PacLII Home | Databases | WorldLII | Search | Feedback

High Court of Fiji
You are here:  PacLII >> Databases >> High Court of Fiji >> 2023 >> [2023] FJHC 79

Database Search | Name Search | Recent Decisions | Noteup | LawCite | Download | Help

  Download original PDF

Software Factory Pte Ltd v Dayal [2023] FJHC 79; HBC26.2022 (17 February 2023)

IN THE HIGH COURT OF FIJI
AT SUVA
CIVIL JURISDICTION


Civil Action No. HBC 26 of 2022


BETWEEN: SOFTWARE FACTORY PTE LIMITED a limited liability company with its registered offices at 371 Victoria Parade, Suva.

PLAINTIFF


AND: PARMESH DAYAL of 95 Kaunitoni Street, Vatuwaqa, Suva, Director.
DEFENDANT


Before: Hon. Mr. Justice Vishwa Datt Sharma


Counsel: Ms Vaurasi L for the Plaintiff

Mr Singh R for the Defendant


Date of Decision: 17th February, 2023


DECISION


[Inter-parte summons seeking Injunctive Orders for Recovery of Property – pursuant of Order 29 of the High Court Rules 1988 and Inherent Jurisdiction of the High Court of Fiji]


On the outset after a brief summation of their respective case, Both parties were then asked if there was any possibility of parties carrying out any settlement and/or able to resolve the matter in the best interest of both parties and if there was any further developments in terms of the status quo with regards to the possession of the Software and Source Codes with them?
The parties did attempt to resolve the issue a couple of short adjournment timetables but to no success.
Hence, the application was then heard and for determination now, accordingly.


Introduction


  1. The Plaintiff Software Factory Pte Limited [SFL] files a writ Action together with an Inter Parte Summons coupled with an Affidavit in Support and sought for the following Orders:-
  2. On the returnable date of the Inter Parte Summon on 26th January 2022, both parties to the proceedings consented to the Injunctive and Restraining Orders sought and enumerated hereinabove at paragraph 1 [2], [3] and [4] respectively.
  3. However, the Orders sought at paragraph 1[1], [5] to [9] hereinabove remained pending and proceeded to hearing and determination on 23rd August 2022.
  4. It is noted that the Nature of the injunctive relief sought herein is a mandatory injunction.
  5. Both parties furnished court with their respective comprehensive written submissions and argued the matter at length orally.
  6. At this juncture, it is essential for this court to note that the Defendant filed a Shareholders Winding up Action No. HBE 65 of 2021 on 14th December 2021 and sought for the relief from Oppression and the Appointment of an interim liquidator accordingly. Thus, HBE 65 of 2021 has Nexus with the current case at hand.
  7. The Plaintiff [SFL] subsequently filed Summons on 24th of June 2022 seeking for striking out of the Defendant’s application HBE 65 of 2021, seeking for relief from oppression and Appointment of an interim liquidator.

Background

  1. The Plaintiff [SFL] is a Software Development Company.
  2. The Defendant joined the Plaintiff Company on 04th April 2022 as a Trainee Computer Programmer. He was then elevated to the position of the General Manager Software Development from 31st December 2019 until the 13th of January 2022. He had been in the Company for 19 years and held a share of 19.95%. He became a Director of the Company in 2012.
  3. On or about December 2021, the Defendant instituted proceedings for relief from oppression [otherwise known as a Shareholders Winding Up] against the Plaintiff [SFL]. These proceedings are pending before court in Companies Action No. HBE 65 of 2021 and has a Nexus with the current proceedings Civil Action No. HBC 26 of 2022.
  4. It is noted that after the Defendant had initiated and commenced the Shareholder’s Winding Up proceedings, that the current proceedings Civil Action HBC 26 of 2022 was commenced subsequently by the Plaintiff.
  5. The Plaintiff Company [SFL] has a total of 21 corporate clients including 6 locals and 15 international.
  6. According to the Plaintiff [SFL], to customize the software to meet the specific needs of their corporate clients, their developers need to access the source codes and make changes to it. The source codes are then compiled into executable code (machine codes) which in turn is installed into the main computer that one at the Corporate Clients Room, and the users can then run and use the features of the software. The ownership and access to the source codes are critical and it is the life-line of the Software Company and vital to the operation of their corporate clients.
  7. According to the Defendant out of 26 Source Codes he controls 20 of the Source Codes and has sole access to these 20 Source Codes.
  8. The Defendant’s employment as a Director with Plaintiff [SFL] was terminated on 13th January 2022.
  9. According to the Plaintiff [SFL], the Defendant has refused to release the 20 source codes in his possession and thus, it necessitated the commencement of the current Injunction Application against the Defendant.

The Current Proceedings Civil Acton No. HBC 26 of 2022.

  1. The Plaintiff [SFL] commenced there proceedings against the Defendant for the recovery of the 20 source codes amongst other property from him that it says it has an exclusive right over. At the outset, the Defendant maintains that as a shareholder in the Plaintiff Company [SFL], he has a proprietary interest of the source codes and other property.
  2. According to the Defendant, the issue of ownership and proprietary interest of the source codes and other property arises directly from the fact that the Defendant has a significant undisputed shareholding in the Plaintiff‘s Company [SFL].
  3. The Defendant also maintains that for the better part of 15 years, the source code have been in the Defendant’s possession without any issue.
  4. Even after the institution of the Shareholders Winding Up proceedings HBE 65 of 2021, the Defendant continued to Service the clients of the Plaintiff Company [SFL] and attended to the day to day needs of the clients until his employment was terminated on 13th January, 2022.
  5. However, the Plaintiff’s [SFL] contention is that the 20 source codes in the possession of the Defendant is owned by the Plaintiff [SFL].
  6. The Defendant has agreed that the source codes belongs to the Plaintiff and is needed for the needs of their Corporate Clients. However, the Defendant’s Contention is that he has a proprietary interest in the Source Codes.

Court’s Consideration

  1. This court only needs to determine the remaining Injunctive and Restraining orders sought and as enumerated at paragraph 1 [1], [5] to [9] inclusive hereinabove of my Judgement accordingly.
  2. The Defendant has vigorously opposed the relief sought therein by the Plaintiff [SFL] and claimed a proprietary interest in the Source Codes of the Plaintiff by virtue of his 19.95% shareholding in the Plaintiff [SFL].
  3. The Defendant submitted that the situation is exacerbated by the fact that there is an existing shareholder’s dispute between the shareholders of the Plaintiff and proceedings HBE 65 of 2021 has impending court determination.
  4. Further, the issue of ownership and proprietary interest of the Source Codes and other property arises directly from the fact that the Defendant has a significant undisputed shareholding in the Plaintiff [SFL].
  5. The nature of the Injunctive relief sought by the Plaintiff [SFL] herein is a mandatory injunctive.
  6. The principles governing mandatory injunction was laid down in Redland Bricks, Ltd v. Morris [1969] 2 ALL ER 576. Generally, while the Court has jurisdiction to grant a mandatory injunction upon an interlocutory application, it is a jurisdiction that is exercised very sparingly. And unlike interim injunction applications, the Cyanamid guidelines do not apply. As Lord Upjohn stated in Redland Bricks (at p.579):
    1. “A mandatory injunction can only be granted where the Plaintiff shows a very strong probability on the facts that grave damage will accrue to him in the future. As Lord Dunedin said, it is not sufficient to say “times” (Attorney-General for the Dominion of Canada v. Ritchie Contracting and Supply Company [1919] AC 999, 1005, PC]. It is a jurisdiction to be exercised sparingly and with caution but, in the proper case, unhesitatingly.”
    2. Damages will not be a sufficient or adequate remedy if such damage does happen.
    3. The cost to the defendants to do the work or the act must be taken into account.
    4. The court must be careful to see that the defendants knows exactly infact what he has to do.
  7. However, the House of Lords went onto say every case must depend essentially on its own particular circumstances.
  8. In a mandatory injunction case the principles to adhere will change on the circumstance of the case.
  9. In 2020, two businessmen Isikeli Tikutu and Michael Makasia approached Semi Tukana [Director and Shareholder 59%] in the Plaintiff Company [SFL].
  10. The purpose of the approach was that both were interested in the financial social platform and wanted a product developed similar to MPAiSA.
  11. The Plaintiff [SFL] was offered the opportunity to be the majority shareholder of the new product but the Defendant, Parmesh Dayal, refused the offer on the basis that the Plaintiff [SFL] should stick with the traditional and Competency which was to design and develop for financial Institutions.
  12. The Plaintiff [SFL] Board agreed for $12 million to be paid over 7 years period of time. However, the Defendant wanted the $12 million to be paid upfront.
  13. As a result of this disagreement on the price to be paid upfront, the Defendant filed a Shareholders Winding Up application alleging oppression of him as a minority shareholder on the 14th December 2021.
  14. Subsequently, the Plaintiff commenced this current proceedings for the Recovery of the Source Codes amongst other property that the Plaintiff [SFL] says has an Exclusive right over.
  15. That Defendant maintains that as a shareholder in the Plaintiff Company [SFL], he has a proprietary interest in the source codes and other property.
  16. The issue of the ownership and proprietary interest of the Source Codes and other property arises directly from the fact that the Defendant has a significant undisputed shareholding in the Plaintiff Company [SFL].
  17. It will be noted that Semi Tukana has the majority shareholder of 59% in the Plaintiff Company [SFL] and is also a majority shareholder in a Company called SOLĒ Ltd.
  18. The major Contention and the dispute of the Defendant that can be ascertained herein is that, Semi Tukana having a 59% share in the Plaintiff Company [SFL] and being a shareholder also in SOLĒ Ltd, it is likely that Semi Tukana will sell the Source Codes SaveLoanSmart software in his possession that is owned by Plaintiff [SFL] to SOLĒ Ltd. This dispute is also the subject matter and substantive issue in the pending shareholders Winding Up Action HBE 65 of 2021 which is impending for Court Hearing and determination.
  19. Above can be substantiated by the fact that Semi Tukana advised the Court on 23rd August 2022 that the deal for the sale of the software to SOLĒ Ltd is not being pursued. Further, according to the Defendant’s contention, Semi Tukana and SOLĒ Ltd have both advertised on SOLĒ Ltd’s website that they will be launching the banking product in October 2022.
  20. In short, the Defendant is of the contention that if the Source Codes in the possession of the Defendant are ordered by the Court to be given/handed/over to the Plaintiff [SFL], then there is every likelihood that Semi Tukana will transfer the IP System belonging to the Plaintiff [SFL] to SOLĒ Ltd. The Defendant added that this was the very reason which prompted the shareholders winding up Action No. HBE 65 of 2021 to be instituted and seek an order for oppression and the appointment of an interim liquidation accordingly.
  21. The Defendant claimed a property interest in the Software and Source Codes of the Plaintiff by virtue of his 19.95% shareholding with the Plaintiff. The question therefore arises “whether the Plaintiff can claim that the entire 26 Source Code [20 with the Plaintiff and 6 with the Defendant currently] belongs to the Plaintiff [SFL] alone and that the same 20 source codes should now be handed over to the Plaintiff?
  22. There is an existing shareholder’s dispute between the shareholders of the Plaintiff [SFL] which prompted the shareholders to file the Shareholder’s Winding Up Case HBE 65 of 2021 before the filing and commenced of the current Civil Action No. HBC 26 of 2021.
  23. The key question at this stage of this proceedings for this court to determine “who has the proprietary interest in the total 26 software and Source Codes? And or who owns the Software and the Source Codes?”
  24. The Plaintiff’s Contention is that the Defendant disregarded the shareholder’s rights to the Plaintiff’s property in the Defendant’s position.
  25. Semi Tukana on behalf of the Plaintiff [SFL] requested copies of Source codes from the Defendant to be returned to the Plaintiff. However, the Defendant did not comply with this request which led to his subsequent dismissal from the Plaintiff Company [SFL], the position that he held.
  26. The Plaintiff’s argument is that the Defendant continues to hold onto the Plaintiff’s property and depriving the remaining shareholder’s of the same and as such is in breach of their rights to the Source Codes and the Software in Question.
  27. The Plaintiff is seeking for mandatory Injunction, list of Assets of the Plaintiff’s Software Factory PTE Limited in the Defendant’s possession, and other remaining orders as enumerated at paragraph 1[1] [5] to [9] inclusive as enumerated hereinabove.
  28. In Hubbard v Vosper [1972] 2QB Megan L. J at page 97 stated:

“If the Plaintiff does have the rights, the right has been infringed. It is true that in certain special cases, one can approach the matter in that way.”


Serious Issue

  1. However, in the present case, the Defendant has demonstrated that there is a serious Question to be tried by the Court and determined accordingly.
  2. The first substantive question to be tried is, ‘whether the Defendant has a legal proprietary interest in the Software and Source Code of the Plaintiff [SFL] by virtue of his 19.95% shareholding in the Plaintiff [SFL]?
  3. Further, the second substantive question to be tried is, “whether the Plaintiff [SFL] can claim that the Source Code belonging to the Plaintiff [SFL] alone and that the same should now be handed over to the Plaintiff [SFL]?”

Damages Undertaken

  1. The Defendant submitted that the undertaking as to damages provided by the Plaintiff is stale and about 8 months old.
  2. The Defendant pleaded at paragraph 50 of his Affidavit in Response filed on 30th May 2022, that the Bank accounts of the Plaintiff are now being meddled with.
  3. Reference is made, to the Fiji Court of Appeal decision of Natural Water of Viti Ltd vs. Crystal Clear Mineral Water (Fiji) Ltd [2004] FJCA 59; ABU 0011.2004S & ABU 0011A.2004S (26 November 2004) in particular to the following paragraph:

“Applicants for interim injunctions who offer an undertaking as to damages should always proffer sufficient evidence of their financial position. The Court needs this information in order to assess the balance of convenience and whether damages would be an adequate remedy.”

  1. In Graham v Campbell [1878] UKLawRpCh 13; [1878] 7 CH D 490 at 494 James LJ Said:

“The undertaking as to damage which ought to be given on every interlocutory injunction is one to which (unless under special circumstances) effect ought to be given. If any damage has been occasioned by an interlocutory injunction, which, on the hearing is found to have been wrongly asked for, justice requires that such damages should fall on the voluntary litigant who fails, not on the litigant who has been without just cause made so.”

  1. In Honeymoon Island Fiji Ltd v Follies International Ltd [2008] FJCA 26; ABU 0063.2007S (4 July 2008), their Lordships of the Court of Appeal stated:

“As a prelude to considering the balance of convenience the Court must consider whether or not the applicant will suffer irreparable loss, being loss for which an award of damages would not be an adequate remedy, either because of the nature of the threatened loss, or because the party sought to be restrained would not be in a position to satisfy an order for damages.”


  1. The Fiji Court of Appeal quoted with approval the following passage from American Cyanamid:

"If damages..... would be an adequate remedy and the defendant would be in a financial position to pay them, no interlocutory injunction should normally be granted" ([1975] AC 396 at page 408).


  1. The question that arises herein is “whether Semi Tukana has in his possession the source codes for the SaveLoanSmart Banking System which SOLĒ Ltd had in principle agreed to buy from the Plaintiff for AUS$12 million? Is it likely that the Banking product advertised by SOLĒ Ltd is the same as SaveLoanSmart software that is owned by the Plaintiff [SFL] and subject of the Shareholders Winding up Application No. HBE 65 of 2021?”
  2. If above is true to any extent, then “should Semi Tukana in his capacity as the majority shareholder in both the Plaintiff [SFL] company and SOLĒ Ltd should have provided sufficient undertaking that SOLĒ Ltd will not use the SaveLoanSmart system or any other system owned by the Plaintiff or any components (database structures, financial transaction engines, stored procedures, designs, source codes, etc) of any systems owned by the Plaintiff?”
  3. Therefore, I find that that the undertaking as to Damages by the Plaintiff is not sufficient in any way to satisfy this court to grant the mandatory injunction as sought herein.

Balance of Convenience


  1. In Professional West Realty (Fiji) Limited v Professional Limited, The Fiji Court of Appeal stated:

“The balance of convenience is often approached by considering the harm to the Plaintiff that may result in the event that the injunction is not granted and the harm to the Defendant that may result in the event that the injunction is granted. The onus lies on the Plaintiff to establish that on balance the harm that it is likely to suffer if the injunction is not granted outweighs any detriment to the Defendant in the event that the injunction is granted.”

  1. The Defendant had strongly submitted and argued that the Defendant has a legal proprietary right over the Software and the Source Codes of the Plaintiff [SFL] by virtue of 19.95% shareholding with the Plaintiff [SFL] and whether the Defendant has in anyway infringed any such rights.
  2. The issue of Legal proprietary will be determined at the substantive hearing, may be on viva-voce evidence together with the impending Shareholders Winding Up Application No. HBE 65 of 2022 and cannot be determined within the current Interlocutory application.
  3. Therefore, the Balance of Convenience is a material consideration to determine in this case in terms of the injunctive orders sought therein.

In conclusion


  1. The current case HBC 26 of 2022 has Nexus with Shareholders Winding Up Application HBE 65 of 2022 and vice-versa.
  2. Following are some serious Questions to be tried in the current matter –

(i) “whether the Plaintiff [SFL] has the ownership of the 26 Source Codes [20 in the Defendants possession and 6 in the Plaintiffs possession at the current time].”


(ii) “Whether the Defendant as claimed by him has any “Proprietary interest” in the Source Codes?”


(iii) ‘Whether the Defendant has disregarded the shareholder’s rights to the Plaintiff’s property in the Defendant’s position as is contended by the Plaintiff?


(iv) “Whether Semi Tukana has a shareholding in the company SOLĒ Ltd?’


  1. It is not clear to Court at this stage of the Interlocutory proceedings, why the Defendant was terminated from his position with the Plaintiff Company [SFL]? Is it only because the Defendant wanted the AUS$12 million to be paid upfront rather than the suggestion by Semi Tukana and the 2 Businessman that the agreed sum of AUS$12 million to be paid within a period of 7 years’ time frame? Or were there some other reasons for the Defendant’s termination from the Plaintiff’s [SFL] Company?
  2. Did Semi Tukana have the intention to sell the said Source Codes to another Company SOLĒ wherein he also held the shareholding and therefore had the intention to deprive the other named shareholders in the Winding up application HBE 65 of 2022 impending hearing and determination?
  3. Apart from above mentioned, there are other issue that arise in the proceedings that prompts this court and the need to be ironed out at the substantive hearing coupled with the impending shareholders winding up application no. HBE 65 of 2022 accordingly.
  4. Bearing in mind that the orders that were sought at Paragraph 1[2], [3] and [4] inclusive hereinabove of my Judgement were made by consent on 18th January 2021 and the status quo has remained intact since then coupled with the fact that the shareholders winding up application HBE 65 of 2021 is impending hearing and determination by this court.
  5. It is only appropriate and fair that I do not accede to the granting of the remaining mandatory injunctive and other orders sought by the Plaintiff as enumerated at paragraph 1[1], [5], [6], [7], [8] and [9] hereinabove respectively.
  6. For the aforesaid rational, I have no alternative but to refuse the Plaintiff’s [SFL] Inter Parte Summons seeking for the remaining mandatory Injunction, Restraining orders, Assets and list of assets of the Plaintiff in the possession of the Defendant together with other orders therein as enumerated at paragraph 1[1], [5], [6], [7], [8] and [9] hereinabove accordingly.

Costs


  1. The application proceeded on to the hearing and determination on the remaining injunctive and other orders sought therein. It is only fair that the Plaintiff [SFL] Pays the Defendant a sum of $650 as Summarily Assessed Costs.

ORDERS


  1. The Remaining Orders sought at paragraph 1[1], [5], [6], [7], [8] and [9] inclusive for an injunction order for the Recovery of 20 Source Codes from the Defendant, Assets and List of Assets of the Plaintiff [SFL] in Defendant’s possession, Police Assistance, cost and other just relief are all accordingly refused and dismissed.
  2. The status quo of the Software, Source Codes and the Assets of the Plaintiff [SFL] to remain intact until this court hears and determines both Civil Action No. HBC 26 of 2022 and Shareholders Winding Up Application No. HBE 65 of 2021 accordingly.
  3. The Plaintiff [SFL] to pay the Defendant a sum of $650 as summarily assessed costs.
  4. The substantive matter is now adjourned to 28th March 2023 at 9.30am for Mention with impending Shareholders Winding Up Application No. HBE 65 of 2021.

Dated at Suva this 17th day of February, 2023.


................................................
Vishwa Datt Sharma
JUDGE

cc: Shekinah Law, Suva.
Parshotam Lawyers, Suva.

PacLII: Copyright Policy | Disclaimers | Privacy Policy | Feedback
URL: http://www.paclii.org/fj/cases/FJHC/2023/79.html