Osprey Industries v Hallam

• Jurisdiction: Papua New Guinea
• Judge: Salika J
• Judgment Date: 01 April 1992
• Citation: [1992] PNGLR 557
• Court: National Court
• Year: 1992
• Judgement Number: N1057

National Court: Salika J

Judgment Delivered: 1 April 1992

N1057

PAPUA NEW GUINEA

[NATIONAL COURT OF JUSTICE]

OSPREY INDUSTRIES

V

HALLAM

Waigani

Salika J

1 April 1992

COSTS — Security for costs — Where plaintiff company may be unable to pay costs of the defendant if defendant is successful in defence — Court's discretion whether or not to order security for costs — Companies Act Ch 146 s 395 (1).

COSTS — Security for costs — Amount of security within court's discretion.

Facts

The plaintiff is a company incorporated in Papua New Guinea and has taken out court proceedings against the defendants. At the time of this application the trial was only partly heard and could go on for another 5 to 7 days. The defendant/applicants had already incurred over K38,000.00 in costs, of which K14,000.00 had been paid. They were of the view that the plaintiff company will be unable to meet their legal costs if they were successful in their defence and applied by way of notice of motion under s 395 (1) Companies Act Ch 146, for orders inter alia, that the plaintiff forthwith deposit with the Registrar of the National Court the sum of K20,000.00 as security for costs. Section 395 (1) reads:

"Where a company is plaintiff in an action or other legal proceedings, a court having jurisdiction in the matter may, if it appears by credible testimony that there is reason to believe that the company will be unable to pay costs of the defendant if he is successful in his defence, require sufficient security to be given for the costs, and stay all proceedings until the security is given".

Held

1. If it appears by credible testimony that there is reason to believe that the plaintiff company will not pay costs of the defendants if the defendants were successful in defence, the Court may require sufficient security to be given for costs and stay all proceedings until the security is given. Per Salika J at p 559: "The Court must have credible testimony before it in order to give such order for security for costs".

2. Even if there is credible testimony before the Court to the effect that the plaintiff will be unable to pay costs of the defendants if the defendants are successful in their defence, the Court still has the ultimate discretion whether to grant or not to grant orders for sufficient security for costs under s 395 (1) of the Companies Act Ch 146. Lindsay Parkinson Co. Ltd v Triplan Ltd [1973] QB 609 referred to.

In exercising the Court's discretion, the following factors should be considered:

1. whether there has been delay in making the application. (Loreva Pty Ltd v Lefa Associated Agencies Pty Ltd (1982) 7 ACLR 164)

2. the bona fides of the plaintiff's claim

3. nullification of proceedings

4. whether the defendants have a cross-claim.

Having considered the evidence and all the relevant factors as to whether or not to exercise the Court's discretion to order security for costs, an order for further security of costs was made.

3. The amount of security is a discretionary matter for the Court, having regard to the circumstances of the case and in the light of s 395 (1) of the Companies Act Ch 146. Reynolds v Walcott [1985] PNGLR 316 referred to.

4. In the circumstances of this case, K20,000.00 is an amount which would be sufficient security. Since K3,000.00 was previously awarded by Amet J, the Court awarded a further K17,000.00.

Cases Cited

Papua New Guinea cases cited

Reynolds v Walcott [1985] PNGLR 316.

Other cases cited

Lindsay Parkinson Co Ltd v Triplan Ltd [1973] QB 609.

Loreva Pty Ltd v CEFA Associated Agencies Pty Ltd (1982) 7 ACLR 164.

Counsel

J Bray, for the applicants.

E Anderson, for the respondents.

1 April 1992

SALIKA J: This is an application for security for costs by way of a notice of motion. The applicants/defendants move the court for orders that:

1. the plaintiff forthwith deposit with the Registrar of the National Court the sum of K20,000.00, being security for costs;

2. the time for entry of the order be abridged to the time of entry by the Registrar, which shall take place forthwith; and

3. such other orders as the court deems fit?

The application is based on s 395 (1) of the Companies Act Ch 146. Section 395 (1) says:

"395 (1) Where a company is plaintiff is an action or other legal proceedings, a court having jurisdiction in the matter may, if it appears by credible testimony that there is reason to believe that the company will be unable to pay costs of the defendant if he is successful in his defence, require sufficient security to be given for the costs, and stay all proceedings until the security is given."

In this case, it is not disputed that the plaintiff in this proceedings is a company incorporated in Papua New Guinea. It is involved in this action against the defendants.

This court is the court that has been hearing the action up to this stage and has jurisdiction over the matter. Therefore, this court may, if it appears by credible testimony that there is reason to believe that the plaintiff company will not pay costs of the defendants, if they are successful in his...