N7087

  PAPUA NEW GUINEA 
[IN THE NATIONAL COURT OF JUSTICE] 
 
WS 1600 of 2014 

BETWEEN:
KEITH BOROK 
for and on behalf of himself and on behalf of 74 other members
 of Wangbin Clan, in the Star Mt. Local Level Government area 
of Western Province whose names and signatures appear on the 
schedule hereto 
Plaintiffs

AND:
OK TEDI MINING LIMITED
Defendant

Waigani: Hartshorn J 
      2017 : 30th October
                
Application for security for costs    
 
Cases cited:

KP Cable Investments Pty Ltd v. Meltglow Pty Ltd & Ors [1995] FCA 76 Konze Kara v. Public Curator of Papua New Guinea (2010) N4055
JST Arkhefield Pty Ltd (2014) SC1352
In re JCA Lumber Co (PNG) Ltd (2015) N6040

Counsel:

Mr. B. Nahupa, for the Plaintiffs
Mr. E. Rere, for the Defendant

30th October, 2017

1. HARTSHORN J: This is a decision on a contested application for the payment of security costs or alternatively for the proceeding to be stayed pending payment of outstanding costs by the plaintiffs in other proceedings.

Background

2. The plaintiffs claim to be customary landowners of land over which the defendant obtained a lease for Mining Purposes No. 29 (LMP 29). The plaintiffs claim that LMP 29 has expired and so they seek damages for trespass from the defendant because of its continued use and occupation of the subject land. The plaintiffs also seek amongst others, damages from the defendant for negligence for allegedly not complying with all relevant laws.

Application for security for costs – law

3. The defendant relies upon Order 14 Rule 25(1)(b) National Court Rules for its application for security for costs. It relies upon In re JCA Lumber Co (PNG) Ltd (2015) N6040 for the relevant law.

4. I reproduce the following passage from my decision in JCA Lumber Co (supra):

“7. Order 14 Rule 25 National Court Rules is as follows:

“25.	Cases for security. (53/2)

(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; or
(c)subject to Sub-rule (2), that the address of a plaintiff is not stated or is mis-stated in his originating process; or
(d)that a plaintiff has changed his address after the commencement of the proceedings with a view to avoiding the consequences of the proceedings,
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.

(2)The Court shall not order a plaintiff to give security by reason only of Sub-rule (1)(c) if it appears to the Court that the failure to state his address or the mis-statement of his address was made without intention to deceive.”

8. There is a discretion given to the court as to whether to give security if the criteria in either (a) – (d) are met. There are numerous cases on a security for costs application in this jurisdiction and the court’s discretion in considering such an application. As an example I refer to Yartlett v. New Guinea Motors Ltd [1984] PNGLR 155. In an application under Order 14 Rule 25 (1) (a), McDermott J followed Sir Lindsay Parkinson & Co Ltd v. Triplan Ltd [1973] 2 All ER 273 at 285, and held that:

“An order for security for costs is within the discretion of the court and all the circumstances of the case must be considered. 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.”

9. As to the discretion conferred by Order 14 Rule 25 (1), I refer to the following statement that I reproduced in Albright Ltd v. Mekeo Hinterland Holdings Ltd (2013) N5774 at para 21. It is a statement by Bowen LJ in Gardner v. Jay (1885) 29 Ch 50, at p59:

“When a tribunal is invested by Act of Parliament or by Rules with a discretion, without any indication in the Act or Rules of the grounds upon which the discretion is to be exercised, it is a mistake to lay down any rules with a view of indicating the particular grooves in which the discretion should run, for if the Act or the Rules did not fetter the discretion of the Judge why should the Court do so?”

10. This statement was also quoted by Lord Wright in the House of Lord’s decision of Evans v. Bartlam [1937] AC 473; 2 All ER 646, and recently in Albright v. Mekeo Hinterland Holdings Ltd (2014) SC1400 at para 29.

11. As there is no indication in Order 14 Rule 25 (1) of the grounds upon which the discretion is to be exercised once the criteria in either (a) – (d) are met, I am of the view that the discretion is unfettered and should be exercised with regard to all of the circumstances of the case.”

5. The plaintiffs rely upon the decision of Makail J. in JST Arkhefield Pty Ltd (2014) SC1352. This was an unsuccessful application for leave to appeal in which His Honour referred to the following applicable principles to be considered on an application for security for costs:

a)	whether there has been delay in making the application;
b)	the bona fides of the plaintiff’s claim;
c)	nullification of proceedings;
d)	whether the defendant has a cross claim;
e)	evidence of the likely amount of the costs.

Submissions

6. The defendant seeks that the plaintiffs give security for costs in the sum of K20,045.20 or such sum as the court thinks fit as:

a)	The plaintiffs claim in their statement of claim is not genuine as it 	does not represent the collective interests of all of the members of 	Wangbin Village, Tabubil, Western Province. This is because over 500 registered members of Wangbin Village receive compensation 	payments relating to LMP 29 and only 74 members have signed the consent and authority that is attached to the writ of summons and statement of claim. Further, the requirements concerning representative actions have not been complied with;

b)	There are not reasonably good prospects of the plaintiff’s claim 	succeeding as:
i)	The plaintiffs do not have a bona fide claim;
ii)	The defendant has the necessary statutory and environmental authority and permission to conduct the Ok Tedi Mine Project;
iii)	All registered members of Wangbin Village have been receiving 	statutorily required land lease compensation, and general and special compensation relating to LMP 29;
iv)	The defendant is not obliged or required to pay compensation to the landholders of the project areas, but does so in good faith and in 	consideration of the continuation of the mine and related operations within the project area;

c)	It is admitted by the plaintiffs lawyer that legal costs are due by the plaintiffs to the defendant in this and one other proceeding;
d)	No money has been paid by the plaintiffs into an account;
e)	The application for security for costs is not being used oppressively. The defendant is concerned about the plaintiffs ability to pay costs already owing as well as future costs leading up to and including trial which are estimated to be over K50,000;	
f)	No want of means has been brought about by any conduct of the defendant.

7. The plaintiffs submit that they should not be required to give security for costs as:

a)	there has been delay by the defendant in bringing the application as costs were awarded to it in proceeding OS 527/12 on 19th December 2014;

b)	the plaintiff has a bona fide claim that is likely to succeed;
c)	the amount sought for security for costs will nullify the proceeding as the plaintiffs are normal villages who rely on benefits from the defendant’s Ok Tedi Mine if and when they are paid;
d)	the defendant has not filed a cross claim;
e)	there is no evidence of future costs of the defendant in this 	proceeding. The amount sought of K20,045.20 is a total of two 	amounts outstanding for costs in this and another proceeding and not an estimation of the likely costs to trial.

Consideration

8. Order 14 Rule 25(1)(b) National Court Rules upon which the defendant relies is:

“(1)Where in any proceedings, it appears to the Court on the application of a defendant—
(a)……. 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; or……”

9. It is argued that the defendant is not able to rely upon this provision as the lead plaintiff is described as suing, “… for and on behalf of himself and on behalf of 74 other members….”, and therefore is suing for his own benefit.

10. In my view, notwithstanding that the lead plaintiff is suing on behalf of himself, he is also suing for the benefit of 74 other persons and in so doing he is not suing for his own benefit. I am satisfied therefore that the lead plaintiff by suing on behalf of 74 other persons does come within Order 14 Rule 25(1)(b) National Court Rules and so the defendant is able to make this application under this provision.

11. In regard to the plaintiffs submission that there has been undue delay in bringing this application, as the defendant relies upon amongst others, the non-payment by the plaintiff of the defendant’s certified costs dated 16th June 2016, as supporting a reason to believe that the plaintiffs will be unable to pay the defendant’s costs if ordered to do so, I am satisfied that there is no undue delay in bringing this application.

12. As to the plaintiff having a bona fide claim, in JCA Lumber (supra) I reproduced the following passage from KP Cable Investments Pty Ltd v. Meltglow Pty Ltd & Ors [1995] FCA 76 at [39] in a case concerning an application for security for costs:

“As a general rule, where a claim is prima facie regular on its face and discloses a cause of action, in the absence of evidence to the contrary, the court should proceed on the basis that the claim is bona fide with a reasonable prospect of success.”

13. In this instance however, I have considered the evidence of Musje Werror, that amongst others, there are over 500 registered members of Wangbin Village who receive compensation payments relating to LMP 29 and only 74 members have purportedly signed the consent and authority attached to the statement of claim. Further it is apparent that the representation requirements of Order 5 Rule 13 National Court Rules and as stated in the Supreme Court decision of Simon Mali v. State (2002) SC690 have not been complied with. Consequently, I am not satisfied that the plaintiffs claim has a reasonable prospect of success.

14. As to the plaintiffs submission that the order sought will have the effect of nullifying the proceeding, the majority of the security sought is for costs in the proceeding for which the plaintiffs are already liable and will have to pay in any event. That the plaintiffs are likely to be unable to pay costs for which they are already liable is in my view, a reason supporting why security costs should be granted and not a reason why a defendant should be unsuccessful with such an application.

15. As to evidence as to the amount of legal costs, it is the case that the defendant has not given an estimation of the costs of the proceeding if it goes to trial. In Konze Kara v. Public Curator of Papua New Guinea (2010) N4055 in which no evidence was given as to the likely costs and outlays, I stated that in the absence of such evidence, even if there is a prima facie entitlement to security for costs, there was no evidence upon which the court could properly determine whether any amount should be ordered. In this instance the only evidence of costs in this proceeding are the certified costs of K15,545.20 for which the plaintiffs are already liable as previously stated.

16. So in regard to the submissions of the plaintiffs in defence of this application, I am satisfied that circumstances exist to permit the defendant to make application under Order 14 Rule 25(1)(b) National Court Rules, that there is no undue delay in bringing the application, that the plaintiffs claim does not have a reasonable prospect of success, that the defendant should not be precluded from bringing this application because the plaintiffs may be unlikely to pay costs in the proceeding for which they are already liable, but that those costs are the only evidence of costs in this proceeding.

17. This, together with the evidence that the plaintiffs have also failed to pay costs in the sum of K4,500.00 in similar proceeding OS 527/12, to my mind entitles the court to form the view that in regard to the lead plaintiff suing on behalf of 74 others, there is reason to believe that he will be unable to pay the costs of the defendant in this proceeding if ordered to do so. 

18. Consequently, I am satisfied that the defendant is entitled to the orders that it seeks but only to the extent of the costs in evidence in this proceeding being K15,545.70. Given this it is not necessary to consider the other submissions of counsel.

Orders

19.   The formal Orders of the Court are:

a)	The plaintiffs are ordered to give security for the defendant’s costs in 	the sum of K15,545.70 within 14 days from today;

b)	If the plaintiffs fail to give security for costs in the sum of K15,545.70 	within 14 days from today, the proceeding shall stand dismissed;

c)	The costs of and incidental to this application of the defendant shall be 	paid by the plaintiffs;

d)	Time is abridged.	
_____________________________________________________________
Horizon Lawyers:   Lawyers for the Plaintiffs                                 
Allens:  Lawyers for the Defendant