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National Court of Papua New Guinea |
PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]
OS NO. 70 OF 2020
BETWEEN:
EDWARD ALINA as the General Secretary of TOMA ILG, PDL 5 and as Chairman of PAI PARAPIA RESOURCES OWNERS ASSOCIATION PDL 6
First Plaintiff
AND:
LAI MARA as the Chairman of TOMA Kondo ILG, PDL 5
Second Plaintiff
AND:
DUGALI HAPE as the Chairman of TOYU ILG, PDL 5
Third Plaintiff
AND:
KUMUL PETROLEUM HOLDINGS LIMITED
First Defendant
AND:
MORAN OIL LIMITED
Second Defendant
Waigani: Numapo J
2020: 14th, 19th, & 25th August
CIVIL PRACTICE AND PROCEDURE –Interlocutory Application - Order for costs is a matter of discretion for the Court (O 22 rr 4 & 5) – Discretion must be exercised with care and only in clear cases - Negligence on the part of the lawyer in conducting the case to the required standard –Lawyer to be personally liable - Leave to discontinue proceedings (O 8 r 61 & O 22 r 17) –Lack of proper consent or authority to commence representatives proceedings (O 5 r 13) – Abuse of Court’s process (O 12 r 40 (c)) – Application for costs granted.
Held:
(i) Courts may order costs against legal practitioners if it is established that the lawyer acted improperly resulting in unnecessary costs been incurred by a party in consequence of a failure, delay or misconduct on the part of the lawyer.
(ii) The power to order costs against a lawyer is a matter of discretion for the court but that such discretion must be exercised with care and only in clear cases.
(iii) The fact that litigation fails is plainly no ground for its exercise. There has to be something that amounts to a serious dereliction of duty.
(iv) Plaintiffs’ lawyer failed to properly conduct his client’s case to the required standard expected of him.
(v) Plaintiffs have caused unnecessary inconveniences, frustrations and costs to the defendants and therefore, must pay for it.
(vi) Application for costs granted.
Cases Cited:
Beecraft No. 2 v Pok, Minister for Lands [2001] PGNC 85; N2125.
Wagun v Pilembo [2008] PGNC 139; N3487
Rex Paki v Motor Vehicle Insurance Limited SC1015
PNG Waterboard v Gabriel Kama SC821
Gulf Provincial Government v Baimuru Trading Ltd (1988) PNGLR 311
Jacob Sarapei v Fred Kulumbu N2405.
POSF Board v Sailas Imanakuan SC677
Benny Balopa v Commissioner of Police N1374
Bishop Brothers Engineering Pty Ltd v Ross Bishop N705.
Willie Mel v Coleman Palialia SC790
Mison Asiki v Manasupe SC797.
Lupari v Sheehan [2009] N4650
Don Pomb Polye v Jimson Sauk Papaki & Electoral Commission of Papua New Guinea [2000] PNGLR 166
Yakam Maleyaki v Judah Utin & Ors [2019] N8040
Lupia v ExxonMobil PNG Ltd [2016] PGNC; N6484
Simon Mali v Independent State of Papua New Guinea (2002) PNGLR 15; Eliakim Laki v Maurice Alaluku, Secretary for Lands [2000] N4158; Wilfred Mamkuni v Ly Coung-Long and Jant Ltd (2011) N4674
Louis Mediang v Ramu Nico Management (MCC) Ltd (2010) N4158.
Counsel:
Mr C. Gagma & D. Dupre, for the Plaintiffs
Mr. N. Pilamb, for the First Defendant
Mr. L. Boas, for the Second Defendant
RULING ON COSTS
25th August, 2020
1. NUMAPO J: The first defendant seek costs against Gagma Legal Services (GLS) representing the plaintiffs, on a solicitor-client basis after the plaintiffs were granted leave to file a notice of discontinuance pursuant to O 8 r 61 of the National Court Rules (Rules). This was after the matter was fixed for hearing of the first defendant’s application to dismiss the proceedings on grounds of competency, amongst others.
2. On 19 August 2020, the day of the hearing of the first defendant’s application filed on 7 August 2020 seeking dismissal of proceedings on various grounds on competency,one of which, was the lack of proper consent and/or authority from the named ILGs (Tomo, Toma Kondo and Toyu) as plaintiffs to commence and maintained proceedings against the defendants, the plaintiffs through their lawyer sought leave to file a notice of discontinuance pursuant to O 8 r 61. No reason was given by the plaintiffs’ counsel why he wanted to discontinue the proceedings. Nonetheless leave was granted and the notice of discontinuance was filed. The first defendant took issue with the action(s) of the plaintiffs to discontinue the proceedings especially on the day when the first defendant’s application to dismiss the proceedings was to be heard. Whilst the defendants did not object to the plaintiffs’ application they indicated however, that they would be seeking costs if leave is granted to discontinue the proceedings for the reason that the defendants had incurred costs defending the matter.
3. After having granted leave, I directed parties to address the court on costs and to file the relevant submissions by 21 August 2020 with the hearing to take place on 25 August 2020. On the returnable date the only written submission on costs was that filed by the first defendant. Counsel for the plaintiff did not file any written submission although Mr Gagma gave an undertaking that he would do so as directed by the court. Plaintiffs obviously, have not complied with the directions of the court. Mr Dupre stood in for Mr Gagma and informed the court that learned counsel taking carriage of the matter was not able to attend as he had travelled out of Port Moresby. Counsel was granted leave to give a verbal reply on submission on costs.
4. The issue is: “Whether the Court has the power to order costs against the plaintiff’s lawyer personally on a solicitor-client basis for been negligent or acting improperly in conducting the plaintiffs’ case”?
(i) Order on Costs
5. The relevant applicable law on costs is O 22 r 4(1) of the National Court Rules (Rules) that states:
(1) The powers and the discretions of the Court in relation to costs shall be exercised subject to and in accordance with this Order.
6. In addition, O 22 rule 5 (1) and (2) reads:
(1) The Court may, in any proceedings, exercise its power and discretions as to costs at any stage of the proceedings or after the conclusion of the proceedings.
(2) Where the Court makes an order in any proceedings for the payment of costs, the Court may require that the costs be paid immediately, notwithstanding that the proceedings are not included.
(ii) Discontinuance
7. Plaintiffs sought leave of court to discontinue the proceedings and leave was granted pursuant to O 8 r 61 and O 22 r 17. The circumstances under which discontinuance can occur with or without leave under O 8 r 61 is where:
(a) The pleadings are not closed – without leave of court or consent of all parties; and
(b) Where the judgment has not been entered – with the consent of all other parties; and
(c) At any time – with the leave of the Court.
8. A party making the claim by originating summons may, with the leave of the Court, discontinue the proceedings at any time so far as it concerns the whole or part of the claim.
9. Order 22 rule 17 (1) is in these terms:
(1) Where, under Order 8 Rule 61, a party to any proceedings discontinues the proceedings without leave as to the whole or any part of the relief claimed by him against any other party, the discontinuing party shall, unless the Court otherwise orders, pay costs of the party against whom the discontinued claim is made, occasioned by the discontinued claim and incurred before service of notice of discontinuance.
10. Generally, courts may order costs against legal practitioners if it is established that the lawyer acted improperly resulting in unnecessary costs been incurred by a party in consequence of that failure, delay or misconduct on the part of the lawyer concerned. It must be clear however, that the lawyer was in the wrong and not the plaintiffs or the defendants. The lawyer will be held personally liable if it can be shown that he is negligent in that he failed to perform his responsibilities to the required standard.
11. The power to order costs against a lawyer is a matter of discretion for the court on a solicitor-client basis (O 22 r 4) but that such discretion is to be exercised with care and only in clear cases. The fact that litigation fails is plainly no ground for its exercise. There has to be something that amounts to a serious dereliction of duty. It is debatable whether the traditional immunity accorded to lawyers would extend to limit the statutory power of the court to order costs against a lawyer. The issue with respect to immunity was not raised by counsels in the present case so we will leave that for another day but what is clear though, is that the court does have the power to order costs against a lawyer in appropriate cases where evidence shows that the action commenced is unmeritorious and without basis either in fact or in law, the Court may exercise its discretion to order costs to be paid on a solicitor-client basis; per Kandakasi J (as he then was) in Beecraft No. 20 Ltd v Pok, Minister for Lands [2001] PGNC 85; N2125.
12. The discretionary power of the Court to order costs is found in O 22 r 4 of the Rules referred to above. In Wagun v Pilembo [2008] PGNC 139; N3487 the Court held that the question of costs is a discretionary matter (O 22 r 4 (1)) and the Court may order costs against a party in appropriate cases.
13. In Rex Paki v Motor Vehicle Insurance Limited SC1015, the Supreme Court held that:
“The award of costs on an indemnity basis is discretionary. An order for costs on an indemnity basis may be made where the conduct of a lawyer or a party to the proceedings is so improper, unreasonable or blameworthy that he should be so punished by such an order....”
14. The Supreme Court in that case identified the following circumstances where the court can award costs on a solicitor-client basis:
(a) Abuse of court’s process by invoking the Court’s review jurisdiction without reasonable cause and where there was no proper basis for filing such an application; where the application is mischievous, unmeritorious and a clear abuse of process; see: PNG Waterboard v Gabriel Kama SC821; Gulf Provincial Government v Baimuru Trading Ltd (1988) PNGLR 311 andJacob Sarapei v Fred Kulumbu N2405.
(b) Running a defence case on a clear lack of defence; the claim could be settled but because of defendant’ s actions or inactions. The plaintiff is caused to undergo unnecessary litigation; see: POSF Board v Sailas Imanakuan SC677; or the defendant took a position at trial when it had no basis on the fact or the law. See also: Benny Balopa v Commissioner of Police N1374, or
(c) Wilful and deliberate defiance of a Court order; see: Bishop Brothers Engineering Pty Ltd v Ross Bishop N705.
(d) The respondent’ s lawyers failed to appear at the hearing of an appeal; see: Willie Mel v Coleman Pakalia SC790, and Mison Asiki v Manasupe SC797.
15. Gavara-Nanu J in Lupari v Sheehan [2009] N4650, relying on Don Pomb Polye v Jimson Sauk Papaki & Electoral Commission of Papua New Guinea [2000] PNGLR 166, stated at para 9:
“The Court has the power to order costs against the plaintiff’s lawyer, if the lawyer is negligent or has acted improperly in conducting the plaintiff’s case.”
16. The first defendant took issue with the plaintiffs’ application to discontinue proceedings and argued that it only came about as a result of the defendant’s application to dismiss the proceedings on grounds of competency, one of which, is the lack of a prerequisite requirement of obtaining proper consent and/or authority of the other plaintiffs named in the proceedings before commencing the representative class action as required under O 5 r 13. Proper consent and/or authority of all interested parties is important to give the lead plaintiff Edward Alina the standing to institute the proceedings for and on behalf of the plaintiffs. This did not happen hence, the lead plaintiff does not have the locus standi.
17. Defendant submitted that the failure to obtain such authority or consent renders the entire proceedings incompetent and amounts to an abuse of Court’s process and had the dismissal hearing proceeded there is every likelihood of the matter being dismissed on competency grounds. Defendant further submitted that the law firm (GLS) representing the plaintiffs failed in its duty of care to its client by not properly advising the plaintiffs of this important requirement in matters concerning representative proceedings before commencing the action. For this reason, the proceedings was futile and bound to fail as soon as it is commenced which GLS ought to have known. In that regard, the plaintiff’s lawyer was negligent and acted improperly in conducting the plaintiff’s case which in turn has caused the defendants to incur unnecessary costs in defending the matter and therefore, must be held personally liable.
18. The requirement of obtaining proper consent and/or authority from all interested parties in representative proceedings is provided for under O 5 r 13 (1) (a) of the Rules. Such is necessary to give the representative or the delegate the standing to institute proceedings for and on behalf of himself and the other plaintiffs named in the proceedings.
19. Order 5 r 13 (1) provides for representative action in the following terms:
“Where numerous persons have similar interest in any proceedings the proceedings may be commenced, and, unless the Court otherwise orders, continued, by or against any one or more of them as representing all or as representing all except one or more of them”.
20. A good body of case laws have stressed the importance of obtaining proper written consent and/or authority of all interested parties before commencing or defending a representative proceeding. Failing that, the representative, delegate or the lead plaintiff does not have the standing to institute or defend proceedings on behalf of the other interested parties. See: Yakam Maleyaki v Judah Utin & Ors [2019] N8040. See also: Lupia v ExxonMobil PNG Ltd [2016] PGNC; N6484; Simon Mali v Independent State of Papua New Guinea (2002) PNGLR 15; Eliakim Laki v Maurice Alaluku, Secretary for Lands [2000] N4158; Wilfred Mamkuni v Ly Coung-Long and Jant Ltd (2011) N4674 and Louis Medaing v Ramu Nico Management (MCC) Ltd (2010) N4158.
21. Although, the defendants were not heard on application to dismiss the proceedings on competency grounds, based on the case authorities above, the defendants, in my view, would have probably succeeded in having the entire proceedings dismissed for want of consent had the application been heard. Although the plaintiff’s lawyer did not address the issue on consent or lack thereof, it appears to me that counsel has not done the due diligence required of him and has failed to advise his clients of the requirement of consent prior to commencing the proceedings.
22. I find that the plaintiffs’ lawyer failed to properly conduct his client’s case to the required standard expected of him and this, in my view, amounts to a serious dereliction of duty. The action(s) taken by the plaintiffs to discontinue the proceedings on the day of the hearing of the first defendant’s application to dismiss the proceedings is, to my mind, mischievous. It was a deliberate act on the part of the plaintiffs’ counsel to frustrate the defendants and cause unnecessary inconveniences. The plaintiffs took an easy way out by filing for discontinuance when they realized that their chances of success was fairly minimal. This is unfair to the defendants and someone will have to pay for this and in this case, the plaintiffs will have to pay. See: PNG Waterboard v Gabriel Kama&Bishop Brothers v Ross Bishop (supra).
23. I note from the court records that this case has been going on for quite some time and plaintiffs had the opportunity to discontinue the proceedings earlier but did not do so resulting in the defendants incurring unnecessary costs. Whether this is by design or default remains to be seen but what is clear to me is that the plaintiffs’ action has disadvantaged the defendants which is very disappointing to say the least.
24. In PNG, a good number of our citizens are illiterate and lacked understanding on basic court processes and procedures hence, it is incumbent upon each and every lawyer and the legal profession in general to ensure that they provide the best legal advice available to our people whom they represent and at times this requires an extra effort that goes beyond the call of duty. Lawyers are professionals and are expected to discharge their roles, functions and responsibilities with utmost care and attention. Sadly, it has become evident in recent times that some unscrupulous lawyers have taken advantage of those impecunious litigants and have profited from representing them in mischievous and unmeritorious claims and in some instances bogus claims that tantamount to a criminal act. In situations like this the lawyer taking carriage of the matter should be personally liable for costs and should also be referred to the Law Society for disciplinary actions.
25. In the circumstances of the present case which I have already discussed, I am satisfied that an order for costs is appropriate against the lawyer representing the plaintiffs. The failure by plaintiffs’ counsel to give reasonable attention to the relevant laws pertaining to representative proceedings is, in my view, a serious failure on his part to properly exercise his duty of care not only to his clients but also to the other party defending the action. I find that the plaintiff’s lawyer was negligent and acted improperly in conducting the plaintiff’s case and therefore, must be personally liable to pay costs.
26. I make the following Orders:
(i) I order costs against the lawyers for the plaintiffs on a solicitor – client basis.
(ii) Plaintiffs to pay for the costs of this proceedings to be taxed, if not agreed.
(iii) The time for entry of these orders is abridged to take place forthwith upon the Court signing the Orders.
Orders accordingly
________________________________________________________________
Gagma Legal Services: Lawyers for the Plaintiffs
Mel & Hennry Lawyers: Lawyers for the First Defendant
Kuman Lawyers: Lawyers for the Second Defendant
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