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Fainga'a v Lelea [2004] TOLawRp 59; [2005] Tonga LR 8 (22 January 2004)

IN THE SUPREME COURT OF TONGA

Fainga'a

v

Lelea

Supreme Court, Nuku'alofa
Ward CJ
C 38/03

22 January 2004; 22 January 2004

Civil procedure – security for costs – factors to take into account – order refused

The plaintiff, a married woman, first brought a claim for damages for unlawful arrest and imprisonment against three individual police officers, the Ministry of Police and the Kingdom of Tonga. After defences had been filed, the plaintiff applied to amend the claim by the addition of another police officer as the fourth defendant. The application was granted on 13 May, 2003 but the plaintiff was ordered to pay the costs incurred by the first, second, fifth and sixth defendants in drafting the defences to the original claim. The parties agreed costs of $400 and agreed that they should be paid in instalments of $50 per week. By 15 December, the plaintiff had only paid $150 and the defendants filed an application for security for costs on the basis that, if the plaintiff was unable to find this small sum, it was unlikely she would ever be able to pay the costs of a full trial. The plaintiff opposed that application and her counsel advised the court that a pig worth $300 was offered in settlement of $150 of the costs but counsel for the defendants did not respond to the offer.

Held:

1. Once the court determined that one of the factors in O17 r 1 was present, it must then decide whether to exercise its discretion to order security. It must, in so doing, have regard to all the circumstances and then decide whether it would be just to do so. That was a two-edged test as justice applied to both sides in an action.

2. Whilst the likelihood of the success of the claim was an important consideration, the court should not undertake an exhaustive analysis of the claim but take a broad view of the possibility of success.

3. Counsel appearing for the government should not, too readily, seek security for costs. The financial resources of many members of the public were such that even a modest order for security would be sufficient to prevent the case proceeding. The government, on the other hand, had far deeper resources and, in the general interest of allowing a matter of concern to be properly ventilated in the courts, could more easily bear the risk of not recovering its costs. In particular, where there were allegations against the police arising from an arrest or other interference with the liberty of the individual, the court should always consider that the justice of the case in those circumstances would point strongly to allowing the case to proceed to trial.

4. The court refused the application for security for costs.

Cases considered:

Porzelack KG v Porzelack (UK) Ltd [1987] 1 WLR 420

Sir Lindsay Parkinson and Co Ltd v Triplan [1973] QB 609

Statute considered:

Companies Act (UK)

Rules considered:

Supreme Court Rules

Ruling

This is a claim for damages for unlawful arrest and imprisonment.

The plaintiff, a married woman, first brought this action against three individual police officers, the Ministry of Police and the Kingdom of Tonga.

After defences had been filed, the plaintiff applied to amend the claim by the addition of another police officer as the fourth defendant. The application was granted on 13th May, 2003 but the plaintiff was ordered to pay the costs incurred by the first, second, fifth and sixth defendants in drafting the defences to the original claim.

It appears the parties agreed costs of $400.00 and that they should be paid in instalments of $50.00 per week. By 15 December, the plaintiff had only paid $150.00 and the defendants filed application for security for costs on the basis that, if the plaintiff is unable to find this small sum, it is unlikely she will ever be able to pay the costs of a full trial.

The plaintiff opposes that application and her counsel advises the court that a pig worth $300.00 was offered in settlement of $150.00 of the costs but counsel for the defendants did not respond to the offer.

I set the matter for hearing in chambers today. Counsel for the plaintiff appeared but counsel for the defendants did not. Miss Guttenbeil from Crown Law, on hearing the case called, attended out of courtesy but was not instructed and could not argue the case.

I refused the application for security for costs and feel it may be helpful if I give brief reasons for the decision.

Order 17 rule 1 gives the court power to order that an action be stayed unless the plaintiff gives security for costs if it appears to the court on application by the defendants that:

"(i) the plaintiff is ordinarily resident out of the jurisdiction, or

(ii) the plaintiff may be unable to pay the costs of the defendant if ordered to do so, or

(iii) the plaintiff has not disclosed his true address to the court."

The rule provides that the court may make such an order if, having regard to all the circumstances of the case, it thinks it is just to do so.

The rule sets out the only grounds upon which security may be ordered. Clearly the defendants' application here is based on rule 1 (ii), a ground, it should be noted, which is not found in the equivalent English rule; O 23 r 1(1).

The general principle is that costs follow the event and so any order for costs is not usually made until the action is finally disposed of. However, Order 17 recognises the fact that, in some cases, there is a significant risk that the defendant may have to defend an action with no real prospect of being able to recover the costs if he is successful. Security for costs may be granted in such cases to avoid what would otherwise be an injustice.

Once the court has determined that one of the factors in O17 r 1 is present, it must decide whether to exercise its discretion to order security. It must, in so doing, have regard to all the circumstances and then decide whether it would be just to do so. That is, of course, a two edged test as justice applies to both sides in an action.

In the case of Sir Lindsay Parkinson and Co Ltd v Triplan [1973] QB 609, which related to the likelihood of a company being able to meet an order for costs under a provision of the English Companies Act, Lord Denning MR mentioned, at 626, some of the matters the court might consider:

"There seems to have been some misapprehension on the matter in the past. The sooner it is put right the better. If there is reason to believe that the company cannot pay the costs, then security may be ordered, but not must be ordered. The court has a discretion which it will exercise considering all the circumstances of the particular case. So I turn to consider the circumstances. Mr. Levy helpfully suggests some of the matters which the court might take into account, such as whether the company's claim is bona fide and not a sham and whether the company has a reasonably good prospect of success. Again it will consider whether there is an admission by the defendants on the pleadings or elsewhere that money is due. If there was payment into court of a substantial sum of money (not merely payment into court to get rid of a nuisance claim), that, too, would count. The court might also consider whether the application for security was being used oppressively – so as to try to stifle a genuine claim. It would also consider whether the company's want of means has been brought about by any conduct by the defendants, such as delay in payment or delay in doing their part of the work."

Although this was under section 726 of the English Act, the principles are the same and have been applied in relation to O 23.

Whilst the likelihood of the success of the claim is an important consideration, the court should not undertake an exhaustive analysis of the claim but take a broad view of the possibility of success.

It was pointed out in Porzelack KG v Porzelack (UK) Ltd [1987] 1 WLR 420:

"I have had a major hearing on security for costs ... in which the parties have sought to investigate in considerable detail the likelihood or otherwise of success in the action. I do not think that is a right course to adopt on an application for security for costs. The decision is necessarily made at an interlocutory stage on inadequate material and without hearing any evidence. A detailed examination of the possibilities of success or failure merely blows the case up into a large interlocutory hearing involving great expenditure of both money and time."

Even in a case where it is not clear whether the plaintiff will succeed or fail, the court should be very wary of making an order, which may have the effect of preventing the plaintiff from pursuing his claim. In such circumstances, the court may decline to order security or may order it in a reduced sum.

In a case such as this, where the plaintiff is alleging improper conduct by public officers, I consider the court should take a much more liberal view of the plaintiff's chances of success. It is in the public interest to have such complaints heard. Therefore, where the claim is based on an allegation of malpractice by a public official, the court should be cautious about making an order which might have the effect of stifling a genuine case. Whilst the court must always be conscious of the possibility that the claim is a sham or brought solely for reasons of malice, if it appears otherwise and is founded on a good cause of action, the court should only order security where it is clear there is no chance of success.

As a result, counsel appearing for the government should not, too readily, seek security for costs in such cases. The financial resources of many members of the public are such that even a modest order for security will be sufficient to prevent the case proceeding. The government, on the other hand, has far deeper resources and, in the general interest of allowing a matter of concern to be properly ventilated in the courts, can more easily bear the risk of not recovering its costs. In particular, where there are allegations against the police arising from an arrest or other interference with the liberty of the individual, the court should always consider that the justice of the case in those circumstances will point strongly to allowing the case to proceed to trial.