SCA NO 73 OF 2014; J.S.T Limited v Arkhefield Pty Ltd (2014) SC1352

• Jurisdiction: Papua New Guinea
• Judge: Makail, J
• Judgment Date: 24 June 2014
• Citation: (2014) SC1352
• Court: Supreme Court
• Year: 2014
• Judgement Number: SC1352

Full Title: SCA NO 73 OF 2014; J.S.T Limited v Arkhefield Pty Ltd (2014) SC1352

Supreme Court: Makail, J

Judgment Delivered: 24 June 2014

SC1352

PAPUA NEW GUINEA

[IN THE SUPREME COURT OF JUSTICE]

SCA NO 73 OF 2014

BETWEEN

J.S.T LIMITED

Applicant

AND

ARKHEFIELD PTY LTD

Respondent

Waigani: Makail, J

2014: 18th & 24th June

SUPREME COURT – PRACTICE & PROCEDURE – Application for leave to appeal – Interlocutory ruling – Dismissal of application for security for costs – Security for costs – Principles of – Prior application dismissed for lack of evidence on amount for security – Second application made and dismissed – Issue estoppel raised – Principles of – Whether arguable case established – Supreme Court Act – s. 14(3)(b).

Cases cited:

Matiabe Oberia v. Chief Inspector Charlie (2005) SC801

National Housing Corporation v. Paul Asakusa (2012) SC1165

Osprey Industries v. Hallam [1992] PNGLR 557

Konze Kara v. Public Curator & The State (2010) N4055

Reynolds v. Walcott [1985] PNGLR 316

Hami Yawari v. Anderson Agiru (2008) N3983

Counsel:

Mr N. Kera, for Applicant

Mr M. Goodwin with Mr B. Nutley, for Respondent

RULING

24th June, 2014

1. MAKAIL, J: This is an application for leave to appeal against an interlocutory ruling of the National Court which refused the applicant’s application for security for costs pursuant to s. 14(3)(b) of the Supreme Court Act. It is opposed. If leave is granted, the applicant will move its application to stay the proceeding in the National Court pending the appeal. This application will not be opposed.

Background Facts

2. The claim in the National Court is for a debt in the sum of AUD195,000.00 for architectural design works said to have been carried out by the respondent on request from the applicant. On 24th March 2014, the applicant made an application by notice of motion filed on 16th August 2013 for an order that the respondent pay into Court security for costs. The bases of the application were that the respondent was a foreign entity not registered in Papua New Guinea and that the respondent commenced prior multiple proceedings for the same debt, which were either dismissed or withdrawn with costs orders in favour of the applicant.

3. On 26th March 2014, the National Court dismissed the application holding that although a prima facie case had been made out, no evidence was produced which would assist the Court to determine an appropriate amount as security. On 25th April 2014, the applicant made a second identical application to the first application by notice of motion filed on 14th April 2014 for security for costs. On the second occasion, the applicant presented evidence which would assist the Court determined an amount as security for costs. The respondent opposed the application and argued that the issue of security for costs was res judicata, as the Court had previously decided on it when it refused it.

4. On 01st May 2014, the National Court dismissed the applicant’s second application holding that the issue of whether security for costs should be paid into Court could not be re-argued based on the principle of issue estoppel. The Court’s reasons were:

(a) the principle of res judicata as argued by the respondent could not be invoked rather the respondent’s argument could be properly described as issue estoppel.

(b) issue estoppel did not permit re-argument of questions of fact or law already determined by the Court: Hami Yawari v. Anderson Agiru (2008) N3983.

(c) the issue of whether the respondent should pay security for costs was raised in the previous motion.

(d) the issue was finally determined when the previous motion was heard.

(e) the parties in the second motion were the same as the previous motion.

Consideration of Application

5. The main consideration in an application for leave to appeal is whether there is an arguable or prima facie case or has it been demonstrated that the trial judge was wrong. Matiabe Oberia v. Chief Inspector Charlie (2005) SC801. In their respective submissions, parties focussed on this issue.

6. The applicant submitted that in the National Court, the respondent did not argue in its defence to the application issue estoppel and as a result, it did not address it in its submissions. On the other hand, the respondent argued res judicata and it was the issue the National Court was asked to rule on. For this reason, it was not within the discretion of the National Court to find that issue estoppel applied and dismissed the application. If the National Court was to find that issue estoppel applied, it should have given parties, especially it an opportunity to address the Court on that issue. The National Court made an error when it found the application was barred by issue estoppel and not res judicata.

7. Even if it was within the discretion of the National Court to find that the application was barred by issue estoppel, it advanced three reasons to show that the National Court erred in law in holding that the principle of issue estoppel prevented the re-arguing of the application for security for costs. They were:

(i) issue estoppel only applies to judgments which are final in substance or form and not to judgments which are merely interlocutory, and

(ii) issue estoppel arises when a particular issue forming a necessary ingredient in a cause of action has been litigated and decided, and

(iii) a decision on an interlocutory application for costs is not a judgment which is final in nature or form and the issue forming a necessary ingredient in the respondent’s cause of action.

8. It submitted that these points demonstrate that there is an arguable case and justify a further consideration by the Court.

9. The converse of these arguments is that the National Court heard the first application on its merits and dismissed it. It dismissed it because the applicant failed to prove the amount as security. The amount is an essential ingredient of a security for costs. The applicant failed to prove it and that is the end of the matter. It cannot be re-litigated. To allow the applicant to raise the issue of security for costs for the second time by way of presentation of evidence to prove the amount as security is in effect inviting it to have a “second bite of the cherry” and is tantamount to an abuse of process.

10. Firstly, contrary to the applicant’s submission that the respondent did not argue in its defence to the application issue estoppel and as a result, it did not have an opportunity to address it in its submissions, there is evidence based on the respondent’s written submission that it did address the issue of issue estoppel together with the principle of res judicata and merger in the judgment. It was on this premise that the National Court found that the principle of issue estoppel applied and not principle of res judicata, and dismissed the application. I find that this is not a case where the applicant was not given an opportunity to address the Court on that issue. Rather it is a case of missed opportunity. I am not satisfied that the National Court made an error when it found that the application was barred by issue estoppel and not res judicata. This proposed ground is not arguable.

11. Secondly, the National Court applied the principles relevant to the principle of issue estoppel as stated by the Supreme Court (Cannings, Manuhu, and Kassman, JJ) in National Housing Corporation v. Paul Asakusa (2012) SC1165. I quote them hereunder:

“(a) the issue raised in the current proceedings is the same issue as that raised in the prior proceedings;

(b) the issue was finally determined in the prior proceedings; and

(c) the parties in the current proceedings are the same as those in the prior proceedings or, if they are not the same, the party against whom the estoppel is sought to be applied was a privy of a party to the prior proceedings and reasonably expected to be aware of the prior proceedings and entitled to be joined but failed without explanation to do so.”

12. It is common ground that the issue before the National Court in the prior application and in the second application is security for costs. Security for costs is a discretionary matter and to appreciate why the National Court dismissed the second application on the ground of issue estoppel, it is important to know what sort of considerations the Court applies when deciding the issue. The applicable principles are stated in Osprey Industries v. Hallam [1992] PNGLR 557 and adopted and applied in subsequent numerous cases including Konze Kara v. Public Curator & The State (2010) N4055. The National Court referred to these principles and decided cases in its ruling and they are:

1. whether there has been delay in making the application.

2. the bona fides of the plaintiff’s claim.

3. nullification of proceedings.

4. whether the defendant has a cross-claim.

13. The decided cases also held that the amount of security is also discretionary and there must be evidence to prove it. Proof of it is an important consideration because the amount that the Court may fix must be fair and reasonable. Security for costs must not be used as a tool to oppress the...