heads of costs that may be awarded by the Court. However, the Courts in England and elsewhere in the Commonwealth have, through the Rules of Court, explained the various heads of costs recognised by the Courts. For example, cost between solicitor and client on an indemnity basis was recognised and applied by Lord Langdale as long ago as 1846 in Courand v Hammer 50 ER at 243. Since then the practice of awarding costs on indemnity basis by the Courts have survived to this day. (See E.M.I. Records Ltd v Ian Cameron Wallance Ltd [1983] 1 Ch. 59 at 64 - 5). This leads me to the case of Fountain Selected Meats Pty Ltd v International Produce Merchants Pty Limited (1988) 81 ALR at 397 wherein at pages 400 - 1, Justice Woodward, said

“Courts in both the United Kingdom and Australia have long accepted that solicitor and client costs can properly be awarded in appropriate cases where ‘there is some special or unusual feature in the case to justify the court exercising its discretion in that way’ (Preston v Preston [1982] 1 All ER 41 at 58). It is sometimes said that such costs can be awarded where charges of fraud have been made and not sustained; but in all the cases I have considered, there has been some further factor which has influenced the exercise of the court’s discretion – for example, the allegations of fraud have been made knowing them to be false, or they have been irrelevant to the issues between the parties: see Andrews v Barnes [1888] UKLawRpCh 112; (1888) 39 Ch D 133; Forester v Read [1870] UKLawRpCh 114; (1870) 6 Ch App 40; Christie v Christie (1873) 39 LR Ch App 499; Degmam Pty Ltd (in liq) v Wright (No 2) [1983] 2 NSWLR 354.

“Another case cited in argument was Australian Guarantee Corp Ltd v De Jager [1984] VicRp 40; [1984] VR 483 where (at 502) Tadgell J allowed solicitor and client costs because he found the pursuit of the action to have been ‘a high-handed presumption’.”

No doubt the expression “high-handed presumption” was appropriate in the case Tadgell J had to decide, and he needed to go no further; but in order to establish a convenient principle in such cases it is necessary to be a little more prosaic. I believe that it is appropriate to consider awarding “solicitor and client” or “indemnity” costs, whenever it appears that an action has been commenced or continued in circumstances where the applicant, properly advised, should have known that he had no chance of success. In such cases the action must be presumed to have been commenced or continued for some ulterior motive, or because of some wilful disregard of the known facts or the clearly established law. Such cases are, fortunately, rare. But when they occur, the court will need to consider how it should exercise its unfettered discretion”.

In Naomi Marble and Granite Pty Ltd v Fai General Insurance Company Limited (No. 2) [1998] QSC 18; (1999) 1 Qd. R. 518, Shepherdson, J. again at page 521 said,

“On the application for indemnity costs the starting point is that in the ordinary case costs follow the event and the Court will order the unsuccessful party to pay the costs of the successful party on a party and party basis. That basis falls short of absolute indemnity. The award of costs on an indemnity basis, that is on the basis of solicitor and client, may in the discretion of the court be awarded against an unsuccessful plaintiff. In Halsbury’s Laws of Australia Vol. 20 at para. 325-9600 the authors say that costs on the solicitor and client basis may be awarded against an unsuccessful plaintiff in a number of categories which are set out in that paragraph. Those categories include:

1. Where a plaintiff has proceeded against a defendant with high-handed presumption.
   
2. Where the court’s process has been used for an ulterior purpose.
   
3. Where some unusual or special feature in the case justifies the court so awarding costs.
   
4. Where allegations of fraud have been made when the plaintiff knew them to be false or irrelevant to the issue.
   
5. Where it appears to the court that a plaintiff properly advised should have known he or she had no chance of success.”
   

At page 522, His Honour quoted Cooper and Markel J.J. in Re Wilcox: Ex parte Venture Industries Pty Ltd (1996) 141 ALR 727 as saying that:

“In order to exercise the discretion judicially the following principles have been accepted by the court as applicable:

(a) the court ought not to depart from the rule that costs be ordered on a party and party basis unless the circumstances of the case warrant the court in departing from the usual course;

(b) the circumstances which may warrant departure from the usual course arise as and when the justice of the case so requires or where there may be some special or unusual feature in the case to justify the court in departing from the usual course;

(c) while the circumstances in cases in which indemnity costs have been ordered offer a guide, the question must always be whether the particular facts and circumstances of the case in question warrant the making of an order for costs other than on a party and party basis.”,

thus affirming the view of Moynihan, J. in Re Talk Finance and Insurance Services Pty Ltd (1994) 1 Qd R 558 at 560. These principles were also affirmed by Shepherdson J. of the Supreme Court of Queensland in Re Noosa Waters Syndicate Unit Trust: Noosa Waters Pty Ltd and Another 055874 of 1997, 3^rd April, 1998, Butterworths Unreported Judgments BC 9801023 at 7 – 9 and Ambrose, J. also of the Supreme Court of Queensland in Re SCA Properties Pty Ltd (In Liquidation) (unreported) No. 4333 of 1997 at 22 – 3. Awarding costs on indemnity basis in this jurisdiction is no different from the application of the principles stated in the above judicial pronouncements. In the case of Mbaeroko Timbers Co. Ltd v Island Construction Management Ltd (Civil Cases 100 and 231 of 1997) Palmer, J. awarded cost on indemnity basis against the first Defendant whilst refusing cost on indemnity basis against Mr. Ziru and Mbaeroko. Turning now to the facts of this case. Fraud as an allegation was first raised by Mr. Parr in a letter to Mr. Sowry on dated 26th October, 1989. That fraud allegation was clearly refuted by Mr. Sowry. Mr. Sowry also explained the reasons giving rise to such allegation. Mrs Meiners had clearly accepted that explanation and apologised by letter dated 27th October, 1989. However, that acceptance by Mrs Meiners did not seem to have been endorsed by Mr. Meiners. That lingering suspicion of fraud quickly resurfaced when the disputed Agreement dated 26^th September 1989 was filed in the High Court of Solomon Islands on 23rd March, 1991 as an Exhibit to Mr. Bayley’s affidavit in Civil Case No. 58 of 1991. The ease and speed with which the ex parte application was made to Ward, C.J. on 25th March, 1991 and its success would seem to have heightened the suspicion of fraud. Not only that, the manner in which the appointment Order (Exhibit 77) was transmitted to Messrs Elliot and Douglas McCluskey on 25th March, 1991 at Gizo and the manner in which that appointment order was served upon Mrs Meiners on 26th March, 1991, confirmed their belief that there was indeed fraud on the part of Mr. Bayley and those who were on his side. This belief remained until Mr. Sullivan produced on the 25^th day of the trial Exhibit 531 being the handwritten note of the hearing of the exparte application before Ward, C.J. on 25th March, 1991. The fact however was that the Court papers in Civil Case No. 58 of 1991 were prepared and filed by Mark McCluskey and not by Messrs Bayley, Elliot (DW 6) and Douglas McCluskey. The fact also is that the Meiners would not have known about that fact. I do not blame them for being ignorant of that fact. The belief held by the Meiners that fraud had been perpetrated against the Company by Mr. Bayley and others manifested itself in Mr. Meiners filing a criminal charge in 1994 in the Honiara Magistrates Court accusing Douglas McCluskey of aiding, abetting and procuring Graham Miller, an undischarged bankrupt to act as receiver and manager of the property of the Company, contrary to section 21 of the Penal Code Act (Cap. 26) and section 334(1) of the Companies Act (Cap. 175) (Civil Case No. 243 of 1993). Mrs Meiners also separately filed a criminal charge against Graham Miller, contrary to section 179(1) of the Companies Act. (Civil Case No. 261 of 1993). These charges were subsequently removed into the High Court and Palmer, J. by Order quashed them in a judgment delivered on 27th August, 1994 (Civil Case No. 243 of 1994). On appeal by Mrs Meiners, the Solomon Islands Court of Appeal dismissed the appeal with costs (Civil Appeal No. 3 of 1994). As a matter of fact, paragraph 16(l) of the Statement of Claim in this case is a repeat of that case. Also, in 1994, Mr. Meiners took on Messrs Barber and Douglas McCluskey in the Honiara Magistrates Court on a charge of conspiracy to commit a felony, contrary to section 376 (now 383) of the Penal Code Act above. The particulars of the offence were that between 1st April, 1991 and 27th June, 1991 Mr. Barber did conspire with Messrs Mark McCluskey, Douglas McCluskey, Bruce Elliot, James Bayley and Graham Miller to steal from the Company by a trick in that the Chief Justice of Solomon Islands was fraudulently induced to appoint Messrs Barber and Douglas McCluskey Receivers and did unlawfully and by intimidation with intent to permanently deprive, take and carry away monies, books, records, property and diverse other things of value from the custody of the Company. Again, by Order dated 30th September, 1994, Muria, C.J. granted certiorari and quashed the charges (Civil Case No. 187 of 1994) Mr. Meiners again appealed to the Solomon Islands Court of Appeal and lost with costs (Civil Appeal Nos. 3 and 8 of 1994). This same allegation is being repeated in the Statement of Claim in this case. I do not know why having tested the waters in the cases referred to above, the Meiners decided to still launch out again in civil litigation on the same grounds. If they had taken the time to read the judgments in the cases referred to above, they would have discovered to their horror that both the High Court and the Court of Appeal had found no evidence whatever to sustain the criminal charges laid by the Meiners in 1993 and 1994. That means there was no evidence even on the balance of probability for the Court to find against Messrs Barber and those accused with him. That also means it would have been suicidal without fresh evidence, to proceed with the same case in civil litigation. To do so in this case was highly presumptive on the Company and the Meiners. It was a waste of time to say the least. It was a shot in the dark. What improvement else can there be to pursue and repeat the same allegations in this action? There is absolutely no basis for this case to be commenced in the High Court in the hope that it may result in something good for the Company and the Meiners. Doing so is, in my view, abusing the Court process and must be pointed out to the Company and the Meiners. It is important that I point this out because this case must be treated in the total context of previous litigations in this Court by the Company and the Meiners. That is to say, the Company and the Meiners are not new to litigation in the High Court of Solomon Islands. In fact, they have litigated in this jurisdiction more than 10 times. They have also retained both local and overseas Counsel many times. I do take into account the fact that the Meiners are not trained lawyers but lay persons. They would not know the rules of procedure in any greater detail than they do now. They would not have known about actionable causes of action and what amount of evidence is necessary to sustain them in a typical trial of issues. However, the Meiners are not exceptions to the multitude of litigants who litigate through solicitors and barristers in this Court. In fact, in this case, Mrs Meiners did say in evidence at the trial that the unamended statement of claim had been drafted by Mr. Trazyk a lawyer from Melbourne in Australia. I think what Mrs Meiners meant was that Mr. Trazyk edited the draft statement of claim later signed by Mrs Meiners on behalf of the Company. There is no evidence to show that the Meiners did seek legal advice as to whether or not this case would stand up in Court on the ground of alleged fraud as believed by them. Whilst this case was still pending trial in the High Court, the Meiners caused the Prime Minister, Mr. Solomon Mamaloni to institute a Commission of Inquiry into the appointment of the Receivers and their conduct of the receivership etc. (See L.N. No. 69/95). This was an expensive exercise on the part of the Government without any tangible benefits to anyone. From my own knowledge, they had even gone as far as attempting to invoke the intervention of a former Governor-General of this country to do something about their same complaint. They obviously can operate without limits in this country a thing they cannot do in their own country Australia or elsewhere for that matter. At the instigation of the Meiners, approach was also made to the Director of Public Prosecutions to investigate alleged non-compliance with certain sections of the Companies Act (Cap. 175) by the Receivers. The Meiners were all out to punish the Receivers at all costs for fraud. The Meiners fired the final shot in the dark at the trial of this action when they amended the Statement of Claim and slotted in the allegation of duress and undue influence regarding Mr. Meiners signature on page 3 of the Deed of Indemnity. Fraud was also alleged regarding Mr. Meiner’s signature on page 4 of the Deed of Indemnity. This is an example of how the Meiners conducted themselves in this case. They treated the Court as an open field of play without being advised about or being aware of the rules of scoring goals. They have been going around in a circle all these years in this court and outside of it over this same issue of fraud. I think what happened in this case was that the Meiners had picked the brains of certain lawyers upon the basis of fixed instructions based upon assumptions and proceeded on that basis. They never really sat down with a solicitor to find out how to set aside the Court Order of 25th March, 1991. This, they have not done to this day. I, therefore, in exercising my discretion, order that costs in this case be awarded to the Defendants on indemnity basis except in so far as they are unreasonable amounts or amounts that have been unreasonably incurred. Subject to the above exceptions, the Defendants must be indemnified by the Plaintiffs for their costs. That is to say, I award costs to the Defendants on indemnity basis to be taxed if the parties do not agree.

F. O. Kabui
Judge