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Trinity Christian Center of Santa Ana, Inc v Graceland Broadcasting Network [2008] WSSC 20 (15 May 2008)

IN THE SUPREME COURT OF SAMOA
HELD AT APIA


BETWEEN:


TRINITY CHRISTIAN CENTER OF SANTA ANA, INC
d.b.a. as TRINITY BROADCASTING NETWORK
a United States of America Non-Profit Corporation
Plaintiff


AND:


GRACELAND BROADCASTING NETWORK
a Board of Trustees duly incorporated under Part III of the
Charitable Trusts Act 1965 having its registered office at
Graceland Building, Levili, Matautu, Samoa
First Defendant


AND:


RICHARD MEREDITH
and his wife MARJORIE MEREDITH,
both Trustees of Levili, Matautu, Samoa
Second Defendant


Counsel: Mr S. Leung Wai for plaintiff
Mr Toailoa for 1st and 2nd defendants


Hearing Date: 17/8/07
Ruling Date: 15/5/08


JUDGMENT OF JUSTICE VAAI


  1. The first and second defendants apply for an order directing the plaintiff to pay to the Registrar of the court the sum of $5 million by way of security for costs and for payment of the defendants counterclaim. The plaintiff is a non-profit organisation incorporated in the United States of America. The first defendant (GBN) was incorporated as a charitable trust on the 27th July 1998 and upon its incorporation it took over the operations of another charitable trust known as Go For Christ Ministries International Trust Incorporated (GFC). The second defendants are husband and wife and two of the trustees of the first defendant.
  2. In November 2005 the plaintiff issued proceedings claiming that when the first defendant took over the operations of GFC, the first defendant and the plaintiff agreed partly orally and partly implied that the first defendant will continue to use the broadcasting and studio equipments and television channel licence provided by the plaintiff to GFC upon the same terms and conditions that had existed between the plaintiff and GFC. It is also alleged that the plaintiff continued to provide to the first defendant financial assistance as well as broadcasting components, towers and other equipments. In September 2005 however the second defendants offered to sell to various persons for around NZ$2.5 million the television station and all equipments thereof including the television channel licences. If the defendants were allowed to proceed with the sale they will breach the agreement with the plaintiff.
  3. In the second alternative, the plaintiff alleged that the television channel licences in the name of the first defendant were either granted to the plaintiff or obtained by a contractor engaged by or paid for by the plaintiff. The beneficial interest in the licences must be vested in the plaintiff and the first defendant therefore held the licences on trust for the plaintiff. In the third alternative the plaintiff said the assets proposed to be sold by the defendants are trust property pursuant to the provisions of the Charitable Trust Act 1965. The plaintiff sought orders, inter alia for:
  4. The plaintiff also filed an ex parte motion for interim injunction. On the 18th November 2005 the court granted the motion and issued an interim injunction to restrain the first and second defendants from selling or otherwise disposing of the assets held by the first defendant. On the 16th January 2006 the court issued another interim injunction to restrain the first and second defendants from receiving from satellite with the plaintiff’s equipments or broadcasting with the plaintiff’s equipments any television programming other than the plaintiff’s programming or locally produced Samoa Christian programming.
  5. The defendants counterclaimed and in their statement of defence and counterclaim they denied any agreement with the plaintiff; the equipments given by the plaintiff were donated or gifted; all television licences were sought for and issued in the name of the first defendant. All the current equipments, assets and licences belong to the defendants. In relation to the proposed sale the defendants say they were exploring the idea of selling off some of the equipment as the legal owners.

Their counter-claim against the plaintiff fell into two parts. In the first part they say the plaintiff’s claim is ill conceived; brought without proper foundation; is an abuse of process and has caused financial loss distress, anxiety. They seek damages to compensate for economic losses and for distress and anxiety resulting from the claim and the interim injunction orders. They also seek $5 million punitive damages.


  1. In the second part of the counterclaim the defendants seek damages of $9,103,395.00 on the basis that if the court rules in favour of the plaintiff, the plaintiff will be unjustly enriched by $9,103,395 being the value of the assets held by the first defendant and purchased by the defendants.
  2. Besides denying the counter-claim, the plaintiff alleged there is no legal basis and no cause of action disclosed in the counterclaim.
  3. It is against that background that I now consider the application for security for costs and security for payment of the defendant’s counterclaim. Rule 30 Supreme Court (Civil Procedure) Rules 1980 provides:

It is common ground that the Rules do not provide for security for payment of judgment. Counsel for the defendants however attempts to invoke the inherent jurisdiction of the Supreme Court (Sections 21 and 31 Judicature Ordinance 1961). Rule 206 Supreme Court (Civil Procedure) Rules also provides:


"If any case arises for which no form of procedure has been provided by the Judicature Ordinance 1961 or these rules, the Court shall dispose of the case in such manner as the court deems best calculated to promote the ends of justice."


In effect rule 206 authorises resort to the inherent of this court where no effective procedure is available to address a particular problem. The New Zealand Court of Appeal decision in Taylor v Attorney General (1975) 2NZLR 675 is authority for the proposition that the inherent jurisdiction of the court may be invoked in cases where to do so does not contravene either a statute or a procedural rule. See also R v Connelly (1964) AC 1254; R v Forbers, Exp Bevan [1972] HCA 34; (1972) 127 CLR 1. It would seem plainly clear that the aim of rule 206 is to plug holes but not to lay down general principles. It relates not to the substance of proceedings but to the mode in which no form of procedure has been provided. The Supreme Court (Civil Procedure) Rules 1980 has plainly and deliberately not provided for security for judgment. The application for security for judgment should be dismissed and is dismissed.


Security for costs


  1. The jurisdiction of the Court to order security for costs is discretionary. How the discretion is to be exercised depends on the circumstances of each case. The discretion is not to be fettered by constructing principles from the facts of previous cases. The rationale for making an order for security for costs against a plaintiff outside the jurisdiction of the court is that a successful defendant ought not be put to the time, trouble and expense of enforcing a judgment for costs out of the jurisdiction. There are a wide range of authorities on the subject. In Aliimalemanu Iao Metai v Ruby Drake and Murray Drake (unreported judgment Supreme Court of Samoa; 2000) Sapolu CJ discussed some of the considerations which may be relevant in the exercise of the courts discretion and they included the ability of the plaintiff to meet a judgment for costs; the costs and expenses involved in the enforcement of a judgment for costs in a foreign jurisdiction; the merit of the plaintiff’s claim; the merits of any defence raised by the defendant, and the existence of a co-plaintiff within the jurisdiction. While a collection of authorities such as that in the judgment of Master Williams in Nikau Holdings v Bank of New Zealand (1992) PRNZ 430 are also of considerable help, they cannot substitute for a careful assessment of the circumstances of the particular case. It is not a matter of going through a check list of the so-called principles. Since the rule contemplates an order for security where the plaintiff will be unable to meet an adverse award for costs, it must also be taken as contemplating that an order for substantial security may, in effect, prevent the plaintiff from pursuing the claim. Access to the courts by a genuine plaintiff is not lightly to be denied. At the same time the interests of the defendant must also be considered. The defendant must be protected against being drawn into unjustified litigation, particularly where it is unnecessarily protracted and over complicated.
  2. A number of lengthy affidavits with numerous exhibits have been filed. There are several considerations which have persuaded me to refuse the application for security for costs. The first is that both the first and second defendants conceded in their first amended statement of defence and counterclaim that the first defendant is a charitable trust and the second defendants were two of the four trustees of the first defendant. It is also conceded by the second defendants that in 2005 they were exploring the idea of selling some of the equipments of the first defendant. Indeed in a letter to prospective buyers dated 10th September 2005 signed by the first named second defendant, the second defendant unequivocally expressed his wish to sell. I quote from parts of the letter:

" ... We wish to notify you that Graceland Broadcasting Network is going on the market for sale."


"Graceland Broadcasting Network is solely owned by my wife and I but it is affiliate station of TBN. This sale will not affect any programming supply or rights from TBN which will continue with the station."


"The sale comes with the following, all of the studio equipment here at Levili, our town office equipment, nine transmission sites around Upolu and Savaii ...". Most of the equipment we have is less than 3 years old."


A copy of this letter reached the plaintiff and prompted the commencement of these proceedings as well as the applications for interim injunctions.


  1. On the strength of the letter and of the pleadings in the amended statement of defence and counterclaim it would seem that the plaintiff has a meritorious claim in its third cause of action namely that the assets proposed to be sold are trust properly pursuant to the provisions of the Charitable Trust Act 1965. Whether the equipments were gifted or donated to the first defendant by the plaintiff they nonetheless became the property of the trust and could not be sold at the whim of the second defendants who believed in September 2005 that the broadcasting equipments, studio equipments and satellite stations of the first defendant were their personal properties.
  2. More importantly the proposed sale would have the effect of defeating the dominant purpose of the trust which was the operation of a television station for the broadcasting of Christian and religious programmes. The plaintiff as a donor to the trust donated equipments for a particular purpose. The purported sale would tantamount to depriving the trust of all its properties essential for the existence of the trust and would render the trustees incapable of exercising their paramount duties of administrating the trust property. Pursuant to section 22(1)(b) of the Charitable Trusts Act 1965 the consent of the Supreme Court ought to have been sought. No steps were taken to obtain such consent simply because the second defendants believed the trust properties were their personal properties.
  3. The second consideration and perhaps the most influential one is the question whether the plaintiff could meet the costs of the defendant if the plaintiff is unsuccessful. There is no evidential foundation to suggest that the plaintiff will be unable to pay costs if awarded against it. Quite the contrary. I accept from the affidavits and exhibits that the plaintiff is a reputable non-profit organisation with substantial assets. It donated or loaned to the first defendant’s forerunner (Go For Christ Ministries) broadcasting equipments; and it continued to donate, gifted or loaned broadcasting equipments to the first defendant after its incorporation in 1998. In the supporting notes for the first defendant’s financial statements for the years ended 31st December 2002 and 2003 it is stated under the heading:

Fixed Assets:


"The original fixed assets (equipment and building improvements) of GBN were all donated by the GBN Trustees and by TBN from USA.


TBN also directly met some of the overseas costs of new Repeater Stations in 2001. The estimated cost to TBN of such payments is SAT$165,000 (USD$48,000). Should GBN ever be dissolved, TBN has the right to the return of all fixed assets it donated."


  1. The third and final consideration for refusing the security for costs application is the delay factor. The action was commenced in November 2005 and upon the completion of interrogatories and change of counsel it was set down for hearing on the 24th and 25th May 2007. By notice of motion dated the 9th May 2007 the defendants sought for the first time orders for security for costs and security for judgment of $5 million. The trial did not proceed as scheduled as the judge assigned to hear the litigation was unavailable. But the delay in pursuing the application for security for costs was unjustified.

Conclusion


(a) Application for security of costs and of judgment is dismissed.

(b) Costs are reserved.

JUSTICE VAAI

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