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Koi v Ducia [2004] FJHC 355; HBC0385D.2003S (27 February 2004)

IN THE HIGH COURT OF FIJI
AT SUVA
CIVIL JURISDICTION

ACTION NO. HBC0385D OF 2003S

BETWEEN:

HAROLD KOI
trading as HAROLD GENERAL WORKS of Suva, Businessman.
PLAINTIFF

AND:

MOAVE DUCIA and ANNABEL DUCIA
of Ikadroka Place, Naveiwakau Road, Valelevu, Nasinu.
DEFENDANT

Counsel for the Plaintiff: S. Valenitabua: Valenitabua S.R. Esq.
Counsel for the Defendant: G. O’Driscoll: O’Driscoll & Shivam

Date of Decision: 27 February, 2004
Time of Decision: 9.30 a.m.

DECISION

In May 2003 the Plaintiff entered into contract for the construction of the Defendants’ residence for a sum of $100,000.00. The contract was oral. The Plaintiff proceeded with the ground works with initial cash injection of $15,730.00 given by the Defendants. Thereafter, to keep the construction moving, the Plaintiff obtained further building materials on credit from Hardware Stores in the amount of $14,754.12. Differences between the parties arose both on the details of the money expended and the types and relevance of the materials purchased by the Plaintiff. In August 2003, the Defendants informed the Plaintiff in writing, that they were terminating the contract. They furthermore told the Plaintiff that they were not paying for the work done nor for the materials purchased on account from the hardware stores. The Defendants have subsequently continued the construction of their residence, hiring another company.

On 17 September 2003, the Plaintiff filed a Writ alleging breach of contract and specific performance. Meanwhile on 20 October 2003, by Ex-parte Motion, made inter partes by the Court, the Plaintiff sought an injunction preventing the Defendants from interferring with his construction works, while stopping any other person or third party from taking over. The Court is also asked to order the payment of $30,000.00 representing the first progress payment, to the Plaintiff. In this, the Plaintiff seeks a mandatory injunction from the Court. The Defendants have meanwhile filed their Defence together with a counter-claim.

THE LAW ON INTERIM INJUNCTION

Since Lord Diplock’s pronouncements in the American Cyanamid v. Ethicon Ltd. [1975] UKHL 1; [1975] AC 396 on the principles to be applied in considering whether or not to grant interim injunction which the Fiji Court of Appeal followed in Cobwebb Co. Pty. Ltd. v. Ratu Kavekini Nakelia & Or. (CA. 46 of 1990), the Court needs only to consider whether the Plaintiff has established that a serious issue has arisen, or that the claim is neither frivolous nor vexatious or that the application discloses a reasonable prospect of success. Once a Plaintiff satisfied these, then the Court must move to consider the balance of convenience. How is this done? The Court assesses whether there is adequate compensation in damages for the Plaintiff if the injunction is refused or on the alternative, the Defendant will be adequately compensated in damages if the injunction is granted. As Lord Diplock stated in American Cyanamid (supra) at p. 400:

“If damages in the measure recoverable at common law would be adequate remedy and the Defendant would be in a financial position to pay them, no interlocutory injunction should normally be granted however strong the Plaintiff’s claim appear to be at that stage. If on the other hand, damages would not provide an adequate remedy for the Plaintiff in the event of his succeeding at the trial, the Court should then consider whether, on the contrary hypothesis that the Defendants were to succeed at the trial in establishing his right to do that which was sought to be enjoyed, he would be adequately compensated under the Plaintiff’s undertaking for the loss he would have sustained by being prevented from doing so between the time of the application and the time of the trial. If damages in the measure recoverable under such an understanding would be an adequate remedy and the Plaintiff would be in a financial position to pay them, there would be no reason on this ground to refuse an interlocutory injunction.”

Is there a Serious Issue to be Tried?

The Plaintiff contends that there exists a valid and legal agreement between him and the Defendants, to build a home for the latter, at a price of $100,000.00. The agreement was orally made. The Defendants concede that there was an oral agreement for the Plaintiff to build their home at a cost of $100,000. There is therefore no dispute as to the existence of a contract to build.

On the other hand, there are different versions of how the construction and foundation works were to start and how they were to be funded. According to the Defendants, the Plaintiff assured them that he was able to begin the initial works from his own funds but that he would be reimbursed together with progress payments, after they, the Defendants, had obtained funds. The Plaintiff however stated in his affidavit that it was specifically agreed between them, that the Defendants were to provide the initial costs, which was to be deducted later from progress payments. Whatever was the correct version of the oral agreement, some money (cash payment of $15,730.00) was paid over to the Plaintiff by the Defendants to help start the construction works. At the same time the Plaintiff obtained a total of $14,754.12 in building materials and goods on credit accounts with Hardware stores.

Disagreement arose as to the type and relevance of purchases made by the Plaintiff. Letters of complaints were written by the Defendants and finally, in August 2003, they terminated the contract. The Plaintiff disputes the validity of the Defendants’ action to end the contract, contending that they cannot unilaterally terminate the contract. The Defendants think otherwise.

There is little doubt that a serious issue of law is raised. The question is whether the Defendants can legally terminate the contract of May 2003 or was the purported termination invalid on the ground that, as the Plaintiff claims, the contract could not be ended unilaterally. The issue is complicated by the fact that the contract was oral. There are no specific provisions that the parties can refer to, except in the end for the Court to hear evidence. The Court is satisfied therefore that a serious issue of law has been raised. Equally, it is satisfied that the Plaintiff’s action is neither frivolous nor vexatious.

Where is the balance of Convenience?

The balance of convenience is primarily measured in terms of whether the parties could be compensated in damages if the injunction were or were not granted: see American Cyanamid (supra). In this present case, the Plaintiff is claiming that the contract still exists and he is entitled to continue with the construction of the Defendants’ home. Part of the reliefs sought is to prevent the Defendants from hiring another company to complete the construction of the residence. The damages claimed represent the costs of work already done (quantum merit) together with materials purchased on accounts and specific and general damages arising from the alleged breach of the contract. According to the Plaintiff, damages would not be an adequate remedy and at any rate, the Defendants would not be in a financial position to pay for the damages he would suffer if the injunction is not granted.

The Defendants say that the contract had been validly terminated and that they are entitled to hire another company. Damages to which the Plaintiff will be entitled, is adequate remedy. In any event, the damages to which the Plaintiff is entitled, according to the Defendants’ Counsel, is easy to quantify from the records of the Quantity-Surveyor of the work already done and the material purchased. Counsel pointed out that the Plaintiff had not made any undertaking as to damages and referred to Krishna Prasad Vilash v. Broadway Muffler & Or. HBC 230 of 2001 where the Court held the view that it had no jurisdiction to award damages to the party injuncted in the absence of an undertaking in damages by the party seeking the injunction. The law in this area is clear, and that is, the Plaintiff is required to make an undertaking on any application for interlocutory injunction: Fenner v. Wilson {1893} 2 Ch 656. However in this instance, the Plaintiff’s Counsel had given the undertaking on behalf of his client. This Court accepts this as conforming with the requirement.

In the Court’s view, the balance of convenience favours the Defendants. While it is true that the serious issue of whether the contract had been validly terminated, is still to be argued, under the present circumstance the Court believes that the present situation should prevail. The construction of the home is well under way. A lot of building materials are on the site and are exposed to the vagaries of the weather. More delay will only make matters worse. It therefore requires of the Court to objectively weigh the practical advantages or otherwise of halting completely the construction works which it believes would be to the detriment of both parties, while time out is taken to argue over the contract or allow in the meantime work to progress. I believe that it is in the best interest of everyone that the present position be maintained. The Defendants have also made undertaking as to damages. There is nevertheless a real concern by the Plaintiff that the Defendants’ by the time their home is completed, would have exhausted all money obtained and entrusted for the purpose. Their undertaking, given that they would not be in a financial position to pay for damages, would therefore according to the Plaintiff, be meaningless. However, the home which the Plaintiff helped to build, will shortly become an asset in the hands of the Defendants.

Finally there is the application by the Plaintiff for the payment of $30,000.00 representing the first progress payment pursuant to the contract, from the Defendants. The relief sought in effect, if the Court were to concede to it, amounts to a mandatory injunction. Counsel for the Plaintiff had not put up any convincing argument in support of it. Even if he did, he was bound to fail. The principles governing mandatory injunction are set down in Redland Bricks Ltd v. Morris {1969} 2 All ER 576. While the Court has jurisdiction to grant a mandatory injunction upon an interlocutory application, it is exercised very sparingly. Certainly the Court will not grant an interlocutory mandatory injunction on affidavit evidence alone especially where issues of fact are strongly contested. The mandatory injunction relief application sought by the Plaintiff therefore fails.

Payment Into Court

Both parties agree that the Plaintiff had done some work on the site. These include the initial ground works, foundation to the dwelling house, and the building of retaining walls and the concrete columns. The exact costs of the work already done had been quantified by a Quantity Surveyor on behalf of the Defendants, but disputed by the Plaintiff. Whatever the final amount, there is no dispute that Plaintiff is owed money by the Defendants for work done and costs reasonably expended. Under the circumstances, the Court deems it appropriate that the Defendants pay a sum of $15,000.00 into Court. The payment is to be made within 14 days.

In the result, the Plaintiff’s application for interim injunction against the Defendants is hereby dismissed.

The Defendants are given 14 days to file their defence to the Plaintiff’s counterclaim.

Costs in the cause.

F. Jitoko
JUDGE

At Suva
27^th February, 2004