Home | Databases | WorldLII | Search | Feedback High Court of Fiji

Kelton Investments Ltd v Governmnet of Tuvalu [2002] FJHC 262; HBC0404d.2002s (8 November 2002)

IN THE HIGH COURT OF FIJI
AT SUVA
CIVIL JURISDICTION

CIVIL ACTION NO. HBC0404 OF 2002

Between:

KELTON INVESTMENTS LIMITED
Plaintiff

and

1. GOVERNMENT OF TUVALU
2. AIR FIJI LIMITED
Defendants

Mr. W. Clarke for the Plaintiff
Mr. A. Tikaram for the 1st Defendant
Mr. W. Morgan for the 2nd Defendant

DECISION

On 20 September 2002 Kelton Investments Limited (the >plaintiff=) issued a Writ of Summons herein against the Government of Tuvalu (the >D1=) and Air Fiji Limited (the >D2=) seeking an order for specific performance and an >interim injunction until further order, restraining Air Fiji Limited from holding an extraordinary general meeting of shareholders on 20 September 2002 or such other date as may be determined pending resolution of this matter.=

On an application made ex parte on the same date supported by an affidavit I granted interim injunction in terms applied for by the plaintiff. The motion was returnable for 18 October 2002.

On 18 October the matter was adjourned for argument on 23 October 2002 with liberty reserved to the parties to agree to certain variation to the said order before 23 October. The variation agreed to was in the following terms and an Order was filed in Court to that effect:

>The Second Defendant is, until further order, restrained from removing Mr. James Michael Ah Koy as Director from the Board of the Second Defendant.=

The Motion was argued before me on 23 October. It was opposed by Mr. Tikaram for D1. Apart from consenting to the amended interim injunction referred to hereabove Mr. Morgan for D2 did not wish to say anything on the Motion.

I have before me for my consideration in this application for injunction affidavit of Michael James Ah Koy in support; an Affidavit in Reply of Taukelina Finikaso, the High Commissioner for the Government of Tuvalu in Fiji, on behalf of D1. There was further affidavit for Plaintiff by James Michael Ah Koy in Reply to the affidavit of Taukelina Finikaso.

Oral arguments were presented by counsel for the parties. Mr. Clarke and Mr. Tikaram both handed in to Court their written submissions which I found to be very useful. I have given these submissions a very careful consideration.

The facts in this application are very simple and I do not propose to state them here at any length for they are all contained in the two affidavits filed on behalf of the plaintiff.

Under an Agreement (being Annexure MAK1 in the affidavit of Michael Ah Koy) the plaintiff sold its shares in Aviation Investments Limited to D1. It is stated by the plaintiff that, inter alia, it was a term and condition of that agreement as stated hereunder in clauses 9 and 10 respectively under the said agreement.

Clause 9 reads:

The Purchaser agrees to use the full voting authority conferred on it by virtue of its voting rights of its shares in Air Fiji Limited through Aviation Investments Ltd. (the Shareholder) to vote onto the Board of Directors of Air Fiji Ltd., the person that Kelton Investments Ltd. may nominate for election to the Board of Directors of Air Fiji Ltd. from time to time.

Clause 10 provides:

The Purchaser agrees by the time of settlement to replace Kelton Investments Ltd. and its Directors as guarantors of whatever credit facilities currently guaranteed by Kelton Investments Ltd. and or its directors for Air Fiji Ltd.

The plaintiff says that D1 is clearly in breach of the said conditions. Mr. Clarke submits that as a result >while the First Defendant wants to avoid its obligation to appoint the Plaintiff director to the Board of the Second Defendant, it wants to keep the Plaintiff chained to guarantees for the Second Defendant. In other words, the First Defendant wants to enjoy all the trappings of ownership without facing the responsibility and risk that accompanies it.= Mr. Clarke goes on to say that >with a possible liability of FJD$10-11 million, must be allowed to maintain its position on the Board of the Second Defendant in order to protect its interests.=

The affidavit evidence reveals that by calling an Extraordinary General Meeting D1 is intending to remove Mr. James Michael Ah Koy as a director.

Mr. Tikaram submits that the said Clause 9 talks of appointment of a director and not his removal. It is submitted that the plaintiff=s claim is frivolous and designed to frustrate the operation of a large commercial entity in support of its very minor shareholding interest.

On the evidence before the Court, this certainly is a case where the interim injunction ought to continue. The plaintiff has convinced the Court that there is a triable issue and it cannot be decided without the trial of the action.

The D1 wants to keep the plaintiffs Aguarantee@ which is in millions, and yet wants to virtually >kick= the plaintiff=s nominee out as a director through an Extraordinary General Meeting. The explanation given by D1 for its high-handed action is far from satisfactory. It is one of the resolutions of Aviation Investment Limited (AIL) >to replace Mr. James Ah Koy as a director of AFL by H.E. Taukelina Finikaso, High Commissioner of Tuvalu to Fiji with immediate effect ....= (Annexure >MAK2' of Affidavit of M.J. Ah Koy).

In these circumstances is it any wonder that the plaintiff has come to protect its interest particularly when its guarantee in millions is still intact? Why has the guarantee not been discharged when the plaintiff has sold its shares to D1? What right has D1 to hold on to the guarantee? None whatsoever on the material before me.

On the principles governing the granting of injunction the leading case is American Cyanamid Co v Ethicon Ltd [1975] UKHL 1; (1975) 1 All E.R 504 and as it was said in that case that the Court must be satisfied that the plaintiff=s claim is not frivolous and vexatious. In other words, there ought to be a serious question to be tried; and if that is the case then the question becomes a matter of the >balance of convenience=.

On the affidavit evidence before me I find that there is a serious question to be tried. The claim is not >frivolous or vexatious= The >balance of convenience= lies in favour of the plaintiff.

I am satisfied that the plaintiff is entitled to an injunction as prayed for and that damages will not be an adequate remedy in the face of such a substantial guarantee.

In the outcome, for these reasons, applying the principles governing the grant of injunction, bearing in mind the words of Megaw J in Hubbard & Anor. v Vosper & Another (1972) 2 WLR 389 at 397 that >each case must be decided on a basis of fairness, justice and common sense in relation to the whole issues of fact and law which are relevant to the particular case=, I order that the interim injunction restraining the second defendant from removing Mr. James Michael Ah Koy as Director from the Board of the Second Defendant remain in force until further order of this Court. The costs are to be costs in the cause.

D. Pathik
Judge

At Suva
8 November 2002