national court of justice

TIMOTHY PETER NEVILLE; and
PETER JOHN DALTON NEVILLE

v

PRIVATISATION COMMISSION

waigani: davani j

3 - 4 November 2004

Practice and Procedure – Application to join – Application made when taxed costs remain unpaid – Court exercising its discretionary powers can stay application to join until costs are paid – O. 12 R. 7 (2) of National Court Rules. 

Costs – Set-off of unpaid costs against an unproven claim – Taxed costs not to be credited against unproven, outstanding debt – O. 22 R. 58 of National Court Rules.

Facts
The applicant, Bank of South Pacific Ltd, applied to be joined as a party in the action brought by the plaintiffs against the defendant.

Held
1.	Where the Court orders a party to pay costs, that party cannot initiate any action or further action against the other unless it has first complied with the order to pay costs. Paul Pukari and Oro Cable TV v Peter Seeto, [1997] PNGLR 246.

2.	The applicant's application is an abuse of process as it has refused to pay costs to the plaintiffs as ordered by the Court. Paul Pukari and Oro Cable TV v Peter Seeto, [1997] PNGLR 246, followed. Application dismissed with costs.

Papua New Guinea cases cited
Paul Pukari and Oro Cable TV v. Peter Seeto [1997] PNGLR 246.

Other cases cited
Edwards v. Hope [1885]14 QBD 922 
Reid v. Cupper [1915] 2 KBD 147.

Counsel
T. Elemi, for the plaintiffs
Mrs T. Nongorr, for Bank of South Pacific
No appearance by defendants

4 November 2004

Davani j. There are two motions before me. Gadens Lawyers motion filed on 3 June 2004 which motion seeks amongst others, an order that the Bank of South Pacific Limited and Mr David Wardley in his capacity as receiver of Coecon Limited be joined as defendants in this matter. I understood this to be the only order being sought by the bank and Mr Wardley and that paragraphs numbered 2, 3, 4, 5, 6 and 7 of the motion were to be moved after an order joining the both parties were made by the court.

In amended Notice of Motion filed on 17 August, 2004, by Rageau, Elemi and Kikira Lawyers, Timothy and Peter Neville (the 'Nevilles') seek orders that the application to join by the bank and Mr Wardley be dismissed or alternatively that the application for joinder by the bank and Mr Wardley be stayed until the Supreme Court costs in SCA 1 of 2002 and costs awarded on 26 November 2001 against Bank of South Pacific and David Wardley are paid in full. The Nevilles also ask in the alternative that these proceedings be consolidated with WS 173 of 2003.

I dealt firstly with the application seeking a stay of the Bank and Mr Wardley's application to join.

In support of the Neville's application is the affidavit of Turai Elemi sworn on 17 August, 2004 to which is attached a true copy the Supreme Court judgment in proceedings SC Appeal No. 50 of 2003 and a true copy of the certificate of taxation of costs in proceedings SC Appeal No. 1 of 2002. In his affidavit, Mr Elemi deposes that the costs have not been settled by the bank and Mr Wardley.

Further, Timothy Neville in his affidavit sworn on the 9 June, 2004 and relied on by the Nevilles in this application, deposes at paragraph 3 that the PNGBC Limited and Mr Wardley did apply by way of motion filed on 12 September, 2001 seeking to be joined as parties to the proceedings. This was heard by Justice Kandakasi on 18 September, 2001 and was dismissed by His Honour on 26 November, 2001. On appeal to the Supreme Court in SCA 1 of 2002 against the National Court's decision, the Supreme Court dismissed the appeal on 10 October, 2003. It is the costs of this appeal that the Nevilles now seek to be paid in full. I note that the Certification of Taxation filed on 12 July, 2004 and attached to the affidavit of Mr Elemi sworn on 17 August, 2004 is a certification by consent for the sum of K5622.10.

Without hearing arguments on merits as to why the Bank of South Pacific is now seeking to be joined in these proceedings, I take note of the Supreme Court's decision in SCA 1 of 2002 where it refused the Bank's application to join the substantive proceedings between Timothy Neville, Peter Neville and the Privatisation Commission and held that it "was a final judgment in that it terminated the action between the appellant and the respondents as there was no further issue on foot between them to be determined at a later date".

I note also the existence of proceedings WS 173 of 2003 where both the Bank of South Pacific and David Wardley are parties to those proceedings. As it is, both the Nevilles, the Bank of South Pacific and David Wardley as receiver have filed several court proceedings which have now become very congested with numerous applications on foot including appeals to the Supreme Court. 

Mrs Nongorr submits that the costs sought by the Nevilles should not be paid by her client because there are proceedings on foot filed by PNGBC Limited in WS 1362 of 2001 where it claims against Timothy Neville and Peter Neville the sum of approximately K790,000.00. This is confirmed by statement from the Bank of South Pacific Limited attached to the affidavit of John Maddision sworn on 17 August, 2004 which shows the closing balance as at 16 August, 2004 for the account of Timothy and Peter Neville to be K778,524.09. In response to this, Mr Elemi produced sealed copy of the Nevilles Defence filed in proceedings WS 1362 of 2001, on 20th September, 2002, which Defence is very detailed. The Defence denies that it owes the bank the monies owing. The Nevilles in that Defence, plead a cross claim, which claims special damages, general damages, interest and costs. The special and general damages are in relation to an allegation of breach of a duty of care by the bank to sell the property at its market value at approximately K650,000.00. It also alleges that the defendants, in this case the Privatisation Commission had failed to account to the Nevilles all monies it received as rental thereby breaching the duty of care by failing to account. 

The issue now is whether the court can under those prevailing circumstances, order that the Nevilles costs be paid? 

Mrs Nongorr submits that her clients should not pay the costs because the taxed costs can be credited against the monies owing to the bank by the plaintiffs. In this case the various proceedings including the bank and the Nevilles are all interrelated. However, the issues dealt with in the various applications before the court are different. But Mr Madison for the bank deposes in his affidavit sworn on 2 June, 2004, that once the plaintiffs' Certificate of Taxation has been converted into a judgment amount, that the Bank of South Pacific shall credit that amount against the amount owed to the Bank of South Pacific by Timothy and Peter Neville. In fact, the Bank does not wish to pay any monies to the plaintiff, as costs.

What powers does the court have in relation to the making of the orders sought by both counsel?

Mr Elemi for the plaintiff/applicants cited to me O. 12 R. 7 (2) of the National Court Rules which reads;

"7.	Dismissal
	…

(2)	Where –

(a)	the court makes an order for the dismissal of proceedings so far as concerns the whole or any part of any claim for relief by any party;

(b)	The court orders that any party to pay any costs; and

(c)	Before payment of the costs, that party brings against a party to whom the costs are payable further proceedings on the same or substantially the same cause of action as that on which that claim for relief was founded,

the court may stay the further proceedings until those costs are paid."

He also relies on Paul Pukari and Oro Cable TV v. Peter Seeto [1997] PNGLR 246, a judgment of Doherty .J. In that case, the court held that when judgments in the same or related actions have not been complied with, that this amounts to an abuse of process. The court then grants stay orders until judgments are satisfied. The court further held that this also applies where the court has ordered the party to pay costs.

Mrs Nongorr submits that O. 12 R. 7 (2) of the rules is discretionary in that the court may stay proceedings until costs are paid. In saying that, Mrs Nongorr submits that the statement from the bank attached to Mr Madison's affidavit is evidence of debt owing by the Nevilles to the bank and it is on that basis that the court should order that the taxed costs be credited to the debt owing. However, I remind myself again that the amount claimed is denied by the Nevilles and that this matter has yet to be determined by a court of law. So if the amount is disputed, then the court should not under any circumstances order that the taxed costs be offset against the monies owing. The only rule that may provide for such a scenario is O. 22 R. 58 of the National Court Rules which is the provision on cross-costs and which states;

"58.	Cross costs
…

(2)	Costs in any proceedings may be set off under paragraph (a) of sub-rule (1) of this rule notwithstanding that a solicitor for a party to the proceedings has a lien for costs in the proceedings."

There have been cases in the commonwealth jurisdiction where courts have ordered set-offs in relation to payment of costs. In Reid v. Cupper [1915] 2 KBD 147, the court relying on Edwards v. Hope [1885] 14 QBD 922 held that the court had a discretion to allow set-off. In Reid v. Cupper (supra), the trial court ordered a set-off of the costs of the defendant in one action against the costs of the plaintiff in another action. At trial, the plaintiff sued the defendant and his wife for damages for slander alleged to have been uttered by the wife. In that action, the defendant succeeded and the plaintiff was ordered to pay the costs of the action. Subsequently an action for assault, wrongful dismissal and false imprisonment was brought by the plaintiff against the defendant's husband. In that action, the plaintiff recovered a verdict and judgment for damages for assault, damages for wrongful dismissal and verdict for the defendant on the claim for false imprisonment, the costs to be taxed on the High Court scale. The trial court held that the costs payable by the plaintiff in the first action should be set-off against the costs payable by the defendant in the second action. The trial judge held that he had a discretion to make the orders. On appeal, the appeal court dismissed the appeal holding that the trial judge rightly exercised his discretion.

O. 22 R. 58 and O. 12 R. 7 of the National Court Rules are discretionary provisions. I have considered briefly, a cross-section of pending actions involving all parties to assist me reach a decision that is fair under the circumstances and where the exercise of my discretion, is proper.

In this case, costs were awarded to the Nevilles by the National Court on 26 November 2001, and following that, costs were awarded to the Nevilles by the Supreme Court in SCA 1 of 2002. As to the present substantive action, the consent restraining orders of 4 September, 2001 are in the same terms as the Originating Summons which effectively means that they are to remain until the hearing and final determination of proceedings WS 1617 of 2000 and payment in full to the plaintiffs of any monies ordered by the court or agreed between any of the parties to these proceedings from;

(a)	selling or attempting to sell any of the assets or property of Coecon Limited;

(b)	the advertising of any of the assets or property of Coecon Limited for sale or otherwise taking any steps preparatory to sell any such assets or property;

(c)	entering into possession of any of the assets or property of Coecon Limited;

(d)	taking any steps to close down the operations of Coecon Limited;

(e)	charging of encumbering in any way whatsoever the assets or property of Coecon Limited.

Proceedings WS 1617 of 2002 and OS 548 of 2001 have, in my view, come to an end and as such the plaintiffs' costs must be paid. Refusal to pay costs by the Bank and Mr Wardley and hereafter, the filing of an application without costs being paid, is an abuse of process. (see Paul Pukari and Oro Cable TV v. Peter Seeto (supra)).

Furthermore, having aired my views in relation to the finality of these proceedings, and without the benefit of the Banks arguments, it may be that the Bank of South Pacific may wish to reconsider applying to join these proceedings because it would not serve any purpose. But that remains to be seen.

In exercising my discretion, I order the following;

1.	That the Bank of South Pacific Limited and Mr David Wardley shall not move their application to join (filed in these proceedings on 3 June, 2004), until after the plaintiffs' assessed taxed costs of K5622.10 are paid;

2.	The Bank of South Pacific and David Wardley as Receiver and Manager of Coecon Ltd shall pay the plaintiffs' costs of this application.

Lawyer for the plaintiffs/applicants: T Elemi - Rageau Elemi and Kikira Lawyers.
Lawyer for Bank of South Pacific: Mrs T Nongorr – Gadens Lawyers.
No appearance by defendants.