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Hideaway Resort Ltd v Sea and See (In Receivership) Ltd [2002] FJHC 74; HBG0006d.2001s (3 April 2002)

IN THE HIGH COURT OF FIJI
AT SUVA
ADMIRALTY JURISDICTION

ADMIRALTY ACTION NO. 6 OF 2001

ADMIRALTY ACTION IN REM AGAINST THE VESSEL B5

Between:

HIDEAWAY RESORT LIMITED
Plaintiff

and

1. SEA & SEE (IN RECEIVERSHIP) LIMITED
2. ANTHONY HO
Defendants

Mr. P. McDonnell for the Plaintiff
Mr. D. Sharma for the Defendant

DECISION

This is the plaintiff's application under Order 29 r.1 of the High Court Rules 1988 and under the Court’s inherent jurisdiction for the following Orders:

(a) An Order restraining the Defendant by himself his servant agents or otherwise from removing from the jurisdiction or disposing of or dealing with any of the Plaintiff’s (wrongly described as the Defendant’ in the Ex Parte Summons) assets within the jurisdiction including and in particular the vessel “B5" until further order.

(b) A further Order that the Defendant forthwith deliver up to the Plaintiff the said vessel by returning the same to the Plaintiff’s premises (wrongly described as the Defendant’s in the Ex Parte Summons) at Queens Road Sigatoka.

An Affidavit in support has been filed by the plaintiff company’s director Robert Wade; and an affidavit in reply was filed by Anthony Ho (the second defendant).

As ordered by Court, both counsel have filed helpful written legal submissions.

Plaintiff’s affidavit

The plaintiff (“HRL”) entered into an Agreement with the first defendant (“SSL”) which has its registered office at Pacific Harbour. Under the agreement SSL was to lease the vessel (“B5”) from HRL in return for monthly rental payments of $1550.00 plus Vat.

The HRL contracted with Pacific Fibreglass Limited (“PFL”) to build the vessel B5 and the vessel was subsequently built and delivered to SSL. The cost of building the vessel was met by HRL by way of lease agreement between HRL and its bankers ANZ (Sigatoka Branch). This arrangement with ANZ provided for certain plant and equipment to be purchased by HRL but subject to ANZ’s rights as lessor on all said plant and equipment. HRL have been making payments to PFL particulars whereof was supplied to second Defendant’s solicitors. HRL continue to pay ANZ $1221.03 by way of lease payments for the vessel.

On 1 May 2000 SSL went into Receivership and the vessel was seized by the Receiver (the Second Defendant). The Receiver has despite making approaches retained possession of the vessel and this has caused damage to the plaintiff (HRL).

Under the Lease Agreement between HRL and ANZ it is clear that during the lifetime of the said Agreement the vessel remains the property of ANZ but provided HRL maintains its payments which it has done, it will have and retain full use of the Vessel. Due to the action of the Receiver, HRL has not been able to do so and has as a result suffered damage. The Receiver is aware of the Lease Agreement between HRL and ANZ but accepts that he is retaining possession of the vessel.

The Defendant’s Reply

The second defendant (‘HO’) is the Receiver of the first defendant (‘D1'). He denies that any valid agreement was ever entered into between the plaintiff and the first defendant for the reasons he gave. As advised by his solicitors the plaintiff has wrongly pleaded and exhibited the ‘so called agreement’ without having it first stamped and therefore the plaintiff cannot exhibit the agreement or rely upon it. In the alternative he believes that the agreement was entered into by the parties after the D1's Receivership in order to defeat the claim of D1 and or its creditors to the vessel for the reasons, inter alia, that the vessel B5 is registered with the Marine Department as being owned by D1 and because of D1's director Glen Cupit’s friendship with directors of the plaintiff they entered into an arrangement to build the vessel and to pay for the vessel.

The D2 says that all payments to ANZ were made by D1 and the vessel was registered in D1's name. No reason was advanced why Mr. Wade allowed the vessel to be registered in D1's name if D1 was not the beneficial owner of the vessel.

He says that the plaintiff had only a nominal role in this whole transaction in that it only facilitated a loan from ANZ Bank to help Glen Cupit and D1 to obtain finance.

The D2 says that at the time when he became Receiver the vessel was listed as one of its assets and he has to be extremely careful about releasing any assets as he will be held accountable. There is no tangible evidence by the plaintiff to show that the vessel was actually owned by them.

He says that if the vessel belongs to ANZ Bank then what locus does the plaintiff have to bring this action. Without proper verification and oral evidence of Glen Cupit and the other parties involved in this matter there is a real likelihood that the plaintiff may obtain unjust enrichment.

Consideration of the issues

On the affidavit evidence before me, I find that many of the facts are in dispute. If the vessel is registered in D1's name then the question arises why was it allowed to be done?; what right has the plaintiff over the vessel if it is not the owner? The alleged agreement (exhibit Annexure RWI to Wade’s affidavit) does not state that the plaintiff is the owner. Evidently, ANZ Bank advanced the moneys to build the vessel and the plaintiff took the responsibility for payment of the loan in respect of it and hence the Master Lease Agreement between ANZ Bank and the plaintiff as “Bank” and “Lessee” respectively (Annexure RW3 to Wades’s affidavit).

In the absence of other evidence, facts do not come out clearly as to what actually took place as far as the true dealing is concerned. It is very difficult to say as to who has a greater say over the vessel on the evidence so far before me.

However, I do bear in mind that at this stage on an application for injunction I do not have to go into the merits of the case. The situation becomes even more difficult when one looks at D2's position as Receiver. He has certain duties to perform and is accountable for the assets of D1. His argument is that D1 is the registered owner of the vessel and no one else. He quite rightly says that more tangible evidence is needed to resolve the question of ownership.

The Law

The principles governing the grant or refusal of injunction are laid down in the well-known case American Cyanamid Co v Ethicon Ltd [1975] UKHL 1; [1975] AC 396.

There is no doubt that there are serious questions to be tried. The plaintiff argues that the vessel does not belong to the first defendant and that it is being wrongfully detained by the second defendant to the detriment of the plaintiff.

Now, as far as the balance of convenience is concerned, the plaintiff no doubt will be deprived of the use of the vessel and consequently loss of revenue while it has to make payments to the Bank on the Lease Agreement. Whereas D1 does not run any risk as it is in Receivership with no likelihood of resuming business operation if it has any. The first defendant is in no position to adequately compensate the plaintiff by way of damages by any undertaking. Therefore, damages will not be nor could it be an adequate remedy for the plaintiff.

Therefore, serious consideration has to be given to the granting of interlocutory injunction. As has been said:

“The Court must act according to the justice of the case as ascertained on the evidence before it and according to the comparative injury which may arise from granting or withholding the injunction”. (Vide Munro v Wivenhac and Brightlingsen Ry Co. [1865] De, G.J. & S 723 at 733.

A number of matters such as: ‘technical defects’ in the Writ of Summons, ‘admiralty action’, ‘parties capacity’, ‘locus’, ‘non-compliance with stamp duties Act’, ‘no undertaking as to damages’, ‘damages are adequate remedy’ and ‘claim in personam’ were raised by learned counsel for the defendants. In this application for injunctive relief the Court is not required to go into the merits of these matters for they are to be dealt with in the trial of the action if raised except I note that for the present purposes ‘undertaking as to damages’ has now been given by counsel for the plaintiff. In view of the order which I propose to make an undertaking as to damages has to come from the plaintiff itself in the form of an affidavit as it is the only proper way of doing it when applying for an injunction.

Conclusion

Having heard both counsel and having given careful consideration to the very useful submissions from them, I consider that, particularly when the first Defendant is in Receivership and there is a liquidator in the person of the second Defendant, an interim injunction ought to be granted. The Plaintiff has more to lose than the first defendant.

For the reasons given hereabove it is ordered that the first Defendant through its liquidator the second defendant by itself, its servants, agents or otherwise be restrained from removing from the jurisdiction or disposing of, or dealing with the vessel ‘B5' until further order alternatively it is further ordered that as liquidator, if the second defendant wishes to minimise costs of preserving the vessel B5 he deliver it to the Plaintiff at its premises at Queen’s Road, Sigatoka with an order for injunction in his favour, the same as for first defendant and liberty is reserved to parties to apply generally with costs in the cause.

D. Pathik
Atg. Judge

At Suva
3 April 2002