Security for costs protects a defendant who fears that, even if successful, a costs order will be worthless. Two provisions operate in Papua New Guinea — one general, one specific to the State.
Order 14 Rule 25
Where in any proceedings, it appears to the Court on the application of a defendant —
(a) that a plaintiff is ordinarily resident outside Papua New Guinea; or
(b) that a plaintiff is suing, not for his own benefit, but for the benefit of some other person and there is reason to believe that that plaintiff will be unable to pay the costs of the defendant if ordered to do so; or
(c) that the address of a plaintiff is not stated or is mis-stated in his originating process; or
(d) that a plaintiff has changed his address after the commencement of the proceedings with a view to avoiding the consequences of the proceedings,
the Court may order that plaintiff to give such security as the Court thinks fit for the costs of the defendant of and incidental to the proceedings, and that the proceedings be stayed until the security is given.
— National Court Rules 1983, O 14 r 25(1)
Rule 25(2) — the Court shall not order security by reason only of paragraph (c) if it appears to the Court that the failure to state his address or the mis-statement of his address was made without intention to deceive.
Rule 24 — references to a plaintiff extend to any person who makes a claim for relief in any proceedings, and to a defendant any person against whom a claim for relief is made. So a cross-claimant may be ordered to give security.
Rule 26 — the security shall be given in such manner, at such time, and in such terms (if any) as the Court may by order direct.
Rule 25(1) contains no general ground of impecuniosity. Poverty alone is not a ground; paragraph (b) reaches inability to pay only where the plaintiff sues for another’s benefit.
Nor is there a paragraph covering a company in liquidation or receivership. That gap is one of the things section 10 of the Claims Act fills — but only for the State.
The State’s wider power
Notwithstanding anything in the National Court Rules, where the State is a party to a suit —
(a) in which another party is — (i) resident outside the jurisdiction; or (ii) is a company in receivership or liquidation; or
(b) involving a matter under the Migration Act (Chapter 16),
or in any other case where it appears likely that costs awarded against another party in favour of the State may not be recovered,
the court may, on application, order that the other party pay security for costs into court.
| O 14 r 25 | Claims Act s 10 | |
|---|---|---|
| Who may apply | A defendant (extended by r 24) | Read with the section as a whole, in favour of the State |
| Against whom | A plaintiff (extended by r 24) | Another party |
| Residence abroad | Yes — r 25(1)(a) | Yes — s 10(a)(i) |
| Company in receivership or liquidation | No such ground | Yes — s 10(a)(ii) |
| Migration Act matters | — | Yes — s 10(b) |
| General likelihood of non-recovery | No | Yes — the closing words |
| Form of security | As the Court directs — r 26 | Payment into court |
Section 10 is expressed to operate where costs awarded against another party in favour of the State may not be recovered. It is a protection for the State, not for a party litigating against it.
A private defendant sued by the State therefore relies on Order 14 Rule 25 in the ordinary way — and against the State, paragraph (a) has no application, since the State is not resident outside the jurisdiction, and there is in any event no doubt about recovery of costs, which are satisfied under section 14.
Compare the same pattern in sections 13 and 15: no execution against the State, ordinary execution by the State.
Order 14 Rule 28
This Division does not affect the provisions of any Act under which the Court may require security for costs to be given.
Rule 28 preserves statutory security for costs powers, and section 10 opens with “notwithstanding anything in the National Court Rules”. The two provisions are consistent: the Rules govern generally, and section 10 adds a wider power where the State is a party.
Section 11 remains the background principle — the rights of parties, as nearly as possible, are the same, and judgement may be given and costs awarded, as in a suit between other persons — subject to the Act’s specific modifications, of which section 10 is one.
Rule 27
Where a plaintiff fails to comply with an order under this Division, the Court may, on terms, order that the proceedings on any claims by the plaintiff for relief in the proceedings be dismissed.
The consequence is serious, and the discretion is exercised on terms. A plaintiff genuinely unable to provide the sum ordered should apply to vary the order rather than let the time pass.
Note also that the order under Rule 25(1) may direct that the proceedings be stayed until the security is given — so the practical effect begins immediately, before any question of dismissal.
Apply by notice of motion with an affidavit establishing the ground relied on — residence, the company’s status, or the material suggesting costs would not be recovered — and a reasoned estimate of the costs to be secured. Bring it promptly; delay until the eve of trial tells against the applicant, because the purpose is to protect costs not yet incurred.
On quantum, see taxation of costs under Order 22.
Sources
- Claims By and Against the State Act 1996 — ss 10, 11, 13–15
- National Court Rules 1983 — O 14 Div 4 Subdiv A, rr 24–28; O 22
- Migration Act (Chapter 16)
The PacLII page for the Migration Act (Chapter 16) is a landing page; the consolidated text is not reproduced in HTML there.
Before relying on anything here, read the current text of the National Court Rules 1983 and check for later amendments. If a decision matters to you, get advice — start with the Office of the Public Solicitor, or find a firm in the law firms directory.