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Sharma v Registrar of Titles [2007] FJHC 118; HBC 351.2001 (13 July 2007)

IN THE HIGH COURT OF FIJI
AT SUVA

CIVIL JURISDICTION

Civil Action No. HBC 351 of 2001

Between:

RAJESH PRAKASH SHARMA
Plaintiff/ Applicant

And:

THE REGISTRAR OF TITLES
1^st Defendant/ Respondent

And:

THE ATTORNEY GENERAL OF FIJI
2^nd Defendant/ Respondent

Before: Master Udit

Counsel: Ms Kenilorea for the Plaintiff /Respondent
Ms M. R. Vuniwaqa for the 1^st & 3^rd Defendants/Applicants
Mr E Veretawatini for the 2^nd Defendant/Applicant

Date of hearing: 19^th June, 2007
Date of Decision: 13^th July, 2007

DECISION
(Security for costs)

Introduction

[1] I have before me two summonses, both filed by the defendants seeking security for costs against the plaintiff. The first and third defendants are jointly represented by the Attorney Generals Chambers and second by Eroni Veretawatini Lawyers. The defendants' counsels seek a sum of $1,500.00 as security for costs for their respective clients. This application is proceeded with on the ground that the plaintiff, who although is a former citizen of this country, is now residing permanently in United States of America. It is vehemently opposed by the plaintiff.

Consideration of the application

[2] The application is filed pursuant to Order 23 rule 1(a) which states:-

[3] Security for costs of action, etc. (O.23, r.1)

1) Where, on the application of a defendant to an action or other proceeding in the High Court, it appears to the Court-

(a) that the plaintiff is ordinarily resident out of the jurisdiction, or

(b)..........

(c)..........

(d)..........

then if, having regard to all the circumstances of the case, the Court thinks it just to do so, it may order the plaintiff to give such security for the defendant's costs of the action or other proceeding as it thinks just.

(emphasis added)

[3] The aforementioned rule, vests the court with an unfettered discretion to order security for costs. All this rule entails to protect is the risks to which an applicant may be exposed to for recovering of costs in a foreign jurisdiction. The quantum of costs comparatively in Fiji is not relatively high although fairly substantive within the jurisdiction which is worth recovering. Execution of costs abroad where the litigation costs are much higher will render the exercise as wholly uneconomical. Be that as it may, ultimately the issue is not that the respondent will not have the assets or money to pay the costs or that the law of the foreign party's country not recognizing an order of our court, and/or enforcement of costs order even be it under any legislation similar to our Reciprocal Enforcement of Judgments Act, (Cap 39), but it is also the extra steps which will be needed to enforce any such judgment outside the jurisdiction. In deed, in will not be an irrefutable presumption to infer that an extra burden in terms of costs and delay, compared with the equivalent steps that could be taken in Fiji, will be an inevitable corollary. The obvious expenditure which comes to my mind is the engagement of an attorney and the conundrum of registering an order in the foreign jurisdiction before it can be enforced.

[4] Mr Veretawatini, in support of the application read the affidavit of Jamila Saireen Bano. It is not in dispute that the plaintiff is not a resident of Fiji. He was a citizen. He emigrated to United States of America. In a nutshell, his submission is that in the event the claim fails, the plaintiff as a matter of course will be liable for costs. Since the plaintiff is residing overseas, it will be difficult to recover any such order abroad. He further claims the plaintiff does not own assets which can easily be converted in to ready cash to satisfy such an order. On the issue of the delay in making this application, Mr Veretawatini submitted that, he only came to know of the residential status of the plaintiff on 9^th February, 2007, when Ms Kenilorea inadvertently mentioned it in the chambers before me. At the time of the commencement of the action, in the intitul the plaintiff expressly stated his address as '215 Rewa Street, Suva'. Upon acquiring knowledge of the plaintiff's change of jurisdiction, without delay he wrote to the plaintiff's solicitors for security for costs, to which no response was forthcoming. Hence this application was filed.

[5] Ms Vuniwaqa, in adopting most parts of Mr Veretawatini's submissions, further added that although the plaintiff may have some assets in the country (referring to the land which is the subject of this litigation), it serves no purpose as the plaintiff is at liberty to dispose of the same. She went further to say that an asset will only be of consequential significance if complimentary order prohibiting disposal is granted. Ms Kenilorea did not have any instructions for consenting to such an order.

[6] In support of the aforesaid submissions Ms. Vuniwaqa aptly referred to a decision of the Court of Appeal in De Bry v. Fitzgerald & Anor [1990] 1 WLR 552 at 555 para f, where His Lordship, Lord Donaldson MR said:-

"Since the purpose of such an order is to have a fund within the jurisdiction which will guarantee that any order for costs in favour of the defendant will be met, it is a complete answer to an application for such an order that a fund already exists, at least if the court can ensure that the fund will not be dissipated".

(emphasis added)

[7] Let me consider the grounds advanced by the plaintiff for opposing the application.

[8] Ms Kenilorea, whilst not disputing the general principle obliging a plaintiff ordinarily residing abroad to pay security, advanced three grounds against the granting of order sought by the defendants.

(a) Former citizen of Fiji

[9] Firstly, it is argued that although the plaintiff is residing abroad, he is a former citizen of Fiji, who has links to the country of his birth. Despite emigrating, he claims that all the links in Fiji have remained intact. She referred to a decision of His Lordship Mr. Justice Connors in Weld Tech Ltd -v- ANZ Banking Group Limited, Lautoka High Court Civil Action No: HBC 0147/2001/L. Weld Tech Ltd was a company registered in Fiji with all its Directors residing abroad. Even though it was a locally registered company, His Lordship, Mr. Justice Connors awarded security for costs as all directors were residing abroad. In that regard, this case does not assist the plaintiff.

[10] In response to the 'residential' requirement as suggested by the plaintiff's counsel, Ms
Vuniwaqa citing from the White Book 1999, para 23/3/4 concisely submitted that:-

'.......The question is one of fact and of degree; it does not depend upon the duration of the residence, but upon the way in which a man's life is usually ordered, and it contrasts with occasional or temporary residence .........In R. v. London Borough of Barnet, ex p. Shah [1983] 2 A.C. 309; [1983] 1 All E.R. 226, H.L., it was held .........the phrase "ordinarily resident" should be construed according to its ordinary and natural meaning, and that a person is ordinarily resident in a place if he habitually and normally resides lawfully in such place from choice and for a settled purpose, apart from temporary or occasional absences, even if his permanent residence or "real home" is elsewhere.'

(emphasis added).

[11] On this question of 'resident', perhaps a party who has only made a provisional decision to go away and live abroad, but has not left the jurisdictional country will be excluded from the definition of 'ordinarily resident' out of the jurisdiction; Appah v. Monseu [1967] 2 ALLER 583 at 584 para h-). Having property in the jurisdiction on its own does not alter the definition under the rule. In Mcrae v Mcrae [1949] 2ALLER 34 at 36, Somerville L.J. held that the residential qualification may change even within a day. For that, all the party has to do is to cut the connection with the country by disposing of the assets such as the house and moving to another country with a clear intention that the adopting country will be the place of his new residence for an indefinite period of time. Here, the plaintiff has already emigrated to United States of America with an intention to and is permanently living there.

[12] I uphold the submissions of Ms Vuniwaqa on this point. There is no merit in Ms Kenilorea's submission and is accordingly dismissed.

(b) Substantive Assets in Fiji.

[13] Ms Kenilorea's, second ground is that the plaintiff has substantive assets in Fiji. In support, she cited a decision of His Lordship Mr Justice Fatiaki (as he then was and now the Honourable Chief Justice) in Babu Bhai Patel -v- Manohan Aluminium Glass Fiji Ltd, Suva High Court Civil Action No: HBC 0019/19 (14th November, 1997). In that matter, a similar submission was unsuccessfully advanced. It was argued that the appellant had valuable real estate asset in Fiji, and had continuing "interest and active participation in an operating wholesale business in the country and his regular visits to Fiji". His Lordship after referring to the general principle that:-

"...if a plaintiff, who is permanently residence out of the jurisdiction, has property within the jurisdiction which can be made subject to the process of the court in such a case the reason of the rule being drawn, the rule given way, and the court will not order security to be given, citing from Reddro v. Chaytor (1879) 40 L.T.797."

held:-

"In the present case however the trial magistrate correctly noted that the appellant's property was not unencumbered; had not been rented out since March 1997; and indeed, the appellant 'was not even sure whether mortgage repayments were up to date or not', Quite plainly once it had been established that the appellant was not ordinarily resident in Fiji, the 'onus' shifted to him to satisfy the trial magistrate that he came within the above-mentioned 'exception' and clearly he failed to discharge that 'onus'"

(emphasis added).

Once again this authority does not assist the plaintiff. Having assets is insufficient for the purpose of being excused from giving security for costs. Any such assets must readily be converted to pay the costs, rather than the mere possibility of it being recovered at a future date, again, at an extra expense.

[14] Certainly, the plaintiff has the land which is subject to this litigation. However, there is no evidence as to whether the land is unencumbered or not. Ms Kenilorea did not elaborate this further in her submissions. Additional properties offered to satisfy the costs are the shares which the plaintiff owns in Pacific Green, Fiji TV, R.B. Patel & Co Ltd, Communication Fiji Ltd, Fiji Sugar Corporation and Colonial First State. How does one convert the shares to satisfy an order for costs? What is the value of the shares? None of the counsel assisted me on this. However, since this is a discretionary matter, in my view any such security is inadequate for two reasons. Firstly, there is no order restraining the disposal of the land or shares. Nor is there any evidence of an undertaking given to the court by the plaintiff obliging him not to dissipate the land or shares until the action is finally determined. Secondly, any enforcement of the order would unavoidably result in further applications to court, such as registering a judgment against the title etc., thus incurring additional unwarranted expenditure and frustration.

(c) Land subject of litigation

[15] Thirdly, and lastly, on behalf of the plaintiff it is submitted that the land which is subject of this litigation will be subdivided and sold. Income derived from the sale of the said land as a whole or after subdivision is submitted to be sufficient security to satisfy any order for costs. Currently, the only impediment is the access. In reply Mr Veretawatini classified this as a very vague and uncertain assertion which is predicated upon future conduct, which may or may not eventuate. In any event, there is reason no for the defendants to wait for the plaintiff to organise his life and property, before they enjoy the fruits of their success. I am in agreement with Mr Veretawatini's submissions on this point, and dismiss the plaintiff's objection based on this ground.

Other factors for considerations

[16] Another factor which I find extremely important for the exercise of discretion is the relative value of the land or shares as opposed to the potential liability for costs, which for the present purposes is to be assessed on standard as opposed to indemnity basis. In my view the total costs that may be awarded against the losing party will possibly be within a range of $2,000 to $3,000. To attach this meagre order for costs against the land valued at $75,000 (by plaintiff's own valuation) is not a feasible proposition, even from the plaintiff's perspective. I say this because, almost six years have lapsed from commencement of this action, which is still not finalised. Not only that, any encumbrance even it be for a meagre sum of costs may eventually hinder the proposal for and expeditious subdivision, if the plaintiff is serious with his plan I asked Ms Kenilorea, as to whether the plaintiff would feel comfortable in encumbering the property for a total cost of around $5000-00 to $6000-00. She did not have any instructions on it.

[17] In my view, any order for security for costs in this case ought to be tailored to reflect the nature and size of the risk which it is designed to protect. What is intended to be protected in this case is a potential liability of $5,000 or $6,000 in toto at most. Associated with this is issue is the ability of a party to provide cash security, usually deposited in court. There is not an iota of evidence that the plaintiff is a person of no means. Prior to leaving Fiji he was working as a Bank Officer. Had that been the case, I may have considered this factor to avoid the claim being stifled.

[18] During the course of the hearing, I required the counsel to make submissions on the relative strength of the parties' case. Ms Vuniwaqa submitted that Attorney General is a nominal defendant and the Registrar of Titles has a meritorious defence which has a realistic prospect of success. Both the parties, which she represents, thus are not liable for the acts or omission of the plaintiff or Navua Drainage Board. Since no variation to the title was lodged for registration, the Registrar of Titles cannot be made liable for an unregistered interest. It may have been a different matter entirely had any documents being lodged for registration and the same was not attended to by the Registrar. Such an omission if deluded the plaintiff as to the indefeasibility of title, unquestionably the Registrar would have been exposed to a suit similar to the present one.

[19] On Behalf of the second defendant, Mr Veretawatini, submitted that the land was properly obtained from the then owner for the drainage purpose. It was obligatory upon the plaintiff to inspect the land before purchasing it. The drain physically exists on the said piece of land. Failure to do so was at his own peril. A claim based absolutely on indefeasibility is submitted not be the ultimate recourse in law.

[20] However, at this juncture I remind myself of the principle that in deliberating upon an application for security for costs, I am not required to delve in to the meticulous details of the merits or demerits of the claim or defence. But in that respect, I am very fortunate in this case as this issue was already considered comprehensively by His Lordship, Mr Justice Pathik in an interlocutory decision dealing with an application to enter a judgment against the State under Order 77 rule 6 delivered on 31^st October, 2003. At this stage, all I can do is to refer to the part of the decision, where His Lordship said:-

'There is no doubt that there has been a considerable delay on the part of the defendants in complying with the High Court Rules. On the other hand, Ms. Rakuita for the defendants has in her very comprehensive written submissions raised numerous defences which appear to have considerable merit in them. In fact she has raised a number of points of law which cannot be resolved without the trial of the action in open Court necessitating the adducing of oral evidence.

The defendants' application in effect is for leave to defend. The principle is that leave must be given unless it is clear that that there is no real substantial question to be tried [Codd v Delap (1905), 92 L.T. 510 H.L]; and further that there is no dispute as to facts or law which raises a reasonable doubt that the plaintiff is entitled to judgment (Jones v Stone [1894] UKLawRpAC 2; [1894] A.C. 122).

In this case the defendants have raised substantial questions of fact which ought to be tried and also difficult questions of law have been raised. In these circumstances leave to defend should be given (Saw v Hakim, 5 T.L.R. 72, Electric etc. Corp v Thomson Houston etc Co. 10 T.L.R. 103)'

[21] Finally, Ms Kenilorea did not pursue any submission of the plaintiff's inability to comply with an order for security. In addition that non compliance with any such order may stifle the plaintiff's claim. Indeed it is a very significant issue for the exercise of the court's discretion. Nor did Ms Kenilorea oppose the lateness of the application. Whilst delay is not a decisive factor but is a matter which may be taken in to consideration.

[22] Having heard the counsel and after reading the supporting documents of both the parties, I hold that the plaintiff is ordinarily resident out of jurisdiction. He has not discharged the onus that there are unencumbered assets within the jurisdiction to satisfy any order for costs which may be awarded against him, if the claim fails. Nor is there any evidence before the court of the plaintiff's inability to meet an order for costs which would adversely affect his claim. Having considered all the circumstances of this case, I hold that the plaintiff be ordered to provide sufficient security for costs, which I intend to consider next.

Quantum of Costs

[23] None of the counsel submitted on the formula for ascertaining the quantum of the security for costs. Equally, important is that none of the defendants' filed their projected bill of costs. Indeed, it would have been a very helpful guide. In any event a very useful guide is provided in Halsbury's Law of England (4^th edtn) Vol. 37para 307, which is appropriate for our jurisdiction. It states:-

"The amount of security for costs ordered to be given is in the discretion of the court, which will fix such sum as it thinks just to do so, having regard to all the circumstances of the case. It is not the practice to order security for cost on a full party and party, still less on an indemnity basis. In the case of a plaintiff resident out of the jurisdiction the more conventional approach is to fix the sum at about two-thirds of the estimated party and parry costs up to the stage of the proceedings for which security is ordered, but there is no hard and fast rule."

[24] Similarly, His Lordship, Mr Justice Gault, a Justice of Appeal of the New Zealand Court of Appeal in Mclachlan & Others v. Mel Network Limited [2002] NZCA 215 (29 August 2002 at paragraph 27 of the judgment pertinently said:-

"[27] The amount of security is not necessarily to be fixed by reference to likely costs awards: National Bank of New Zealand Ltd v Donald Export Trading Ltd [1980] 1 NZLR 97, at 103. It is rather to be what the Court thinks fit in all the circumstances..."

Conclusion

[25] Having considered, the submissions of the counsel, I conclude both the applications for the security for cost be allowed. Whilst the plaintiff is evidently entitled to pursue his claim, it is to be equally anticipated that the defendants will incur cost in defending it. If ultimately the plaintiff is unsuccessful or abandons the claim, the defendants certainly need protection for their costs. Applying the formula as set out in paragraph 24 above, I fix and order the plaintiff to pay a security for costs in the sum of $1,200 to the first and third defendants, jointly and $1,200 to the second defendant, which are to be deposited in court by 15^th August, 2007. Upon depositing security for cost, I will refer the file to a Judge to fix a trial date for which purpose this action is adjourned to 15^th August, 2007.

Accordingly, so ordered

J.J.Udit
Master

13 July, 2007