Pune v Drake [2015] WSSC 33 (4 February 2015)

SUPREME COURT OF SAMOA
Pune v Drake, Attorney General and Attorney General on behalf of MNRE [2015] WSSC 33

Case name:	Pune v Drake, Attorney General and Attorney General on behalf of MNRE
Citation:	[2015] WSSC 33
Decision date:	4 February 2015
Parties:	Kirita Maria-Kolotita Pune for plaintiff Ruby Drake for first defendant Attorney General and also on behalf of the MNRE for second and third defendant
Hearing date(s):	23 January 2015
File number(s):
Jurisdiction:	Civil
Place of delivery:	Mulinuu
Judge(s):	Justice Vaai
On appeal from:
Order:	The applications by the three defendants for security for costs are granted. Security for costs is fixed at $10,000 for each defendant. The plaintiff is ordered to pay $30,000 to the Registrar of the Court as security for costs. Upon receipt of the $30,000 the Registrar shall deposit the said amount into a term deposit with a local bank until further order of the court. The plaintiff’s claim is stayed until security is given.
Representation:	O Woodroffe and I Tanielu for plaintiff K Kruse for first defendant D Clarke for second defendant D Kerslake for third defendant
Catchwords:
Words and phrases:
Legislation cited:	Land Titles Registration Act 2008 Supreme Court (Civil Procedure Rules) 1980
Cases cited:	Wilex Cocoa and Coconut Products Ltd v Electric Power Corporation Nikau Holdings Ltd v Bank of New Zealand Neely v Attorney General Trinity Christian Centre of Sana Ana Inc v Graceland Broadcasting Network Wollongong City Council v Fpm Constructions Pty Ltd
Summary of decision:

IN THE SUPREME COURT OF SAMOA
HELD AT MULINUU

BETWEEN:

KIRITA MARIA-KOLOTITA PUNE Retired Person of Papakura, Auckland
Plaintiff

AND:

RUBY DRAKE Barrister and Solicitor of Apia, Samoa
First Defendant

AND:

THE ATTORNEY GENERAL Barrister and Solicitor of Apia, Samoa
Second Defendant

AND:

THE ATTORNEY GENERAL ON BEHALF OF THE MINISTRY OF NATURAL RESOURCES AND ENVIRONMENT
Third Defendant

Counsel: O Woodroffe and I Tanielu for Plaintiff
K Kruse for First Defendant
D Clarke for Second Defendant
D Kerslake for Third Defendant
Hearing: 23 January 2015
Judgment: 4 February 2015

JUDGMENT OF THE COURT

Introduction

4. In these interlocutory proceedings each of the three defendants seeks an order directing that the plaintiff give security for costs. The applications are grounded on rule 30 of the Supreme Court (Civil Procedure Rules) 1980 which empowers the court to require a plaintiff not a resident in Samoa to give security for costs in any civil proceedings.
5. Security for costs is sought on the basis that the defendants have reason to believe that the plaintiff who resides at Auckland, New Zealand will be unable to meet an order for costs in favour of the defendants in the event that the plaintiff is unsuccessful in her claim.
6. The plaintiff opposes the three applications.

Background

7. The plaintiff, an elderly retired lady, is the daughter of the late Vaeluaga Leilua who owned a piece of land at Tuloto which he conveyed to one of his sons, Molio’o, in 1995 by way of gift. Molio’o mortgaged the Tuloto land to the Samoa Breweries. Vaeluaga Leilua also owned land at Lotopa.
8. Vaeluaga Leilua died in 1997. The plaintiff in 2002 instructed the first defendant to commence proceedings to challenge the transfer of Tuloto and Lotopa land to Molio’o. A statement of claim was filed and a caveat was lodged with the third defendant as the Land Registrar against the title of the lands to protect the interests of the plaintiff.
9. In February 2003 the plaintiff’s claim was heard in the Supreme Court and the decision was then reserved. Molio’o died subsequent to the court hearing.
10. In December 2013 the Samoa Breweries as mortgagee exercised its power of sale and sold the Tuloto land to a third party. To facilitate the registration of the transfer of land to the third party the solicitor for the mortgagee wrote to the third defendant notifying the third defendants of the impending documents for registration and for the caveator to be notified to apply to the court to verify their caveat within the notice period.
11. On the 23^rd December 2013 the third defendant wrote to the first defendant as solicitor for the caveator (plaintiff) that an application had been made for the removal of the caveat pursuant to section 55 of the Land Titles Registration Act 2008. It also advised the first defendant that the caveat will be withdrawn after the lapse of 21 days.
12. According to the third defendant the 21 days expired on the 31^st January 2014. Before the expiry date, the first defendant by letter dated 24^th January to the Registrar of the Supreme Court enclosed a letter from the daughter of the plaintiff requesting the caveat to remain on the register.
    • A copy of the letter was sent to the third defendant.
13. The caveat lapsed on the 31^st January 2014.
14. On the 4^th February 2014 the Supreme Court granted the application to extend the caveat. The order was lodged with the third defendant on the 7^th February 2014, seven days after the caveat had lapsed.
15. Attempts by the first defendant and by the Registrar of the Supreme Court to persuade the third defendant to extend the caveat pursuant to the court order were unsuccessful.
16. Following the removal of the caveat, the transfer of the Tuloto land to the third party was then registered. These proceedings have been commenced following the transfer of the land to the third party. It is alleged by the plaintiff that the defendants who owed various duties to the plaintiff, failed in those duties, resulting in the transfer of the land to the third party, thus depriving the plaintiff of her legal entitlement to the land.
17. After registration of the land to the third party, the plaintiff instructed counsel, present counsel, to commence these proceedings. On the 15^th July 2014 the Supreme Court issued an Interim Judgment in the 2003 proceedings. The two sentence judgment reads:
    1. I have decided that the deeds of conveyance by way of gift from Vaeluaga Leilua to the defendant were fraudulent.
    2. However, I will not at this stage grant the declaration and order sought by the plaintiff until I hear counsel on the position of any third party mortgage.

• PFM Sapolu
• Chief Justice

18. Against the first defendant it is alleged that as solicitor for the plaintiff, the first defendant was negligent and breached the duty of care owed by a solicitor to the plaintiff by failing to ensure that the plaintiff’s interests in the land were protected by taking all necessary action to prohibit the transfer of ownership of the land pending the outcome of the 2003 court hearing.
19. As against the second defendant it is alleged that the second defendant as the legal advisor to the third defendant breached his fiduciary duty owed to the plaintiff when he advised the third defendant to remove the caveat. The breach is alleged to arise in a conflict of interest situation as the wife of the second defendant is a shareholder and director of the third party which purchased the land.
20. The claim against the third defendant is grounded on the allegation of breach of statutory duty and contempt of Court by removing the caveat contrary to the provisions of the Land Titles Registration Act 2008, and contrary to the order of the Supreme Court and against the advise of the Registrar of the Supreme Court.
21. The plaintiff acknowledge that she has no assets in Samoa, but she potentially has legal interest in the Tuloto land and land at Lotopa which are the subject of court action and if the Court rules in her favour then the plaintiff will have legal interest in land in Samoa.
22. If the plaintiff succeeds in her court actions concerning the two pieces of land in Samoa, her interests in the lands would be a beneficial one together with other beneficiaries. There is no indication when the court’s written judgment will be delivered and whether the declarations sought will be granted.

Assets in New Zealand

23. There is affidavit evidence that the plaintiff is the sole final beneficiary of a Family Trust. She is also a discretionary beneficiary of the same Trust which owns property at Papakura, Auckland. Market value of the Papakura property as at the 12^th August 2014 was $320,000. There is a mortgage on the property with the current balance at (NZ)$121,000 leaving an equity of NZ$200,000.
24. It was also deposed in the affidavit that the plaintiff as the sole beneficiary of the estate of her late husband who passed away in 2010 is entitled to her late husband’s shareholding in a company called Smartpay Holdings Limited. The number of the shares have not yet been verified.
25. Other than the property at Papakura Auckland, the only other asset of the Trust appears to be the $10 deposited by the plaintiff as settlor at the establishment of the Trust. The Trust does not appear to generate any income.

Ability to pay costs

26. It is quite obvious the plaintiff currently has no assets in Samoa to meet an adverse order for costs. Although it is contended she has potential interest in the two parcel of lands in Samoa, those beneficial interests are potential only.
27. As for the assets in New Zealand, apart from the shares in Smart Pay Holdings, the assets are owned by the Trust with the vesting date set for the 7^th February 2091, some 76 years away. Although the plaintiff (a retired old lady) is one of the trustees of the Trust there is affidavit evidence by the first defendant that the plaintiff has been clinically diagnosed with dementia since 2010. It follows that if the defendants were to attempt to enforce judgment for costs in New Zealand they would encounter considerable difficulties and expenses.
28. On balance I am satisfied on the materials before the Court that it can reasonably be inferred that the plaintiff will be unable to meet an adverse award for costs.

Exercise of discretion

29. I turn now to consider whether an order for security for costs would be just in all the circumstances.
30. The exercise of the discretion requires the balancing of two competing interests of justice. On the one hand the interest of justice requires that the defendants should be protected against the risk of a cost award that is of no value if the plaintiff is unsuccessful in her claim. On the other hand the interest of justice requires that the plaintiff should not be denied access to the courts by reason of an order for security for costs. See Wilex Cocoa and Coconut Products Ltd v Electric Power Corporation [2009] WSSC 35; Nikau Holdings Ltd v Bank of New Zealand [1992] 5 PRNZ 430.
31. The rationale for making an order for security for costs against a plaintiff residing outside the jurisdiction of the court is that a successful defendant ought not be put to the time, trouble and expense of enforcing a judgment for costs outside the jurisdiction. See Neely v Attorney General [1984] 2 NZLR 636; Trinity Christian Centre of Sana Ana Inc v Graceland Broadcasting Network [2008] WSSC 20. Other than her entitlement as beneficiary to the unknown amount of shares owned by her late husband, the plaintiff has no other assets in New Zealand.
32. The allegations levelled against the three defendants are denied by all the defendants. The second defendant in particular denies that he advised the third defendant to remove the caveat. He also denies owing a fiduciary duty to the plaintiff. The third defendant contended that the caveat had lapsed before the court order was made to extend it and as the caveat had lapsed there was no caveat to be extended. As the third defendant had complied with its statutory obligations the third defendant contends that the plaintiff has no valid claim against it.
    • As for the first defendant it is submitted that the allegations by the plaintiff that the first defendant should have sought court injunctions against the third defendant not to remove the caveat is without legal basis due to the provisions of the Government Proceedings Act 1974. The allegation that the mortgagee should have been enjoined from exercising its power of sale is also contended by the first defendant as lacking merit.
33. The plaintiff’s claim in my respectful view cannot be demonstrated as lacking merit. The caveat lodged against the title by the first defendant on behalf of the plaintiff in 2002 was to protect the interests of the plaintiff by prohibiting any further dealings with the land pending the outcome of the court hearing held in 2003. That caveat has been removed and the land transferred to a third party contrary to the wishes and instructions of the plaintiff.
34. The success or otherwise of the claim and of the defences would depend on the assessments of the facts as well as the interpretation of the relevant statute and the law. As far as this application is concerned the merits of the parties are in equipoise. The review of the pleadings in the statements of claim and of the defences in the affidavits and of the written and oral submissions demonstrates that the bona fides of the parties are evenly balanced.
35. Counsel for the plaintiff submitted that one of the factors which the court should take into account in favour of the plaintiff to refuse granting the order for security of costs is the delay by the Supreme Court to deliver its decision on the plaintiff’s claim adjudicated in 2003 which has caused substantial prejudice to the plaintiff, including prejudice to these current proceedings and the bringing of this motion for security for costs.
    • The delay in the delivery of the decision by the court is unfortunate not only to the plaintiff but also the other parties to the 2003 hearing including the mortgagee. But the delay is not only beyond the control of the defendants, it has nothing to do with any of the defendants.
36. Applications for security for costs have been promptly filed in response to claims seeking two million talā ($2,000,000) damages against each defendant. Ultimately a balancing exercise is required. There is no burden one way or the other.
37. Factors which may be relevant in the exercise of the court’s decision are to be found in Nikau Holdings Ltd v Bank of New Zealand; Wilex Cocoa and Coconut Products v Electric Power Corporation; Wollongong City Council v Fpm Constructions Pty Ltd (2004) NSWSC 523.
    • The relevant factors are not to be treated as exhaustive; they can be of assistance to the court; it is not a matter of going through a checklist of factors as a factor which is accorded significance in a particular case may not be relevant to a different case.
38. Although the Interim Judgment of the Supreme Court dated the 15^th July 2014 referred to in paragraph 14 has deemed the deeds of conveyances for both the Tuloto and Lotopa lands to be fraudulent there is no indication when the full judgment will be delivered. Until such judgment is delivered any contemplated appeal cannot be considered. And in any event the declarations sought have not been granted until counsel has been heard regarding the position of third party mortgagee.
    • In my respectful view the Interim Judgment itself poses some constitutional problems particularly the fact that the mortgagees were not cited as parties at the 2003 hearing and their position and rights according to the Interim Judgment will be adjudicated upon in their absence after submissions by counsel representing the interests of the other parties. There is potential for further delays.
39. On balance I consider that an order for security of costs would be just in all the circumstances.
40. I turn to consider the quantum of security to be ordered. The first defendant seeks security in the sum of $100,000. Counsel told the court that counsel from overseas will be instructed to defend the claim against the first defendant.
    • The second defendant seeks $33,500 and the third defendant $30,000.
41. The amounts sought by the defendants are based on an estimated amount of party and party costs and solicitor client costs which are not the approaches to be adopted in determining the quantum of the security. See Wilex Cocoa and Coconut Products v Electric Power Corporation; and Nikau Holdings ltd v Bank of New Zealand.
    • The amount to be fixed should be that which is appropriate in the interests of justice and having regard to all the circumstances of the case.
    • The amount of the order should not be illusory or oppressive, not too little and not too much.
42. An estimated length of the trial is another factor which the court should take into consideration. From the pleadings and responses it seems the bulk of the evidence would be documentary which will significantly reduce trial time.
43. I do not consider the engagement of overseas counsel as a significant factor in determining the quantum for the security.
44. Standing back and having regard to all the circumstances of the case I consider that an order for security in the sum of $10,000 for each defendant is appropriate.

Result and Orders

45. The applications by the three defendants for security for costs are granted. Security for costs is fixed at $10,000 for each defendant. The plaintiff is ordered to pay $30,000 to the Registrar of the Court as security for costs.
46. Upon receipt of the $30,000 the Registrar shall deposit the said amount into a term deposit with a local bank until further order of the court.
47. The plaintiff’s claim is stayed until security is given.
    

JUSTICE VAAI