Independent State of Papua New Guinea v PNG Sustainable Development Program Ltd

• Jurisdiction: Singapore
• Judge: Woo Bih Li J
• Judgment Date: 19 November 2019
• Neutral Citation: [2019] SGCA 72
• Plaintiff Counsel: Philip Antony Jeyaretnam SC, Andrea Gan Yingtian and Ashwin Nair Vijayakumar (Dentons Rodyk & Davidson LLP)
• Date: 19 November 2019
• Docket Number: Civil Appeal No 78 of 2019 (Summons No 116 of 2019)
• Hearing Date: 04 October 2019
• Subject Matter: Appeals,Stay of appeal,Civil Procedure
• Published date: 12 December 2019
• Citation: [2019] SGCA 72
• Defendant Counsel: Quek Yi Zhi Joel and Ng Pei Qi (WongPartnership LLP)
• Court: Court of Appeal (Singapore)
• Year: 2019

Woo Bih Li J: Introduction

The applicant in the present application, PNG Sustainable Development Program Limited, is the respondent in the substantive appeal, Civil Appeal No 78 of 2019 (“CA 78”). It succeeded before the High Court in defending the claims brought by the Independent State of Papua New Guinea, the appellant in CA 78, and was awarded costs fixed at over $2m. By way of the present application, Summons No 116 of 2019 (“SUM 116”), PNG Sustainable Development Program Limited applied for CA 78 to be stayed until the Independent State of Papua New Guinea paid the costs awarded by the High Court.

I will, in these grounds, refer to the applicant in SUM 116 (ie, the respondent in CA 78) as “PNGSDP” and the respondent in SUM 116 (ie, the appellant in CA 78) as “the State”.

The present application concerns the issue of when an appeal may be stayed pending the payment of costs awarded by the court below, which is an issue of some practical importance. I heard the application as a single judge sitting in the Court of Appeal. Having heard the parties’ submissions, I dismissed PNGSDP’s application for the appeal to be stayed, for reasons which I will explain in these grounds.

Background

In Suit No 795 of 2014 and Originating Summons No 234 of 2015 (collectively, “the consolidated proceedings”), the State as plaintiff sought to establish the existence of and enforce rights of control and oversight which it claimed to have over the operations and assets of the defendant, PNGSDP. The trial for the consolidated proceedings took place in 2018, following which the High Court Judge (“the Judge”) reserved judgment. On 2 April 2019, the Judge issued his judgment which can be found at Independent State of Papua New Guinea v PNG Sustainable Development Program Ltd [2019] SGHC 68. In summary, the Judge dismissed all of the State’s claims against PNGSDP.¹ The issue of costs was reserved.

On 8 April 2019, the State filed CA 78, appealing against the Judge’s decision to dismiss all of its claims against PNGSDP. On the same date, the State’s solicitors certified that they had furnished the standard undertaking as security for PNGSDP’s costs of the appeal, pursuant to O 57 r 3 of the Rules of Court (Cap 322, R 5, 2014 Rev Ed) (“Rules of Court”).

On 26 July 2019, the Judge issued his decision on costs of the consolidated proceedings (“costs order of 26 July 2019”). He ordered the State to pay to PNGSDP costs fixed at $2,320,000 plus reasonable disbursements to be taxed if not agreed.² Aside from the costs order of 26 July 2019, the Judge had made previous costs orders in favour of PNGSDP for interlocutory applications in the consolidated proceedings.³ Although the State had made payment of some of the interlocutory costs orders totalling $16,347.75,⁴ a sum of $186,300 remained unpaid by the State.

Subsequently, on 15 August 2019, PNGSDP’s solicitors wrote to the State’s solicitors, demanding payment of the total sum of $2,522,356.07 (the “Outstanding Sum”) by 22 August 2019.⁵ The Outstanding Sum comprised the following:⁶ the costs of and incidental to the consolidated proceedings fixed at $2,320,000 pursuant to the costs order of 26 July 2019;⁷ the portion of the costs of interlocutory applications in the consolidated proceedings fixed by the Judge which remained unpaid by the State totalling $186,300;⁸ and the disbursements agreed between the parties on 22 September 2017 and 24 October 2017 for the interlocutory applications in the consolidated proceedings amounting to $16,056.07.⁹

On 22 August 2019, the State’s solicitors wrote to PNGSDP’s solicitors, requesting deferred payment of the Outstanding Sum until the disposal of CA 78 given that the costs orders were subject to the State’s appeal in CA 78.¹⁰ On the same date, PNGSDP’s solicitors replied, rejecting the State’s request for deferred payment on the basis that CA 78 did not operate as a stay of execution of the various costs orders, and reiterating its demand for payment of the Outstanding Sum by 26 August 2019.¹¹

Having received no further reply from the State’s solicitors, PNGSDP filed SUM 116 on 10 September 2019 for all further proceedings in CA 78 to be stayed until the State paid to PNGSDP: the Outstanding Sum; and all such further interest payable, at the rate prescribed in the Rules of Court from the date of each costs order or agreement (as the case may be) to the date of full payment.

The basis of the application was this court’s inherent powers, as expressly preserved under O 92 r 4 of the Rules of Court.

For completeness, I mention that the State claimed in the present application that PNGSDP itself had not paid costs ordered against it in a number of interlocutory applications, totalling $24,979.85. This sum owed by PNGSDP had allegedly not been set off against the Outstanding Sum owed by the State.¹² In any event, the sum of $24,979.85 claimed to be owed by PNGSDP to the State was significantly lower than the Outstanding Sum owed by the State to PNGSDP and there was no dispute that the State remained the net debtor.

I heard SUM 116 on 4 October 2019. As at the time of the hearing, PNGSDP had not commenced any enforcement proceedings against the State in respect of the Outstanding Sum.¹³ The State also had not applied for a stay of execution of the various costs orders made by the Judge pending the outcome of CA 78.

In addition, as at the time of the hearing, the State’s case in the appeal had been filed (on 23 September 2019), while PNGSDP’s case in the appeal was due on 11 October 2019.¹⁴

Having heard the parties’ submissions at the hearing for SUM 116, I dismissed the application. CA 78 is currently fixed for hearing before the Court of Appeal in January 2020.

Parties’ submissions PNGSDP’s submissions

PNGSDP relied principally on the Court of Appeal’s decision in Roberto Building Material Pte Ltd and others v Oversea-Chinese Banking Corp Ltd and another [2003] 2 SLR(R) 353 (“Roberto”),¹⁵ where it was recognised that the appellate court has the inherent jurisdiction to require an appellant to pay the costs of the action below, on penalty of the appeal being stayed, where the justice of the case so demanded.¹⁶ It also relied on two decisions of the High Court, namely, Lim Poh Yeoh (alias Aster Lim) v TS Ong Construction Pte Ltd [2017] 4 SLR 789 (“Lim Poh Yeoh”)¹⁷ and FT Plumbing Construction Pte Ltd v Authentic Builder Pte Ltd and another matter [2018] SGHCR 3 (“FT Plumbing”).¹⁸

PNGSDP argued that the requirements as set out in these three cases for a stay of proceedings pending the payment of costs ordered by the court were satisfied in the present case. Specifically, it claimed that there were two factors which, when combined, were sufficient to make the circumstances of the present case exceptional such that a stay of the appeal was justified.

First, PNGSDP argued that the State was able but simply unwilling to pay the Outstanding Sum as it had not provided a convincing explanation for its continued non-payment of the sum.¹⁹ The fact that the State was acting in bad faith in not paying the Outstanding Sum was also allegedly evidenced by its past conduct in the consolidated proceedings.²⁰ As the State was able but unwilling to pay the Outstanding Sum, the stay of the appeal would not stifle the State’s right of appeal and cause prejudice to it, since it would only delay the appeal pending payment of the Outstanding Sum plus interest.²¹

Second, PNGSDP submitted that it would face difficulties enforcing the various costs orders against the State because enforcement would have to be undertaken in Papua New Guinea as the State was not within Singapore’s jurisdiction. Any attempt that it makes to enforce the costs orders against the State in Papua New Guinea was likely to be time consuming and ultimately unfruitful.²² That the enforcement of the costs orders would be a challenging process which would in all likelihood result in PNGSDP not being able to recover the Outstanding Sum for a very long time, and certainly not before CA 78 was disposed of, was argued to be a further reason for the stay to be granted in the present case.²³

The State’s submissions

The State emphasised that the case law, specifically Roberto, makes clear that it is only in exceptional circumstances that the Court of Appeal would order a stay of the appeal pending payment of costs awarded below.²⁴ It argued that the present case was not such an exceptional case justifying the grant of the stay.

The State denied PNGSDP’s allegations that it had acted in bad faith in the consolidated proceedings. It argued that such allegations were without merit and in any event, bore no connection to the present stay application.²⁵ It also denied PNGSDP’s allegation that it was able but unwilling to pay the Outstanding Sum. It explained that it faced difficulties in paying the Outstanding Sum because of strict foreign exchange controls in place, which made it difficult for it to transfer large sums of foreign currency at short notice.²⁶

The State further highlighted the fact that PNGSDP had filed the present application without having made any prior attempt to enforce the Outstanding Sum. It argued that PNGSDP was seeking to stifle its right of appeal by bringing the stay application.²⁷

Legal authorities Locus classicus: Roberto

The key authority on staying an appeal pending payment by the appellant of costs awarded to the respondent below is the Court of Appeal’s decision in Roberto. In that case, the respondents in the substantive appeal applied for the appeal to be stayed until the taxed costs of the first respondent in the action below were paid by the appellants. The application was first heard by a single judge of the Court of Appeal who allowed the respondents’ application. The appellants then applied by way of motion to discharge the stay order. A three-judge Court of Appeal allowed the...