N471(L)

PAPUA NEW GUINEA
[NATIONAL COURT OF JUSTICE]

YARLETT

V

NEW GUINEA MOTORS LTD

Waigani
McDermott J

13 April 1984
1 June 1984

COSTS - Security for costs - Application to be made promptly - Order discretionary - Relevant considerations - Evidence of amount sought - National Court Rules, O. 14, r. 25(1)(a).

In an action claiming damages for breach of a contract of employment by a non-citizen an application for security for costs was made by the defendant pursuant to the National Court Rules, O. 14, r. 25(1)(a), at a time when a defence and cross claim had been filed, an order for particulars made, notices of discovery filed and an order for evidence to be taken by a judge as examiner complied with, at which stage it became known that the plaintiff was out of the jurisdiction.

Held

(1) An application for security for costs should be made promptly and before considerable expense is incurred.
Pooley’s Trustee v. Whetham (1886) 33 Ch. 76; King v. The Commercial Bank of Australia Ltd [1921] V.R. 48; Smail v. Burton; Re Insurance Associates Pty Ltd (In Liquidation) [1975] V.R. 776, followed.

(2) An order for security for costs is within the discretion of the court and all the circumstances of the case must be considered.

(3) In determining whether an order for security of costs should be made the following matters, inter alia, may be taken into account:

(a) whether the claim is bona fide;

(b) whether there is a reasonably good prospect of success;

(c) whether there is an admission on the pleadings or elsewhere that money is due;

(d) whether money has been paid into account;

(e) whether the application for security is being used oppressively;

(f) whether want of means has been brought about by any conduct of the parties.

Sir Lindsay Parkinson & Co. Ltd v. Triplan Ltd [1973] 2 All E.R. 273 at 285, followed.

(4) In the circumstances it was fair and reasonable that no security be ordered for costs prior to the date of the application but that security be ordered up to the close of interlocutory matters.

(5) Evidence of the amount of security to be awarded ought to be placed before the court.

Cases Cited

Bishop Shipping Services Pty Ltd v. The M. V. "Pedro" (No. 2) [1980] P.N.G.L.R. 263.
King v. The Commercial Bank of Australia Ltd [1921] V.R. 48.
Pacific Acceptance Corporation Ltd v. Forsyth (No. 2) [1967] 2 N.S.W.R. 402.
Pooley’s Trustee v. Whetham (1886) 33 Ch. 76.
Sir Lindsay Parkinson & Co. Ltd v. Triplan Ltd [1973] 1 Q.B. 609; 2 All E.R. 273.
Smail v. Burton; Re Insurance Associates Pty Ltd (In Liquidation) [1975] V.R. 776.

Notice of Motion

This was an application for security for costs made pursuant to the National Court Rules, O. 14, r. 25(1)(a).

Counsel

S. Sandow, for the plaintiff/respondent.
A. David, for the defendant/applicant.
Cur. adv. vult.

1 June 1984

MCDERMOTT J: By notice of motion dated 13 April, the defendant seeks an order for security of costs in the sum of K1500 up until close of all interlocutory matters plus a stay of proceedings until the security is furnished. The order is sought pursuant to O. 14, r. 25(1)(a), of the National Court Rules.

The plaintiff commenced (on 20 September 1983) his action claiming damages for breach of contract of employment. The company defended the action (on 28 October 1983) and made a cross claim alleging breach of duty and subsequent loss. The pleadings were amended in December. On 24 February 1984, an order for evidence to be taken by a judge as an examiner was made and this evidence was taken on 7 March 1984.

In addition, the plaintiff obtained an order for particulars, filed a notice of discovery and filed a list of documents. The defendant also filed a notice of discovery. All this happened prior to the date of this application.

The plaintiff was originally employed by the company in 1982 as controller of parts. The plaintiff is not a citizen of this country and was brought from England to work here. The defendant company is a big organisation long established here. It seems to me that in the circumstances of this country, residence is contingent on employment. The reasonable belief is that it is highly unlikely a person can continue to reside here after employment has been terminated. Unless special circumstances exist, the financial strain alone, notwithstanding the illegality of residence, would compel a person to leave.

The plaintiff was dismissed on 2 September 1983. Seven months later this application is made on the basis that knowledge of the plaintiff being out of the jurisdiction only came to light when evidence was taken before the examiner.

Whilst this may be so, it seems to me a better way of putting it, in view of my earlier remarks, is that not until the evidence was taken, was thought given to obtaining security for costs. I do not consider reliance on this late information to be at all reasonable in the circumstances of this case.

Delay is an important consideration and it is well established by authority that applications for security for costs be made promptly and before considerable expense is incurred: see Pooley’s Trustee v Whetham (1886) 33 Ch. 76; King v The Commercial Bank of Australia Ltd [1921] V.R. 48 and Smail v. Burton; Re Insurance Associates Pty Ltd (In Liquidation) [1975] V.R. 776. The latter case concerned an appeal but the considerations are relevant, at 777:

"If an appellant has expended sums of money preparing the appeal for hearing and all the matters necessary to be performed have already been performed and the appeal is ready for hearing, it would be patently unjust to permit a respondent who stood by and allowed that work to be done to come to court and to ask for security after such expenses have been incurred. ... On the other hand, if there are reasonable causes for delay, including the conduct of the appellant then different considerations might well apply".

It seems to me delay by the defendant is fatal to the bulk of the claim.

The order sought is one of discretion. In exercising discretion under this rule, all the circumstances of the case have to be considered. Speaking of a similar discretion under s. 447 of the Companies Act 1948 (Imp.) in Sir Lindsay Parkinson & Co. Ltd v. Triplan Ltd [1973] 2 All E.R. 273 at 285 Lord Denning mentions matters which the court might take into account:

(1) whether the claim is bona fide and not a sham;

(2) whether there is a reasonably good prospect of success;

(3) whether there is an admission by the defendants on the pleadings, or elsewhere that money is due;

(4) whether money has been paid into account;

(5) whether the application for security was being used oppressively;

(6) whether a plaintiffs want of means has been brought about by any conduct of the defendants.

I am in the advantageous position of having already heard part of the evidence as an examiner. I am strengthened in the view that the claim is a bona fide one. This can also be seen from the nature of the pleadings.

The only other matter I can really consider is that of oppression. This is a most relevant consideration in this jurisdiction and I have mentioned the circumstances which can force a litigant out of the jurisdiction. In reality, he is immediately penalised by circumstances beyond his control. In some way, the concept of equality before the law has to be maintained in the face of this fact. In my view, it comes back to what is fair and reasonable in the circumstances.

I therefore, rule that the defendant is not entitled to any security for costs prior to the date of this application. I am asked to order security up to the close of interlocutory matters. I hope that such an order will not require a further order for security as a litigant should know what is the maximum security he may be called upon to provide: see the approach of Moffitt J. in Pacific Acceptance Corporation Ltd v. Forsyth (No. 2) [1967] 2 N.S.W.R. 402 at 408.

I too, like Pratt J. in Bishop Shipping Services Pty Ltd v. The M.V. "Pedro" (No. 2) [1980] P.N.G.L.R. 263, am in the dark as to the amount of security to be awarded. The proceedings have come a long way, a large sum would be inappropriate.

I order the plaintiff to pay security of costs in the sum of K500. I order that there be a stay of the plaintiffs claim and of the defendant’s cross claim until the security is furnished. Costs of the application to be costs in the cause.

Orders accordingly.

_____________________

Lawyer for the plaintiff/respondent: Young & Williams.
Lawyer for the defendant/applicant: Gadens.