Wilex Cocoa & Coconut Products Ltd v Electric Power Corporation [2010] WSSC 167 (17 December 2010)

IN THE SUPREME COURT OF SAMOA
HELD AT MULINUU

BETWEEN:

WILEX COCOA & COCONUT PRODUCTS LTD a duly incorporated company having its registered office in Apia
Plaintiff

AND:

ELECTRIC POWER CORPORATION a statutory corporation duly established under the electric Power Act 1972 and continued under the Electric Power Corporation Act 1980
Defendant

Counsel: P Fepuleai and A Roma for plaintiff
M Ring Q.C, A Hooker and D Clarke for defendant

Reasons: 22 October 2010

Written Submissions: 19 November and 3 December 2010

Judgment: 17 December 2010

JUDGMENT OF SLICER J (No 2)

1. The defendant is entitled to its costs in its action. It seeks an additional order against Edward Wilson, the managing director of the company.
   
2. The court has jurisdiction to order costs against a non-party (Dymocks Franchise System (NSW) Pty Ltd v Todd (No 2) [2004] UK PC 39; Asset Building M. Pritchard Limited v Hamburg Limited [2008] HC NZ).
   
3. The court accepts that the guiding principles concerning 'non-party' costs are as stated in the defendant's written submissions namely;
   

"(i) although costs against non-parties were to be regarded as exceptional, the ultimate question was whether in all the circumstances it was fair to make the order;

(ii) generally speaking the discretion would not be exercised against a pure funder, that is a party which had no personal interest in the litigation, did not stand to benefit from it, was not funding it as a matter of business and did not seek to control its course;

(iii) justice required that a non-party which not merely funded but substantially also controlled or at least stood to benefit from the llitigation should pay the successful party's costs if the litigation failed;

In such cases, the non-party is not so much facilitating access to justice by the party funded as gaining access to justice for the non-party's own purposes;

(iv) generally speaking a non-party which promoted and funded litigation by an insolvent company for its own financial benefit should be liable for costs if the litigation failed."

4. There is one further matter which requires consideration before the costs application can be determined. In the course of these proceedings, various interlocutory procedures were undertaken by the parties to enhance their respective causes or bring the proceedings to an end. They included an application by the plaintiff to restrain the Attorney General from representing the defendant. That application was refused by Justice Vaai in a ruling published on 9 December 2004. The defendant gave notice of change of counsel on 18 November 2004 and its former counsel withdrew as the legal representative on 29 November 2004.
   
5. In turn, the defendant sought to stay the proceedings pending the provision for security of costs relying on the decision of Malifa v Sapolu [1998] WSSC 21.
   
6. An order for the provision of security was made by the learned Chief Justice in his judgment delivered on 23 April 2009 (Wilex Cocoa and Coconut Products Ltd v Electric Power Corporation [2009] WSSC 35). In his Reasons for Judgment, the Chief Justice noted:
   

"Counsel for the defendant has estimated that the additional legal fees will bring the total legal fees to be incurred by the defendant to about $500,000."

7. In concluding that "there is reason to believe that the plaintiff will be unable to pay the costs of the defendant" he observed:
   

"The plaintiff's managing director then deposes that in the event that the plaintiff is unsuccessful in its claim, its external liabilities of $2,390,035 will not be paid by the plaintiff but borne by the shareholders in the form of personal guarantees. This seems to suggest that the plaintiff will not be in a position to pay an award of costs ordered against it if it is unsuccessful in its claim, especially if it is a substantial award. Such an award is likely to be borne by the plaintiff's shareholders in the form of personal guarantees."

8. His Honour exercised his discretion and made an order for security of costs and applied the relevant principles governing the amount of that security as stated in Nikau Holdings Ltd v BNZ (1992) 5 PRNZ 430. Counsel for the defendant had requested security in the sum of $25,000. His Honour fixed the amount of $60,000 as the appropriate sum "bearing in mind what is said in Wollongong City Council v Fmp Construction Pty Ltd [2004] NSWSC 23".
   
9. Following the order, the defendant provided two Banker's Guarantees amounting to $60,000 on 21 August 2009.
   
10. In the course of his Reasons for Judgment, the learned Chief Justice stated at paragraph 56:
    

"The defendant is always entitled to return to the Court seeking additional security depending upon the circumstances: Wollongong City Council v Fmp Construction Pty Ltd [2004] NSWSC 23 at para 51. The Court has an inherent jurisdiction to review and vary an order for security for costs where there has been a material change in circumstances since the making of the order or where the interests of justice so require: Civil Remedies in New Zealand (2003) at para 19.3.12, p.739."

11. No such application was made. There is no evidence that the defendant gave notice to Wilson that it would seek a costs order against him personally if the action failed. Had it done so it would have brought to his attention that he was personally at risk.
    
12. The court accepts that Wilson controlled the company. But the defendant had not pursued the option left open on the security application. Nor did it give advance notice of a 'personal claim'.
    
13. The ordinary rule that costs ought to follow the event as between the parties will be applied.
    
14. The court has been provided with details of professional costs, the fees incurred for opinions and the giving evidence and disbursements. The plaintiff submits that some of the experts used by the defendant were not called as witnesses and the defendant's claim discounted accordingly.
15. The court does not accept the contention. It was necessary for the defendant to examine and test an inflated claim for damages. The plaintiff did not provide a reliable assessment, made by its own witness, until late in trial, and after cross-examination of Wilson.
    
16. The court accepts that the components of total costs incurred amounting to $2,036,836 is reasonable given the:
    
    • (1) nature of the case;
    • (2) length of the hearing;
    • (3) extensive interlocutory proceedings;
    • (4) complexities raised by the plaintiff's pleadings; and
    • (5) necessity to adduce scientific and opinion evidence of highest quality.
      
17. It has assessed that claim in the light of its own knowledge of the court file, current costs of litigation and its own understanding of the length of time required for ultimate determination of the action.
    
18. The memorandum of costs has been reduced to take into account party/party amounts. The reduction is fair and equitable.
    
19. The plaintiff is to pay the defendant's costs assessed in the sum of $1,283,396.
    

(JUSTICE SLICER)