Nagan Engineering (Fiji) Ltd v Raj [2010] FJHC 47; HBC106.2009 (18 February 2010)

IN THE HIGH COURT OF FIJI
AT LAUTOKA
CIVIL JURISDICTION

Civil Action No.: HBC 106 of 2009

BETWEEN:

NAGAN ENGINEERING (FIJI) LIMITED
a limited liability having its registered office at Old Kings Road, Yalalevu, Ba.
1st Plaintiff

LEAH LOUISE NAGAN
of Old Kings Road, Yalalevu, Ba Company Director.
2nd Plaintiff

AND:

NEEL HEM RAJ
(father’s name Ram Prasad)
of Nukuloa Back Road, Ba, Company Director.
1st Defendant

AND:

NIRMALA DEVI RAJ
(father’s name Ram Rup)
of Nukuloa Back Road, Ba, Company Director.
2nd Defendant

AND:

NAGAN FERROALLOYS (FIJI) LIMITED
a limited liability having its registered office at Nukuloa Back Road, Ba.
3rd Defendant

AND:

MISHRA PRAKASH & ASSOCIATES
a firm of Solicitors having its registered offices in Ba, Lautoka and Suva.
4th Defendant

Before: Master A. Tuilevuka

Counsels: Young & Associates for the Plaintiff
Mishra Prakash & Associates for the Defendant

Date of Hearing: 25th January, 2010
Date of Ruling: 18th February, 2010

RULING
(Limitation Period, Res Judicata)

INTRODUCTION

[1] This is the 4th Defendant’s (Mishra Prakash & Associates) application that all claims against it in the statement of claim be struck out with indemnity costs. Mishra Prakash relies on the following grounds:-

(i) the statement of claim is statute barred pursuant to section 4 of the Limitations Act.

(ii) Mishra Prakash has or had at not time at all exposed itself in a conflict of interest situation nor did it ever breach its fiduciary duty or duties to the Plaintiffs as alleged in paragraph 7 of the statement of claim.

(iii) alternatively – the statement of claim is based on an alleged solicitor-client relationship or contract and is a totally separate cause of action from those pleaded against the other Defendants

[2] The 1st Plaintiff company, Nagan Engineering (Fiji) Limited (“NE (Fiji) Ltd”) was incorporated in the mid 1960s. It was founded by the 2nd Plaintiffs late husband. When he passed on, the 2nd Plaintiff, Mrs. Leah Loiuse Nagan (Mrs. Nagan), took over the reins of NE (Fiji) Ltd.

[3] At some point in time, the 1st Defendant (Neel Hem Raj)) became involved in NE (Fiji) Ltd and 1000 shares were to be issued to him, allegedly on the advice of the 4th Defendant.

[4] On 31st October 1995, Mrs Nagan and Hem Raj wrote an instruction to Mishra Prakash & Associates to incorporate a new company. According to that instruction, Mrs. Nagan and Hem Raj were to share directorship and shareholding equally.

[5] On the 13th November 1996, Mishra Prakash & Associates gave various legal advice to Mrs. Nagan vide a letter dated the same day. Included in that letter was an advice to NE (Fiji) Ltd to transfer Certificate of Title No. 12538 [“land”) registered in it’s name to a new entity. Mishra Prakash & Associates then advised the Plaintiffs to set up a new entity so it can hold CT No. 12538. The purpose of that advice apparently was to keep the land out of any potential FDB creditor action. Acting on that advice, the Plaintiffs then instructed Mishra Prakash to transfer CT 12538 to Nagan Ferroalloys (Fiji) Limited (“NFFL”) the 3rd Defendant Company. As it turns out, NFFL was incorporated as a result of Mrs. Nagan’s and Hem Raj’s instructions of 31st October instruction.

[6] The Plaintiffs say that Mishra Prakash & Associates failed to warn them of the risks they would be exposed to if NFFL does not hold the land on trust for NE (Fiji) Ltd. They further say that Mishra Prakash & Associates , at about the same time, was receiving certain instructions from Hem Raj to issue an additional share in NFFL to his wife Nirmala Devi Raj, which advice Mishra Prakash & Associates later acted upon.

[7] It is alleged that Mishra Prakash & Associates failed to disclose the said Hem Raj-instruction to Mrs. Nagan. It is claimed that the former should have done so as it potentially undermined her position in NFFL which ultimately put NE (Fiji) Ltd at risk. The statement of claim pleads that Mishra Prakash & Associates either withheld that instruction deliberately from NE (Fiji) Ltd and Mrs. Nagan or negligently failed to disclose it to them. According to the pleadings, had Mishra Prakash & Associates informed the Plaintiffs about Hem Raj’s instruction (or the change in the shareholding structure that resulted from it), it would have put NE (Fiji) Ltd off from transferring CT 12538 to NFFL .

[8] As it turns out, some eleven or twelve years after NE (Fiji) Ltd transferred the land to NFFL, the latter filed a Writ and Statement of Claim in Lautoka Civil Action 251 of 2008 on a cause of action which, to put it quite simply, is premised on an assertion of its lawful right as registered proprietor of CT 12538. The Defendants in that case are NE (Fiji) Ltd, Mrs. Nagan and Mrs. Nagan’s son who has replaced Hem Raj as Managing Director in NE (Fiji) Ltd.

[9] The substantive dispute in 251 of 2008 is still pending in Court. In that case, NFFL is seeking judgement against NE (Fiji) Ltd and Mrs. Nagan for unpaid rental of close to $100,000 to date on an apartment and storage space they use on CT 12538. In the Statement of Claim, NFFL also seeks an order that NE (Fiji) Ltd and Mrs. Nagan be restrained from trespassing on the land or from interfering with NFFL or from removing equipment or machinery in any way. An Order is also sought that NE (Fiji) Ltd and Mrs. Nagan return NFFL’s equipment and pay damages done to the property and that Mrs. Nagan’s shareholding in NE (Fiji) Ltd be appropriated and cancelled to satisfy damages.

[10] On the same day that NFFL filed the above claim in 251 of 2008, it also filed an inter-partes motion seeking an injunction to restrain NE (Fiji) Ltd and Mrs. Nagan from interfering with the plaintiffs business, directors, managers and employees in their use of the premises.

[11] In due course, NFFL obtained that injunction.

[12] For the purpose of the proceedings now before me, it is relevant to note that the late Mr. M. K Sahu Khan who then was acting for NE (Fiji) Ltd and Mrs. Nagan had objected to Mr. Mishra appearing for NFFL at the hearing of the injunction. Mr. Sahu Khan’s principal ground of argument was that Mishra Prakash & Associates were in a position of conflict as they had acted previously for NE (Fiji) Ltd and Mrs. Nagan.

[13] Datt J had delivered a ruling upon which Mr. Mishra relies to argue here that the cause of action based on conflict is res judicata.

[14] I reproduce below the relevant extract from Datt J’s written ruling.

MR. JUSTICE DATT’S RULING - LAUTOKA CIVIL ACTION 251 of 2008

[15] The reasons given by Datt J in his written ruling are as follows:

“I noted that the certificate of title was issued in the name of the plaintiff company.

Mr .Mishra appeared for the plaintiff and Mr M K Sahu Khan appeared for all the defendants.

Mr. M K Sahu Khan made an application that Mr. Mishra should not appear on behalf of the plaintiff for the reasons that he had taken instructions from the first defendant and had acted previously on her behalf in many matters. He claimed that Mr. Mishra is personally aware of previous matters in which he acted on behalf of the first defendant. But the first defendant did not disclose in her affidavit what was the nature of “confidential” matters relevant in this case when counsel was appearing on behalf of the plaintiff seeking an injunction to allow the plaintiffs to enter their premises so that they could conduct their company business. The Plaintiff claimed that they were illegally locked out from their premises by the defendants.

Mr. Sahu Khan submitted that there was actual conflict of interest between the defendant and counsel for the plaintiff. I noted that Mr. MK Sahu Khan provided a detailed submission in this matter which I took into account in making my decision, and considered there was any actual or potential conflict of interest in the present case before the court.

In this case the plaintiff was seeking an injunction against the defendant so that the plaintiff could carry out its business at their premises, it was not necessary for the counsel to have had any personal knowledge of any matters which may have existed in their personal dealings as a solicitor and client.

I noted some of the cases counsel referred to by the defence counsel and considered the decision in Mallesons Stephen Jaques v KPMG Peat Marwick [1990] 4 W A R 357, where the defendant retained the plaintiffs law firm in its dealings in several matters and was aware of the business operations conducted by the defendant. Some times later the Corporate Affairs Commission engaged the plaintiffs to prosecute matters under the Corporate Act, when it was clear that the plaintiff had full knowledge of the operations of the defendant company. The court considered that there was close proximity of relationship between the plaintiff and the defendant; accordingly, there was a conflict of interest.

In reply Mr. Mishra stated that for the defence counsel to argue that there was a conflict of interest, it was incumbent upon the defendant to show, what were the matters in which the conflict existed, when the application before was seeking injunctive relief against the defendants who were illegally occupying the land belonging to the plaintiff company.

Mr. MK Sahu Khan submitted that the plaintiffs claim was unsustainable since there was no actual evidence submitted by the plaintiff to show that the defendants had prevented the management and the staff from operating their business at their premises.

There was no affidavit evidence deposed by the first or the second defendant supporting the nature of conflict of interest existed if Mr. Mishra appeared on this application on behalf of the plaintiff.

I noted that conflict of interest could arise in various forms and instances between solicitor and a client. The applicable test is explained in the judgement of Mallesons Stephen Jaques v KPMG Peat Marwick [above].

After assessing all the evidence and considering that the right of counsels to appear in matters before the court, I should be careful in not barring counsels who have acted on behalf of their former clients and prevent them from appearing against them, where there was no actual evidence of conflict of interest was submitted to the court. I do not consider that a counsel’s right of appearance should be considered lightly when there is an application that counsel acting for a part should be disqualified when counsel may have acted for the client in other matters.

In my view a counsel would be disqualified to act for a client, if there was evidence before the court that the counsel had knowledge of confidential matters which was being litigated before the court and that the counsel acquired those information while he had acted for the client in a previous instruction. There was no evidence of this put before the Court.

I concluded that there was no real actual or potential conflict of interest when Mr. Mishra was appearing on behalf of the plaintiff where the plaintiff was seeking injunctive relief against the defendant which was in no way related to Mr. Mishra’s knowledge of the business activities of the first defendant.

Accordingly, I allow Mr. Mishra to appear in the application before the court”.

[16] My analysis of the reasons stated above is recorded below (see paragraphs in my discussion of the issue of Res Judicata which Mishra Prakash & Associates has raised in their submissions.

SECTION 4 OF THE LIMITATIONS ACT

[17] The first ground for striking out is that the statement of claim is statute barred under section 4 of the Limitations Act (Cap 35). Section 4 (1) (a) states as follows:

4.-(1) The following actions shall not be brought after the expiration of six years from the date on which the cause of action accrued, that is to say-

(a) actions founded on simple contract or on tort;

[18] As section 4 is being raised as a ground at this interlocutory stage, I adopt the New Zealand Court of Appeal’s approach in Johns v Johns and Holloway [2004] NZCA 42 (as per Tipping J).

[19] In the above case, the Court had to deal with an interlocutory application to strike out causes of action in a statement of claim on limitation grounds pursuant to the Limitation Act 1950 (NZ).

[20] Tipping J stated the relevant principles as follows at para [2]:

"As the case is one involving strike out, the facts upon which the Court must act are those alleged in the plaintiffs pleadings, which must for present purposes be taken as capable of proof. Causes of action or aspects thereof should only be struck out before trial on the basis that they are statute or otherwise barred, if the defendant can establish that proposition conclusively. If there is any real doubt about the matter, the case should be allowed to go to trial where all issues of fact and law can be fully explored. This is no more than the ordinary strike out principle applied in the context of a strike out application which is based on limitation grounds." (my emphasis).

[21] The above passage clearly states that in considering a striking out application based on section 4, this Court must assume that the facts in the statement of claim are established. It then puts the onus on the Defendant (Mishra Prakash & Associates) to establish conclusively that the cause of action based on facts is time barred. Hence, any doubt about whether the claim is statute barred should be reserved for the substantive trial.

[22] Two issues arise. Firstly, when did the cause of action accrue and secondly, is there enough evidence before me now to be able to determine conclusively at this interlocutory stage when the cause of action accrue?

[23] The gist of Mr. Mishra’s submission is that since the advice in question was given more than ten years ago, the action is outside the mandatory six-year limitation period provided in section 4 of the Limitations Act.

[24] Mr. Mishra argues also that the plaintiffs had sought independent legal advice from at least two other solicitors and did not act on his advice alone (see further paragraphs 26 & 27 below).

[25] Mr. Young cites various authorities in support of the submission that time accrues on any cause of action from the time the Plaintiff suffers loss or injury as a result of a negligent act or omission of the Defendant. There are many case authorities in Fiji that confirm this as the correct position in law. These case authorities justify this approach by saying that the negligent nature of an act or omission will only surface when loss, harm or damage has arisen as a result of it (see also New Zealand Supreme Court case of Thorn v Davey Burton 2008 NZSC 65; Wardley Australia Ltd & Anor. v The State of Western Australia 1993 175 CLR at 527; Invercargill City Council v Hamlin [1996] 1 NZLR 5.

[26] In any event, to return to the point raised by Mr. Mishra, whether the plaintiffs did receive independent legal advice is a triable issue. While it appears to be not a point of dispute between the parties, the nature of the advice and the legal inferences to be drawn from it will, in every likelihood, be a point of contention.

[27] For example, if the Plaintiffs were advised independently about the risks of transferring the land without a formal instrument to record that the land is to be held on trust by NFFL for NE (Fiji) Ltd – it could mean that they were aware of the risks and had willingly assumed them – perhaps in the threat of potential FDB creditor action?

[28] This is just one of the many issues of fact/law that can only be tested fully at trial.

CONFLICT OF INTEREST & BREACH OF FIDUCIARY DUTY AS ALLEGED IN PARAGRAPH 7 OF THE STATEMENT OF CLAIM?

[29] It is alleged in paragraphs 6.0 to 7.0 of the Statement of Claim that Mishra Prakash, whilst advising the Plaintiffs that it is necessary to transfer CT 12538 to a new entity, and whilst being instrumental in incorporating the 3rd Defendant to hold CT 12538, was all the while taking contrary instructions from Hem Raj to issue one share in NFFL to his wife, Nirmala Devi Raj.

[30] It is claimed that Mishra Prakash owed a duty to disclose Hem Raj’s instruction to Mrs. Nagan as it had the potential effect of upsetting the balance in NFFL’s shareholding. Put simply – it meant that Mr and Mrs Raj’s combined shareholding would prevail as the majority over Mrs. Nagan’s.

[31] It is further alleged that in acting on Hem Raj’s instruction, Mishra Prakash breached a fiduciary duty it owed not only to Mrs. Nagan – but also to NE (Fiji) Ltd.

[32] I am aware of the relevant test applied by Mr. Justice Inoke in RC Manubhai & Company Ltd –v- Herbert Construction Company (Fiji) Ltd [2009] FJHC 219; HBC 75. 2009L (7 October 2009). One of the issues he had to consider was whether a lawyer acting against his former client is conflicted. Inoke J examined the case of Bolkiah v KPMG [[1998] UKHL 52; 1999] 1 ALL ER 517 and Spector v Ageda [1973] 1 Ch. 30 and then applied the principles in these cases as follows:

"[28] There is no dispute that Mr Ram acted for Herbert Construction in other matters and was the former solicitor for Herbert Construction. That in itself is not sufficient for this Court to stop Mr Ram acting for RC Manubhai in this action. Herbert Construction must show (i) that Mr Ram is in possession of information which is confidential to the company and to the disclosure of which the company has not consented and (ii) that the information is or may be relevant to the new matter in which the interest of the other client is or may be adverse to Herbert Construction. Although the burden of proof is on the plaintiff, it is not a heavy one. The former may readily be inferred; the latter will often be obvious"(emphasis added).

[33] In the case before me, I am of the view that whether or not Mishra Prakash & Associates did so expose itself in a conflict of interest situation or whether it ever breached its fiduciary duties to any of the plaintiffs is – depending on the answer to the question I state below - best left for trial.

[34] That question is – whether or not Datt J had determined conclusively and with finality in his Ruling in 251/08 (see paragraph 15 above) that Mishra Prakash & Associates was not in a position of conflict as alleged in the Statement of Claim in this case - 106/09 – hence attracting the application of the principles of res judicata against the relevant cause of action in 106/09.

SUBMISSIONS ON RES JUDICATA

[35] Mr. Mishra submits that Datt J had heard and dealt with inter-partes an application by NE (Fiji) Ltd, Mrs. Nagan and Anand Abel Rao that Mishra Prakash be disqualified from acting for NFFL. Because Datt J had dismissed the application (see paragraph 15 above), the Plaintiffs (i.e. NE (Fiji) Ltd and Mrs. Nagan) are now estopped by the principles of res judicata of re-litigating conflict of interest as a cause of action.

[36] Mr. Mishra emphasised in his submissions that there had been a "full hearing" on the issue with full arguments from the late Mr. M K Sahu Khan who was then acting for the Plaintiffs.

[37] He also submits that the causes of action which are claimed here could have been lodged in civil action of 251 of 2008L.

[38] Mr. Mishra cites the well known case of Yat Tung Investments Co. Limited –v- Dao Heng Bank Ltd and Another (1975) A.C and Taveuni Estates Limited –v- NBF Asset Management Bank & Ors Suva High Court Civil Action No. 452 of 2005 to support his proposition that it is an abuse of process to raise in subsequent proceedings matters which could and therefore should have been litigated in earlier proceedings.

[39] That submission, I note, would be based on the principles in Henderson v Henderson (1843) Hare 100 at p. 115 follows:-

"In trying this question, I believe I state the rule of the court correctly, when I say, that where a given matter becomes the subject of litigation in, and of adjudication by, a court of competent jurisdiction, the court requires the parties to that litigation to bring forward their whole case, and will not (except under special circumstances) permit the same parties to open the same subject of litigation in respect of matter which might have been brought forward as part of the subject in contest, but which was not brought forward, only because they have, from negligence, inadvertence, or even accident, omitted part of their case. The plea of res judicata applies, except in special cases, not only to points upon which the court was actually required by the parties to form an opinion and pronounce a judgment, but to every point which properly belonged to the subject of litigation, and which the parties, exercising reasonable diligence, might have brought forward at the time."

(emphasis added)

[40] In my view, the above submission conveniently ignores the fact that Civil Action 251/08 is still before the Court with a pending application to consolidate this action with it. Perhaps Mr. Mishra is pre-empting that he will not oppose the application for consolidation when it is heard on 29th March 2010!

[41] Mr. Young submits that the principles of res judicata does not apply in this case because Civil Action 251 of 2008L dealt with a cause of action that is not the same as the one in the current proceedings. He appears to submit in the alternative that because "no evidence by cross-examination was even put before the Court" then the issue of res judicata does not apply. He cites the following passage of Buckley J in Carl-Zeiss Stiftung v Rayner and Keeler Ltd and Others [1969] 3 AELR 897.

"On the other side it has been suggested that, if it is once shown that a particular issue is res judicata, the court is bound to strike out any plea by the estopped party which raises that issue. I feel unable to accept that argument. R.S.C., Ord. 18, r. 19, is framed in language which is not mandatory but permissive. Its predecessors in earlier rules of court have always been treated as conferring a discretionary jurisdiction. (See, for example, Golding v. Wharton Salt Works Co. (15).) If it were the fact that in certain kinds of circumstances, such as that an issue which is res judicata has been pleaded, the court would always exercise the jurisdiction in a particular way, this would not import that the jurisdiction was not discretionary but merely that in such circumstances the discretion ought to be exercised in that particular way. I do not think, however, that, because an issue is res judicata, the court in the exercise of its discretion should always strike out an allegation raising that issue. The court, for example, might consider in a particular case that the better course would be for the claim of res judicata to be raised by pleading, which is, after all, the normal method of dealing with an estoppel, and dealt with at the trial. Or the court might consider that the negligible importance of the subject matter of the alleged estoppels made the cost of an application to strike out the offending plea unjustifiable, or that the opposite party had a triable answer to the alleged estoppels. It appears to me that, if a party adopts the course taken by the plaintiff here, it is for the applicant to show that to allow the offending plea to stand in the pleading will in fact give rise to one of the vices mentioned in R.S.C., Ord. 18, r. 19, of such quality and in such circumstances that the court ought, in the exercise of its discretion, to strike out the offending matter. Every case must depend on its own facts.

When a party to an action seeks to obtain an order striking out some part of his opponent’s pleading, it is, in my judgment, incumbent on him to indicate clearly what he wants to be struck out."

[42] Mr. Young submits that at best, Datt J’s ruling was only on the issue of whether should be prevented should be prevented from acting in 251 of 2008. He adds that the cause of action pleaded in the current case was not at issue before Datt J. He then cites Blair v Curran [1939] HCA 23; (1939) 62 CLR 464, 531 and Moss v Anglo-Egyptian Navigation Co (1865) LR 1 Ch Ap 108, 114 – 6 and Vitosh v Brisbane City Council [1955] HCA 52; (1955) 93 CLR 622 in support of his proposition that the context in which Datt J made his earlier ruling must be considered and relevant to this are the actual ground(s) given by the Court in its reasoning for ordering a dismissal of the proceedings.

PRELIMINARY POINT ON RES JUDICATA

[43] A party who wishes to set up res judicata by way of estoppel must establish six ingredients according to Spencer-Bower & Turner: The Doctrine of Res Judicata, 2nd Edn., 1969, pp. 18,19.

(i) "that the alleged judicial decision was what in law is deemed such.

(ii) that the particular judicial decision relied upon was in fact pronounced, as alleged.

(iii) that the judicial tribunal pronouncing the decision had competent jurisdiction in that behalf.

(iv) that the judicial decision was final (my emphasis)

(v) that the judicial decision was or involved, a determination of the same question as that sought to be controverted in the litigation in which the estoppels is raised.

(vi) that the parties to the judicial decision, or their privies, were the same persons as the parties to the proceeding in which the estoppels is raised, or their privies, or that the decision as conclusive in rem"

[44] Let me disclose now at the outset that I did examine both the formal record and the reasons outlined in Datt J’s written Ruling when I deliberated on the issue. I make this point known now because it appears to have been an issue that troubled Buckley LJ in Carl-Zeiss-Stiftung v Rayner [1969] 3 All E.R. 897 at 911:

"There seems however to be a considerable body of authority binding on me and on the Court of Appeal in support of the view that I ought to have regard only to the formal record and not to any reasons given by the learned judge in his judgement or, as I think must follow, by the House of Lords......

I have heard no argument on this aspect of the matter and accordingly as a precautionary measure I will state my views on the assumption that I should have regard to the reasoned judgements"

(see also Spencer-Bower & Turner: The Doctrine of Res Judicata, 2nd Edition, 1969, pp 183,184 said as follows:

"It has been said...that for the purpose of ascertaining the subject matter of the decision relied upon as res judicata, in general only the record (in the formal sense) of the judgement or order itself can be examined. Where an express declaration as to any particular question or issue appears on the face of the record of a formal judgement, or where "from the judgement itself the actual grounds of the decision can be clearly ascertained there is no necessity for further search..."

CONCLUSIONS ON RES JUDICATA

[45] And now, to return to the issue at hand, there are several things I note from Datt J’s ruling (see paragraph 15 above).

[46] Firstly, Datt J was dealing with an urgent interim injunction application by the plaintiff before a defence had been filed.

"...the plaintiff was seeking an injunction against the defendant so that the plaintiff could carry out its business at their premises, it was not necessary for the counsel to have had any personal knowledge of any matters which may have existed in their personal dealings as a solicitor and client" (my emphasis).

[47] Buckley LJ in Carl-Zeiss-Stiftung observed as follows at page 910 lines B -D:

"It is said however as regards the English decisions that these, being interlocutory, are not of a final character. Many interlocutory orders, such, for instance as an interim injunction limited to take effect only until judgement or further order, clearly involve no final decision of any issue between the parties either expressly of, since they depend only on a prima facie case being made out, by implication. Finality for this purpose means that the decision: (a) is one which does not ex facie, as in the case of an order for an account or enquiry, leave something to be judicially determined or ascertained before the decision can become effective or enforceable; and (b) is not subject to subsequent discharge, recision, modification or any other form of revision by the court or tribunal making the decision

[48] Secondly, Datt J noted that CT No. 12538 was issued in the name of the Plaintiff.

"I noted that the certificate of title was issued in the name of the plaintiff company.

[49] When I consider the above extract together with the extract cited in paragraph 46 above, it appears that all that Datt J considered relevant in granting the injunction was who was the registered proprietor of CT No. 12538. In other words, any issue of conflict of interest was irrelevant at that interlocutory stage and could be relegated to the back burner for the time being so to speak.

[50] Thirdly, Datt J referred to the case of Mallesons Stephen Jaques v KPMG Peat Marwick (supra - for conflict of interest for a solicitor acting against a previous client).

[51] Fourthly, relying on the Mallesons approach, Datt J looked for evidence that Mishra Prakash had within his knowledge or possession – to quote him - "confidential matters relevant in this case when counsel was appearing on behalf of the plaintiff seeking an injunction".

[52] Fifthly, he could not find such evidence in the affidavit filed by Mrs. Nagan i.e. he could not find any evidence that Mishra Prakash had within its knowledge or possession confidential matters pertaining to NE (Fiji) Ltd and Mrs Nagan that would put him in a conflict of interest situation in the injunction hearing.

"There was no affidavit evidence deposed by the first or the second defendant supporting the nature of conflict of interest existed if Mr. Mishra appeared on this application on behalf of the plaintiff".

[53] Sixthly, even if there was evidence of "personal knowledge of any matters which may have existed in their personal dealings as a solicitor and client" - that would have been irrelevant in the urgent interim injunction application that he had to deal with.

[54] I conclude as follows.

[55] Datt J did not make a final decision on the conflict of interest issue. There was no positive evidence before him. But even if there was positive evidence that Mishra Prakash & Associates had confidential information such as the one alleged in the present case (106/09) – it would not have been enough to put Mishra Prakash & Associates in a conflicted position from acting for NFFL in the urgent interim injunction application. Hence – while Datt J may have cited "lack of evidence" as one of the reasons in his ruling, it was more so – in my view - because it was irrelevant.

[56] Buckley LJ in Carl-Zeiss-Stiftung observed as follows at page 913 lines C -F:

"No finding or decision would occasion an estoppels unless it were final, but it may be said that no finding or decision on an interlocutory application, apart from the actual relief granted (which may or may not be of a final nature), is final in the relevant sense unless in consequence of the doctrine of res judicata it is a bar to further litigation of that issue. Possibly the solution of this apparent dilemma may depend on whether the issue was explicitly raised in the earlier proceedings and the parties ought to be treated as having then put forward all the facts and arguments which they then considered relevant to its resolution, so that the issue was fully considered on its merits in a judicial manner. Difficulties of the kind noticed by Lord Reid are likely, I think, to arise in a particularly acute form on interlocutory proceedings, where the parties are unlikely to wish to incur in the preliminary stages of an action all the trouble and expense which may be involves in thrashing out a complicated issue"

[57] My reading of the above is as follows. An interlocutory finding or decision is prima facie, not "final". However, if in the proceedings on the interlocutory application, the issue was explicitly raised, and the parties had put forward all facts and arguments - relevant - to the resolution of the issue, and the issue was fully considered on its merits, then the principle of res judicata may be applied.

[58] Again, applying the above, in this case, it is clear that Datt J had not gone into the merits of the issue of conflict of interest for at least two reasons: firstly, because there was "no evidence" so parties cannot be said to have put forward all facts and arguments and secondly, because possession of confidential information was irrelevant to the interlocutory injunction application. All he had to consider was whether the Plaintiff had made out a prima facie case.

[59] Accordingly, I dismiss the application to strike out on the ground of res judicata.

SEPARATE CAUSE OF ACTION

[60] I observe that there is a pending application in Civil Case 251/08 filed on 28th September 2009 seeking an order that the injunction granted by Datt J be discharged and that there be a consolidation of Actions 251 of 08 with 106 of 2009. Those applications are marked for hearing on 29th March 2010 at 10.00 a.m. before Mr. Justice Inoke.

[61] I will reserve this issue to be considered together with the application for consolidation.

ORDERS

(i) the issue of whether or not the claim is statute barred under section 4 of the Limitation Act (Cap 35) is reserved for the substantive trial.

(ii) whether Mishra Prakash & Associates (4th Defendant) has or had at any time at all exposed itself in a conflict of interest situation or was ever in breach of its fiduciary duty or duties to the plaintiffs as alleged in paragraph 7 of the statement of claim – is reserved for the substantive trial.

(iii) the application to strike out on the ground that the Plaintiffs are estopped by the doctrine of res judicata from pleading conflict of interest as a cause of action – is dismissed.

(iv) I reserve the issue of whether the claim against Mishra Prakash & Associates is a totally separate cause of action from that against the other defendants to 29th March 2010 at 10.00 a.m. to deal with together with the application for consolidation.

(v) I award costs to the Plaintiff which I summarily assess at $250 -00 (two hundred and fifty dollars) to be paid within 14 days.

Anare Tuilevuka
Master

18th February 2010.