N2831

PAPUA NEW GUINEA

[IN THE NATIONAL COURT OF JUSTICE]

OS 198 OF 2005

YAMA GROUP OF COMPANIES LIMITED
First Plaintiff

AND

SMUGGLERS INN RESORT HOTEL LIMITED
Second Plaintiff

NEISENAL NO.77 LIMITED
Third Plaintiff

AND

YAMA SECURITY SERVICES LIMITED
Fourth Plaintiff

AND

PNG POWER LIMITED
Defendant

LAY J
PORT MORESBY
2005: 2nd and 17th May

Mandatory injunction – considerations for granting – strong case that serious damage will occur- American Cyanamid principles apply—it should normally be strong and clear that the plaintiff will succeed at trial – overriding consideration, the course of least damage.

Cases Cited:
PNG Cases:
Leytrac Pty. Ltd v State [1982] PNGLR 148
Agutoi Trading Pty. Ltd v NCDC [1990] PNGLR 12
Robinson v National Airline Commission [1983] PNGLR 476
Employers Federation of Papua New Guinea vs. Papua New Guinea Waterside Workers & Seamens Union in N393

Overseas Cases:
Shepherd Homes Ltd v Sandham [1971] Ch 340; Film Rover International Ltd v Cannon Film Sales Ltd [1987] 1 WLR 760; Redland Bricks Limited v Morris [1970] AC 625; Re BusinessworldComputers Pty. Ltd; and Australian Telecommunications Commission; Federal Court of Australia No. 850; Queensland v Australian Telecommunications Commission (1985) 59 ALJR 562 at 563; Localbail Finance Ltd v Agroexport [1986] 1 WLR 657; 

Other Authorities:
Spry: Equitable Remedies 5th Ed.; White Book.

Representation:
Mr. B Lomai for the Plaintiffs
Mr. S. Kassman for the Defendant

Facts

The Second Plaintiffs hotel premises at Madang were disconnected from the Defendant’s electricity supply after a dispute of about 3 years duration as to the arrears of payment claimed by the Defendant in a sum now approaching K400, 000. The Plaintiffs said the electricity account had been inflated by inaccurate meter readings, errors in transferring bills to the Second Plaintiffs account with the Defendant, that it had counter claims for unpaid security services of over K300,000 and accommodation supplied of over K44,000 and a further claim for breach of contract for which it had demanded over K300,000. The Plaintiffs sought an injunction to restore the power pending litigation of the claim and counter claims.

Held

The power having been disconnected before the application was made for an injunction; the injunction sought was a mandatory injunction. Considerations for the grant of a mandatory injunction include (a) it should only be granted where a strong case that serious damage will occur to the applicant is made out; (b) the general principles for negative injunctions apply, that there is a serious question to be tried, damages are not an adequate remedy and the other factors affecting the balance of convenience favour the applicant; the case should normally be one which gives an unusually strong and clear view that the applicant will be successful at trial(c) the more likely it appeared that the plaintiff would succeed at trial the less reluctant the court would be to interfere at the interlocutory stage; (d) the cost to the defendant in performing the mandatory acts should be weighed against the likely damage to the applicant; (e) if the relief sought is such as would normally be granted after a trial it should be refused on an interim application unless the prejudice or hardship to the applicant is disproportionate to the prejudice and hardship to be caused the defendant in performing the order; (f) if the mandatory injunction is simply to restore some activity which has been previously performed by the defendant, rather than to embark on some new activity, it will be more readily granted; (g) ultimately in deciding whether or not to grant a mandatory injunction the over riding consideration is an exercise in deciding which course will do the least damage, or to put it another way, the lower risk of injustice, if it turns out that the court has made the ‘wrong’ decision; (h) if an injunction is granted the order should specify exactly what it is the defendant has to do, leaving the defendant in no doubt as to what is required to comply with the order. 

The Second Plaintiff had shown a strong case that serious damage would be caused to its business, however there was no convincing evidence to support its claim that there was something wrong with the electricity metering, or the Defendants accounting, nor for its counter claims for unpaid security and accommodation charges, apart from the sums conceded by the Defendant. That still left a sum over K300, 000 due to the Defendant. There were no particulars of its claim for breach of contract in respect of a security contract with the Defendant. The claim could not be taken into account. Granting the injunction would perpetuate a failed commercial relationship. Application refused. Injunction dissolved. 

_______________________________

By an originating summons filed on 19th April 2005 the Plaintiffs sought declarations in relation to the fact that the Defendant had disconnect the electricity supply from the Second Plaintiff’s hotel premises in Madang. The Plaintiffs moved the Court by Motion for an order to direct the Defendant to reconnect the power supply and for other orders. On 22nd April 2005 an interim mandatory injunction directing the Defendant to re-connect the electricity supply to the Second Defendant’s hotel property was given by this Court. The Court also directed the motion be argued on 2nd May 2005 when the matter came before me.

The Defendant disconnected the power supply because of alleged arrears of payment. Correspondence between the parties regarding arrears of payment and disputes over the accuracy of the meters or the accounts goes back to 2001. On 26th August 2004 the Defendant sent a letter to the First Plaintiff warning of imminent disconnection of power if arrears claimed of K319, 010.74 were not paid within 7 days. Internal correspondence from the Defendant’s Credit Controller Northern Region to the Provincial Manager at Madang puts the total of the First Plaintiff’s outstanding accounts at K398, 268.52.

In addition to allegations of erroneous accounts from the Defendant the Plaintiffs cross claim for money owing for outstanding accommodation and security charges incurred by the Defendant. By a Form 42 dated 27th January 2005 under the Companies Act the Third Plaintiff claimed K303, 723.48 for unpaid invoices for the supply of security services in Port Moresby and Madang between 2000 and 2004. In a letter to the Defendant dated 4 April 2005 the Plaintiffs claimed a total of K342, 639.12 for an alleged breach of a terminated security contract. No calculation particulars were provided of these claims.

The Plaintiffs say the hotel premises were, from the date of disconnection until the interim mandatory injunction, running on a stand by generator. Due to its lack of capacity guest services had to be curtailed and loss and damage was being suffered and will be suffered. Both parties served Form 42 notices on each other which they have allowed to expire without taking winding up proceedings.

Submissions

The Plaintiffs submitted the jurisdictional basis for an injunction was s155(4) of the Constitution and that the issues to consider were, whether there was a serious question to be tried, whether the balance of convenience favour the granting of an injunction and under that head, whether damages would be an adequate remedy and preservation of the status quo. Further they submitted that loss of goodwill and reputation are matters which will not be adequately compensated by damages and there is strong evidence that the meter readings have wildly fluctuated and inflated the electricity account.

The Defendant submitted that the form of proceeding was inappropriate because it would not give all of the relief required by the Plaintiffs as the declarations will not resolve anything and would lead to a multiplicity of actions. The Plaintiffs debt is just under K400,000 and the counter claim was recently raised for the first time. The Defendant has always had power to disconnect for non payment both under the Electricity Supply By Law and under the Customer Supply Contract clause 15 as approved by the Independent Consumer and Competition Commission. The Plaintiffs have not demonstrated a serious case, it amounts to a plea for time, the consequences of disconnection are the same for everybody, they have only made out a claim for damages, and there is substantial delay in raising the counter claim. The sales contract governs the relationship between the parties. The undertakings are inadequate, they should be signed by all Plaintiffs, there should be security provided.

Reasons

During argument I raised with counsel, that what was being sought here was a mandatory injunction, which is different in nature to an ordinary injunction. An ordinary negative injunction is one to prevent an event which is likely to cause damage to the applicant. When the event happens before the injunction is granted there is nothing to injunct and an ordinary negative injunction cannot be obtained. So that in this case where the electricity had been disconnected from the hotel premises before the orders were sought, the ordinary negative injunction would be of no avail. Necessarily therefore what the Plaintiffs seek is a mandatory injunction. A case frequently referred to as giving some guidelines as to the application of mandatory injunctions is Shepherd Homes Ltd. v Sandham [1971] where Megarry J said: 

"As it seems to me, there are important differences between prohibitory and mandatory injunctions. By granting a prohibitory injunction, the court does no more than prevent for the future the continuance or repetition of the conduct of which the plaintiff complains. ... On the other hand, a mandatory injunction tends at least in part to look to the past, in that it is often a means of undoing what has already been done, so far as that is possible. Furthermore, whereas a prohibitory injunction merely requires abstention from acting, a mandatory injunction requires the taking of positive steps ... This will result in a consequent waste of time, money and materials if it is ultimately established that the defendant was entitled to retain the erection."

A little later he said:

"The subject is not one in which it is possible to draw firm lines or impose any rigid classification. Nevertheless, it is plain that in most circumstances a mandatory injunction is likely, other things being equal, to be more drastic in its effect than a prohibitory injunction. At the trial of the action, the court will, of course, grant such injunctions as the justice of the case requires; but at the interlocutory stage, when the final result of the case cannot be known and the court has to do the best it can, I think the case has to be unusually strong and clear before a mandatory injunction will be granted, even if it is sought in order to enforce a contractual obligation."

So judgments use phrases like "strong and clear" and "a very strong probability of a risk of grave damage".

In Films Rover International Ltd. v. Cannon Film Sales Ltd, Hoffmann J discussed the nature of a mandatory interlocutory injunction in a passage of his judgment in which he said:

"But I think it is important in this area to distinguish between fundamental principles and what are sometimes described as ´guidelines', i.e. useful generalisations about the way to deal with the normal run of cases falling within a particular category. The principal dilemma about the grant of interlocutory injunctions, whether prohibitory or mandatory, is that there is by definition a risk that the court may make the ´wrong' decision, in the sense of granting an injunction to a party who fails to establish his right at the trial (or would fail if there was a trial) or alternatively, in failing to grant an injunction to a party who succeeds (or would succeed) at trial. A fundamental principle is therefore that the court should take whichever course appears to carry the lower risk of injustice if it should turn out to have been ´wrong' in the sense I have described. The guidelines for the grant of both kinds of Interlocutory injunctions are derived from this principle."

A little later he said that: 

"Semantic arguments over whether the injunction as formulated can properly be classified as mandatory or prohibitory are barren. The question of substance is whether the granting of the injunction would carry that higher risk of injustice which is normally associated with the grant of a mandatory injunction."

In Redland Bricks Ltd. v Morris [1970] AC Lord Upjohn had earlier said that a mandatory injunction could: 

"... only be granted where the plaintiff shows a very strong probability upon the facts that grave damage will accrue to him in the future."

That there should a higher standard of assurance by the court in ordering a mandatory injunction is not universally held to be the correct approach as appears from the following comments of Gummow J in Re BusinessworldComputers Pty. Ltd: And Australian Telecommunicatoins commission:

The reasoning of Hoffman J. is consistent with what is to be gleaned from consideration of the historical development of this remedy. The development of the jurisdiction of courts of equity to grant interlocutory injunctions, particularly interlocutory mandatory injunctions, has been traced, with reference to English and United States cases, in learned articles by Judge Klein, "Mandatory Injunctions", (1898) 12 Harv. Law Rev. 95, and by Professor Leubsdorf, "The Standard For Preliminary Injunctions", (1978) 91 Harv. Law Rev. 525. These writers indicate two matters of importance for the present case. First, it has long been the case that interlocutory mandatory injunctions would be more likely to issue where the defendant was compelled, not to embark upon a fresh course of conduct, but, as here, to revert to a course of conduct pursued before the occurrence of the acts or omissions that provoked the litigation. Secondly, whilst there has been a natural reluctance to decree burdensome relief without a full hearing, prohibitory injunctions may have that tendency just as much as mandatory relief, and there has never been general acceptance of any precise verbal formula controlling the grant of interlocutory mandatory relief. All that may usefully be said was perhaps said long ago by Knight Bruce VC in North of England Junction Railway Co. v Clarence Railway Co. (1844) 1 Coll. 507 at 521-522; 63 ER 520 at 526-527:

This branch of (the court's) jurisdiction may be one not fit to be exercised without particular caution, but certainly it is one fit and necessary, under certain circumstances, to be exercised. Under what circumstances it should be exercised must be a matter for judicial discretion, in each several case.

14. I am aware that the requirement, as a principle, of a "high degree of assurance" (being a higher standard than required for prohibitory injunctions), drawn from the decisions of Megarry J. and Gibbs CJ, has attracted some support from single judges of this Court (e.g. Australian National Airlines Commission v The Commonwealth of Australia (1986) 66 ALR 545 at 552; Midland Milk v Victorian Dairy Industry Authority, 24 December 1987,unrep.). However, for reasons I have given, I would eschew any such principle. I would prefer the course taken by both Powell J. in Fletcher Challenge Ltd. v Fletcher Challenge Pty. Ltd. (1981) 1 NSWLR 196 at 207-208 and Sheppard J. in Holiday Inns (Pacific) Inc. v Leisure Developments (Qld)Pty. Ltd. (7 October 1987, unrep. pp. 18-25), as exemplifying the proper approach in administering the remedy of interlocutory mandatory injunction.

I have been unable to find in England any dissent from the proposition that a higher degree of satisfaction of the prospect of grave damage is required in the case of a mandatory injunction, except to the extent that the requirement to take the course which will do the least damage should be the over riding consideration. I find therefore that the "high degree of assurance" test, at least in respect of the prospect of damage is still the common law of England which I will follow in preference to any different test applicable by some judges in Australia.

The note at O.29/1/5 of the White Book ends with a paragraph that begins: 

"The Cyanamid guidelines are not relevant to mandatory injunctions. The case has to be unusually strong and clear before a mandatory injunction will be granted at the interlocutory stage even if it is sought in order to enforce a contractual obligation."

I do not accept that the note in the White Book is consistent with the comment below, made by Mustill L.J. in relation to that statement by Megarry J, in Locabail Finance Ltd. v. Agroexport [1986] 1 WLR 657 at p. 664:

"It was pointed out in argument that the judgment of Megarry J. antedates the comprehensive review of the law as to injunctions given by the House of Lords in American Cyanamid Co. v Ethicon Ltd. [1975] A.C. 396 but to my mind at least, the statement of principle by Megarry J. in relation to the very special case of the mandatory injunction is not affected by what the House of Lords said in the Cyanamid case."

My view is that all that Mustill L.J. is saying is that the higher standards of persuasion and risk of damage referred to by Megarry J should be adopted in determining that there is ‘serious question to be tried’ and for that reason I prefer the statement from Spry: Equitable Remedies referred to below. The note in the White Book continues, however:

"... where it is necessary that some mandatory order has to be made ad interim the Court will make the order whether or not the high standard of probability of success at trial is made out ( Leisure Data v. Bell [1988] F.S.R. 367)."

The passage from "Spry: Equitable Remedies", 5th ed, p 572, is as follows:

".... On all interlocutory applications the hardship or prejudice that may ensue if relief is granted or if conversely it is refused is weighed with other relevant considerations, including the strength of the plaintiff's case (see generally American Cyanamid Co v Ethicon Ltd [1975] AC 396 ....); and although the court acts with caution, a mandatory order is made if the balance of justice so requires. But when the plaintiff is seeking on an interlocutory application an order for the specific performance of part or all of the defendant's obligations under a contract, being relief that is ordinarily granted only at the final hearing, that relief is, at least in the absence of special circumstances, granted only if its refusal would give rise to disproportionate prejudice or hardship to the plaintiff, as against the prejudice or hardship that its grant will cause the defendant (Films Rover International Ltd v Cannon Film Sales Ltd [1987] 1 WLR 670). Since account is taken of the strength of the plaintiff's case, the more probable it appears that he will succeed at the final hearing or in other relevant proceedings, the less reluctance to intervene will be shown by the court (Locabail International Finance Ltd v Agroexport [1986] 1 WLR 657)."

Single judges of this Court have referred to other authorities and of some assistance is the following further passage from Redland Bricks Ltd. v Morris in the opinion of Lord Upjohn, although it is principally directed to the case where a construction is to be demolished or rebuilt in consequence of the mandatory order:

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 plaintiff’s 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."

From this survey I now conclude that:

1.	A mandatory injunction should normally only be granted where a strong case that serious damage will occur to the applicant is made out: Shepherd Homes Ltd. v Sandham; Redland Bricks Ltd. v Morris; Attorney-General for the Dominion of Canada v Ritchie Contracting and Supply Co.

2.	The general principles for negative injunctions apply, that is that there is a serious case to be tried, damages are not an adequate remedy and does the balance of convenience favour the applicant; "Spry: Equitable Remedies", 5th ed, p 572; but the case should normally one giving an unusually strong and clear view that the applicant will be successful at trial: Shepherd Homes Ltd. v Sandham9; Locabail Finance Ltd. v. Agroexport

3.	The more likely it appears that the plaintiff will succeed at trial the less reluctant the court will be to interfere on an interim basis: Locabail Finance Ltd. v. Agroexport13;

4.	But if it is necessary to make some interim order the Court will do so whether or not the high standard of probability of success at trial is made out: Leasure Data v Bell;

5.	the cost to the defendant of performing the mandatory acts should be weighed against the likely damage to the applicant; Redland Bricks Ltd. v Morris10.

6.	if the relief sought is such as would normally only be granted after a trial, it should be refused on an interim application unless the prejudice or hardship to the applicant is disproportion to the prejudice and hardship to be caused the defendant in performing the order; Films Rover International Ltd v Cannon Film Sales Ltd

7.	If the mandatory injunction is simply to restore some activity which has been previously performed by the defendant, rather than to embark upon some new activity, it will be more readily granted; Businessworld Computers Pty. Ltd: And Australian Telecommunications commission.

8.	Ultimately in deciding whether or not to grant a mandatory injunction the over riding consideration is an exercise in deciding which course will do the least damage, or, to put it another way, the lower risk of injustice, if it turns out that the court has made the ‘wrong’ decision; Films Rover International Ltd. v. Cannon Film Sales Ltd; Robinson v National Airlines Commission.

9.	If an injunction is granted the order should specify exactly what it is the defendant has to do, leaving the defendant in no doubt as to what is required to comply with the order; Redland Bricks Ltd. v Morris10.

In this case I consider that the Second Plaintiff has made out a strong case that serious damage will occur to its business if the mandatory injunction is not continued. That damage is not likely to be adequately compensated for by damages. There would be great difficulty in calculating an award of damages, if for example, the business failed by reason of the electricity supply. Damages could cover a long period into the future with all of the imponderables which that would bring to the calculation of loss of future profits and goodwill.

I have however found it necessary to pay closer attention to the serious question to be tried made out by the Plaintiffs, as an examination of the annexures to the affidavits indicates that they do not appear to support some of the assertions made by deponents or by counsel.

Erroneous Metering Claim

The first ‘case’ is that the electricity accounts have been inflated by unjustified meter readings. This allegation is contained in the written submissions (para. 24) and in the affidavit of Peter Pabene sworn 13th April 2005 at para’s 3 and 13. Peter Pabene is the Corporate Executive Manager for the Yama Group of Companies. The evidence pointed to as establishing that the meter readings are faulty is that one month is very low and the next is very high. In para 13 of Peter Pabene’s affidavit a table is set out comparing some of the bills and most of those bills are annexed to the affidavit. The first accounts contrasted are for 15th April 1999 of K5,236.22 compare with 13th July 1999 for K10,717.27. The next periods are 8th January 2003 for K9112.99 contrasted with 7th July 2003 of K3, 620.85. It is a matter of common knowledge that July is a much cooler month than January. So even without technical evidence one can draw a tentative conclusion that air-conditioning and refrigeration will not be required to work as hard in July as in January and will thus draw less electricity. However, I do not discount the differences. Looking at all of the examples given, it seems to me that they are not going to account for more than about K50, 000 in the aggregate even if there was satisfactory evidence that the charges were the result of a technical fault, which there is not. And I deal with this issue of technical fault further a little later on.

Billing/Account Print Out Discrepancies

Secondly it is said that there are queries on discrepancies between the billings and the entries on the account print out, from the Defendant, marked annexure "B" in the affidavit of Peter Pabene. A comparison of the marked billings shows as follows:

BILLING						ACCOUNT PRINT OUT
Date	Amount					Amount
8/01/03	K9112.99					K8250
6/09/02	K8722.75					K8722.75
7/07/03	K3620.35					K3620.35
6/01/04	K3493.46					K8832.14
6/08/03	K9889.02					K9001.04
6/01/05	K13,253.42					K12,290.05
7/03/05	K72,822.37					K39,822.37

So of all but one of the accounts marked for query with the Defendant, the amount posted to the 2nd Plaintiff’s account with the Defendant is less than the amount of the bill. In the one case where more was posted to the 2nd plaintiff’s account than appeared in the bill the amount of the discrepancy is less than K4, 400.

Annexed to the affidavit of Peter Pabene is a report prepared by the officers of the Defendant on 10th March 2005 in respect of the accuracy of the main meter of the 2nd Plaintiff’s premises. The results revealed:

a)	the meter was very accurate;
b)	average monthly billing which would result from extrapolating the ½ day test would result in a bill of K12,115 for 2860 kwh;
c)	someone had tampered with the meter connections removing the Defendant’s seals and loosening screws which would cause the meter not to register the full consumption and it was estimated there would be "resulting losses of 1/3 of the energy unregistered." The expected average consumption after rectification "is about 30,000 kwh/month" I infer this would result in an average monthly account of K15, 900.

A scan of the Smugglers Inn bulk meter account print out from December 2000 to March 2005 shows the following:

a)	the opening balance was arrears of K47,497.81;
b)	the closing balance was arrears of K367,139.12;
c)	there are a few months which show sudden large variations in consumption but nearly all of those have been included in the comments already made;
d)	average charges have increase gradually which I infer is a reflection of the usual increase in charges for electricity;
e)	the arrears have been increasing at a rate of a little less than K50,000 per annum since 1st December 2000 on a very consistent basis.

To summarize Peter Pabene’s affidavit at para’s 2 & 3 he says the profitability of the security company was used to prop up the losses in the other subsidiaries until the security company lost a number of lucrative contracts. Blame for the large arrears at Smugglers Inn is laid at the feet of the Receiver Manager appointed by PNGBC. In February 2001 director Agatha Yama wrote to the Defendant confirming arrears were K61,000 and gave an undertaking that the monthly payments would cover the monthly bill plus arrears if possible. Two points should be noted. First I infer from the text of that letter that the Receiver manager was no longer in control of the hotel, and that what has occurred since then has occurred under the Plaintiffs own management. Secondly it is clear that the undertaking has not been kept.

The correspondence to the Defendant admits to cash flow problems and the Plaintiffs hopes are pinned on recovering awards of damages in other actions. There were further admissions of lack of finance in 2004. A final disconnection notice was issued on 29th November 2004. Power was apparently first disconnected on 3 February 2005 because the 2nd Plaintiff wrote to the Defendant enclosing two bank cheques of K3,000 each said to be for November and December 2004. From the account printout the billing for November was K11,512.81 and for December K12,399.28. So the payments made were but a small fraction of the amounts due for those months. All this evidence is strongly against Plaintiffs Counsel’s submission that "the Defendant and the Plaintiffs have put in place a workable arrangement whereby bills outstanding would be paid on an installment basis."

I think it is fair to conclude that the 2nd Plaintiff is a company which has demonstrated that it cannot trade its way out of it arrears position with the Defendant.

None of the information provided by the Plaintiffs concerning discrepancies in electricity billing gives me any confidence that the 2nd Plaintiff might, with further evidence, establish a serious question to be tried for more than K50,000. Not that such a serious question to be tried has been established because the Plaintiffs have produced no technical evidence to challenge the Defendant’s report that the meter readings at the 2nd Plaintiffs premises are accurate. The Plaintiffs simply repeat the assertions of inaccuracy.

Billing of Independently Metered Units at Smugglers

There is a line in the evidence that the Defendants have been incorrect to charge the 2nd Plaintiff for consumption of power at separately metered units on the 2nd Plaintiffs property and occupied by tenants. The Plaintiffs say the tenants should pay. It is simply a matter of contract. The Defendant will charge the consumer who applied for connection of power to the meter. I consider there is nothing in this argument. The Plaintiffs do no suggest the meters are not connected in the name of the 2nd Plaintiff. 

Contra Claim for Security Services to the Defendant

In respect of the general claim of K300, 000 plus for outstanding accounts for security services provided to the Defendant, attached to Peter Pabene’s affidavit is the Defendants letter of 23rd August 2004 acknowledging that the Plaintiffs had provided security services and that all the payments for those services were withheld between January 2003 and May 2004, totaling K78,736. This money plus another K12609 was offset from the Yama Group’s accounts leaving an outstanding balance of K211,308.60. This balance seems to have been a mistake, for 3 days later the Defendant wrote again advising the balance was K319, 010.74.

On 27th January 2005 the 4th Plaintiff issued a form 42 under the Companies Act against the Defendant claiming K303,723.48 for unpaid security services for the period 2000 to 2004. No precise dates and no details nor invoices, apart from 4 totalling K35,898.80 for amounts not included in the statutory demand, have been provided. This claim ignores the fact that the 2nd Plaintiff had been informed by the Defendant that payments for January 2003 to May 2004 had been applied to the Plaintiffs electricity account. The Defendants letter of 20th March 2005 admits a debt for security services of K47, 412.12. and this balance takes into account all of the invoices annexed to the affidavit of Peter Pabene, apart from Invoice 4902. Invoice 4902 dated 4/4/05 claims a total of 274 hours for 3 guards in Madang with no commencing or finishing dates. The other invoices show 3 security guards in Madang were billed monthly. There must therefore be some question over the bona fides of Inv. 4902. The Plaintiffs affidavits do not challenge the Defendants claims in its letter with respect to the amount due by the Defendant.

There is therefore absolutely no basis in the evidence before me to find that the Plaintiffs have a serious question to be tried against the Defendant for the sum in the Form 42 demand, or in any sum exceeding the amount conceded by the Defendant. All that can be said is that the Plaintiffs demanded the sum.

Claim for Accommodation Provided

The Plaintiffs claim an amount for accommodation provided by the Second Plaintiff to the Defendant’s employees. A form 42 was issued against the Defendant in the sum of K44, 635. No supporting evidence was provided in or with the Plaintiffs affidavits. The Defendant conceded a sum of K17, 424.30 which it says has been passed for payment; and invoices totalling K15, 718.15 are awaiting production by the 2nd Plaintiff of the accommodation warrant. There is a difference of roughly K11,000 between the 2nd Plaintiffs claim and the amount admitted by the Defendant. There has been no evidence submitted by the Plaintiffs, other than the form of demand, upon which any conclusion could be drawn that the Plaintiffs have a serious question to be tried for that K11,000.

My conclusion is therefore that:

1.	There is no evidence to support an arguable case that the Plaintiffs electricity accounts have been greatly inflated by inaccurate metering, or accounting errors by the Defendant;

2.	There is no evidence to support a finding that there is an arguable case that the Defendant is indebted to the Plaintiffs:

a)	for security services, except for the amount of K47,112.12 conceded. Invoice 4902 is some evidence for a further claim of K29, 296.08 but I find that evidence unsatisfactory for the reasons previously mentioned;

b)	for accommodation provided by the Plaintiffs to the Defendant apart from the amount conceded, or contingently payable, in the total sum of K33,142.

The position of the Defendant is clearly set out in its letter to the Plaintiffs dated 24th March 2005 as follows:

	Current Yama Group debt	K394,274.26
	Contra debt by Defendant	K 75,389.57-
--------	Nett due to the Defendant	K318,884.69

I find no satisfactory evidence for the Plaintiffs to support an arguable case for the Plaintiffs against that position.

Claim for Damages for Breach of Contract

Finally the Plaintiffs point to the Defendants letters of 7th January 2005 and 10th February 2005 awarding a 12 months contact for 3 guards then terminating it on one months notice. The claim by the Plaintiffs against the Defendant arising out of that event is not supported by any quantification or other evidence. No serious question to be tried has been demonstrated.

The order sought is simply to reconnect the power supply until the Plaintiffs claims are tried. This is the type of order which will be more ready given, because it does not require the Defendant to expend any significant amounts, but simply to resume the supply which it formerly provided: Businessworld Computers Pty. Ltd: And Australian Telecommunications Commission. If the order was made conditional upon the Plaintiff keeping current accounts paid up to date then the status quo would be preserved and neither party would suffer any further loss from the order except that the Defendant would suffer a ‘loss of opportunity’ cost in relation to being kept out of the amount which it claims. 

However, it does not appear to me, based on the history of the conduct of their accounts with the Defendant, that the Plaintiffs have a capacity or willingness to pay the full monthly account and an order for them to do so would be an exercise in futility. Preserving the power connection until trial will simply cause a detriment to the Defendant while the Plaintiffs are given an opportunity to try a very weak collection of claims. Granting the injunction will perpetuate a failed commercial relationship.

The course which will do the least legally justifiable damage is not to grant the injunction. I refuse the application. I dissolve the interim injunction. The Plaintiffs are to pay the Defendant’s costs of the proceedings.

Lawyers for the Plaintiffs		:	Lomai and Lomai
Lawyers for the Defendant		:	Kassman Lawyers