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University of the South Pacific v Mudie [2011] FJHC 690; HBC178.2002 (31 October 2011)

IN THE HIGH COURT OF FIJI ISLANDS
AT SUVA
CIVIL JURISDICTION

Civil Action No: HBC 178 OF 2002

BETWEEN:

THE UNIVERSITY OF THE SOUTH PACIFIC & HUGH JOHN DICKSON
Plaintiffs

AND:

W. ANDREW MUDIE & OFFSHORE PENSIONS & INVESTMENTS LIMITED
Defendants

Counsel: Ms. P. Keniloria for the Plaintiffs.
Mr. G. O' Driscoll for the Defendants.

Date of Judgment: 31 October, 2011

JUDGMENT

1. The plaintiff filed Notice of Motion and grounds of Appeal seeking following relief:
   
   1. The order for security for costs in the sum of $ 2500.00 payable in 21 days made by the Deputy Registrar, Mr. Emosi Koroi, on 07.08.2002 be set aside wholly or varied;
      
   2. The application for security for costs be dismissed with costs;
      
   100. The defendants do pay the costs of this appeal.
        

Background to the case

2. The plaintiffs filed writ of summons together with their statement of claim on 25.04.2002. The defendant filed summons for security for costs on 19.07.2002. When the case was called before the Deputy Registrar on 24.07.2002, the plaintiff was ordered to pay a sum of $ 2500.00 into court within 21 days as security for costs.
   
3. Having aggrieved by the said order of the Deputy Registrar, the plaintiff filed Notice of Motion with grounds of appeal.
   
4. The plaintiff's grounds of appeal are as follows:
   
   1. That the learned deputy registrar erred in law in exercising jurisdiction to deal with the application for security for costs after having made a prior order to assign the said application to a judge for a hearing.
      
   2. That the learned deputy registrar erred in law in failing to give any reasons for his decision.
      
   3. That the learned deputy registrar erred in fact and law in failing to give any or any sufficient weight to the affidavit evidence before him.
      
   4. That the learned deputy registrar erred in fact and law in not applying the correct principles in the exercise of his discretion to order security for costs in the circumstances when the co-plaintiff was resident within jurisdiction of the court and was prepared to give an undertaking on security for costs for the second plaintiff.
      
   5. The learned deputy registrar erred in law in hearing the application for security for costs on a mention date and/ or in the absence of the plaintiffs resulting in a miscarriage of justice.
      
5. The matter was argued before Justice Jitoko on 04.02.2002, and the Ruling was reserved. However, no Ruling was delivered.
   
6. Subsequently, this matter was allocated to me and when the matter was called before me, parties agreed to have the judgment based on submissions made before Justice Jitoko.
   
7. In the meantime, the defendant filed a Notice of Motion for an order that the plaintiff's action against the defendant be struck out for want of prosecution.
   
8. I will first deal with the defendant's striking out application. Although the defendant has filed a Notice of Motion to strike out the plaintiff's claim, no affidavit was filed by the defendant in support of his motion. The defendant's counsel submitted orally that no action had been taken by the plaintiff to prosecute the action since October 2002 and therefore the action should be struck out.
   
9. In reply to that, an affidavit was filed by a legal executive of the plaintiff's solicitors. In that affidavit, it is deposed that parties made oral submissions before the then justice Jitoko on 4.10.2002, in relation to the plaintiff's Notice of Motion and since then the matter has been pending a ruling from the court.
   
10. It is further deposed that court listed the matter on 23.08.2010, and the plaintiff filed written submissions on 21.10.20110, and also filed affidavit verifying list of documents on 12.11.2010.
    

Relevant legal principles

11. Order 25 rule 9 of the High court Rules reads as follows:
    

i. 9.-(1) if no step has been taken in any cause or matter for six months then any party on application or the Court of its own motion may list the cause or matter for the parties to show cause why it should not be struck out for want of prosecution or as an abuse of process of the court.

ii. (2) Upon hearing the application the Court may either dismiss the cause or matter on such terms as may be just or deal with the application as if it were a summons for directions.

12. There are two distinct circumstances in which an action may be dismissed for want of prosecution, namely:
    
    1. When a party has been guilty of intentional and contumelious default, and;
       
    2. Where there has been inordinate and inexcusable delay in the prosecution of the action.
       
13. Although there is a delay on the part of the plaintiff in prosecuting the action, court must not strike out the same unless it is apparent that the delay is inordinate and it would cause serious prejudice to the defendant.
    
14. The word 'inordinate' is defined in the Supreme Court Practice (1991) as follows:
    

'Inordinate' means materially longer than the time usually regarded by the profession and courts as an acceptable period.'

15. In Department of Transport –v- Chris Smaller (Transport) Ltd [1989] 1 All.E.R.897, it was held that;
    

'Inexcusable delay by the plaintiff in prosecuting an action after the limitation period has expired is not a ground for striking out the action for want of prosecution unless the defendant has suffered prejudice from the delay or a fair trial of the issue is impossible.'

16. In an application of this nature, the defendant must show actual prejudice and it should be reasonably foreseeable. It is not sufficient to simply show likelihood of prejudice. In the present case, the defendants have not stated or submitted as to how they would be prejudiced if the matter is not struck out.
    
17. The factors to be considered in deciding the likelihood of causing prejudice to the defendant in an application of this nature are stated in National Insurance Guarantee Corp. Ltd v. Robert Bradford & Co. Ltd (1970) 114 S.J.436, C.A as follows:
    

'The effect of the lapse of time on the memory of witnesses or, in the course of such time of their death or disappearance are the most usual factors. Their importance depends upon the circumstances, the issues and the other evidence that can be given. Thus the lapse of time may be very prejudicial if the circumstances of an accident or oral contracts or representations are in issue, but is of much less importance in a heavy, well documented commercial action.'

18. In Allen v. Sir Alfred McAlpine& sons [1968] 1 All.E.R.543 at 547 Lord Denning commented on the issue of delay and its effects on the action as follows;
    

'When the delay is prolonged an inexcusable, and is such as to do grave injustice to one side or the other, or to both, the court may in its discretion dismiss the action straight away, leaving the plaintiff to his remedy against his own solicitor who has brought him to this plight.' (Emphasis added)

19. It was further submitted that the defendant would be seriously prejudiced due to the plaintiff's delay in prosecuting the action. However, in this case the defendant has failed to explain the nature of the prejudice. The defendant has also failed to produce compelling evidence of substantial prejudice to justify striking out of the plaintiffs' action.
    
20. More importantly, the Order 25 Rule 9 (1) and (2) are not mandatory in, nature. Therefore, I am of the view that Court shall, before the exercise of its discretion under Order 25 Rule 9, consider the legal questions of importance raised, strength of the plaintiff's case and the likelihood of causing prejudice to both parties.
    
21. In the present case, the length of delay is almost 8 years, which warrants more explanation by the plaintiff. However, in considering the circumstances, which prevented the plaintiff from taking steps in the instant case, it is my considered view that a different approach should be employed by the Court when it deals with the issue of delay in deciding the present application.
    
22. Although the plaintiff's Notice of Motion was argued before the High Court, there was no written ruling by the judge. Hence, it is quite difficult, if not impossible for the plaintiff to take any further step without knowing exactly what the ruling of the judge.
    
23. Therefore, the facts of this case show that the circumstances beyond their control had prevented the plaintiffs from taking necessary steps in the case in time.
    
24. It seems abundantly plain therefore that the plaintiff could not take steps due to an administrative laxity of the court, which, in my view, is sufficient to persuade Court to hold with the plaintiff.
    
25. It must be further emphasized that a litigant should not be penalised to suffer due to an administrative laxity of the Court. Therefore, in the present case, though it appears that the plaintiff's delay is inordinate, still the plaintiff can be excused in view of the circumstances under which the plaintiff was unable to prosecute the action.
    

The defendants' application for security for cost

26. Now I shall turn to the issue of security for costs. The application for security for costs is made under order 23 Rule 1 of the High Court Rules 1988 which reads:
    

(1) Where, on the application of a defendant to an action or other proceedings in the High Court, it appears to the court-

1. That the plaintiff is ordinarily resident out of the jurisdiction, or
   
2. That the plaintiff (not being a plaintiff who is suing in a representative capacity) is a nominal plaintiff who is suing for the benefit of some other person and that there is reason to believe that he will be unable to pay the costs of the defendant if ordered to do so, or
   

100. Subject to paragraph 2, that the plaintiff's address is not stated in the writ or other originating process or is incorrectly stated therein, or
     

4. That the plaintiff has changed his address during the course of the proceedings with a view to evading the consequences of the litigation,
   
5. then if having to all the circumstances of the case, the court thinks it just to do so, it may order the plaintiff to give such security for the defendant's costs of the action or other proceedings as it thinks just.
   

(2). The court shall not require a plaintiff to give security by reason only of paragraph (1) (c) if he satisfies the court that the failure to state his address or the mis-statement thereof was made innocently and without intention to deceive.

(3) The references in the forgoing paragraphs to a plaintiff and a defendant shall be construed as references to the person (howsoever described on the record) who is in the position of plaintiff or defendant, as the case may be, in the proceeding in question, including a proceeding on a counterclaim.

27. The above section clearly shows that the court has the discretion on whether or not to order security for cost. In other words there is no hard and fast rule that security for cost should be ordered when the plaintiff is ordinarily resident outside the jurisdiction. In exercising its discretion, court has to consider the plaintiff's prospect of success, admission by the defendant and open offers and payments into court.
    
28. The following passage by Sir Nicolas Brown Wilkinson VC as reported in Porzelack K.G v. Porzeluck (UK) Ltd [1987] 1 W.L.R 420 at 422, 423 is of much importance to the present case.
    

'The purpose of ordering security for costs against a plaintiff ordinarily resident outside the jurisdiction is to ensure that a successful defendant will have a fund available within the jurisdiction of this court against which it can enforce the judgment for costs. It is not, in the ordinary case, in any sense designed to provide a defendant with security for costs against a plaintiff who lacks funds. The risk of defending a case brought by a penurious is as applicable to plaintiffs coming from outside the jurisdiction as it is to plaintiff's resident within the jurisdiction. There is only one exception to that, so far as I know, namely, n the case of limited companies, where there are provisions under the Companies Act for security for costs. Where the plaintiff resident outside the jurisdiction is a foreign limited company, different factors may apply: see DSQ Property Co. Ltd. v. Lotus Cars Ltd.[1987] 1W.L.R. 127. Under the R.S.C., Order 23, rule 1 (1) (a), it seems to me that I have entirely general discretion either to award or refuse security, having regard to all the circumstance of the case. However, it is clear on the authorities that, if other matters are equal, it is normally just to exercise that discretion by ordering security against a non-resident plaintiff. The question is what, in all the circumstance of the case, is the just answer.'

29. Hence it is not desirable to award security for cost solely on the ground of plaintiff being a resident in another jurisdiction. Court must consider other facts incidental to the proceedings.
    
30. In considering an application of this nature, the following passage by Lord Denning as reported in Sir Lidsy Parkinson & Co Ltd. v.Farripian Ltd [1973] 2 A.E.R. 273 at 285-286 is of great assistance.
    

.....'If there is a reason to believe that the company cannot pay the costs, then security may be ordered, but not must be ordered. The court has a discretion which it will exercise. The court has a discretion which it will exercise considering all the circumstances of the particular case. So I turn to consider the circumstances. Counsel for Triplan helpfully suggests some of the matters which the court might take into account, such as whether the company's claim is bona fide and not a sham and whether the company has a reasonably good prospect of success. Again it will consider whether there is an admission by the defendants on the pleadings or elsewhere that money is due. If there was a payment into court of a substantial sum of money (not merely a payment into court to get rid of a nuisance claim), that too would count. The court might also consider whether the application for security was being used oppressively-so as to trey and stifle a genuine claim. It would also consider whether the company' want of means has been brought about by any conduct by the defendants, such as delay in payment or delay in doing their part of the work.

31. It is not in dispute that the 1st named plaintiff is a body established by a Charter under the laws of Fiji and also, it is not disputed that it has substantial assets in Fiji, so that in the event of any order for costs is made against the plaintiffs, it has the capacity to meet such an award.
    
32. The first named defendant resides in England. The defendants' reason for seeking cost as it appears from the affidavit in support of the defendant is that the defendant would not be able to recover the cost should the action of the plaintiffs fail.
    
33. The Deputy Registrar without giving any reasons made an order for security for costs. As I stated earlier, the purpose of ordering security for costs against a plaintiff ordinarily resident outside the jurisdiction is to ensure that a successful defendant will have a fund available within the jurisdiction of this court against which it can enforce the judgment for costs.
    
34. In the present case there are two plaintiffs, and the 2nd named plaintiff against whom the security for costs order was made by the Deputy Registrar can therefore be considered as a co-plaintiff.
    
35. The 1st named plaintiff being a university based in Fiji has substantial assets and hence, is in a better financial position to pay costs, if ordered by court. The defendant has also not proved anything contrary to that. The Deputy Registrar should have paid his attention to the above facts before making an order for security for costs.
    
36. In view of the above, the mere fact that the 2nd named plaintiff is ordinarily a citizen outside the jurisdiction should not have been taken as a ground by the Deputy Registrar to order the plaintiff to pay security for costs.
    
37. The ordinary rule of practice is that no order for security for costs will be ordered if there is co-plaintiff resident within the jurisdiction, unless it is proved that the co-plaintiff is not a genuine co-plaintiff but is merely joined to defeat an application for security for costs.
    
38. In the present case, when the statement of claim is considered, it appears that both the 1st named plaintiff and 2nd named plaintiff have the same cause of action against the defendants and therefore, it is my view that the 1st named plaintiff is not a nominal plaintiff so that any order for costs can be awarded against the 1st named plaintiff should the defendant succeeded.
    
39. What the Deputy Registrar has failed to consider was the undertaking given by the 1st named plaintiff to pay costs and the nature of the cause of action it has against the defendants. Also, the Deputy Registrar has failed to consider the fact that the 1st named plaintiff was a resident within the jurisdiction of the court.
    
40. In 'White Book' (1991) page 428 para: 23/1-3/4 it is stated:
    

'Where the undertaking of a party or his solicitor to pay the whole or a specified proportion of the costs or a specified sum in lieu of security for costs is accepted by the other party, there is no need for any application to the court. Where such an undertaking is given an accepted in lieu of security for costs, it lasts as long as there is no final judgment from which an appeal lies. It will be limited to the amount of the security so given.'

41. In any event, since the Deputy Registrar has not given any reason for his order for security for costs, there is no way to justify his order.
    
42. Upon consideration of the above facts, I conclude that the circumstances of this case do not warrant security for costs to be ordered.
    
43. Final orders
    
1. Defendants' Notice of Motion to strike out the plaintiff's action is dismissed.
   
2. The order for security for costs made by the Deputy Registrar on 07.08.2002 is set aside.
   
3. Costs shall be in the cause.
   

Pradeep Hettiarachchi
JUDGE

At Suva
31 October, 2011