The Friendly Islands Satellite Communications Ltd (Tongasat) will have to pay $15,000 pa'anga for security of costs to the Supreme Court, before their appeal against a ruling of the Lord Chief Justice can be heard.

Tongasat wants to appeal a ruling that declared that multi-million Chinese aid fund grants paid to the company had been unlawful. However, if Tongasat fails to make the payment on the due date of 15 March, its appeal will be not be heard during the sitting of the Court of Appeal in April.

An application was brought by 'Akilisi Pohiva (second respondent) that the appellant Tongasat must provide security for his costs on their appeal. He also sought that Tongasat's appeal be stayed until it gives the security as ordered.

President of the Court of Appeal, O.G. Paulsen in an interim ruling on February 28, after hearing the evidence ruled that Pohiva's application successful.

He said that Tongasat shall provide security for the second respondent's costs by making payment to the Registrar of the Supreme Court of the sum of $15,000 by no later than March 15.

This amount has been assessed by reference to usual awards of costs on appeals to the Court of Appeal after making allowance for the involvement of Senior Counsel in this case.

Chief Justice Paulsen said Tongasat's appeal is against his judgements given on August 17 and September 5, 2018.

“I made declarations concerning the lawfulness of the expenditure of aid grant funds amounting to USD$49.9 million received by the Kingdom from the People's Republic of China, that in the event were paid or applied almost entirely for the benefit of the appellant."

Tongasat's finances

The President of the Court of Appeal said his further concern arose out of the evidence at trial concerning Tongasat and its current financial position. 

He said that evidence was drawn either from Tongasat’s own discovered documents or the evidence under cross-examination of its Managing Director Ms Lucy 'Ilaiu. 

"In my view, the only possible conclusion to be drawn from that evidence was that Tongasat (i) had long since been stripped by HRH Princess Pilolevu of all significant financial assets, including but not limited to Tongasat's share of the first and second tranche payments the subject of the litigation, leaving Ms 'Ilaiu in control of an effective shell, and (ii) was an insolvent and worthless company in any event."

In addition, there was no suggestion in evidence that Tongasat continued to trade following the termination of its Agency Agreement, with the Kingdom, which featured in the proceedings.

He said this suggests that Tongasat's own legal representation in relation to the appeal, now for the first time involving overseas counsel is being independently funded from some outside source.

"The likelihood of any such outside source being prepared to pay any costs order made in my favour should Tongasat be unsuccessful is in my view non existent."

The Court was also told that Tongasat has an ongoing history of failing and indeed refusing to honour Court orders for costs made against it.

"This evidence has not been challenged by the appellant and is compelling. I am also in the fortunate position of having heard the evidence given in the Supreme Court as to the appellant's financial circumstances, which appeared parlous.I am satisfied that there is good reason to believe that the appellant will not be in a position to pay costs on this appeal should it be required to do so."

This application is to be heard on May 3 for mention before Justice Paulsen and by that date the Court will have ruled on Tongsat's motion to adduce further evidence.

Meanwhile, costs were awarded to Pohiva which is to be fixed by the Registrar if not agreed, on this application for security.