Ha'amo Growers Company Ltd v Squash Export Company Ltd [2002] TOSC 18; C 0634 2001 (8 May 2002)

IN THE SUPREME COURT OF TONGA
CIVIL JURISDICTION
NUKU’ALOFA REGISTRY

NO. C634/2001

BETWEEN:

1. HA’AMO GROWERS COMPANY LTD.
2. FRIENDLY ISLAND MARKETING COMPANY LTD.
3. INDEX LTD.
4. LAU LAVA LTD.
5. TOMIFA PAEA EXPORT LTD.
Plaintiffs

AND:

1. SQUASH EXPORT COMPANY LTD.
2. TOULIKI TRADING ENTERPRISES LTD.
3. PROCORP LTD.
4. NISHI TRADING LTD.
5. COMMERCIAL FARMERS CO-OPERATIVE LTD.
6. MINSTER OF MARINE & PORTS.
7. KINGDOM OF TONGA
Defendants

BEFORE THE HON MR JUSTICE FORD

Counsel: Mr Niu for plaintiff and Miss Simiki for the sixth and seventh defendants.

Dates of submissions: 10, 26 and 29 April 2002.
Date of Ruling: 8 May 2002.

RULING

The five plaintiffs are squash exporting companies. On 18 October 2001 they issued the present proceedings against the defendants. On the same day they applied for and were granted an ex parte interlocutory injunction which was complied with, effectively bringing the substantive proceedings to an end. The plaintiffs now seek an order for costs to be awarded on a solicitor-client basis against the defendants jointly and severally in the sum of $5000. The sixth and seventh defendants have opposed the application.

The statement of claim alleges that the plaintiffs and the first five defendants are squash pumpkin exporting companies. They each have their respective groups of registered farmers. The companies provide their growers with seeds, fertilisers and chemicals on credit and in some cases they provide cash advances to their farmers for growing and harvesting the squash. In return, the farmers sell their squash crops to the exporting company which in turn sells the product on the Japanese market. The companies organise their farmers so that the crops are planted and harvested in a sequence which allows for the orderly shipments of the harvest over a period of some eight weeks in October and November each year.

For the 2001 season the five plaintiff companies had worked together and organised their operations in such a way that they knew early in the piece that their combined exports would require four shipments. The ships had been arranged to arrive and depart from Tonga on specific dates and an agreed tonnage had been allocated for each shipment. Freight costs were payable on the tonnage contracted to be shipped regardless of whether the actual quantity loaded reached the contract tonnage figure or not. Any shortfall is described in the trade as "dead freight".

The plaintiffs were expecting their second ship for the season, the MV "Dalnegorsk" to arrive in the port of Nuku'alofa on Friday 19 October 2001 and loading was due to commence at 10 am that day. The contract tonnage for that particular shipment was 2300 tonnes of squash.

At the same time, there was another vessel in port, the MV "Summer Phoenix" which was contracted to the first five defendants. It was due to ship 3400 tonnes of squash to Japan but the first five defendants had only enough squash available at that time to load between 1500 and 2000 tonnes.

It is alleged that the first five defendants then made a complaint (it is not clear to whom) that the plaintiffs had breached an agreement made between them to co-operate in shipping squash crops from the Kingdom for the 2001 season. They claimed that, pursuant to the agreement, the plaintiffs should be required to load their squash into the MV "Summer Phoenix" so as to make up the contract tonnage figure of 3400 tonnes. The plaintiffs acknowledged that they did have a verbal agreement with the first five defendants to co-operate in the shipment of squash during the 2001 season but contend that the agreement was to apply only where one group was able to make up the others' dead weight without incurring a loss to its own group of farmers or jeopardising its future shipments.

It is further alleged that as a result of the complaint referred to, the sixth defendant, the Minister of Marine and Port, made a statement in the Legislative Assembly on 16 October (the statement of claim says "17 October" but the date was subsequently stated in an affidavit to be "16 October") saying that the plaintiffs' vessel, the MV "Dalnegorsk" would not be permitted to dock until 3400 tonnes of squash had been loaded into the MV "Summer Phoenix". The statement of claim then goes on to allege that in response to that statement in the Assembly, the plaintiffs received faxes from the shipping agent for the first five defendants dated 17 October requiring them to deliver their squash to the wharf the following day to be loaded onto the first five defendants' vessel, the MV "Summer Phoenix".

It is not clear from the pleadings why the plaintiffs felt constrained to obey a direction from the shipping agent for the first five defendants. Presumably, it was feared that the authorities would enforce the statement the Minister is alleged to have made in the Assembly, but that is not specifically pleaded. In all events, the plaintiffs claim in the pleadings that the contract freight charge from Tonga to Japan was US $163.50 per tonne and, on that basis, if they were required to load their squash into the defendants' vessel, it would mean a loss to them, in dead weight on their own vessel, of up to US$310,650.00. Hence, their application for an injunction restraining the defendants from stopping or delaying the docking of their vessel, the MV "Dalnegorsk" or either of the plaintiffs' two other scheduled shipments.

That is the background to the proceedings as set out in the statement of claim. The first five defendants filed no defence and have taken no steps in the proceeding. The sixth and seventh defendants filed an application to strike out the three paragraphs in the statement of claim which made reference to them on the grounds that the proceedings disclosed no reasonable cause of action. The strike out application was set down for hearing on 10 April 2002. At the outset of the hearing, in response to questions from the Bench, counsel for the plaintiffs confirmed that the proceedings were no longer extant. Counsel acknowledged that, as the plaintiffs had obtained their injunction and their shipments had been allowed to proceed unhindered, the proceedings were effectively at an end. Counsel confirmed that the only significance of the strike out application was in relation to the plaintiffs' claim for costs.

The court then declined to proceed with the hearing of the strike out application on the basis that it was not prepared to embark on, what would in effect be, an academic exercise. Instead, the plaintiffs were invited to file a formal application for costs with submissions in support; the defendant would have an opportunity to respond and a Ruling would then be given.

The plaintiffs duly filed their application. It seeks costs against all the defendants but it was served only on the fifth and sixth defendants and I am prepared to deal with it on that basis only. The other parties have not had the opportunity of being heard.

Counsel for the plaintiffs correctly submitted that costs normally follow success and unless the defendants are able to show that there are special circumstances in this case which should disentitle the plaintiffs, costs should be awarded in their favour. He went on to submit:

"10. . . . .

(a) . . . .

(b) The facts show no lawful justification whatsoever for what the defendants did or attempted to do. They attempted, improperly and unlawfully, to force the plaintiffs to load their squash onto the vessel of the first five defendants in order that no dead freight would be charged against those defendants. The plaintiffs, who were already contracted to load a specified, tonnage on its own vessel, would thereby be unable to load that specified tonnage. They would therefore be liable for dead freight instead.

(c) The order which required the plaintiff to so load their squash onto the first five defendants' vessel, was made by the sixth defendant . . . .

(d) There was therefore only two alternatives left to the plaintiffs:

(i) seek an appointment to see the sixth defendant and try and change his order, or

(ii) use the very little time available, to apply for interim orders from this Court."

Plaintiffs' counsel submitted that it would have been a waste of time attempting to persuade the sixth defendant to change his mind because, from the minutes of the proceedings in the Legislative Assembly, it was "very clear" that the sixth defendant had already made up his mind on the subject.

For the sixth and seventh defendants, counsel submitted that there are special circumstances why costs should not be awarded to the plaintiffs in this case, the principal reason being that the matter was determined at the very outset on an interlocutory basis without having to be litigated to trial. It was also submitted that the plaintiffs had not been able to establish any causal link between the sixth and seventh defendants and the problems giving rise to the proceedings. Counsel noted, in this regard, that although there is a reference in the pleadings to discussions in Parliament, there was no specific official government instruction given to the plaintiffs in relation to the matter. The point was also noted that the sixth defendant, Hon Cecil Cocker, had filed an affidavit in which he denied making any statements along the lines alleged in Parliament on 17 October 2001. It was in response to that affidavit that the plaintiffs filed an affidavit acknowledging that the reference to the 17 October date in the statement of claim was not correct and the date should have been 16 October. The deponent also clarified at that stage that the Minister of Marine and Port referred to in the statement of claim, who allegedly made the statement complained of in the House on 16 October, was the Acting Minister of Marine and Port, the Hon William Clive Edwards.

As is noted in Halsbury, 4th edition, vol 37, para 714, "in general, costs are in the discretion of the court, which has full power to determine by whom and to what extent they are to be paid . . ." The detailed procedural rules in England relating to costs have not been enacted in Tonga and so the reported English authorities on the subject need to be approached with a certain amount of caution. I must say, however, that I have found some helpful guidance in the English cases in considering the approach the court should take in exercising its discretion on the question of costs in cases which have been brought to an end at an early stage. In the present case, the principal claim was for injunctive relief and when the injunction was granted and complied with the proceedings effectively came to an end.

The English text Civil Procedure, 2001 edition, para 44.3.5.1 states:

"Where the subject matter of proceedings becomes academic during the course of the proceedings, leaving costs as the only issue, it is within the court's discretion whether or not it should consider the substantive issue in deciding any order as to costs. Unusual circumstances would have to exist before the court would consider an academic issue . . . .

In deciding the appropriate costs order to be made when judicial review proceedings are concluded without a full hearing, the starting point is the court's wide discretion . . . . to depart from the old rule that the unsuccessful party usually paid the costs of the successful party."

The text then refers to the decision of Scott-Baker J. in Boxall v Waltham Forest LBC December 21, 2000 (unreported) and noted that the court in that case found that the authorities had established the following principles:

“(i) the court had power to make a costs order when the substantive proceedings had been resolved without a trial but the parties had not agreed about costs;

(ii) the overriding objective was to do justice between the parties without incurring unnecessary court time and additional cost;

(iii) the extent to which the court would look into unresolved substantive issues depended on the circumstances of the case, not least the amount of costs at stake and the conduct of the parties;

(iv) in the absence of good reason to make any other order, the fallback was to make no order as to costs; and

(v) the court should take care to ensure that it did not discourage parties from settling . . . proceedings."

As costs are an entirely discretionary matter, it would be wrong to try and prescribe any rigid guidelines that must be applied but it is difficult to argue against the soundness of the five principles expounded in the Boxall case.

In the present case, I consider that there is significant substance in the points made by counsel for the sixth and seventh defendants in opposition to the plaintiffs' claim. The case was effectively determined on day one with the granting of the ex parte injunction. Significantly, it appears that no preliminary attempt had been made to resolve the matter without recourse to litigation. The plaintiffs did not, for example, follow the practice often, if not usually, adopted before filing an injunction application, of writing a letter before action. Such a letter would have given the defendants notice that an injunction would be applied for unless an assurance was given by a stipulated time that the apprehended act would not occur.

The plaintiffs say that such a course of action would have been a waste of time because the Minister had already made up his mind on the issue. That may well be the case, but it is no real answer, however, to the soundness of following the letter before action practice; particularly when it later comes to the question of costs. The real threat of an injunction application often brings about the desired result and, in any event, the failure of a defendant to respond to a letter before action warning certainly gives the plaintiff a much sounder basis for seeking costs.

Another factor is that, although he is not named in the statement of claim, the Minister who made the statement complained of in the Assembly is apparently Hon William Clive Edwards who is alleged to have been the Acting Minister of Marine and Port on 16 October 2001. Whether that allegation is correct is not something readily apparent from the pleadings. The minutes of the Legislative Assembly proceedings for the day in question produced by the plaintiff as an exhibit to an affidavit do not refer to the Hon W. C. Edwards in the capacity of Minister of Marine and Port. Instead, he is referred to as the Acting Prime Minister and Minister of Police. It is also not clear from the pleadings, whether the actual Minister of Marine and Port, Hon Cecil Cocker, was present on 16 October. He certainly was present the following day, however, but there is no indication in the pleadings as to whether he had reached any conclusions either way on the issues raised by the plaintiffs in this case.

In other words, I am not satisfied that an appropriately worded letter before action to the sixth defendant would not have brought about a result which would have alleviated the plaintiffs' concerns and avoided the necessity of issuing court proceedings.

In R v Royal Borough of Kensington and Chelsea ex p Ghrebregiosis (1994) 27 HLR 602, which is another decision referred to in the Boxall case, Brooke J made an order for costs in favour of a claimant at a very early stage in the proceedings but, as it was expressed in the Boxall decision:

"He said it was only in a very clear case that such an order should be made. But it was such a case. The letter before action set out the facts and law with admirable clarity. If the respondents had given proper attention to the merits of the case when they received the letter they would have taken the necessary steps to make the proceedings unnecessary."

In the present case there was no letter before action and the defendants were never given the opportunity of assessing the claimed merits of the plaintiffs' case before the injunction proceedings were filed.

Although plaintiffs' counsel refers in his submissions to the order made by the Minister of Marine and Port which required the plaintiffs to load the squash onto the first five defendants' vessel, it is not clear from the pleadings exactly what the reference refers to.
(emphasis added)

It was said in the submissions that the "order" was given "on the eve or late on the 17/10/01" but that is not the allegation set out in the statement of claim. The statement of claim refers only to statements made by the sixth defendant in the Legislative Assembly on (as per the correction) 16 October. The statements in the House can hardly be described as an "order" to the plaintiffs. In any event, I have not heard argument on the issue as to whether, by virtue of the provisions of clause 73 of the Constitution, which states, ". . . .no member of the House shall be liable for anything he may have said or published in the Legislative Assembly", any liability can attach to statements made in the Legislative Assembly.

In the result, I have not been persuaded, either as to the merits of the plaintiffs' case against the sixth and seventh defendants, or that this is an appropriate case for a cost award against those parties. In the Boxall case, Scott- Baker J. said he entirely agreed with Sedley J., who in an earlier decision rejecting a claim for costs, had opined that "the attempt to recover costs had simply incurred further expense on both sides while the practice on costs should do nothing to discourage sensible settlements and pointless expeditions to the court that incurred further costs."

I share those sentiments. It is unfortunate that additional legal costs would have inevitably been incurred in pursuing the present application which is now declined. I make no award as to costs; they are to lie where they fall.

NUKU'ALOFA: 8 MAY 2002

JUDGE