Dakuidreketi v Foon [2005] FJHC 157; HBC0245.2005 (30 June 2005)

IN THE HIGH COURT OF FIJI
AT SUVA
CIVIL JURISDICTION

CIVIL ACTION NO.: HBC0245 OF 2005

BETWEEN:

KENI DAKUIDREKETI and
JOSHUA DAKUWAQA QALILAWA BALEINAIVALU
1ST PLAINTIFFS

THE NEW BARN HOLDINGS LIMITED
2ND PLAINTIFF

AND:

PETER FOON
1ST DEFENDANT

HOUSE GARDENS and PATIOS (FIJI) LIMITED
2ND DEFENDANT

Date of Hearing: 22nd June 2005
Date of Ruling: 30th June 2005

Mr. W. Archibald for the Plaintiffs
Mr. D. Sharma for the Defendants

DECISION

Contrary to the usual chain of events, in this case the defendant filed a motion for interim injunction. The action arises out of a Sale and Purchase Agreement dated 10/11/04 entered into between the first plaintiff and/or his nominee and the first defendant. The first defendant is the proprietor of a nightclub called the Barn. The plaintiff wanted to purchase it. The purchase price was $250,000.00 of which $125,000.00 has already been paid.

The premises on which the nightclub is located was leased by the Vendor from one Mahendra Maharaj who is the registered proprietor of the proprietor. The Vendor held a five-year tenancy which expired on 31st December 2004. For the purposes of the present application, I accept that the landlord had promised the first defendant to renew the tenancy for further period of five years but all other terms and conditions were to be agreed upon – annexures J and L of the plaintiff’s affidavit sworn on 17th June 2005.

A dispute has arisen between the landlord and the first defendant as to what the rental for the proposed new term ought to be. The plaintiff accordingly on 11th November 2004 gave notice to the first defendant indicating that the tenancy will not be renewed. I was told from the bar table that the first defendant has instituted a civil action to hold the landlord to his promise.

The defendants are seeking interim injunctions against the plaintiffs for –

(a) immediate delivery of the Barn nightclub and all chattels to them

(b) plaintiffs to refrain from interfering with defendants’ operation of the Barn Nightclub until further orders

(c) to provide an immediate audited account of all revenue generated by the Barn Nightclub since 10th November 2004.

Counsels agree that there are serious issues to be tried. Mr. Sharma submitted that the first defendant is entitled to rescind the agreement as the plaintiffs have failed to pay $25,000.00 within two weeks of the agreement. He also says the plaintiffs have failed to pay the first defendant management fee of $500.00 per week for managerial advice and support.

Mr. Archibald however submitted that it is the defendant who is at fault. He said that the plaintiff’s concern is negotiations for lease. He submitted that there is no guarantee that the landlord will grant an extension of lease in which event the plaintiffs will need to relocate their business.

Whether or not the agreement was based on some form of understanding and assurances from the first defendant that a five-year lease would be forthcoming is a first serious issue. Secondly, the agreement provides that the first defendant will provide management services at the rate of $500.00 per week. The agreement was to subsist till 31st December 2009. There are indications in the correspondences that the first defendant was sick and was going to migrate so for how long he was to provide such service is unclear. Clause 1.1(e) suggests it was to be a period of three months. Whether such advice was provided or not is also in dispute.

The third substantial issue is whether and what chattels the defendant’s have left behind for plaintiffs to use.

Mr. Sharma also submitted that the defendants gave possession to plaintiffs on 10th November 2004. The plaintiffs are in possession but the defendants’ are answerable to the landlord for all risks attendant upon occupation of building – risks like fire. Counsel for plaintiffs could not inform the court if the plaintiffs had taken out insurance.

I am firmly of the view that the plaintiffs should be left in possession of the premises as the balance of convenience favours them. The plaintiffs have spent $125,000.00 which is half the purchase price. They have been let into possession by the defendants. The plaintiffs have by spending this substantial sum shown that they seriously intend to pursue the business of nightclub whereas the first defendant speaks of his ill health. The plaintiffs therefore in all probability would nurture this business. In any event, on what basis do I give the possession back to the defendants – they have no tenancy as that was brought to an end by the landlord.

Further, the defendants’ loss is easily quantifiable; – it is the balance sum under the contract whereas if the plaintiffs ultimately succeed on trial which might take place in a year or two, they will have difficulty calculating what their nett loss would be. Also pending trial, the plaintiffs’ future would be left in a limbo and surrounded by uncertainty. What would they do while waiting for trial? However if they are left in possession, they can give their business a planned direction and be ready to pay the balance of purchase price if tenancy is given.

It is clear from the agreement Clause 2.2(ii) that the plaintiffs had to pay $25,000.00 to the Vendor within two weeks of the execution of the agreement. That they have not paid. It is only fair that if the plaintiffs are left in possession, this sum ought to be paid. I had considered ordering the money to be paid into court but that makes little commercial sense as it would remain locked up rather than the defendant being able to put it to use.

I had during the submissions indicated in broad terms what course of action I intended to take. The overall ends of justice suggests that I leave the plaintiffs in possession of the nightclub, that I order them to pay $25,000.00 to the first defendant. Since there is part purchase price still to be paid, I also allow the defendants to inspect the Barn Nightclub and the chattels and take photos of the premises and chattels upon giving notice to the plaintiffs.

I therefore make following interlocutory orders :

(a) pending trial or further order the plaintiffs are to remain in possession and operate the Barn Nightclub.

(b) the plaintiffs are to pay the sum of $25,000.00 to the defendant or his solicitors in fourteen (14) days.

(c) The defendants are at liberty to inspect the Barn Nightclub and the chattels and take photos upon giving notice to the plaintiffs.

It is unlikely that this action including two others would have come to court had it not been for the intransigent attitude displayed by the landlord.

[ Jiten Singh ]
JUDGE

At Suva
30th June 2005