PUT UP $800,000 as Security for Costs or be SHUT OUT: Aiyaz Khaiyum's chamcha Nalin Patel and his lawyer wanted former G.Lal & Co founding partner to cough up $800,000 for his case to proceed in Fiji High Court!

"On the outset, the First Defendant submits [through his Suva lawyer John Apted] that a total costs are expected to amount more than $200,000 and for the Second Defendant with overseas Counsel in excess of $600,000" - Fiji High Court, 3 November 2015

'Considering the circumstance of the case, I will order a [security for] cost of $7,500 to each of the two Defendants, a total of $15,000 -
NALIN PATEL  Chartered Accountant of Level 10 FNPF Place, 343 Victoria Parade, FIRST DEFENDANT; and NALIN PATEL  and PRADEEP PATEL as partners in the firm of G. Lal & Co, now trading under the franchise name BDO & Associates of Level 10 FNPF Place, 343 Victoria Parade, Suva,
SECOND DEFENDANT' -
Fiji High Court, 3 November 2015

'Upon the perusal of the Plaintiff’s Statement of Claim filed in court, at paragraph 15, he [Girdhar Lal] states that “the First and Second Defendants by their actions have fraudulently deprived the Plaintiff off his interest and share in the partnership of G Lal & Co from January 1991.” He further stated at paragraph 18 ‘whilst the Plaintiff was abroad the first and second Defendants without the knowledge and or assent of the Plaintiff, fraudulently purported to act as agent for the Plaintiff in dealing with the Fiji Revenue and Customs Authority, in relation to the personal tax affairs of the Plaintiff.’

VISHWA DATT SHARMA
Acting Master of the High Court

Fijileaks: Edited Version

Lal v Patel [2015] FJHC 844; HBC318.2014 (3 November 2015)

IN THE HIGH COURT OF FIJI
AT SUVA
CIVIL JURISDICTION

Civil Action No. HBC 318 of 2014

BETWEEN:

GIRDHA[R] LAL of 656 Kirkland Avenue, Vallejo, California 94592, United States, Accountant.
PLAINTIFF

AND:

NALIN PATEL  Chartered Accountant of Level 10 FNPF Place, 343 Victoria Parade.
FIRST DEFENDANT

AND:

NALIN PATEL  and PRADEEP PATEL as partners in the firm of G. Lal & Co, now trading under the franchise name BDO & Associates of Level 10 FNPF Place, 343 Victoria Parade, Suva.
SECOND DEFENDANT

BEFORE : Acting Master Vishwa Datt Sharma

COUNSEL : Mr. Anil J. Singh for the Plaintiff

Mr. John Apted for the Defendants

Date of Hearing : 10th August, 2015
Date of Ruling : 03rd November, 2015

RULING

1. INTRODUCTION

1. The First and Second Defendants filed two (2) separate Summons together with Affidavits In Support on 18th March, 2015 and sought for the following orders-
   • (i) That the Plaintiff do within fourteen (14) days give security for the First and Second Defendants’ costs to the satisfaction of the court on the grounds that the Plaintiff is ordinarily resident outside of the Jurisdiction and otherwise as appear in the affidavits of  Nalin Patel  and Pradeep Patel;
   • (ii) That in the meantime all proceedings herein other than the proceedings relating to the giving of such security be stayed; and
   • (iii) That the costs of this application be the Plaintiff’s costs in any event.
2. The applications were made pursuant to Order 23 r 1(a) of the High Court Rules, 1988 and the inherent jurisdiction of the court.
3. The Plaintiff filed an Affidavit in Opposition to both Defendants’ application.
4. The application was heard on 10th August, 2015.
5. Defendants Counsel furnished his written submissions to this court on 10th August 2015 and the Plaintiff’s Counsel filed his written submissions after the conclusion of the hearing on 04th September, 2015.

1. BACKGROUND TO THIS CASE

1. The Plaintiff commenced proceedings by a Writ of Summons and the Statement of Claim on 13th November, 2014.
2. In essence he is claiming relief going back to 01st January, 1998 and concerns events that occurred between 1990 and 1994.
3. Parties are not disputing that the Plaintiff was the founder of G. Lal & Co. a firm of that name now operates under franchise from the international accounting firm of BDO, as BDO.
4. The Plaintiff and the first defendant were the sole partners from about 30 June 1983.
5. The Plaintiff migrated to United States of America in 1991.
6. It is not in dispute that when the Plaintiff left Fiji in 1990, he took no active part in the affairs or operations of the accounting practice in which he had been a partner with the first defendant.
7. According to the Defendant, after the Plaintiff left in 1991, the first Defendant did not provide him with final settlement of accounts or purchase the Plaintiff’s interest as allegedly required by section 43 of the Partnership Act.
8. The Plaintiff states that he did not receive any profits of the practice from 01st January, 1991.
9. The Plaintiff’s first cause of action against both the first and second Defendants is that his exclusion from partnership and its rights constituted fraud.
10. The Plaintiff also alleges that the first and second Defendants wrongfully purported to represent him in dealings with the Commissioner of Inland Revenue which resulted in an unjustified tax liability.
11. The Plaintiff claims from the Defendants-
    • (a) Shares of the profits of the Firm of G Lal & Co from 01st January, 1991 till judgment together with 5%interest on the amount of shares of the partnership assets;
    • (b) The Plaintiff’s share in the profit of the partnership between 01st January, 1988 and 31st December, 1990;
    • (c) An order that the Defendants make a full disclosure of the financials of the partnership together with details of its assets and liabilities from 01st January, 1988 till 31st December, 1990 and from 01st January, 1991 till date of judgment;
    • (d) General Damages; and
    • (e) Costs.
12. The Defendants filed their respective Defences to the Plaintiff’s claim.

1. THE LAW

1. Security for costs of action, etc. (O.23, r.1)

1.-(1) Where, on the application of a defendant to an action or other proceeding in the High Court, it appears to the Court-

(a) that the plaintiff is ordinarily resident out of the jurisdiction, or

(b) that the plaintiff (not being a plaintiff who is suing in a representative capacity) is a nominal plaintiff who is suing for the benefit of some other person and that there is reason to believe that he will be unable to pay the costs of the defendant if ordered to do so, or

(c) subject to paragraph (2), that the plaintiff’s address is not stated in the writ or other originating process or is incorrectly stated therein, or
(d) that the plaintiff has changed his address during the course of the proceedings with a view to evading the consequences of the litigation,

then if, having regard to all the circumstances of the case, the Court thinks it just to do so, it may order the plaintiff to give such security for the defendant’s costs of the action or other proceeding as it thinks just.

(2) The court shall not require a plaintiff to give security by reason only of paragraph (1) (c) if he satisfies the Court that the failure to state his address or the mis-statement thereof was made innocently and without intention to deceive.

(3) The references in the foregoing paragraphs to a plaintiff and a defendant shall be construed as references to the person (howsoever described on the record) who is in the position of plaintiff or defendant, as the case may be, in the proceeding in question, including a proceeding on a counterclaim.

1. ANALYSIS and DETERMINATION

1. This is an application by the First and Second Defendants seeking separate orders for security for costs to be made against the Plaintiff on the ground that the Plaintiff is ordinarily resident out of the jurisdiction.
2. It is appropriate that the parties to this proceeding must understand what is meant by security for costs.
3. Security for costs is a common law legal concept of application only in costs jurisdictions, and is an order sought from a court in litigation. The general rule in costs jurisdiction is that "costs follow the event". In other words, the loser in legal proceedings must pay the legal costs of the successful party. Where a defendant has a reasonable apprehension that its legal costs will not be paid for by the Plaintiff if the defendant is successful, the defendant can apply to the court for an order that the plaintiff provide security for costs.
4. In the present case, the Plaintiff has admitted and confirmed in her Affidavit in Opposition that she is a Resident of United States of America. She has said nothing about owning any assets in Fiji Jurisdiction.
5. She opposes the application for security for costs but states if the court so orders, then she believes may not be able to find any more than $15,000.
6. The fundamental principle is the right of a litigant to pursue and enforce rights in the courts. The court must have a concern to achieve a balance between ensuring that adequate and fair protection is provided to the Defendant, and avoiding injustice to an impecunious Plaintiff by unnecessarily shutting it out or prejudicing it in the conduct of the proceedings. (Case of Idoport Pty Ltd v National Australia Bank Ltd [2000] NSWLR 598 refers).
7. Therefore, it follows that the discretion lies with the Court to order the Plaintiff to give security for the Defendants’ costs of this action only after the Court has given due regards to all the circumstances of the case.
8. There is no hard and fast rule that security for cost should be ordered when the Plaintiff is ordinarily resident outside the jurisdiction. Hence it is not desirable to award security for cost solely on the ground of plaintiff being a resident in another jurisdiction. Court must consider other facts incidental to the proceedings.

On the outset, the First Defendant submits that a total costs are expected to amount more than $200,000 and for the Second Defendant with overseas Counsel in excess of $600,000.

Firstly, the Plaintiff has indicated in his affidavit and the Defendants have established that the Plaintiff is a Resident in the United States of America.

Secondly, there is no direct evidence from either party whether the Plaintiff has assets within Fiji Jurisdiction that may be utilized to recover costs if the Plaintiff loses the case.

Thirdly, the Plaintiff has appraised court with section 15(2) of the Constitution which has been taken into consideration. The Plaintiff stated that he would be deprived of his rights to litigation if court orders unrealistic amount of costs the Defendant is seeking.

In any event, the fundamental principle is the right of a litigant to pursue and enforce rights in the courts. The Plaintiff should not be shut out from prosecuting her case.

Upon the perusal of the Plaintiff’s Statement of Claim filed in court, at paragraph 15, he states that “the First and Second Defendants by their actions have fraudulently deprived the Plaintiff off his interest and share in the partnership of G Lal & Co from January 1991.” He further stated at paragraph 18 ‘whilst the Plaintiff was abroad the first and second Defendants without the knowledge and or assent of the Plaintiff, fraudulently purported to act as agent for the Plaintiff in dealing with the Fiji Revenue and Customs Authority, in relation to the personal tax affairs of the Plaintiff.’

The Defendants have pleaded Defence of Limitation under the Limitation Act Cap 35, Illegality, Estoppel, Laches, Delay and Acquiescence and make further objections to the Plaintiff’s Statement of Claim in terms of disclosing no reasonable cause of action, is frivolous or vexatious, may prejudice or delay fair trial in this action and is an abuse of the process of the court.

To this, the court is of the view that it should not delve itself prematurely into the merits of the case at this stage of the case, rather deal with the pending issue of the security for costs.

As I have earlier on stated herein above that the Plaintiff’s cause of action as it can be ascertained from the Statement of Claim that “the First and Second Defendants by their actions have fraudulently deprived the Plaintiff off his interest and share in the partnership of G Lal & Co from January 1991.” Further ‘whilst the Plaintiff was abroad the first and second Defendants without the knowledge and or assent of the Plaintiff, fraudulently purported to act as agent for the Plaintiff in dealing with the Fiji Revenue and Customs Authority, in relation to the personal tax affairs of the Plaintiff.’

At this stage of the proceedings, the court should proceed on the basis that the claim is bona fide and has reasonable prospects of success. It is for the court to hear the case in terms of the evidence tendered in the proceedings and determine accordingly.

(vi) Foreign Plaintiffs
Where a Plaintiff is ordinarily resident overseas and has no assets in the jurisdiction, there must be weighty reasons why an order for security for costs should not be made. A Defendant is not expected to bear the uncertainty of enforcement in a foreign country. The difficulty in enforcing an order for costs overseas against a non-resident Plaintiff will usually be sufficient to ground an order, especially where there is no reciprocal right of enforcement in the relevant foreign jurisdiction.

(vii) Delay
Application for security should be brought promptly and delay by a Defendant is a relevant factor in the exercise of the discretion. However, the passage of time is but a factor to be taken into account in the balancing exercise. The delay must be weighed in terms of prejudice and factors that have led to the delay.

In this case the Plaintiff commenced proceedings on 13th November, 2014 and the Defendants filed separate applications seeking security for costs on 18th March, 2015, some four (4) months after.

1. The Plaintiff in this case commenced proceedings against the Defendants by way of a Writ of Summons on 13th November, 2014, wherein he claims that “the First and Second Defendants by their actions have fraudulently deprived the Plaintiff off his interest and share in the partnership of G Lal & Co from January 1991.” Further ‘whilst the Plaintiff was abroad the first and second Defendants without the knowledge and or assent of the Plaintiff, fraudulently purported to act as agent for the Plaintiff in dealing with the Fiji Revenue and Customs Authority, in relation to the personal tax affairs of the Plaintiff”’ as set out in the statement of claim.
2. So far, the pleadings have reached the stage where the Plaintiff has obtained orders on the Summons for Directions for the Plaintiff and Defendants to file and serve their respective affidavit verifying list of documents, and inspection of documents. Henceforth, after due compliance, parties will invoke the next cause of action for a Pre- Trial Conference and minutes to be filed in terms of the High Court Rules 1988. At present, the substantive matter has come at a standstill in terms of filing of pleadings, and consequently, some four (4) months later, the Defendants thought fit to file separate applications for security for costs.
3. The Plaintiff has not attended to the next cause of action and or filed his affidavit verifying Plaintiff’s list of documents as per the court’s order on the Summons for Directions to pursue the case further and then allow the Defendants to file their affidavit verifying Defendants’ list of documents and so on. The Plaintiff cannot just delay the prosecution of his case because of the pending application for security for cost. If the Plaintiff is at all serious about his claim, then he should have taken due diligence with the prosecution of the same rather than await the outcome of this pending security for costs application. Further, there is no evidence before me that the delay in this pending application for security for cost has caused hardship for the future conduct of this action by the Plaintiff.
4. The First Defendant has separately sought for security for costs to an amount more than $200,000 and for the Second Defendant with overseas Counsel in excess of $600,000 respectively.
5. The security for cost is rather ordered to secure the Defendants, in an event of Plaintiff's claim being not successful at the conclusion of the hearing. The security for cost sought by the Defendants in anticipation up to the conclusion of the case to meet the cost, if the Plaintiff's claim is dismissed, is exorbitant in nature. A decision in any case comes only after a full hearing and determination. It may not be prudent to judge a case on the face of it, prima facie.
6. The court can order security for cost up to a particular stage of the proceedings. A further application will be required after passing that stage of the trial. The Defendants will be at liberty to make decisions whether any further applications for security for costs will be necessitated, having regards to all the circumstances of this case. Bearing in mind the present status quo of this case, it cannot be said how the case will be handled by the parties hereafter.
7. Considering the circumstance of the case, I will order a cost of $7,500 to each of the two Defendants, a total of $15,000.
8. This amount to be deposited into the Chief Registrar’s interest bearing account in the High Court.t Further, the Plaintiff is directed to remit the said sum within 28 days from today. If the money is not deposited within 28 days as directed herein, the Plaintiff’s case will be struck out accordingly.

1. CONCLUSION

1. Taking into consideration the above rational, I will accede to the First and Second Defendant’s application to order security for costs at $7,500 to each of the Defendants, a total of $15,000.
2. The Plaintiff is directed to remit the abovementioned sum within 28 days from today. If the money is not deposited within 28 days into the Chief Registrar’s interest bearing account, the action will be struck out accordingly.
3. The Plaintiff is also directed to file and serve his affidavit verifying Plaintiff’s list of Documents within 28 days from today and 28 days thereafter, for the two Defendants to file their affidavit verifying Defendants list of documents accordingly.

1. FINAL ORDERS

1. The Plaintiff is directed to deposit a total sum of $15,000 into the Chief Registrar’s interest bearing account at the High Court in Suva, as security for cost within 28 days.
2. The action will be struck out if the abovementioned direction is not complied within the stipulated time frame of 28 days.
3. The Plaintiff is further directed to file and serve summons for directions within 21 days from today.
4. The cost of this application is assessed summarily at $750 and the cost should be paid to the Defendant within 21 days.
5. The case will now be scheduled for further directions on 02nd December, 2015 at 9 am.

Dated at Suva this 03rd day of November, 2015

VISHWA DATT SHARMA
Acting Master of the High Court
Full judgment:
lhttp://www.paclii.org/cgi-bin/sinodisp/fj/cases/FJHC/2015/844.html?stem=&synonyms=&query=nalin%20patel

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From Fijileaks Archive:

"Perjury in False Affidavit, Abuse of Office, and Aiding and Abetting Perjury"

"6. We request the Director of Public Prosecutions to establish whether Mr Chaudhry and Nalin Patel, in presenting to FIRCA the letter from Harbhjan Lal, whose content was materially false [re his enquiring the details of the funds etc] –Chaudhry (and Nalin Patel) committed a criminal offence under Fiji’s tax laws by offering a false document to FIRCA, namely the Harbhajan Lal letter.

7: We request the Director of Public Prosecutions to investigate the Suva accountancy firm of G. Lal & Co, Mr Chaudhry’s delegated tax agent which dealt with FIRCA in 2004, to establish whether it was aware of the inconsistencies in the Harbhajan Lal-Chaudhry correspondence regarding the $2million, and whether the accountancy firm also had in its possession the Delhi Study Group letter dated 12 October 2004.

8: We request the Director of Public Prosecutions to establish whether Mr Chaudhry and Nalin Patel submitted Harbhajan Lal’s letter knowing its content was false in material respects to prevent FIRCA from pursuing the original source of the funds in Mr Chaudhry’s Australian bank account."

Victor Lal and Russell Hunter's 60 page legal submission to DPP's Office, 12 September 2012