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Datuk Kei Yik Wong v Tiong Sii Huang [2023] PGNC 89; N10181 (31 March 2023)

N10181

Waigani: Anis J
2023: 24^th & 31^st March

STAY APPLICATIONS – Applications premised on earlier court orders ordering payment of costs before further proceedings may be filed – Order 12 Rules 1 and 7(2) – National Court Rules – s 155(4) – Constitution – application contested – argument based on law – whether obligation to pay costs under Order12 Rule 7(2) arises when costs are taxed and not beforehand – consideration – ruling

Cases Cited:
Nil

Counsel:
A. Mana, for the Petitioner
E. Andersen & Ms. Kalu, for the Respondents

DECISION

31^st March, 2023

1. ANIS J: The petitioners (petitioner), the parties, and the 2 proceedings herein are the same or similar. The petitioner is a minority shareholder in the 2 fourth respondent companies (the 2 companies) in proceeding MP 17 of 2022 and proceeding MP 18 of 2022 (the 2 proceedings/petitions). He files the 2 proceedings to challenge his status as a minority shareholder in the 2 companies. He claims that the actions or inactions of the respondents have reduced or prejudiced his shareholding interests in the 2 companies, and he wants the Court to make declaratory orders to correct that amongst others.

2. His relief includes seeking declaratory orders that the actions of the respondents in issuing additional shares were done in breach of the Companies Act 1997 (the CA) such as s47 thus that they should be declared null and void. The petitioner also seeks, amongst others, orders under s152 (2)(a) of the CA requiring the first respondent to acquire his shares at a fair market value.

RELEVANT BACKGROUND

3. The petitioner had earlier commenced 2 separate by related proceedings in the National Court. The first proceeding was WS 417 of 2021 (WS 417) and it was commenced on 13 September 2021. The parties therein were the petitioner as the plaintiff and the respondents in MP 18 as the defendants. The second proceeding was WS No. 423 of 2021 (WS 423) and it was commenced on 20 September 2021. The parties therein were the petitioner as the plaintiff and the respondents in MP 17 as the defendants. WS 417 and 423 (the earlier proceedings) were heard together on various occasions. But on 6 April 2022, Kandakasi DCJ dismissed both proceedings. His actual orders read:

1. This proceeding is dismissed.
2. Costs to the Defendant to be taxed if not agreed.
3. For clarity the Plaintiff will be at liberty to commence proceedings under the Companies Act and its rules subject to meeting the cost order.
4. The time of the entry of these orders is abridged to take place forthwith upon the Court signing the Orders.
   

NOTICE OF MOTION

4. Now, the respondents in the 2 proceedings herein filed 2 applications on 14 October 2022. Both applications were heard together before me on 24 March 2023. The relevant rule cited in the 2 applications was Order 12 Rule 7(2) of the National Court Rules (NCR). Relying on the said rule and term 3 of the Court Order made in the earlier proceedings, the respondents request that the 2 petitions that are filed herein be stayed until their costs incurred in the earlier proceedings are settled.

MAIN ISSUE

5. The main issue argued by the parties is this: Whether the petitioner’s obligation to pay the respondents’ costs in the earlier proceedings shall only arise or commence after the costs have been taxed.

CONSIDERATION

6. Order 12 Rule 7(2) of the NCR reads:

“(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; and

(b) the Court orders that 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.

....”

7. I have heard arguments for and against the issue.

8. I think the answer to the issue is straight forward.

9. In the present case, we are talking about a court issued order for payment of costs before further proceedings may be commenced. Costs of the earlier proceedings were awarded to the respondents which must be paid by the petitioner. To me, ‘the obligation to pay’ appear to exist at the time when the orders were made. I have looked up various definitions on the term ‘obligation’. It may be generally defined as an act or something where a person is either morally or legally bound by, to for example do or carry out. It may also be regarded as duty or commitment that is imposed upon someone.

10. To elaborate, let me refer to the common use of phrases such as “to be taxed if not agreed,” or “shall be taxed if not otherwise agreed,”. They obviously give, as part of the options, an opportunity for parties to consider settling on costs on a consensual basis without the need for taxation. This opportunity or option (i.e., to pay cost ahead of taxation) supports the view or proposition that the obligation to pay costs is not dependent upon taxation of cost itself. To me, this makes practical sense. Firstly, if cost is ordered by a court against a party, then unless the said order is set aside, the party whom a cost order is made against is obligated by the Court Order to pay costs either by agreement or after taxation and that is that.

11. I also refer to Term 3 of the Court Order of 6 April 2022. It permits, for clarity purposes, the petitioner’s right to commence further proceedings under the CA. However, the Court expressly completes the term of the said order by stating .... subject to meeting the cost order. The parties herein do not dispute that the petitioner has not yet settled the respondents’ costs in the earlier proceedings. The parties also do not dispute that presently, costs have or are being taxed by the taxing officer but that a final assessment or certificate of taxation has not yet been issued at the time of hearing of the 2 applications. And it is not disputed that the petitioner has gone ahead and has filed these 2 petitions without first settling his costs in the earlier proceedings.

12. In my view, the petitioner must settle the respondents’ costs whether through taxation or agreement before he may be permitted to file proceedings such as the 2 petitions. The acts of filing the 2 proceedings or petitions may also be seen as defiant or in breach of the Court Orders of 6 April 2022.

13. And this. Even if I follow the petitioner’s argument and say that he is obligated to pay the costs of the earlier proceedings but only after taxation (which I say otherwise), that does not give him the liberty to file further proceedings as he has done. This is because he has not met or complied with the costs order of 6 April 2022. In other words, he must pay the respondents’ costs, whether it be by agreement or taxation, before he can commence further proceedings. In this case, taxation is pending. To me, this means that the petitioner is still yet to meet his cost obligation; that he has not complied with term 3 of the Court Order of 6 April 2022. Given that he has not met that obligation, he is restrained by the Court Order of 6 April 2022 to file further proceedings.

14. Given these findings, I am minded to exercise my discretionary power under Order 12 Rule 7(2) of the NCR without the need to look at the specific or detail requirements for a stay application. In my view, this is a matter where the Court’s grant of a stay order is simply premised on earlier existing Court Orders which remain binding, namely, the Court Orders of 6 April 2022. The Court therein has expressly ordered the petitioner to pay the costs of the respondents before he may be permitted to commence further proceedings under the CA.

15. In this case, I am satisfied that term 3 of the Court Orders of 6 April 2022 remains outstanding, thus, given that the petitioner has already filed the 2 proceedings, they ought to be stayed at this juncture, that is, to give effect to or enforce term 3 of the Court Orders of 6 April 2022.

SUMMARY

16. In summary, I find the applications properly made out in terms of their sources. I find Order 12 Rule 7(2) applicable in this instance. And this is a case where there is already a Court Order in place that requires the petitioner to pay the costs of the respondents in the earlier proceedings before he may be permitted to file further proceedings such as the 2 proceedings. Evidence adduced shows that the costs for the earlier proceedings continue to remain unsettled and outstanding before and after the 2 proceedings were commenced, and the situation remained the same as at the time of hearing the 2 applications on 24 March 2023.

17. The obligation to pay costs in the earlier proceedings, in my view, arose at the time when the Court Orders of 6 April 2022 were made.

18. I will therefore grant the 2 applications. The 2 proceedings shall be stayed pending full payment of the respondents’ costs incurred in the earlier proceedings.

COST

19. There are no special circumstances that exist that may influence me to award cost differently other than to order cost to follow the event.

ORDERS OF THE COURT

20. I make the following orders:

1. Proceeding MP No 17 of 2022 and proceeding MP 18 of 2022 are stayed until the respondents’ costs in proceeding WS 417 of 2021 and WS 423 of 2021 are settled in full.
   
2. The petitioner shall pay the respondents’ costs of the 2 applications on a party/party basis which may be taxed if not agreed.
   
3. Time for entry of these orders is abridged to the date and time of settlement by the Deputy Registrar of the National Court which shall take place forthwith.
   

The Court orders accordingly
________________________________________________________________
Corrs Chambers: Lawyers for the Petitioner
Dentons Lawyers: Lawyers for the Respondents