Independent State of Papua New Guinea v PNG Sustainable Development Program Ltd [2019] SGCA 72

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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.

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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.

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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. The issue of costs was reserved.

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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”).

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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. 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. Although the State had made payment of some of the interlocutory costs orders totalling $16,347.75, a sum of $186,300 remained unpaid by the State.

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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. 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.

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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. 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.

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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. 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.

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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”), 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. 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”) and FT Plumbing Construction Pte Ltd v Authentic Builder Pte Ltd and another matter [2018] SGHCR 3 (“FT Plumbing”).

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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.

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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. 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.

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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. It argued that the present case was not such an exceptional case justifying the grant of the stay.

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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 appellants’ motion and discharged the stay order.

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The three-judge Court of Appeal held in Roberto that it had the inherent jurisdiction, as preserved under O 92 r 4 of the Rules of Court, to require an appellant to pay the costs of the action below, on penalty of the appeal being stayed (at [15]). Order 92 r 4 of the Rules of Court states:

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In addition, the three-judge Court of Appeal held that s 36(1) of the Supreme Court of Judicature Act (Cap 322, 1999 Rev Ed) was sufficiently broad to allow a single judge of the Court of Appeal to stay an appeal pending payment of costs below but not to strike out the appeal for non-compliance of an order to pay such costs (Roberto at [23]). The relevant portion of s 36(1) referred to by the court in Roberto remains the same in substance today, notwithstanding some modifications in the precise wording. Section 36(1) of the Supreme Court of Judicature Act (Cap 322, 2007 Rev Ed) presently reads:

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The Court of Appeal emphasised, however, that the jurisdiction to order a stay of appeal pending payment of costs below should only be invoked in special or exceptional circumstances where there was a clear need for it and the justice of the case so demanded. The court explained (Roberto at [17] and [19]):

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Aside from Roberto, PNGSDP relied on the cases of Lim Poh Yeoh and FT Plumbing, which concerned applications by a defendant to stay proceedings commenced by the plaintiff, where the judgment debt and costs of separate proceedings between the parties remained unpaid by the plaintiff.

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In Lim Poh Yeoh, the plaintiff engaged the defendant to build a pair of semi-detached houses. The defendant brought adjudication proceedings against the plaintiff and was awarded the sum of $138,660 (“Judgment Debt”). In Originating Summons No 381 of 2013 (“OS 381”), leave was granted to the defendant to enforce the adjudication determination as a judgment debt. Without having paid the Judgment Debt, the plaintiff commenced a separate suit against the defendant (“Suit 92”) for damages for uncompleted and defective works. The defendant applied to stay Suit 92 pending payment by the plaintiff of the Judgment Debt and all outstanding costs awarded to the defendant in the various proceedings between the parties. The defendant’s stay application was allowed by the assistant registrar, whose decision was affirmed on appeal. In respect of the outstanding costs, the High Court judge found that the plaintiff had the means to pay the outstanding costs but was simply refusing to do so (at [12]). The plaintiff’s conduct demonstrated that she was picking and choosing which outstanding orders of court to comply with so that she would not weaken the legal position that she was adopting. In particular, to support her legal position, she had deliberately paid all of the interlocutory costs orders made in Suit 92 but not the costs arising from OS 381 (at [13]). This demonstrated her attempt to “game the system”, and “use the power of [the] Court when it suit[ed] her and disregard it when it [did] not” (at [13]). As for the plaintiff’s non-payment of the Judgement Debt, the High Court judge noted that a fundamental premise of the Building and Construction Industry Security of Payment Act (Cap 30B, 2006 Rev Ed) (“SOPA”) regime was that a successful claimant should be paid speedily, and thus the plaintiff should not be allowed to continue to deprive the defendant of its right to prompt payment (at [18] and [19]).

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From the above, it is apparent that the question before the court in Lim Poh Yeoh and FT Plumbing was not on all fours with that which was before me in SUM 116. In particular, the stay applications in those two cases arose within the specific context of the SOPA regime, where the object of the regime was of relevance. In the present case, on the other hand, the issue was whether an appeal pending before the Court of Appeal should be stayed until the costs awarded below were paid by the appellant. In the circumstances, the usefulness of Lim Poh Yeoh and FT Plumbing in the present application was in my view to some extent limited.

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Although not highlighted by PNGSDP or the State, there were a number of English cases relevant to the issue of whether an appeal should be stayed pending payment of the judgment debt or costs below.

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In Hammond Suddard Solicitors v Agrichem International Holdings Ltd [2001] All ER(D) 258 (“Hammond Suddard”), the English Court of Appeal held that these provisions gave the court the discretion to order the continued prosecution of an appeal to be made conditional on the appellant’s payment of the judgment debt and costs below (at [38]–[40]). In that case, the appellant was a company incorporated in the British Virgin Islands. The respondents opposed the appellant's application for a stay of execution of the judgment below, and asked for an order that the appellant be allowed to continue its appeal only if it paid or secured the full amount of the judgment debt and costs below. The court granted the order sought by the respondents, having taken into account the following six factors which, when combined, sufficed to constitute a compelling reason (at [41]):

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Thus, based on Hammond Suddard, it would appear that in England, the fact that there is a real risk that the respondent would be unable to recover the judgment debt and costs below in the event the appellant fails in the appeal (due to difficulties in enforcement), alongside the lack of evidence from the appellant that it is unable to make payment, is sufficient to constitute a compelling reason for the stay to be granted.

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In Bell Electric Ltd v Aweco Appliance Systems GmbH & Co KG [2003] 1 All ER 344, the English Court of Appeal further held that even where there was no reason to suppose that vigorously pursued steps of enforcement would ultimately prove fruitless if the appeal fails, there may nonetheless be a compelling reason for the stay to be granted (at [22]). Such compelling reason may be found where the reason for the appellant’s non-payment of the judgment debt and costs below is not financial difficulty, but its knowledge that the respondent is unlikely to commence enforcement proceedings while the appeal is pending due to practical difficulties (at [22]–[23]). The court stated (per Potter LJ, with whom Carnwath LJ agreed):

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I noted a difference between the principles underlying the approach set out by this court in Roberto and the English approach. Under the English approach, a key consideration is the timely payment of a judgment debt or costs and this principle justifies the grant of a stay of the appeal where the appellant can afford to pay the costs below but fails to do so. As the English Court of Appeal noted in Hammond Suddard (at [48]):

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In Roberto, however, this court emphasised that a stay of appeal pending payment of costs below should only be granted in “rare” cases as the right of appeal should not be curtailed by considerations which are extraneous to the appeal. It was explained that the appellate court should not be used as a means to enable the respondent to obtain payment of his taxed costs (Roberto at [17]). On this basis, Roberto suggests that the mere fact that the appellant has the ability to pay the costs below but has not done so is not a special or exceptional reason for a stay to be granted.

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As mentioned, PNGSDP submitted that there were two factors which made the circumstances of the present case exceptional. First, it suggested that the State was able but simply unwilling to pay the Outstanding Sum and therefore was abusing the process of the court in failing to comply with the costs orders. Second, PNGSDP argued that it would likely face difficulties in enforcing the costs orders against the State in Papua New Guinea. As both of these allegations were not made out on the evidence, there was no basis for the stay to be granted and I accordingly dismissed SUM 116.

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I rejected PNGSDP’s submissions in this regard. There was no connection between the State’s alleged past conduct in the consolidated proceedings and the State’s present non-payment of the Outstanding Sum. Even if I were to assume that PNGSDP’s allegations were true, the fact that the State’s claims had evolved from the time of commencement, and that it had obtained an interim injunction against PNGSDP pending the outcome of the case, did not establish abuse of process on the part of the State for the purposes of staying the State’s appeal pending its payment of costs below. The situation might have been different if for instance there was evidence that the State had consistently flouted court orders and that the non-payment of the Outstanding Sum was another manifestation of its abuse of the process of the court (see eg, Suntech Power Investment Pte Ltd v Power Solar System Co Ltd (in liquidation) [2019] SGCA 52 at [51]–[52] in the context of an application to strike out a pending appeal where the appellant was in continuing breach of a court order). There was, however, no such suggestion made by PNGSDP in the present case.

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PNGSDP’s second main submission was that a stay should be granted because any attempt it makes to enforce the costs orders against the State in Papua New Guinea was likely to be time consuming and ultimately unfruitful. Specifically, it alleged that the State would utilise certain provisions within the relevant Papua New Guinea legislation for enforcement of judgments to stymie its attempts at enforcement. In its written submissions, PNGSDP raised various aspects of the applicable legislation in Papua New Guinea which would allegedly allow the State to stymie its attempts at enforcement. It claimed, inter alia, the following:

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I did not accept PNGSDP’s allegations on the difficulties it would face in enforcing the costs orders as there was a lack of evidence to support its allegations. As counsel for PNGSDP confirmed at the hearing before me, the allegations pertaining to difficulties in enforcement of the costs orders in Papua New Guinea were not raised on affidavit and only in written submissions for SUM 116. There was, in the circumstances, no basis for me to accept PNGSDP’s allegations about the State’s likely conduct in enforcement proceedings.

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In the present case, while PNGSDP had reproduced the relevant Papua New Guinea legislation it sought to rely on in its bundle of authorities filed alongside its written submissions, there was nothing on the face of the relevant provisions of the REOJA and CBAATSA cited by PNGSDP which suggested that the costs orders awarded by the High Court in this case would not be enforced in Papua New Guinea. There was no explanation on affidavit why the registration of the judgment would likely be set aside on grounds of public policy under s 5 of the REOJA. Similarly, in respect of the allegations as set out at [45(b)]–[45(e)] above, no evidence was adduced to establish that the Solicitor-General was likely to endorse that the satisfaction of the costs orders of the Singapore High Court could not take place, or that the Departmental Head responsible for finance matters would not make the relevant payment to satisfy the costs orders.

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I was also of the view that as the State was a foreign plaintiff, it was open to PNGSDP to apply for security for its costs of the action pursuant to O 23 r 1(1)(a) of the Rules of Court, but it had not. At the hearing before me, counsel for PNGSDP accepted that this was an option available to PNGSDP but which it had not undertaken. Having omitted to apply for security for costs of the action, PNGSDP was partly responsible for the predicament it found itself in.

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For these reasons, I found that PNGSDP had failed to establish that it would face difficulties in enforcing the costs orders and that this was an exceptional reason for the stay to be granted.

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As I have observed above, there are a number of English authorities which suggest that the fact that the respondent is likely to face difficulties in enforcing a judgment debt or costs order could be a compelling reason (under the CPR) for the appeal to be stayed pending payment of the judgment debt or costs by the appellant. However, the approach in Roberto is different although Roberto was not a case involving the need to seek enforcement of a judgment debt or costs order in a foreign country. It is uncertain if the English approach will be adopted in Singapore, given the observation in Roberto that the respondent may well face difficulties in enforcing the costs order below while the appeal is pending but that the appellate court should not be used as a means to enable the respondent to obtain payment of his taxed costs (at [17]). Since PNGSDP failed to adduce any evidence of the difficulties it would face in enforcing the costs orders, it was unnecessary for me to decide the point. It suffices for me to observe that, based on Roberto, the mere fact that enforcement proceedings would have to be commenced overseas against a judgment debtor is unlikely to be sufficient to constitute a special or exceptional reason for a stay to be granted as that would result in a stay of appeal being granted in almost all cases where the appellant resides in a foreign country. This would undermine the general principle that a stay of an appeal pending payment of costs below should only be granted in special or exceptional circumstances.

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For all of the foregoing reasons, I found that the twin criteria of prejudice and justice for a stay to be granted pending payment of the Outstanding Sum were not met. There was no special or exceptional circumstance justifying the stay. I therefore dismissed PNGSDP’s application with costs.