When procedural issues become a minefield | Daily News

When procedural issues become a minefield

What may appear to be regular, routine issues such as making payments to Court where required, can have dire consequences nevertheless.

Section 416 of the Cvil Procedure Code provides that at any stage of the action, “if it appears to court that the Plaintiffs are residing out of Sri Lanka, the Court may in its discretion either of its own motion or on the application of any defendant order the Plaintiff to give security for the payment of all costs incurred and likely to be incurred.”

That is obviously to make sure that if costs are ordered against any plaintiff who is not in the country, such costs can be recovered by the defendant irrespective of whether the plaintiff is abroad, and conveniently ‘goes missing’ as a result.

However, the Court in the exercise of its discretion should be satisfied that the said Sections 416 and 417 are not being oppressively used by the party moving for security.

It means of course that the defendant may not use the need for the plaintiff to furnish security as some sort of tool in order to adversely impact the plaintiff’s chances in court.

A case came up in appeal that asked the Court of Appeal for relief on precisely such an issue that had transpired in the District Court. (Barr Kumarakulasinghe and Others v. Ollegasegaram Amaratungaj – SLR - 323, Vol 3 of 2005.)

In this matter, the plaintiff had been ordered by the District Judge to furnish security to the value of Rs. 1,010,000. He challenged that order in a Leave to Appeal application.

The Court of Appeal decided in judgement:

“An order calling upon a plaintiff under Sections 416 and 417 of the Code should not be made as a matter of course. The Court in the exercise of its discretion should be satisfied that the aid of either section is not being oppressively used by the party moving for security.”

“In this case the defendant has failed to explain to Court why the defendant wanted the plaintiffs to deposit such an enormous sum when the plaintiffs’ action was valued at Rs.700,000 and the defendants counterclaim at Rs.400,000.”

Citing oppressive use of the provision, the judges of the Court of Appeal decided that the order for security was not justifiable, and set it aside.

In a separate case, Martin vs. Suduhamy, (Sri Lanka Law Reports 1991 – Volume 2), a petition of appeal was filed in the Supreme Court in terms of Section 755(4) of the Civil Procedure Code. The matter in issue was that security deposited upon appeal was not hypothecated by bond as security for the costs of appeal as provided for by Section 757(1) of the Code. When objection to the hearing was taken on this ground, the appellant took a postponement but took no meaningful steps to rectify the omission.

Justice Bandaranayake in her judgement stated that the failure of the appellant to offer an explanation suggest that his failure to hypothecate – to pledge collateral for the money deposited – was not by a mere mistake or oversight but probably intentional. It was observed in judgement that “Such conduct in my view should be regarded as materially prejudicial to the respondent and not a trivial inconvenience. The appeal should therefore be rejected. The appeal is dismissed with costs.”

However, such appeals are not dismissed on the mere technical grounds of not depositing the security required on appeal or hypothecating it.

Court has discretion either to grant relief, or to reject the appeal for failure to furnish said monies to court. The respondent has not been materially prejudiced in this case, held Justice Mark Fernando in his differing judgement in the same case.

Justice Mark Fernando held that “prejudice to the respondent is the same, whether there is no bond, or whether there is a bond which lacks a vital clause, namely, it gives rise to the possibility that the sum deposited as costs might not be available to the successful respondent. But is this prejudice “material”?

Court ultimately decided that a matter of Rs, 750 which was the amount of the security involved, is not “material” or “substantial” in a case where the respondent had obtained much larger sums in damages.

The problem according to Justice Fernando however was that the appellant though he did not materially prejudice the case by not ensuring the hypothecation the money, did nothing to rectify the error. Justice Fernando stated in judgement:

“I am in respectful agreement with Lord Chancellor in Sameen v. Abeyewickrema that relief can be granted even in respect of total or substantial non-compliance, and even if no excuse is forthcoming. But while the Appellant’s non-compliance was by no means substantial, the material before us suggests that the Appellant deliberately did not comply with Section 757(1); obtained a postponement of the hearing when the objection was taken, but refrained from taking any steps to cure his default; and made no application for relief to the Court of Appeal.”

In other words, Justice Fernando held that there was nothing prejudicial to the defendant by the appellant’s lapse in not subjecting the security deposited to be hypothecated. But yet, if he was to continue the case despite the lapse, he should have explicitly pleaded in Court to grant that relief, which he failed to do. The appeal was dismissed.