Austree Enterprise Pty Ltd v Guo [2014] SBHC 107; HCSI-CC 322 of 2012 (9 July 2014)

IN THE HIGH COURT OF SOLOMON ISLANDS
Civil Case No. 322 of 2012
(Civil Jurisdiction)

Austree Enterprise Pty Ltd
First Claimant

And

Zong Wu Zhou
Second Claimant

And

Ling Yun Zhou
Third Claimant

V

Shiyao Guo
First Defendant

And

China United (SI) Corporation Ltd
Second Defendant

And

Ray Chu
Third Defendant

And

Junbin Guo
Fourth Defendant

And

Junzong Guo
Fifth Defendant

Hearing: 28th May 2014
Judgment: 9th July 2014

For the Claimants: J. R. Ward and J. Finau
For the First Defendant: Ms. Bird
For the 2nd Defendant: G. Suri.
For the 3rd, 4th and 5th Defendants M. Pitakaka

Palmer CJ:

This is an application for security of costs by the Second Defendant on the grounds that the Claimants do not have any assets in the jurisdiction and that in the event the Second Defendant wins this action it is doubtful if the Claimants would be able to meet its claim for costs.

The Claimants oppose the application on the following grounds. First, on the issue of delay, they submit that the proceedings had been on foot for some three years. They submit the Second Defendant ought to have brought such application promptly. They rely on the judgment of McClellan J. in Jazebas Pty Ltd v. Haddad[1], that such application for security for costs should be done promptly. In Halsburys Laws of Australia [325-9710] dated 25th May 2014, it states that an application for security for costs should be brought promptly and prosecuted promptly so that if there is to be any delay in the plaintiff's claim while it is finding security or if it is going to frustrate the plaintiff's claim, it does so early on before the plaintiff had incurred too many costs. Where the defendant delays in applying for security so as to permit the plaintiff to incur substantial costs in preparing for the proceeding and has the potential to unduly prejudice and be oppressive to the plaintiff, an order for security for costs is unlikely to be granted.

The second ground relied on by the Claimant in objecting the application for security for costs is that their claim is not a sham[2], was brought in good faith and has prospects of success.

Thirdly, in the light of a counter claim filed, the Claimant should not be subjected to any requirement to pay security for costs[3]. The Claimants are the subject of a substantial counter claim for $2,105,000.00.

I am satisfied the application for security for costs should fail on the following grounds. I accept the submission of delay in this application as having substance in that the application has not been brought promptly. I accept that substantial costs have been incurred by the Claimant in pursuing this claim and to impose an order for costs at this point of time would cause undue prejudice and be oppressive to the Claimants.

Secondly, I am also satisfied the claim of the Claimants at this point of time is not a sham, it has been brought in good faith and has prospects of success. The audit report authorized by the Claimants and undertaken by an international accounting firm, Deloitte Touche Tohmatsu Limited summarized its findings into three categories, (i) Established claims; (ii) Probable claims; and (iii) Inconclusive claims. The established claims category totals some $55,382,977.00 (SBD); the probable claims amount to $9,631,399.00 (SBD) and inconclusive claims amount to $235,855.00 (SBD).

I note also that while the Claimant does not have substantial assets in the country, the subject of the dispute, being the town ground building/plaza, is a building of substantive value, and that substantial costs have been expended in the construction of that building. That building alone is evidence of substantial means based on the claim of the Claimants of substantial money that had been expended towards its construction.

I am not satisfied therefore that it can be said the Claimants do not have means to meet the costs of the Second Defendant in the event the Second Defendant wins its case. The likelihood of an outright bill amounting to the amount of the security for costs claimed by the Second Defendant being ordered at this point of time seems remote, also noting that no breakdown on the bill of costs has been provided to justify the application.

The balance of justice in this application weighs in favour of the Claimants and accordingly I am satisfied the application for security for costs should be dismissed.

Orders of the Court:

1. Dismiss application for security of costs.
2. Costs awarded against the Second Defendants.
   

The Court.

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^[1] [2007] NSWCA 291; (2007) 65 ACSR 276 at [74]
^[2] Sir Lindsay Parkinson & Co Ltd v. Triplan Ltd [1973] QB 609 at 625-627
^[3] See Willey v. Synan [1953] 54 CLR at 175, HCA 76 (judgement of Latham CJ at 179.8 and Dixon J at 184.9).