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Supreme Court of Papua New Guinea |
PAPUA NEW GUINEA
[IN THE SUPREME COURT OF JUSTICE]
SCA NO. 67 OF 2023
BETWEEN
EDWARD SASINGIAN
Appellant
AND
AIR NUIGINI LIMITED trading as AIR NIUGINI
Respondent
Waigani: Makail J, Liosi J & Wood J
2024: 23rd & 26th April
SUPREME COURT – Appeal against order for costs – Award of solicitor/client costs against lawyer – Right to be heard – Duty of Court – Reasonable opportunity to be heard – Reasons for giving solicitor/lawyer opportunity to be heard discussed – Failure to give solicitor/lawyer reasonable opportunity to be heard – Denial of reasonable opportunity to be heard – Miscarriage of justice – Order for solicitor/client costs set aside – Remittance for hearing on the question of who should bear solicitor/client costs appropriate and ordered – Constitution – Section 59 – Supreme Court Act – Section 16 – National Court Rules – Order 22, rule 65(1)
Facts
Acting on the instructions of the plaintiffs, the appellant commenced proceedings against the respondent in the National Court to recover outstanding accrued money in lieu of furlough leave. A trial was conducted to determine issues of liability and assessment of damages and subsequently, the National Court delivered its judgment holding that the plaintiffs failed to establish the action and dismissed the proceedings. Further, it ordered the appellant (as the lawyer representing the plaintiffs) to pay the solicitor/client costs of the defendant in the National Court. The appellant appealed the order for costs after being granted leave to appeal pursuant to Section 14(3)(c) of the Supreme Court Act. Amongst other grounds, the appellant contended that as the respondent did not seek solicitor/client costs against him, he did not respond. Further, he contended that he was entitled to be given a reasonable opportunity to be heard on the question of solicitor/client costs and the National Court failed to give him that opportunity contrary to Section 59 of the Constitution and Order 22, rule 65(1) of the National Court Rules.
Held:
Cases Cited:
Teamae v. Motor Vehicle Insurance Limited (2013) SC1224
Islands Helicopter Services Ltd v. Wilson Sagati & Others (2008) N3340
Curtain Bros (PNG) Ltd v. University of Papua New Guinea (2005) SC788
Counsel:
Appellant in person
Mr C Joseph, for Respondent
JUDGMENT
26th April 2024
1. BY THE COURT: Acting on the instructions of the plaintiffs, Catherine Paulus and Dorothy Gerota, the appellant commenced proceedings against the respondent in the National Court to recover outstanding accrued money in lieu of furlough leave. A trial was conducted to determine issues of liability and assessment of damages and on 21st April 2023 the National Court delivered its judgment holding that the plaintiffs failed to establish the action and dismissed the proceedings. Further, it ordered the appellant (as the lawyer representing the plaintiffs) to pay the solicitor/client costs of the defendant in the National Court. The appellant appealed the order for costs after being granted leave to appeal on 11th August 2023 pursuant to Section 14(3)(c) of the Supreme Court Act.
Grounds of Appeal
2. The appellant relied on four grounds of appeal, one of them being that as costs on solicitor/client basis were made against him, he was entitled to be given a reasonable opportunity to be heard and the National Court failed to give him that opportunity contrary to Order 22, rule 65(1) of the National Court Rules (“NCR”).
3. In the second ground, the appellant contended that the respondent did not expressly seek costs against him. It sought costs against the plaintiffs. However, when the National Court delivered its judgment, it ordered him to pay costs of the respondent on a solicitor/client basis.
4. In the third ground, the appellant contended that the National Court’s exercise of discretion was wrong because it did not refer to the source of power to order him to pay costs on a solicitor/client basis. The appellant contended that the Court’s source of power is derived from Order 22, rule 65(1) of the NCR. According to rule 65(1), the duty is on the Court to give a solicitor a reasonable opportunity to be heard where the Court is considering making the following orders:
(a) disallow the costs as between him and his client; and
(b) direct the solicitor to repay to his client costs which the client has been ordered to pay to any other party; and
(c) direct the solicitor to indemnify any party other than his client against the costs payable by the party indemnified.
5. In this instance, the Court did not give the appellant the opportunity to be heard before making the order for costs against him.
6. The fourth and final ground is that there is no evidence to support the finding that the appellant was responsible for the costs being incurred improperly or without reasonable cause or were wasted by undue delay or by misconduct or default or acted improperly.
Overview of Types of Costs
7. In this jurisdiction, there are at least three types of costs that may be awarded by the Court. These are:
(a) Party/party costs pursuant to Order 22, rule 24 and Scale of Costs in Schedule 2 of the NCR.
(b) Solicitor/client costs based on the hourly rate of solicitor/lawyer pursuant to Order 22, rule 35 of the NCR.
(c) Indemnity costs based on the hourly rate of solicitor/lawyer pursuant to Order 22, rule 65 of the NCR.
8. The type of costs awarded by the National Court in the exercise of its discretion and under consideration is solicitor/client and indemnity costs because the appellant was ordered to indemnify the respondent by personally paying the respondent’s costs of litigation on a solicitor/client basis under Order 22, rules 35 and 65 of the NCR.
Reasonable Opportunity to be Heard
9. We consider that grounds one, two and three bring up a common issue in relation to whether the appellant is entitled to reasonable opportunity to be heard before the National Court awarded solicitor/client costs against him and will consider them together.
10. The appellant relied on Section 59 of the Constitution and submitted that in its broad application, it placed a duty on the National Court as a decision-making body to give him a reasonable opportunity to be heard on the question of costs where it was considering awarding solicitor/client costs against him personally. When the National Court did not, it breached Section 59 and denied him natural justice.
11. Further, the appellant submitted that the notion that the National Court had a duty to give him a reasonable opportunity to be heard is restated in Order 22, rule 65(1) of the NCR where it envisaged that a solicitor shall be given a reasonable opportunity to be heard in a case where the National Court is considering making the following types of costs orders:
(d) disallow the costs as between him and his client; and
(e) direct the solicitor to repay to his client costs which the client has been ordered to pay to any other party; and
(f) direct the solicitor to indemnify any party other than his client against the costs payable by the party indemnified.
12. According to the appellant, the notion that the National Court had a duty to give him a reasonable opportunity to be heard on
the question of solicitor/client costs is not novel or an extraneous requirement of the law but one recognized as necessary to distinguish
and separate award of solicitor/client costs against a party from solicitor/client costs against the solicitor/lawyers as was held
by the Supreme Court in Teamae v. Motor Vehicle Insurance Limited (2013) SC1224 at [27]:
“........that an order for costs in circumstances is in breach of the principles of natural justice in that the second appellant was not heard on costs. See also Order 22, rule 65(1) of the National Court Rules.”
13. The respondent submitted that the Teamae case (supra) has no bearing on the issue under consideration because it is distinguishable on its facts. In that case the lawyers were not counsel at the trial when the National Court awarded solicitor/client costs against them. Consequently, the Supreme Court upheld one of their grounds of appeal that the National Court failed to give them a reasonable opportunity to be heard under Order 22, rule 65(1) of the NCR. In the present case, the appellant was counsel at the trial and the transcripts of the National Court trial established that he did not respond or make submissions to contest the respondent’s submissions for the Court to award solicitor/client costs against him or the plaintiffs.
14. While the respondent has correctly identified the factual difference between the Taemae case (supra) and this case, we reject its submissions that it was not necessary for the National Court to give the appellant a reasonable opportunity to be heard on the question of solicitor/client costs. We agree with the appellant that the National Court had a duty to give him a reasonable opportunity to be heard on the question of solicitor/client costs because this type of costs is at a higher scale than the party/party costs in the Scale of Costs of Schedule 2 of the NCR. Significantly, the costs will be personally paid by the solicitor/lawyer, in this case, the appellant.
15. Additionally, an award of solicitor/client costs against a solicitor/lawyer has wider serious implications. One of them is the loss of professional reputation and integrity. This may lead to loss of existing and potential clients and in turn, revenue for the solicitor/lawyer. The other is the risk of attracting a higher premium for insurance indemnity cover for the solicitor/lawyer based on what may be perceived as a professional negligence case against the solicitor/lawyer. The physical and emotional stress of being faced with a substantial bill of costs from the opposing party cannot be underestimated and will operate in favour of a solicitor/lawyer’s claim to a right to be heard separately from his client/party on the question of solicitor/client costs.
16. These appeared to be the some of the concerns the National Court alluded to in Islands Helicopter Services Ltd v. Wilson Sagati & Others (2008) N3340 when it stressed the importance of the right of a lawyer to be heard in relation to solicitor liability for costs at [9] of the judgment:
“Costs on a party-party basis is the norm in any Court proceedings. Costs awarded on a lawyer-client basis is a departure from the norm and it requires proper exercise of judicial discretion. An order for costs on lawyer-client basis is a serious matter for the lawyer concerned, both in terms of financial burden placed on the lawyer and adverse effect on his/her professional reputation, and the onus, which is no doubt a heavy one; falls on the lawyer seeking such costs to persuade the Court to exercise this discretion in his or her favour”.
17. We consider that these are some of the reasons which may draw support to the appellant’s contention that the principles of natural justice under Section 59 of the Constitution and Order 22, rule 65(1) of the NCR placed on the National Court, a duty to give the appellant a reasonable opportunity to be heard on the question of solicitor/client costs where the Court is considering whether or not to order the solicitor/lawyer to personally pay solicitor/client costs. A further reason is that while we heard from the respondent that the National Court has broad discretion to order the appellant to pay solicitor/client costs, and one of the considerations is that, the Court will look at the conduct of the lawyer in relation to his/her handling of the case, we are not persuaded that the broad discretion should deny a solicitor/lawyer, in this case, the appellant, a reasonable opportunity to be heard.
18. In the present case, notwithstanding the respondent’s strong submissions that the appellant was given an opportunity to be heard, it is abundantly clear from the transcripts of the National Court trial that the respondent’s submissions were directed at the plaintiffs Catherine Paulus and Dorothy Gerota to pay solicitor/client costs. There were no submissions made by the respondent that the appellant should personally bear the respondent’s costs on a solicitor/client basis. This is further reinforced by the written submissions of the respondent where the respondent submitted at [31] and [32] that “.........the Court ought to dismiss the entire proceedings with costs against the plaintiffs. ANL seeks costs on a solicitor and client basis for these reasons......” and the respondent’s lawyers letter of forewarning dated 6th July 2022 which made no claim for costs on solicitor/client basis against the appellant. We are satisfied that the respondent did not seek solicitor/client costs against the appellant and the National Court misdirected itself to award solicitor/client costs against the appellant. Even if it was considering ordering the appellant to pay this type of costs, based on the principles of natural justice under Section 59 of the Constitution and restated in Order 22, rule 65(1) of the NCR, we are further satisfied that the National Court failed to give the appellant a reasonable opportunity to ‘show cause’ why he should not be personally liable for solicitor/client costs.
Conduct of Lawyer
19. As to ground four, while both parties made strong submissions for and against the reasons for the National Court to arrive at its decision to order the appellant to pay solicitor/client costs, and we note the respondent’s submissions reinforcing what appeared to be the appellant pursuing an unmeritorious and unsubstantiated action which was bound to fail because based on the contract of employment between the parties, the plaintiffs had been paid and the respondent owed no money in lieu of furlough leave to them, it is not necessary for us to consider this ground because the appellant was not heard on these points.
Conclusion
20. A discretionary judgment of National Court may be set aside where there is an identifiable error: Curtain Bros (PNG) Ltd v. University of Papua New Guinea (2005) SC788. In the present case, we are satisfied that the National Court made an identifiable error when it misdirected itself in ordering the appellant to pay solicitor/client costs when the respondent did not seek this type of costs order against the appellant. Further, that it did not give the appellant a reasonable opportunity to be heard on the question of solicitor/client costs and a miscarriage of justice has occurred.
21. We uphold the appeal and set aside the order for the appellant to pay solicitor/client costs. Finally, we note that this finding will mean that the respondent will have no costs order to recover costs of the proceedings from the appellant or the plaintiffs. In addition, we note that the respondent sought costs against the plaintiffs, but the National Court ruled against the appellant, the appellant did not seek any order to substitute the plaintiffs to pay the solicitor/client costs. Moreover, we note that the plaintiffs are not parties to the appeal and were not heard in relation to the question of whether they should be ordered to pay solicitor/client costs or that the question of who should pay solicitor/client costs should be remitted to the National Court for hearing.
22. In the circumstances, we consider that a fair and just outcome is to invoke the powers of the Supreme Court under Section 16 of the Supreme Court Act and order that the National Court proceeding be reinstated and the question in relation to who should bear the solicitor/client costs be remitted to the National Court for hearing.
Order
23. The final terms of order of the Court are:
1. The appeal is upheld.
5. Time shall be abridged.
__________________________________________________________________
Ashurst Lawyers: Lawyers for Respondent
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