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Deyuan Fishing Ltd v Neville [2008] PGNC 276; N4848 (18 January 2008)

N4848

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS 2003 OF 2005

BETWEEN:

DEYUAN FISHING LIMITED
Plaintiff

AND:

TIM NEVILLE, MP GOVERNOR, MILNE BAY
PROVINCIAL GOVERNMENT
First Defendant

AND:

SAM INGUBA, COMMISSIONER OF POLICE, ROYAL
PAPUA NEW GUINEA CONSTABULARY
Second Defendant

AND:

NATIONAL FISHERIES AUTHORITY
Third Defendant

AND:

INDEPENDENT STATE OF PAPUA NEW GUINEA
Fourth Defendant

Waigani: Hartshorn, J.
2007: 13th December,
2008: 18th January

Security for Costs - Order 14 Rule 25 National Court Rules - Company Incorporated in Papua New Guinea - Majority Shareholders Resident Overseas

Facts:
The Third Defendant, National Fisheries Authority makes application for the Plaintiff, Deyuan Fishing Ltd to pay a sum of K50,000 into Court as security for costs and that the proceedings be stayed until the security is given as Deyuan Fishing Ltd is a foreign company.

Cases cited:

Reynolds v. Walcott [1985] PNGLR 316

Counsel:

Mr. B. Takin, for the Plaintiff
Mr. R. Raka, for the Third Defendant

18th January, 2008

1. HARTSHORN, J: The Third Defendant, National Fisheries Authority (NFA) makes application for the Plaintiff, Deyuan Fishing Ltd (Deyuan) to pay a sum of K50,000 into Court as security for costs and that the proceedings be stayed until the security is given as Deyuan is a foreign company.

2. The application is made pursuant to Order 14 Rule 25 of the National Court Rules which relevantly is as follows:

(1) Where in any proceedings, it appears to the Court on the application of a defendant-

(a) that a plaintiff is ordinarily resident outside Papua New Guinea; or

(b) that a plaintiff is suing, not for his own benefit, but for the benefit of some other person and there is reason to believe that that plaintiff will be unable to pay the costs of the defendant if ordered to do so;.............

the Court may order that plaintiff to give such security as the Court thinks fit for the costs of the defendant of and incidental to the proceedings and that the proceedings be stayed until the security is given.

3. NFA contends that Deyuan is a foreign company as 150 of a total of 165 shares in the company are owned by non citizens whose addresses are listed as being outside Papua New Guinea. The principal place of business and the address for service of Deyuan however, is an address in Papua New Guinea. This is the address of the 3rd shareholder who is a Papua New Guinean citizen. Deyuan is incorporated in Papua New Guinea under our Companies Act.

4. If a costs order was made in these proceedings against Deyuan, the order would be enforceable against Deyuan in Papua New Guinea and not against its shareholders whether in Papua New Guinea or overseas. This is not a situation where reciprocal enforcement of judgment legislation has to be considered in determining whether security for costs should be ordered, as in other cases where the plaintiff is an individual residing overseas. Accordingly, I am not of the view that security for costs should be ordered under Order 14 Rule 25(1)(a).

5. As to Order 14 Rule 25(1)(b) it could be said that Deyuan being a company, is ultimately suing for the benefit of its shareholders.

6. There is evidence in an affidavit filed on behalf of NFA that Deyuan was deregistered on 7 December 2005 and therefore no longer exists. Counsel for Deyuan Mr. Takin, deposes inter alia, that he is instructed that Deyuan was restored to the register of companies by the Registrar on 7th April 2006 although no direct evidence of this has been filed.

7. In any event the fact that Deyuan was deregistered for a period of time can be argued to be a reason to believe that Deyuan may be unable to pay the costs of NFA if so ordered.

8. In an affidavit filed in behalf of NFA it is deposed inter alia, that since the proceedings were instituted NFA has incurred over K20,000 in fees and that it is estimated that if the matter goes to trial then NFA's costs may exceed K50,000. Counsel for Deyuan contends that these estimates are excessive.

9. In the circumstances I am of the view that it is appropriate that security for costs be ordered. As to the amount, I note an approach referred to in Reynolds v. Walcott [1985] PNGLR 316 as fixing the sum of security to about two thirds of the estimated party and party costs, but there is no hard and fast rule.

10. I also note the affidavit filed on behalf of Deyuan by its Papua New Guinean shareholder, Ms. Margaret Gabut in which Ms. Gabut deposes inter alia, that she would like to guarantee on behalf of Deyuan for future costs that are incurred by NFA, "should it sustain damage by any reason of the order made pursuant to the Plaintiff's cause of action in this matter." By that I presume Ms. Gabut means that she would like to guarantee on behalf of Deyuan the payment of any costs that Deyuan may be ordered to pay NFA.

11. Accordingly I order that:

a) the plaintiff give security for costs in the sum of K30,000 as set out in b) below.

b) the sum of K20,000 is to be paid into the trust account of the National Court at Waigani by the 1st of February 2008, and

i) Ms. Margaret Gabut shall provide to the third defendant her personal guarantee by 1st of February 2008, to pay the third defendant the sum of up to K10,000 if costs are ordered to be paid to the third defendant by the plaintiff in these proceedings and the plaintiff does not comply with that order within 30 days of the order being made. The guarantee is to be prepared by the lawyers for the plaintiff and is to be in the usual format; or

ii) the further sum of K10,000 is to be paid into the trust account of the National Court at Waigani by the 1st of February 2008.

c) the costs of and incidental to this application are to be paid by the plaintiff to the third defendant.
_____________________________________________________________

B. T. Gobu & Associates Lawyers: Lawyers for the Plaintiff
Elemi Lawyers: Lawyers for the Defendant