SC1031

PAPUA NEW GUINEA
[IN THE SUPREME COURT OF JUSTICE]

SCA NO. 89 OF 2008

Between:

AIR TRAFFIC CONTROLLERS ASSOCIATION & ORS
Appellants

And:

CIVIL AVIATION AUTHORITY & ORS
Respondents

Waigani: Injia, CJ
2009: 4th May

COSTS – application for order for costs upon discontinuance of appeal – no provision on Supreme Court Act or Supreme Court Rules on Courts power to award costs in civil appeal – award of costs part and parcel of Supreme Courts ordinary jurisdiction – whether an appellant who discontinues proceedings has no rights to seek costs but pay for respondents costs - both parties negotiated on discontinuance of Court proceedings and a common position reached by settlement on continuation of court proceedings – each party bear their own costs – O7 Div.6 (rr19 – 22) Supreme Court Rules

Cases Cited:

Papua New Guinea cases
Ainea Sengero v Luther Wenge (2001) N2152
Polye v Sauk (2000) SC651

Overseas Cases:
Ritter v Godfrey [1920] K.B. 47

Counsel:

D Steven, for the appellants
K Kawat, for the First Respondent

4th May, 2009

1. INJIA, CJ: On 27th March 2009, this Court granted the appellant leave to withdraw the appeal. The appellants now apply for an order for costs in their favor. The first respondent opposes the application. The first respondent however does not seek costs but says each party should bear their own costs of the appeal.

2. No issue arises as to my jurisdiction sitting as a single judge to hear and determine the application.

3. The application filed on 3 March 2009 does not state the jurisdiction provisions under which the order is sought. There is no general provision in the Supreme Court Act or the Supreme Court Rules on the Courts power to award costs in a civil appeal. However, subject to specific provisions on costs in the Supreme Court Act or the Supreme Court Rules, the award of costs in a civil appeal is part and parcel of the Supreme Court’s ordinary jurisdiction: Polye v Sauk (2000) SC 651. It seems the appellant invokes the Court’s ordinary jurisdiction on costs.

4. Award of costs upon discontinuance of appeal is governed by Supreme Court Rules (SCR) O 7 Div. 6 (rr 19 – 22), in particular rr 19 & 21, which state as follows: 

"19.	An appellant may at any time file and serve a notice of discontinuance of the appeal and upon it being filed, the appeal shall be abandoned. ……

21.	A party filing a notice under Rule 19 shall except in criminal appeals, be liable to pay the costs of the other party or parties occasioned by his appeal."

5. Mr Kawat of counsel for the respondents submits this rule is mandatory. Where an appellant discontinues the appeal, he is liable to pay the respondents costs. The appellant who discontinues his appeal, with or without leave of the Court, has no right to seek cost.

6. Mr Steven of counsel for the appellant submits the Court has a general discretion whether or not costs should follow the event. This discretion is analogous to the discretion given to the National Court by NCR O 22 r 11. He refers to my decision in Ainea Sengero v Luther Wenge (2001) N2152 in which I adopted and applied Lord Atkin’s statement of principles in Ritter v Godfrey [1920] K.B. 47, as follows:

"It is not easy to deduce from these authorities what the precise principles are that are to guide a judge in exercising his discretion over costs. And yet as the discretion is only to be exercised where there are materials upon which to exercise it, it seems important to ascertain the principles upon which a judge is to discern whether the necessary materials exist. In the case of a wholly successful defendant, in my opinion the judge must give the defendant his costs unless there is evidence that the defendant (1.) brought about the litigation, or (2.) has done something connected with the institution or the conduct of the suit calculated to occasion unnecessary litigation and expense, or (3.) has done some wrongful act in the course of the transaction of which the plaintiff complains."

7. SCR, O 7 rr 19 & 21 embodies the general principle that costs follow the event. Upon filing a Notice of Discontinuance, the appellant’s liability to pay the respondent’s cost is automatic or mandatory. The situation may be changed only by prior agreement between the parties. SCR O7 r 21 or indeed O 7 Div. 6 under which r 21 appears, is silent on the question of discretion. That is because the occasion does not arise for the Court to exercise its discretion on costs. Upon filing and service of the Notice of Discontinuance, the appellant is liable to pay the respondent’s costs. 

8. SCR, O 7 rr 19 & 21 do not however cover the situation where an appellant seeks and obtains leave to discontinue an appeal. In my view, where leave to discontinue the appeal is sought, the Court may consider the question of costs and exercise its ordinary jurisdiction on whether or not costs should follow the event. This practice is similar to the discretion given to the National Court by O 8 rr 61 & 63; and O 22 r 11 of the National Court Rules (NCR): Order 8 rr 61 & 63 state as follows:

"61.	Discontinuance. (21/2)

(1) A party making a claim for relief may discontinue proceedings so far as concerns the whole or any part of any claim for relief by him - ……

(c)	at any time—with the leave of the Court.

(2) A party making a claim by originating summons may, with the leave of the Court, discontinue the proceedings at any time so far as concerns the whole or any part of the claim…….

63.	Terms of leave. (21/4)

The Court may give leave under Rule 61 or 62 on terms.’

9. Order 22 r 11 states as follows:
 
"If the Court makes an order as to costs, the Court shall, subject to this order, order that the costs follow the event, except where it appears to the court that some other order should be made to the whole or any part of the costs."

10. In my view, SCR O 7 rr 9 & 21 should be read subject to the Supreme Court decision in Polye v Sauk, supra, where the Supreme Court held that a combined reading of s 6 (2) and s 35 of the Supreme Court Act (disregarding the anomalous and erroneous drafting in s 35) gave the Supreme Court the same powers as the National Court on costs. The Supreme Court in a subsequent case endorsed this view: see William Moses v Otto Benal Magiten, SC 875 (2006). It follows that in a case where an appellant discontinues the appeal by leave of the Court, in the absence of an express exclusion by the Supreme Court Act or Supreme Court Rules, of the Courts ordinary discretionary jurisdiction on costs, it is within the Court’s ordinary jurisdiction on costs by the Supreme Court Act or Supreme Court Rules, the Court may determine whether or not costs should follow the event or more specifically, that the appellant should pay the respondent’s costs. As for the relevant principles or test to be applied, I would adopt the test in Ritter v Godfrey which were adopted and applied in Sengero v Wenge. 

11. Applying these principles to the facts of this case, the appellant challenged the validity of a Memorandum of Agreement (MOA) entered into between the appellant and the respondents on 13th August 2008, on the basis that the person who represented the respondent, Mr Lawrence Titimur, lacked capacity. The National Court refused an application for interim orders. An appeal was lodged against the decision. An interim order was issued by this Court restraining the respondents from enforcing the MOA pending the appeal. The appellant took steps to prepare the appeal for hearing including preparation and filing of Appeal Book. On 18th November 2009, both parties entered in a fresh MOA in which Mr Titimur was not involved as a signatory to the MOA. Later the respondent withdrew the original MOA. This prompted the appellant to discontinue the appeal and seek costs.

12. Mr Kawat has referred to evidence before me which shows that Mr Titimur had authority to represent the appellant. The appellant submits there is evidence to show that Mr Titimur did not represent the appellant but even if he did, his appointment was revoked and this was communicated to him on the day the MOA was signed. For my part I am unable to reach any definitive finding of fact in the absence of the untested evidence before me. 

13. What is clear is that the discontinuance of the appeal was prompted by the withdrawal of the original MOA and its replacement with the new MOA. It is not clear if questions on the validity of the MOA particularly in respect of Mr Titimur’s representative capacity provided the sole reason for the withdrawal but the fact that Mr Titimur was not a signatory to the new MOA suggests that that may have been one of the reasons for the withdrawal of the original MOA. 

14. More importantly I infer from the evidence before me that the purpose of the withdrawal of the original MOA was to facilitate further negotiations between the parties to enter into a new MOA which was done on 18th November 2008. The discontinuance of the appeal proceedings and the National Court proceedings was requested by the respondent after the new MOA was executed as early as 20th November 2008. I infer from these events that both parties negotiated on the discontinuance of the Court proceedings and a common position was reached by settlement on the continuation of the court proceedings after the new MOA was entered into. The Appeal Book was filed on 28th November 2008 despite the request to withdraw the court proceedings. Application for leave to discontinue the appeal was filed on 4th March 2009 (more than 3 months later) and leave to discontinue was obtained almost four months later on 27th March 2009. Had the appellant discontinued the proceedings after the new MOA was entered into, there would have been no need to prepare and file the Appeal Book and other steps taken to prepare the appeal for hearing thereby incurring unnecessary costs. 

15. In all the circumstances, I am not persuaded by the applicant that the respondent was entirely at fault in entering into the original MOA which is the subject of these Court proceedings. In that regard I note the strong evidence from Mr Titimur before me that he had the initial authority from the appellant to negotiate with the respondents and to enter into an agreement with the respondents. Both parties were responsible for entering the original MOA whose validity was later questioned by the appellant and conceded to by the respondent. The original MOA was quickly replaced with a new MOA which was acceptable to both parties. In the circumstances, I am of the view that the respondents are not entirely at fault in entering into the original MOU which prompted these proceedings. It is only fair that neither party should be penalized with costs. In the exercise of my discretion, I order that each party bear their own costs of the appeal. 

___________________________________

Stevens Lawyers: Lawyer for the Appellant
Kembonga Robin Kawat: Lawyer for the Respondent