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Lau Lava Ltd v Minister of Labour Commerce and Industries [2004] TOLawRp 45; [2004] Tonga LR 303 (27 August 2004)

IN THE SUPREME COURT OF TONGA

Lau Lava Ltd

v

The Minister of Labour Commerce and Industries anors

Supreme Court, Nuku'alofa
McElrea J
CV 599/2004

27 August 2004; 27 August 2004

Practice and procedure – application for interim relief – dismissed

The Plaintiff company was granted an export licence in February 2001 for the export to Japan of Sato-imo taro, also known as Japanese taro. The licence was a letter of 16 October 2001 headed up "re: application for exclusive license (5 years) for export of sato-imo taro [to] Japan" The letter showed that the Plaintiff's request was approved by the Minister subject to four conditions. The Plaintiff's complaint was that within the five year period the Minister granted another export licence for the same product to the same market namely Japan, so that the Plaintiff's licence was no longer an "exclusive" licence. That second licence was granted in February 2004 to the Third Defendant. The Plaintiff claimed it had made an extensive commitment to the development of the Japanese market for this particular specialist product and has outlaid in cash some $250,000 to that end, and that this investment would be virtually worthless if another competitor was allowed to operate in that market. The Third Defendant argued that they would suffer irreparable damage if it was prevented from exporting the crop it had grown. The plaintiff applied for interim relief.

Held:

1. The order sought would prevent the third defendant from loading on board any ship any crop of sato-imo taro where the destination was Japan. That was in effect a permanent order and would prevent the export of the 172 tonnes of taro which is ready for export. Such crop if not exported now would have to be sold locally, and the evidence was that it would be sold at a considerable loss.

2. There was no cause of action pleaded against the third and fourth defendants. The law did not allow its coercive powers of injunction to be used against parties who were not said to have committed any wrong, civil or criminal, whatsoever.

3. The Court concluded that the balance of convenience favoured the public of Tonga and its exporting reputation, as well as the commercial interests of the Third Defendant, rather than the interests of the Plaintiff. The balance of convenience factors lay against the granting of any interim relief.

4. Interim relief was normally granted to preserve the status quo at the date of hearing. The fact of the matter was that the status quo was that two parties were given the right to export sato imo taro. Therefore it would be inconsistent with the general principles of injunctions for the Court to interfere with that by preventing the Third Defendant from exporting the crop which it had grown.

5. The application for interim relief was dismissed.

Rules considered:

Supreme Court Rules 1991

Counsel for plaintiff: Mr Afeaki
Counsel for first and second defendants: Miss Simiki
Counsel for third defendant: Mr Niu
Counsel for fourth defendant: Mr Edwards

Oral Judgment on Application for Interim Injunctions

The two proceedings, and the various applications

Before me are two different proceedings brought by the same plaintiff, Lau Lava Ltd, relating substantially to the same matter. The first proceeding, CV 592/2004, is brought against the Minister of Labour Commerce and Industries as First Defendant and the Ministry of Labour Commerce and Industries as Second Defendant, and those were the only defendants. There was an ex parte application for interim relief filed at the same time as the proceedings were commenced. The Chief Justice directed that the proceedings be served as there was no immediate urgency requiring an ex parte hearing, and he directed service not only on the defendants but also on the other grower in this matter, Ha'amo Growers Ltd.

The Plaintiff subsequently filed a new proceeding against the same First and Second Defendants but included Ha'amo Growers Ltd as Third Defendant and Port Services Ltd as Fourth Defendant. Again there was an urgent ex parte application for interim orders for injunctions. In that application various grounds are set out.

Both proceedings were assigned to me by the Chief Justice. I directed that the second proceedings be served and said that I was not prepared to hear an application for interim relief without the parties being served and able to be represented at the Court. Accordingly the Court has sat for most of today dealing with this matter on a defended basis.

At the commencement of the hearing Mr Afeaki as counsel for the Plaintiff indicated that his client wished to consolidate the two sets of proceedings. I regard that course of action as likely to be extremely confusing. There are many parallels between the two proceedings but a number of differences. The Court and the parties would not want to be chopping and changing between one file and the other to work out what is going on. I decline the application to consolidate the proceedings.

The Plaintiff has sought leave to file an amended statement of claim in the second proceeding. In that it seeks the same relief as it sought in the first proceeding. The relief sought in the first proceeding was not sought in the statement of claim but in the application for interim relief. My view is that the parties have been on sufficient notice as to what general relief is sought, and no prejudice is suffered by any party by my granting leave for an amended statement of claim to be filed. I do grant that leave but subject to the question whether leave should be granted to the Plaintiff to bring judicial review proceedings.

With that proviso, leave is now granted for the amended statement of claim to be filed. The application to consolidate the two files is refused. The Plaintiff will have to elect as to which of the files it is proceeding on, and I take it Mr Afeaki that it will be the second proceeding with the new statement of claim, is that right? (Counsel confirms this.) Accordingly the first proceeding is now dismissed.

There was another application, one by Ms Simiki for the Kingdom of Tonga to be joined as a defendant, but after discussion with the Bench that application has been withdrawn pending further consideration. It may be renewed at a later point but I do not have to deal with it now.

There are therefore now two remaining applications, one for interim relief and the other for leave to bring judicial review proceedings against the Crown. I regard them as related but separate issues. I will give brief reasons shortly but I will say now that the application for interim relief is refused, and I reserve my decision on the application for leave to bring judicial review proceedings. That application was made only because the Court pointed out the need for it under Order 27 Rule 2 of the Supreme Court Rules. Such application is required by sub-rule (1) and is to be made promptly and in any event within three months of the date when the grounds of the application first arose, unless the Court considers there is good reason to extend that period. I reserve my decision on whether leave should be granted, and in particular on whether the application was made promptly.

The interim orders sought

Without deciding that issue I believe that an answer is very clear to the application for interim relief. That application is to be found in a document entitled "Urgent ex parte application for interim orders for injunctions". It is important to note the interim orders that were sought ex parte but have been considered on notice. The first order sought is an interim order restraining the First and Second Defendants from issuing any second licence during the currency of the Plaintiff's "excusive licence". The second order would restrain the Third Defendant, Ha'amo Growers Ltd, from loading on any boat or ship any export crop of sato imo taro for Japan. Thirdly there is an interim order sought against Port Services Ltd, the Fourth Defendant, preventing it likewise from loading any such crop.

Summary of the dispute

It is important now briefly to indicate the area of dispute. The Plaintiff company was granted an export licence in February 2001 for the export to Japan of the said crop of Sato-imo taro, also known as Japanese taro. The licence (exhibit "B" of the Plaintiff's affidavit) is a letter of 16 October 2001 headed up "re: application for exclusive license (5 years) for export of sato-imo taro [to] Japan" The letter shows that the Plaintiff's request was approved by the Minister subject to four conditions:

1. "The Exclusive Export License will become effective once you start exporting Satoimo to Japan.

2. It is confined to exporting Satoimo to the Japanese Market (Product and Market specific).

3. The license will be revoked if you cease to export any Satoimo for a period of 8 months or more.

4. The exclusive export licence is for a period of 5 years."

The essence of the Plaintiff's complaint is that within the five year period the Minister had granted another export licence for the same product to the same market namely Japan, so that the Plaintiff's licence is no longer an "exclusive" licence. That second licence was granted in February this year to the Third Defendant. There is a lengthy background to the granting of that licence, and the Ministry's position is set out in a letter from the Minister to the Plaintiff which is exhibit "D" to the Plaintiff's affidavit, a letter of 16 August 2004. I do not propose to go into the details of that background at the moment.

In essence the Plaintiff says it has made an extensive commitment to the development of this Japanese market for this particular specialist product and has outlaid in cash some $250,000 to that end, and that this investment will be virtually worthless if another competitor is allowed to operate in that market.

For the Third Defendant Mr Niu, assisted by written submissions from New Zealand counsel Mr Waalkens who is unable to be here today, has argued that his client would suffer irreparable damage if it is prevented from exporting the crop it has grown. The evidence is that it is currently packaging a crop expected to weigh some tonnes to load on to a ship on Monday, the next working day, for Japan. The Third Defendant is therefore strongly opposed to any suggestion that it should not proceed with that order, especially when it was given an export licence by the Minister in February.

Again there is extensive evidence as to dealings between the Plaintiff and the Third Defendant, and also the Ministry, over the possible issuing of another licence.

The relief sought

I say first of all about the application for interim orders that there is nothing interim about the relief sought against the Third Defendant. The order sought would prevent it from loading on board any ship any crop of sato-imo taro where the destination is Japan. That is in effect a permanent order and would prevent the export of the 172 tonnes of taro which is ready for export. I infer that such crop if not exported now would have to be sold locally, and the evidence is that it would be sold at a considerable loss.

Whilst the amended statement of claim seeks other relief in the nature of judicial review, that relief is not sought today. The other relief sought in the statement of claim is a declaration "that the process giving rise to the issue of the second licence was either illegal or unreasonable or procedurally unfair"; secondly, an "order certiorari" quashing the second licence issued by the First and Second Defendants, or in the alternative an order requiring the First Defendant to revoke the second licence, and restraining the Minister from issuing any second licence during the currency of the exclusive licence; or in the alternative to all the foregoing, damages in the sum of $1,000,000 and costs.

No evidence of any proposed further licence

As I say, that is the relief sought ultimately. The only interim relief sought is injunctions preventing the issue of a second licence, and the loading of the Third Defendants crop on any ship bound for Japan. There is no evidence before the Court that the Minister or the Ministry is proposing to issue any new licence. There is therefore no basis for the Court to make an order restraining those parties from issuing another licence. The Court does not issue injunctions into thin air. They are only issued where there is a demonstrated need for them, and there is no evidence that another licence is proposed to be issued. The concern of the Plaintiff is with the second licence already issued.

For that reason alone - in other words, that there is nothing to injunct - the first application must fail.

No causes of actions pleaded against Third or Fourth Defendants

I turn then to the second and third applications, relating to the Third and Fourth Defendants. They also in my view must fail. There is no cause of action pleaded against either the Third or Fourth Defendants. Indeed Mr Afeaki as counsel has said in court today that the Plaintiff has "no issue" with those parties. It is clear that they have been joined purely to prevent this export order leaving Tonga on Monday.

How the Plaintiff thinks it can do that when it has no cause of action, and pleads no cause of action, against the Third Defendant, defies understanding. I have never seen such an application before. If this had any merit, then the Plaintiff would also be entitled to injunctions against the carriers who might be going to take the goods to the port, against people who might be going to sign the shipping documents at the wharf, against the seamen on the ship – there is no end to where it could go. The law does not allow its coercive powers of injunction to be used against parties who are not said to have committed any wrong, civil or criminal, whatsoever. To me it is abundantly clear that for those reasons alone and without going any further, this application for interim relief must fail.

Plaintiff's failure to make full disclosure

First of all, and importantly, there is a failure by the Plaintiff to make full disclosure to the Court at the time of seeking interim, ex parte relief. It was not until this morning, when I read the affidavit prepared on behalf of the Third Defendant, that I was aware that it had written to the Plaintiff on 12 July this year about a discussion that had taken place the previous Friday, 9 July, when at the conclusion of that meeting the directors of the Plaintiff advised that they would or may be about to commence proceedings against the Third Defendant including seeking an injunction to prevent it exporting its sato-imo crop to Japan.

The proceedings that have ensued are exactly in that category. In effect the Plaintiff is seeking an injunction to prevent it doing that, and I believe that was the effect of the first proceedings as well. The first proceeding had a statement of claim that was defective in many respects but it did seek an order quashing the licence issued to Ha'amo Growers Ltd, and the application for interim orders asked the Court to quash the second licence or alternatively to require the Minister to revoke it. That was in effect an order to prevent the Third Defendant from exporting its crop. It is exactly what the Third Defendant feared might happen. They wrote this letter to the directors of the Plaintiff on 12 July challenging the Plaintiff's view of the matter and putting forward a large number of factors for it to consider. It concluded by asking that the Plaintiff ensure that any injunction application be made "on proper notice to us". The letter continued: "We will cooperate, but insist on being heard to protect our rights. Please also make sure a copy of this letter is brought to the attention of the court."

I assume that the Plaintiff provided a copy of this letter as a relevant item to its counsel in Auckland, Mr Hirschfeld. If so, it was a serious dereliction of duty on his part not to advise the Court that this letter had been written – that Ha'amo Growers Ltd insisted on being heard and wanted its view put before the court in the form of this letter. Any party seeking interim relief ex parte, i.e. without the other party being heard, is under an obligation well known to competent counsel to inform the Court of any relevant factor against the application known to the Plaintiff. In my view the matters set out in that letter ought to have been put before the Court at the time the application was made for interim relief.

Exactly the same considerations apply to the second ex parte application. I am told however by Mr Afeaki who appears today in the absence of Mr Hirschfeld that the second application was not drafted by counsel at all but by the Plaintiff's directors and that they were ignorant of their obligation to inform the Court. If so, it is a surprising omission on their part. The letter itself asks that they be advised and be given notice of any application. I would have thought as a matter of courtesy, if nothing else, that such a request would have been honoured. Instead the Plaintiff's directors sought to persuade the Court to grant relief on an interim basis without hearing the other parties. That application was refused peremptorily by me on 25 August on the basis that a hearing date had already been set for today, and the matter has proceeded.

In my view the lack of good faith on the part of the Plaintiff and its counsel in the way it has handled this matter is a matter that goes against it in the exercise of the Court's discretion. It is a matter that Mr Waalkens raises in his written submissions and I am obliged to add that I do not accept the explanation offered by Mr Afeaki as being a proper justification.

The balance of convenience

I am going to leave aside for the moment the question of whether there is a serious issue to be tried, or a prima facie case has been made out against the First and Second Defendants. I have indicated that I cannot see such a case against the Third or Fourth Defendants as no issue is pleaded against them. I will give my rulings in relation to those matters when I give my reserved decision on the application for leave to bring judicial review proceedings. But assuming for present purposes that the Plaintiff can overcome that test (whatever it may be), the Court still has to go on and consider where the balance of convenience lies.

Here I am satisfied that the balance of convenience lies in favour of the Third Defendant. The Plaintiff's directors in their affidavit make strong assertions that if the Third Defendant is allowed to export this particular crop to Japan, the Plaintiff's licence will be "virtually worthless". There is no evidence from them at all to support that assertion. It is a mere and bald assertion. There is no evidence of how much of this crop the Japanese market is able to absorb from Tonga. There is no evidence, or even suggestion, that there are orders which the Plaintiff has which it is going to lose, or is likely to lose, if the Third Defendant proceeds with its export.

The sort of evidence that would normally be found in an application for interim injunction, dealing with the balance of convenience, is just not present in the Plaintiff's papers. Whether that is due to oversight by counsel or the lack of any such evidence existing in any event, I do not know and I express no view on that. But I do say that all I have on the one hand are mere assertions that the so-called exclusive licence will be of no value or worth if any competitor is allowed.

Against that I have evidence that, whereas the Plaintiff has managed so far in a period of nearly three years to export only 2.99 tonnes of this crop, the Third Defendant has (I gather, from a single crop) about 170 tonnes ready to export on Monday. That would suggest that the Third Defendant is the one with business credibility, and indeed I would have thought that the Plaintiff's own credibility in the Japanese market would already have been severely damaged by its inability to provide more than three tonnes of this crop over a lengthy period.

In contrast to that the Third Defendant in its first year of operation with this crop – having planted it earlier this year – is now ready to make a substantial export. There is some evidence from the Third Defendant of losses it will suffer. I accept that on the basis of the evidence before the Court there are substantial costs that would be incurred by cancelling these orders and the shipping arrangements that have already been made.

There is a further factor under the balance of convenience raised by more than one of the defendants but principally by counsel for the First and Second Defendants, Ms Simiki. She points out that the Kingdom of Tonga itself has its reputation on the line. There is evidence, on which I express no view at the moment, that the licence issued to the Third Defendant was issued precisely because the Plaintiff had failed to export or had gone so long without being able to take advantage of the licence it had been given. I accept that there is a serious question about the effect of that failure on Tonga's reputation. There is some evidence that Australia has now entered this specialised market and that Tonga is at risk of missing out if its growers are not able to get their crops shipped to Japan.

I conclude that the balance of convenience favours the public of Tonga and its exporting reputation, as well as the commercial interests of the Third Defendant, rather than the interests of the Plaintiff which has taken so long to get to this point and is not even alleging that it is about to fulfil an order – indeed there is no allegation that it has a crop that it is ready to export.

On that basis also, the balance of convenience factors lie against the granting of any interim relief.

Preserving the status quo

Finally I mention that interim relief is normally granted to preserve the status quo, i.e. things as they stand at the moment. Mr Afeaki submits that the status quo from his clients' point of view is the position stated in their affidavit, namely that they have an exclusive licence to export.

The status quo that the court looks to is the status quo at the date of hearing. The second licence was issued in February this year, that is six months ago. It came to the notice of the Plaintiff two months later, in April when they were told about it by the Third Defendant. The Plaintiff explains its delay in the meantime by saying they wanted to see this in writing from the Ministry and they did not get it in writing until just a few weeks ago, but in my view they were put on notice as from April this year, when they were told by the Third Defendant that they had been given an export licence. That was confirmed in July by the Minister verbally, but not at that stage in writing.

Even before April this year there were other events that should have put them on notice. In November last year there were discussions between the three parties, or at least between the Plaintiff and the Ministry, when the Plaintiff was told that the Third Defendant was seeking a licence to export sato imo taro.

In any event, whatever view one takes of that, and I am not expressing a concluded view, it remains the case that the status quo that the Court is considering is that there are two licences on foot at the moment. Whether the granting of the second one amounted to a breach by the Government of its obligations has yet to be decided, but the fact of the matter is that the status quo is that two parties have been given the right to export this crop. Therefore it would be inconsistent with the general principles of injunctions for the Court to interfere with that by preventing the Third Defendant from exporting the crop which it has grown.

Conclusion

There are other issues that arose in the hearing. I will deal with them in my reserved decision relating to the application for leave to judicially review the actions of the First and Second Defendants. For the various reasons I have given, my view is that there is not one but several grounds upon which the Plaintiff fails by a very large margin to justify the granting of interim relief, and the application is accordingly dismissed.

The other parties will be entitled to costs. If they are not able to be agreed within the next 28 days they are to be taxed.