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Raju v Amalgamated Telecom Holdings [2011] FJHC 753; HBC268.2010 (18 November 2011)

IN THE HIGH COURT OF FIJI
AT SUVA
CIVIL JURISDICTION

Civil Action No. HBC 268 of 2010

BETWEEN:

NARAYAN RAJU f/n SOMA RAJU of San Francisco, California, USA.
PLAINTIFF

AND:

AMALGAMATED TELECOM HOLDINGS having its registered office at 2nd Floor, Harbour Front, Rodwell Road, Suva.
DEFENDANT/ APPLICANT

BEFORE: Master Deepthi Amaratunga

COUNSELS: No appearance for the Plaintiff
Mr. Prasad V. for the Defendant

Date of Hearing: 4th November, 2011
Date of Ruling: 18thNovember, 2011

RULING

A. INTRODUCTION

1. This is an application seeking of security for cost against the Defendant. The Defendant is a resident outside Fiji and he has not filed an affidavit in opposition for the security for cost and no appearance was also made at the hearing. The Plaintiff has sued the Defendant on alleged contract for services rendered to the Defendant. The Defendant states that there was no contract for any services, between the Plaintiff and Defendant. The Plaintiff did not file an affidavit in opposition for the security for cost with the necessary materials to object to this application and previously an action was filed by the Plaintiff against the Defendant for a similar claim and discontinued subject to a cost being awarded for the Defendant, which has not been paid for more than 4 years. The Plaintiff's claim is based on quantum meruit, but has not filed an affidavit in opposition to establish his claim. The previous conduct, namely failure to pay the cost awarded four years ago coupled with lack of any materials establishing the claim of the Plaintiff justifies grant of security for cost.
   

B. FACTS

2. The Plaintiff is suing the Defendant for the alleged services he rendered to the Defendant while he was in Fiji. Defendant is denying any contractual relationship between the Plaintiff and Defendant and deny any money owing to the Plaintiff.
   
3. The Plaintiff has filed an action against the Defendant earlier by way of a writ of summons and the said case HBC 306/07 which was discontinued on 4th December, 2007 by consent of the Plaintiff and the Defendant and also a cost of $450 was ordered against the Plaintiff, but that cost was not paid to the Defendant. And in the reply to the Defence the Plaintiff state he paid the cost but no details were given of such payment.
   
4. No affidavit in opposition was filed, and no application for extension of the time for the affidavit in opposition was also filed. No appearance for the Plaintiff at the hearing, though the hearing was advanced to 11.30a.m from 2pm with the consent of the parties, after I was informed of a meeting at 2.30pm and in any event no one turned up even at 2 pm for the hearing. So I am convinced that Defendant who had not filed an affidavit in opposition and also did not wish making any submissions on security for cost application. In any event since the Plaintiff has not filed any affidavit in opposition even as late as 11th November, 2011 one week after the hearing, the change of time for the hearing which was done with consent, would not have made a difference, as he would be precluded from producing any materials at the hearing. The change of the time was informed by the court through the office and it was confirmed that both parties agreed for hearing at 11.30 a.m.
   

C. RELEVANT LAW AND ANALYSIS

5. Order 23 Rule 1 of the High Court Rules provides as follows:
   

ORDER 23

SECURITY FOR COSTS

SECURITY FOR COSTS OF ACTION

Order 23 Rule 1 of the High Court Rules of 1988 provides:

"1(1) Where, on the application of a defendant to an action or other proceeding 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;
   

then if, having regard 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 proceeding as it thinks just." (emphasis is added)

As the rule itself states, the ordering of security is a matter of discretion. The discretion is an unfettered one. However, security should only be ordered if the Court is satisfied that it is just to do so having regard to all the circumstances of the case.

6. Although Security may be ordered against a foreign resident plaintiff, there is no inflexible or rigid rule that security must be ordered, as it is a matter of discretion depending on the circumstances of the case if the court thinks it is justified in ordering so.
   
7. Para 23/3/3 of the White Book says in regard to foreign plaintiffs-
   

"In exercising its discretion under r.1 (1) the Court will have regard to all the circumstances of the case. Security cannot now be ordered as of course from a foreign plaintiff, but only if the Court thinks it just to order such security in the circumstances of the case. For the circumstances which the Court might take into account whether to order security for costs, see per Lord Denning MR in Sir Lindsay Parkinson & Co Ltd v Triplan Ltd [1973] QB 609 at 626-627; [1973] 2 A;; ER.

8. In Sir Lindsay Parkinson & Co. Ltd v Triplan Ltd [1973] 2 All ER 273 at pop. 285-286, Lord Denning MR described the factors as follows-
   

"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 try and stifle a genuine claim. It would also consider whether the company's 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."

9. The purpose of the discretion to order for costs against a foreign plaintiff was described in Corfu Navigation Co. V. Mobil Shipping Co. Ltd [1991] 2 Lloyd's Rep. 52 (p. 54 Lord Donaldson MR) –
   

"The basis principle underlying R.SC, 0.23, r.1 (1) (a) is that it is prima facie unjust that a foreign plaintiff, who by virtue of his foreign residence is more or less immune to the consequences of an order for costs against him, should be allowed to proceed without making funds available within the jurisdiction against which such an order can be executed."

At p. 55, Lord Donaldson MR further said –

"In the context of the present appeal it has to be remembered that the purpose of O.23, r.1 is not to make it difficult for foreign plaintiffs sue, but to protect defendants."

10. So, the security for cost is not granted merely on the issue of the residence of the Plaintiff alone. The rationale is that Defendants should not be unnecessarily encumbered to defend a foreign Plaintiff when there is a doubt as to the claim of the Plaintiff and or its conduct, where there is likelihood of cost being ordered against the Plaintiff, which would be difficult to recover. It was held that even if the choice of law provision in the contract confers the jurisdiction that it would not preclude the court from ordering security for cost. So in the absence of any written contract and total denial of any agreement between the parties by the Defendant the application for security for cost is reinforced under the circumstances.
    
11. Consistently with this, para 23/3/4 of the White Book states that while security for costs is not ordered as a matter of course –
    

"On the other hand, as a matter of discretion, it is the usual ordinary or general rule of practice of the Court to require the foreign plaintiff to give security for costs, because it is ordinarily just to do, and this is to, even though by the contract between the parties, the foreign plaintiff is required to bring the action in England (Aeronave SP v Westland Ltd) [1971] 1 WLR 1445; [1971] 3 All ER 531, CA)."

12. The purpose of the rule and the prima facie presumption in favour of ordering security for costs has been recognized and applied in Fiji. In this Court in Furuuchi Suisan Company Ltd v Tokuhisa [2009] FJHC 194; Civil Action 95. 2009 (9 September 2009), Byrne J said –
    

"31.0. The first case I mention is Porzelack (UK) Ltd, (1987), 1 All ER 1074 where Sir Nicolas Browne Wilkinson V.C. said at p. 1076: 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 endorse 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 plaintiff is as applicable to plaintiffs coming from outside the jurisdiction as it is to plaintiff's residents within the jurisdiction.

"Under Order 23, r1(1)(a) it seems to me that I have an entirely general discretion either to award or refuse security, having regard to all the circumstances 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 circumstances of the case, is the just answer."

13. The rationale was also described in Sharma v Registrar of Titles [2007] FJHC 118, HBC 351. 2001 (13 July 2007), where Master Udit elaborated further –
    

"[3] The aforementioned rule, vests the court with an unfettered discretion to order security for costs. All this rule entails to protect is the risks to which an applicant may be exposed to for recovering of costs in a foreign jurisdiction. The quantum of costs comparatively in Fiji is not relatively high although fairly substantive within the jurisdiction which is worth recovering. Execution of costs abroad where the litigation costs are much higher will render the exercise as wholly uneconomical. Be that as it may, ultimately the issue is not that the respondent will not have the assets or money to pay the costs or that the law of the foreign party's country not recognizing an order of our court, and/or enforcement of costs order even be it under any legislation similar to our Reciprocal Enforcement of Judgments Act, (Cap 39), but it is also the extra steps which will be needed to enforce any such judgment outside the jurisdiction. Indeed, in will not be an irrefutable presumption to infer that an extra burden in terms of costs and delay, compared with the equivalent steps that could be taken in Fiji, will be an inevitable corollary. The obvious expenditure which comes to my mind is the engagement of an attorney and the conundrum of registering an order in the foreign jurisdiction before it can be enforced."

D. TIME FOR APPLICATION

14. Para 23/3/38 of the White book makes clear that applications for security may be made at any time –

"Time for making application for security (rr.1-3) – the right to security is not waived by service of the defence, and an order for security may be made at any stage of the proceedings (Re Smith (1896) 75 LT 46, CA: and see Arkwright v Newbold [1880] WN 59; Nartano v Mann [1880] UKLawRpCh 124; [1880] 14 CH D 419, Ca; Lydney, etc Iron Ore Co. v Bird [1883] UKLawRpCh 102; (1883) 23 CH D. 358).

An application for security may be made after judgment for the costs of further proceedings directed by the judgment as, e.gl. The taking of an account before an Official Referee (Brown v Haig [1905] 2CH 379).

Delay in making an application for security for costs, however, may be relevant to the exercise of the Court's discretion to order security. Although in most cases delay is not a decisive factor; it may be treated as important, especially where is has lead, or may have led the plaintiff to act his detriment, or may cause him hardship in the future conduct of the action (Jenred Properties Ltd v Ente Nazionale Italiano per ilTurismo (1985) Financial Times, October 29, CA)." (Emphasis is added)

E. PROSPECTS OF SUCCESS

15. The Plaintiff's claim is based on the principle of quantum meruit. There is no written contract between the parties for the claim of the Plaintiff, for the alleged services rendered. The Defendant states if there was any services rendered that was on good faith basis and no commitment was made for remuneration. The general rule is that where a contract expressly provides for fixed remuneration on specified events, the court cannot award any other remuneration on those events, nor can it awarded any remuneration if they do not occur.(Bristain v Rossiter(1879) 11 QBD 123; Gilbert & Partners v Knight (1968) 112 s. J. 155;Wiluszyaski v Tower Hmlets LBC [1989] I.C.R 493.

16. In Craven-Ellis v Cannons Ltd [1936]2 K. B403 Lord Denning held that liability to pay a quantum meruit " is an inference which a rule of law imposes on the parties where work has been done or goods have been delivered under what purports to be a binding contract but is not so in fact".(emphasis is added). So, what is paramount to succeed the claim – for the Plaintiff is that the element of binding intention that has to be establish by the Plaintiff.

17. It is also noted that work done under a contract before it is frustrated does not give rise to any quantum meruit claim at common law, thus the position of the Plaintiff and his claim is not a clear and unambiguous under the circumstances that is deducible from the pleadings. The plaintiff claims that he is a pathologist, and a consultant in the ICT (it is stated as IT) field, but the alleged services were relating to setting up of 'IT Park', a BPR Centre or a 'call centre' in Fiji. In the absence of affidavit in opposition I am left with only the affidavit in support of this summons and the likelihood of plaintiff's success is not a strong one and on the available evidence before me there is a prima facie strong defence for the Defendants.

18. Para 23/3/3 of the White Book states in regard to prospects of success –

"A major matter for consideration is the likelihood of the plaintiff succeeding. This is not to say that every application for security for costs should be made the occasion for a detailed examination of the merits of the case. Parties should not attempt to go into the merits of the case unless it can be clearly demonstrated one way or another that there is a high degree of probability of success or failure (Porzelack KG v Porzelack (UK) Ltd [1987] 1All ER 1074). In the cases which follow, investigation of the merits was justified only because of the plaintiffs demonstrated a very high probability of success. If there is a strong prima facie presumption that the defendant will fail in his defence to the action, the Court may refuse him any security will fail in his defence to the action, the Court may refuse him any security for costs (seeper Collins J in Crozat v Brogden[1894] UKLawRpKQB 57; [1894] 2 QB 30 at 33."

19. It further states –

"In considering an application for security for costs the Court must take account of the plaintiff's prospects of success, admissions by the defendant, open offers and payments into Court, but a defendant should not be adversely affected in seeking security merely because he has attempted to reach a settlement. Evidence of negotiations conducted "without prejudice" should not be admitted without his consent (Simaan Contracting Co. V Pilkington Glass Ltd [1987] 1 WLR 516; [1987] 1 All ER 345."

20. The Plaintiff is alleging that he provided services to the Defendant and no contract of employment was referred. The Defendants deny any services rendered through a contract of employment neither a contract nor even any correspondence between the parties are before me to indicate any relationship between them, that can be regarded as a request for Plaintiff's services. The Plaintiff has also failed to produce any evidence to show payment of earlier cost awarded to the Defendant in 2007, clearly indicating that the Plaintiff is a person who has already defaulted even a meager cost of $450 for more than 4 years. This again shows the behavior of the Plaintiff and untrustworthiness regarding the payment of cost that was ordered with the consent of the parties. This shows clearly the lack of respect even for a order of the court. Under the circumstances it is nothing but just to order a security for cost, considering the past behavior and the strength of the case on the materials before me. The Plaintiff was unable to provide any written contract or any correspondence that create a legally binding agreement with the Defendant that can substantiate the claim for the Plaintiff.

21. In considering all the materials before me, I think that a security for cost is justified and in the circumstance I grant an order for security for cost in favour of the Defendant.

F. AMOUNT OF SECURITY

22. In Babu Bhai Patel v Manohan Aluminium Glass (Fiji) Limited (CA No. 0019 of 1997) (14.11.1997), the Court said –

"Having said that however, Halsbury Laws of England Vol. 37 provides some guidance in paragraph 307 entitled Amount of Security, where it states –

"The amount of security for costs ordered to be given is in the discretion of the court, which will fix such sum as it thinks just to do so, having regard to all the circumstances. It is not the practice to order security for cost on a full party and party, still less on indemnity basis. In the case of a plaintiff resident out of the jurisdiction the more conventional approach is to fix the sum at about two thirds of the estimated party and party costs up to the stage of the proceedings for which security is ordered, but there is no hard and fast rule."

23. However, subsequently in Procon (GB) Ltd v Provincial Building Co. Ltd &Ors [1984] 2 All ER 368 (pp. 375-376 Judge Cumming – Bruce LJ), the rule of practice relied on was discredited –

"I am satisfied that, having regard to the provisions of RSCOrd 23, r1(1), which on their face confer an unfettered discretion on the court, there is no solid reason for a general and arbitrary practice whereby, after estimating party and party costs up to the date of the proceedings for which security is ordered, an arbitrary fraction of one third is knocked off before the order for security is made."

24. At p. 379, he said –

"...I am not myself persuaded that a two-third fixed practice in fact exists, but if it does I am satisfied that it is time it stopped. I can see no sensible reason why the court should not order security in the sum which it considers the applicant would be likely to recover on taxation on a party and party basis if the court considers it just to do so."

25. Paragraph 23/3/39 of the White book therefore now says –

"Amount of security (rr. 1-3) – The amount of security awarded is in the discretion of the Court, which will fix such sum as it thinks just, having regard to all the circumstances of the case. It is not always the practice to order security on a full indemnity basis. If security is sought, as it often is, at an early stage in the proceedings, the Court will be faced with an estimate made by a solicitor or his clerk of the costs likely in the future to be incurred; and probably the costs already incurred or paid will be only a fraction of the security sought by the applicant. At that stage one of the features of future of the action which is relevant is the possibility that it may be settled perhaps quite soon. In such a situation it may well be sensible to make an arbitrary discount of the costs estimate as probably future costs, but there is no hard and fast rule. On the contrary each case has to be decided on its own circumstances, and it may not always be appropriate to make such a discount (Procon (Great Britian) Ltd v Provincial Building Co. Ltd [1984] 1 WLR 557; [1984] 2 All ER 368, CA). It is a great convenience to the Court to be informed what are the estimated costs, and for this purpose a skeleton bill of costs usually affords a ready guide (cited with approval by Lane J in T Sloyan& Sons (Builders) Ltd v Brothers of Christian Instruction [1974] 3 All ER 715 at 720).

Security for costs is not necessarily confined to future costs, but may, when applied for promptly, be extended to costs already incurred in the suite (Brocklebank v King's Lynn Steamship Co. [1878] UKLawRpCP 16; [1878] 3 CPD 365); Massey V Allen [1879] UKLawRpCh 228; [1879] 12 Ch D 807; Procon (Great Britian) Ltd v Provincial Building Co. Ltd [1984] 1 WLR 557; [1984] 2 All ER 368, CA)."

Considering the circumstances of this case and the probable length of the case in the absence of any contract between parties and the length of the trial and the present day costs awarded in such circumstances where the plaintiffs' actions are dismissed, I order a cost of $5000 as security for cost. It is also be noted that on the pleadings the Plaintiff is a consultant with substantial assets, but failed to mention any assets in Fiji, but considering the past behavior of the Plaintiff who did not even honour a meager cost of $450, I will order the security for cost be deposited in court within 21 days and even if he has some assets in Fiji, considering the past behavior of non payment of cost as it is reasonable to order such an amount considering his past track record of non payment of cost awarded by consent of the parties as he is residing outside the jurisdiction.

G. CONCLUSION

26. Considering the complex nature of the issues that will be involved at trial and the principles relating to the quantum meruit and the defences to such a claim, and the other circumstances of the case I will order a security for cost of $5,000 as the security for cost to be paid within 21 days.

H. FINAL ORDER

27. The Court Orders as follows

1. The Plaintiff is ordered to provide a security for cost of $5000 to be deposited in favour of this case in court with in 21days.
   
2. The cost of this application will be cost in the cause.
   

Dated at Suva this 18th day of November, 2011

Mr. Deepthi Amaratunga
Master of the High Court
Suva