Rean-PCS Joint Venture v Solomon Water (trading as Solomon Water) [2024] SBHC 111; HCSI-CC 605 of 2023 (15 August 2024)

HIGH COURT OF SOLOMON ISLANDS

Case name:	Rean-PCS Joint Venture v Solomon Water (trading as Solomon water)
Citation:
Date of decision:	15 August 2024
Parties:	Rean-PCS Joint Venture v Solomon Water (trading as Solomon Water)
Date of hearing:	5 July 2024
Court file number(s):	605 of 2023
Jurisdiction:	Civil
Place of delivery:
Judge(s):	Talasasa PJ
On appeal from:
Order:	1. An Order that the Claimant give security for the payment of costs which may be awarded against it in this proceeding in the amount of SBD 500,000.00, or such other sum as the Court thinks fit, by payment of the said sum into Court. 2. An order that the Claimant pay the Defendant’s costs of an incidental to this application. 3. An order that the proceeding be stayed until such time that the Claimant pays the security set out in order 1 into Court; and 4. If the Claimant fails to comply with order 1 or 2, then these proceedings are deemed dismissed, with the Claimant to pay the Defendant’s costs of and incidental to the proceedings on an indemnity basis. 5. Time given for payment of the costs to court is 21 days from today. 6. Costs in the Cause
Representation:	Radclyffe A for the Defendant –Applicant Kilua S on behalf of Rano W for Claimant-Respondent
Catchwords:
Words and phrases:
Legislation cited:	Solomon Islands Courts (Civil Procedure) Rule 2007, r14.7, 14.8, r1.14
Cases cited:

IN THE HIGH COURT OF SOLOMON ISLANDS
CIVIL JURISDICTION

Civil Case No. 605 of 2023

BETWEEN

REAN-PCS JOINT VENTURE
Claimant

AND:

SOLOMON WATER (TRADING AS SOLOMON WATER)
Defendant

Date of Hearing: 5 July 2024
Date of Ruling: 15 August 2024

Radclyffe A for the Defendant-Applicant
Kilua S on behalf of Rano W for Claimant-Respondent

RULING-: APPLICATION FOR SECURITY FOR COSTS

INTRODUCTION

1. This is an application by the Defendant for security of costs in the sum of Solomon Islands Dollar $500 000.00 or such other amount as the Court think fit.
2. The application was filed on 7 May 2024 and was initially set for hearing on 14 June 2024; it was not heard until 5 July 2024.
3. At the conclusion of the hearing Counsels were notified that the ruling would be delivered in 7 to 10 days. However, as it had transpired, unfortunately, the ruling could not be delivered until today.
4. The application made pursuant to Rules 24.50 and 24.52, is supported by sworn statement of a Mr Anderson Kesaka a legal practitioner who is employed by the Defendant.
5. The application was opposed by the Claimant. Needless to say, at the time of hearing, Ms Kilua appearing for the Claimant informed court that lead Counsel for the Claimant Mr Rano has been unwell or being admitted at the hospital and therefore was unable to appear. Ms Kilua asked if Mr Rano be given time to speak to the submissions as he was the one who prepared the submissions.
6. Mr Andrew Radcliffe of Counsel for the Defendant objected to any adjournment and wished that the matter for hearing be proceeded with.
7. As the court had not received any prior notification of Mr Rano’s absentia Counsel Ms Kilua was asked to stand in for Mr Rano and proceed with the hearing of the application.
8. I note however, the information of Mr Rano’s ill-health via an email sent to the registry by Mr Rano earlier than the time of the hearing was not conveyed to the judge until after the hearing.
9. Another point which I would like to address in the preliminary is the objection raised in court by Ms Kilua as well as is outlined in the written submission by Mr Rano. That relates to effecting service of the application and supporting evidence.
10. It was submitted that the application and the supporting sworn statement of Mr Kesaka were not served on the Claimant or its lawyers. Rather, was served through Rano and Company’s pigeon hole at the High Court Registry purportedly on or about 23 May 2024. It was contented that the Claimant were deprived of the opportunity to respond in time to the sworn statement of Mr Kesaka.
11. Counsel for the Claimant further highlighted that the sworn statement referred to only contained information relative to matters of law rather than factual matters, which Counsel says offends against Rules 14.7 and 14.8 of the Solomon Islands (Courts) Civil Procedure Rules 2007. It also lacks material facts to support the application, it was submitted.
12. On the other hand, Mr Radclyffe submitted that the application was not a controversial application. It is standard practice where the Claimant is an overseas entity to order security for costs.
13. As to service of documents, Mr Radclyffe contended that legal practitioners have been using the pigeon hole system. He had placed the documents for Mr Rano in the pigeon hole on 13 June 2024. He had also sent an email at about 1pm that day letting Mr Rano know what he intended to do.
14. In any case, Mr Radclyffe says there shouldn’t be any reason to delay the proceedings. Counsel highlighted that Rule 1.14 of the Solomon Islands Civil Procedure Rules 2007 gives power to court to dispense with compliance or full compliance with any of the rules at any time, in the interests of justice.
15. After given some thought to the differing positions taken by Counsels, I accepted the reasons given by Mr Radclyffe and that the hearing of the application continues. I then asked Counsels to proceed with their submissions.

BACKGROUND

16. The Claimant is REAN-PCS Joint Venture. It is constituted and operates as a joint venture in accordance with the terms stipulated in a Joint Venture Agreement which was executed on 29 October 2021, operating under the name of Rean PCS Joint Venture.
17. Rean WaterTech Private Limited and PC Snehal Construction Private Limited, led by Rean WaterTech Private Limited were duly registered private companies under the Companies Act 2013 of India.
18. Rean WaterTech Private Limited is a company incorporated under the Solomon Islands Companies Act 2009, on 16 September 2022.
19. Mr Kesaka deposed that the incorporation was after the date of the contract and therefore is not a party to the contract the subject of these proceedings.
20. The Claimant, REAN, was contracted to build a water treatment plant and pipeline (WTP), a venture or project principally funded jointly by the Asian Development Bank (ADB), World Bank and the European Union (EU) along with contributions from Solomon Water and the Solomon Islands Government (SIG).
21. The Claim for general damages or the sums involved being in the order of but not limited to USD 15,646,656.00 plus other damages which are not stated here.
22. The Defendant is a statutory entity established under the Solomon Islands Water Authority Act (Chapter 130, Revised Laws). It is trading or conducting business as Solomon Water.
23. On 30 April 2024, the interim injunction issued on 18 December 2023 were ordered to be maintained or be continued until the final determination for the substantive hearing.

SECURITY FOR COSTS

24. Mr Radclyffe relying on the sworn statement of Mr Kesaka submitted that the Claimant is an entity ordinarily resident outside Solomon Islands as pleaded in paragraph (a) of the claim filed on 8 January 2024. As referred to earlier in this ruling, Counsel submitted that Rean WaterTech Private Limited, the locally incorporated company is not a party to the contract at the heart of this litigation. It is therefore irrelevant to the determination of this application, says Counsel.
25. It was submitted that a proposal much earlier in the year that the Claimant pays $500 000 by way of security for costs was not agreed to by the Claimant.
26. Counsel Radclyffe highlighted that in this jurisdiction, it is standard practice that security is either provided by payment of money into Court or by an irrevocable bank guarantee from a commercial bank carrying on business in the jurisdiction.
27. The Sworn Statement of Mr Biswas referred to a performance guarantee. Counsel Radclyffe submitted that this is nothing to do with the costs of these proceedings but is a bond for the performance of the contract.
28. Counsel Radclyffe noted that the trial of the proceeding would last for up to 5 days and would require several days preparations due to the complexity of the dispute between the parties and the large quantum of the claim.
29. Quite conversely, and in objection to the application, Counsel Kilua pointed out in her oral submissions that the Claimant is willing to stay in the country and continue with the project. In other words, there is no reason to fear the Claimant being a flight risk should cost of litigating this matter be ordered to be paid by the Claimant at the end of the trial. It is therefore unnecessary to consider security for costs, says Counsel.
30. In the written submission by Counsel Rano, it was submitted that the Defendant’s basis for requesting security, primarily the Claimant’s foreign status and lack of fixed property in Solomon Islands, is insufficient to warrant such a security order. It was submitted that despite being a foreign entity, Rean PCS JV has demonstrated substantial investment in the local economy and adherence to legal and contractual frameworks within Solomon Islands, as evidenced by the project at Kongulai, Guadalcanal and various local engagements.
31. It was further submitted that Rean PCS JV is committed to respecting the legal process and ensuring that all engagements are handled with the utmost integrity and adherence to Solomon Islands legal standards.
32. Counsel Rano contended that mandating a high-security deposit could unjustifiably burden Rean PCS JV and impede its ability to seek justice and pursue genuine and valid claims. Mr Rano elaborated that courts have recognised in Aerolift and Mahoe^[1] that security for costs should not be used oppressively or as a barrier to prevent legitimate access to the legal system. This is an important safeguard for litigants, particularly Rean PCS JV being assured of a balanced and equitable legal process, says Counsel.
    • “... the circumstances which the court may take into account include: the plaintiff’s bona fides and his prospects of success; whether the defendants have admitted on the pleadings or elsewhere that money is due; whether the application for security is being used oppressively.”^[2]
33. Counsel Rano further justified why the application should be refused in submitting that the Claimant has not only engaged in significant financial undertakings within Solomon Islands but has also established operational infrastructures that demonstrate a long-term commitment to fulfilling all legal and contractual duties. These clearly demonstrate the Claimants financial stability and intent to fully participate and comply with legal processes.
34. It was submitted that in consideration of the substantial local engagements and financial commitment of Rean PCS JV the Court should be satisfied that that significantly reduce any perceived risks by the Defendant.
35. Counsel Rano with Counsel Kilua highlighted the connection to the jurisdiction of the Claimant Rean PCS JV which had been referred to earlier. Rean PCS JV, though a foreign entity has substantial connections to the jurisdiction.
36. That is an important factor to consider. Relying on Success Charters Development Ltd v Metropolis Development Ltd, unreported, High Court, Civil Case No.2 of 2022 (24 November 2022), Counsels submitted that despite the Claimant being a foreign entity, the factor of connection to the jurisdiction favours the Claimant’s position; that the application should be refused.

DETERMINATION AND CONCLUSION

37. I thank both Counsels for their written and oral submissions including the assistance by Ms Kilua when her senior was not able to appear in person due to ill health.
38. I have taken the time to consider the arguments by both parties and I must say I was impressed with the substance of their arguments and the level of their presentations.
39. They set out clearly for my consideration the bolts and nuts of the application for security for costs and whether or not to grant the application.
40. It is set out in the substantive case that the claim for general damages or the sums involved being in the order of but not limited to USD 15,646,656.00 plus other damages which are set out in the claim.
41. I note and appreciate that the Claimant Rean PCS JV has connection to the jurisdiction which Counsel Rano described as quite substantial. That it maybe that it has shown its capacity to meet the costs of bringing these proceedings if ordered.
42. In addition to what Mr Radclyffe submitted that the trial or hearing of the substantive matter would last for up to 5 days and would require several days preparations due to the complexity of the dispute between the parties and the large quantum of the claim, Counsel Radclyffe relying on the sworn statement of Mr Kesaka, pointed out that there are a few interlocutory procedures to be undertaken prior to trial, including attendances at pre-trial hearings, disclosure and inspection of documents. This maybe a lengthy process given the volume of documents on both sides. Counsels will also prepare witness statements.
43. Counsel Rano’s submission in urging the court to consider that the involvement of the Claimant in carrying out business pertaining to the contract and others is, in the words of Counsel Rano, ‘illustrative of a commitment that extends beyond mere foreign presence, reflecting a deep economic and operational linkage to the local context.’
44. The argument by Counsel Rano is mouth-watering and quite persuasive. I understand Counsel’s argument that the imposition of financial security under these circumstances could unduly stifle the Claimant’s pursuit of justice.
45. In balancing the concerns expressed by Counsel Rano together with the concerns of Counsel for the Defendant, it is my firm view in the interests of justice and for the security of litigation, that payment of security for costs is the most appropriate way to address the present situation or the concerns expressed in Counsels’ submissions.
46. However attractive and near convincing the argument of Mr Rano as complimented by Ms Kilua, might have been, the exercise of my discretion turns on the status of the Claimant and the nature of the claim. I cannot pay ‘lip service’ to these considerations.
47. As is alluded to by Counsel Rano, in his reference to Aerolift International Ltd v Mahoe Heli-Lift, it is a matter for the court’s discretion to be exercised having regard to all the circumstances of the case. His Lordship, Palmer J (as he then was), states:
    • “The discretion of the court is to be exercised after the court has had regard to all the circumstances of the case and if it thinks it just to do so.”^[3]
48. After carefully and thoughtfully considered the factors outlined and elaborated on, in the submissions of Mr Rano, as well as the opposing view of Mr Radclyffe, on balance, the scale tilt towards ordering security for costs. I so order as sought in the application by Mr Radclyffe.

ORDERS OF THE COURT.

1. An Order that the Claimant give security for the payment of costs which may be awarded against it in this proceeding in the amount of SBD 500,000.00, or such other sum as the Court thinks fit, by payment of the said sum into Court.
2. An order that the Claimant pay the Defendant’s costs of an incidental to this application.
3. An order that the proceeding be stayed until such time that the Claimant pays the security set out in order 1 into Court; and
4. If the Claimant fails to comply with order 1 or 2, then these proceedings are deemed dismissed, with the Claimant to pay the Defendant’s costs of and incidental to the proceedings on an indemnity basis.
5. Time given for payment of the costs to court is 21 days from today.
6. Costs in the Cause

THE COURT
Hon. Justice Ronald Bei Talasasa Jr
PUISNE JUDGE

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[1] Aerolift International Ltd v Mahoe Heli-Lift (SI) Ltd [1996] SBHC 88; HCSI-CC 387 of 1995 (28 May 1996)

^[2] Ibid
^[3] ibid