Labasa Blue Metal Supplies Ltd v Mount Kasi Ltd [1998] FJHC 89; Hbc0322d.98s (3 July 1998)

Fiji Islands - Labasa Blue Metal Supplies Ltd v Mount Kasi Ltd - Pacific Law Materials

IN THE HIGH COURT OF FIJI

AT SUVA

CIVIL JURISDICTION

ACTION NO. HBC 0322 OF 1998

:

LABASA BLUE METAL SUPPLIES LIMITED
a limited liability company having its
registered office in Labasa
Plaintiff

AND:

MOUNT KASI LIMITED
a limited liability company having its
registered office in Savusavu
Defendant

A. Sen for thentiff/tiff/Respondent
R.A. Smith for the Applicant/Defendant

Date of Hearing: 3rd July 1998
Date of Ruling: 3rd Ju98

RULING

On the 24th of June 1998 I granted the Plaintiffntiff a Mareva Injunction against the Defendant:

(1) restraining it from removing from the jurisdiction of this Court any plant, machinery or gold until the final determination of this action;

(2) that the Defendant's agents, namely Island Hoppers be restrained from removing any gold either from the Plaintiff's mining site or from delivering any gold to any persons or body or removing any gold from the jurisdiction of this Court;

(3) I directed that the Defendant hand over to the custody of this court all gold in its possession until the final determination of this Court and further that the delivery of my order to the Customs Department of Fiji be sufficient to restrain the Defendant from removing any gold from the jurisdiction of this Court.

I reserved liberty to either party to apply on 72 hours notice.

The order was made on an ex parte Notice of Motion filed that day on behalf of the Plaintiff supported by an affidavit by Mohammed Abdul the Managing Director of the Plaintiff sworn on the 23rd of June 1998.

Also filed on the 24th of June was a Writ of Summons containing a Statement of Claim by the Plaintiff against the Defendant alleging that under an oral contract the Plaintiff did mining for the Defendant at its gold mine on Vanua Levu and that the Defendant was indebted to the Plaintiff in the sum of $401,993.61 allegedly due for work and labour done between April and June 1998.

In his Affidavit Mohammed Abdul stated that the Defendant had advised the Plaintiff that it would be closing its operations in Fiji from 5.00 p.m. on the 23rd of June. The affidavit also annexed a copy of a letter dated 23rd June from Pacific Islands Gold N.L. to the Australian Stock Exchange in Sydney, Australia stating that the Company which owns the Defendant had decided to suspend mining operations at Mount Kasi due to continuing losses.

It is unnecessary here to mention any of the contents of Mohammed Abdul's affidavit except paragraphs 10 and 11. These state that on the 23rd of June employees of the Plaintiff advised the Plaintiff that the mill had been closed and the last consignment of gold would be removed from the mine site on the 24th of June 1998 and that all the expatriate staff would leave soon thereafter.

Paragraph 11 stated that unless the Defendant was restrained it will remove all its gold from the country leaving the Plaintiff without any hope of recovering what is legally due to it.

On the 1st of July 1998 the Defendant applied on an ex parte Summons for an abridgment of time to apply under my order of 24th June to 24 hours and that service of any order made be effected by facsimile transmission to the Plaintiff's solicitors.

On the same day the 1st of July the Defendant issued a Summons for the discharge of the Injunction and because of the urgency of the matter I heard it at 11.30 a.m. today.

The Summons was supported by an affidavit of Catherine Hussain on behalf of the Defendant, containing 15 paragraphs.

Paragraphs 5 and 6 are only relevant to the present application. Paragraph 5 deposes that the Defendant is not empowered to sell gold in Fiji and all its product is sold forward to its primary financier (formerly) Barclays Bank PLC but now ABN Amro (Aust) Limited which has a registered security over all Mount Kasi's assets including all the gold that is produced by Mount Kasi and including the gold that is subject to the Order of this Court.

Paragraph 6 states that in accordance with the practice in the precious metals industry, the security documents given by Mount Kasi required Mount Kasi to deliver all its product to a registered mint in the form of dore - a concentrate of the chemically extracted product of milled ore - which the mint then refines and deals with in accordance with arrangements made between the financier and the miner. In this case, the mint, Johnson Matthey of Thomastown, Victoria, on receipt of advice that Mount Kasi's parent, Pacific Islands Gold N.L., of the transmission of a shipment of dore, immediately credits 80% of the estimated fine gold in the dore to a "gold account" held for the financier who then credits Mount Kasi with the value. This is how Mount Kasi is said to get its money. Paragraph 6 continues:

"All of Mount Kasi's production has been sold in this fashion. The shipment under restraint was in the process of being sold in accordance with Mount Kasi's invariable practice and in the ordinary course of business. The proceeds were to be returned to Fiji in accordance with Mount Kasi's standard practice."

An Affidavit in Reply was filed by the Plaintiff but apart from stating that the Plaintiff has invested several thousand dollars at the mine site on the Defendant's assurance that it would be able to assist financially and meet the Plaintiff's monthly claim, I consider the remaining parts of the affidavit except paragraph 12 do not bear to any major degree on the Summons now before me.

Paragraph 12 states that in the event the injunction is dissolved there is a danger that the Defendant will remove all its assets from the jurisdiction of this Court and as a result many local creditors of the Defendant will be either made bankrupt or wound-up.

Having considered the submissions now made to me on behalf of the parties I have come to the clear conclusion that the injunction should be partially dissolved. I am not satisfied on the evidence that the action of the Defendant on which the Court granted the injunction was designed to dissipate any of its assets of gold. In my judgment it was merely carrying on its business in the way deposed to in paragraph 6 of the affidavit of Catherine Hussain and as such does not constitute the type of conduct mentioned by Lawton L.J. C.B.S. United Kingdom Ltd. v. Lambert (1983) Ch. 37 at 42A-B. In my view it does not establish that the Defendant was conducting its affairs with intent to deprive anyone who might have judgment against it of the fruits of victory.

In PCW (Underwriting Agencies) Ltd. v. Dixon (1983) 2 All E.R. 158 Lloyd J. (as he then was) said at 162:

"The purpose of the jurisdiction is not to secure priority for the plaintiff, still less, I would add, to punish the defendant for his alleged misdeeds. The sole purpose or justification for the Mareva order is to prevent the plaintiffs being cheated out of the proceeds of their action, should it be successful, by the defendant either transferring his assets abroad or dissipating his assets within the jurisdiction."

This case is referred to in a book by the Canadian barrister Debra M. McAllister, entitled Mareva Injunctions on p.52.

I am not satisfied that cheating the Plaintiff was the purpose of the Defendant's actions here.

As was said by Kerr L.J. in Ninemia Corp. v. Trave (1984) 1 All E.R. 398:

"As the law stands, this jurisdiction cannot be invoked for the purpose of providing plaintiffs with security for claims, even when these appear likely to succeed."

In my judgment the real purpose of the Plaintiff in seeking to obtain the injunction in relation to the Defendant's export of gold was to give it some security for its claim. In the light of these two cases I consider it has no right in law to do so.

I sympathise with the Plaintiff but must find for the reasons I have just given that the injunction must be dissolved in so far as it relates to the export by the Defendant of gold from Fiji.

There will be no order for costs.

JOHN E. BYRNE
JUDGE

Authorities referred to in Ruling:

C.B.S. United Kingdom Ltd. v. Lambert (1983) Ch. 37 at 42A-B.

Mareva Injunctions, 2nd Edition, Debra M. McAllister LL.B.

Ninemia Corp. v. Trave (1984) 1 All E.R. 398.

PCW (Underwriting Agencies) Ltd. v. Dixon (1983) 2 All E.R. 158.

The following additional authorities were referred to in argument:

Commercial Litigation: Pre-Emptive Remedies, 2nd Edition, Goldrein and Wilkinson.

Halsbury's Laws of Australia.

The Mareva Injunction and Related Orders by Mark S.W. Hoyle, 2nd Edition 1989

Capital Cameras Ltd. v. Harold Lines Ltd. and Others (1991) WLR 54.

Third Chandris Shipping Corporation and Others v. Unimarine SA (1979) 2 All E.R. 972.

Hbc0322d.98s