Koroqica v Housing Authority [2008] FJHC 295; HBC116.1999 (11 July 2008)

IN THE HIGH COURT OF FIJI
AT LAUTOKA

CIVIL ACTION NO. 116 OF 1999

BETWEEN

TIMOCI KOROQICA and TERRENCE O’NEIL
Plaintiffs

AND

THE HOUSING AUTHORITY
Defendant

Appearances: Patel & Sharma & Co. for the Plaintiff
Maharaj Chandra & Associates for the Defendant

Date of Ruling: 11 July 2008

RULING

[1] Before me is an application by the defendant by summons dated 26 March 2008 for orders that the injunction granted on 20 February 2008 be discharged and if the injunction is discharged an enquiry be made as to the damages sustained by the defendant as a result of the injunctive order. Both parties have filed comprehensive affidavits and helpful written submissions for which I am grateful.

[2] The starting point for the consideration as to whether the injunctive order should be maintained or granted are the principles expressed in American Cyanamid –v- Ethicon Limited [1975] UKHL 1; [1975] A.C. 396. At pages 406 & 407 of the judgment of Lord Diplock, the principles are expressed as follows:

"The object of the interlocutory injunction is to protect the plaintiff against the injury by violation of his right for which he could not be adequately compensated in damages recoverable in the action if the uncertainty will resolve 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 will resolve in the defendant’s favour at the trial. The Court must weigh one need against the other and determine where "the balance of convenience lies."

[3] On page 407 Lord Diplock said:-

"It is no part of the court’s function at this stage of the litigation to try to resolve conflicts of evidence on affidavits as to facts on which the claims of either party may ultimately depend nor to decide difficult questions of law which call for detailed argument and mature considerations. These are matters to be dealt with at the trial. One of the reasons for the introduction of the practice of requiring an undertaking as to damages upon the grant of interlocutory injunction was that "it aided the court in doing that which was its great object viz. abstaining from expressing any opinion upon the merits of the case until the hearing": Wakefield v. Duke of Buccleugh (1865) 12 L.T. 628, 629. So unless the material available to the court at the hearing of the application for an interlocutory injunction fails to disclose that the plaintiff has any real prospect of succeeding in his claim for a permanent injunction at the trial, the court should go on to consider whether the balance of convenience lies in favour of granting or refusing the interlocutory relief that is sought."

[4] It is upon this basis that I consider the application before me.

[5] The fundamental requirements might be summarized as:-

(i) Is there a serious question to be tried?

(ii) Are damages an adequate remedy?

(iii) Where does the balance of convenience lie?

Serious issue to be tried

[6] For the reasons stated above, it is not for this Court in an application for an interim injunction or to dissolve an injunction, to carry out a trial of the merits of the dispute. It suffices for the Court to be satisfied that there is in fact a serious issue to be tried. Lord Diplock also held that it was not part of the courts function at this stage to decide difficult questions of law which call for detailed argument and mature considerations. This is the case at hand.

[7] I have no difficulty in arriving at the conclusion that there are serious questions to be tried in this action. I have also upheld Mr. Singh’s submission that the evidence, albeit untested, already before the court shows that there are sufficient special circumstances to warrant that the status quo be maintained. The serious issues also concern the validity of the mortgage documents on which the defendant relies. There are issues surrounding whether the documents were properly executed, whether the defendant engaged in conduct that was in all the circumstances unconscionable and whether sections 55 and 56 of the Fair Trading Act 1992 were breached. A key issue is whether given that the defendants sold defective houses to the plaintiffs (that the houses were defective is not in serious dispute. What is disputed is the extent of the defects), the consideration under the mortgage wholly fails. Determination of this issue is critical and ought to be decided before the defendant is permitted to exercise its rights under the mortgage.

[8] I agree with Mr. Singh that there is considerable doubt concerning the validity of the transactions between the parties given that:

(i) there was no sale and purchase agreement detailing the respective rights of the parties and there appears to have been no express warranty made by the defendant in respect to the condition of the houses

(ii) there was no Engineering Certificate provided at the time of negotiations for the purchase of the dwelling houses

(iii) the Engineering Certificates are not for newly built houses but for structures which have been renovated and are not complete

(iv) there is an expert engineer’s report stating that some of the structures are substantially defective for lack of proper foundation

(v) there is considerable doubt regarding the true value of the dwelling houses

Are damages an adequate remedy

[9] The answer to this is clearly no. If the mortgagee sales were allowed to proceed this would have the effect of nullifying the plaintiffs’ action against the defendant. The plaintiffs, being low-income earners would be without a home. In my view this is patently unfair given that the subject matter of the plaintiffs’ action are the houses which the defendant is now attempting to exercise its mortgagee powers over. If the plaintiffs were to succeed on the issue of liability, the award of damages is likely to be significant. Orders can be made that these monies be applied to settlement of the mortgages.

Where does the balance of convenience lie?

[10] Again I am in agreement with Mr. Singh that the balance of convenience lies in favour of the plaintiffs. I adopt the principle applied by Justice Jitoko in Koro v Hometown Motors Company Ltd.[1] wherein His Lordship said:

"Whenever necessary, the Court will take a broad view in the interpretation of the law and apply it for the benefit of the party that will be more prejudiced if the status quo is not maintained......Equity requires the Court to do all it can to preserve the property by the maintenance of the status quo in the special circumstances of this case."

[11] There are special circumstances present in this case. The plaintiffs represent a group of low-income earners who executed mortgages over properties which are defective. There is also the critical issue as to whether the mortgages are void. The status quo ought to be maintained to preserve the rights of the plaintiffs and to ensure that the prosecution of their claims is not rendered futile by the sale of their properties.

Order

(i) The injunction is to continue until the determination of this action.

(ii) The defendant’s application is dismissed with costs to the plaintiffs in the sum of $550.00.

(iii) The amendment application is adjourned to the Master’s List on 13 August 2008 at 9.30 am.

Gwen Phillips
Judge

At Lautoka
11 July 2008

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^[1] [2005] FJHC 67; HBC 056R.2004S @ page 3