IN THE SUPREME COURT OF TONGA
Supreme Court, Nuku'alofa

CV 74/2009

Oceania Printing Technologies Ltd

v

PSS Ltd

Andrew J 
3 June 2009; 5 June 2009 

Practice and procedure – security for costs application - dismissed 

The defendant in a civil action made an application for security for costs against the plaintiff. The application sought for the plaintiff to pay the sum of $15,000 as security for the defendant's costs of the proceedings and that the action between the parties be stayed until the plaintiff gave such security. The defendant claimed that the plaintiff was a counter defendant in other civil actions and if it was ordered to pay costs in that matter, it may be unable to pay the costs of the defendant in the action if ordered to do so. The defendant also claimed that the plaintiff failed to pay costs when ordered to do so in other applications and that the relationship between the parties was indicative of the fact that the plaintiff would not be disposed to pay any costs in this case even if it was ordered to do so. 

Held: 

1. It could not be said that the plaintiff might be unable to pay any costs if awarded against him. He had some assets in the jurisdiction, for example he was a 1/3 owner of the defendant company and had other businesses in Tonga. Further, it appeared on balance that he may at least be partially successful. 

2. An order for security for costs was not justified and the application was dismissed. 

Rules considered: 

 Supreme Court Rules 2007 

Counsel for the plaintiff/respondent : Mr Niu 
Counsel for the defendant/applicant : Mrs Stephenson 

Ruling

This is an application by the defendant for security for costs. The application seeks for the plaintiff to pay the sum of $15,000 as security for the defendant's costs of the proceedings and that the action between the parties be stayed until the plaintiff gives such security. 

The applicant says that one Pradeep Narayan is a director and shareholder on the Plaintiff company together with his wife Reeta Narayan and between them they control the operations of the Plaintiff. It is noted that the Pradeep Narayan was one of 3 directors of the defendant company and still owns one third of the shares in the defendant company. 

The defendant says that the plaintiff is a company incorporated in New Zealand with its registered office in Auckland and that it has no assets of significance in the Kingdom of Tonga. It says that the plaintiff is a counter defendant in other civil actions and if it is ordered to pay costs in that matter; it may be unable to pay the costs of the defendant in the present case if ordered to do so. It also says that the plaintiff has failed to pay costs when ordered to do so in other applications and that the relationship between the parties is indicative of the fact that the plaintiff would not be disposed to pay any costs in this case even if it was ordered to do so. These matters are set out in the affidavit evidence of the two other directors of P. S. S. Limited. 

The plaintiff's claim in these proceedings is essentially for monies owing from the sale of various office equipment as supplied to the defendant by the plaintiff. At the heart of the dispute is an alleged verbal agreement said to have been made between the parties. That is, as asserted by the defendant and denied by the plaintiff.  

The defendant acknowledges that it is ordinarily resident out of the jurisdiction of the Court and that it is true that that is a ground upon which the Court may order security for costs to be paid by the plaintiff but says that the Court must consider all the circumstances before ordering that it would be first to award security for costs. O. 17 Rule 1 provides that where on the application of a defendant to any proceeding it appears to the Court that:- 

(a) the plaintiff is ordinarily resident out of the jurisdiction, or

(b) the plaintiff may be unable to pay the costs of the defendant if ordered to do so, or 

(c) the plaintiff has not disclosed his true address to the Court. 

The Court may, if after having regard to all the circumstances of the case it thinks first to do so, order that all the actions be stayed until the plaintiff gives security for the defendant's costs of the proceeding in such sum and in such manner as the Court may determine. 
The defendant says that it has a strong case against the defendant who has already admitted that $9,021.43 is owing to the plaintiff. Further, the defendant says that: 

- There was no verbal agreement between the parties as alleged. 

- That it has not breached any court order and that the issue of costs being paid by defendant on those costs being taxed. 

- That it will pay any costs awarded against it and that it does have and will have sufficient funds and assets to pay any such costs if ordered to do so. 

It seems to me, looking at all the circumstances of this case, that it could not be said that the Plaintiff might be unable to pay any costs if awarded against him. Further he does have some assets in the jurisdiction. He is for example a 1/3 owner of the defendant company. He has other businesses in Tonga so that he has a substantial presence here. Further, it appears on balance that he may at least be partially successful in these proceedings, if it has been shown as it appears, that at least some amounts are owing to him and if as said that the dispute is as to when and if any debt is owing. 

In all of these circumstances I do not think, on balance, that an order for security for costs is justified. 

I dismiss the application. Costs of this application to be costs in the cause.