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High Court of Fiji |
IN THE HIGH COURT OF FIJI
AT SUVA
Civil Action No. HBC 431 of 2007S
BETWEEN:
JANIFA BI
(f/n Ibrahim Khan)
of Suva in Fiji, Real Estate Agent,
as Administratrix of the Estate of
Mohammed Azam Ali (f/n Azmat Ali)
Applicant/Plaintiff
AND:
REHANA ALI
(f/n Krishna Chand)
of Tamavua, Suva in Fiji
Respondent/First Defendant
AND:
JOSEPH ROBERT LAI TOO FONG
of Suva in Fiji, Office Manager
Second Defendant
AND:
EASTWIND PTY LTD
a limited liability company having its registered office
at 49 Millet Street, Vatuwaqa, Suva in Fiji
Third Defendant
AND:
ASCOT MOTORS PROPRIETORY LIMITED
a limited liability company having its registered office
at 49 Millet Street, Vatuwaqa, Suva in Fiji
Fourth Defendant
AND:
ALLSAFE SECURITY AND PROTECTION PROPRIETORY LIMITED
a limited liability company having its registered office at
49 Millet Street, Vatuwaqa, Suva in Fiji
Fifth Defendant
AND
AZAM AND REHANA’S INVESTMENTS (PROPRIETORY) LIMITED
a limited liability company having its registered office at
49 Millet Street, Vatuwaqa, Suva in Fiji
Sixth Defendant
Appearances:
Mr Nagin for the Plaintiff
Mr Parshottam for the Defendants
Date of Hearing: 7 October 2008, 30 October 2008
Date of Judgment: 3 November 2008
JUDGMENT
Letters of Administration granted; Widow seeking appointment as director of companies; Widow seeking injunction against company dealings without her consent; Widow seeking appointment as receiver or joint receiver; De facto spouse asserting ownership of all assets; Assertion of constructive trust in de facto spouse’s favour; De facto spouse dealing with companies’ assets; De facto spouse selling companies’ assets; Property held by deceased and de facto spouse as tenants in common; Property held by deceased and de facto spouse as joint tenants; Property held in deceased’s own name; Interests of deceased and widow’s children; Power to appoint receiver; Nature/character of receiver; Succession, Probate and Administration Act (Cap 60), s. 6(1)(c); Companies Act (Cap 247), ss. 80, 86; High Court Act (Cap 13), s. 18; Judicature (Consolidation) Act 1925 (UK), s. 45
American Cyanamid v. Ethicon Ltd [1975] UKHL 1; [1975] AC 396
Bond v. Tollemache (1862) 7 LT 526
Floydd v. Cheney [1970] 1 All ER 446
Gawthorpe v. Gawthorpe [1878] WN 91
Greville v. Fleming (1845) 2 Jo&Lat 335
Honeymoon Island (Fiji) Ltd v. Follies International Ltd [2008] FJCA 36; ABU0063.2007S (4 July 2008)
John v. John [1898] UKLawRpCh 131; [1898] 2 Ch 573
Re Lloyd Allen v. Lloyd [1879] 12 Ch 447, at 451
Natural Waters of Viti Ltd v. Crystal Clear Mineral Water (Fiji) Ltd [2004] FJCA 59; ABU0011.2004S & ABU0011A.2004S (26 November 2004)
Sargeant v. Read [1876] UKLawRpCh 3; (1876) 1 ChD 600
Stardust Cruises Ltd v. The Registrar of Titles & Ors (Suva High Court CA No. 371/05, 20 December 2005)
Tullet v. Armstrong [1836] EngR 976; (1836) 1 Keen 428
1. Background
The Plaintiff and Applicant herein, Janifer Bi, is the widow of Mr Mohammed Azam Ali, with whom she had two daughters, Jasbeen Mofia Ali and Adilah Zahira Ali, as at 28 January 2008 some 20 and 16 years of age respectively. In 1997 Mr Ali returned to Fiji from Sydney, Australia, where he had been living with his family (Janifer Bi and the daughters). Prior to his return, proceedings had been instituted between Mr Ali and Ms Bi under the Family Law Act 1975 (Cth) which were concluded in or about September 1996. In 1998 Mr Ali commenced a de facto relationship with the First Defendant/Respondent Rehana Ali. At his death on 29 April 2007, he was living in Fiji with Ms Ali. Ms Bi was living in Australia with her and Mr Ali’s daughters, who travelled to Fiji at various times over the years to visit their father.
1.1 Letters of Administration were granted to Janifer Bi by the High Court on 17 July 2007.
1.2 On 13 September 2007, a Statement of Claim was filed by Ms Bi, stating that at the time of his death, Mr Ali was director and shareholder of the Third to Sixth Defendants, namely Eastwind Pty Ltd (Eastwind), Ascot Motors Proprietary Limited (Ascot Motors), AllSafe Security and Protection Proprietary Limited (AllSafe Security), and Azam and Rehana’s Investments (Proprietary) Limited (Azam and Rehana’s Investments).
1.3 Under the Statement of Claim Ms Ali had, since Mr Ali’s death, ‘operated and managed these companies so as to exclude’ Ms Bi from ‘involvement in their operation or management’. Ms Ali had, it was said, ‘refused to appoint’ Ms Bi as a director, however, Ms Ali had ‘wrongly and without any colour of right’, and ‘without [Ms Bi’s] consultation or agreement, purported to appoint’ Joseph Robert Lai Too Fong (the Second Defendant)(Mr Fong) as a director. Further, Ms Ali ‘intends to siphon off all the profits and assets’ of those four companies (Eastwind, Ascot Motors, AllSafe Security and Azam and Rehana’s Investments) ‘to the exclusion’ of Ms Bi and the beneficiaries of Mr Ali’s estate.
1.4 Under the Statement of Claim, Ms Bi seeks the following Orders:
(i) Ms Bi be registered as a shareholder and member of Eastwind, Ascot Motors, AllSafe Security, and Azam and Rehana’s Investments in respect of the shares held by Mr Ali in those companies.
(ii) Ms Bi be appointed a director of Eastwind, Ascot Motors, AllSafe Security, and Azam and Rehana’s Investments.
(iii) That the purported appointment of Mr Fong as a Director of Eastwind, Ascot Motors, AllSafe Security and Azam and Rehana’s Investments ‘is null and void’.
(iv) Ms Ali and Mr Fong jointly and/or severally by themselves and/or through their servants and/or agents ‘be restrained from in any way whatsoever dealing with the assets’ of Eastwind, Ascot Motors, AllSafe Security and Azam and Rehana’s Investments without obtaining proper directors’ resolutions in meetings duly attended by Ms Bi.
(v) Such further and other relief as to this Honourable Court may deem just.
(vi) Indemnity costs.
1.5 By application dated 27 September 2008, Ms Bi sought summary judgment. By orders of 15 July 2008 that application was discontinued, with the Defendants ordered to file a Statement of Defence, along with an Affidavit disclosing all assets in the names of Mr Ali and ‘all the Defendants (except [Mr Fong])’. Ms Bi was ordered to file an Affidavit ‘disclosing matters arising’ in Family Court of Australia proceedings.
1.6 The Defendants, by their Counsel, undertook ‘that no real property of the Defendants (except [Mr Fong]) will be dealt with in any manner whatsoever without reference to [Ms Bi] and no such dealing is to take place within 30 days of such reference’.
1.7 Following the Orders of 15 July 2008, on 31 July 2008 an Affidavit was filed for Ms Bi annexing various documents relating to Family Court of Australia proceedings; on 25 August 2008 a Defence and Counterclaim was filed; and on 27 August 2008 an Affidavit ‘(Disclosure of Assets)’ was filed for Ms Ali. Subsequent to the filing on 1 September by Solicitors for Ms Bi of a Summons for Directions, on 17 September 2008 the Master made Orders to facilitate the expeditious hearing of the substantive action.
1.8 Prior to the Directions Hearing before the Master, however, on 15 September 2008 a Notice of Motion was filed for Ms Bi, seeking the following Orders:
‘Upon the grounds contained in’ the Supporting Affidavit of Ms Bi.’
1.9 This Notice of Motion is the basis for the hearing leading to the judgment herein.
2. Contentions for Ms Bi
All the material on the Court file provides a background to matters arising between the parties. In respect of the present Notice of Motion, material put forward for Ms Bi includes the Affidavit in Support filed 15 September 2008 (Affidavit in Support), Affidavit in Reply filed 29 September 2008 (Affidavit in Reply), Written Submissions and oral submissions made at the hearing.
2.1 (a) Affidavit in Support: Ms Bi’s Affidavit in Support refers, amongst other matters, to the undertaking given through Counsel on 15 July 2008 (the undertaking):
... that no real property of the Defendants (except [Mr Fong]) will be dealt with in any manner whatsoever without reference to [Ms Bi] and no such dealing is to take place within 30 days of such reference.
2.2 Ms Bi says that the undertaking was sought because she was ‘very concerned that [Ms Ali] was in the process of dissipating the assets of [Eastwind, Ascot Motors, AllSafe Security and Azam and Rehana’s Investments] and thereby undermining the worth of those Companies and consequently affecting the worth of the Estate’s shares therein’: Affidavit in Support, para 3
2.3 She goes on to say that the Orders of 15 July 2008 were not complied with as to timelines for filing the Statement of Defence and Affidavit of Assets. Time was extended by the Master on 7 August 2008 to 25 August 2008. On that date, the Statement of Defence was ‘ready’ but not filed – then was filed after the hearing before the Master on that day; and the Master extended time for the Statement of Assets to 28 August 2008: Affidavit in Support, paras 6 and 7
2.4 Additionally, on 7 August 2008 the Master ‘extended the undertaking to [include] vehicles’ at Ms Bi’s Counsel’s request ‘because of an advertisement’ in the Fiji Times 26 July 2008 ‘advertising certain vehicles belonging to [Ascot Motors]’: Affidavit in Support, para 6, Annexure ‘A’
2.5 Ms Bi expresses concern that delay in filing of the Defence and Statement of Assets has been ‘deliberate’ to ‘delay the proceedings in an effort to dissipate the Company assets and thereby adversely affect’ the interests of Ms Bi and Mr Ali’s Estate. In this regard, she annexes correspondence between her Solicitors and those of Ms Ali and the other Defendants, upon which Ms Bi bases her view that it:
... now seems very clear that [Ms Ali] is not capable of managing and operating the businesses of [Eastwinds, Ascot Motors, AllSafe Security and Azam and Rehana’s Investments]. In fact on the 15th of August 2008 the business of Ascot Motors ... was closed down and all the employees were sent home. I am afraid that with the way [Ms Ali] is going on all the businesses will soon be shut down to the detriment of [Ms Bi] and [Mr Ali’s] Estate. It appears that [Ms Ali] is bent on dissipating away the assets of the Companies to some secret advantage to herself and to disadvantage [Mr Ali’s] Estate: Affidavit in Support, para 10
2.6 The correspondence comprises letters from 4 August 2008 through to 10 September 2008 relating to the projected sale of company vehicles:
Letter from Sherani (Ms Bi’s Solicitors) requesting an urgent response re an ‘attempt to sell all the Company Vehicles belonging to Eastwind’ and calling of tenders to effect this: Affidavit in Support, Annexure ‘B’
Letter from Parshotam (Ms Ali’s Solicitors) stating the Defendants ‘propose to put the following properties up for sale’:
Letter from Sherani responding to Parshotam’s Letter of 28 August 2008:
Letter from Parshotam in response to Sherani’s Letter of 1 September 2008:
Please note that the Order of 15 July 2008 (as varied on 7/8/2008) merely requires the Defendants (except [Mr Fong]) not to deal with any real property or vehicles of [the Defendants] without reference to [Ms Bi] and no such dealing is to take place within 30 days of such reference.
Our clients have notified you of what their intentions are vis-à-vis the properties described in our letter ... and that is where the matter ought to have been at. The Order is one of notification – not to seek approval. Of course, if your client considers that some mischief is afoot (and our clients vehemently deny that) then your client can consider herself at liberty.
However, so that your client has some appreciation of what is going on, [Ms Ali] has instructed us to set the following out as to her position:
Over the recent past, the gross profit margin in the works and services provided by the Eastwind Group of companies has reduced.
Additionally, sales have dropped.
There are new players in the market: Ash Engineering, Pacific West Builders, Nityas Engineering (these were not around when [Mr Ali] was still alive).
This has compelled [Ms Ali] to rationalize her operations so she remains competitive and can successfully bid for the [scarce] works that are available.
During [Mr Ali]’s time, the Eastwind Group of companies had a virtual monopoly in pump maintenance works and calibration and to a large extent, in pre-fabrications works as well as underground tank installations.
In the case of vehicles, these are mostly old and now considered surplus to requirements. They serve no purpose within the Group and are costly to maintain (including having to pay insurance, wheel tax, third party, registration etc) on them when the vehicles are making a nil financial contribution to the Group’s trading activities.
Further, since [Mr Ali]’s death no new vehicles have been purchased.
In so far as CL8709 (30 Ackland St Property) is concerned, the Ascot operations have not made any profits of any significance over the past 4 years or so. The liabilities of Ascot continued to escalate – and these had to be met by Eastwind – and Eastwind could no longer afford this.
Please note that [this] property is owned by Eastwind but has been used by Ascot - and Ascot has not even been making payment of any rent to Eastwind (a situation that prevailed from pre-Azam days).
The Ascot operations have now been closed off and all workers (7) terminated. One worker has been reemployed by Eastwind to service Eastwind vehicles.
The steps that are being taken are usual and necessary steps for any company trading in a competitive environment. Once cannot just sit on one[‘s] laurels and believe that what was working two years ago will continue to work. Changes have to be brought about to that trading carries on a profitable level.
It is very well for your client to be sitting on the sides and making all kinds of spurious allegations without having any idea of what is involved and when all she is concerned about is getting a large chunk, if not the whole, cake – without having any risk or guarantee on the line.
To put things in perspective, this is the current debt situation of the Eastwind Group (approximated only):
Eastwind
Term Loan Account at CNB:-$597,000.00
Overdraft Account at CNB:-$283,000.00 (limit $300,000.00)
Term Loan Account at MF:-$516,000.00
AllSafe
Term Loan Account at CNB:-$ 70,000.00
Overdraft Account at CNB:-$ 43,000.00 (limit $ 50,000.00)
Azam and Rehana
Term Loan Account at CNB:-$735,000.00
Term Loan Account at CNB:-$138,000.00
Mastercard:-$ 20,000.00
All the above debts are under personal guarantee of [Ms Ali] (and the Estate of [Mr Ali]).
In addition, there are numerous trade debts relating to the Eastwind Group of companies.
[Ms Ali] appreciates that your client is exercising her rights in pursuing the legal action against her and the Eastwind Group of companies – but this very act is distracting [Ms Ali] from the business activities of the Eastwind Group of companies – and then your client complains that the Eastwind Businesses are not being operated normally.
Please let us know if you require anything further from our clients: Affidavit in Support, Annexure ‘E’
2.7 (b) Affidavit in Reply: Ms Bi raises concerns about the delay referred to in her Affidavit in Support, and the impact this is having upon the asset position vis-à-vis Mr Ali’s estate, with Ms Ali in possession and Ms Bi and her and Mr Ali’s daughters being excluded. She raises various matters going to a belief that Ms Ali is ‘bent on dissipating the assets’ which will disadvantage Ms Bi and the two daughters ‘who are the lawful beneficiaries in [Mr Ali]’s estate’. She is concerned that assets could be sold at under-value with Ms Ali ‘making a secret commission in the process’. She raises matters as to the cars: Ms Ali ‘says they are surplus to requirements’ so should be ‘sold off’ whilst when Ms Bi requested a vehicle for use in Fiji she was told ‘there were no vehicles available’. Meanwhile Ms Ali’s brother ‘is driving the Company vehicle DN836’ which he has fulltime despite not working for the companies which are ‘paying all fuel, maintenance etc’ for the vehicle, and ‘all [Ms Ali]’s relatives have access to Company vehicles’ whilst Ms Bi and her daughters ‘have been refused completely’. Ms Ali ‘did not allow my daughters to stay in the house at 30 Petrie Road, Tamavua when they were [in Fiji] for the funeral’: Affidavit in Reply, para 7
2.8 Ms Bi asserts that as lawful Adminstratrix of Mr Ali’s estate she is ‘entitled to be registered as a shareholder and a director’, and is not registered solely because Ms Ali ‘is putting impediments in my way and deliberately and wrongfully not acknowledging the legal position’. Ms Bi says she was initially told by Ms Ali to ‘come up with Letters of Administration and then she will deal with it’. When that occurred, ‘she is now claiming some nebulous trust to deprive me and my children of the lawful inheritance’. The properties on which Ms Bi says she is entitled to be registered are those in Mr Ali’s name and those where Mr Ali and Ms Ali are tenants in common: Affidavit in Reply, para 8
2.9 Ms Bi says there is ‘no dispute as to what constitutes’ Mr Ali’s estate for Mr Ali and Ms Ali ‘owned properties in their separate names including the shares in the Companies’. She disputes any resulting or constructive trust and ‘even if the property is disputed it still needs to be preserved’, hence her application: Affidavit in Support, para 9
2.10 Ms Bi also says that she was involved in the Eastwind Group of Companies as although she and Mr Ali separated in 1996, a reconciliation occurred prior to his coming to Fiji. Mr Ali continued to be in touch with her and ‘sought [her] help in relation to the businesses in Fiji and [she] continued such assistance’ after Ms Ali ‘came into the picture as a director’. Ms Bi did this by ‘purchasing items’ for Mr Ali and the companies, forwarding them from Sydney to Fiji (documents attached). Shares in Eastwind were to be held by Ms Bi but as a director and shareholder had to be resident in Fiji, she ‘gave [her] shares to [her] father-in-law. These shares were then transferred to Ms Ali albeit they ‘should have gone to [Ms Bi’s] mother-in-law according to [her] father-in-law’s will’: Affidavit in Reply, paras 9, 16
2.11 Properties in Australia were, says Ms Bi, transferred to her by Mr Ali however in 2004 ‘he got me to take a loan of $AUS 320,000 ... on [those] properties to finance previous loans taken to set up Eastwind’ (documentation attached). Money was sent from Fiji by Mr Ali for the daughters and ‘all other expenses’ (documentation attached). A&J Petroleum Pty Ltd (A&J) ‘was also supplying to the Companies right up to 2005’ when it closed down, and A&J ‘funded and started Eastwind, with Ms Bi continuing to operate A&J until 2005’. It ‘commenced operation in 1992’ and ‘was almost the same as the businesses of the ... Companies in Fiji’ and ‘did the same business as that of Eastwind’: Affidavit in Reply, paras 10, 22, 23, 24
2.12 Various other matters are canvassed, together with the statement that Ms Bi ‘doesn’t have any problems working with [Ms Ali] if it is in the best interest of the Companies and their businesses’. She would also have provided a guarantee vis-à-vis the companies had she been requested; if appointed a director and the bank requires a guarantee from her she will provide it, assuming the responsibilities and duties of a director if so appointed. She has ‘skills and experience in business’, ‘running A&J from 1992 to 2005 and at the same time doing [her] real estate business in the name of Remax Paradise Realty’, with various qualifications in business: Affidavit in Reply, paras 14, 24
2.13 Ms Bi also attests to her capacity to make an undertaking as to damages, citing her ownership of a Fiji property Native Lease No. 25131 being Lot 10, State 1 in Caubati unencumbered and ‘worth more than $180,000.00’. She states further that she ‘has properties in Australia’ and asserts her interest under succession law in properties in Mr Ali’s name alone, and those which were held by Mr Ali and Ms Ali as tenants in common, together with Mr Ali’s shares: paras 21, 27
2.14 (c) Submissions for Ms Bi: In Written Submissions, supplemented by oral submissions, for Ms Bi it is said that companies (and shares) ‘retain their value when they are going concerns’ and ‘selling off’ assets is detrimental to the companies and not in the interests of the lawful beneficiaries of Mr Ali’s estate. Ms Bi ‘at all material times was [Mr Ali’s] lawful wife and now is [his] widow’: Written Submissions, paras 1 and 2.01 As his widow, Ms Bi is ‘entitled to the personal chattels ... and one third of the residuary estate absolutely and the children are entitled to the remaining two thirds’: s. 6(1)(c) Succession, Probate and Administration Act (Cap 60) Eastwind was set up on 3 April 1997, with shares held by Mr Ali and Mr Ali’s father, Azmat Ali: 25,000 shares each. On Mr Azmat Ali’s death his shares were ‘somehow transmitted to [Mr] Ali then transferred to [Ms Ali]’: Written Submissions paras 2.04, 2.05
2.15 Ascot Motors, AllSafe Security and Azam and Rehana’s Investments are set up as follows: Written Submissions, para 2.08
| COMPANY | SHAREHOLDERS | NO. OF SHARES |
| | | |
| ASCOT MOTORS |
| 05 95 |
| ALLSAFE SECURITY |
| 01 99 |
| AZAM AND REHANA’S INVESTMENTS |
| 60 40 |
2.16 Following grant of Letters of Administration, Ms Bi requested registration as shareholder of the companies and also appointment as a director, it is said. However, this was denied to her by Ms Ali. Ms Bi then filed an action and application for summary judgment, the defences being raised that:
2.17 In response to these defences, Counsel says as to the constructive trust, it ‘does not arise in this situation at all’ as both Mr Ali and Ms Ali were shareholders ‘either by themselves or through Eastwind in which they were joint shareholders’, and this is a matter for trial in any event: Written Submissions, paras 6-6.04 As to the transmission of shares, Ms Bi made application – attested to by letters annexed to her Affidavit in Reply; and Mr Ali founded Eastwind prior to meeting Ms Ali, hence Mr Ali cannot have held it or any of it under a constructive trust of which Ms Ali is the beneficiary: Written Submission, paras 2.09-2.11
2.18 Counsel notes that despite the undertaking given on 15 July 2008 that no real property would be dealt with in any manner without reference to Ms Bi and 30 days notice to her, the Fiji Times of 26 July 2008 carried an advertisement by Eastwind (without reference to Ms Bi) calling for tenders for the purchase of vehicles. Upon the matter’s being raised by Ms Bi’s solicitors before the Master, the undertaking was then extended to motor vehicles. The exchange of letters between the solicitors re the motor vehicles and proposals for sale of the assets is then referred to: Written Submissions, paras 2.15-2.18
2.19 For Ms Bi it is submitted that she is an equal shareholder with Ms Ali in Eastwind, whilst Ms Ali is a minority shareholder in the other companies, yet Ms Ali ‘is purporting to control the companies to the exclusion of’ Ms Bi’. Further, Ms Ali’s response as to the rights of Mr Ali’s daughters that she ‘was prepared to consider their situation’ is unsatisfactory in that:
She will at some time consider their situation but not give them their legal entitlement. This Honourable Court needs to do justice and do it quickly before [Ms Ali] permanently deprives [Mr Ali]’s children of their inheritance: Written Submissions, paras 2.19-2.20
2.20 Counsel then refers to the law relating to transmission of shares, by way of sections 80 and 86 of the Companies Act (Cap 247):
A transfer of the share or other interest of a deceased member of a company made by his personal representative shall, although the personal representative is not himself a member of the company, be as valid as if he had been such a member at the time of the execution of the instrument of transfer: s. 80
The production to a company of any document which is by law sufficient evidence of –
shall be accepted by the company, notwithstanding anything in its articles, as sufficient evidence of such grant or undertaking: s. 86
2.21 Reference is also made to the Articles of Association of Eastwind, Ascot Motors and AllSafe Security, and the Memorandum of Association of Azam and Rehana’s Investments observing that for Eastwind, Ascot Motors and AllSafe Security the position is the same in that the directors could not have declined transfer of the shares nor appoint another director as Ms Ali has done, by purporting to appoint Mr Fong as director. For Azam and Rehana’s Investments, the Memorandum of Association indicates a quorum cannot be fewer than two, as ‘one person cannot have a meeting’ – citing Company Law JF Northey, 1981 edn, pp. 155 and 242-43;
Section 3 – Meetings of Directors
Meetings of the Board are held as decided by the directors and in terms of the articles. The business of the directors is conducted at meetings at which a quorum must be present. If there is not a quorum, decisions taken are invalid ...
Transmission
Subject to the articles, where the registered holder of shares dies, or becomes bankrupt, his shares vest in his personal representatives or the Official Assignee. They are entitled, on production of evidence of their appointment, to enjoy the rights and privileges of the member. A transfer, executed by the personal representatives of the deceased, is as valid as if executed by the member.
...
The personal representatives of a deceased member may transfer his shares without being included in the register under their own names, they become personally liable on the shares: Buchan’s case (1879) LR 4 AppCas 549. Similarly, if they take new shares in their own names. They will, of course, have a right of indemnity against the estate to the extent of the assets therein: Written Submissions, paras 3.02-3.05
2.22 It is further said that a receiver must be appointed because Ms Ali ‘cannot act on her own and conduct directors and general meetings:
[Ms Bi] is entitled to shares therefore entitled to be a director and ... should [be appointed] as Receiver pending the hearing and determination of this action. [Ms Ali] says she cannot work with [Ms Bi] ... She may say that about any other person as well but that is not relevant. What is most important is the welfare of the Companies and the protection of their assets. Personalities cannot come into this ...: Written Submissions, para 5.02
2.23 Amongst other matters for Ms Bi, it is said that in the ‘absence of a properly constituted board, or deadlock on the board of directors’ a receiver may be appointed: The Law on Receivers and Administrators of Companies, Lightman and Moss: Written Submissions, para 5.04
2.24 Specifically on granting an interim injunction, Counsel submits that the tests in American Cyanamid v. Ethicon Ltd [1975] UKHL 1; [1975] AC 396 are met for:
2.25 Further, Ms Bi has given a ‘sufficient undertaking as to damages’ based on assets in Australia and in Fiji. In any event, it is said, a majority of shares in three of the companies devolves upon her as Administratrix of Mr Ali’s estate: Written Submissions, paras 8-8.01
2.26 In addition, ‘there will not be any [damages] issue ... as the injunction will not result in any damages as it will prevent damage’. Here, it is repeated that if any asset requires sale, this can be effected with Ms Bi’s consent or through application to Court: Written Submissions, paras 8.01-8.02
3. Contentions for Ms Ali
Ms Ali has filed two Affidavits in Opposition – one filed 23 September 2008, the second with leave, filed on 14 October 2008 (Affidavit in Opposition; Further Affidavit), plus Written Submissions, whilst oral submissions were also presented at the hearing.
3.1 (a) Affidavit in Opposition: Ms Ali says that there was ‘no deliberate attempt to delay the proceedings’. Delay came through ‘the work [her solicitors] had to put in in compiling the pleadings [taking] more time than was originally anticipated’ as well as the solicitor handling the matter on her behalf having fallen ill for four days. Ms Ali says further that she ‘had to spend many hours in collating information and ... much time’ with her solicitors. She, too, she says is ‘keen to bring this proceeding to an expeditious end’. The proceeding ‘is causing me much strife as it is distracting me from my work, it is putting me under strain and is affecting my health [and] taking up a lot of time and putting me to a lot of loss and expense’. She is meanwhile obliged ‘to continue doing business ... and dealing with [her] creditors’ and has insufficient ‘time or energy to be doing all this at once’. She wants a conclusion expeditiously so that she and Ms Bi ‘can move on with our lives’: Affidavit in Opposition, paras 9-11
3.2 Ms Ali says, too, that delay is attributable to Ms Bi’s application for summary judgment and its being discontinued after Ms Ali ‘was put to the trouble of compiling and filing a voluminous Affidavit and [her] solicitors filed a comprehensive Memorandum of Counsel’. She observes she sought no order for costs as she ‘also just wanted the matter to be moved along’. Hence it is ‘not fair’ and 'inappropriate’ to characterise the delay as ‘devious or deliberate’ on her part: Affidavit in Opposition, paras 12 and 13
3.3 Ms Ali says that the undertakings of 15 July 2008 (property) and 7 August 2008 (motor vehicles) were ‘given voluntarily’ with ‘care ... not to have any conditions or consents attached ... as they would have ... resulted in stifling me from carrying on my business’. She denies there was any imposition by the Court upon her of the undertakings ‘due to some mischief that I was up to’. In any event, she says, proceeds of sale of every asset ‘will simply go to the secured creditor’ so she has ‘no opportunity to dissipate any assets to some secret advantage to myself’: Affidavit in Opposition, paras 14-18
3.4 Ms Ali then sets out her view of Ms Bi’s position, as not being a shareholder or director of any of the Eastwind Group of companies, nor the registered owner of any real property (joint tenants and tenants in common being Mr Ali and Ms Ali):
At best, [Ms Bi] is the Adminstratrix of [Mr Ali]’s estate. What constitutes [his] estate is a matter of dispute ...: Affidavit in Opposition, paras 19-20
3.5 Ms Ali says that Ms Bi and Mr Ali separated in 1996 and that she (Ms Ali) and Mr Ali ‘set up our own lives together (including our businesses) in 1997 – and we did so together until his death on 29 April 2007’. Ms Bi benefited from a property settlement in Australia, which to the best of Ms Ali’s knowledge and belief ‘did not involve any assumption of debt obligations by her’ and ‘that should have been the end of the matter for [Ms Bi] but she has now come ashore to Fiji – and is seeking to assert herself on what [Mr Ali] and I built up in Fiji’. Ms Ali has had ‘no such benefit’ as that gained by Ms Bi in the Australian property settlement and is ‘still managing the business of the Eastwind Group ... with a large debt owed [and her] properties being mortgaged to a secured lender’: Affidavit in Opposition, Paras 21-23
3.6 The debts to which Ms Ali is exposed under her personal guarantee are then listed as approximately $2.498ml –
Debt to Colonial National Bank:-$1.865ml
Debt to Merchant Finance:-$0.583ml
Credit line with RC Manubhai:-$0.050ml
3.7 The financial arrangements mean any default or breach ‘can trigger off an action on any of these securities including securities given by me and ... the guarantee given by me’. She does not believe Ms Bi and she can work together and that if Ms Bi ‘is honest about it’ she (Ms Bi) cannot work with Ms Ali. In any event, it is Ms Ali’s guarantee ‘which is on the line and [Ms Ali’s] properties which are on the line’. Ms Bi ‘can just walk away’ in the event of failure whereas Ms Ali 'will be left with all the debts and a wrecked life’: Affidavit in Opposition, paras 23-25
3.8 Ms Ali then lists the debt situation, which indicates that from a position on 29 April 2007, at Mr Ali’s death, to 23 September 2008, when the companies have been under her sole control (with Mr Fong) all liabilities have been reduced except the Eastwind overdraft with Colonial National Bank and the AllSafe Security overdraft also with the Colonial National Bank. The Merchant Finance borrowing was taken ‘at an effective interest rate of 27.0% per annum and as can be seen {Ms Ali has] reduced the debt significantly - $29,579.19 to $18,474.71: Affidavit in Opposition, paras 26-31
3.9 Just ‘a week before his death’ Mr Ali ‘borrowed $100,000.00 from Merchant Finance to purchase three vehicles [which] are still with the company and that borrowing ... is ... in he amount ... owed ...’: Affidavit in Opposition, para 32
3.10 She expresses a concern that if Ms Bi:
... does take up any appointment as Receiver, then the [Colonial National Bank] may just step in and exercise its rights under its Debentures. This will be disastrous for my companies and I – the bank will simply seek to get repaid – which may mean sale of the companies and all the properties (of which I am registered as owner ...) and the loss to me will be immeasurable. On the other hand, however, [Ms Bi] could just walk away from all the chaos and misery and back into her own life and live off the property settlement she benefited from from [Mr Ali]: Affidavit in Opposition, para 36
3.11 Ms Ali says that she met Mr Ali ‘in May 1998 and commenced a relationship with him in July 1998’. Tat that time she was in paid employment but resigned in September 1998 ‘and became fully involved in [Mr Ali]’s businesses form October 1998’. Since then she has ‘been fully involved and engaged in the Eastwind Group of companies’. This was ‘more than fulltime’. She lists the major clients with whose senior officers she says she ‘interacted ... on a ‘one-on-one’ basis, [compiling] tenders [and] engaging in discussions to conclude contracts and finance discussions’. This she has continued to do following Mr Ali’s death: Affidavit in Opposition, paras 37-41
3.12 She has now leased the residence in which she lived with Mr Ali, to service the bank debts - and resides with other family members. She lists various personal financial matters and says she has ‘made adjustments’ to her ‘lifestyle and ... expenditure levels’ since Mr Ali’s death. She says she has been ‘categorically advised that because of this litigation and its intensity, Eastwind is considered a ‘high-risk’ company to be doing business with. That is another battle I am having to fight’: Affidavit in Opposition, paras 42-48
3.13 Ms Ali further avers that Ms Bi ‘simply wants to step into the Eastwind Group companies ... without offering to take on any obligations not [having] for example offered any security or guarantee for her performance [nor] even offered any security or guarantee for the debts’:
Even if she did offer any guarantees, I do not know what securities she will be able to offer. In my case, four properties (which I own with [Mr Ali] – either as Joint Tenants or as Tenants in Common) are mortgaged to Colonial National Bank: Affidavit in Opposition, paras 49-50
3.14 She says that to be best of her knowledge and belief and ‘based on conversations [she] had with [Mr Ali], A&J Petroleum Pty Ltd was a company Mr Ali and Ms Bi owned prior to their separation and Ms Bi ‘relinquished her interest and involvement in this company’ upon property settlement. It was a very small business, essentially a ‘one-man’ operation, with Mr Ali the ‘key man’ with his skills involved. Ms Bi ‘had no active involvement ... – except perhaps providing some clerical and administrative service’. It closed in 1996 and employed three (3) personas only ‘on a casual basis’. However, Eastwind operations ‘are not only confined to petrol pumps and tanker truck maintenance’ (as with A&J) but to underground and overhead tank fabrication and other business. She sets out the nature of the business of the other companies, saying that Ms Bi ‘had not disclosed or demonstrated any skill or expertise in these areas’: Affidavit in Opposition, paras 50-52
3.15 Eastwind Group of companies ‘which I now manage’ has a workforce of 60 with an annual turnover of approximately $2.0ml and when Mr Ali was alive ‘the company had turnover of approx $2.6m except in 2007 (an exceptional year), the turnover was $3.0m). This is a far different situation from A&J Petroleum Pty Ltd’: Affidavit in Opposition, para 53
3.16 Ms Ali says that company accounts are ‘currently being finalised’ but she cannot ‘offer any comments on that yet’ but is able to say that due to the economic downturn in Fiji ‘trading has been difficult in the past year’. She has had to ‘be prudent about [her] business practices [taking] definitive and positive steps to rationalise [her] business operations, ... closing down’ Ascot Motors and laying off staff, cutting costs generally and so on: Affidavit in Opposition, paras 54, 55
3.17 Ms Ali also draws attention to the undertaking as to damages given by Ms Bi, stating it is inadequate due to non-disclosure of any assets, their value and location. She says an undertaking is ‘of crucial significance’ here if ‘at the end of this exercise, it is found that [Ms Bi] could not maintain a claim against the Defendants but in the meanwhile caused damage to the Defendants – what would the Defendants’ remedy be and what would they attach their remedies to’: Affidavit in Opposition, para 56
3.18 (b) Further Affidavit: Ms Ali says that Ms Bi asserts ‘ownership of all’ Mr Ali’s property ‘either in her capacity as Administratrix ... or in her personal capacity as a beneficiary in [Mr Ali]’s estate – without in any way giving any recognition to my claim and right as a beneficial owner of such property’. She is ‘making wild and spurious allegations against’ Ms Ali and ‘deposing facts which are simply untrue’: Further Affidavit, paras 7-10
3.19 Ms Ali traverses what transpired at the hearing vis-à-vis summary judgment on 15 July 2008 and the recording of consent orders. Ms Ali amongst other matters says she is ‘conducting the business affairs of the Eastwind group ... in a proper and businesslike manner ... always under the scrutiny of the financiers’. She says she ‘cannot in all conscience do what [Ms Bi] is accusing [her] of’. She then traverses various matters as to the decision to sell motor vehicles and the timing, taking into account the period since Mr Ali’s death, the changed circumstances and situations. She explains as to the company vehicles and their assignment and various changes that have resulted in vehicles being surplus with some having ‘run their useful lives’. She also makes explanation as to the matter of use of a vehicle as requested by Ms Bi: Further Affidavit, paras 10-12
3.20 Ms Ali responds to matters relating to her occupancy of the residence she had shared with Mr Ali prior to his death and lack of any request by Mr Ali’s daughters for residence, and various other matters relating to religious rituals associated with Mr Ali’s death, in addition to matters relating to usage of motor vehicles and her family’s involvement or otherwise in this: Further Affidavit, paras 13-15
3.21 As to Ms Bi’s relationship with Mr Ali, Ms Ali says:
[Ms Bi] seems to go on about her being the ‘legal wife’ of [Mr Ali] – when she had nothing to do with him since [he] moved to Fiji in 1997. She only showed up at the funeral for the one night and then left: Further Affidavit, para 16
3.22 She appends an Application for Divorce signed on 9 March 2007 believing this to be ‘the document filed by [Mr Ali] in the Federal Magistrates Court of Australia’. She then refers to various matters in the document including that Mr Ali answered as to the date of separation between him and Ms Bi ‘7 February 1996’, at that time ‘regarding the marriage as over’, that he and Ms Bi have lived ‘occasionally’ under the same roof after separation over the period 7 February 1996 to early 1997 for ‘blocks of approximately two weeks each’. He and Ms Bi did not ‘live as husband and wife’ at any time after separation and it is unlikely they will reconcile. A copy Affidavit made by Ms Bi and believed to have been filed in the Family Court of Australia in or about August 2001 is also appended: Further Affidavit, para 17
3.23 Ms Ali believes that Mr Ali left Australia for Fiji ‘because [Ms Bi] made his life a living hell and ... he just wanted to bring closure to that part of his life and restart a new life in Fiji’. She says that Mr Ali’s father was holding shares ‘in trust’ for Mr Ali and the shares were transferred to her: ‘It was all part of [Mr Ali] and my intention to have property owned jointly and to be held for each other.’ Ms Bi provided ‘no assistance’ in the building of Eastwind operations – Ms Ali has come across none. Ms Ali refers to the documentation in this regard provided by Ms Bi and draws attention to various matters which she says indicate that it was unrelated to business matters or ‘do not amount to a steady and ongoing involvement with the Eastwind group’: Further Affidavit, paras 18-21
3.24 Ms Ali addresses the matter of the $AUD 320,000.00 loan referred to by Ms Bi and notes there is no indication of ‘how that loan was disbursed or who to’. She refers also to the property settlement between Mr Ali and Ms Bi and says further that she has ‘no record’ of $AUD 320,000.00 ‘coming into the Eastwind Group’ and it was ‘not received by Eastwind or by [Mr Ali] or anyone on their behalf’ to the best of her knowledge and belief. She surmises that the funds ‘were applied’ for the purchase of a property at Prestons, NSW by Ms Bi: Further Affidavit, para 22
3.25 Other documentation provided by Ms Bi in her Affidavits is referred to, amongst them the bank account which ‘is a Home Loan Account ... [and] not an operating or current account’. She says that credits were ‘funds remitted by [Mr Ali] or on his behalf to repay the Home Loan Account’ and it was not used for Ms Bi or the daughters for their expenses, contrary to Ms Bi’s attestation. She provides material of her own in relation to this account: Further Affidavit, para 23
3.26 Ms Ali says that the Eastwind Group was established and whatever property and other assets owned by Mr Ali and herself or the Eastwind Group’ happened during the time that [Mr Ali] and [she] were together’. She notes there the incorporation dates of AllSafe, Ascot Motors, and Azam and Rehana Investments, respectively 1999, 2004 and 2005. She advises further that ‘the bank’ has been ‘fully apprised of all business decisions’ made by her including Ascot Motors closure and says that was the bank’s suggestion: Further Affidavit, paras 24, 25
3.27 She denies any personal involvement with Mr Prasad (a matter referred to by Ms Bi in her material), then addresses critically the matter of Ms Bi’s ‘offer of a guarantee’. She denies she had not made proper disclosure vis-à-vis the companies and refers amongst other matters to the Affidavit of Assets filed 28 August 2008. She repeats a lack of any knowledge of involvement of Ms Bi in setting up the Eastwind Group of companies and that Mr Ali ‘left Australia to be away from’ Ms Bi so that it is ‘inconceivable that he would then involve her in businesses he was setting up in Fiji away from her and to be away from her’. She acknowledges the possibility of ‘isolated situations’ of Ms Bi’s involvement in business transactions ‘but that is all they were: isolated situations and it will indeed be stretching the imagination to conclude that [Ms Bi] was actively involved in the Eastwind businesses’. Ms Ali says that as far as she knows, ‘no financial assistance was obtained’ from Ms Bi ‘for the benefit of Eastwind’: Further Affidavit, paras 26-30
3.28 Ms Ali addresses an issue as to a complaint to police lodged by Fida Hussein against Mr Ali but it ‘does not add anything’ to Ms Bi’s application: Further Affidavit, para 31
3.29 She annexes copy of her bank statement on her account with Colonial National Bank where rent from residential properties and her salary is credited and ‘all payments to the bank are paid out from this account’. She identifies various transactions. She says her family is living with her at her expense not that of the companies and in any event ‘all assets in [Mr Ali’]s name are beneficially owned by me and [Ms Bi] is not in any position to complain’. She then refers to matters relating to her and Mr Ali’s mother as well as overseas trips and other matters referred to in this vein by Ms Bi: Further Affidavit, paras 33-37
3.30 Ms Ali repeats that she has contributed greatly by working hard with Mr Ali ‘since about September 1998’ building Eastwind business ‘with him’. She refers again to the property settlement made through the Family Court of Australia. As to Mr Ali’s daughters she says:
Insofar as [Mr Ali’s] daughters are concerned, I am very much willing to consider their situation as they have been close to me too and I know that [Mr Ali] would have wanted me to make some provision for them. However, with the very adversarial approach that [Ms Bi] is taking against me, it has been difficult for me to focus on this while I am forever battling it out with her in the Courts: Further Affidavit, para 38
3.31 Ms Ali refers to the property to which Ms Bi refers as being worth $180,000 and ‘doubts very much’ this is its value, saying it would be helpful if Ms Bi ‘had provided a valuation report from a registered valuer: Further Affidavit, para 39
3.32 She then adverts once more to A&J and Ms Bi’s involvement or otherwise, as well as what was said in the affidavit of 21 August 2001 by Ms Bi as to A&J. She refers to a cheque book she holds for A&J and notes various matters in relation thereto. She then refers to the Eastwind Vehicles and their position vis-à-vis servicing and says amongst other matters that Ascot Motors ‘was not a major part of the Eastwind Group’s operations but ... did tie up valuable resource and was causing the Eastwind Group economic losses’: Further Affidavit, paras 40-41
3.33 (c) Submissions for Ms Ali: In oral submissions, Counsel for Ms Ali relied on two basic issues:
A. Is the Plaintiff, Ms Bi, as Administratrix of the estate entitled to take in assets of the deceased, Mr Ali;
B. The First Defendant, Ms Ali, having raised the issue of constructive trust has raised sufficient evidence that what was in Mr Ali’s name (whether alone or as tenant in common) was held by him in trust for Ms Ali.
3.34 If the aspect of constructive trust is made out to the exclusion of Ms Bi, then there is nothing Ms Bi can seek to injunct or receive. Further, the relief sought in the Notice of Motion of 12 September 2008 is contradictory: that is, if both injunction and appointment as receiver are granted, then Ms Bi is injuncting herself.
3.35 Counsel then traversed the material before the Court, including that Ms Bi on the one hand admits she and Mr Ali separated and concedes the de facto relationship between Mr Ali and Ms Ali at the relevant time, then in later documentation asserts that she and Mr Ali reconciled – something not initially said. Ms Bi’s interests were satisfied through the property settlement in Australia, and Ms Ali is the one who contributed to the accumulation of assets in Fiji. As to the joint properties, Ms Ali succeeds to these as survivor. All assets are mortgaged with personal guarantee and mortgages for all debts.
3.36 The circumstances do not support the issue of an injunction by reference to American Cyanamid Co v. Ethicon Ltd [1975] UKHL 1; [1975] AC 396 and Natural Waters of Viti Ltd v. Crystal Clear Mineral Water (Fiji) Ltd [2004] FJCA 59; ABU0011.2004S & ABU0011A.2004S (26 November 2004), for Ms Ali must be allowed to go on with the business without impediment. She has agreed to consent orders giving notice to Ms Bi as to real property and vehicles, with a 30 day notice period included. This means that all the criteria (which alone are the basis upon which the matter should be considered) are not met:
3.37 The contention for Ms Ali is, it appears, that there is no serious issue to be tried for the matter is clear: Ms Ali succeeds to all the property in the companies and any other assets by way of joint tenancy and as to tenancy in common and property/assets held in Mr Ali’s name, she succeeds to these by the constructive trust evidenced by her contribution and the way in which the companies were structured by her and Mr Ali.
3.38 A principal focus for Ms Ali also appears to lie upon the undertaking as to damages and the adequacy or otherwise of this insofar as Ms Bi is concerned:
Any applicant for an Injunction must not only provide an Undertaking but also sufficient evidence of his financial worth to support that Undertaking: Written Submissions, para 1.8
3.39 In this regard, Counsel refers particularly to Natural Waters of Viti Ltd v. Crystal Clear Mineral Water (Fiji) Ltd and its citation in Stardust Cruises Ltd v. The Registrar of Titles & Ors (Suva High Court CA No. 371/05, 20 December 2005), where His Lordship Justice Singh said:
The Plaintiff has given no undertaking as to damages and this is a serious omission. Not only undertaking as to damages must be offered but the Plaintiff should also have provided sufficient evidence of its financial worth in support of its undertaking ...: Written Submissions, para 1.10
3.40 For Ms Ali, concentration is also directed to the principles applying to the appointment of receivers, by reference to the High Court Rules 1988, Order 30 and the High Court Act (Cap 13), section 18 and its reference to the High Court’s possessing and exercising ‘all the jurisdiction, powers and authorities which are for the time being vested in or capable of being exercised by Her Majesty’s High Court of Justice in England’. Reference is then made to the High Court of England’s powers under the Judicature (Consolidation) Act 1925 (UK), section 45, which provides that the High Court has power to appoint a receiver ‘by an interlocutory order in all cases in which it appears to the Court to be just or convenient so to do’ and such may be made ‘either conditionally or upon such terms and conditions as the Court thinks just: s. 45(1)(2) Written Submissions, paras 2.2-2.3
3.41 Authorities cited for Ms Ali would appear to support the appointment of a receiver in the present case ‘to preserve property where litigation is pending to decide the rights of the parties’: Tullet v. Armstrong [1836] EngR 976; (1836) 1 Keen 428 However (in addition to the fact that Ms Ali says there is no arguable question as to the property/asset rights of the parties, for she is the rightful owner of all the assets/property in question), the caveat is that, it is said, it is ‘necessary to allege and prove the property is in jeopardy and in such case the court ‘will appoint a receiver at its discretion’: Greville v. Fleming (1845) 2 Jo&Lat 335; Floydd v. Cheney [1970] 1 All ER 446: Written Submissions, paras 2.5, 2.6
3.42 First, there is no cause for exercise of discretion and, even if there were, Counsel says:
3.43 Further, there is ‘no limit on the discretion of the Court to appoint a Receiver on a Motion except that it is to be exercised only where it appears to the Court to be ‘just and convenient’, and ‘just and convenient’ has been said to mean ‘where it is practicable and the interest of justice require it’: Gawthorpe v. Gawthorpe [1878] WN 91; John v. John [1898] UKLawRpCh 131; [1898] 2 Ch 573
3.44 Taking all these matters into account, it is understood that Ms Ali’s position is that there is no cause for appointment of a receiver, and case is made out in the material before the Court. Even if it were (which is not so), Ms Bi is not suited to fill the role of receiver. Hence, neither the injunction should issue, nor the appointment of receiver whether of Ms Bi or anyone else should be made.
4. Issues in Determination
There are two matters here for determination: the question whether an interim injunction should issue, and the question whether Ms Bi should be appointed a receiver or joint receiver to the Eastwind Group of companies (Eastwind Group).
4.1 (a) Interim Injunction: Serious Issue to be Tried: As to the application for an interim injunction, perusal of the material before the Court shows that however one characterises the test under American Cyanamid v. Ethicon Ltd [1975] UKHL 1; [1975] AC 396, the first limb is met. There is a serious issue to be tried and/or an arguable case and/or an arguable claim to the right sought to be protected. In the ordinary course, property held in the name of the deceased becomes a part of the deceased’s estate and in the case of intestacy the Succession, Probate and Administration Act (Cap 60) resolves the matter as to who succeeds to the title or ownership of the assets/property. As Ms Ali resists this interpretation by recourse to the constructive trust principle and that Ms Bi’s interests have been fully met through the property settlement in Australia under the Family Law Act 1975 (Cth), unless the parties are able to agree to a resolution satisfactory to both, then the matter has to be resolved through the courts. Further, any resolution ‘satisfactory to both’ is not in any event satisfactory overall, for theirs are not the only interests in issue: Mr Ali and Ms Bi’s daughters’ interests are very much at stake. This is recognised by both Ms Bi and Ms Ali, albeit as her Affidavit material attests, Ms Ali seeks to resolve that aspect by way of gratuity or generosity on her part, rather than by reference to the Succession, Probate and Administration Act.
4.2 Further, some possible issues are raised as to the operation of the Eastwind Group of companies (Eastwind Group). First, there is the question as to Ms Bi’s entitlement or otherwise to be appointed a director. Secondly, there is the question as to Mr Fong’s appointment as a director. Thirdly, there is a question as to the way in which each company – Eastwind, Ascot Motors (although now it is understood, defunct), AllSafe Security and Azam and Rehana’s Investments – is operating insofar as adherence to the Articles of Association and the provisions of the Companies Act (Cap 247) is in issue.
4.3 Additionally, the transactions being carried out in relation to the Eastwind Group appears on the material to raise some questions. These matters are all discernable from the material provided by Ms Ali. It said for Ms Ali that the reason for sale of vehicles and Ascot Motors was (briefly) that the economic conditions pertaining in Fiji over the past year dictated this, along with vehicles being surplus or aged, are ‘costly to maintain and serve no purpose within the group’. On the other hand, Mr Ali bought several new vehicles shortly before his death, borrowing $100,000.00 from Merchant Finance to do so: Affidavit in Opposition, para 32 This may raise a question as to the direction he considered the business was going, as opposed to the position now being put forward by Ms Ali – as to Ascot Motors not being a profitable venture. It is of course said that Ascot Motors made no profits of any significance over the past 4 years or so. However this too raises a question for Mr Ali allowed this set of circumstances to continue over that time. Of course, Mr Ali’s now being dead, it is not unusual that the Eastwind Group may take a different direction. On the other hand, it would appear that Mr Ali had a considerable hand in building up the companies and was – if not ‘the’, then ‘a’ directing force. Hence, that Ms Bi does raise a question as to a change of direction in Mr Ali’s absence from controlling, etc the operation of Ascot Motors (and the Eastwind Group as a whole) may be understandable and at least on the material vis-à-vis Ascot Motors appears to be not without some base. How strong a base it is, of course, cannot be answered at this stage – and there may be no foundation for concern at all in the final analysis. We have not yet, however, reached the final analysis.
4.4 As to the Eastwind Group as a whole, Ms Ali says it did exceptionally well in the year prior to the present year, and in the three years before that also did well. She attributes a downturn to the economy, and also to the entry of new players in the market. However, this may raise a concern in that in the circumstances of a downturn in the economy, a question may arise as to how new players could establish themselves or do so with such force as to destabilise the operations of Eastwind Group, at least to the extent of having to sell off assets which have been a part of the Eastwind Group for a not inconsiderable time and where Mr Ali does not appear to have shown signs of relinquishing or a need for so doing. It is said that the ‘new players it the market’ were ‘not around when [Mr Ali] was still alive’: Letter of 10 September 2008 Parshotam to Sherani However, there these companies appear to have ‘got up to speed’ in the space of eighteen months (Mr Ali died in April 2007) so as to challenge Eastwind Group’s financial stability – as appears to be the position in support of the sale of Ascot Motors, etc – at a time when economic downturn is cited as causing a downturn in Eastwind Group’s affairs or profitability.
4.5 There may also be an issue in that loans have decreased, yet overdrafts have increased: is this a good practice in business terms, or is it explicable in all the circumstances of running Eastwind Group profitably and with due business-like prudence. What is the case here?
4.6 That Ms Ali has been constrained to move out of the residence she formerly occupied with Mr Ali, in order to deploy rental therefrom towards payment of Eastwind Group liabilities may raise a concern, for this could appear to be a measure indicative of ‘dire straits’: Affidavit in Opposition, para 42 Up to the present time, it would appear, the Eastwind Group operated by servicing its debts through its operations whilst Mr Ali was at hand. This may mean that there is simply a change of direction consistent with a different business practice, one not capable of critique simply for being different. On the other hand, it may be reason for pause.
4.7 It could mean that Mr Ali was the driving force in the Eastwind Group – or that Ms Bi’s contention has some foundation and that she had played a role in the building up of the companies or at least some of them, and that in Mr Ali’s absence and with her no longer playing a role, Eastwind Group is now in difficulty. This is a matter that remains in issue, insofar as both parties are concerned, for Ms Bi asserts it, Ms Ali denies it.
4.8 Ms Ali says that there is ‘chaos’ at the present time. This she attributes it appears to Ms Bi’s involvement – although Ms Bi is not involved in the running of the companies. Would the ‘chaos’ be rectified if Ms Bi were involved? On the other hand, does Ms Bi lack the business acumen required, as Ms Ali says: Affidavit in Opposition, paras 50-53
4.9 Certainly it is now some time down the track: as noted, Mr Ali died in April 2007. True it is that a company or group of companies cannot – and ought not – stand still. As it is said for Ms Ali: ‘The steps that are being taken are usual and necessary steps for any company training in a competitive environment’: Letter of 10 September 2008 Parshotam to Sherani However, the direction in which the ‘not standing still’ takes the company or the group is a matter that would appear to require reflection as against the past performance and conduct of the company or group.
4.10 Ms Ali says that the Eastwind Group is now considered a ‘high risk’ company: Affidavit in Opposition, para 48 This is attributed to the present litigation. The solution, therefore, would appear to be to expedite the litigation to conclusion for the sake of the companies and indeed all the parties. In this circumstance and all the foregoing, it appears indisputable that there is a serious issue to be tried.
4.11 The first limb of American Cyanamid v. Ethicon Ltd being met, what of the remaining limbs?
4.12 (b) Interim Injunction: Damages a Suitable Remedy: This is not a case where ‘damages will do’. It would appear to be in the interests of all parties and Mr Ali and Ms Bi’s daughters that the Eastwind Group remains as a functioning business or group of companies. It would not appear to be in anyone’s interests for the business position of the Eastwind Group to deteriorate. Hence, the importance of preserving the Eastwind Group as a functioning entity or functioning group of companies, so long as prudent business acumen dictates that this should be so. The loss of a functioning business which is operating competitively in a competitive market cannot be remedied by damages: if the companies deteriorate or are sold off, where are the resources to come from to pay the damages in any event? Further, as noted, a functioning company is preferable to damages for it has an existence which is income producing, is already established in a market with business capacity, clientele, etc. Damages are simply money – to be income producing effort has to be taken in deploying them so as to produce income. All the effort that built up the functioning companies will have to be repeated to enable a damages award to properly or wholly replace the loss of a functioning company or functioning companies. Of course this is dependent upon the company or companies being profitable and functioning well in a competitive environment. However, Ms Ali’s position is that the companies under her tutelage are so doing – it is the litigation that is interfering with the business (apart from the economic situation). Hence, all the more reason to preserve them so that whatever the outcome of the litigation, the Eastwind Group remains intact (subject to any business decisions consistent with good business practice).
4.13 Ms Bi puts herself forward as a business person who wishes to be involved in the running of the companies: Affidavit in Support, para 12; Affidavit in Reply, paras 16, 22, 23 If the outcome of the litigation is favourable to her and/or her daughters, then it would necessary result in her and/or their succeeding to ownership of shares and other assets of the Eastwind Group. This is a very different matter from an action where damages would or could be a suitable outcome.
4.14 The next question, then, is as to the balance of convenience.
4.15 (c) Interim Injunction - Balance of Convenience: For Ms Ali, it is said that the balance of convenience lies with her. This is because she wishes to maintain Eastwind Group so that the companies are functioning entities under her tutelage or control. This she says is the better way to advance the interests of the Eastwind Group in an orderly businesslike manner, without interference or intrusion putting the businesses at risk – a risk she says is already being experienced due to the litigation.
4.16 Ms Bi says that the balance of convenience lies with the grant of the interim injunction, so that steps being taken by Ms Ali which Ms Bi believes to be to the detriment of the Eastwind Group and hence detrimental to the interests of all involved – herself, her and Mr Ali’s daughters, and all the Defendants – are halted and the Eastwind Group is preserved.
4.17 Here, the undertaking as to damages arises. As was said in American Cyanamid v. Ethicon Ltd [1975] UKHL 1; [1975] AC 396:
... [grant of an interlocutory injunction] was to mitigate the risk of injustice to the plaintiff during the period before ... uncertainty [as to legal rights] could be resolved that the practice arose of granting him relief by way of interlocutory injunction; but since the middle of the 19th century this has been made subject to his undertaking to pay damages to the defendant for any loss sustained by reason of the injunction if it should be held at the trial that the plaintiff had not been entitled to restrain the defendant from doing what he was threatening to do. The object of the interlocutory injunction is to protect the plaintiff against injury by violation of his right for which he could not be adequately compensated in damages recoverable in the action if the uncertainty were resolved in his favour at the trial; but the plaintiff’s need for such protection must be weighed against the corresponding need of the defendant to be protected against injury resulting from his having been prevented from exercising his own legal rights for which he could not be adequately compensated under the plaintiff’s undertaking in damages if the uncertainty were resolved in the defendant’s favour at the trial. The court must weigh one need against another and determine where ‘the balance of convenience’ lies: at 406 (Emphasis added)
4.18 Ms Bi has given an undertaking. She stated it baldly in her Affidavit in Support: para 13
4.19 This is insufficient. This Court is bound by Natural Waters of Viti Ltd v. Crystal Clear Mineral Water (Fiji) Ltd [2004] FJCA 59; ABU0011.2004S & ABU0011A.2004S (26 November 2004) insofar as the sufficiency or adequacy of an undertaking as to damages is in issue. There, the Court of Appeal said:
In our view there was plainly a serious issue to be tried. The potential for damage to the Appellants operation was palpable. While both parties offered undertakings in damages, neither placed sufficient material before the court to fortify those undertakings. At the same time, we see no reason to disagree with the Judge’s finding that the Respondent was "a minnow" by comparison with the Appellant. In those circumstances, we are satisfied that there was a real danger to the Appellant of irrecoverable damage being incurred as a result of the Respondent’s use of get up No. 3 and its prominent use of the word "Fiji". Applicants for interim injunctions who offer an undertaking as to damages should always proffer sufficient evidence of their financial position. The Court needs this information in order to assess the balance of convenience and whether damages would be an adequate remedy: at 12; see also Honeymoon Island (Fiji) Ltd v. Follies International Ltd [2008] FJCA 36; ABU0063.2007S (4 July 2008), at para [16]
4.20 Ms Bi improved upon her original statement, saying:
My undertaking is substantial for the following reasons:-
4.21 Ms Ali challenges the undertaking, saying that setting the value of the property in Fiji at ‘more than $180,000’ is ‘very much’ to be doubted: Further Affidavit, para 39 On the other hand, Ms Ali does assert Ms Bi’s ownership of property in Australia. Ms Ali surmises that $AUD 320,000 (which Ms Bi refers as going to Eastwind Group) was ‘applied’ for the purchase of a property at Prestons, New South Wales: Further Affidavit, para 22
4.22 As to the other properties Ms Bi lists to support her undertaking, a problem for her is that they are a part of the litigation: that is, Ms Ali challenges Ms Bi’s interest in these properties/assets. She asserts her interest by way of constructive trust: Ms Ali says for that reason they belong to her. Should Ms Ali succeed, the very basis of the undertaking as to damages would be taken away from Ms Bi – and would not therefore be available to support her undertaking. Ms Bi is thus precluded from putting these forward in support of her undertaking - or at least that the Court cannot take them into account in that regard.
4.23 This then leaves Native Lease No. 25131 and ‘properties in Australia’ which Ms Ali says includes a property at Prestons, NSW. I do not consider ‘properties in Australia’ is sufficient to sustain an undertaking as to damages. It does not fulfill the requirements of Natural Waters of Viti Ltd v. Crystal Clear Mineral Water (Fiji) Ltd. That Ms Ali asserts ownership by Ms Bi of the Prestons property is not sufficient, either. Thus, Ms Bi’s undertaking is dependent upon Native Lease No. 25131, the value of which is challenged, the assertion being that Ms Bi should have provided a valuation by a listed valuer.
4.24 Where does this leave the parties and the injunction application? Before proceeding to a final determination on that question, I turn to the other part of the application, that for Ms Bi to be appointed receiver, or (as in oral submissions) joint receiver together with Ms Ali.
4.25 (e) Appointment of Receiver - Principles: Submissions for Ms Bi as to the problem of lack of properly constituted board and the fact that Articles of Association require to be followed are put forward in support of the appointment of Ms Bi as receiver/manager. Authorities cited for Ms Ali both support and undercut Ms Bi’s application.
4.26 (f) Appointment of Receiver: Present Circumstances: In the circumstances of the present case, it seems to me that the appointment of a receiver, whether Ms Bi or anyone else, would be detrimental to the Eastwind Group and indeed to all the parties – Ms Bi included. That is, the appointment of a receiver would signal loudly that the Eastwind Group is ‘in trouble’. This would not achieve Ms Bi’s stated aim of preserving the companies in a viable state so that they remain operational and are sustained as the inheritance to which she believes her and Mr Ali’s daughters are entitled, and her entitlement asserted under the Succession, Probate and Administration Act.
4.27 It appears to me that Ms Bi’s aim for the preservation of the Eastwind Group would be better served by her appointment as a director of Eastwind, AllSafe Security and Azam and Rehana’s Investments, and if there is any entity remaining, Ascot Motors.
4.28 I am not persuaded to this view by Ms Ali’s contention that the two cannot or could not work together. Ultimately, if Ms Bi succeeds in the substantive action they will, bluntly, simply have to do so. If, as each asserts, she is a businessperson with business acumen and capacity, then the suggestion that they cannot or could not work together is highly surprising. People do not have to be ‘friends’ or ‘soul mates’ in order to conduct business whether together as a company or partnership, or with other entities. Ultimately, of course, it may well be preferable that people who are ‘enemies’ or do not ‘like’ one another avoid each other whether in business – if conducted at close hand – or elsewhere. However, the contention that businesspeople cannot conduct business together and cannot operate a business together if they have personal differences appears to indicate a possible lacuna in business awareness. True it is that the parties here are, the one, the widow and, the second, the surviving de facto spouse. However, each purports to have identical interests – an interest in the Eastwind Group both in its present state and as to its building-up; each at one time at least had an interest in the welfare and wellbeing of the creator or joint creator of the Eastwind Group, Mr Ali. Each also asserts an interest in and concern for Ms Bi and Mr Ali’s daughters.
4.29 Their responsibility is to review the manner in which matters are currently being conducted, to re-assert the business acumen and capacity each says she possesses, and address the management and operation of the Eastwind Group from a business perspective – the business perspective each professes to hold.
5. Determination - Outcome
In the interests of the parties, and particularly in the interests of the daughters of Ms Bi and Mr Ali, Jasbeen Mofia Ali and Adilah Zahira Ali, Ms Ali and Ms Bi need to reconsider their position vis-à-vis the Eastwind Group. To enable them to work out together a plan for ensuring that the Eastwind Group is conducted in a businesslike manner without distractions and ‘chaos’ (as Ms Ali puts it), the interim injunction should issue. All the requirements of American Cyanamid v. Ethicon Ltd [1975] UKHL 1; [1975] AC 396 are met. The only matter in issue is the undertaking as to damages. In that regard, to secure the undertaking Ms Bi should lodge with the Chief Registrar of the High Court the title to the land she puts forward to support her undertaking, namely Native Lease No. 25131 being Lot 10, Estate 1 in Caubati, to be held until the determination of the substantive proceeding.
5.1 This will give them a breathing space to come to terms with the fact that Letters of Administration have been granted in Ms Bi’s favour and the legal consequences of that. Clearly the Eastwind Group of companies must operate in accordance with their Articles. The Defendants need to address this reality.
5.2 At the same time, I can see no benefit accruing in the grant of receivership by the appointment of Ms Bi as a receiver or a joint receiver with Ms Ali. Rather, Ms Bi and Ms Ali need to (as above) work out a plan for proceeding – this may require the assistance and advice of their Solicitors - so that pending the hearing and determination of the substantive matter the Eastwind Group of companies are conducted in a business-like manner with decisions being made that advance the interests of the Eastwind Group and each of the companies – namely Eastwind, AllSafe Security and Azam and Rehana’s Investments, and whatever (if anything) remains of Ascot Motors.
5.3 The grant of the interim injunction means that in order to ensure that Eastwind Group can function effectively, the parties will need to begin to communicate effectively as soon as possible so that they make a workable plan for proceeding pending the hearing and determination of the substantive matter. I will make the injunction effective pending that hearing and determination, however, will also add ‘or until further order’. This means that if they are able to work out a plan as I have said, they can return to Court to request that the injunction be dissolved or varied or made subject to terms and conditions, or for some other order which will enable Eastwind Group to function effectively as a business entity or group of companies.
5.4 Ms Ali and Ms Bi express a wish to have the issues resolved expeditiously through the hearing of the substantive matter. Action needs to be taken by them both to ensure that the substantive matter is heard expeditiously. If this means that the matter should be returned to the Master for directions so that each party is ready to proceed as soon as possible, then I will so order. If, however, the parties are able to draw up consent orders for progressing the matter expeditiously, then ‘liberty to apply’ is included in the Orders herein so that the parties may return for that purpose. If they believe that the matter is ready now to proceed to hearing, then I will set a date for hearing.
ORDERS
Jocelynne A. Scutt
Judge
Suva
4 November 2008
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