Chambers v Wakaya Limited [2011] FJCA 25; ABU0040.10 (15 March 2011)

IN THE COURT OF APPEAL, FIJI ISLANDS
AN APPEAL FROM THE HIGH COURT

CIVIL APPEAL NO.ABU 0040 OF 2010
(High Court Civil Action No. HBC 256 of 2010)

BETWEEN:

KENNETH CHAMBERS
1st Appellant

AND:

MARSHA NUSBAUM
2^nd Appellant

AND:

WAKAYA LIMITED
Respondent

CORAM: Hon. Justice William Marshall, Justice of Appeal
Hon. Justice Izaz Khan, Justice of Appeal
Hon. Justice Kankani T. Chitrasiri, Justice of Appeal

COUNSEL: Mr K Chambers in Person – 1st Appellant
Mr W Hiuare for the 2nd Appellant
Mr R Naidu for the Respondent

Date of Hearing: Friday 4th March 2011

Date of Judgment: Tuesday, 15th March 2011

JUDGMENT

William Marshall, JA

1. I agree with the judgment and reasons and the proposed orders of Izaz Khan JA. I wish to give some further explanation on two points.
   
2. I agree with Izaz Khan JA that the Respondent has no locus standi to seek an injunction and with his citation of Gleeson CJ in Australia Broadcasting Corporation v. Lenah Game Meats Pty Ltd (2001) 1853 ALR 1.
   
3. However I prefer to explain the same principle on the basis that the High Court in Fiji enjoys, as a court dispensing both common law and equity, jurisdiction only in support of a Plaintiff's right of property or other established legal right under Order 29 of the Rules of the High Court to issue quia timet interlocutory interim injunctions. Developed by equity in the nineteenth century this jurisdiction arises where the Plaintiff takes action against alleged infringement by a Defendant of a property or other established legal right. The Plaintiff applies to the Court for an interlocutory injunction restraining the Defendant from infringing that right until trial or further order. At the trial the issue of whether the Defendant has infringed the Plaintiff's right is decided. If the Defendant succeeds he may then obtain damages from the Plaintiff who in order to obtain the interim injunction will have been required to give a cross undertaking in damages.
   
4. I recently explained this principle in my judgment of 10th March 2011 in Strategic Nominees Ltd (In Receivership) v. Gulf Investments (Fiji) Limited Civil Appeal No. ABU 0039 of 2009. There are other situations under the common law and statute where the power to issue injunctive relief arise. In the Strategic judgment I refer also to the framework of law in respect of mortgagors in default who issue a cross claim of some kind in order to postpone or prevent the mortgagee's exercising his right of possession or sale. This is a good example of a situation and legal framework where the law developed, in Harvey v. McWatters [1948] 49 SR (NSW) confirmed by the High Court of Australia in Inglis v. Commonwealth Trading Bank of Australia (1971-72) CLR 161, a limited specific form of injunctive relief outwith the quia timet interim interlocutory injunction framework.
   
5. In Strategic as in this present case in the Court below the learned judge applied American Cyanamid v. Ethicon [1975] UKHL 1; [1975] AC 396 principles. But in Strategic and in this present case the judgment of Lord Diplock in that case does not apply. Lord Diplock was concerned only with quia timet injunctions. He says so in the judgment. His detailed rules centred on "balance of convenience" and "preserving the status quo" only apply in decisions concerning whether to grant the Plaintiff a quia timet interim interlocutory injunction. The quia timet situations have been extended in Mareva [1980] AER 213 and Anton Pillar [1976] Ch 55 but not otherwise. Without any further development of the quia timet law situations the law and the extent of the Fiji High Courts jurisdiction is clear. If the Plaintiff does not have an action to prevent the Defendant infringing a proprietary or other established legal right of the Plaintiff, there is no jurisdiction to entertain an application or grant an interim interlocutory injunction on a quia timet or any other basis. In the mainstream common law jurisdictions there is no new law that Lord Diplock's advice can be used in other situations. There are cases, however, such as Bryanston Finance v. de Vries (No.2) [1976] Ch 63 where the Court of Appeal in England has emphasized that it is an egregious error to interpret American Cyanamid and "balance of convenience" and so forth in ways and into situations never intended or envisaged by Lord Diplock.
   
6. I have no doubt that the learned Justice Pradeep Hetteriachchi had no jurisdiction to grant any injunctive relief to Wakaya Limited.
   
7. The second point is whether a Defendant (in the Court below) such as Kenneth Chambers who has sustained damages on account of a Plaintiff applying for and the Court, without jurisdiction, granting an interim injunction restraining his lawful intended course of action, can recover damages.
   
8. In the quia timet situation the Plaintiff gives a cross undertaking and that means that if the Plaintiff has not infringed the claimed proprietary or other established legal right, the Defendant is entitled to damages from being prevented from (for example), selling his product in competition with the Plaintiff. That is the usual commercial situation in patent and trademark cases.
   
9. In my view common law and equity have developed to the point that the cross undertaking is to be implied in quia timet applications. That will not stop judges from requiring the undertaking from Plaintiffs so that they are advised of the adverse risks involved in making a quia timet application. But this risk is now so well known, that if the cross-undertaking is not given, the loss suffering defendant should, upon vindication at trial, be awarded damages in respect of his loss. After all the Plaintiff by his application and his obtaining the injunction has caused the damages to the Defendant. As the matter then turns out the Plaintiff has failed to prove that his proprietary or other legal right has been infringed by the Defendant.
   
10. If that is so where the Plaintiff has failed in the quia timet situation, the same principle should apply where the loss and damage has been caused by the Plaintiff obtaining an injunction which is beyond the jurisdiction of the Court to grant and which never can be upheld and made perpetual in a substantive hearing.
    
11. I therefore agree that Mr Kenneth Chambers and Ms Marsha Nusbaum should be awarded damages in respect of Wakaya Limited applying for and being granted an injunction, which has caused them loss and damage. That matter as Izaz Khan JA proposes should be referred to the Master for assessment. In my view if it is the case that Justice Pradeep Hetteriachichi did not obtain a cross undertaking, from Wakaya Limited that is not a matter that impinges upon the justice of awarding the Appellants damages arising from Wakaya's application which gave rise to the appellant's sustaining loss and damage.
    

Izaz Khan, JA

12. The first appellant is Kenneth Chambers. On 17th August 2010, his 22 year old son, Alexander Lynch-Chambers died of an inoperable brain tumour at the CWM Hospital in Suva.
    
13. The appellants wished to bury him on a lot they owned, being Lot 6, in DP 4648 being an acre, three roods and five perches in area on Wakaya Island which was owned by the Respondent, Wakaya Limited.
    
14. Mr. Kenneth Chambers appeared for himself and made submissions which were adopted by Mr. Hiuare who appeared for the 2nd appellant.
    
15. The respondent filed an ex-parte application for injunction to restrain the appellants from burying Alexander's body on Wakaya Island as soon as they found out the appellants plans on 25th August 2010. Mr R. Naidu appeared for the respondent, Wakaya Limited.
    
16. The ex-parte interim injunction was granted in the following terms:
    

"An interim injunction that the defendants by themselves and/or through their servants and/or agents or howsoever be restrained from entering and burying Alexander Gerald Walsh- Wrightson Lynch-Chambers on Wakaya Island or on Certificate of Title No.27687".

17. On 6th September 2010, the appellants made the application to have the interim injunction dissolved. The matter was heard by the High Court in Suva and His Lordship Pradeep Hettiarachchi, J, dismissed the appellant's action, with the result that the injunction has remained in force and has prevented the appellants not only

from burying the body of Alexander Lynch-Chambers but also from entering their land on Wakaya Island.

18. After the appellants exhausted their attempts to bury the body of Alexander Lynch-Chambers on their land on Wakaya Island, they buried him on 18th September 2010 at Nukuwatu village burial ground in Lami near Suva. At the hearing of this appeal, Mr Chambers declared to the Court that the appellants had no intention of dis-interring the body of Alexander Lynch-Chambers from his grave at Nukuwatu and re-burying him on their land on Wakaya Island if this Court dissolved the injunction.
    
19. According to paragraph 1 of the respondent's Statement of Claim, Wakaya Island is a luxury private island resort, known as the Wakaya Island Resort and Spa. On the island are private residential lots on which owners can build private homes. I assume that the appellant's Lot 6 is one such private residential lot.
    
20. In paragraph 8 of the Statement of Claim it is alleged that any burial on Wakaya Island or on Lot 6 will affect the plaintiff's operations as a luxury private island resort and a luxury private residential and homesites lots causing the respondents loss. Particulars of loss were given as loss of guests, loss of income and loss of value of residential lots on the island.
    
21. It might be noted, that at the hearing for the dissolving of the injunction on 6th September 2010 before His Lordship Pradeep Hettiarachchi, J. no evidence was adduced on the question of the allegations of various losses as alleged in paragraph 8 herein. I will have something more to say about this later in the judgment.
    
22. As an aside, it might be noted that the 2nd Appellant, Marsha Nusbaum is the registered proprietor of the whole of Lot 6 in CT 27687 and the 1st Appellant, Kenneth Chambers claims to own 50% of Lot 6 by agreement with the second appellant. As his interest has not yet been registered he claims to be only an equitable owner at this stage. He informed the court that his 50% equitable ownership arises from a transfer executed by the first appellant to him but the transfer has not been registered because of a caveat lodged by the respondent.
    
23. The second appellant obtained title to Lot 6 by way of a marriage settlement from the original owner, Edward Nusbaum in 1985.
    
24. As paragraph 21 of the affidavit of Meliki Togavua Tuinamuana sworn on 25th August 2010 shows the respondent has taken the position that the registered proprietor of Lot 6, being the second appellant could not enter her property because she was in arrears of payments due to the respondent. She has admitted that she is in arrears of these payments which amounted to approximately $14,000.00.
    
25. Marsha Nusbaum's acquisition of Lot 6 from her former husband, Edward Nusbaum by way of a marriage settlement was effected by way of a contract dated 5th July 1985.
    
26. It was argued by Counsel for the respondent that Mrs Nusbaum, the second appellant as the successor in title assumed all liabilities in respect of Lot 6 pursuant to the provisions of Clause 15 of the contract which provided:
    

"The purchaser declares and agrees that the covenants and agreements on his part contained in Clauses 12, 13 and 14 hereof shall not merge on the transfer of title to him but shall continue in full force and effect and remain binding on the Purchaser his executors and administrators successors and assigns and that in the event of the Lot being resold the Purchaser if he shall be reselling and every person deriving title under the Purchaser to the Lot upon reselling shall obtain from the sub-purchaser and send to the Vendor a deed of covenant by the sub-purchaser to carry out the Purchaser's obligations under the said covenants and agreements in all respects as if the sub-purchaser had personally entered into this agreement."

27. Clause 20 of the contract is highly relevant to the question whether the respondent is entitled to prevent the second respondent and/or her servants or agents from entering upon Lot 6. Clause 20 provides:
    

"If the Purchaser shall make default in payment when due of the remaining Balance or of any other moneys payable under this agreement or shall fail or neglect to

observe or comply with any covenant stipulation or agreement on his part in this agreement contained and to be performed or observed by him (the times for such payment performance or observance fixed by this agreement being strictly of the essence of this contract) and if the Vendor shall give the Purchaser notice in writing specifying the default and requiring the default to be remedied within the period of forty-five days after the date of giving such notice and if the Purchaser fails within such period to remedy the default then and in any such case the Vendor without prejudice to the other remedies of the Vendor hereunder may at the option of the Vendor exercise any of the following remedies namely:

(a) May enforce this present contract in which case the whole balance of the Purchase Price then unpaid shall become due and at once payable;

(b) May rescind this contract of sale and thereupon all moneys therefore paid shall be forfeited to the Vendor as liquidated damages;

(c) May re-enter upon and take possession of the Lot without the necessity of giving any notice or making any formal demand;

(d) May (without first tendering any transfer to the Purchaser) re-sell the Lot either by public auction or private contract subject to the such stipulations as the Vendor may think fit and any deficiency in price which may result on and all expenses attending a re-sale shall be made good by the Purchaser and shall be recoverable by the Vendor as liquidated damages the Purchaser receiving credit for any payments made in reduction of the Purchase Price. Any increase in price on re-sale after reduction of expenses shall belong to the Vendor."

28. As would have been noticed, paragraph (c) entitles the respondent to re-enter and take possession of Lot 6 without the necessity of giving any notice or making any formal demand.
    
29. There is no evidence of any such re-entry ever being made by the respondent and therefore it must be the case that the second appellant being the owner of Lot 6 was never evicted and is still in possession.
    
30. The question now arises whether the respondent was entitled to restrain the appellants from burying the body of Alexander Lynch-Chambers on Lot 6 on Wakaya Island.
    
31. As I said earlier there was no evidence before His Lordship Hettiarachchi, J that the burial of Alexander on Lot 6 would have had harmful effects on the Resort and Spa operations as well as the sale of the Lots by the respondent.
    
32. In the light of the foregoing facts, further question arises whether the respondent was entitled to obtain the restraining order which it did obtain from His Lordship Hettiarachchi, J.
    
33. The first question which comes to my mind is whether the respondent had the locus standi to obtain the injunction. In this case, the respondent was the owner of the island but the registered proprietor of Lot 6 was the second appellant and the first appellant claimed a 50% equitable interest by arrangement with the second appellant.
    
34. In the absence of any evidence going to the question of harm to the respondent arising from the burial of a dead body on Lot 6, it is difficult for me to see why and how the respondent would have had the locus standi to bring action for an interim injunction restraining the appellants from burying a body on their land. I set out what Gleeson CJ of the Australian High Court said at [15] and [16] of Australia Broadcasting Corporation v. Lenah Game Meats Pty Ltd (2001)185 ALR1:
    

"A dispute arose in the course of argument as to "whether interlocutory injunctive relief to prevent publication can be granted without any underlying cause of action to be tried". In the context of the present case, this is puzzling. There could be no justification, in principle, for granting an interlocutory injunction here other than to preserve the subject matter of the dispute, and to maintain the status quo pending the determination of the rights of the parties. If the respondent cannot show a sufficient colour of right of the kind sought to be vindicated by final relief, the foundation of the claim for interlocutory relief disappears."

35. The respondent could not establish any legal right against the 2nd appellant apart from a possible debt claim of about $14,000 which was disputed. The arrears claimed were not a charge on Lot 6 and therefore could not be a basis for a claim that Lot 6 could be sold as in the exercise of a mortgagee's power of sale. I am not aware of any court order which could be served against the 2nd appellant so the respondent could link the arrears to Lot 6.
    
36. There is clear evidence that the Minister of Health had approved the burial under provisions of the Burial and Cremation Act Cap 117: see Annexure KC2 of the Affidavit of Kenneth Chambers sworn on 30th August 2010.
    
37. Therefore, I am inclined to the view that the injunction ought to be dissolved as the respondent lacked the locus standi to seek it in the first place. However, I am going to proceed on the assumption that it did have locus standi and deal with other important issues thrown up by this case.
    
38. In my view the respondent did not have the right to eject the second appellant or the first appellant who has her consent to enter Lot 6 on the ground that monies were owed to the respondent. The second appellant has admitted that she is in arrears but she disputes the entitlement of the respondent to those monies. The monies levied by the respondent were supposed to be for the utilities it was to provide under the covenants. The respondent has failed to do so provide these utilities.
    
39. Even if the respondent were to establish that a substantial sum of money was owed to it by the second appellant that would still not entitle the respondent to eject the second appellant from her land because there was no evidence of any re-entry as required by Clause 20 (c) of the Contract, if it applied, nor of any legal right against Lot 6 by virtue of the arrears.
    
40. The provisions of Clause 20 may not have survived the settlement of the contract of 25th July 1985 between Edward Nusbaum and the respondent.
    
41. It will immediately be observed that Clause 20 is not part of the intention of non-

merger expressed in Clause 15: see Knight Sugar Co. Ltd v. Alberta Rly & Irrigation Co. [1938] 1 All ER 266 at 269 where Lord Russell of Killowen said:

"It is well settled that, where parties entitled to an executory agreement which is to be carried out by a deed afterwards to be executed, the real completed contract is to be found in the deed...The most common instance,

perhaps, of this merger is the contract for sale of land followed by conveyance on completion. All the provisions of the contract which the parties intend should be performed by the conveyance, and all the rights of the purchaser in relation thereto are thereby satisfied."

42. As no intention was expressed to continue the obligations in Clause 20 after the settlement of this contract, on the principles of merger discussed above, there is no doubt that the vendor did not have right of re-entry because clause 20 had merged with the transfer. Therefore the true position, in this case is that the second appellant's right to occupy Lot 6 was not affected in any way because the respondent not only had no right to re-enter but had not re-entered in fact.
    
43. The respondent, through paragraph 5 of Affidavit of its Director of Finance, Ms Meliki Tuinamuana has raised the question that as the appellants were only granted the Minister's consent to acquire Lot 6 on the condition that they complied with the

use of the property as a retirement and holiday accommodation site, the use of Lot 6 for burial purposes would run contrary to the Minister's consent.

44. The answer to that argument is that any breach of the Minister's consent is a matter between the Minister and the appellants and secondly, it is questionable whether the burial of one body would detract from the major requirements of the consent given by the Minister.
    
45. The granting of the ex-parte injunction which was confirmed by the interim injunction was, in my view, wrong. I cannot find any basis upon which the respondent could have applied for such an injunction.
    
46. However, as the body of Alexander Lynch-Chambers is buried at Nukuwatu Cemetery in Lami and as the appellants have expressed their intention not to disturb the body, meaning that it should not be disinterred and buried on Lot 6 on Wakaya Island, the question arises whether this appeal is moot.
    
47. In the light of the intention of the appellants not to re-bury the body of Alexander Lynch-Chambers on Lot 6 on Wakaya Island, on one view, it might appear that any order dissolving the injunction is otiose.
    
48. However, the appellant's claim that the terms of the injunction confirmed by His Lordship Hettiarachchi, J which states that the defendant by themselves and/or through their servants and/or agents or howsoever be restrained from entering and burying Alexander Gerald Walsh-Wrightson Lynch-Chambers on Wakaya Island or on Certificate of Title No. 27687 (The underlining is mine) have enabled the respondent to stop entering on their land.
    
49. The appellants claim that the respondent has restrained them solely from entering upon Lot 6 by relying on these words. They say that the words of the injunction covered their entry onto Lot 6 whether they were there for a burial or not. It is plain that the wording should have been "from entering to bury". Even counsel for the respondent agreed.
    
50. I am of the view that the respondent wrongfully kept the First and Second appellants out of their land. I do not know whether the respondent had given an undertaking as to damages. I have not been able to find anything about it in the Appeal Records.
    
51. The appellants are entitled to damages in the light of the fact that the injunction caused them, I am sure, severe psychological trauma and anxiety over a prolonged period; and it will be dissolved by this Court: see Injunctions by David Bean at page 88 Fifth Ed. Also there never was the possibility of final injunctive relief. The emotional suffering must have been quite pronounced.
    
52. In the interests of resolving this matter fully and finally I award the first and second appellants damages for wrongful denial of access to lot 6 through the interim injunction granted by his Lordship Hettiarachchi, J.
    
53. However, as there is no evidence of the quantum of damages which this Court could order, I think the best course would be to refer this matter to the Master for the assessment of damages and an order should be made to this effect. I also propose that this court should order the interim injunction granted by His Lordship Hettiarachchi, J on 25th August 2010 be set aside. In respect of the caveat, preventing the 1st Appellant registering his 50% on Lot 6, it must be removed forthwith. On the issue of costs I would order that in respect of their costs incurred in the Court below the Appellants costs should be paid by the Respondent assessed at $3000. As to costs in this Court the Respondent should also pay costs to the Appellants assessed at $3000.
    

Kankani T. Chitrasiri, JA

54. I also agree with the reasons and the orders of Izaz Khan JA, in respect of the judgment, the reasons and the orders proposed by him in this case.

William Marshall, JA

The Orders of the Court

55. The orders of the Court are:

(i) The interim injunction granted by his Lordship Mr Justice Hettiarachchi on 25th August 2010 be dissolved and other orders, if any, in the Court below be set aside.

(ii) Any caveat lodged by the respondent preventing registration of a transfer of 50% interest in Lot 6 to Kenneth Chambers to be removed by Wakaya Limited forthwith.

(iii) The matter be referred to the Master for the assessment of damages suffered by the appellants Kenneth Chambers and Marsha Nusbaum by reason of the respondent's interim injunction.

(iv) The respondent is to pay the appellants' costs of $3,000.00 in this Court and $3,000.00 for their costs below.

.........................................................
Hon. Justice William Marshall
Justice of Appeal

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Hon. Justice Izaz Khan
Justice of Appeal

.........................................................
Hon. Justice Kankani T. Chitrasiri
Justice of Appeal