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Risale v Kohlhase [2015] WSSC 165 (9 October 2015)

IN THE SUPREME COURT OF SAMOA
Risale v Kohlhase and Tupu [2015] WSSC 165

IN THE SUPREME COURT OF SAMOA
HELD AT MULINUU

BETWEEN:

SHARAYNE RISALE and PONAMU RISALE
Plaintiffs

AND:

LESLIE MARIA KOHLHASE
First Defendant

AND:

KEVIN KOHLHASE
Second Defendant

AND:

SEB & RENE SPORTS LIMITED
Third Defendant

AND:

FAATOIA TUPU
Third Party

Counsel: T Lamb for plaintiffs
D Clarke for defendants

Decision: 9 October 2015

DECISION OF THE COURT

1. The first and second defendants seek security for costs against the plaintiffs pursuant to rule 30(1) Supreme Court (Civil Procedure) Rules 1980 which provides:
   • In any civil proceedings and at any stage thereof, the Supreme Court may require a plaintiff or applicant resident out of the jurisdiction of the Supreme Court to deposit any sum of money as security for costs and may stay the proceedings pending the making of that deposit.
2. The defendants seek payment of $120,000 by the plaintiffs to secure the costs of the two defendants in the event that the plaintiffs’ claim be unsuccessful. Counsel for the two defendants estimate trial time to be more than three weeks.
3. Grounds upon which security for costs is sought are:
   • (i) The plaintiffs are resident overseas and they have no tangible assets or property in Samoa.
   • (ii) The defendants intend to vigorously defend these proceedings and have a good defence to the claim.
   • (iii) Should the plaintiff’s claim against the defendants be unsuccessful, any award of costs in favour of the defendants would be rendered nugatory unless the plaintiffs pay into Court the amount sought as security for costs.
   • (iv) The defendants will incur significant costs in defending these proceedings and the amount sought is appropriate in the interests of justice and having regard to all the circumstances of the case; and
   • (v) It is just and equitable that the order for security of costs should be made.
4. It is not denied that the plaintiffs reside in New Zealand and they have no assets in Samoa. But the plaintiffs say that any adverse order for costs against them can be met through the undertaking of Tupuola George Hunt, (Mr Hunt) the father of Sharayne, the first named plaintiff. Mr Hunt has backed his undertaking through counsel by making available his residential home on a half acre free hold land, valued in the year 2012 at $479,000, as security for any order of costs against the plaintiffs.
5. Mr Clarke, counsel for the two defendants contended that the undertaking by Mr Hunt, however genuine it may be, is not the security contemplated by rule 30. He argued that rule 30 limits the discretion of the court, on the type of orders it can make. He says at paragraph 3.3 of his written submissions:
   • 3.3 In terms of rule 30, the Rule specifically provide for the deposit a sum of money as security for costs are to be provided to the court. Rule 30 expressly dictates the requirement that security for costs is to be a deposit of a sum of money as directed by the Court. Rule 30 is not inclusive of an undertaking. While the courts have consistently recognised the discretionary powers of the Courts to grant security for costs in previous case authorities, it is our respectful submission that any existing discretion relates only to the determination of quantum and only as to the factors to consider when deciding whether to order security for costs. In our respectful view, this discretion is not extended to include the form in which security for costs is to be given by a plaintiff resident overseas. Under rule 30 the form of security is specifically limited to the deposit of a sum of money.
6. Mr Lamb for the plaintiffs submitted that the court has an unfettered discretion under rule 30 to consider whether security for costs should be ordered and one of the factors the court should consider is whether a third party is willing and able to stand behind the plaintiffs and offer undertaking to be liable for costs and if so, the form of any such undertaking.
   • There are numerous authorities in New Zealand and Australia that a suitable undertaking from a third party is acceptable as a means of security. Counsel cited Ray & Phyllis Denning Trustee Ltd v Watercare Services Ltd New Zealand High Court 3/11/2008 and the New South Wales Supreme Court decision in Wollongong City Council v FPM Construction Pty Ltd [2004] NSWSC 523.
7. Mr Clarke however argued that those authorities are not relevant in the interpretation of rule 30 since the relevant rules in New Zealand and Australia are worded differently to our rule 30. In New Zealand for instance, the relevant New Zealand High Court Rule is rule 5.45. The relevant part of that rule requires the plaintiff resident overseas and against whom the order is made to give security for costs:
   • (i) to pay the sum ordered into court, or
   • (ii) to give, to the satisfaction of the Judge or Registrar security for that sum.

Discussion

8. There is no doubt that any adverse order of costs against the plaintiffs can be adequately covered by the security which Mr Hunt has pledged over his unencumbered property. How that security is to be effected remains to be determined.
9. The primary dispute is whether the security offered by Mr Hunt is a factor which the court ought to consider in the exercise of its discretion under rule 30 when considering whether to order security for costs. If the security pledged by Mr Hunt is available, and as there is no dispute as to its adequacy, it is unnecessary to order security of costs against the plaintiffs.
10. It is common ground that if the plaintiffs had tangible assets or property in Samoa, the question of security of costs would not have arisen, simply because there would be no need for the defendants to enforce any adverse order for costs overseas. If that is so, there is logic in contending that tangible assets and property of a third party pledged as security for any adverse costs order against the plaintiff, should be a relevant factor in the exercise of the courts discretion to refuse an order for security of costs. After all, those assets would protect the defendants, by making it unnecessary for them to go through the trouble and expense of enforcing cost orders overseas.
11. This Court in Metai v Drake [2000] WSSC 49, and Wilex Cocoa & Coconut Products Ltd v EPC [2009] WSSC 35, said that third parties standing behind the plaintiffs, supporting the plaintiffs is a relevant factor to the exercise of the courts discretion in determining whether it is appropriate to order security for costs. It is good logic and good sense that in the exercise of the unfettered discretion of the court, the court ought to achieve a balance between ensuring that an adequate protection is provided to the defendants, and avoiding injustice to an impecunious plaintiff by unnecessarily shutting it out or prejudicing it in the conduct of the proceedings.
12. Contrary to the submissions of Mr Clarke, the discretion of the court is not fettered by rule 30 to limit the court’s power, to order plaintiffs resident overseas with no assets in Samoa, to payment of deposits of sums of money as security for costs. Numerous authorities speak of the discretion of the court as a wide one and the circumstances in which the discretion is exercised cannot be stated exhaustively. The factors relevant to the exercise of the discretion vary from case to case.
13. It follows that the undertaking security pledged by Mr Hunt is a factor which the court should consider in the exercise of its discretion. Security for costs should not be ordered against the plaintiffs.
14. Mr Lamb also contended that rule 66 provides further powers to the court in deciding how security for costs should be given. Rule 66 provides:
    • “The Court may, as a condition of granting any interlocutory application, impose such terms and conditions as it thinks fit and without prejudice to the generality of the foregoing provisions, may make orders requiring any party
      • (a) To give security; or
      • (b) To give an undertaking; or
      • (c) To pay money into court; or
      • (d) To pay all or any part of the costs of the proceedings.

Rule 66 speaks of conditions which the court may impose after it had determined and granted an interlocutory application. Rule 30 grants unfettered discretion to the Court when it considers security for costs applications. In my view, rule 66 has no relevance to the exercise of the court’s discretion under rule 30.

Result

(1) It follows that the application for payment of sums of money as security for costs should be refused. Before granting the formal order the plaintiff’s counsel is to file within 21 days and serve a copy on the defendant’s counsel the appropriate security over Mr Hunt’s property.
(2) Counsel for the defendant to file response (approving or rejecting) within 2 days after receipt of the security.
(3) If the security is approved by counsel for the defendant, or if no response is filed the court will forthwith grant the formal orders.
(4) If rejected the Court will hear counsels on the 6^th November 2015.
(5) Costs are reserved.

JUSTICE VAAI