IN THE SUPREME COURT OF TONGA

Flyniu Airlines Ltd anor

v

HRH Prince 'Ulukalala Lavaka Ata anors

Supreme Court, Nuku'alofa
Webster CJ 
CV 575/2004

8 September 2004 

Practice and procedure – review of injunction – injunction rescinded 

The plaintiffs applied for a review of the injunction granted on 17 August 2004 in view of the Court's decision earlier that day to join the other domestic airline, Peau 'o Vava'u Ltd as third defendant.  The injunction had quashed the order of the Minister revoking the second plaintiff's Foreign Air Operators Certificate.  The defendants challenged whether there was a serious issue to be tried. 

Held: 

1. A serious question to be tried was one for which there is some supporting material, of which the outcome is uncertain -- see Cayne v Global Natural Resources plc [1984] 1 All ER 225 (CA) 237. 

2. The aim of the serious issue test was to avoid the court having to consider difficult questions of law or fact at the interlocutory stage.  It was no part of the court's function at the interlocutory stage of litigation to try to resolve conflicts of evidence on affidavit as to facts on which the claims of either party may ultimately depend, nor to decide difficult questions of law which called for detailed argument and mature considerations -- American Cyanamid Co v Ethicon Ltd [1975] 1 All ER 504 (HL). 

3. The intervention of Peau 'o Vava'u had made a material difference and had changed the overall picture.   Peau 'o Vava'u could suffer financial loss if the injunction were continued while the plaintiffs could suffer financial losses (albeit unspecified) if the injunction was to be responded.  To decide between those two alternatives was a truly difficult balance for the court to make but there were other factors that had affected the balance of convenience.  The second plaintiff had taken no steps to appeal against the Minister's revocation order and the plaintiffs had not provided supporting evidence of the adequacy of their undertakings as to damages. 

4. The injunction which had quashed the order of the Minister was rescinded. 

Cases considered: 
American Cyanamid Co v Ethicon Ltd [1975] 1 All ER 504 (HL) 
Cayne v Global Natural Resources plc [1984] 1 All ER 225 (CA) 
Klissers Farmhouse Bakeries Ltd v Harvest Bakeries Ltd [1985] 2 NZLR 140 (CA) 

Counsel for plaintiffs: Mr Edwards 
Counsel for first defendant: Mr Gudsell, Mr Nielsen and Mr Havea 
Counsel for second defendant: Miss Fukofuka 
Counsel for third defendant: Mr Waalkens QC 

Ruling

This was a hearing in open court on 6 September 2004 to consider a review of the injunction granted by the Court on 17 August, in view of the Court's decision earlier that day to join the other domestic airline, Peau 'o Vava'u Ltd as 3rd defendant. That injunction quashed the order of the 1st defendant, now the Minister, revoking the 2nd plaintiff's Foreign Air Operators Certificate [FAOC]. 

The purpose of this hearing was only to review the issue of the injunction in relation to the revocation of the FAOC and not for any wider purpose. In view of the public importance of this whole matter, it has to be understood that this is only an interim or temporary ruling, which does not affect the full hearing of the plaintiffs' case. 

There was no suggestion that the applicable law was any different in substance from that set out in the Court's previous written ruling dated 20 August. 

Mr Waalkens QC made submissions for Peau 'o Vava'u in relation to the question of whether there is a serious issue to be tried, ie one for which there is some supporting material, of which the outcome is uncertain: per Cayne v Global Natural Resources plc [1984] 1 All ER 225, 237 (CA). Mr Gudsell also made detailed submissions for the Minister on the question of whether there was a serious issue to be tried, including a detailed analysis of certain aspects of the history of the matter from a chronological point of view; and Miss Fukofuka for the Kingdom supported these. 

While I carefully noted and considered all those submissions and those of Mr Edwards for the plaintiffs in response, I do not consider that it is helpful to set them out here in greater detail nor to express any detailed views on them (even in a preliminary fashion) at this stage, largely because they may involve matters still at issue when the substantive hearing of this application comes before me. The House of Lords was clear in American Cyanamid Co v Ethicon Ltd [1975] 1 All ER 504 (HL) that the aim of the serious issue test was to avoid the court having to consider difficult questions of law or fact at the interlocutory stage. It is no part of the court's function at this stage of the litigation to try to resolve conflicts of evidence on affidavit as to facts on which the claims of either party may ultimately depend, nor to decide difficult questions of law which call for detailed argument and mature considerations: American Cyanamid. 

On the material now before me, which is probably still incomplete, but which has to include the fact that the plaintiffs did not actually apply to be a single operator, I consider that it is now a more open question whether the plaintiffs have a real prospect of success, though I still think that the outcome is uncertain. However I stress that if that touches on issues which will be before the Court at the substantive hearing, those are still open issues for the Court then and I have an open mind on them. 

But in relation to the other factors described in the American Cyanamid case and other authorities as having to be considered in an application for an interlocutory injunction, I consider that the intervention of the 3rd plaintiff, Peau 'o Vava'u, has made a material difference and has changed the overall picture. 

In respect of damages, the question before the Court is now no longer a simple question of the balance of the risk of doing an injustice, where on the one hand there might be no financial hardship to the Minister and the Kingdom if an injunction were continued, and on the other hand the plaintiffs stand to be seriously affected financially. Now, even leaving aside the positions of the Minister and the Kingdom, Peau 'o Vava'u may suffer financial loss if the injunction were continued, while the plaintiffs may suffer financial losses (albeit unspecified) if the injunction were rescinded. To decide between those 2 alternatives is a truly difficult balance for the Court to make, only moderated by the fact that the period of the injunction (which related to the period of the original FAOC) has only a few more days to run until 15 September. So the financial losses of either the 3rd defendant or the plaintiffs for that remaining period will be readily quantifiable as damages. 

However there are also other factors which I believe now affect the assessment of the balance of convenience. There was no evidence that the 2nd plaintiff has taken any steps to appeal against the revocation of the FAOC; and no explanation about this. While the plaintiffs have provided undertakings as to damages, they have not provided evidence supporting the adequacy of those undertakings nor information about their ability to meet damages, nor even detailed information about their joint venture or other business arrangements: in the case of the 1st plaintiff, that has to be set beside the statements in the affidavit of Mr Finau, its Chief Executive Officer, that its business will effectively be closed on revocation of the FAOC and its shareholders will lose their whole investment. 

The plaintiffs' Counsel Mr Edwards admitted that there was now no problem with making other arrangements for passengers if the quashing of the revocation is rescinded, particularly if, as the 3rd defendant Peau 'o Vava'u suggested through its Counsel Mr Waalkens QC, a period of grace of 1-2 days is allowed before the rescission takes effect. Mr Edwards also submitted that the real concern of the plaintiffs had been about the dangers to the tourism industry, but as mentioned in my earlier ruling that is a side issue and I do not see that as a relevant factor on this limited issue, particularly in relation to the question of the interim quashing of the revocation of the FAOC, and particularly now that the FAOC only has a few days to run. 

Overall I consider that the intervention of Peau 'o Vava'u and all those other factors now tip the balance of convenience against the plaintiffs, so standing back and asking myself where overall justice lies in terms of Klissers Farmhouse Bakeries Ltd v Harvest Bakeries Ltd [1985] 2 NZLR 140 (CA), I consider that at this interim or interlocutory stage the balance now favours reviewing the injunction which quashed the revocation of the FAOC and rescinding it. 

Once again I was grateful to all Counsel for their detailed and helpful legal submissions. 

I have given these legal reasons for my decision, but once again I should like to make clear in general terms that at this stage any decision about granting or revoking an injunction is about a temporary or holding operation. It is important that this ruling is understood as a whole for what it is: it is emphatically not any indication of likely success in the full hearing, nor of the way the Court may be thinking about that. The final decision will only come after the Court has heard all the facts and all the submissions for the parties. 

In terms of the submissions by Mr Waalkens QC for the 3rd plaintiff, I consider it reasonable that this rescission should take effect 2 days after this decision is intimated to the parties, as follows: 

THE COURT ORDERS THAT: 

It rescinds the injunction granted by it on 17 August 2004 (which quashed the order of the Minister dated 13 August 2004, which with effect from 16 August 2004 revoked the 2nd Plaintiff's Foreign Air Operator Certificate No FAOC57567), the rescission to take effect from 6:00 pm on Friday 10 September 2004. 

Note: A separate Order has been made in relation to other interlocutory and timetable matters decided on 6 September. 

HAVING HEARD Counsel for the parties on 6 September 2004, 

IT IS ORDERED THAT: 

1. Under Order 9 Rule 2 Peau 'o Vava'u Ltd is joined as 3rd Defendant. 

2. HRH Prince 'Ulukalala Lavaka Ata, as Prime Minister and Minister for Civil Aviation, is substituted as 1st Defendant for Mr 'Alovaleamoemapa Faletau, Secretary for Civil Aviation. 

3. The Plaintiffs are to file further pleadings and written submissions on its application for leave to apply for judicial review in respect of issues of policy by close of business on Monday 13 September, with copies to the Defendants. 

4. The Defendants are to file their responses within 8 days, ie by close of business on Tuesday 21 September, with copies to the Plaintiffs. 

5. The Plaintiffs are to file any further response by close of business on Monday 27 September, again with copies to the Defendants. 

6. The Defendants will, if appropriate, have 14 days from the issuing by the Court of its ruling on the question of leave to apply for judicial review (in respect of issues of policy) to file defences to that claim. 

7. Any timetable issues on the Plaintiffs' application for mandamus will be considered after the ruling on leave referred to in Para 6. 

8. In view of the public importance of the issues, it is hoped that it may be possible to hold the substantive hearing of the Plaintiffs' claims (which is expected to take 1 week) in mid-November, or if not then by the end of the year at the very latest. Timetable issues in relation to security for costs and a pre-trial conference about 1 month in advance will be dealt with at a later date.