Newham v Nadi Contractors Ltd [2005] FJHC 647; HBC0136.2003L (13 May 2005)

IN THE HIGH COURT OF FIJI
AT LAUTOKA
CIVIL JURISDICTION

CIVIL ACTION NO. HBC0136 OF 2003L

BETWEEN:

ALLAN CHARLES NEWHAM
Plaintiff

AND:

NADI CONTRACTORS LIMITED
Defendant

Counsel for the Plaintiff: Mr. B. Singh
Counsel for the Defendant: Mr. B.C. Patel

Date of Hearing: 12 April 2005
Date of Ruling: 13 May 2005

RULING

The plaintiff applies by Notice of Motion seeking a mandatory injunction compelling the defendant to register a memorandum of transfer of 10,000 ordinary $1.00 shares in the name of the plaintiff. The Motion also seeks that the defendant deliver to the plaintiff various financial records and other records of the defendant company and further an interlocutory injunction restraining the defendant from selling, assigning or disposing or purchasing, hiring or leasing any item of plaint or equipment and having a value of more than FD$5,000.00 or assigning, mortgaging or charging any asset of the company or pledging credit or borrowing or entering into any agreement to borrow or obtain money from third parties and restraining the paying of directors or shareholders loans or dividends.

In support of the Notice of Motion, the plaintiff relies upon an affidavit sworn by him on the 5^th October 2004.

The application is opposed and the defendant relies upon an affidavit of Trevor Robert Gallagher sworn on the 5^th April 2005.

Background

There are related proceedings which are numbered HBC 163 of 2004L in which Trevor Robert Gallagher is the plaintiff, Allan Charles Newham the 1^st defendant and the Reserve Bank of Fiji as the 2^nd defendant. A ruling in that matter was delivered today.

There are further prior proceedings between the parties being Action No. HBC 0164 of 1999 wherein the plaintiff was Allan Charles Newham, the 1^st defendant Trevor Robert Gallagher and the 2^nd defendant, Nadi Contractors Limited.

The issue before the court in those proceedings were for all relevant purposes the same as the issues now before the court, that is the entitlement of Allan Charles Newham to be registered as a shareholder and director of the defendant company.

On the 5^th May 2000, Madraiwiwi J. delivered judgment where he declared that the deed of trust dated 2^nd June 1990 was a valid and legal document and he granted an injunction to maintain the assets of Nadi Contractors Limited until the determination of the action. His Lordship refused to grant the relief sought as the plaintiff (Allan Charles Newham) was not a shareholder of the 2^nd defendant (Nadi Contractors Limited).

The judgment referred to was appealed to the Fiji Court of Appeal which court gave judgment on the 15^th November 2002 wherein the Court of Appeal affirmed the declaration that the deed of trust dated the 2^nd June 1990 was valid and legal but revoked the injunction.

The decision of the Fiji Court of Appeal was appealed to the Supreme Court of Fiji which court gave judgment on the 21^st May 2004 and set aside the declaration made by the Court of Appeal that the deed of trust was valid and legal and declared that the deed of trust dated the 2^nd June 1990 required the permission of the Minister but was capable of validation under section 20(2) of the Exchange Control Act. All other orders made by the Court of Appeal were to stand, that is the revocation of the injunction continued.

Trevor Robert Gallagher has now brought further proceedings against Allan Charles Newham and the Reserve Bank of Fiji which are numbered HBC0163 of 2004L. In those proceedings, the plaintiff seeks declarations:

(i) that the deed of trust dated the 2^nd June 1990 is invalid and of no effect because of an incompletely constituted trust;

(ii) that the deed of trust dated the 2^nd June 1990 being an incompletely constituted trust is not a settlement under section 31 of the Exchange Control Act;

(iii) that the deed of trust dated the 2^nd June 1990 not being a settlement under section 31 cannot be validated under section 20(2) of the Exchange Control Act;

(iv) that the 2^nd defendant cannot validate an incompletely constituted trust under section 20(2) of the Exchange Control Act;

(v) that any purported validation of the deed of trust dated the 2^nd June 1990 by the 2^nd defendant under section 20(2) of the Exchange Control Act before 21 May 2004 is improper and of no effect;

(vi) identifying all the terms of the deed of trust dated the 2^nd June 1990 as agreed by the plaintiff and the 1^st defendant.

The 1^st and 2^nd defendants in those proceedings, that is Allan Charles Newham and Reserve Bank of Fiji applied to the court pursuant to Order 18 Rule 18 to strike out the plaintiff’s statement of claim.

In a ruling delivered today, the court dismissed the 1^st and 2^nd defendants' summonses and restrained the 1^st defendant from acting on the Reserve Bank of Fiji certificate of validation dated the 18^th May 2004 and from confirming or upholding that certificate pending final determination of that action.

The Application

The plaintiff’s application seeks to cause the defendant to register the plaintiff as a shareholder which of course would require a valid certificate pursuant to section 31 of the Exchange Control Act and this, it would seem requires the deed of trust dated the 2^nd June 1990 to be validated pursuant to section 20(2) of the Exchange Control Act.

The further relief sought whilst not in identical terms is similar in effect to the injunctive relief sought and granted by the High Court in Matter No. HBC0164 of 1999 which injunctive relief was revoked by the Court of Appeal.

The applicant refers the court to Savage v Lunn – NSW Court of Appeal 9 March 1998. The applicant does not get the support it seeks from this authority at this time when the validity of the deed, the foundation for the transfer of shares, is in issue. It seems therefore that it is inappropriate at this point in time for the court to even consider the granting of the mandatory injunction sought in paragraph 1 of the Inter-parte Notice of Motion. This is even more so, when one considers the serious effect of an interim mandatory injunction which of necessity has the effect of a final order.

This places a significant burden on the court to be satisfied to a high degree that the plaintiff will establish his right at trial. There is a far lesser risk of injustice by refusing a mandatory injunction. Whilst there may be circumstances that justify the granting of a mandatory injunction notwithstanding the risk of injustice but only where that risk is sufficiently outweighed if the injunction be refused –Zockoll Group Ltd V Mercury Communications Ltd [1998] FSR 354.

Lord Upjohn in Redland Bricks Ltd v Morris [1970] A.C. 652 at 665 set out general principles in general terms for the granting of mandatory injunctions. Relevantly, those principles required the plaintiff to show a very strong probability upon the facts that grave damage will accrue to him in the future and the damages will not be a sufficient or adequate remedy.

It would appear from the nature of this case that damages would in fact be an adequate remedy. It would appear that the plaintiff could be adequately compensated by damages. The financial position of the defendant is set forth in paragraph 3.3 of the affidavit of Robert Trevor Gallagher sworn on the 5^th April 2005 which discloses that the defendant company’s contract with Emperor Gold Mining Co. “is worth more than $4 million per annum gross”.

The undertaking as to damages given by the applicant is inadequate and in effect does not amount to an undertaking as to damages. Such an undertaking to be effective must detail the financial position of the person or entity giving the undertaking. Without such information, it is indeed meaningless.

With respect to the orders sought in the second paragraph of the Notice of Motion, there would appear with little basis for ordering the information to be furnished at this point of the proceedings and certainly no basis is made out in the material that is placed before the court on the application.

The interlocutory injunction sought in paragraph 3 of the Notice of Motion is not supported by an undertaking as to damages as is detailed above. It may be that on a proper basis being shown and a good and sufficient undertaking as to damages being given that there is a merit in such an injunction being granted. However, on the material before the court on this application it is not possible for the injunctive relief sought to be granted.

In the light of the orders made in Matter No. HBC0163 of 2004L today, it seems inappropriate to do other than dismiss the Notice of Motion and accordingly, the Orders of the Court will be:

1. The Notice of Motion dismissed.

2. The plaintiff to pay the defendant’s costs of the Notice of Motion assessed in the sum of Seven Hundred and Fifty Dollars ($750.00).
   

JOHN CONNORS

JUDGE

At Lautoka

13 May 2005