N798

PAPUA NEW GUINEA
[NATIONAL COURT OF JUSTICE]

AGUTOI TRADING PTY LTD

V

NATIONAL CAPITAL DISTRICT INTERIM COMMISSION

Waigani
Jalina AJ

3 January 1990
6 January 1990

INJUNCTION - Mandatory injunctions - Restoring things to former condition - Relevant principles - Probability of damages - Adequacy of damages - Costs of complying with order - Terms of order - Storekeeper’s licence - Suspension unreasonable - Restoration ordered.

A trading company was notified of the suspension, for a period of three months, of its storekeeper’s licence for breaches of conditions of the licence and notice of the suspension was advertised in two daily newspapers. The trading company was not previously notified of the alleged breaches of conditions nor had it been given an opportunity to refute the alleged breaches. On an application for a mandatory injunction lifting the suspension of the licence pending a proper determination of the matter;

Held

(1) A mandatory injunction, the purpose of which is to compel the restoration of things to their former condition, is an entirely discretionary remedy, taking into account all the circumstances of the case, and as to which the following considerations are relevant:

(a) whether the plaintiff has shown a very strong probability upon the facts of grave damage occurring to him in the future;

(b) that damages will not be a sufficient or adequate remedy if damage does occur in the future;

(c) the question of the cost to the defendant of complying with a mandatory order in relation to which a distinction is to be drawn between cases where the defendant has acted wantonly and unreasonably towards the plaintiff and cases where the defendant has acted reasonably, though in the event, wrongly.
Redland Brick Ltd v Morris [1970] AC 652 at 665-667, applied.

(2) A mandatory injunction, except in very exceptional circumstances, should be granted in such terms that the person against whom it is granted ought to know exactly what he has to do.

(3) In the circumstances, the defendant had acted wantonly and unreasonably in suspending the storekeeper’s licence without giving it an opportunity to be heard, the suspension was likely to affect the goodwill and business operations of the plaintiff and might cause grave damage not otherwise anticipated, damages would not be an adequate remedy and the cost to the defendant of complying had not been shown.

(4) The defendant should be ordered to lift the suspension of the storekeeper’s licence pending a proper hearing of the matter and final determination of the proceedings or the expiration of three months whichever should first occur.

Cases Cited

Leytrac Pty Ltd v The Independent State of Papua New Guinea [1982] PNGLR 148.
Redland Brick Ltd v Morris [1970] AC 652.
Robinson v National Airlines Commission [1983] PNGLR 476.
Specialist Centre Pty Ltd v The Independent State of Papua New Guinea [1988-89] PNGLR 22.

Motion

This was an application on notice seeking, inter alia, mandatory injunctions.

Counsel

I Kaur, for the applicant/plaintiff.
D Lambu, for the respondent/defendant.
Cur adv vult

6 January 1990

JALINA AJ: On Wednesday, 3 January 1990, in my first case after I was sworn in on 2 January 1990 as an Acting Judge of the National Court, I gave orders in favour of the plaintiff with brief oral reasons based on my notes of the proceedings. I had to do it that way as the court sittings on Thursday and Friday (4 and 5 January respectively) were cancelled due to the death of the late Governor-General, Sir Ignatius Kilage, and I was scheduled to depart on circuit to East New Britain on Saturday, 6 January. I now give my detailed reasons for the decision.

The facts of this case are that, on 28 December 1989, the defendant, through its Liquor Licensing Committee, wrote to the plaintiff giving notice of and, in fact, suspending its storekeeper’s licence in respect of Section 3, Allotment 3, Badili. The letter, which was addressed to the Manager, is in the following terms:

"Dear Sir,

Subject: SUSPENSION OF STOREKEEPER’S LICENCE

You are hereby advised that your Storekeeper’s Licence in respect of the premises situated at Section 3, Lot 3, Badili is suspended as of 28/12/89 at 1.00 pm for a period of three (3) months.

The reasons for the suspension are that you have breached the conditions of the Storekeeper’s Licence set by the Licensing Committee of NCDIC.

The conditions breached are:

1. The Licencee shall not deliver beer to any premises other than duly licenced premises.

2. The licencee shall not sell more than two cartons of beer to any one person during any one day.

As Chairman of the Liquor Licensing Committee of NCDIC, I consider this a gross breach of the NCD Liquor Law. Therefore on this basis the Committee has ordered that your licence be suspended for a period of three (3) months.

Yours faithfully,

COMMISSIONER,

Liquor Licensing Commission."

On 2 January 1990, the plaintiff issued a writ of summons claiming damages. On the same day, it filed a notice of motion seeking the following orders and I quote:

"1. For a mandatory order that the defendant and its servants or agents lift the suspension of the plaintiffs Storekeeper’s Licence in respect of Section 3, Allotment 3, Badili pending a proper hearing of this matter and the final determination of these proceedings.

2. For a mandatory injunction order that the defendant and its servants or agents immediately notify the South Pacific Brewery and other suppliers of the plaintiff that the said suspension has been lifted until further order.

3. For an injunction to restrain the defendant and its servants or agents from proceeding any further with the suspension of the said Storekeeper’s Licence pending further order.

4. For an order that the defendant publish a retraction of the notification of the suspension of the said Storekeeper’s Licence in the Post-Courier and the Niugini Nius.

5. That the defendant be ordered to pay the cost of this Application.

6. That the time for entry of this order be abridged to the time of settlement of the order by the Registrar which shall take place forthwith.

7. Such or further orders as the Court deems fit."

The case was argued before me that morning and lasted about an hour and I adjourned for decision that afternoon. It was a case which was not strongly contested by Mr Lambu for the defendant. I will deal with the defence case later. Ms Kaur, for the plaintiff, was a little more prepared although I would have liked her to have done a little better. For example, the plaintiffs storekeeper’s licence, which the defendant is alleged to have suspended, was not produced or annexed to the affidavit filed by the plaintiff in support of this application.

In support of its application, the plaintiff has filed an affidavit sworn by one Paul Clowes, who is one of its directors. In the affidavit, Mr Clowes says that the plaintiff has not breached the conditions of its licence, that the defendant had not adduced any evidence in support of the allegations, that it had not been given any opportunity to refute the alleged breaches, that the defendant had published the suspension in the two daily newspapers and that such publication has affected, or is likely to adversely affect, its business and its goodwill in its business operations.

May I mention, in passing, that my perusal of the above letter from the NCDIC (which is annexure "A" to the affidavit of Paul Clowes) does not mention anything such as, a period of time within which the plaintiff would be allowed to reply to the alleged breaches before the defendant could suspend the licence. In fact, when I queried why the licence was mentioned in Mr Clowes’ affidavit but not annexed to it, I was informed by Ms Kaur that it had not, in fact, been issued. All that the plaintiff had was a letter notifying the plaintiff to pay the licence fee. The plaintiff, it appears, has been trading on the basis of that letter. This obviously raises a serious question as to whether there is, in fact, a licence and what the conditions of such a licence are. If there was no licence, how was the plaintiff supposed to have breached its conditions? If there was a licence (but the conditions of such licence have not been brought to the notice of the plaintiff), how was the plaintiff supposed to know what conditions it had to comply with? Ms Kaur did not argue this point which is a crucial point in my view.

Ms Kaur (for the plaintiff) relied on Robinson v National Airlines Commission [1983] PNGLR 476, a well-known case in Papua New Guinea on interlocutory injunctions. She quoted to me a passage (at 480) where his Honour, Andrew J, referring to earlier decisions on interlocutory injunctions, said:

"The purpose of an interlocutory injunction is to preserve the status quo until the hearing of the main action ‘where other factors appear to be evenly balanced it is a counsel of prudence to take such measures as are calculated to preserve the status quo’, per Frost CJ in Mt Hagen Airport Hotel Pty Ltd v Gibbs and Anor [1976] PNGLR 316. No real principles can be laid down as to when they should or should not be granted except they are granted which ‘just or convenient’ and what falls within that description must differ substantially from case to case. As Lord Denning MR said in Hubbard v Vosper [1972] 2 WLR 389 at 396:

‘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 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... 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.’

What the plaintiff must prove is that he has a serious, not a speculative case which has a real possibility of ultimate success and that he has property or other interests which might be jeopardized if no interlocutory relief were granted. Then it becomes a matter of seeing if, in all the circumstances of the case the court should nonetheless exercise its discretion by declining to issue an interlocutory injunction.

In order to determine this, the court will have regard to such factors as the adequacy of damages, the possibilities of alternative remedies, whether there has been any laches and delay, the strength of the grounds of defence suggested by the defendant, what, if any, undertakings the defendant is prepared to give, and most importantly, hardship and the balance of convenience: see Meagher pars 2167-2168."

She submitted, on the basis of the above passage, and the affidavit referred to above, that the plaintiff had, until its suspension, a valid licence, that it was not in breach of the conditions of the licence, coupled with the fact that it had not been given an opportunity to reply to the alleged breaches, it had a very strong case rather than a speculative one with a real possibility of ultimate success and that the defence case was very weak. The continuation of the suspension for the entire period of three (3) months would not only cause the plaintiff to suffer damages but it would seriously affect its business operation and goodwill. The crux of Ms Kaur’s submission was that a mandatory injunction should be issued because the defendants had breached s 59 of the Constitution.

Before I proceed to discuss the submissions by Mr Lambu for the defendant, I would like to make one observation. The observation is that I find it rather perplexing that Ms Kaur, whilst continuing to press for mandatory injunctions, without seeking leave to amend the notice of motion for an interlocutory injunction, relies on Robinson’s case which relates to interlocutory injunctions. She did not refer me to any authority dealing with mandatory injunctions. The only passage which mentions mandatory injunctions in Robinson’s case is (at 479) where Andrew J referred to Equity Doctrines and Remedies (1st ed, 1975) by Meagher, Gummow and Lehane, par 2172, which states:

"The interlocutory mandatory injunction is a Rara Avis. This is partly because a mandatory injunction is usually more onerous for a defendant to comply with than a prohibitory one; moreover, the usual purpose of an interlocutory injunction is to preserve the status quo, a consideration inapplicable to mandatory injunction. But there is nothing to prevent a court issuing an interlocutory mandatory injunction."

This passage may very well provide a basis for me to grant an interlocutory mandatory injunction rather than the mandatory injunction sought by the plaintiff, bearing in mind that there appears to me to be a clear breach of the principles of natural justice by the defendant, and further bearing in mind that since ordinary writs of summons such as the one filed by the plaintiff take a long time to proceed to trial, the plaintiff may incur further damage to its business and goodwill and may even cease operations. Furthermore, a mandatory injunction rather than an interlocutory mandatory injunction may be unfair to the defendant as the case may take more than three (3) months, the period of the suspension, to be concluded.

I now turn to Mr Lambu’s submission for the defendant. Mr Lambu, who is employed by the State Solicitor’s Office, appeared, due to the inability of Mr Kelly Naru of the National Capital District Interim Commission to appear, as he did not have a practising certificate for this year. Whether or not Mr Lambu appeared on instructions from the defendant is not relevant for present purposes, but one observation I would like to make at this juncture is that it seems to me, from the appearance of Mr Lambu, that the State Solicitor would be the lawyer on the record and that any change in lawyers for the further conduct of these proceedings may have to be done in accordance with the National Court Rules.

Mr Lambu, after stating that the issuing of a licence to the plaintiff and its subsequent suspension had, in fact, taken place, submitted that the application should not be granted as the affidavit filed by the plaintiff does not show any grounds why a mandatory injunction should be granted.

However, Mr Lambu did not produce any evidence (whether by affidavit or by oral testimony) to support this submission. I therefore did not consider this submission convincing.

Mr Lambu’s next submission was that, in view of the act sought to be restrained already having taken place, the granting of the application for injunction would serve no useful purpose. The plaintiff should have sought a declaration by originating summons rather than claiming damages through a writ of summons. In support of this submission, he relied on Leytrac Pty Ltd v The Independent State of Papua New Guinea [1982] PNGLR 148 in which Kapi J (as he then was) held that where the act intended to be restrained has already occurred, an injunction is not available. An alternative remedy by way of declaration may be available. This appeared to me to be Mr Lambu’s strongest argument. However, Leytrac’s case arose out of termination of a contractual arrangement and is therefore distinguishable from the facts of the case before me. Furthermore, whilst an action for declaration through an originating summons may be the most desirable course for the plaintiff to have taken, O 4, r 3 of the National Court Rules gives the plaintiff an option between a writ of summons and an originating summons: see Specialist Centre Pty Ltd v The Independent State of Papua New Guinea [1988-89] PNGLR 22. It has opted to claim damages through a writ of summons in this case. On the basis of the evidence before me, grave injustice could be caused to the plaintiff if I were to follow Leytrac’s case. In my view, had the plaintiff known that its licence was likely to be cancelled or had it been given an opportunity to refute the allegations, it could have taken steps to prevent the act sought to be restrained, namely suspension, taking place.

The general principles governing mandatory injunctions are outlined by the House of Lords in the case of Redland Brick Ltd v Morris [1970] AC 652. In that case, the respondents cultivated a market garden on eight acres of land which sloped down towards and adjoined land from which the appellants, a brick company, excavated earth and clay. As a result of the appellants’ excavations which had been begun some 60 feet away from the respondents’ boundary, a large pit was left on the appellants’ land which had filled with water to a depth of eight or nine feet. Towards the end of 1964, part of the respondents’ land began to slip and a small part of it slipped onto the appellants’ land. The appellants undertook certain remedial work but it was ineffectual and further slips occurred. In an action in the county court in which the respondents claimed damages and injunctions, there was conflicting evidence on the likelihood or extent of further slipping but the judge accepted the evidence of the respondents’ expert that further slipping of about one acre of the respondents’ land was likely to occur. It was agreed that the only sure way of restoring support to the respondents’ land was by back-filling the clay-pit up to the respondents’ boundary, which might cost the appellants £35,000 and that the present value of one acre of the respondents’ land was between £1,500 and £1,600. The judge awarded £325 damages for injury already suffered and granted injunctions (1) restraining the appellants from interfering with the support of the respondents’ land by further excavation and (2) directing them to take all necessary steps to restore support to the respondents’ land within six months.

It was held, allowing the appeal, that albeit there was a strong probability of grave damage to the respondents’ land in the future and that damages were not a sufficient remedy in the circumstances, it was a factor to be taken into consideration that the appellants had not behaved unreasonably but only wrongly, and since the mandatory injunction imposed upon the appellant an absolutely unqualified obligation to restore support without giving them any indication of what work was to be done, it offended a basic principle in the grant of equitable relief of this nature and that accordingly the mandatory injunction was discharged. The relevant passages which set out the principles applicable to mandatory injunctions are contained in the judgment of Lord Upjohn (at 665B-667B) and I quote:

"My Lords, quia timet actions are broadly applicable to two types of cases: first, where the defendant has as yet done no hurt to the plaintiff but is threatening and intending (so the plaintiff alleges) to do works which will render irreparable harm to him or his property if carried to completion. Your Lordships are not concerned with that and those cases are normally, though not exclusively, concerned with negative injunctions. Secondly, the type of case where the plaintiff has been fully recompensed both at law and in equity for the damage he has suffered but where he alleges that the earlier actions of the defendant may lead to future causes of action. In practice this means the case of which that which is before your Lordships’ House is typical, where the defendant has withdrawn support from his neighbour’s land or where he has so acted in depositing his soil from his mining operations as to constitute a menace to the plaintiffs land. It is in this field that the undoubted jurisdiction of equity to grant a mandatory injunction, that is an injunction ordering the defendant to carry out positive works, finds its main expression, though of course it is equally applicable to many other cases. Thus, to take the simplest example, if the defendant, the owner of land, including a metalled road over which the plaintiff has a right of way, ploughs up that land so that it is no longer usable, no doubt a mandatory injunction will go to restore it; damages are not a sufficient remedy, for the plaintiff has no right to go upon the defendant’s land to remake his right of way.

The cases of Isenberg v East India House Estate Co Ltd (1863) 3 De GJ & S 263 and Durell v Pritchard (1865) 1 Ch App 244 have laid down some basic principles, and your Lordships have been referred to some other cases which have been helpful. The grant of a mandatory injunction is, of course, entirely discretionary and unlike a negative injunction can never be ‘as of course’. Every case must depend essentially upon its own particular circumstances. Any general principles for its application can only be laid down in the most general terms:

1. A mandatory injunction can only be granted where the plaintiff shows a very strong probability upon the facts that grave damage will accrue to him in the future. As Lord Dunedin said in 1919 it is not sufficient to say ‘timeo’. [Attorney-General for the Dominion of Canada v Ritchie Contracting and Supply Co [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. This is only the application of a general principle of equity; it has nothing to do with Lord Cairns’ Act or Shelfer’s case [1895] 1 Ch 287.

3. Unlike the case where a negative injunction is granted to prevent the continuance or recurrence of a wrongful act the question of the cost to the defendant to do works to prevent or lessen the likelihood of a future apprehended wrong must be an element to be taken into account:

(a) where the defendant has acted without regard to his neighbour’s rights, or has tried to steal a march on him or has tried to evade the jurisdiction of the court or, to sum it up, has acted wantonly and quite unreasonably in relation to his neighbour he may be ordered to repair his wanton and unreasonable acts by doing positive work to restore the status quo even if the expense to him is out of all proportion to the advantage thereby accruing to the plaintiff. As illustrative of this see Woodhouse v Newry Navigation Co [1898] 1 IR 161;

(b) but where the defendant has acted reasonably, though in the event wrongly, the cost of remedying by positive action his earlier activities is most important for two reasons. First, because no legal wrong has yet occurred (for which he has not been recompensed at law and in equity) and, in spite of gloomy expert opinion, may never occur or possibly only upon a much smaller scale than anticipated. Secondly, because if ultimately heavy damage does occur the plaintiff is in no way prejudiced for he has his action at law and all his consequential remedies in equity.

So the amount to be expended under a mandatory order by the defendant must be balanced with these considerations in mind against the anticipated possible damage to the plaintiff and if, on such balance, it seems unreasonable to inflict such expenditure upon one who for this purpose is no more than a potential wrongdoer then the court must exercise its jurisdiction accordingly. Of course, the court does not have to order such works as upon the evidence before it will remedy the wrong but may think it proper to impose upon the defendant the obligation of doing certain works which may upon expert opinion merely lessen the likelihood of any further injury to the plaintiffs land. Sargant J pointed this out in effect in the celebrated ‘Moving Mountain’ case, Kennard v Cory Bros & Co Ltd [1922] 1 Ch 265 at the foot of 274 (his judgment was affirmed in the Court of Appeal [1922] 2 Ch 1):

4. If in the exercise of its discretion the court decides that it is a proper case to grant a mandatory injunction, then the court must be careful to see that the defendant knows exactly in fact what he has to do and this means not as a matter of law but as a matter of fact, so that in carrying out an order he can give his contractors the proper instructions.

This has been well settled for a long time and I regret that I cannot agree with Danckwerts LJ ([1967] 1 WLR 964 B), that the observations of Joyce J in Attorney-General v Staffordshire County Council [1905] 1 Ch 336, 342 have not been followed in practice. My experience has been quite the opposite. There may be some cases where, to revert to the simple illustration I gave earlier, the defendant can be ordered ‘to restore the right of way to its former condition’. This is so simple as to require no further elucidation in the court order. But in anything more complicated the court must in fairness to the defendant tell him what he has to do, though it may well be by reference to plans prepared by some surveyor, as pointed out by Sargant J in the passage in the ‘Moving Mountain’ case to which I have already referred. The principle is summed up by Maugham LJ, in Fishenden v Higgs & Hill Ltd (1935) 153 LT 128, 142:

‘I should like to observe, in the first place, that I think a mandatory injunction, except in very exceptional circumstances, ought to be granted in such terms that the person against whom it is granted ought to know exactly what he has to do.’ "

Returning now to the submission by both counsel, I must say that I am not convinced by the defendant’s submission at least on the current state of the evidence before me. Although some of the basic principles applicable to interlocutory injunctions as stated in Robinson, and those applicable to mandatory injunctions as stated in Redland Brick are similar, since Redland Brick is actually concerned with mandatory injunctions, I propose to apply the principles laid down in that case and this I do. I therefore find that the defendant, in suspending the plaintiffs licence for alleged breaches of the conditions without it (the plaintiff) being made aware of the conditions, let alone it being given an opportunity to be heard, has acted wantonly and quite unreasonably to the plaintiff. The suspension is likely to affect its goodwill and business operations such that if it is not lifted, it may cause the plaintiff grave damage which it may not have anticipated.

Furthermore, on the question of cost to the defendant to lift the suspension, the defendant has not shown what cost, substantial or otherwise, it would incur if the injunction is granted.

I do not consider that damages would be an adequate remedy since on the evidence as indicated above, it is not only income from the sale of liquor that will be affected, but also its goodwill, thus resulting in possible loss of suppliers and customers generally. Another factor to be taken into account in this respect is that the whole of the storekeeper’s licence is suspended and not merely its right to sell liquor, even though the letter of 28 December only alleges breaches relating to sale of liquor. Such general suspension of the whole licence may result in the closure of the store.

I also do not consider that if a mandatory injunction is granted it would be difficult for the defendant to know exactly what it has to do. What the defendant is required to do is quite clear from the orders sought by the plaintiff in this case.

Whether or not an injunction should be granted is, of course, a matter for the court in the exercise of its discretion, taking into account all the circumstances of the case. I decided to exercise my discretion, for the above reasons, in favour of the plaintiff. But I do not consider that a mandatory injunction in the terms sought by the plaintiff should be granted, since to do so would be unfair to the defendant, in view of the fact that the suspension is only for three months.

I therefore ordered, upon the plaintiffs undertaking to pay damages in case this injunction was wrongly granted:

(1) That the defendant and its servants or agents lift the suspension of the plaintiffs storekeeper’s licence in respect of Section 3, Allotment 3, Badili pending a proper hearing of this matter and final determination of these legal proceedings or until Friday, 6 April 1990 at 4 pm whichever shall happen the sooner.

(2) That costs of this application be costs in the cause.

(3) That time for entry of this order be abridged to the time of settlement of the order by the Registrar which shall take place forthwith.

Orders accordingly

____________________

Lawyers for the applicant/plaintiff: Day and Associates.
Lawyer for the respondent/defendant: State Solicitor.