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

Khan v Celtrock Holdings Ltd [2014] FJHC 58; Civil Action 23.2014S (14 February 2014)

IN THE HIGH COURT OF FIJI
AT SUVA
CIVIL JURISDICTION

Civil Action No. 23 of 2014S

BETWEEN:

RAMEEZ ZAVEER KHAN of 22 Vatudina Road, Muanikoso Housing, Nasinu, Company Director.
Plaintiff

AND:

CELTROCK HOLDINGS LIMITED a company incorporated in Fiji and having its registered office at Suva.
1st Defendant

AND:

SEA QUEST (FIJI) LIMITED a company incorporated in Fiji and having its registered office at Suva.
2nd Defendant

APPEARANCE : MR SINGH V. with MR PARSHOTAM for the Plaintiff
MR FA I. for the Defendants

DATE OF JUDGMENT: 14th February, 2014

Interlocutory Judgment

1. This is an application for mandatory injunction filed on 31st January 2014. The Plaintiff sought the following orders:

A. For a mandatory injunction that Sea Quest (Fiji) Limited, the Second Defendant, whether by itself or by its agents or servants or otherwise howsoever, allow the Plaintiff to continue with the management of the business affairs of Celtrok Holdings Limited, the First Defendant, including but not limited to dealing with creditors, banks, debtors, employees and any other party with whom the First Defendant deals with in the normal course of its business until further order by this court.

B. For an injunction that the Second Defendant, whether by itself or by its agents or servants or otherwise howsoever, be restrained from intermeddling or continuing to meddle in the Plaintiff's management of the business affairs of the First Defendant and the business affairs of the First Defendant until further order of this court.

C. That the Defendants pay the costs of and occasioned by this application.

2. Indorsement of Claim was filed on 23rd January 2014 and the Statement of Claim was filed on 10th February 2014.

3. The summons was served on the Defendants on 31st January 2014 and the Defendants opposed the application for Interim Mandatory Injunction and filed the Affidavit sworn by Brett William Haywood on 7th February 2014 and the matter was taken up for hearing on 7th February 2014 and the counsel for the Plaintiff brought to the notice of the court two documents annexed to the Affidavit in Support marked L and W were not stamped and with an undertaking by the solicitor for the stamping to accept the said documents for the purpose of hearing. The counsel for the Defendants objected to the application and ruling was made by this court once the evidence is placed before this court that the documents are tendered to the Commissioner for Stamp Duty, the court will use its discretion to proceed with the hearing.

4. Accordingly, matter was fixed for hearing on 12th February 2014. The following documents were filed subsequent to 7th February 2014:

(a) Statement of Claim dated 10th February 2014;

(b) Affidavit of Satish Parshotam undated filed on 12th February 2014.

5. By the Statement of Claim filed on 10th of February 2014, the Plaintiff prayed:

A. A declaration:

(a) That the Resolution which the First Defendant passed on 12 December 2013 at an Extraordinary General Meeting whereby it purported to:

(i) terminate the Plaintiff as its Managing Director;

(ii) remove the Plaintiff as a signatory to its cheque account, and

(iii) disallow the Plaintiff entry into its business premises until payment for shares allotted to the Plaintiff in the First Defendant

is ultra vires and illegal and void and of no effect.

(b) That any further Resolutions passed by the First Defendant since 12 December 2013 is ultra vires and illegal and void and of no effect.

(c) That the Plaintiff is a director of the First Defendant and a signatory to its cheque account or accounts.

B. An order that the Plaintiff be allowed to enter the premises and manage the affairs of the First Defendant as its Managing Director.

C. An injunction to restrain the Second Defendant from preventing or hindering in any way the Plaintiff from acting as the Managing Director of the First Defendant in managing the business affairs of the First Defendant.

D. An order that the Defendants pay the costs of and occasioned by this action.

6. As stated in the Affidavits of the Plaintiff and the Defendant, the background of the matter and conclusions and findings of this court are as follows:

6.1 The 2nd Defendant purchased the 1st Defendant Company in November 2012 for the price of $1,800,000.00 which was admitted by the Defendants.

6.2 The Plaintiff was unable to forward the Share Transfer Certificate of the 1st Defendant Company to the 2nd Defendant Company. The Defendants had stated that the purchase of the 1st Defendant Company was done by Brett William Haywood and not by William Bertrand Haywood. Annexure A to the Defendant's Affidavit the 2nd Defendant share holding as at 31st March 2013 is:

• Brett William Haywood - 3,509,999 ordinary shares of $1.00 each fully paid.
• Wahid Ali - 1 oridinary share of $1.00 each fully paid.
  

Although the Plaintiff alleged that the share holding in the 2nd Defendant is by Brett William Haywood and William Bertrand Haywood the annexure 'A' to the Affidavit states the share holding of 3,509,999 shares are with Brett William Haywood. The Plaintiff annexed the Declaration of Trust marked 'E' which states that:

"Brett William Haywood HEREBY DECLARES that he holds and has at all times since 29th day of June 2012 held 1,790,100 shares of the issued shares in the company together with all the benefits accruing thereon IN TRUST for the said William Bertrand Haywood of 102 Princess Drive, Nelson, New Zealand, Company Director and Brett William Haywood HEREBY APPOINTS the said William Bertrand Haywood his Executors and assigns as his Attorney for and in his name to execute any transfer of the said shares together with all the benefits accruing thereof."

6.3 In absence of any material to the contrary, the inference that this court can infer is that Brett William Haywood as per Annexure 'A' to the Affidavit in Response has ownership of 3,509,999 shares is a true statement since there is no evidence to the effect the shares were transferred to any other party under the Declaration of the Trust.

6.4 The Plaintiff had stated he was appointed as the Managing Director of the company in November 2012 and he had not established by way of evidence any arrangement in Transfer of Shares when he was appointed as the Managing Director. The Defendant admitted the Plaintiff was appointed as the Managing Director and he was also one of the sole signatory to the account. There is no evidence the appointment as the Managing Director was subject to Transfer of Shares.

6.5 A copy of the Profit and Loss Statement was annexed to the Plaintiff's Affidavit and he had stated that the company had made a net increase of the profit to $859,544.30 as at December 2013 from a loss of $51,090.75, (Annexure marked 'I' to the Plaintiff's Affidavit).

6.6 In reply the Defendant had disputed the profit in its Affidavit in Response and the monies owed to the 2nd Defendant (the invoices raised for payments were annexed as Annexure 'C' to the Defendant's Affidavit). The statement marked 'I' is not authenticated neither audited and this court cannot accept the increase of the profitability of the company for the purpose of Interim Mandatory Injunction orders.

6.7 The Share Transfer Certificate and Share Transfer forms alleged to be signed by Brett William Haywood are disputed and the Defendants claim the said documents are forgery. The counsel for the Defendants vehemently denied the signature of Brett William Haywood and further submitted:

(a) there was no Share Transfer Agreement;

(b) he never offered 50% of the share holding to the Plaintiff;

(c) the purported document marked as 'J' and annexed to the Plaintiff's Affidavit (board resolution dated 9th July 2013) is a forgery;

(d) the email correspondence marked as 'D' to the Defendant's Affidavit commencing from 3rd July 2013 to 29th July 2013 cast doubt about the legitimacy of the Board resolution dated 5th July 2013.

6.8 I agree with the submission made by the counsel for the Defendant. On perusal of the e-mail correspondence (in midst of the correspondence with FIRCA), there was no necessity to sign a board resolution during that period. Replying to the said averments the Plaintiff had annexed a copy of the Board resolution dated 17th July 2013 and stated that the resolution passed on 5th July 2013 was rescinded and after discussion with William Bertrand Haywood, shareholding to be transferred was reduced to 49%. It is a matter for concern of this court why this document was not annexed to the Affidavit in Support filed by the Plaintiff. It is fundamental that the party to disclose all documents in an application for injunction. I conclude the Plaintiff failed to disclose this document in his 1st Affidavit as such he had suppressed this document from this court, although the Plaintiff averred this in paragraph 29 of the Affidavit.

6.9 It was also the position of the Defendant that he became aware of the Share Transfer documents on 5th December 2013 and Share Transfer documents being alleged as forgery as such I find the documents filed does not establish a case to issue interim relief and this court should go into merits of this case at a substantive hearing.

7. Further Conclusions

7.1 I find that the alleged Transfer of Shares, there is no consideration paid. Further there was no Share Transfer Agreement as such it is my conclusion that the Plaintiff had not established a case for interim reliefs.

7.2 The Plaintiff had been appointed as the Managing Director of the company. His share holding in the company is in dispute. He was removed from his job. As at date he had not invested any monies in the company except for the personal guarantee given by him for the company's debts. The Plaintiff's allegation is company is not functioning properly and by seeking interim relief, he attempts to take over the control of the company. The Plaintiff had not justified his claim. If the company is not run properly, the loss will be for the shareholders who invested the money. They have to face the consequences putting their investment at a risk not the Plaintiff. I conclude the Plaintiff has no right for any interim reliefs at this stage.

7.3 The Plaintiff's Statement of Claim filed on 10th of February 2014 he challenges the board resolution passed on 12th December 2012 inter-alia terminate his employment and seek a declaration that the said resolution is ultra vires and illegal and void and of no effect. On the other hand, Summons for Interim Mandatory Injunction the Plaintiff seeks orders to manage the company by himself without interference by the Second Defendant or its agents or servants etc. I conclude if the Interim Mandatory Injunction is issued it will have the effect of final relief claimed in this action. As such I find this court cannot entertain the Interim reliefs at this stage without going into the merits of the substantive action.

7.4 The personal guarantees given by the Plaintiff to the Lenders were brought into the attention of this court. The Lenders will first analyse the viability of the business and thereafter consider the security aspects. Their main concern is whether the business generates income for repayment. Security aspects come in lastly on fall back situation in case of a default. It is general practice of a Bank to obtain personal guarantees from the existing officers who manage the business including Directors. Personal guarantee given by the Plaintiff was on the basis that he was the Managing Director of the 1st Defendant Company. The Plaintiff has the right to inform the Bank that since he was seized to be the Managing Director and the Bank to request for fresh guarantees from the company. I find that the personal guarantees given by the Plaintiff cannot be considered as a basis to grant interim reliefs in this matter. If the Plaintiff is removed from the company illegally, the Plaintiff has a case for damages and that is adequate remedy.

8. Law

8.1 It is important to draw attention to American Cyanamid Co. v. Ethicon Co. Ltd [1975] UKHL 1; 1 ALL E.R. 504, the leading source of Law for Interim Injunctions:

(a) The Plaintiff must establish that there is a serious question to be tried;

(b) The inadequacy of damages to compensate the Plaintiff by the Defendant.;

(c) If the Plaintiff satisfies the tests, the grant or refusal of an injunction is a matter for the exercise of the court's discretion on the balance of convenience.

As stated in the preceding paragraphs the answers to questions (a) and (b) are yes. In such situation balance of convenience lies with the Defendant.

The law on the issue of an interim injunction is well settled. The principles set out in American Cyanamid case was followed in Fiji Natural Waters of Viti Ltd v. Chrystal clear Mineral Waters (Fiji) Ltd [2004] FJCA 59; ABU0011 2004S & ABU 0011A 2004S (unreported decided on 26th November 2004).

8.2 In paragraph 7.3, I concluded that the interim relief claimed by the Plaintiff tantamount to granting of the final Relief. In support of my conclusion, I cite the statement of Lord Diplock in case of NWL Ltd v. Woods (1979) 3 All ER 614 at page 625 Lord Diplock qualified his decision in the American Cyanamid and stated:

"My Lords, when properly understood, there is in my view nothing in the decision of this House in American Cyanamid Co. v. Ethicon Ltd to suggest that in considering whether or not to grant an interlocutory injunction the judge ought not to give full weight to all the practical realities of the situation to which the injunction will apply. American Cyanamid Co. v. Ethicon Ltd, which enjoins the judge on an application for an interlocutory injunction to direct is attention to the balance of convenience as soon as he has satisfied himself that there is a serious question to be tried, was not dealing with a case in which the grant or refusal of an injunction at that stage would, in effect, dispose of the action finally in favour of whichever party was successful in the application, because there would be nothing left on which it was in the unsuccessful party's interest to proceed to trial."

This principle was followed in case of Ba Town Council v. Fiji Broadcasting Commission (1976) 22 FLR 91:

".....................It is not the practice of the court to grant an Interlocutory Injunction which will have the practical effect of granting the sole relief claimed.........."

Although, I have considered several other issues in this matter, this issue alone is suffice to refuse the application for Interim Injunction.

8.3 I also have considered the question of purported agreement made by the Defendants to Transfer the Shares to the Plaintiff. Admittedly there was no Sale and Purchase Agreement between the parties. It is not desirable by this court to decide existence of an oral agreement by only considering the Affidavit evidence. In this regard I quote Lord Diplock's statement in American Cyanamid case:

"It is not part of the Court's function at this stage of the litigation to try to resolve conflicts of evidence on affidavits as to facts on which the claims of either party may ultimately depend nor to decide difficult questions of law which call for detailed argument and mature consideration. These are matters to be dealt with at the trial."

My findings in this matter is that there are serious questions of facts and law to be tried and as such oral evidence must be led and the matter should be argued properly to resolve the issues.

9. Having concluded as above, I make the following orders:

(1) Summons filed on 31st January 2014 dismissed.

(2) No orders for as to costs.

Delivered at Suva this 14th day of February 2014.

C. KOTIGALAGE
JUDGE