A local company lost a trade mark case, appealed, and then stopped trading while a winding-up petition was pending. The question was whether it should have to secure the respondent's costs before the appeal went on.
Brinks Pty Ltd, Barry Tan and Herman Lucas v Brink’s, Incorporated [1996] PGSC 16; [1996] PNGLR 75; SC501
Supreme Court, Waigani — Amet CJ, Kapi DCJ and Los J, 12 June 1996.
What happened
Brink’s Incorporated, the international security company, sued Brinks Pty Ltd and two individuals for infringing its trade marks. Sheehan J entered summary judgment restraining the use of the name and ordering the company to change it. The appellants appealed. The respondent moved for security for the costs of the appeal under section 18 of the Supreme Court Act, which allows the Court or a Judge, “in special circumstances”, to order that just security be given, failing which the appeal is deemed abandoned.
What was argued
The respondent relied on two matters: that the second appellant resided outside Papua New Guinea, and that the first appellant could not pay costs because a winding-up petition was pending and it had defaulted on filing submissions below. The appellants said none of this amounted to special circumstances and that no fresh evidence showed where the individual appellant lived.
What the Court decided
1. Section 18 had not previously been interpreted. “Special circumstances” cannot be exhaustively defined, but it is relevant to have regard to the circumstances in which the National Court may order security under Order 14 rule 25 of the National Court Rules. Those four circumstances are adopted: (a) the appellant is ordinarily resident outside Papua New Guinea; (b) there is reason to believe the appellant will be unable to pay the respondent’s costs if ordered; (c) the appellant’s address is not known; (d) the appellant has changed address after instituting the appeal to avoid its consequences.
2. The onus is on the party seeking security. No evidence proved that any appellant normally resided abroad, so ground (a) failed. A six-day delay in filing submissions below did not show inability to pay.
3. A pending winding-up petition to which no defence had been offered, together with counsel’s concession that the company had ceased operating, made it more than likely the company could not pay. Security of K2,300, the company’s share of estimated costs of K6,500, was ordered against the first appellant only.
Did it make new law?
Yes. It was the first interpretation of section 18 and it supplied the working definition of special circumstances that every later application has used. No National Court decision was under review; the application was made directly to the Supreme Court. Later decisions have added that the power is discretionary even when a ground is shown, that the merits of the appeal and delay in applying are relevant, and that a history of unpaid costs orders can satisfy ground (b).
Why it matters
Respondents should apply early and prove one of the four grounds with evidence, usually of impecuniosity: unpaid judgments, unpaid costs, a company no longer trading.
Appellants can resist by showing means, or by showing that the respondent’s own conduct caused the impecuniosity, a factor drawn from the National Court cases.
The sanction is severe. Under section 18(2) an appeal in which ordered security is not given is deemed abandoned.
What it does not decide
Brinks does not close the categories; the Court said special circumstances cannot be exhaustively defined. It does not deal with security against a respondent, or with security under the review jurisdiction, where later decisions have applied the same approach by analogy. Nor does it fix the amount by any formula: “just security” is assessed on the evidence of likely costs.
Recent cases applying it
- McConnell v Loloata Island Resort Ltd [2024] PGSC 22; SC2553 — Hartshorn J identified Brinks as the full Court judgment on point and quoted its adoption of the Order 14 rule 25 grounds.
- Covec (PNG) Ltd v Kama [2024] PGSC 155; SC2692 — an appellant’s failure and refusal to pay numerous costs orders in related proceedings constituted special circumstances; security ordered.
- Pak v Motor Vehicles Insurance Ltd [2024] PGSC 162; SC2745 — Brinks applied on a contested application against an unsuccessful personal injury plaintiff.
- Lumbuweh v Watson [2021] PGSC 118; SC2233 — Brinks the principal authority on an application under section 18 and Order 7 rule 24.
Sources
- Brinks Pty Ltd v Brink’s, Incorporated [1996] PGSC 16; [1996] PNGLR 75 (Amet CJ, Kapi DCJ and Los J, 12 June 1996)
- Supreme Court Act (Chapter 37) — s 18; Supreme Court Rules 2012 — Order 7 r 24; National Court Rules 1983 — Order 14 r 25
- McConnell v Loloata Island Resort Ltd [2024] PGSC 22; SC2553; Covec (PNG) Ltd v Kama [2024] PGSC 155; SC2692; Pak v Motor Vehicles Insurance Ltd [2024] PGSC 162; SC2745; Lumbuweh v Watson [2021] PGSC 118; SC2233
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