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Hedge v Khan [2003] FJHC 253; HBC0050j.2002b (13 February 2003)

IN THE HIGH COURT OF FIJI
AT LABASA
CIVIL JURISDICTION

CIVIL ACTION NO. HBC0050 OF 2002

Between:

GEOFF HEDGE AND
GRAEME HEDGE
Plaintiffs

and

1. BASHIR KHAN f/n Puran
2. VUNIMOLI SAWMILLS LIMITED
Defendants

Mr. A. Kohli for the Plaintiff
Mr. A. Sen for the Defendant

DECISION

This is the defendants’ Motion for dissolution of the interim injunction granted herein on 26 July 2002 against the defendants restraining them from selling disposing of or in any manner whatsoever dealing with the Sawmill in question and the land contained in L.D. 4/9/2050 or until the sum of $41,002 is paid into Court.

Background

The background to the case is that an affidavit in support of the ex parte motion for interim injunction was filed by the plaintiffs who issued a writ of summons herein as well. An order granting the application was made on 26 July 2002. The documents were served on the defendants who later on 19 August 2002 filed a Statement of Defence to the writ. Now I have before me the motion dated 15 August 2002 for dissolution of the Order supported by an affidavit. The second plaintiff filed a Reply thereto followed by a Reply by the first defendant.

As ordered, both counsel made written submissions which were received by the Registry at Suva from Labasa on 12 November 2002.

Plaintiffs’ submission

It is Graeme Hedge’s (GH) contention that when he met Bashir Khan (BK) in Brisbane, the latter offered to sell his company sawmill business together with land and equipment to the plaintiffs.

The GH said that he came to Fiji and inspected the sawmill and accepted BK’s offer. Bashir Khan unknown to the plaintiffs, entered into an agreement with another company and is now selling the mill to an American company and has, it is believed, accepted the sum of $100,000.00 as deposit.

The plaintiffs say that they have incurred an expenditure of $41,002.00 in coming to Fiji, staying here and have incurred losses in Australia whilst they have been in Fiji negotiating the sale and purchase of the mill.

The learned counsel for the plaintiffs submits that there was an offer to sell and acceptance but this is denied by BK. He submits that there is an arguable case. The plaintiffs say that: ‘what he (BK) does not appreciate is that the injunction allows him to sell the mill upon payment of the sum of $41,002.00 in Courts’. The plaintiffs doubt whether they will be able to recover anything from the defendants should they succeed in their action.

In the circumstances counsel submits that the injunction continue in the present form until the trial of the action.

Defendants’ submission

The first defendant Bashir Khan (BK) who is a director of the second defendant company (‘VSL’) deposed that there was no discussion with the second plaintiff (GH) about the selling of the sawmill of the second defendant. It was GH who discussed with him ‘about the buying of timber’. Later on 30 July 2001 BS offered to sell his sawmill to the plaintiffs for $500,000.00 but there was no response from them. Aletter dated 6 August 2001 followed withdrawing the offer. Thereupon GH saw BS with one Ratu Maimuri who wanted to take the sawmill on hire. That fell through because Maimuri did not pay the sum of $10,000.00 in advance for hiring the sawmill. Bashir Khan says that the plaintiffs have no cause of action against the defendants.

In response to GH, Bashir Khan in his affidavit outlines other dealings with other companies but plaintiffs have nothing to do with them.

The defendants say that they have more assets than liabilities and they would be able to pay the sum of $41,002.00 in full should the court find against them after the trial of the action.

The learned counsel for the defendants submits that damages is a proper remedy in this case if the plaintiffs succeed. On the ex parte injunction the plaintiffs failed to disclose that an agreement had already been made between the defendants and a Company the K.L. Matawalu Associates Co. Ltd which had paid $100,000.00 to Lands Department and Habib Bank on behalf of the defendants.

Counsel further submits that where there is no legal right in the plaintiffs which is recognizable by the Courts, an interlocutory injunction cannot be granted. In his written submission counsel sets out facts which show that the plaintiffs have no legal rights and/or their legal right is not threatened. The plaintiff has all through been supporting Woodheart Industries Ltd to take the mill and to supply timber to plaintiffs.

The defendants also point out that the GH was on work permit for 4 months only; he could not do business in Fiji in the circumstances.

Counsel submits that the ‘balance of convenience’ goes in favour of the defendant because they have already signed an agreement, part of the money has been paid, the purchaser has already taken delivery of the sawmill and is operating it and to restrain now would cause greater harm to the defendants than to the plaintiff.

The defendants pray that the interim injunction granted herein be dissolved.

Consideration of motion to dissolve injunction

As stated in the headnote to London City Agency (LCD), Ltd. And Another v Lee and Others (1969) 3 All ER 1376 (although the present application is inter partes):

“Just as a court will grant an interlocutory injunction on an ex parte application if a case of sufficient cogency is made so also will the court on an ex parte application made on sufficiently cogent grounds discharge or vary an injunction granted ex parte.”

The question for the Court’s determination is whether the interim injunction ought to continue on the facts in the exercise of the court’s discretion or whether the plaintiffs should be left to their remedy in damages.

The principles to be followed in considering the granting of injunctive relief are set out in the leading case of American Cyanamid Co. v Ethicon Ltd [1975] UKHL 1; (1975) A.C. 396. The House of Lords there decided that in all cases, the Court must determine the matter on a balance of convenience, there being no rule that an applicant must establish a prima facie case. The extent of the court’s duty in considering an interlocutory injunction is to be satisfied that the claim is “not frivolous or vexatious”, in other words, “that there is a serious question to be tried”.

In any consideration of an application of the nature before me the following passage from the judgment of Lord Diplock in Cyanamid (Supra) at 406 is pertinent on the object of interlocutory injunction and I have applied it to the facts of this case:

“..... to protect the plaintiff against injury by violation of his right for which he could not be adequately compensated in damages recoverable in the action if the uncertainty were resolved in his favour at the trial; but the plaintiff’s need for such protection must be weighed against the corresponding need of the defendant to be protected against injury resulting from his having been prevented from exercising his own legal rights for which he could not be adequately compensated under the plaintiff’s undertaking in damages if the uncertainty were resolved in the defendant’s favour at the trial. The court must weigh one need against another and determine where the balance of convenience lies”. (emphasis mine)

A similar view was expressed by McCarthy P in Northern Drivers Union v Kuwau Island Ferries (1974) 2 NZLR 61 when he said:

“The purpose of an interim injunction is to preserve the status quo until the dispute has been disposed of on a full hearing. That being the position, it is not necessary that the Court should have to find a case which would entitle the applicant to relief in all events: it is quite sufficient if it finds one which shows that there is a substantial question to be investigated and that matters ought to be preserved in status quo until the essential dispute can be finally resolved ...”

(ibid, 620)

“It is always a matter of discretion, and ... the Court will take into consideration the balance of convenience to the parties and the nature of the injury which the defendant, on the one hand, would suffer if the injunction was granted ... and that which the plaintiff, on the other hand, might sustain if the injunction was refused ...” (ibid, 621).

There are disputed facts in this case. The defendants are denying the allegations made against them. Where the truth lies cannot be determined without the trial of the action. From the nature of the plaintiffs’ claim of $41,002.00 it is clear that it is for alleged expenses incurred on accommodation, consultation, solicitors’ costs, telephone calls etc and salary of directors for 12 days in the process of the plaintiffs wanting to buy the sawmill. How far the plaintiffs have established their legal right to claim damages is far from clear.

In all the circumstances of this case and the manner in which the alleged dealings took place, it would be too dangerous to allow the injunction to continue. The defendants stand to loose much more than the plaintiffs. The plaintiffs can very well be compensated for in damages if they succeed as the defendants are in a position to pay same if any is awarded. The ‘balance of convenience’ lies in favour of the defendants.

Therefore, this is not a case where the interlocutory injunction should continue as the plaintiffs have not laid the proper basis for it. In the following passage from the judgment of Lord Denning M.R. in Hubbard v Vosper (1972) 2 WLR 389 guidance on the principles of granting an injunction has been succinctly stated and is apt:

“In considering whether to grant an interlocutory injunction, the right course for a judge is to look at the whole case. He must have regard not only to the strength of the claim but also to the strength of the defence, and, then, decide what is best to be done. Sometimes, it is best to grant an injunction so as to maintain the status quo until the trial. At other times, it is best not to impose a restraint upon the defendant but leave him free to go ahead. For instance, in Fraser v Evans [1969] 1 QB 349, although the plaintiff owned the copyright, we did not grant an injunction because the defendant might have a defence or fair dealing. The remedy by interlocutory injunction is so useful that it should be kept flexible and discretionary. It must not be made the subject of strict rules.”

On the whole of the facts of this case the defendants would be greatly affected by the continuation of the injunction. The balance of convenience definitely must be exercised in favour of the defendants.

Conclusion

I conclude with the following passage from the judgment of Megarry J at 397 in Vosper (supra) to which I have given great weight:

“One can really imagine a case in which the plaintiff appears to have a 75% chance of establishing his claim but in which the damage to the defendant from the granting of the interlocutory injunction, if the 25% defence proved to be right, would be so great compared with the triviality of the damage to the plaintiff if he is refused the injunction that an interlocutory injunction should be refused. To my mind, it is impossible and unworkable to lay down different standards in relation to different issues, which fall to be considered in an application for an interlocutory injunction. Each case must be decided on a basis of fairness, justice and commonsense in relation to the whole issue of fact and law which are relevant to the particular case.”

Conclusion

Having analyzed the affidavit evidence before me and applying the principles stated by Lord Diplock, I hold that damages as a remedy is sufficient in this case. There are no serious questions to be tried to grant an injunction.

Therefore, the interlocutory injunction granted herein is ordered to be dissolved as the plaintiffs have no right to its continuance with costs against the plaintiffs in the sum of $400.00 to be paid within 14 days from the date of this decision.

D. Pathik
Judge

At Suva
13 February 2003