N8057

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS 369 of 2018

BETWEEN:
PREMIER CORPORATION
LIMITED
Plaintiff/Cross Defendant

AND:
DUKEMASTER (PNG)
LIMITED
Defendant/Cross Claimant

Waigani: Hartshorn J
2019: 21st August

Application for security for costs 

Cases Cited:
Papua New Guinea Cases

In re JCA Lumber Co (PNG) Ltd (2015) N6040
Konze Kara v. Public Curator (2010) N4055

Overseas Cases

P M Sulcs and Assocs P/L v. Daihatsu Aust P/L [No 2] [2000] NSWSC 826

Counsel:

Mr. J. Sirigoi, for the Plaintiff/Cross Defendant
Mr.R. Mannrai, for the Defendant/Cross Claimant

21st August, 2019

1.	HARTSHORN J: This is a decision on a contested application for security for costs.

Background

2.	This proceeding concerns a dispute between a landowner and developer in regard to a project known as “Paramount Commercial Centre”. The plaintiff, the developer, seeks amongst others, a declaration that the defendant’s termination notice issued on 28th February 2017 is, “tantamount to a wrongful termination and a repudiatory breach of the JV Agreement” between the parties, reimbursement by the defendant for development costs expended by the plaintiff and general and special damages.

3.	The defendant, the landowner, defends and cross claims that amongst others, the Joint Venture Agreement was terminated for cause, an order that the JV Agreement was rescinded, declaratory relief to the effect that the plaintiff breached the JV Agreement and that the defendant lawfully terminated the JV Agreement, damages and that the development land be returned to the defendant. 

This application

4.	The defendant seeks security for costs pursuant to Order 14 Rule 25(1) National Court Rules on the grounds that:

a)	all of the directors of the plaintiff are out of the jurisdiction of Papua New Guinea;

b)	the plaintiff has no assets in the jurisdiction;

c)	the plaintiff’s claim has no merit.

5.	The plaintiff submits that the application for security for costs should not be granted as:

a)	the terms of the orders sought in the plaintiff’s notice of motion are oppressive. This is because they seek an amount of K500,000.00 to be paid within seven days and that if such payment is not made, then a self-executing order to dismiss the proceeding is sought. The purpose of seeking such orders is to force the plaintiff out of the jurisdiction, it is submitted;

b)	the defendant has not given evidence as to why such a large sum is sought;

c)	whilst the defendant may be entitled to security for costs, this application has not been properly made.	

Law
6.	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.”
7.	I reproduce the following passage from my decision in In re JCA Lumber Co (PNG) Ltd (2015) N6040: 
“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.”
8.	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?”
9.	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.
10.	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.
Consideration
11.	In this instance the unrebutted evidence of the defendant is that the directors of the plaintiff are resident outside of Papua New Guinea and have been for some years. I am satisfied therefore that the requirement of Order 14 Rule 25 (1) (a) National Court Rules has been met.
12.	The defendant further submits that the plaintiff’s substantive claim is not likely to succeed. The plaintiff submits that it has a good chance of succeeding. In this regard, I have not heard from the parties witnesses and am not in a position to form a view on the merits. As to how this aspect should be considered, I note the following passage of Kirby J (as he then was) in P M Sulcs and Assocs P/L v. Daihatsu Aust P/L [No 2] [2000] NSWSC 826 as to the approach of Beazley J in K P Cable Investments Pty Ltd v. Meltglow Pty Ltd &Ors[1995] FCA 76, in a case concerning an application for security for costs in which Her Honour:
 “……identified as a relevant matter, the strength and bona fides of the plaintiff’s case. Her Honour adopted the observations of French J in Bryan E Fencott& Associates Pty Ltd v. Eratta Pty Ltd [1987] FCA 102; (1987) 16 FCR 497 at 514 when she said this: (at 197)
“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.	Here, in the absence of evidence to the contrary, I will proceed on the basis that the claim and cross claim are bona fide and with reasonable prospects of success.
14.	 I now consider the submissions of the plaintiff that this application is being used oppressively. The first part of this submission concerns the amount of K500,000.00 sought. The only evidence in regard to this sum is from Mr. Eii Sing Hii. He deposes that the defendant’s legal costs are likely to be between K300,000.00 and K500,000.00 as it is intended to engage a, “barrister or QC from Australia”. Mr. Hii does not give details of how these sums were arrived at. He does not specify for instance, if these sums are a result of calculation or a quote or estimation, whether they include lawyers’ fees and/or disbursements and over what period of time. I am not satisfied that there is sufficient evidence upon which the court may properly determine 
15.	To the extent that whether any amount should be ordered: Konze Kara v. Public Curator (2010) N4055 the sum of K500,000.00 appears to have been chosen randomly, to my mind this is evidence that this application is being used oppressively. Secondly, that an order is sought that such amount be paid within seven days is also oppressive. It is unlikely that many large legitimate entities would be able to arrange payment of K500,000.00 within seven days. Thirdly, that a self-executing order is sought to dismiss the proceeding if the said sum of K500,000.00 is not paid within seven days, is also in my view, evidence of the application being used oppressively.
16.	Consequently, given that I have formed the view that this application is being used oppressively by the defendant, I am not satisfied that it is in the interests of justice that this court should exercise its discretion in favour of the defendant. This application is refused.
Orders
17.   The court orders that:
a)	The relief sought in the notice of motion of the defendant/cross claimant filed 29th August 2018 is refused;
b)	The defendant/cross claimant shall pay the costs of the plaintiff/cross-defendant of and incidental to the said notice of motion;
c)	Time is abridged.
__________________________________________________________________
Sirigoi Lawyers: Lawyers for the Plaintiff/Cross Defendant               
Mannrai Lawyers: Lawyers for the Defendant/Cross Claimant