Mr S.P. Sharma and later Mr R.A. Smith
for the Applicants/Appellants (Original Defendants)
Mr S. Parshotam for the Respondents (Original Plaintiffs)
Ruling in chamber application to stay
injunction pending appeal
This is an application to stay an interim injunction pending appeal.
On 16th September Krishna Prasad and Vijay Prasad the Respondents (Original Plaintiffs) issued a writ in the Suva High Court (No.
411 of 1992) seeking certain orders as to undertaking and security from the Original Defendants Vishnu Prasad and Lakshmi Prasad
(the present Applicants/Appellants).
On 17th September, 1992 the Respondents obtained an ex parte mareva injunction from Fatiaki J. against the Applicants/Appellants and
their associated companies. As the order in question is lengthy and detailed a copy of the order as sealed in 18/9/92 is attached
hereto for the sake of clarity and convenience. On 21st September, 1992 the Applicants/Appellants moved the High Court inter partes
for the dissolution of the injunction on 9 grounds. The matter was argued at length in chambers on 24th and 25th of September, 1992.
Fatiaki J. gave his Ruling on 2nd October, 1992 whereby he dismissed the Appellants' application and ordered that the injunction
granted by him on 17/9/92 be extended until further order. He, however, reserved liberty to the Appellants to apply generally to
the Court in respect of their assets. The following extract taken from pages 2 and 3 of Fatiaki J.'s Ruling provide the background
to the dispute and the proceedings before me-
"The plaintiffs who are medical practitioners and citizens of Australia are related not only by marriage but also through blood
ties to the defendants who are residents of Fiji. During the course of their relationship a proprietary company entitled Burcrest Pty. Ltd. (hereafter referred to as 'Burcrest') was incorporated in October 1984 with the first plaintiff and first defendant as directors. Subsequently in April 1988 the second defendant was also made a director.
On the 24th of March 1988 the plaintiffs executed amongst other securities a guarantee in favour of the Commonwealth Bank of Australia (hereafter referred to as 'CBA') securing all moneys lent to Burcrest.
Prior to their executing the aforesaid guarantee the plaintiffs allege that the defendants "... orally promised and represented to the plaintiffs that if they signed the guarantee, the defendants would indemnify and
keep indemnified the plaintiffs from any liability, costs or expenses incurred in connection with the guarantee ...". This is denied by the defendants.
Thereafter on the 20th of October 1990 the first plaintiff resigned as a director and secretary of Burcrest and a year later on the 18th of November 1991 CBA demanded from the plaintiffs payment of a sum well in excess of $Aust 2 million under the terms of the guarantee executed by the plaintiffs.
Since the CBA demand various efforts have been made by the plaintiffs through their solicitors to obtain from the defendants and various named
companies a written Deed of Indemnity without any success.
Finally on the 16th of September 1992 the plaintiffs issued proceedings in this Court for various orders and obtained ex parte a 'mareva injunction' which the defendants now seek to have dissolved."
On 2/10/92 the Applicants/Appellants filed a Notice of Appeal against Fatiaki J.'s order and at the same time lodged an ex parte application
before a single Judge of the Court of Appeal to stay the order pending appeal. I heard the application which was supported by affidavit,
and granted an interim stay on the following terms -
"(a) That the appellants are to file an undertaking in writing by 10 a.m. Tuesday 6th October 1992 that they will not part with
their interest or assets in the properties listed in part B(a) of page 2 of the Order of Injunction dated the 17th September 1992.
(b) That all relevant papers be served on the Respondents or their Solicitors within 7 days.
(c) That the matter shall stand adjourn for inter parties hearing on Monday 19th October 1992 at 9.30 a.m."
On 8/10/92 the Respondents filed an ex parte motion to dissolve my interim stay order. On 14/10/92 both parties agreed that both applications
be heard together.
Subsequently I heard both parties briefly in chambers on 2 occasions and it was finally agreed that I give my ruling on the basis
of written submissions made. In the meantime the interim stay and the written undertaking continued in force. Subsequently there was a change of solicitors and further adjournments were granted either by consent or to comply with my request
for certain information.
On 7th July, 1993 Mr R.A. Smith the new solicitor for the Applicants tendered, with the consent of Mr S. Parshotam, a photocopy of
a Writ of Summons (No. 916 of 1993) issued by the Respondents (Original Plaintiffs in Fiji) in the Supreme Court of Queensland against
the Commonwealth Bank of Australia seeking the following reliefs:
"1. A declaration that a deed of guarantee dated 24th March, 1988 executed by the Plaintiffs in favour of the Defendant is void
or unenforceable against the Plaintiffs or either of them;
2. Alternatively to paragraph (1) a declaration that the liability of the Plaintiffs under the deed is limited to $60,000.00;
3. A declaration that the said deed of guarantee has been duly terminated by the Plaintiffs;
4. Damages for breach of s.52 of the Trade Practices Act 1974;
5. Damages for breach of fiduciary duty and/or negligence;
6. Such relief as to the Court shall seem just under s.87 of the Trade Practices Act;
7. Further or other relief;
8. Costs."
The application before me is based on the provisions of Section 20(f) of the Court of Appeal Act which gives a single Judge power "to stay execution or make any interim order to prevent prejudice to the claims of any party
pending appeal".
It is clear that in making my determination I will have to bear in mind the interests of both parties and decide where the balance
of convenience lies. In short, which party will suffer the greater prejudice if the stay is granted or if it is not granted.
Having considered the affidavit evidence before me and bearing in mind written and oral submissions made by both sides in support
of their respective applications and having regard to the grounds of appeal I have come to the clear conclusion that the Applicants
are likely to suffer the greater prejudice if the application is not granted. The far-reaching effect of the mareva injunction could
virtually paralyse the business activities of the Applicants (and even of some of their associates), a result that could ironically
prove inimical to the claims of the Respondents in the High Court. Refusal to make a stay order could also render the appeal nugatory.
If the application is granted subject to the Respondents' interest being protected there is likely to be no prejudice to the Respondents.
What the Respondents are really interested is to see that the Applicants do not dissipate their properties before their (Respondents')
claim in the High Court for indemnity and surety is adjudicated upon. This I am satisfied can be largely achieved by the nature of
undertaking given by the Applicants.
I, therefore, grant the application for a stay order subject to the following terms -
(i) That the Applicants continue to abide by their undertaking given in writing on 6/10/92 and filed in this Court on the same date.
(ii) That the Applicants shall not, without the prior leave of this Court, dispose of or attempt to dispose of by sale or otherwise
their shares in any of the companies listed in Order B(b) of the High Court Order.
(iii) That the Respondents have liberty to apply to dissolve the stay order in the event they come into possession of any information
indicating that the Applicants are acting or about to act in contravention of their undertaking to the Court or in breach of any
order of this Court.
(iv) That this stay order and the undertaking shall continue in force pending the decision of the Court of Appeal or until earlier
amended or dissolved.
(v) That liberty is reserved to either party to apply generally either to the Court of Appeal or to the High Court whichever course
is appropriate at the relevant time.
The Respondents' application to dissolve the interim stay is dismissed.
The costs of this application will be costs in the cause.
Sir Moti Tikaram
Resident Justice of Appeal
Suva
16th July, 1993.
Abu0048d.92s
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