DNS Contracting Ltd v Yaukave Island Resort Ltd [2005] FJHC 214; HBC0243.2005 (8 August 2005)

IN THE HIGH COURT OF FIJI
AT SUVA
CIVIL JURISDICTION

CIVIL ACTION NO.: HBC0243 OF 2005

BETWEEN:

DNS CONTRACTING LIMITED
a limited liability Company duly incorporated in New Zealand
PLAINTIFF

AND:

YAUKAVE ISLAND RESORT LIMITED
a limited liability company duly incorporated in Fiji
DEFENDANT

Mr. V. Kapadia for Plaintiff
Mr. P. McDonnell for Defendant

Date of Hearing: 22nd July 2005
Date of Decision: 8th August 2005

DECISION ON INTERLOCUTORY INJUNCTION

On 24th May 2005 the plaintiff filed a writ of summons together with a Notice of Motion for Interlocutory Injunction. The subject matter of the claim are eight pieces of machinery used in construction industry.

The defendant company intended to build a resort on Yaukuve Island. On 1st December 2003 it entered into a building contract with Ca’Bella Pacific Construction (Fiji) Limited and Lomac Construction and Project Services Limited for them to carry out the necessary works. The project cost was in excess of nine million dollars. The plaintiff is a New Zealand based company incorporated on 10th March 2004 and is engaged in hiring out heavy machinery. In its statement of claim it alleges it hired out eight items of machinery to Ca’Bella between 10th January 2004 to 30th August 2004. It alleges that Ca’Bella was using this machinery on Yaukuve Island in the resort construction. It alleges that in March 2005 a dispute arose between the defendant and Ca’Bella as a result of which Ca’Bella was forced out of the Yaukuve Island and its plant equipment and machinery including the plaintiff’s machinery being kept and used by the defendant. The defendant it alleges is refusing to release the machinery. In short it alleges the eight items of machinery belonged to the plaintiff. Ca’Bella only hired them and had no right to ownership.

The defendant on the other hand states that it believed the machinery belonged to Ca’Bella and under the terms of its agreement with Ca’Bella it could, upon breach of agreement by Ca’Bella, terminate the agreement and take possession of and use the plant equipment and materials. It relied on Clause 25 of the agreement annexed to the affidavit of Thierry Morali.

As this is an application for interlocutory injunction the usual principles of American Cyanamid Company v. Ethicon Ltd. – [1975] UKHL 1; 1975 AC 396 need to be considered. These are:

(a) whether serious issues are raised
(b) whether damages would be an adequate remedy
(c) where does the balance of convenience be?

In Klissers Farmhouse Bakeries Limited v. Harvest Bakeries Limited – 1985 2 NZLR 140 Cooke J said it was necessary to see where the overall justice lay and the court ought at the end to stand back and consider this aspect. Mr. Kapadia forcefully argued that the case does not even warrant consideration of American Cyanamid principles as this is a case of a defendant wrongfully detaining or converting plaintiff’s assets and the plaintiff is prima facie entitled to injunction. The defendant he submitted has no arguable case. The hire purchase agreements have not been challenged.

For Mr. Kapadia’s arguments to be sustained, I have to be satisfied that the plaintiff owns the chattels. However, this is a serious issue raised in affidavits. The plaintiff was incorporated on 10th March 2004 – see Annexure TM01 to affidavit of Thierry Morali. This would mean that two of the Hire Purchase Agreements in respect of Concrete Batch Miser and Front End Loader were executed before incorporation of the company as they were executed on 10th January 2004. Some explanation would be required on this. Annexure TM08 is a creditors list of Ca’Bella as at 28th February 2005 and it does not disclose the plaintiff as a creditor. Further annexure TM09 shows that a trailer, Front end loader, Bobcat, and a truck have already been purchased by Ca’Bella. There is some similarity in description of these four items with four of those items shown in paragraph 3 of the statement of claim. The documents which originate from Ca’Bella give some weight to defendant’s assertions that DNS does not own at least some of these items. I do not have to find conclusively on the ownership at this stage but it points to a serious issue being raised. Nor can I simply ignore the fact that Glen Rich is a director of both the plaintiff and Ca’Bella.

Is damages an adequate remedy? One may argue that the subject matter of the claims are machines value of which can be easily calculated and damages would be an adequate remedy. However, one also has to consider the ability of the defendant to pay damages. I do not have any significant details of defendant’s worth. It may be a lessee of an island but for al I know it may have borrowed moneys from financial institutions on securities to develop the island so it would have its obligations to make repayments.

BALANCE OF CONVENIENCE:

As affidavit evidence stands now the items could either belong to the plaintiff or Ca’Bella or some items belong to plaintiff and some to Ca’Bella. Any interest which the defendant has in the items belonging to Ca’Bella would depend on whether or not the agreement between it and Ca’Bella was lawfully terminated. The defendant can only show interest in the items by firstly showing Ca’Bella owned the items and secondly it validly terminated the building agreement. That matter I believe is under arbitration now so I shall refrain from comment on that aspect. The items are on Yaukuve Island, a somewhat remote place to which the defendant has easy access but the plaintiff’s access comes at a cost. To refuse injunction would mean the defendant being able to use items and deplete their value. I could if I wanted allow their use on payment of current monthly hire charges. However the defendant could then use them for 24 hours a day by inexperienced persons and quickly run them down. I also do not know if the defendant has qualified experienced persons to operate and to maintain the machines which I believe are expensive items. These machines need to be conserved.

I consider there is much sense in Mr. Kapadia’s suggestion that the only safe place is to keep the machinery in Suva in a proper garage.

Accordingly the overall justice of this case requires that the items be kept in a safe place in the jurisdiction of Fiji court. Accordingly I grant orders restraining the defendant from using, concealing, altering, dismantling, removing, transferring, disposing off or selling those items listed in the order made on 31st May 2005. I also order the defendant to forthwith hand over those assets or chattels together with keys to them (if any) to the plaintiff. The plaintiff is ordered to bring and safely keep the items in a reputable garage in Suva to be agreed upon by the parties or to be decided by court pending hearing of the matter or earlier resolution. The plaintiff is not to remove the assets out of jurisdiction until further order of the court.

Each party to bear its own costs.

[ Jiten Singh ]
JUDGE

At Suva
8th August 2005