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Belcher v Ponifasio [2023] WSSC 33 (16 May 2023)

IN THE SUPREME COURT OF SAMOA
Belcher v Ponifasio [2023] WSSC 33 (16 May 2023)

IN THE SUPREME COURT OF SAMOA
HELD AT MULINUU

BETWEEN

ALAN BELCHER, of Siusega, Businessman.

Plaintiff

A N D

TUALA TEVAGA IOSEFO PONIFASIO, of Malifa, Member of Parliament.

Respondent

Counsel: T S Wulf for Applicant

F S for Respondent

Hearing Dates: 30 March 2023

Decision Date: 16 May 2023

RULING ON APPLICATION FOR SECURITY FOR COSTS

INTRODUCTION

1. This is a motion by the Defendant for security for costs of $15,000.00 against the Plaintiff on the grounds that:
   • (i) the Court has inherent jurisdiction to order security for costs against the Plaintiff;
   • (ii) the Plaintiff has filed a $207,800.00 claim against the Defendant;
   • (iii) there is reason to believe that the Plaintiff is unable to meet the Defendant’s costs if the Defendant is successful in defending the Plaintiff’s claim against him; and
   • (iv) it is just in the circumstances for the Court to order security for costs.
2. The Plaintiff opposes the motion on the grounds that:
   • (i) the Plaintiff resides in Samoa and is working and living in Samoa and has done so for more than 10 years;
   • (ii) the Plaintiff was the owner of a machine hiring business and the excavator in dispute is one of the machines that was rented out by the Plaintiff; and
   • (iii) the Plaintiff resides in Samoa and rule 30 of the Supreme Court (Civil) Procedure Rules 1980 (“the Rules”) does not apply.

Background:

3. The dispute between the Plaintiff and the Defendant concerns a Hitachi Excavator 200LC which the Plaintiff says he purchased in New Zealand for NZD$55,000.00. Sometime in 2014, the Plaintiff says that he hired the excavator to the Defendant for work at the Defendant’s Malifa hotel.
4. While the excavator was being used to carry out the Defendant’s work, the Plaintiff alleges the Defendant asked to buy the excavator and they agreed on a purchase price of $130,000.00. The Defendant was to make payments towards the excavator “when he can”.[1] The Defendant was also to prepare a written agreement but did not do so.
5. Between July 2014 and October 2015, the Defendant allegedly made three payments totalling $2,300.00 towards the cost of the excavator. In or about July 2018, the Defendant sold the excavator for $60,000.00 without informing the Plaintiff or seeking his consent.
6. The Defendant disputes the Plaintiff’s ownership of the excavator and alleges that the Plaintiff and his business partner offered and he used the excavator for his earthworks at Malifa. The Plaintiff and his business partner however had disputes “on matters such as ownership and control of the Excavator”[2] and other issues.
7. The Defendant denies agreeing to buy the excavator. While he was in possession of the excavator, the Defendant says the Plaintiff and his partner stopped calling in to check on it. When the Malifa hotel opened in 2014, the excavator was taken and stored at the Defendant’s family property at Papaloloa and later, his cousin’s Alafua land.
8. At Alafua, the excavator was visible to the public. The Defendant says he received many enquiries to hire or buy the excavator. He eventually disposed of the excavator to a third party for $40,000.00. The Defendant has filed a counter-claim against the Plaintiff for $50,000.00 for costs allegedly incurred in transporting and storing the excavator. The Defendant says the only payments he made were for his use of the excavator.

The Law:

Security for Costs

9. The application is brought in the Court’s inherent jurisdiction. In Wilex Cocoa and Coconut Products Ltd v Electric Power Corporation [2009] WSSC 35 (23 April 2009), Sapolu CJ set out the approach for security for costs applications in the Court’s inherent jurisdiction. Sapolu CJ identified 4 factors:
   • (i) the threshold test and whether “there is reason to believe that a plaintiff will be unable to pay the costs of the defendant, if the plaintiff is unsuccessful”;^[3]
   • (ii) whether in the exercise of the Court’s discretion, it is appropriate in all the circumstances to make an order for security for costs. In determining whether to grant the application for security for costs or not, there is no predisposition either way by the Court. The exercise of the discretion to award or decline security for costs involve the balancing of two competing interests: “On the one hand, the interests of justice require that the defendant should be protected against the risk of a costs award that is of no value if the plaintiff is unsuccessful in its claim. On the other hand, the interests of justice require that the plaintiff should not be denied access to the Courts by reason of an order for security for costs...”;^[4]
   • (iii) the merits of the Plaintiff’s claim and the Defendant’s defence and make an assessment of each party’s prospects of success; and
   • (iv) Any other relevant factors.

Costs Payable for Lawyers in same Firm

10. In these proceedings, the Defendant is represented by a partner in his firm. At the end of the hearing, I requested counsel to file supplementary submissions on whether a partner in a law firm is entitled to a costs award when represented by another partner in the same firm. I am grateful to defence counsel for helpful supplementary submissions.
11. The general rule is that a self-represented person is entitled to disbursements but not costs.[5] Like many general rules, there are exceptions. The New Zealand Supreme Court in McGuire v Secretary for Justice stated:
    • “[55] Until the Court of Appeal judgment in Joint Action Funding, the general understanding was that a successful litigant in person was entitled to recover disbursements but not costs. We will refer to this as “the primary rule”. As an exception to the primary rule, a litigant in person who was also a lawyer could recover costs. We will refer to this as “the lawyer in person exception”. A party who had conducted litigation using an employed lawyer could also recover costs. We will refer to this as “the employed lawyer rule”. Whether the employed lawyer rule was properly seen as an application of the primary rule (in the sense that such a party was not to be regarded as self-represented) or an exception may be open to debate. As will become apparent there is some practical overlap between the employed lawyer rule and the lawyer in person exception where the litigant is a lawyer but is represented by a lawyer whom he or she employs.”
12. The primary rule can be traced back centuries with the leading authority on the lawyer in person exception being The London Scottish Benefit Society v Chorley.[6] This case was cited by the New Zealand Supreme Court in McGuire v Secretary for Justice as follows:[7]
    • “[57] ...There Brett MR observed:
    • When an ordinary litigant appears in person, he is paid only for costs out of pocket. He cannot himself take every step, and very often employs a solicitor to assist him: the remuneration to the solicitor is money paid out of pocket. He has to pay the fees of the court, that is money paid out of pocket; but for loss of time the law will not indemnify him. When, however, we come to the case of a solicitor, the question must be viewed from a different aspect. There are things which a solicitor can do for himself, but also he can employ another solicitor to do them for him; and it would be unadvisable to lay down that he shall not be entitled to ordinary costs if he appears in person, because in that case he would always employ another solicitor.
    • ...”
13. The employed lawyer rule includes not just an employed lawyer but includes a firm partner. In Joint Action Funding Ltd v Eichelbaum [2017] NZCA 249, the New Zealand Court of Appeal at para [2] stated in terms of the employed lawyer rule “...a practising barrister and solicitor who brings or defends a proceeding in person” or by a partner or employee of the firm “is entitled to the same costs as when acting on behalf of a client (the lawyer-litigant exception).”[8]
14. If the Defendant is successful in defending these proceedings, I accept that he would be entitled to costs in the same way as if counsel other than from his law firm was acting on his behalf.

Discussion:

Threshold test.

15. Although the Defendant seeks $15,000.00 for security for costs, there is no evidence of what costs the Defendant has incurred to date; the partnership’s standard hourly fees rates; or any assessment of the anticipated costs of defending these proceedings based on those rates. This makes my assessment of the threshold question as to “whether there is reason to believe that a plaintiff will be unable to pay the costs of the defendant, if the plaintiff is unsuccessful”[9] more difficult.
16. The Defendant in his affidavit dated 19th September 2022 deposes that the Plaintiff has a debt owing to Drake & Co lawyers for $47,357.23. According to the Defendant, judgment was entered and the debt now amounts to at least $70,000.00.
17. The Plaintiff does not contest the existence of a debt owing to Drake & Co, leaving the assertion unanswered. There is also no evidence that he currently earns any income. The Plaintiff’s position is that any adverse costs against him can be met from his assets which he values at between $25,000.00 and $30,000.00.
18. I accept that the Defendant would be entitled to costs if he is successful in his defence. Those costs may not necessarily be nominal. In circumstances where there is no evidence of the Plaintiff earning any income and he appears to have at least one debt compounding, I am satisfied that there is reason to believe the Plaintiff will be unable to pay the Defendant’s costs if the Plaintiff is unsuccessful. Although the Plaintiff says he has assets to meet a costs award, those assets have not been liquidated to pay the Plaintiff’s existing debt. That leaves me in some doubt as to their actual value, not independently verified and their availability to meet an adverse costs award.

Whether to Make an Order for Security for Costs

19. I now turn to whether in the exercise of the Court’s discretion, it is appropriate in all the circumstances to make an order for security for costs.
20. There are two versions of what was allegedly agreed between the Plaintiff and the Defendant. The Plaintiff’s version is that the Defendant hired and then requested to buy the excavator. The agreement to purchase was an oral agreement. On this basis, the Plaintiff sues the Defendant for specific performance of the purported agreement to buy the excavator; damages for alleged breach of the agreement to buy the excavator; and fraud by the Defendant allegedly knowingly and dishonestly selling the excavator.
21. The Defendant accepts that the excavator was from the Plaintiff and his business partner but there was a dispute between them over the excavator’s ownership. The Defendant further says there was no agreement to buy the excavator. The only money paid was for his use of the excavator. The Defendant also accepts that although he did not own the excavator, he sold it. He asserts that he was lawfully entitled to do so pursuant to section 22(1) of the Sale of Goods Act 1975 (“SG Act”). Through counsel, the Defendant further accepts that prior to selling the excavator, he took no steps to return it.
22. In determining the merits of the Plaintiff’s case, French J of the Federal Court of Australia stated the relevant principles in Re Bryan E Fencott and Associates Pty Ltd v Eretta Pty Ltd; John Cooke; Bemboka Nominees Pty Ltd; Nardo Pty Ltd and Hikkadwa Pty Ltd [1987] FCA 102 (31 March 1987) that:
    • “135. It is consistent with authority and the existence of a broadly based discretion that the bona fides and merits of the claim be taken into account where there is material from which some assessment can be made.
    • 136. Where there is a claim prima facie regular and disclosing a cause of action, I see no reason why the Court would, in the absence of evidence, proceed on the basis that the claim was other than bona fide with a reasonable prospect of success.” (emphasis added)
23. The equitable remedy of specific performance is discretionary. The Plaintiff’s claim turns, it seems, on establishing his ownership of the excavator and that an agreement was entered into with the Defendant to buy the excavator. The claim is prima facie regular and discloses a cause of action. I cannot conclude that the Plaintiff’s claim for specific performance is therefore not brought bona fide or that it has no reasonable prospects of success. The excavator did not belong to the Defendant. It was from the Plaintiff and his business partner (according to the Defendant) that the Defendant obtained the excavator and made payments. Whether the Plaintiff owned the excavator and an agreement was entered into to buy the excavator will be for the Plaintiff to establish.
24. The Plaintiff’s second cause of action is for breach of the alleged agreement to buy the excavator. This cause of action also rests on the Plaintiff establishing ownership and the existence of the agreement to buy the excavator. Again, the claim is prima facie regular and discloses a cause of action. I cannot conclude that the Plaintiff’s claim for breach of agreement is not brought bona fide or that it has no reasonable prospects of success.
25. The Plaintiff’s final cause of action is solely pleaded for alleged “fraud” without linking it to any distinct cause of action.[10] It is not clear which species of fraud the Plaintiff relies and whether it is common law or equitable fraud. In Nadinic v Drinkwater [2017] NSWCA 114 (30 May 2017), the New South Wales Court of Appeal explained the difference of fraud at common law and in equity as follows:
    • “22....For present purposes, it will suffice to distinguish the two senses in which “fraud” is used in civil litigation which correspond to different meanings at law and in equity. The difference turns on the state of mind of the person said to have committed fraud. At common law, “fraud is proved when it is shewn that a false representation has been made (1) knowingly, or (2) without belief in its truth, or (3) recklessly, careless whether it be true or false”: Derry v Peek [1889] UKHL 1; (1889) 14 App Cas 337 at 374. The contrast with equity was explained by Viscount Haldane LC in Nocton v Lord Ashburton [1914] UKLawRpAC 31; [1914] AC 932 at 953-954: “[i]n Chancery the term ‘fraud’ thus came to be used to describe what fell short of deceit, but imported breach of a duty to which equity had attached its sanction”. His Lordship emphasized that a person who misconceived the extent of the obligation which a court of equity imposed upon him or her, “however innocently because of his ignorance”, was taken to have violated an obligation which he was taken by the Court to have known, and with the result that the conduct was labelled fraudulent. He said of fraud in this sense at 954 that:
    • “What it really means in this connection is, not moral fraud in the ordinary sense, but breach of the sort of obligation which is enforced by a Court that from the beginning regarded itself as a Court of conscience”.
    • The distinction must be taken to be settled law. For example, a unanimous High Court said (albeit in a statutory context) that establishing equitable fraud “does not require that an actual intention to cheat must always be proved”: Polyaire Pty Ltd v K-Aire Pty Ltd (2005) 221 CLR 287; [2005] HCA 32 at [35].”
26. The cause of action for fraud is poorly pleaded but appears on its face to be common law fraud, the tort of fraudulent misrepresentation and deceit. The difficulty with the cause of action as pleaded is that the tort involves a misrepresentation to the person who has allegedly suffered loss, in this case, the Plaintiff. While the Plaintiff pleads dishonesty in the sense that the Defendant is alleged to have “knowingly and dishonestly sold the Excavator to a third party knowing that the Excavator is legally owned by the Plaintiff”,[11] a fraudulent misrepresentation to the Plaintiff which is a constituent element of the cause of action has not been pleaded.
27. If it is equitable fraud that is alleged to have been perpetrated by the Defendant, the pleadings are unhelpful.
28. The Plaintiff’s complaint appears in essence to be the tort of conversion.
29. As presently pleaded, I do not view the cause of action for fraud as having reasonable prospects of success.
30. Although the pleaded action for fraud does not have reasonable prospects for success, the Defendant does not dispute that he sold the excavator which he did not own. The Defendant relies on section 22(1) of the SG Act to assert his right to sell the excavator submitting that “the Plaintiff by his conduct is precluded from denying his authority to sell the excavator to a third party acquirer.”[12]
31. In my respectful view, the Defendant’s reliance on section 22(1) of the SG Act is likely to be misconceived. This is because section 22(1) of the SG Act is not there to protect a seller of goods who neither owns the goods nor has the authority to sell the goods but to protect an innocent buyer of the goods. As North J stated in Davey v Paine Brothers (Motors) Limited [1954] NZHC 114; [1954] NZLR 1122 at 1127 – 1128:
    • “If the history of the development of the law relating to mercantile transactions is examined, it becomes apparent, as Denning LJ, has pointed out in Bishopsgate Motor Finance Corporation, Ltd v Transport Brakes, Ltd ([1949] 1KB 322; [1949] 1 All ER 37), that for many years two principles strove for mastery. "The first is for the protection of property: no one can give a better title than he himself possesses. The second is for the protection of commercial transactions the person who takes in-good faith and for value without notice should get a good title...It follows, then, that there are at least two ways in which an owner may lose the title to a chattel. First, if he so acts in relation thereto as to clothe an agent with apparent authority to sell, he was at common law precluded as against those who were induced bona fide to act on the faith of that apparent authority from denying that he had given such an authority. This common-law principle finds statutory expression in s 23 of the Sale of Goods Act, 1908...”^[13]
32. There is nothing in the pleadings and material before me to suggest that the Plaintiff had clothed the Defendant with apparent authority to sell the excavator.
33. During oral submissions, defence counsel suggested the Plaintiff had abandoned the excavator and the Defendant as a result was entitled to sell it. The law on this point is succinctly addressed in 2 Halsbury’s Laws of England (4th Edn) at 1574 which states:
    • “Bailee’s power of sale. At common law a bailee has no right, except possibly in an emergency, to dispose of the goods entrusted to him without the bailor’s permission, even though they may have remained uncollected by the bailor.”
34. In my respectful view, the alleged abandonment of the excavator as a basis upon which the Defendant claims a right to have sold the excavator will also likely to be misconceived. This conclusion is reinforced by the concession by the Defendant through counsel that no effort was made to locate the Plaintiff before selling the excavator.

Other Relevant Factors

35. Much has been made in the material before me of the Plaintiff’s immigration status. Suspecting the Plaintiff to be in the country illegally,[14] defence counsel has written on three occasions (19 September 2022, 4 October 2022 and 28 March 2023) to the Ministry of Prime Minister and Cabinet (Immigration Division) (“MPMC”) on this point. In letter dated 19 September 2022, counsel expressed the view that if the Plaintiff “has remained in Samoa unlawfully, then he ought to be removed or deported from Samoa...We are also of the view that a person that is in Samoa should not be free to access Samoa courts and public funded facilities, unless they make good their residency status.”[15] The Defendant further alleges that the Plaintiff has waited 8 years and that these proceedings are politically motivated and has been brought in an effort to discredit him given his current government post.^[16]
36. The Plaintiff for his part alleges that the Defendant is trying to “have me deported out of Samoa to make it difficult for me to bring my claim against him.”^[17]
37. Presently, the immigration status of the Plaintiff is not material to the application for security for costs. Although the Defendant submits that the Plaintiff is not a “resident” of Samoa and therefore it is arguable that rule 30 of the Rules applies, this misconstrues rule 30 of the Rules which states:
    • “30. Plaintiff not Resident in Western Samoa - (1) In any civil proceeding and at any stage thereof the Supreme Court may require a plaintiff or applicant resident out of the jurisdiction of the Supreme Court to deposit any sum of money as security for costs, and may stay the proceeding pending the making of that deposit.
    • ...” (my emphasis added)
38. Rule 30 is concerned with whether the Plaintiff is “resident out of the jurisdiction of the Supreme Court”. Presently, he is not “resident out of the jurisdiction of the Supreme Court”. Further, on the affidavit evidence, he appears to have resided in Samoa for a number of years and remains within this Court’s jurisdiction. Rule 30 does not apply.
39. The evidence before me also shows that by letter dated 8th April 2019, the Plaintiff lodged a written complaint with Police concerning the alleged sale and theft of his excavator by the Defendant. This occurred well prior to the Defendant’s current government appointment.
40. The Plaintiff’s allegation that the Defendant is attempting to deport him due to these proceedings is supported by letters from defence counsel to the MPMC. Defence counsel expressly links enquiries into the Plaintiff’s “current residency in Samoa given the law suit he has filed against our client.”[18] That same letter then expresses the view that if the Plaintiff is in Samoa unlawfully, he should be deported. In the third letter to the MPMC dated 28th March 2023, the MPMC is questioned why the Plaintiff had not yet been deported, in accordance with MPMC’s written advice of 7th October 2022.
41. The timing of the letters to MPMC also support the inference that the calls to deport the Plaintiff is likely to be due to these proceedings. The first letter was sent on the 19th September 2022, soon after the Plaintiff’s claim was filed with the Supreme Court on the 2nd August 2022. The third letter was sent to the Chief Executive Officer of the MPMC on the 28th March 2023, two days before the hearing of this application.
42. I turn to briefly address the view expressed that persons in Samoa should not be free to access Samoa’s courts unless they make good their residency status. This is wrong. Access to Samoa’s courts by any person seeking redress for an alleged wrong is not contingent on the person’s immigration status. They are two separate matters. As Nelson J stated in Tu’isila Maluafiti Fagasoia Tu’isila v Attorney General & Ors (Unreported) (3 May 2023), “[a]ccess to justice and the courts is a fundamental precept and component of the rule of law.”
43. Second, the steps taken by the Defendant to have the Plaintiff deported colors this application and raises the risk that the application may be oppressive in that it is being used as a vehicle to deny a potentially impecunious litigant his right to litigate.[19] In Yandil Holdings Pty Ltd v Insurance Co of North America cited in Wollongong City Council v Fpm Constructions Pty Ltd v Insurance Co of North America at paragraph 19, Clarke J stated the relevant principle in these terms:
    • “(t)he fact that the ordering of security will frustrate the plaintiff's rights to litigate its claim because of its financial condition does not automatically lead to the refusal of an order. Nonetheless it will usually operate as a powerful factor in favour of exercising the court's discretion in the plaintiff's favour.”
44. In this case, the reason the Defendant was originally prompted to enquire about the Plaintiff’s immigration status is because the Plaintiff took these proceedings against him. The Defendant was in possession of information concerning the Plaintiff’s immigration status for some years prior to these proceedings but took no steps to raise any concerns beforehand. I infer from this that the accompanying call to also deport the Plaintiff is linked to these proceedings with the Plaintiff’s deportation likely to make his continuation of these proceedings more difficult. The Defendant’s efforts to deport the Plaintiff undermines this application and raises the risk that it is oppressive. Taking this factor into account, the merits of the Plaintiff’s claims and the Defendant’s defence and mindful that that the ordering of security for costs may frustrate the Plaintiff’s right to litigate, I have determined to deny the motion for security for costs.

Result:

45. I make the following orders accordingly:
    • (a) The Defendant’s motion for an order for security for costs is dismissed.
    • (b) Costs reserved.

JUSTICE CLARKE

^[1] Affidavit in Support of Allan Belcher dated 3 March 2023.
^[2] Statement of Defence and Counterclaim dated 28 March 2023.
^[3] Wilex Cocoa and Coconut Products Ltd v Electric Power Corporation, see para. [30].
^[4] At para. [33].
^[5] McGuire v Secretary for Justice [2018] NZSC 116 at para. [55].
^[6] Above n.5 at paras [56] and [57].
^[7] Above n.5 at para [57].
^[8] Although the New Zealand Court of Appeal was over-ruled by the Supreme Court in McGuire v Secretary for Justice for abrogating the lawyer in person exception and employed lawyer rule, the Court of Appeal’s recitation of the employed lawyer rule was not challenged.
^[9] Above n.3, see para. [30].
^[10] Actions for fraud generally include one or more distinct causes of action: Alii and Faipule of Satapuala v Attorney General [2008] WSSC 88 (24 October 2008), paragraphs 15 – 17.
^[11] Statement of Claim, paragraph 25.
^[12] Outline of Submissions on behalf of the Defendant in support of Motion for Security for Costs.
^[13] Section 23 of the Sale of Goods Act 1908 is identical to section 22 of the Sale of Goods Act 1975.
^[14] Defendant’s affidavit dated 19^th September 2022, para. 4.
^[15] Supplementary Affidavit of the Defendant in support of Motion for Security for Costs, letters dated 19 September and 4 October 2022.
^[16] Affidavit dated 19^th September 2022, para. 6; Above, n 12 para. 32.
^[17] Affidavit in Support of Allan Belcher dated 3^rd March 2023, para. [15].
^[18] See annexure “L” to affidavit of Defendant dated 28 March 2023, being letter dated 19 September 2022.
^[19] Wollongong City Council v Fpm Constructions Pty Limited (formerly Fyntray Project Management Pty Limited) [2004] NSWSC 523 (10 June 2004).