| Fiji Islands - Shipbuilding (Fiji) Ltd v Murphy - Pacific Law Materials |
IN THE HIGH COURT OF FIJI
AT SUVA
CIVIL JURISDICTION
CIVIL ACTION NO. 0057 OF 1997
BETWEEN:
SHIPBUILDING (FIJI) LIMITED
Plaintiff
AND:
1. BRIAN MURPHY
(Chartered Accountant as Receiver and Manager appointed for
DONALD PICKERING AND SONS ENTERPRISES LIMITED)
1st Defendant
2. SARL TAHITIAN'S SHIPBUILDERS
2nd Defendant
Mr. D. Sharma for the Plaintiff
Mr. R. Naidu for the Defendants
JUDGMENT
On the 17th of February 1997 this Court granted ex parte to the plaintiff company an interim injunction restraining the defendants "... from levying distress ... or from re-entering the premises (Shed No. 11) occupied by the plaintiff ..."
The injunction was further made conditional upon the payment into Court of the sum of $18,957.99 being the amount demanded in a letter of the second defendant company for reimbursement of rental and other charges paid in relation
to the premises occupied by the plaintiff company.
By inter partes summons dated the 17th of March 1997 the defendants now seek inter alia the dissolution of the above injunction on the following grounds:
(a) lack of jurisdiction;
(b) absence of a valid 'cause of action';
(c) material non-disclosure; and
(d) changed circumstances viz. cancellation of the contract.
It is necessary to refer to some of the factual background in order to gain some meaningful understanding of the case. Very briefly
this case has its origins in a ship-building contract entered into by a Tahitian organisation ('ACP') and a Fiji ship-building company ('United') in November 1994 and later amended in 1995 and 1996.
As part of its efforts to facilitate the building of the vessels 'United' entered into a Tenancy Agreement to lease a suitable premises (Shed No. 11) belonging to the Ports Authority of Fiji ('PAF') situated at Walu Bay in Suva. In August 1996 'United' went into receivership and the 1st defendant was appointed its receiver.
Subsequently, through a Novation Agreement dated 13.9.96 the ship-building contract which was originally entered into between 'United' and 'ACP', was to be continued to completion by the second defendant company Sarl Tahitian's Shipbuilders ('STS') '... as though (STS) had originally contracted with ACP in terms of the contract ...'
Furthermore and in terms of a Schedule C to the Novation Agreement 'United' entered into a Deed granting 'STS':
"... a licence to occupy the premises (leased from PAF) for the exclusive purpose of performing the works prescribed by the Contract
... on condition that (STS) ... perform and observe all the agreements and conditions contained in the Tenancy Agreement as though
(STS) were the tenant thereunder including ... United agreement to pay rental."
Finally on 1st October 1996 by an agreement entitled Amend No. 03/96, 'ACP' or its nominee 'STS' entered into a subcontract with the plaintiff company Ship Building Fiji Limited ('SFL') to build the remaining vessels in terms of United's original contract. Article 6 of this latter contract expressly provided inter alia:
"SFL agrees to pay for addition costs, specifically the actual cost of rental on the shipbuilding facility currently operated
by United Engineers (i.e. PAF's shed) to complete vessels No. 92 and No. 93 ..."
By letter dated 30th September 1996 a representative of 'STS' wrote to 'SFL' in the following relevant terms:
"I hereby grant you authority to commence work on the vessels, known as the Tahiti Project. If final agreement between (SFL)
and (STS) is not reached you agree to vacate immediately at the request of (STS), the premises leased by (United) from (PAF)."
It is sufficiently plain from the correspondence subsequently exchanged between representatives of the 'SFL' and 'STS' that from the outset problems were encountered with two (2) aspects of the contract between 'SFL' and 'STS'; on SFL's part, concern was raised with 'STS' as to SFL's rights; liabilities and 'legal status' in relation to its occupation of the premises in which it was constructing the vessels namely, PAF Shed No. 11; and, on the part of 'STS', concern was raised as to the provision of a satisfactory performance guarantee by 'SFL' in terms of Clause 1 of a contractual letter dated 30th September 1996 executed by 'STS' and 'SFL' on 1st October, 1996 (the 'guarantee letter').
Furthermore the seeming inability or unwillingness of the parties to amicably resolve these two 'issues' has resulted in a hardening of attitudes culminating in STS's letters of 16th January 1996 and 6th February 1997 to 'SFL' threatening inter alia '... to consider its legal alternatives' and demanding '... all work should cease and SFL should vacate the premises,' respectively. So much then for the background to the case. I turn next to consider in greater detail the various grounds urged by
the defendants in seeking the dissolution of the ex parte injunction.
JURISDICTION & CAUSE OF ACTION:
In this regard counsel for the defendants submits that the Court has no jurisdiction in the proceedings since the plaintiff is 'bound by a contract subject to the laws of French Polynesia' and counsel drew the Court's attention to Art 14 of United's original contract with ACP which deals with Arbitration; and Art 2 of the General Conditions applicable to EEC-funded contracts which provides that:
"The Law of the Contract shall be the law of the state of the Contracting Authority unless otherwise stated in the Special Conditions."
Counsel for the plaintiff company submits, however that there is no contract in existence between 'STS' and SFL in so far as Amend No. 3/96 is an agreement strictly entered into between 'ACP' and 'SFL' but in any event the agreement is prima facie 'void ab initio' being in direct contravention of Art 7.5 of the General Conditions which expressly prohibits contractual relations between the Contracting Authority and sub-contractors and in the event that that
is so, counsel submits that the appropriate 'conflict of laws' rule is that the contract is governed by the law of the territory where the premises is situated and/or where the contract is being
or to be performed which, in both instances, is Fiji.
Suffice it to say that without necessarily accepting the submissions of counsel for the plaintiff company, I reject the arguments
of defence counsel. The particular and limited nature of the dispute in this case namely, SFL's right to occupy the premises in question is nowhere expressly dealt with in either Amend No. 3/96 or in United's original Contract or for that matter, in STS's Novation Agreement. True enough Art 6 of Amend No. 3/96 indirectly refers to the premises but other than setting out an obligation on the part of 'SFL' to pay for the rental, does not expressly authorise SFL's occupation of the premises.
That right (if any) is traceable in large part to STS's letter of 30th September 1996 (op. cit at p.3) and as counsel for the plaintiff company submits, it is a 'right' that was granted in Fiji; relates to a Fijian licensee; refers to premises situated in Fiji and owned by a Fijian statutory Authority.
Professor Dicey in his leading work concerning the 'conflict of laws' states the applicable rule with regard to immovables in the 4th edition of his work in the following terms at p.353:
"The common law has avoided all difficulties by a simple and uniform test. It declares that the law of the situs shall exclusively
govern in regard to all rights, interests, and titles in and to immovable property. Of course, it cuts down all attempts to introduce
all foreign laws, whether they respect persons or things or give or withhold the capacity to acquire or dispose of immovable property.
All questions concerning the property in immovables including the form of conveyance are decided by the lex situs."
The jurisdiction question in my view may be further tested by asking the question how can a Court in French Polynesia lawfully order vacant possession of land situated in Fiji? and even if it could (which I very much doubt), how could such an order be enforced? Whatever might be the answer to that rather vexed question I am satisfied that this Court has
jurisdiction on this rather limited question. What then is the 'legal status' of the plaintiff company's occupation of the premises in question?
The 1st defendant's affidavit dated 19th March 1997 para. 14 describes SFL as being '... no more than STS's licensee in Shed No. 11' and later at para. 33: 'The defendants say that SFL is nothing more than a mere licensee'.
It is not entirely clear what is meant by a 'mere licensee' but if it may be equated with a 'bare licensee' then with all due regard to such a view I cannot agree. In my considered opinion the plaintiff company was a 'contractual licensee' with a contractual licence to occupy the premises.
London Borough ough of Hounslow v. Twickenham Garden Developments Ltd (1970) 3 ALL E.R. 326 Megarry J. (as he then was) in a scholarly judgment discussing the nature of the licence in that case said at p.333:
"The threefold classification of licences is well known. There are licences coupled with an interest, contractual licences, and
bare licences."
and then at p.337 in considering the nature of the particular licence granted in the case before him his lordship said (in words that are, with slight variations, equally applicable to the present case before me):
"... in this case the contract is one for the execution of specified works on the site during a specified period which is still
running. The contract confers on each party specified rights on specified events to determine the employment of the contractor under
the contract. In those circumstances, I think there must be at least an implied negative obligation of the borough not to revoke
any licence (otherwise than in accordance with the contract) while the period is still running, just as in Hurst's case there was an implied negative obligation not to revoke the licence until the performance had concluded."
and later on the same page his lordship cited the observations of Lord Uthwatt in Winter Garden Theatre (London) Ltd. v. Millennium Productions Ltd. (1947) 2 ALL E.R. 331 at p.343 where he said:
"The settled practice of the courts of equity is to do what they can by an injunction to preserve the sanctity of a bargain.
To my mind, as at present advised, a licensee who has refused to accept the wrongful repudiation of the bargain which is involved
in an unauthorised revocation of the licence is as much entitled to the protection of an injunction as a licensee who has not received
any notice of revocation ..."
and Megarry J. continues:
"the case of building operations is really a fortiori a cinema performance, because it must be obvious to all from the outset
that far more is involved in the building contractor moving his equipment on to a site, hiring his labour, making his subcontract
and so on and then in putting a stop to all operations, than is involved in a member of a cinema audience, going in, sitting down
and then getting up and leaving."
The final citation I wish to read from the judgment of Megarry J. is to be found at p.343 where the learned judge summarises:
"... the position relating to contractual licences as follows:
(1) A licence to enter land is a contractual licence if it is conferred by a contract; it is immaterial whether the right to enter
the land is the primary purpose of the contract or is merely secondary.
(2) A contractual licence is not an entity distinct from the contract which brings it into being, but merely one of the provisions
of that contract.
(3) The willingness of the Court to grant equitable remedies in order to enforce or support a contractual licence depends on whether
or not the licence is specifically enforceable.
(4) But even if a contractual licence is not specifically enforceable the Court will not grant remedies in order to procure or aid
a breach of the licence."
The learned judge then added 'four points' of which I need only refer to the 'second' and 'third' - where he says at pp. 343/344:
"... in the light of the Winder Garden Case I find it difficult to see how a contractual licensee can be treated as a trespasser so long as his contract entitles him to
be on the land; and this is so whether or not his contract is specifically enforceable."
and:
"Third, there may be another road to the irrevocability of a licence, namely, the doctrine of a licence acted upon."
In similar vein is the more recent judgment of Lord Denning M.R. in Verrall v. Great Yarmouth B.C. (1980) 1 ALL E.R. 839 where he said at p.844:
"Since the Winter Garden case, it is clear that once a man has entered under his contract of licence, he cannot be turned out. An injunction can be obtained
against the licensor to prevent his being turned out. ... So I hold that the observation in Thompson v. Park are no longer good law. I agree with what Megarry J. said about them in London Borough of Hounslow v. Twickenham Garden Developments Ltd."
Taxed with the judgment of Megarry J. in the Hounslow case defence counsel sought to rely on that part of the express wording of the 'STS' letter (op.cit at p.3) which reads: "If final agreement between (SFL) and (STS) is not reached you agree to vacate immediately at the request of (STS), the premises
leased by (United) from (PAF)." Counsel's rather simplistic submission on this aspect is that by STS's letter of 6th February 1997 such a 'request' was made and in terms of the above sentence, 'SFL' was obliged to 'vacate (the premises) immediately'. I cannot agree.
The making of 'the request' is conditional upon no final agreement being reached between the parties (as to what is not known) nor is there a time frame or limit imposed in the letter when such agreement must be reached. But in any event the very next day, 1st October, 1996, Amend No. 3/96 and the 'guarantee letter' were executed by the relevant parties. In this latter regard I am satisfied despite counsel for the plaintiff's submissions to the
contrary, that a binding 'final agreement' has been concluded between the parties and accordingly the 'outlet' sought to be invoked by defence counsel in his submissions was no longer available to 'STS' as from 1st October, 1996. A fortiori where the plaintiff company was allowed to remain on the premises performing an 'unconcluded contract' for over 4 months.
In the light of the above there is no doubt in my mind that the plaintiff's claim against the 2nd defendant company, although it might
have been more clearly drafted, nevertheless, raises serious issues to be tried. Grounds (a); (b) & (d) are accordingly dismissed. I turn next to deal with the defendant's remaining ground (c).
MATERIAL NON-DISCLOSURE
In this regard defence counsel forcefully submits that the plaintiff company in seeking the ex parte injunction was in serious breach of its duty to make the fullest and frankest disclosure of all material facts both favourable and
unfavourable to its application. (per Donaldson L.J. in Bank of Mellak v. Nikpour (1985) F.S.R. 87 and per Warrangton L.J. in R. v. Kensington Income Tax Commissioners (1917) 1 K.B. 486 at 509)
In particular defence counsel submits that the plaintiff company in its application, failed to disclose the existence of a binding
contract between itself and STS viz. Amend No. 3/96 and the 'guarantee letter' and accordingly the ex parte injunction ought to be discharged in limine. This defence counsel submitted was 'trite law'.
In my view however, upon an application inter partes to dissolve or discharge an ex parte injunction the Court has the opportunity and the duty to examine the entire matter anew upon the basis of all the affidavits and submissions placed before it at the inter partes hearing and may, in exercising its discretion afresh in the matter, dissolve, vary, suspend or extend the ex parte injunction and may even grant a fresh injunction as in its discretion appears just.
I am fortified by the observations of Browne-Wilkinson V.C. in Dormeil Freres v. Nicolian Ltd. (1988) 3 ALL E.R. 197 where the learned Vice Chancellor said at p.199:
"... if, in the circumstances existing when the matter comes before the Court inter partes justice requires an order continuing
the ex parte injunction or the grant of a fresh injunction, such an order can be made notwithstanding the earlier failure to make
such disclosure. Moreover, there is authority that, contrary to the law as it was originally laid down, there is no absolute right
to have an ex parte order obtained without due disclosure set aside: There is a discretion in the Court whether to do so or not."
In considering this 'ground' I am also guided by the headnote to Brinks - MAT Ltd. v. Elcombe (1983) 3 ALL E.R. 188 which contains the following relevant passage dealing with non-disclosure in ex parte applications:
"Whether a fact not disclosed is of sufficient materiality to justify or require immediate discharge of the order without examination
of the merits depends on the importance of the fact to the issue to be decided by the judge on the application. The fact that the
non-disclosure was innocent, in the sense that it was not known to the applicant or that its relevance was not perceived, is an important,
but not decisive, consideration in deciding whether to order an immediate discharge. However the Court has a discretion notwithstanding
proof of material non-disclosure which justifies the immediate discharge of an ex parte order, to continue the order or to make a new order on terms."
Ralph Gibson L.J. in his judgment at pp. 192/193 (ibid) enumerated no less than seven (7) relevant 'principles' of which the second reads:
"(ii) the material facts are those which it is material for the judge to know in dealing with the application as made; materiality
is to be decided by the Court and not by the assessment of the applicant or his legal advisors."
In the light of the above, the non-disclosure complained of by defence counsel, namely, the failure to disclose the existence of a
binding contract between the parties is in my considered opinion not 'material' to the narrow ambit of the plaintiff company's claim. Indeed the disclosure of Amend No. 3/96 only serves to reinforce that view in so far as it is common ground that Amend No. 3/96 nowhere expressly authorises or spells out or deals with the nature of the plaintiff company's legal right to occupy the premises
in question.
In all the circumstances I am firmly of the view that the injunction ought to be continued against the second defendant company until
the final determination of the action. To that extent the defendant's application is dismissed. In so far as the first defendant
is concerned, as presently advised and pleaded, I am not at all satisfied that the plaintiff company has any 'cause of action' against him and accordingly the injunction is discharged in respect of the first defendant who is sued in his capacity as the receiver
and manager of 'United'. The parties having both partially succeeded in this matter there will be no order as to costs.
Finally by way of further directions the plaintiff company is ordered to file and serve on the defendants within 14 days an amended Statement of Claim which complies with the requirements of Order 18 of the High Court Rules.
Thereafter the action is to follow its normal course.
D.V. Fatiaki
JUDGE
At Suva,
10th April, 1997.
Hbc0057j.97s
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