Silver Beach Properties Ltd v Jawan [2011] FJCA 48; ABU0042.2009 (29 September 2011)

IN THE COURT OF APPEAL, FIJI ISLANDS
APPELLATE JURISDICTION

CIVIL APPEAL NO. ABU 0042 OF 2009
[High Court Civil Action No. HBC 357 of 2007]

BETWEEN:

SILVER BEACH PROPERTIES LIMITED
Appellant

AND:

SAIJAD JAWAN also known as SAIJAD KHAN
Respondent

CORAM : Hon. Justice William Marshall, Justice of Appeal
Hon. Justice Kankani Chitrasiri, Justice of Appeal
Hon. Justice Sriskandarajah, Justice of Appeal

COUNSEL : Mr S. Maharaj for the Appellant
Mr S. Sharma for the Respondent

Date of Hearing: Wednesday, 31 August 2011
Date of Judgment: Thursday, 29 September 2011

JUDGMENT

William Marshall, JA

1. I do not agree with the proposal of my brother Kankani Chitrasiri JA to limit the Mareva that will be in operation post this judgment to $115,000. That is because the Respondent has not accepted the settlement of $115,000 despite strong evidence of its existence. I understood Mr Sharma to say that when the appellant had applied to the Master for summary judgment, the Respondent had defended by denying the settlement's existence. Regrettably the Master's ruling is still awaited.
   
2. In my view all that is presently restrained should remain restrained until all civil proceedings are settled and payment or execution has been completed.
   
3. I am critical of the decision of Madam Justice Phillips in the Court below. The Respondent had been employed in the tourist trade for many years. Mr Robert Uma Sen had sworn on behalf of Silver Beach Properties Limited in an affidavit dated 30th November 2007.
   

"15. THAT I have been informed by our Regional General Manager namely Jamal Sehan and verily believe that upon the discovery of theft by the Defendant, he called the Defendant on 19/11/2007 and requested him to come to the Company office on 20/11/2007 at 9.00 a.m. to discuss some matter in regards to the company account. That the Defendant confirmed he would come on 20/11/2007 at 9.00 a.m.

16. THAT on 20/11/2007 up until 9.30 a.m. the Defendant did not come to our office to discuss the accounting matter and upon enquiry, our company has been reliably informed that the Defendant in the morning of 20/11/2007, flew away to New Zealand quietly to avoid investigation."

4. As it seems to me, Madam Justice Phillips refused to continue the Mareva, because the Respondent argued that the facts were that he had over the years travelled to New Zealand on a number of occasions. The Respondent further argued that since Mr Sen had known of these trips and had not disclosed them in his affidavit the Plaintiffs were in breach of their obligation to make full and accurate disclosure on applying ex parte for a Mareva Injunction.
   
5. For my part there is a world of difference between the Respondent's visits to New Zealand prior to the discovery of an alleged crime and tort against his employers. The significance of paragraphs 15 and 16, in this context were self standing and sufficient. There was no duty to refer to the Respondent's travel habits before the relevant events occurred. The Plaintiff was not in breach of duty. In my opinion this Mareva should have been extended by Her Ladyship.
   
6. On all other matters I agree with the reasoning of Kankani Chitrasiri JA. I agree with the orders proposed save and except for the limitation to $115,000.
   

Kankani Chitrasiri, JA

7. This is an appeal filed by SILVER BEACH PROPERTIES LIMITED (original Plaintiff - hereinafter referred to as the Appellant) challenging the judgment of Madam Justice G. Phillips dated 11th June 2008. In that judgment Her Ladyship dissolved the Mareva Injunction issued on an ex-parte application made by the appellant on the 30th November 2007
   
8. The said Mareva Injunction sought by the appellant was to restrain the respondent (original defendant – hereinafter referred to as the respondent) from transferring, dealing with, charging, mortgaging, assigning, disposing or removing from the jurisdiction any of its properties or assets including that of:
   
   • (i) Residential Property contained in Crown Lease Number 12965 L/D Ref 4/11/1715.
   • (ii) Motor Vehicle Registration No. S J Khan.
   • (iii) Rental Cars bearing Nos. LR1767, LR1768 LR1769, LR1770, LR1771, LR1772, LR1773, LR1774, LR1775 and LR1776 registered with the LTA as SAIJAD JAWAN, trading as Power Rentals.
   • (iv) Substantial monies in Westpac Bank Account No. 538609-40.
   • (v) Substantial Fiji National Provident Fund saving under FNPF No. 1424202.
     

9. Upon filing an ex parte notice of motion by the appellant, learned High Court Judge made order granting a Mareva Injunction, as prayed for in the said ex-parte notice of motion. The matter was then adjourned for several times in order to have the inter-partes inquiry finalized. Until the judgment dated 11.06.2008 was delivered, the said ex-parte order was extended time to time.

10. Having considered the relevant material, Her Ladyship made order dissolving the ex parte ruling issued on the 30th November 2007 and dismissed the appellant's application for Mareva Injunction with costs.

11. Being aggrieved by the said decision made on the 11th June 2008, the appellant filed an appeal on the 19th June 2008. This appeal was marked deemed abandoned on the 04th June 2009 for non-compliance of the Court of Appeal rules. However, pursuant to an application by the appellant, the said order was vacated by the Ruling dated 02nd of December 2009 and granted leave for the appellant to file a fresh notice of appeal. Accordingly, the appellant filed another notice of appeal pursuant to which this matter has now come up before this Court.

12. The appellant in its appeal sought to canvass the decision of the Learned Judge on 5 grounds of appeal. However, upon a careful consideration of those 5 grounds it appears that all those grounds are directed towards the issue, namely whether or not the trial judge erred in law or in facts, by not adhering to the established principles governing the issuance of Mareva Injunctions when she made her decision dissolving the ex-parte Mareva Injunction.

Background

13. The appellant company based in Sigatoka, engaged in activities relating to tourism. The respondent at all material times to this action was employed by the appellant company as its Financial Controller though he had been working in the company since the year 1989 in various capacities. He had joined the company as an Accounts Clerk and thereafter became its Financial Controller on the 6th April 2004, having counted a long service of employment. He had resigned from the company with effect from 12.10.2007.

14. In the statement of claim of the appellant company, it is stated that the respondent in breach of his terms and conditions of employment, had misused foreign currencies belonging to the company causing it a substantial loss.
    
15. The evidence for the aforesaid allegation against the respondent is found in the affidavit of Robert Uma Sen filed along with the ex-parte notice of motion dated 30th November 2007. In that affidavit, he had deposed to the facts, in the capacity of the Regional Financial Controller of the parent company of the plaintiff.
    

16. According to Mr. Sen the respondent's whereabouts were not known to him at the time the action was filed in the High Court but he had believed that the respondent had flown away to New Zealand on the 20th November 2007. Mr. Sen had also stated that there had been material to establish that the respondent had used part of the foreign currencies collected by the Cashier of the company without it being depositing in the bank accounts of the respondent company. Basically, the contention of Mr. Sen was that the respondent was trying to leave or has left the jurisdiction consequent upon misappropriating the funds of the appellant company.

17. The respondent in his affidavit filed in opposition had explained the way in which the monies were collected during the course of business of the appellant company. He also has described the manner in which such moneys were deposited in the bank. Whilst stating so, the respondent had denied misusing any money of the appellant company.

18. Having considered all the evidence and the law relevant to the issuance of Mareva Injunctions including the tests that has to be applied in such a situation, Her Ladyship came to the conclusion that there is no material to grant relief and then she dismissed the application to issue a Mareva Injunction.

The Grounds of Appeal

13. Being aggrieved by the judgment of the Learned High Court Judge dated 11th June 2008, the appellant filed an appeal relying upon the following 5 grounds of appeal.

"1. That the Learned Judge erred in law and in fact in not following the established principles of law applicable to granting of Mareva injunctions thereby refusing to extend the injunction granted on ex-parte application on 30/11/2007.

2. That the learned Judge erred in law and in fact in refusing to consider at all the various ancillary orders sought and thus prematurely and wrongly dismissed partial Mareva injunction granted on 30/11/2007.

3. That the learned Judge erred in law and in fact in dismissing the Motion filed on 30/11/2007 when there was no application for dissolution of the partial injunctive Mareva injunction but only variation of the Order 5 (d) and 5(d) (ii).

4. That the learned Judge erred in law and in fact in not awaiting the hearing of the application for specific discoveries together with application for cross-examination of the defendant on his affidavits which were devoid of information and evasive.

5. That the Learned Judge erred in law and in fact in failing to exercise her discretion judicially and thereby refused to grant the continuance of Mareva injunction granted on 30/11/2007."

14. As I have already referred to earlier in this judgment, all the grounds of appeal seem to revolve round the principles governing the issue of mareva injunctions. Therefore, the only issue in this instance is to consider whether or not the learned trial judge applied the aforesaid principles of law to the facts of this case, correctly.

Analysis

15. Accordingly, I will now examine the manner in which Her Ladyship applied the law to the facts of this case.

16. Recognition of issuing Mareva Injunctions came into existence as a result of judicial activism that began in the case of Mareva Compania Naviera SA v. International Bulk Carriers SA (175) 2 Loyd's Report 509;1980 1AER 213 (CA). In the book titled "The Due Process of Law" Lord Denning MR describes this innovative step as the greatest piece of judicial reform in his time.

17. Long line of authorities are found in this connection in common law jurisdictions as well as in Fiji.

18. The law recognizes two pre-conditions when issuing Mareva Injunctions. First being the applicant proves its case to the required minimum standard and the second being that there is a danger by reason of the defendant absconding, removing its assets from the jurisdiction or dissipating them in order to negate the judgment being executed, in the event the plaintiff succeeds at the end.

19. The requirement referred to in the said first limb was explained by Mustill, J in Ninemia Maritime Corporation v. Trave Schiffartsgesellschaft GmbH [1983]2 Lloyd's Rep 600 at 603; [1984] 1 All ER 398 at 402-3:

"The strength of the plaintiff's case is relevant in two distinct respects – (i) the plaintiff must have a case of certain strength, before the question of granting Mareva relief can arise at all. I will call this the 'threshold'. (ii) even where the plaintiff shows that he has a case which reaches the threshold, the balance of his case is to be weighed in the balance with other factors relevant to the exercise of the discretion."

20. The High Court of Australia in the case of Patrick Stevedores Operations No.2 Pty Ltd v. Maritime Union of Australia (1998) 195 CLR 1 at 46, it was held that the plaintiff should establish that there is a serious question to be tried in order to obtain mareva injunction.

21. In Chiou v. Wang (1984) FJHC 160 his Lordship Byrne J. summarized the law as follows:

"Since the case which gave its name to Mareva injunctions was decided namely Mareva Compania Naviera SA v. International Bulk Carriers SA" 1 All ER the rules relating to the granting of such injunctions have become reasonably well defined although I have little doubt that in the course of time they may be further enlarged. I will discuss some of these rules when dealing with particular parts of the evidence in this case but two basis propositions are clear:

- Any application for a Mareva Injunction must show that so far as the merits of his proposed actions are concerned he has a good arguable case.
- The defendant has assets within the jurisdiction and there is a real risk if not restrained he will remove the assets from the jurisdiction or dissipate them within it."

22. Upon a careful examination of the said authorities, it is clear that the presence of a mere arguable case is not sufficient to issue a Mareva Injunction. It should be remembered that the standard of proof in establishing the presence of a prima facie case is always higher than the standard required in cases where the interlocutory injunctions are issued with the view of maintaining the status quo until a final determination is made.

23. This proposition is supported by the decision of Lord Donaldson, M.R in the case of Polly Peck International Plc. v. Nadir and Others (no.2)(1992) 4 All ER 769 at pp785-786. In that judgment His Lordship said:

"I therefore turn to the principles underlying the jurisdiction. (1) So far as it lies in their power, the Courts will not permit the course of justice to be frustrated by a defendant taking action, the purpose of which is to render nugatory or less effective any judgment or order which the plaintiff may therefore obtain. (2) It is not the purpose of a Mareva injunction to prevent a defendant acting as he would have acted in the absence of a claim against him. Whilst a defendant who is a natural person can and should be enjoined from indulging in a spending spree undertakes with the intention of dissipating or reducing his assets before the day of judgment, he cannot be required to reduce his ordinary standard of living with a view to putting by sums to satisfy a judgment which may or may not be give in the future. Equally no defendant whether a natural or a juridical person, can be enjoined in terms which will prevent him from carrying on his business in the ordinary way or from meeting his debts or other obligations as they come due prior to judgment being given in the action. (3) Justice requires that defendant by free to incur and discharge obligations in respect of professional advice and assistance in resisting the plaintiff's claims. (4) It is not the purpose of a Mareva injunction to render the plaintiff a secured creditor, although this may be a result if the defendant offers a third party guarantee or bond in order to avoid such an injunction being imposed. (5) The approach called for by the decision in American Cyanamid Co. v. Ethicon Ltd [1975] UKHL 1; (1975) 1 All ER. 504, (1975) AC 396 has, as such, no application to the grant of refusal injunction which proceeds on principles which are quite different from those applicable to other interlocutory injunctions."

24. The next requirement when issuing Mareva Injunctions is to consider the possibilities of removing assets of a defendant from the jurisdiction and also to look at the opportunities of dissipating them even within the jurisdiction. Such an examination of the facts is necessary in order to ensure the satisfaction of a decree in the event the Court holds with the applicant in the main action. This requirement too, depends mainly on the facts placed before court by the respective parties.

25. By looking at the impugned Judgment, it seems to me that the learned trial judge has considered the aspect of law as in the same manner that I have described hereinbefore in this Judgment. Hence, I do not wish to examine the tests which are to be applied when issuing Mareva Injunctions.

26. I will now examine the manner in which Her Ladyship considered the facts of this case at the time she dissolved the Mareva Injunction. When considering the facts of the case it is seen that the learned Trial Judge was basically depending on the version brought forward by the respondent. In her judgment, blindly accepting the version advanced by the respondent, she has stated:

"at this interlocutory stage it would be precarious to arrive at any finding just because he was overall in charge of the accounting department, that he had misappropriated funds that are now missing."

27. Therefore, it is seen that the learned High Court Judge has totally disregarded the consideration of the responsibilities of a person in charge of a work place. It is an accepted norm that the person who is in charge of a particular division in a place of work should take the responsibility for the acts of his subordinates unless clear evidence is shown to prove his/her innocence. This is because the subordinates are bound to carry out the directions of the superiors. Therefore, it is not correct to state that the person in charge of a work place is not responsible for the wrongs done by his subordinates without looking at the full picture having regard to the material placed by all the parties.

28. In this instance, learned Judge has concluded that the respondent cannot be held responsible for the shortage of funds relying upon the audit that was being done in the appellant company at the time the application was made. It is not safe to come to such a finding with regard to the shortage of funds relying upon the facts presented by the respondent. In fact, it was brought to the notice of court at a subsequent stage that there had been a shortage of funds of the appellant company during the tenure of the respondent. In the circumstances, it is my opinion that the learned High Court Judge has misdirected herself when she disregarded the shortage of funds depending on assumptions that are not exactly correct when she arrived at her decision.

29. The learned High Court Judge also was of the view that the plaintiff had failed to establish the risk of dissipation of assets. In coming to that conclusion too, the learned judge has basically relied upon the defendant's explanation about his visits to New Zealand. This is evident by her reasoning in the impugned judgment. Such a comment show that the learned High Court Judge was carried away by the defendant's explanations without having due regard to the plaintiff's case.

30. Moreover it is seen that the learned trial Judge herself has accepted the position that the defendant is a frequent traveler to New Zealand. The evidence reveals that the respondent has done so three times in the year 2007. [one but the last two sentences in paragraph 9 of the judgment] Therefore it is clear that the learned Judge would have come to a different conclusion if the evidence was properly analyzed.

31. For the foregoing reasons it is my view that the learned trial Judge has misdirected herself as to the facts of the case when she concluded that the appellant has neither established a good arguable case nor the risk of dissipation of the assets of the respondent. Therefore, I conclude that the decision of dissolving the Mareva Injunction by the learned High Court Judge is erroneous.

Applications made after the Dissolution of the Mareva Injunction

32. At this stage, it is important to refer to the events taken place after the dissolution of the Mareva Injunction. Such an exercise is necessary since there is material to show that there had been a settlement of the main dispute between the parties. With the assistance of the court clerk, I was able to peruse the case records of these ancillary applications maintained by the Court of Appeal Registry. Accordingly, the following facts were revealed. For convenience, I will state those events from the date the Notice of Appeal was filed.

(i) In compliance with the rules of procedure, viz. within 42 days of the delivery of the Judgment, a Notice of Motion consisting of 5 grounds of appeal was filed on the 19th June 2008 challenging the judgment of Phillips JA,

(ii) Considering the filing of the said appeal, Byrne JA, the acting President of the Court of Appeal made order on the 17th June 2008, staying the execution of the judgment of Her Ladyship Justice Philips.

(iii) Consequently on the 26th January 2009, the appellant filed another application seeking leave of the Court to file papers for contempt of court against the respondent alleging that the respondent did not comply with the said order made on the 17th June 2008.

(iv) In that contempt proceedings, Powell, JA made order inter-alia that the respondent be restrained from transferring, disposing dealing with, charging or assigning the motor vehicle bearing registration no EJ710 until the final determination of the committal proceedings and given the opportunity for the respondent to explain the steps that he had taken subsequent to the stay of execution. Those committal proceedings are yet to be resumed.

(v) The Court on the 4th June 2009 decided to abandon the appeal filed on the 19th June 2008 for non compliance of the appellate rules, and it was informed to the appellant on the 28th June 2009.

(vi) Consequently, an application for leave to appeal out of time (inter parte) was filed by the appellant on the 5th August 2009. Byrne JA granted leave for the said application on the 2nd December 2009 with the condition that the grounds of appeal should be filed and served on the Court and on the respondent not later than the 10th of December 2009.

(vii) The appellant then filed a fresh Notice of Appeal on the 8th December 2009. The proceedings now before this Court were commenced upon the said subsequent notice of appeal dated 8th December 2009.

(viii) Respondent made an application on the 6th of August 2008, seeking permission of the Court to withdraw a sum of $100,000 from his account bearing number 9801519373 maintained at the Westpac Banking Corporation in Sigatoka Branch.

(ix) The Court, after due consideration of the said application of the respondent permitted him to withdraw the sum of $65,000 out of $212,000 lying in his account at the Westpac Bank. This is evident by paragraph 37 of the Ruling dated 26th January 2009. It states thus:

"[37] The result therefore is that I order the Respondent be given leave to withdraw the sum of $65.000.00 from the $212,000.00 held in Westpac Banking Corporation Sigatoka branch account number 9801519373 but decline to grant the orders sought in the Respondent's Notice of Motion paragraphs 2 and 3. Costs will be in the cause."

(x) Immediately before the order was made to abandon the first appeal, the two parties supposed to have arrived at a settlement of the main dispute. This is evident by the letters exchanged between the parties. Those letters are annexed to the appellant's application for leave to appeal out of time.

(xi) Immediately after the Ruling dated 26th January 2009 was delivered allowing the respondent to withdraw $65,000, an application was made by the respondent to strike out the claim dated 30th November 2007 of the appellant, made in its original writ of summons.

(xii) The appellant then made a counter application to the above application of the respondent and sought to strike out the request referred thereto. In the same application, the appellant also sought to obtain $115,000 in order to have the settlement enforced.

(xiii) Both the applications referred to in clause (xi) and (xii) are still pending before the Master in the High Court of Lautoka. Both Counsel at the argument stage stated that the ruling in both these applications is yet to be delivered by the Master.

33. Upon a careful examination of the aforesaid events, particularly the contents in paragraph (xii) above that had taken place pursuant to the dissolution of the Mareva Injunction on the 11th June 2008, it is crystal clear that the appellant has decided to restrict its claim to $115,000. However, the parties are still awaiting a decision from the Master on the matter.

Conclusion

34. As I have discussed before, the basis of issuing Mareva Injunctions is:
    
    1. to ensure satisfying the judgment expected to be delivered in favour of the appellant provided the plaintiff has put forward a good arguable case which has a probable chance of winning in the end; and
       
    2. to prevent the respondent leaving the jurisdiction or dissipating his assets from the jurisdiction.
       

35. The analysis of the facts and the law mentioned hereinbefore, show that the aforesaid criteria referred to in paragraph 35 have been met by the appellant.

36. The purported settlement between the parties also shows that the respondent at one time was prepared to pay the appellant $115,000. Presence of such a settlement is strengthened by the following comments made by His Lordship Justice Byrne in his Ruling dated 2nd December 2009. In that Ruling His Lordship has remarked thus:

"The respondent was represented by experience lawyers. I am left with the strongest suspicion that this claim is but an attempt to evade payment to the appellant".

37. Therefore, it is my opinion that the appellant is entitled to a Mareva Injunction against the respondent. However, the issue of such an injunction cannot be justified in this instance, if the value of the assets that are to be frozen exceeds $115,000 since the appellant on its own has decided to restrict its claim for the said amount. I have come to the above conclusion because the very purpose of issuing a Mareva Injunction is to ensure the plaintiff enjoys the fruits of the Judgments, if the case is decided in his favour which is the basis of the law relating to issuance of Mareva Injunctions.

38. Accordingly, it is my opinion that the learned trial judge has erred when she dissolved the Mareva Injunction, issued upon reading the ex-parte notice of motion dated 30th November 2007. However, as mentioned in the earlier paragraph, the Court in this instance should take a serious note of the alleged settlement arrived at between the parties. Against such a background, the respondent should not be prevented unnecessarily from dealing with his assets that are not necessary to have the final decree satisfied.

39. Having taken a serious note of the settlement alleged to have taken place between the parties, particularly the fact that the Appellant on its own volition agreeing to limit the claim for $115,000, it is not prudent to issue a Mareva Injunction to freeze the assets of the respondent to a value exceeding the said $115,000.00.

40. Accordingly, a Mareva Injunction is issued preventing the respondent withdrawing the sum of $115,000 from his account 9801519373 maintained at the Sigatoka Branch of the Westpac Banking Corporation. All the other orders made freezing the assets of the respondent shall stand removed.

Sriskandarajah, JA

41. I agree with the reasons of Kankani Chitrasiri JA for the issue of Mareva Injunction. I agree with the views expressed by William Marshall JA that the Mareva Injunction should not be restricted to freeze the assets of the respondent to a value exceeding $115,000.

William Marshall, JA

ORDERS OF THE COURT

42. The wording of order (2) below is a majority decision. The orders of the Court are:

(1) The judgment of Madam Justice Phillips is set aside and the appeal filed by the appellant is decided in its favour and the appeal is allowed.

(2) (i) This order is subject to the $65,000 released to the Respondent by the Order of Byrne Acting President on 6th August 2008 from the Respondent's Westpac Bank, account number 9801519373 being not included in the injunction now ordered by this Court.

(ii) The properties to be restrained by order of this Court are those ordered to be restrained by Madam Justice Gwen Phillips in this action on 30th November 2007. (These are listed at paragraph 8 above)

(iii) The Respondent Saijad Jawan also known as Saijad Khan is restrained from transferring, dealing with, charging, mortgaging assigning, disposing of, or removing from the jurisdiction, all or any of the assets listed or described at (ii).

(iv) This order continues until all damages and costs (if any) enforceable as a money judgment ordered to be paid by the Respondent to the appellant in this action have been paid to the Appellant. Alternatively until under the terms of any settlement, monies agreed therein have been paid by the Respondent to the Appellant. Alternatively, until further Order of this Court.

(3) All the Orders made pursuant to the reading of ex-parte Notice of Motion dated 30th November 2007 are vacated.

(4) Costs of this appeal be paid by the Respondent to the Appellant summarily assessed at $2,500.00.

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

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

..............................................................
Hon. Justice Sriskandarajah
Justice of Appeal

SOLICITORS
Suresh Maharaj & Associates for the Appellant

Samusamuvodre Sharma Law for the Respondent