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Ebbage v Ebbage [2001] VUCA 7; Civil Appeal Case 7 of 2001 (27 April 2001)

IN THE COURT OF APPEAL IN THE
REPUBLIC OF VANUATU
(Civil Jurisdiction)

Civil Appeal Case No 7 of 2001

BETWEEN:

RAYMOND JOSEPH EBBAGE
as personal representative of
the ESTATE OF PAUL GERRARD EBBAGE (Deceased)
APPLICANT

AND:

SUSAN JAYNE EBBAGE
RESPONDENT

CORAM:
Hon Justice John von Doussa
Hon Justice Bruce Robertson
Hon Justice Daniel Fatiaki
Hon Justice Oliver Saksak

COUNSEL: Mr Mark Hurley for the Applicant
Mr Robert Sugden for the Respondent

DATE: 12 June 2001

PRACTICE AND PROCEDURE – strike out – dismissal of action – inherent jurisdiction – to be used sparing and only in exceptional cases – need to investigate facts – use of affidavits

JUDGMENT

1 The applicant seeks leave to appeal from a decision of Coventry J delivered on 30 March 2001 which ordered that the applicant’s claim for damages under an undertaking as to damages be struck out. The parties accept that the decision was interlocutory in nature, and that an appeal lies to this Court only with leave, either from the primary Judge or from this Court. The applicant applied to Coventry J for leave to appeal but leave was refused on 20 April 2001. The application is renewed before this Court.

2 The application is supported by a proposed Notice of Appeal and several hundred pages of documents comprising affidavits, correspondence and submissions of the parties that were before Coventry J. These documents canvas in depth the evidentiary material on which the applicant bases his claim for damages under the undertaking, and on which the respondent contends that the claim for damages is so without merit that it was doomed to failure.

3 The matter has a complex history. There has been much litigation between the parties, both in Australia and in the Supreme Court of Vanuatu. The applicant is the executor of the estate of his late son, Paul Gerrard Ebbage deceased (the deceased) who died in Australia on 2 December 1998. The respondent is the widow of the deceased. The respondent and the deceased had separated some years before his death but were not formally divorced.

4 Probate of the deceased’s will was granted to the applicant in the Supreme Court of Queensland on 23 July 1999, and was re-sealed in the Supreme Court of Vanuatu on 2 September 1999.

5 A major asset of the estate comprised shares beneficially owned by the deceased in a company, Macro Management Group Inc (Macro) which, in turn, was the registered holder of 1,179,820 shares in Advanced Engine Technologies Inc (AET Inc), a company listed on the NASDAQ Stock Exchange in the United States of America. (In many of the documents, the number of shares is mistakenly stated as 1,161,820.) AET Inc was established to develop a revolutionary combustion engine invention.

6 Macro is a company incorporated in accordance with the laws of Vanuatu. Its incorporator is Moores Rowland Corporate Services Ltd. The registered office is at the office of a firm of Chartered Accountants in Vanuatu, Moores Rowland, and the Director of the company, Equity Holdings Ltd, is an entity controlled by Moores Rowland. The partner of that firm responsible for the administration of Macro is Mr Laurie Harrison.

7 On 23 August 1999 the respondent commenced proceedings against the applicant in the Supreme Court of Vanuatu claiming various reliefs, including a claim for family maintenance. On 27 August 1999, before the proceedings had been served on the applicant, the respondent obtained an ex parte injunctive order restraining the applicant, Macro and Moores Rowland from doing anything directly or indirectly to dissipate or move assets of the estate out of Vanuatu. The ex parte order was supported by “the usual undertaking” as to damages given by the respondent.

8 The applicant wanted the matter quickly re-listed before the court to apply to discharge the ex parte order, but regrettably encountered lengthy delays in obtaining a hearing. On 27 September 1999 he issued a summons in the Court seeking to have the ex parte order set aside and replaced with appropriate undertakings by him. A copy of that summons had been served on the respondent on about 23 September 1999, before it was issued. A hearing date was not assigned until 29 March 2000 when the matter was set down for hearing before Coventry J for trial on 14 June 2000. On that day the trial proceeded. His Lordship struck out the proceedings with the result that the ex parte injunctive order of 27 August 1999 was discharged.

9 Between 27 August 1999 and 16 June 2000, the value of the AET shares on the NASDAQ Stock Exchange dropped substantially in value, the applicant alleges from $US 6.50 to $US 2.25.

10 Before turning to the events which followed, it is necessary to make two comments in relation to the terms of the ex parte order.

11 The ex parte order did not appoint a return date when the matter would be reconsidered by the Court. As a matter of invariable practice, we consider that this should be done. An ex parte order is made without the party affected by the order having any opportunity to be heard [1]. As a matter of basic justice, restraints imposed by ex parte orders should be confined both in time and scope to that which is absolutely necessary to secure the plaintiff’s position, and to hold the status quo, until the defendant has the opportunity to be heard. The ex parte order should nominate an early date, usually a few days hence, when the Court will reconsider the matter. The hearing should be fixed having regard to the time required for the proceedings to be served, and for the defendant to obtain legal advice.

12 Had a hearing date been nominated in the present case, it is probable that the events which now give rise to this application would not have occurred.

13 Secondly, there is a paragraph of the ex parte order which required the applicant to account to the respondent for the assets of the estate within the jurisdiction within twenty eight days. This order gave rise to further proceedings between the parties. There was no need for such an order to be made on an ex parte application. An order of that kind was one that should have been made only after the applicant had been given the opportunity to be heard. Orders of that kind intended to aid the plaintiff in the prosecution of the action usually can, and should, be deferred until the other party has the opportunity to place material before the Court and to be heard.

14 We return to the primary issue before this Court. On the dissolution of the interlocutory injunction the applicant applied for an inquiry as to damages under the undertaking. On 30 July 2000 Coventry J ordered that the applicant within twenty eight days file and serve the affidavit material upon which he relied in support of his application for payment of damages, and allowed a further twenty eight days for the respondent to file answering affidavit material, and a further period for the applicant to reply thereto. His Lordship fixed a date for a conference “to fix the trial”. The direction required the parties on that occasion to indicate if any of the deponents were required to give oral evidence.

15 In response to this direction, the applicant filed a short affidavit that merely recited the NASDAQ Stock Exchange trading price for AET shares on the date when the ex parte order was made and when it was dissolved, and by reference to exchange rates calculated a claim for damages equating the drop in value of the shares to $AUS 4,286,104. The affidavit failed to address any other facts, and in particular failed to address the question of causation. Whilst there is precedent to support the proposition that on an undertaking in support of an injunction which restrains trading in shares, the diminution in shares is an indicator of loss (see, for example, Mansell v British Linen Company Bank [1892] UKLawRpCh 114; [1892] 3 Ch 159), authority is clear that the party seeking damages under an undertaking carries the onus of establishing both the quantum of the loss claimed, and that the loss was caused by the undertaking, not by the litigation itself or by some other cause: Air Express Ltd v Ansett Transport Industries (Operations) Pty Ltd [1981]BHCA 75; [1981] HCA 75; (1981) 146 CLR 249 per Gibbs J at 312 – 313 and per Mason J at 325. All the facts must be investigated: Mansell v British Linen Company Bank at 163.

16 The respondent filed an affidavit in reply which addressed the facts and denied the applicant’s entitlement to damages on several grounds. First, she alleged that on 8 October 1999 she had indicated through her solicitors that she would not unreasonably withhold her consent for the sale of the shares if the applicant had a serious proposition for the sale of the shares. She deposed that thereafter she was at no time asked to consent. Secondly, she asserted that the applicant had not during the operation of the ex parte order had an intention to sell the shares. Thirdly, she asserted that throughout this time the applicant was not in possession of the relevant share scrip and was not in a position to sell the shares even if he had wished to do so, and she identified factual material to support that proposition.

17 The matter was brought on for hearing before Coventry J on 3 October 2000 when it appears that the respondent’s solicitors pointed out that the applicant’s affidavit material did not address causation, and did not identify material facts that would support an entitlement to damages. That led his Lordship to direct that the applicant file and serve a Statement of Claim within twenty eight days, and directed that the respondent within fourteen days thereafter file and serve a “motion to strike out the Statement of Claim and supporting affidavits”. The applicant was given leave to file further affidavits in support of his claim.

18 On 30 October 2000 an elaborate Statement of Claim was filed by the applicant which pleaded that the diminution in value of the shares in respect of which damages were claimed (and quantified) was caused by the ex parte order and the restraining effect which it had on the applicant and Moores Rowland.

19 On 13 November 2000, at which time no additional affidavit material had been filed by the applicant, the respondent, through her solicitors, issued a summons seeking an order that “the Defendant’s Statement of Claim for damages as a result of the injunction of 27 August 1999 be struck out and the Application for damages be dismissed”. This summons was supported by affidavits from the respondent’s solicitors which deposed to facts said to establish that the applicant was unable through the period that the ex parte injunction was in force to dispose of the AET shares.

20 That summons came before Coventry J on 7 December 2000. On 13 December 2000 his Lordship, with short published reasons, adjourned consideration. He held that the application was premature as the applicant wished to file further affidavit material. It is clear from the published reasons that the respondent’s application was not made under the Rules of Court as an application to strike out the pleading on the ground that it failed to disclose a cause of action. Rather, it was an application made in the inherent jurisdiction of the Court on the basis that the affidavits before the Court did not support the pleadings, and were insufficient to establish causation. His Lordship observed:

“The plaintiff went through the existing affidavits, particularly in the defendant’s case and said, quite simply, unless that evidence is changed radically then no additional or explanatory affidavits can save the claim. This is particularly so if the affidavits in the plaintiff’s case are used. She asked the Court to exercise its inherent jurisdiction.”

21 That the application was made under the inherent jurisdiction to strike out the whole claim is also supported by the heading to his Lordship’s reasons which reads:

“Interim Ruling on Application to Strike Out a Claim Made Pursuant to an Undertaking as to Damages”

22 On 24 January 2001 further affidavits were filed by the applicant, his son Mr J J Ebbage who had been assisting his father in the administration of the estate, and from his principal solicitor in Queensland, Mr G J Hamilton.

23 On 15 February 2001 Coventry J gave directions requiring the applicant to complete his affidavit material by 1 March 2001 and the respondent to complete hers by 8 March 2001, and fixed a date for hearing of the respondent’s motion to strike out the claim. That application came on for hearing on 26 March 2001 and resulted in the order against which the applicant now seeks leave to appeal.

24 Before Coventry J, the parties filed detailed written submissions which were supplemented by oral submissions. It is plain from the respondent’s submissions that the Court was being invited to exercise its inherent jurisdiction to strike out the proceedings on the basis that the affidavit material that had been filed failed to establish loss caused by undertaking, and, on the contrary material advanced through the respondent’s affidavits, not challenged by the applicant, showed positively that the applicant had not been in a position to sell the shares throughout the period in question.

25 The formal order made by Coventry J on 30 March 2000 was that “The claim made by the defendant pursuant to the undertaking in damages given by the plaintiff upon the making of the ex parte order of 27 August 1999 is hereby struck out”. The order itself, and his Lordship’s reasons, speak of striking out the claim, not the Statement of Claim. The reasons are clear that the order was made pursuant to the inherent jurisdiction of the Court to stay or dismiss an action which is an abuse of its process or is frivolous or vexatious. His Lordship found that the claim was frivolous or vexatious because it could not be supported on the affidavit material filed by the applicant. His Lordship made the order based only on his interpretation of the affidavit material filed by the applicant, a point emphasised by his Lordship in his reasons for refusing leave to appeal.

26 The applicant contends that leave to appeal should be granted because, it is said, his Lordship erred in failing to apply a principle first established in Willis v Earl Howe [1893] UKLawRpCh 68; [1893] 2 Ch 545, and in consequence the wrong test was applied by his Lordship in ruling that the claim should be struck out. Further, it is said that in any event his Lordship misapprehended the facts. It is contended that there was conflicting affidavit material which warranted a trial at which the deponents could be cross-examined. The applicant contended that this Court has at no stage considered the power of the Court in its inherent jurisdiction to strike out proceedings, and that it should take this opportunity to do so.

27 The inherent power of a court of record to stay or dismiss proceedings that are an abuse of its process or are frivolous or vexatious is long standing and well established: see The White Book [The Supreme Court Practice 1997, 18/19/18], Bullen & Leake & Jacob’s Precedents of Pleadings 12^th ed., p 149 - 150, and Jacobs and Goldrein Pleadings Principles and Practice, Sweet-Maxwell, 1990 at pp 227 – 229. It is not suggested that his Lordship in any manner misapprehended the scope of the jurisdiction, save that in its exercise it is said that he failed to apply a principle established in Willis v Earl Howe. His Lordship correctly recognised that the jurisdiction is distinct from the powers of the Court conferred by the Rules to strike out pleadings which on their face fail to disclose a cause of action. He recognised that the jurisdiction is one which ought to be sparingly exercised, and only in exceptional cases (as to which see Lord Herschell in Metropolitan Bank v Pooley (1885) 10 App Cas 210 at 219).

28 Counsel for the applicant contends that Willis v Earl Howe established that the scope for leading evidence on a strike out application is limited to the establishment of incontrovertible facts which in themselves show that the cause of action is not maintainable. We think this is a gloss upon Willis v Earl Howe which the decision does not support. As a matter of fact, the proceedings in that case were dismissed because the Statement of Claim asserted facts which were notoriously wrong. However, the reasons of the Court do not in terms so limit the scope for affidavits. The defendant, without delivering a Statement of Defence, had moved the Court to take the Statement of Claim off the file as not disclosing any reasonable cause of action and to dismiss the action as frivolous and vexatious. The motion was supported with an affidavit which addressed the facts. Lindley LJ at 551, having already decided that the case should be dismissed on the ground that it did not relevantly allege a fraud to support the relief claimed, went on to say:

“But when we look at the affidavit filed by the defendant’s solicitor, Mr Trower - and it has been settled that an application of this kind may be supported by affidavits – it is obvious that this is a most hopeless action. The story about the supposititious child has been circulated since 1853, and the plaintiff’s predecessors in title might have discovered the fraud long ago, if fraud there was, without any difficulty. The action is utterly hopeless and without foundation, and I therefore think Mr Justice Kekewich was right in not allowing it to go on.”

Bowen LJ agreed, and Kay LJ at 554 said:

“An affidavit has been filed on behalf of the Defendant, as the practice allows, to show that this action is frivolous or vexatious. According to that affidavit, the foundation of the Plaintiff’s case ... has been publicly alleged again and again for many years. It has been the ground for more than one action by claimants of this estate, who have failed ....”

29 What is clear from Willis v Earl Howe is that all the facts of the case must be investigated and this can be done on affidavits. This is in accordance with the judgments in Metropolitan Bank v Pooley, decided a few years before. In that case Lord Blackburn at 220 – 221 had said in relation to the inherent jurisdiction:

“From early times (I rather think, though I have not looked at it enough to say, from the earliest times) the court had inherently in its power the right to see that its process was not abused by a proceeding without reasonable grounds, so as to be vexatious and harassing – the court had a right to protect itself against such an abuse, but that was not done upon demurrer, or upon the record, or upon the verdict of a jury or evidence taken in that way, but it was done by the court informing its conscience upon affidavits and by a summary order to stay the action which was brought under such circumstances as to be an abuse of the process of the court, and in a proper case they did stay the action.” (emphasis added)

30 In our opinion, it is clearly established that in support of an application made under the inherent jurisdiction, affidavits may be adduced, unconfined by any rule of principle which limits them to the establishment of “incontrovertible facts”.

31 Affidavits filed in support of an application may be contested by affidavits from the other side to a contrary effect. If this occurs, it is probable that the Court will not be satisfied that the facts are sufficiently clear to conclude that the action is bound to fail. It is well established that the Court should not exercise the inherent jurisdiction if there is any reasonable prospect that the resolution of disputes within the evidence, if resolved favourably to the party opposing dismissal, could support that party’s claim.

32 In the present case, we are not satisfied that his Lordship misunderstood the law in that respect. He expressed his ultimate conclusion as follows:

“There is nothing on the face of the affidavits to show that at any time between 27 August 1999 and 16 June 2000 the plaintiff was in a position to deal with the shares had the restraining order not been made. Indeed, the contrary is so. Had the [defendant] set out, on 27 August, immediately to sell or otherwise deal with the shares then [he] would not have been in a position to do so by 16 June 2000, irrespective of the restraining order.

In the circumstances, there is no evidence of any loss to the defendant as a result of the restraining order and I strike out the claim.”

33 In our opinion, as there is no reason to doubt the existence, nature and scope of the inherent jurisdiction of the Court, and as we are satisfied that his Lordship did not misapprehend the function of affidavits on such an application, we are not satisfied that these matters provide a ground for granting leave to appeal. In the absence of any important issue of law that requires the consideration of the Court of Appeal, to obtain a grant of leave the applicant must at the least show that there is a reasonable prospect that the appeal would succeed if leave were granted. In this case the applicant would have to show that his Lordship erred in his interpretation of the affidavit material, and that he should have concluded that there were areas of contention worthy of trial which, if resolved favourably to the applicant, could lead to an award of damages in his favour.

34 In his reasons for decision, his Lordship addressed the two principle contentions of the respondent, first that the evidence failed to show that the applicant had an intention to sell the shares during the relevant time, and secondly that, whatever the applicant’s intention, he was at no time in a position to sell them.

35 On the first ground, his Lordship ruled in favour of the applicant, observing that the applicant had sworn that if he had been free to do so he would have sold the shares. The matter was decided against the applicant on the second ground.

36 On the second ground, the respondent contended that:

(a) the estate did not have the share scrip and could not obtain it, or lawfully obtain a replacement;

(b) throughout the period a third party, completely outside the control of the respondents, blocked the applicant from gaining the information needed to sell the shares; and

(c) a fourth party, as known to the applicant, was making a claim to the beneficial interest in the shares.

37 His Lordship concluded that the applicant’s affidavits, when read in their entirety, provided no evidence contradicting these propositions. As to the first contention, his Lordship observed that the applicant accepted that he did not have the share scrip. The applicant contended that he would have been able to replace the share scrip, and in support of that assertion tendered a letter from a solicitor instructed on his behalf in the United States in September 2000, that is some three months after the injunction had been discharged. Whilst that letter identifies statutory provisions which permit the replacement of share scrip where it has been “lost, stolen or destroyed” his Lordship did not consider that during the relevant time the applicant was in a position honestly to declare that to be the situation. We are not persuaded that his Lordship erred in that conclusion.

38 The applicant’s affidavit material deposed that on 11 December 1998 the applicant had made contact with Mr Harrison at Moores Rowland. Mr Harrison informed him that the deceased was the beneficial owner of the shares in Macro. At that time Mr Harrison agreed that the applicant could attend Vanuatu to inspect the company records. However, on 14 December 1998 Mr Harrison informed him that he would not disclose any information to him until probate had been issued in Australia and re-sealed in Vanuatu. In an affidavit sworn on 2 May 2000 the applicant deposed that:

“On 18 September 1999, I had a further telephone conversation with Harrison. During that telephone conversation Harrison informed me that I obviously represented a beneficial owner in the Vanuatu companies, but as there were ‘others’ involved who also claimed to have a beneficial interest in those companies, he would not provide me with information regarding the Vanuatu companies.

Harrison refused to disclose to me how many or who the other claimed beneficial owners in the Vanuatu companies were. He stated that as these companies were international companies, they were governed by the International Companies Act1992 and that there were secrecy provisions preventing him disclosing information to me. During this telephone conversation, Harrison said that he had received facsimile transmissions from ‘other parties’ stating that he was not to disclose to me any information regarding assets of the estate. He would not say who such ‘other parties’ were.

By Civil Case No 103 of 1999 dated 4 November 1999 and filed herein, I as the executor of the estate and as plaintiff sought orders against various persons including the partners of Moores Rowland compelling Moores Rowland, its servants, agents and all trust and nominee companies controlled by it to disclose to my solicitors for their inspection information concerning the Vanuatu companies and details of any bank accounts held by those companies. That originating summons is still pending.”

39 In an affidavit of Mr John Ebbage sworn on 12 September 2000 in proceedings in the Family Court of Australia at Brisbane (an exhibit to an affidavit of the applicant filed on 24 January 2001), in explaining the inability of the executor of the estate to comply with the order requiring him to account for the Vanuatu assets to the respondent, he said:

“Unfortunately, all of the books and records relating to the assets of the estate were held by a firm of accountants in Vanuatu, Moores Rowland who simply refused to provide the executor with information regarding the estate assets which were controlled by Moores Rowland. Moores Rowland’s correspondence raised various excuses as to why they would not disclose information. One excuse was that there were ‘other parties’ who were communicating with Moores Rowland, threatening them and maintaining that they [the other parties] had an interest in the estate’s assets. Another reason articulated by Moores Rowland was that any disclosure of any information regarding companies incorporated in Vanuatu would be in breach of section 125 of the Republic of Vanuatu International Companies Act No 32 of 1992.”

40 Later, the deponent said that Moores Rowland also referred to the ex parte injunction as a reason for not supplying the information. However, the clear import of the material before his Lordship was that Moores Rowland would not have provided details of the assets of the estate without order of the Court directing them to do so, even if the ex parte injunction had not been made.

41 It emerges from these affidavits that at least until 2 May 2000 the applicant did not have information about the estate’s assets in Vanuatu sufficient to enable him conscientiously to swear an affidavit that AET share scrip registered in the name of Macro was lost, stolen or destroyed. He simply had no information about the assets, let alone the difficulties of establishing title to them. This is also borne out by an affidavit of Mr G J Hamilton sworn on 8 February 2000, also filed on the applicant’s behalf, in which he deposes that on 22 September 1999 he told the respondent’s solicitor in the precincts of the Family Court in Brisbane that the applicant “was unaware of the nature of any assets of the estate of the deceased in Vanuatu” because Mr Harrison refused to provide any information on the topic.

42 Moreover, the applicant’s affidavit deposed to repeated attempts to arrange a listing of the applicant’s motion to have the ex parte injunction set aside. The applicant and his solicitors believed that a hearing would be obtained within a week or two of the order being made, and, when this did not happen, arranged for the summons filed at Court on 27 September 1999 to be prepared. Thereafter they continued to believe that an early listing would be available. In these circumstances it is significant that the applicant produced no evidence that during that period steps were being taken by him to obtain control of scrip to enable a sale. That this was not happening bears out the conclusion that the applicant had insufficient information about the Vanuatu assets of the estate to take any action in that respect.

43 In reaching the conclusion which he did on this issue, counsel for the applicant alleged that his Lordship failed to give sufficient weight to par 14 of the applicant’s affidavit sworn on 24 January 2001. That paragraph is as notable for what it does not say as for what it says. It reads:

“(a) Prior to the ex parte orders being vacated on 16 June 2000, I had made some general enquiries as to the whereabouts of the Macro Management share scrip;

(b) subsequent to the making of the order on 16 June 2000, information arising out of discovery proceedings in an action commenced by myself in the United States for the recovery (of) assets beneficially owned by the Estate and further enquiries by myself confirm my earlier view that the share scrip had been lost, destroyed or stolen;

(c) in or about the first week in September 2000, I instructed Minter Ellison to make an application to AET Inc for replacement share scrip. Minter Ellison did so and by facsimile transmission dated 18 September 2000 from Mr Neil Cummings, the solicitor for AET Inc, to Minter Ellison’s New Mexican agents, Keleher & McLeod, Mr Cummings confirmed that he had issued instructions to AET Inc’s stock transfer agent to issue duplicate certificates and forward the certificates to myself at my home address at Coorparoo in Brisbane. Now produced and shown to me and marked with the Letter ‘C’ is a true copy of a facsimile transmission dated September 18, 2000 from M Neil Cummings & Associates to Keleher & McLeod. (It is to be noted from the reference to Macro Management in this fax is ‘Macro Management Ltd’, however, shortly after Minter Ellison received a copy of this facsimile transmission, they advised Mr Cummings that the correct name of the company was ‘Macro Management Group Inc’ and Mr Cummings noted his records accordingly.)”

44 Paragraph (a) fails to recognise that at least by 2 May 2000 the applicant had no useful information about the AET share scrip. The balance of the information deposed to does not provide a basis for holding that in the short period between 2 May 2000 and 16 June 2000 the applicant had any prospect of obtaining replacement share scrip even if he came into possession of information during that time which would justify him swearing a declaration that the original share scrip was lost, stolen or destroyed.

45 When other information before his Lordship filed by the respondent, but in part emanating from the applicant, is taken into consideration the hopelessness of the applicant’s claim becomes even more obvious. First, the applicant had filed an affidavit from Mr Philip Wainwright, an international investment banker, that indicated that at the best it would take about two months to obtain replacement share scrip and, further, in the circumstances revealed in all the affidavit material, Mr Wainwright was of the opinion that share scrip could not be replaced having regard to other competing claims and litigation over the same shares.

46 An affidavit sworn on 9 October 2000 by Mr M G Adamson, the respondent’s solicitor, exhibited a verified derivative complaint for injunctive relief filed in the Superior Court of the State of California, County of Los Angeles, by the applicant on 30 June 2000. The allegations therein are verified on oath by the applicant as correct. The allegations included that a third party, Mr S C Manthey and companies apparently controlled by him, had become the registered owner of the AET shares between the date of death of the deceased and 30 June 1999 (i.e. before the ex parte order was made). The Californian proceedings allege that Mr Manthey, acting without the knowledge and consent of the deceased’s estate, fraudulently transferred to off-shore companies in his control shares in AET including shares in Macro’s name. The relief claimed includes an injunction mandating that Mr Manthey deliver to the applicant the certificate for the “1.161820” shares which Macro beneficially owns in AET.

47 It appears from this affidavit that at some time between 2 May 2000 and 30 June 2000 when the applicant verified the pleadings in the Californian proceedings, that he obtained information about Macro’s shareholding in AET, and learned that the shares had been transferred to others.

48 In the face of all this evidence it is hardly surprising that his Lordship was satisfied that during the relevant time the applicant was not in a position to sell the shares even if there had been no injunction.

49 On point (b), his Lordship held:

“There is much evidence to show that the [applicant] sought information concerning the shares from the third party, Mr Harrison, but the latter refused to disclose that information as he had received other claims to beneficial ownership and had regard to his statutory obligations of secrecy under the International Companies Act.”

50 That conclusion is in accordance with the affidavit material adduced by the applicant, as well as by the respondent, and the substance of it was not in contention.

51 On point (c) (that a fourth party was claiming beneficial interest in the shares), his Lordship noted that in the separate proceedings brought by the applicant against Moores Rowland, he was eventually given access to information about the estate’s assets. However, his Lordship said:

“By that time, if not earlier, it was clear that the fourth party was claiming a beneficial interest in the shares in litigation claiming that was on foot.”

52 In written submissions, counsel for the applicant has identified the fourth party as Mr Manthey. Counsel took the Court to an exhibit of the affidavit of Mr Adamson sworn on 13 February 2000 which exhibited a copy of proceedings, in the Supreme Court of Queensland by Mr Manthey against the applicant and others in which Mr Manthey asserts that he is beneficially entitled to the AET shares held by Macro. Those proceedings were not commenced until 18 December 2000. That the proceedings were not commenced by Mr Manthey until that date is said to support the proposition that during the currency of the ex parte injunction the applicant could have dealt with the AET shares originally registered to Macro had the share scrip been replaced. Even though Mr Manthey did not issue the proceedings until December 2000, it is plain that he was claiming to be beneficially entitled to the shares long before that – indeed he had arranged for their transfer into entities controlled by him before 30 June 1999. We do not think that the date of the issue of the proceedings by Mr Manthey in Queensland advances the applicant’s case. The fact remains that the applicant was unaware of the nature of the deceased’s assets in Vanuatu until very close to the day on which the ex parte injunction was dissolved, and could not have obtained before that date replacement scrip. Moreover, the facts as disclosed by the affidavit evidence, hardly support the proposition that the share scrip was lost, stolen or destroyed. Rather, they support the conclusion that the scrip was held by another party who claimed to be entitled to it.

53 The applicant also complains that an affidavit which he sought to file at the hearing on 26 March 2000 was rejected by his Lordship. Having regard to the various directions that had been made as to the filing of affidavits before that hearing, we do not consider that his Honour erred in ruling that the affidavit was too late. However, nothing turns on it as the affidavit addressed an aspect of the case upon which his Lordship did not rely, namely that the AET shares were “restricted shares”.

54 In our opinion, his Lordship was correct in holding that there was no evidence disclosed in the affidavit material that would support the issue of causation which the applicant was required to establish. Counsel for the applicant contends that no decision on that issue should have been made until the witnesses had been cross-examined. In our opinion his Lordship was entitled to bring the proceedings to an end when he did. Directions had been made on three occasions requiring the applicant to file in affidavit form the material upon which he relied to support his claim. He had been given every opportunity to do so. His Lordship received lengthy written and oral submissions based on those affidavits. We are unable to detect in the procedures which the parties followed, and in the ruling of his Lordship, any injustice to the applicant. Even if the matter had been allowed to proceed to trial, it would have been open to counsel for the respondent to apply to have the claim dismissed on the ground that the supporting evidence to be adduced by the applicants failed to prove the necessary ingredients of the claim. There is no reason to think that the outcome would have been any different.

55 Finally, we wish to stress that whilst the inherent jurisdiction has been successfully engaged in this case to dismiss the applicant’s claim, this outcome should not be interpreted as any departure from the accepted principle that the inherent jurisdiction is one to be sparingly used only in exceptional cases. The present case for a combination of reasons was of that kind. It concerned an inquiry as to damages under an undertaking, where the exercise of the Court power to enforce the undertaking is discretionary (see Cheltenham and Glouchester Building Society v Ricketts [1993] 4 All ER 276 at 281); under the procedure adopted by the Court for that inquiry, directions had three times been given to the applicant to file the affidavit material upon which he intended to rely; and there appears to have been common agreement between his Lordship and counsel for the parties that at the hearing on 26 March 2001 the matter was to be dealt with under the inherent jurisdiction.

56 In our opinion, as an appeal on the grounds identified in the proposed Notice of Appeal would have no reasonable prospect of success, we consider that leave to appeal should be refused with costs.

DATED AT PORT-VILA this 12^th day of June 2001.

ON BEHALF OF THE COURT

J. von DOUSSA J

ENDNOTE:

[1] Ex parte orders should only be issued in the most exceptional circumstances.