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Supreme Court of Samoa |
IN THE SUPREME COURT OF SAMOA
HELD AT APIA
BETWEEN
ALIIMALEMANU IAO METAI
of 2 Craig Road, Milford, Auckland.
Plaintiff
AND
RUBY DRAKE AND MURRAY DRAKE,
Partners of Drake & Co., Barristers and Solicitors,
Level Two, Chandra House, Convent Street, Apia, Samoa.
Defendants
Counsel: O. Woodroffe for plaintiff
R. Drake for defendant
Hearing: 20 October 2000
Judgment: 2 November 2000
JUDGMENT OF SAPOLU CJ
Introduction
The plaintiff is a Samoan citizen who has been resident in Auckland, New Zealand, for several years. The defendants are the partners in a law firm of barristers and solicitors in Apia. On 2 March 1996, whilst in Samoa, the plaintiff injured his right eye whilst cutting grass at his home. He attended to the Motootua National Hospital (as that hospital was then called) where he was given treatment by an eye-doctor. He now claims in his statement of claim that the treatment he received has caused him damage.
The plaintiff also says in his amended statement of claim that on 11 April 1996 he instructed the defendant Ruby Drake to take legal action against the Motootua National Hospital for negligent treatment of his injured eye. An oral agreement was then reached between the plaintiff and Ruby Drake that the defendants would file a negligence claim against the hospital on behalf of the plaintiff. The plaintiff also agreed to provide medical evidence from New Zealand to further substantiate his claim against the hospital.
Such a claim against the Motootua National Hospital has not been filed. It was said the claim is now time barred under the Limitation Act 1975. The aforesaid hospital is part of the Department of Health. As such it is part of the government. Counsel for the plaintiff pointed out that under section 21(1)(b) of the Act, the limitation period for bringing an action against the government is one year. So any action for negligence against the hospital must now be out of time and the plaintiff is without his remedy against the hospital. As a consequence, the plaintiff has filed a claim against the defendants seeking damages in negligence, breach of contract and breach of fiduciary duty for failing to file the plaintiff’s claim against the hospital within time.
The defendants have not filed a statement of defence to the plaintiff’s claim but they have filed an application for security for costs together with supporting affidavits. In one of those affidavits Murray Drake, the second named defendant, says that the plaintiff was advised to provide full details including reports from the doctor who attended him in Samoa and the doctor who would see him in New Zealand to enable the defendants to assess whether or not he might have a claim. The plaintiff in one of his affidavits objects to Murray Drake’s affidavit saying that he was not present during consultations between the plaintiff and Ruby Drake. Be that as it may, the plaintiff says in his amended statement of claim that he agreed to provide medical evidence from New Zealand to further substantiate his claim. What is said in the statement of claim is to the same effect. Apparently no medical evidence from the doctors who saw the plaintiff in New Zealand was provided. I will touch upon some more alleged facts later in this judgment.
Application for security for costs
The defendant's application for security for costs is made under rule 30 of the Supreme Court (Civil Procedure) Rules 1980. That rule provides:
“(1) In any civil proceedings and at any stage thereof, the Supreme Court may “require a plaintiff or applicant resident out of the jurisdiction of the Supreme Court “to deposit any sum of money as security for costs and may stay the proceedings “pending the making of that deposit.
(2) When any sum has been so deposited as security for costs, it shall be so “disposed of in such manner as the Court directs.”
Clearly the threshold requirement that the plaintiff must be resident outside the jurisdiction of the Court is satisfied in this case. I would venture to suggest that “resident” in the context of rule 30 means “ordinarily resident”. So the Court has jurisdiction to entertain the defendants application as the plaintiff is now ordinarily resident in New Zealand outside of this Court’s jurisdiction. In this case there was no dispute as to the threshold requirement being satisfied. It was the question of how the discretion should be exercised in respect of the application for security and the question of quantum that became the focus of the submissions by both counsel. I will deal only with the question of discretion in this judgment. Before I do so, I wish to turn first to what was raised by counsel for the plaintiff that the application for security is unconstitutional as it violates Article 9 of the Constitution.
Article 9 of Constitution
Article 9 of the Constitution provides the right to a fair trial. More specifically Article 9(1) provides:
“9. Right to a fair trial – (1) In the determination of his civil rights and obligations or of any charge against him for any offence, every person is entitled to a fair and public hearing within a reasonable time by an independent and impartial tribunal established under the law. Judgment shall be pronounced in public, but the public and representatives of news service may be excluded from all or part of the trial in the interests of morals, public order or national security, where the interests of juveniles or the protection of the private life of the parties so require, or to the extent strictly necessary in the opinion of the Court in special circumstances where publicity would prejudice the interests of justice.”
Counsel for the plaintiff submitted that the application for security is unconstitutional because it violates the right to a fair trial provided in Article 9(1). She did not argue in detail as to how an application for security violates Article 9(1) except to say that a litigant has a right of access to the Courts but the effect of a security application is to prevent a plaintiff from having access to the Courts. Counsel for the defendants, on the other hand, submitted briefly on the constitutionality of a security application.
With respect, I am unable to determine whether an application for security for costs is in violation of Article 9(1) on the basis of what was said by counsel. I have to rely on authority for the answer. In Dicey and Morris: The Conflict of Laws (1993) 12th ed, vol 1, p204, it is stated:
“The English practice, and that based upon it in other common law countries, has been the subject of complaint on human rights or constitutional law grounds. The European Commission of Human Rights has rejected as manifestly ill-founded an application in which it was argued that the dismissal by the Court of Appeal of an appeal on the failure of the appellants, who were resident abroad, to lodge security for costs amounted to a denial of access to Court, contrary to Article 6(1) of the European Convention on Human Rights. In Canada, provisions as to security for costs by non-resident plaintiffs have been attacked as contravening the principle of equality before the law in section 15(1) of the Canadian Charter of Rights and Freedoms. Although successful in one case, the balance of authority is clearly against this argument. The Irish High Court has held that a requirement that a plaintiff give security for costs did not fetter any of his rights under the Irish “Constitution.”
I must point out that Article 6(1) of the European Convention on Human Rights which provides for the right to a fair trial, is very similar in terms to Article 9(1) of our Constitution which deals with the same subject matter. I have no reason to doubt the correctness of what is said in Dicey and Morris: The Conflict of Laws (supra). On the basis of that authority I hold that rule 30 of the Supreme Court (Civil Procedure) Rules 1980 and the present application for security for costs do not violate Article 9(1) of the Constitution. That conclusion appears to be consistent with the international jurisprudence on the subject.
Discretion
In the exercise of the Court’s discretion whether to grant or refuse an application for security for costs, the real question is whether in all the circumstances it is just to make an order for security or not. Counsel referred to a number of principles cited in New Zealand authorities which are applicable to the exercise of the Court’s discretion whether to make an order for security under rule 60 of the New Zealand High Court Rules. I must sound a word of caution when reading New Zealand authorities on this subject. Rule 60 of the New Zealand High Court Rules is differently worded from rule 30 of our Supreme Court (Civil Procedure) Rules. The New Zealand rule also applies not only to non-resident but also to resident plaintiffs. It is also to be noted that the New Zealand law on an application for security for costs is somewhat different from the law in Australia and England. For the English position see, for instance, the judgment of Sir Nicholas Browne-Wilkinson V-C in Porzelack KG v Porzelack (UK) Ltd [1987] 1 All ER 1074.
For useful statements on the principles applied by the New Zealand Courts in the exercise of their discretion, see Nikau Holdings Ltd v Bank of New Zealand [1992] 5 PRNZ 430; Phipps v Healthcare Otago Ltd (unreported judgment of Master Venning delivered on 25 March 1999 in the High Court, Dunedin, CP 39/95); and Aquaculture Corp v McFarlane Laboratories (1984) Ltd [1987] 1 PRNZ 467.
In this case, both counsel referred to a number of factors the Court should take into account in the exercise of its discretion whether to order security. But the factors they actually concentrated upon are: the ability of the plaintiff to meet a judgment for costs if the plaintiff is unsuccessful; the merits of the plaintiff’s claim and the merits of any possible defence by the defendants, and whether the plaintiff’s impecuniously was caused by the acts of the defendants. I have already dealt with the constitutionality of rule 30 and an application for security. I will now deal in turn with each of the relevant to the exercise of discretion as raised by counsel.
Plaintiff’s ability to pay a judgment for costs if he is unsuccessful
It was agreed between counsel that the plaintiff who is resident in New Zealand is now unemployed being a retired public servant from the Samoan Public Service. He has no money to pay for any judgment for costs if he is unsuccessful in his claim. The plaintiff’s wife has offered to support her husband’s claim and to meet any judgment for costs against the plaintiff. She says in her affidavit, she has a full time and part time job in New Zealand as well as savings of NZ$40,000 in the New Zealand Post Office. The plaintiff and his wife also have four children.
Given that both the plaintiff and the defendants are represented by New Zealand counsel, that this case if it goes to trial will take about three days, that there are about four or five New Zealand doctors who are likely to be called to testify, and that any judgment for costs against the plaintiff if he is unsuccessful will have to be enforced in New Zealand, I am far from confident that the plaintiff’s wife will be in a position to meet any judgment for costs even if her offer was accepted.
Her earnings from her employment will undoubtedly be spent on providing for her family and herself. She has four children and an unemployed husband. I believe she would also have to meet the costs for airfares and possible hotel accommodation for her husband’s New Zealand lawyers when his claim proceeds trial. Counsel for the plaintiff also advised the Court that the four or five doctors who treated the plaintiff in New Zealand will all be called by the plaintiff to testify when the trial proceeds. This must involve a very high amount in costs for air fares, hotel accommodation and any medical fees to be paid to the doctors. All these costs, I suspect, will have to be paid by the plaintiff’s wife given that the plaintiff is now unemployed. On top of all those costs, the wife may also have to pay return airfares for the plaintiff to come to Samoa for the trial.
There is also the question of costs and expenses involved in the enforcement of a judgment for costs in New Zealand if the plaintiff is unsuccessful. Judgments of the superior Courts of Samoa can be enforced in New Zealand under arrangements for the reciprocal enforcement of judgments between the two countries. I asked counsel for the plaintiff and the solicitor acting as local agent for the plaintiff’s New Zealand counsel on 30 October for information as to the likely amount of costs involved in enforcing a Samoan judgment for costs in New Zealand. Counsel for the plaintiff advised in writing the next day that those costs will be NZ$10,000. Even though that amount appears to be on the high side, I am of the view that the costs involved in enforcing a Samoan judgment for costs in New Zealand would be far from being minimal or insignificant.
The plaintiff’s wife is resident in New Zealand. So any possible judgment for costs against her will have to be enforced in New Zealand at extra costs and expenses to the defendants which would be far from minimal. This a factor to be weighed in the balance.
There is another factor. There is no guarantee that the savings by the plaintiff’s wife in the New Zealand Post Office will not be utilised until the Court has delivered a judgment on the plaintiff’s action which must be sometime next year, several months away. I am not suggesting that the wife will not honour her offer to support her husband in the event of a judgment for costs against him. What I am saying is that the defendants will not be feeling comfortable and secure if the Court is to accept the wife’s offer without making an order for security. After all the plaintiff will have to meet at least travel costs, hotel accommodation for four or five New Zealand doctors and any medical fees when the case proceeds to trial. In addition are the return airfares for New Zealand counsel and the plaintiff himself. Given the impecuniosity of the plaintiff, one would expect he would have to rely on his wife to meet those pre-judgment costs and expenses. These are matters which would also have to be weighed.
Counsel for both the plaintiff and the defendants in reply to a request by the Court to both counsel for information as to the enforceability of a judgment for costs in New Zealand, subsequently filed written submissions and authorities which show that the New Zealand Courts have jurisdiction to make an award of costs against a third party or non-party in appropriate circumstances and may accept an undertaking for security for costs from a third party. Whether or not the Court will accept such an undertaking is a matter of discretion. Certainly the undertaking must be safe and adequate. I do not consider the offer of support from the plaintiff’s wife to be safe or adequate for the purpose of the defendants application for security.
Merits
The plaintiff’s action is for damages on the grounds of negligence, breach of contract, and breach of fiduciary duty by the defendants. As already explained the action arose out of the alleged failure of the defendants as solicitors for the plaintiff to take legal action in negligence against the Motootua National Hospital and the Department of Health, within the limitation period of one year. It is further alleged that as a result of the defendants' failure, the plaintiff’s action against the hospital for damage to his injured right eye due to negligent treatment has been time barred. It was therefore said that as a result of the defendant’s failure to act, the plaintiff has lost the opportunity to bring his action against the hospital. And the defendants' failure to act constitutes negligence on their part.
The defendants have not yet filed a statement of defence to the plaintiff’s claim but have applied for security for costs. In the supporting affidavits of Murray Drake, it is stated that the plaintiff was asked to send the defendants any medical reports on the treatments he would have in New Zealand to enable the defendants to assess whether the plaintiff might have a case against the hospital. No such medical reports have been sent to the defendants. New Zealand counsel who has been engaged by the defendants to act on their behalf since August this year, has also written to New Zealand counsel for the plaintiff for medical reports on the treatments on the defendant by New Zealand doctors, but no such report was forthcoming. Counsel for the plaintiff advised the Court that at one time she asked the defendants to hand over the plaintiff’s file in exchange for the medical reports but nothing has happened. She also advised the Court that the medical reports do support the plaintiff’s claim.
It is trite law that damages is an essential element of the tort of negligence. Negligence is not actionable without damage. What the defendants seem to be saying is that the defendants did not breach any duty of care to the plaintiff because he was asked to send any medical evidence from doctors in New Zealand to enable them to assess whether there might have been a claim against the hospital but the plaintiff did not send such evidence. Secondly, the defendants seem to be saying that in the absence of any medical evidence from the plaintiff, the proper inference to be drawn is that there is no evidence to show that the treatment given to the plaintiff at the Motootua National Hospital caused him damage. In essence, what the defendants are saying is that there is no evidence so far to show any causal connection between the damage the plaintiff says he has suffered and the treatment given to him at the hospital. So even if the defendants had filed legal action against the hospital, it was bound to fail on causation. The plaintiff has therefore not lost any opportunity to bring a successful claim against the hospital. Consequently, the plaintiff has no cause of action against the defendants because there is no evidence of any damages caused to the plaintiff as a result of the alleged negligence against the defendants. The damage the plaintiff has suffered to his eye was really caused by himself whilst cutting grass at his home here in Samoa.
I think the same may be said in relation to the claim for breach of the defendants' duty in contract. Traditionally, damages is not an essential element for a cause of action in contract. The Courts have been known to award only nominal damages in an action for breach of contract where a breach has been established but there is no proof of actual loss. However, the law has evolved from that position. In Day v Mead [1987] NZCA 74; [1987] 2 NZLR 443, which was concerned with an action by a client against a solicitor for negligence and breach of fiduciary duty, Cooke P (as then was) said at p470:
“[Subject] to special contractual terms, the same duty of care arises in both tort and contract and has the same incidents. On this view, the duty is not to cause damage by failing to take reasonable care, and a cause of action for negligence does not arise in either tort or contract unless and until damage accrues. Mere negligence should not be actionable unless it causes harm. For example, if a title search is negligently omitted but in fact the title was perfectly good and unencumbered, there should be neither a cause of action in either contract or tort. In Midland Bank Trust Co. Ltd v Hett Stubbs and Kemp [1979] Ch 384, 435, Oliver J thought that an action in contract or tort for nominal damages, for professional negligence which had in fact through remedial action resulted in no damage should be struck out.”
Cooke P did not favour the approach by Oliver J in the Midland Bank case for the purpose of the logical development of the modern law of negligence.
In the next case of Mouat v Clark Boyce [1992] 2 NZLR 559 which was also concerned with an action by a client against a solicitor on the grounds of professional negligence in tort and contract, and breach of fiduciary duty in equity, Cooke P said at p.558:
“As mentioned in Day v Mead there is also an argument that a duty of care not only arises from the same sources [contract and tort] but has the same incidents. On this view it is a duty not to cause damage by negligence. True the cause of action in contract arises on breach, but the breach is not complete until damage has been caused. So in the present case the plaintiff would have had no cause of action of any kind if the solicitor had failed in all respects in which he has been found at fault but of her own volition the plaintiff had finally repented and decided not to sign the mortgage. Again I would be disposed on the score of directness to prefer that approach to the alternative that an action for nominal damages for a breach of a contractual duty of care should be struck out as an abuse of process (see the Midland Bank case at p 435)”.
In this case the plaintiff is suing for both alleged negligent breaches of the duty of care in tort and in contract. In Day v Mead and Mouat v Clark Boyce, Cooke P stated that damages is an essential element in both causes of action. I respectfully adopt the approach by Cooke P that damages should be treated as an element of a cause of action in a negligent breach of a contractual duty of care situation and that a negligent breach of contract is not complete until damages has been caused.
So it is most relevant for the plaintiff to show that he has actually suffered loss due to the alleged negligent breach by the defendants of their contractual duty of care. This means he has to adduce material to demonstrate there is a causal connection between the failure of the defendants to act and the loss he claims to have suffered. The plaintiff pleads in his statement of claim that as a result of the breach by the defendants of their contractual duty of care he has suffered damage. But such a pleading does not explain how his damage was caused by the defendants breach of their duty in contract. More particulars are required to demonstrate the causal connection between the alleged breach of contract and the damage suffered: see for instance the judgments of McKay and Thomas JJ in Sew Hoy & Sons Ltd v Coopers & Lybrand [1996] 1 NZLR 392 where a similar pleading was ordered to be further particularised in an action by a client against an auditor for breach of a duty of care in contract and in tort.
I cannot help thinking, that the medical reports on the treatments the plaintiff received in New Zealand are crucial in order to establish a nexus in the chain of events between the alleged negligent breach by the defendants of their duties in contract and in tort and the damage claimed to have been suffered. The absence of those medical reports goes to undermine the strength of the plaintiff's case and gives the appearance of strength to the defendants defence. This is also a factor which the Court has to weigh.
From the way the claim for damages for breach of fiduciary duty is framed, damages would also be an essential element. It is alleged that the relationship between the plaintiff and the defendants was one of trust and confidence. And the failure of the defendants to file the plaintiff’s claim in negligence against the hospital constituted a breach of their fiduciary duty to the plaintiff. As a result of the defendants' failure, the plaintiff suffered damage. What I have already stated about demonstrating a causal connection between the breach of duty in contract and in tort also applies to the nexus to be shown between the alleged breach of fiduciary duty and damage.
Cause of plaintiff’s impecuniosity
Counsel for the plaintiff also submitted that it is the defendants' negligence that has caused the plaintiff’s impecuniosity. Counsel for the defendants responded that if the plaintiff is now impecunious it is not because of the defendants.
As the material placed before the Court shows, the plaintiff was already a retired public servant when he injured his right eye. The defendants did not injure his right eye. At the time of his injury, the plaintiff was a law student at Auckland University, he was not working. So if the plaintiff now has little or no money, the defendants could not be the cause of his impecuniosity. If what the plaintiff means is that he would have had a successful claim for damages in negligence against the hospital if the defendants had taken legal action against the hospital, then on the material placed before the Court, I have doubts that would have been so, as that material does not demonstrate, or sufficiently demonstrate, that the alleged breaches of duty on the part of the defendants resulted in damage to the plaintiff.
Exercise of discretion
The plaintiff has given a pre-estimate of its costs at NZ$40,000 and sought security in the sum of NZ$20,000 or its Samoan equivalent. They have also asked for a stay of proceedings until any security ordered has been deposited with the Registrar in terms of Rule 30.
The Court has wide discretion to do what it considers just in all the circumstances. I have to decide whether in all the circumstances it is just in the exercise of my discretion to make an order for security for costs in favour of the defendants.
Clearly the plaintiff has no money to pay any security. The offer by his wife to support her husband’s case financially is not sound or satisfactory. It is not clear at this stage whether the plaintiff’s case has any merit due to the non-disclosure of the reports on the medical treatments he received in New Zealand. Counsel for the plaintiff has her reasons for refusing to disclose those reports to counsel for the defendants.
I am rather hesitant about making an order for security against a plaintiff who has no money or is given inadequate financial support, but has a meritorious claim, because the effect of an order for security will be to stifle a meritorious claim by reason of the plaintiff’s impecuniousity. However, I do not know whether the plaintiff has a meritorious claim or not until I have seen the reports on the medical treatments the plaintiff revived in New Zealand. For those reasons, I have come to these conclusions.
Conclusions
The plaintiff is ordered to provide to the Court within 10 days copies of the reports on the medical treatments the plaintiff received in New Zealand. The Court will then decide whether or not to make an order for security for costs in favour of the defendants.
If the plaintiff is not able to provide those reports within 10 days, the Court will still proceed to decide whether or not an order for security should be made.
This judgment is necessarily an interim judgment.
I will defer any decision on the question of costs in these proceedings until my final judgment.
CHIEF JUSTICE
Solicitors:
O. Woodroffe for plaintiff
Drake & Co. for defendants
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