MMI v IPL (Costs) [2024] WSSC 5 (8 March 2024)

IN THE SUPREME COURT OF SAMOA
MMI v IPL (Costs) [2024] WSSC 5 (08 March 2024)

Case name:	MMI v IPL (Costs)
Citation:	[2024] WSSC 5
Decision date:	08 March 2024
Parties:	MMI (Applicant) v IPL (Respondent)
Hearing date(s):
File number(s):	MISC 84/23
Jurisdiction:	CIVIL
Place of delivery:	Supreme Court of Samoa, Mulinuu
Judge(s):	Justice Niavā Mata Tuatagaloa
On appeal from:
Order:	Accordingly, I find appropriate an award of 2/3rds of the actual costs reasonably incurred by the Respondent to the amount of US$81,814.02.
Representation:	T Patea for the Applicant K Koria & A Yi Tan for the Respondent
Catchwords:	Costs – indemnity costs.
Words and phrases:
Legislation cited:	International Companies Act 1988, ss. 158; 159; 159(2)(a);
Cases cited:	Crownland International Co Ltd v Pioneer Freight Futures Co Ltd (BVI) [2009] WSSC 102 (28 October 2009); Letele v Filia [2011] WSCA 2 (13 May 2011); OF Nelson Properties v Sia’aga [2010] WSSC 54 (11 June 2010); O N & Sons Construction v Pacific Forum Line (unreported, 30 November 2015); Polynesian Limited v Samoa Observer [1999] WSSC 35; see also Colgate-Palmolive Co v Cussons Pty Ltd (1993) 118 ALR 240.
Summary of decision:

IN THE SUPREME COURT OF SAMOA
HELD AT MULINUU

IN THE MATTER:

of the International Companies Act 1988, Sections 158 and 159 (2)(a).

BETWEEN:

MMI

Applicant

AND:

IPL

Respondent

Counsel: T Patea for the Applicant

K Koria & A Yi Tan for the Respondent
Ruling: 8 March 2024

RULING AS TO COSTS

Proceedings

1. The Court on 19^th December 2023 dismissed the application to set aside statutory demand following a hearing on 30^th November 2023. The Court did not make an order as to costs.
2. The Respondent in their notice of opposition to the application to set aside statutory demand sought (amongst others) an order for costs.
3. The Respondent on 9^th February 2024 filed a memorandum of costs seeking for indemnity costs. The memorandum of costs was served upon counsel for the Applicant (MMI) and the matter was called in court on 16^th February 2024. Counsel for the Applicant appeared and the matter was adjourned to 28^th February 2024 for counsel for the Applicant to file a response.
4. To date counsel for the Applicant has not filed a response.
5. The Court now turns to consider the application for costs by the Respondent. First, I provide the background leading to the application for costs.

Background

6. The following is what took place:
   • On 24^th November 2022 letter of demand by Respondent lawyer to Applicant
   • On 27^th March 2023 Statutory Demand by Respondent
   • On 11^th April 2023 Response by letter to Statutory Demand by the Applicant
   • On 28^th April 2023 the Application to Set Aside Statutory Demand was filed
   • On 19^th June 2023 the matter was first mentioned and was further adjourned to 17^th July 2023 for Mr Koria to file and serve their response.
   • On 17^th July Ms Chang appeared on behalf of Mr Koria with instructions for a further adjournment to 31^st July for Mr Koria to file and serve a Petition to Wind Up.
   • On 31^st July Mr Koria sought a further adjournment to 21^st August to file a response.
   • On 21^st August a response was filed by way of Notice of Opposition to the Application to Set Aside Statutory Demand. The matter was set for hearing in the week commencing 27^th November 2023
   • On 30^th November 2023 the Application to Set Aside was heard. The decision was reserved.
   • On 19^th December 2023 the decision was issued.
   • On 9^th February 2024 Respondent filed memorandum of costs.
   • On 16^th February 2024 memorandum of costs by Respondent called in Court.

Costs sought by the Defendants

7. The Respondent seeks indemnity costs to the amount of US$122,721.03 on the grounds^[1] that: (I summarised)
   • (a) Costs should follow the event. The Application to Set Aside has been dismissed in its entirety;
   • (b) There are special features in these proceedings;
   • (c) The Applicant has acted unreasonably in pursuing the Motion.
   • (d) The Applicant has raised baseless and ‘concerning’ allegations which effectively implicates its “participation in an illegal activity”.
8. The Respondent has provided itemised accounts setting out in some detail the work undertaken in these proceedings.

The Law

9. The approach to costs is well settled. The Court ought not to depart from the ordinary rule that costs be awarded on a party-to-party basis unless there are special circumstances.^[2] That is, costs tend to follow the result, and the successful party is entitled to a reasonable contribution towards costs incurred in the course of litigation. This Court is not bound by the scale of costs under the Supreme Court (Fees and Costs) Rules 1971.
10. The Court can from, time to time award indemnity costs.^[3] That is, make an award that will, in effect, indemnify the successful party for the full costs of the litigation. Such an order is rare but may follow where the circumstances of a case require some special or unusual feature; where there has been flagrant misconduct by a party or where a party has acted unreasonably - by pursuing a wholly unmeritorious and hopeless claim or defence or pursuing a matter for an ulterior motive.^[4]
11. The quantum to be awarded by the Court in any costs claimed is discretionary.

Discussion

12. The Respondent seeks indemnity costs on the basis that the Applicant has acted unreasonably in pursuing their application to set aside. They say that, the Applicant should never have filed the application as there was no winding up petition before the Court. In essence, the Respondent appears to argue that the motion was misconceived, therefore unmeritorious and had no chance of succeeding from the outset.
13. I agree, that the application to set aside is misconceived on the law upon which it is brought. This is a fundamental flaw. However, the Respondent themselves did not in their response refer to this ‘misconceived’ flaw in their notice of opposition or in their submissions. In fact, the Respondent asked the Court to order (as one of the orders sought) compulsory winding up of the Applicant company. This also is, based on a fallacy of sections 158 and 159 of the International Companies Act 1988 (“ICA”). Section 159 of the ICA is only invoked when a petition to wind up has been filed under section 158. Therefore, the Court cannot order compulsory winding up without a petition for winding up being filed by the Respondent. The Court noted that Mr Koria sought a second adjournment to file a petition for winding up (see Background). This was not done, instead, a response by way of notice of opposition was filed after three adjournments.
14. Whilst the Applicant may have acted unreasonably in pursuing their application, I am mindful that the Respondent has also opposed the application on a ‘misconceived’ view of the law by also seeking an order from the Court for compulsory winding up of the Applicant Company. Furthermore, the Respondent in its correspondence with the Applicant could have brought this to the attention of the Applicant, to withdraw their application to set aside; failing that, they (Respondent) will pursue indemnity costs should they be successful in opposing the application.
15. The special, baseless and concerning features raised by the Respondent are not relevant to the assessment of costs here.

Result

16. For the above reasons, I do not consider indemnity costs to be appropriate.
17. As already mentioned the Respondent provided itemised accounts setting out in some detail the work undertaken in these proceedings. The Court of Appeal in Letele v Filia^[5] on reasonable costs said, “The bare assertion of what has been charged does not establish reasonableness.” The Court has an absolute and unfettered jurisdiction to award costs and that discretion is to be exercised judicially. Costs will be assessed on the usual basis of a contribution towards a litigant’s reasonable costs.
18. I take the approach of Aitken J in O N & Sons Construction v Pacific Forum Line^[6] as follows:
    • In determining the amount, the Court will first determine what the actual and reasonable costs of the successful party should be, and from that amount, what a reasonable contribution would be. Such contribution is usually fixed at 2/3rds of the reasonable cost identified.
19. Accordingly, I find appropriate an award of 2/3rds of the actual costs reasonably incurred by the Respondent to the amount of US$81,814.02.

JUSTICE NIAVĀ MATA TUATAGALOA

---

^[1] First Defendant’s submission at paragrapgh [40]
^[2] O N & Sons Construction v Pacific Forum Line (unreported, 30 November 2015) per Aitken J; Crownland International Co Ltd v Pioneer Freight Futures Co Ltd (BVI) [2009] WSSC 102 (28 October 2009).
^[3] OF Nelson Properties v Sia’aga [2010] WSSC 54 (11 June 2010).
^[4] Polynesian Limited v Samoa Observer [1999] WSSC 35; see also Colgate-Palmolive Co v Cussons Pty Ltd (1993) 118 ALR 240.
^[5] Letele v Filia [2011] WSCA 2 (13 May 2011).
^[6] O N & Sons Construction v Pacific Forum Line (unreported, 30 November 2015).