N6800
PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

OS 227 OF 2015

BETWEEN:

TALISMAN ENERGY 
NIUGINI LIMITED
 Plaintiff

AND:
BISMARK MARITIME 
LIMITED
First Defendant

AND:
HAMISH WILLIAM SHARP
Second Defendant

Waigani: Hartshorn J
    2015: 7th & 8th May 
        
Application for mandatory injunction

Cases Cited:
Papua New Guinea Cases

Canopus No 16 Limited v. Maisi Trust Company Limited (2008) N3401

Overseas Cases

Nottingham Building Society v. Eurodynamics Systems [1993] FSR 468 
Zockoll Group Limited v. Mercury Communications Limited [1997] EWCA 2317

Counsel:

Mr. A Mana, for the Plaintiff
Mr. W. Frizzell, for the Defendants

Oral decision delivered on

8th May, 2015

1.	 HARTSHORN J: This is a decision on an application for a mandatory injunction.

2.	The plaintiff, Talisman Energy Niugini Limited (Talisman), applies for a mandatory injunction for the delivery to it of a land drilling rig that the first defendant, Bismark Maritime Limited (Bismark), is holding pursuant to a purported lien. Bismark applies for a stay of the proceeding pending arbitration of any dispute that it has with Talisman pursuant to a charter party agreement between them (Charter Party). 

3.	Talisman substantively seeks amongst others, a declaration that Bismark has breached the Charter Party by initiating a dispute without complying with the dispute resolution clause in the Charter Party, and also seeks an order compelling Bismark to comply with clause 31 of the Charty Party.  

Background 

4.	Talisman and Bismark are parties to a Charter Party Agreement pursuant to which Bismark provides shipping services to Talisman. Under the Agreement Bismark is responsible for the transportation, unloading and storing of cargo before it is released to Talisman. 

5.	  On 21st April 2015 Bismark advised Talisman that it would not release Talisman’s cargo as it alleged Talisman owed it US$1,575,399.16. Bismark has asserted that it has a lien over the cargo. This cargo consists of a land drilling rig. It is leased to Talisman by Parker Drilling Co (Parker). The drilling rig is in the process of being demobilised to Lae. Talisman incurs a fee of US$70,000.00 per day during demoblisation under its contract with Parker. 

6.	Talisman contends further, that Bismark owes it a total of US$631,558.55 under the Charter Party.  

7.	 In a meeting on 27th April 2015 it was agreed between the parties that the disputes between them would be settled by a payment by Talisman of US$488,880.00 and upon payment the drilling rig would be delivered to Talisman. Talisman paid the sum of US$488,880.00 by a payment of US$120,821.45, and by taking into account two credit notes issued to Talisman by Bismark. These credit notes were issued in June 2014 and February 2015 in the sum of US$368,068.55.

8.	Bismark by one of its directors, Mr. Hamish Sharp deposes that one of these credit notes was issued in error. The drilling rig has not been released to Talisman. 

9.	Counsel for Talisman submits that there was an agreement between Talisman and Bismark for Talisman to pay US$488,880.00 in settlement of the disputes between them. This was paid by Talisman by a combination of payment and discounting of credit notes. Notwithstanding this, Bismark has not released the drilling rig and is in breach of the agreement. 

10.	Counsel for Bismark submits that there was an agreement reached on 27th April 2015, but Talisman did not honour the agreement as it only made payment of the sum agreed less US$357,920.00 which it maintains is covered by two credit notes issued to Talisman by Bismark. Further, one of those credit notes was issued in error. 

11.	As a result, submits Bismark, as there is a dispute between the parties in and about the Charter Party, its resolution is covered by clause 31 of the Charter Party. Clause 31 is mandatory. It provides relevantly, that any dispute arising out of the Charter Party shall be resolved in the manner set out, in clause 31 (a) and (b). Pursuant to clause 31 (b), as no agreement has been reached, under clause 31 (a), the dispute shall be finally and exclusively settled by arbitration in accordance with the Rules of Arbitration of the Singapore International Arbitration Centre.  

12.	 Given this submits Bismark, a stay of this proceeding should be granted pending the arbitration of the dispute, as is sought in Bismark’s Notice of Motion.  

Consideration

13.	It is common ground as I understand it, that there was an agreement between the parties on 27th April 2015. This is evident from the affidavits of Mr. Sharp sworn 3rd and 4th May 2015 and the two affidavits of Mr. Hoving for Talisman. That agreement was for Talisman to pay US$488,880.00 and K42,281.93. It is also common ground that the dispute between the parties was referred to the respective Managing Directors or equivalent of the parties, pursuant to clause 31 (a) Charter Party and that is when and where an agreement was reached on 27th April 2015. 

14.	Clause 31 (b) of the Charter party relevantly provides:

“If no agreement is reached under clause (a) ………. the dispute shall be settled by arbitration.” 

15.	 Here however, an agreement was reached. What is in issue is any breach of the agreement reached on 27th April 2015, and not any dispute arising out of the Charter Party. 

16.	Consequently, I am not satisfied that Bismark is entitled to the stay that it seeks as the subject dispute is not covered by clause 31 of the Charter Party. 

17.	As to the orders sought in the notice of motion of Talisman, counsel for Talisman made oral application pursuant to Order 12 Rule 1 National Court Rules and no objection was taken by counsel for Bismark. What is sought is a mandatory injunction. As to the principles that are applicable in deciding whether a mandatory injunction should be granted, I refer to my case of Canopus No 16 Limited v. Maisi Trust Company Limited (2008) N3401. In that case, I reproduced the following from Nottingham Building Society v. Eurodynamics Systems [1993] FSR 468 which was referred to in Zockoll Group Limited v. Mercury Communications Limited [1997] EWCA 2317:

“In my view the principles to be applied are these. First, this being an interlocutory matter, the overriding consideration is which course is likely to involve the least risk of injustice if it turns out to be ‘wrong’ in the sense described by Hoffmann J. 

Secondly, in considering whether to grant a mandatory injunction, the court must keep in mind that an order which requires a party to take some positive step at an interlocutory stage, may well carry a greater risk of injustice if it turns out to have been wrongly made than an order which merely prohibits action, thereby preserving the status quo. 

Thirdly, it is legitimate, where a mandatory injunction is sought, to consider whether the court does feel a high degree of assurance that the plaintiff will be able to establish this right at a trial. That is because the greater the degree of assurance the plaintiff will ultimately establish his right, the less will be the risk of injustice if the injunction is granted. 

But, finally, even where the court is unable to feel any high degree of assurance that the plaintiff will establish his right, there may still be circumstances in which it is appropriate to grant a mandatory injunction at an interlocutory state. Those circumstances will exist where the risk of injustice if this injunction is refused sufficiently outweigh the risk of injustice if it is granted.” 

10. Waller L.J in G & A Limited (supra) referred with approval to the comment of the other judge in Zockroll’s case (supra), Simon Brown LJ, who did not disagree with the above formulation but was inclined to put the matter quite shortly in relation to the granting of a mandatory injunction as follows:

“Where does the balance of convenience lie?” or, to my mind the preferable formulation of the issue: “which course carries the lower risk of injustice?” ” 
………..
13. Adopting the above principles, given that this is an interlocutory matter, which course is likely to involve the least risk of injustice if it turns out to be ‘wrong’? By this is meant, “the granting of an injunction to a party who fails to establish its 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 trail” Megarry J. in Shepherd Homes Limited v. Sandham [1971] Ch. 340, 351.” 

18.	In the circumstances of this case, regardless of which party is successful in the substantive proceeding, if the drilling rig is not returned to Talisman to return to Parker, Talisman will incur US$70,000.00 per day. 

19.	 If the drilling rig is returned to Talisman, and Bismark is successful in the substantive proceeding, Bismark can recover against Talisman. There is no evidence that Talisman would not be able to pay Bismark, but if it had to pay US$70,000.00 per day to Parker for a lengthy period, its financial capacity to pay Bismark if so ordered, may be effected. 

20.	In the circumstances, I am of the view that the risk of injustice if the mandatory injunction is refused is sufficiently greater than the risk of injustice if the injunction is granted. Consequently the mandatory injunction sought by Talisman should be granted.

Orders 

21.	The Court Orders:

   a)	As to the Notice of Motion of the 1st and 2nd defendants filed 5th May 2015:

        i)	The relief sought in paragraph 1 is granted;

       ii)	The relief sought in paragraph 2 is refused.

   b)	As to the Notice of Motion of the plaintiff filed 30th April 2015:

        i)	The relief sought in paragraph 1 is granted;

   c)	The costs of and incidental to both notices of motion are reserved;

   d)	Time is abridged. 

___________________________________________________________________
Allens Lawyers: Lawyers for the Plaintiff                                                  
Warner Shand Lawyers: Lawyers for the Defendants