Waiqele Sawmill Ltd v Suncourt (Wholesalers) Ltd [2011] FJHC 335; Civil Action 14 of 2010 (8 June 2011)

IN THE HIGH COURT OF FIJI AT LABASA
CIVIL JURISDICTION

CIVIL ACTION NO. 14 OF 2011

BETWEEN:

WAIQELE SAWMILL LIMITED,
a limited liability company having its Registered office in Qelewaqa, Labasa
PLAINTIFF

AND:

SUNCOURT (WHOLESALERS) LIMITED,
a limited liability company having its registered office in Nabua, Suva
DEFENDANT

Counsel : M Amrit Sen for the plaintiff
Mr D.Sharma for the defendant

Hearing : 31st May 2011

Judgment

1. On 27th April, 2010,the plaintiff made application by way of ex parte notice of motion seeking the following order:
   

An order restraining the defendant either by its servants or agents or howsoever from disposing the assets of the company including motor vehicles, real property or any other property until the final determination of this action or until such time the amount claimed under the writ of summons being the sum of $185,005.33 (One Hundred Eighty Five Thousand Five Dollars and thirty three cents) is deposited into this Honourable Court or alternatively a bank security for the said amount is provided to the satisfaction of the plaintiff.

The application was made pursuant to Order 29 Rule 1 and 2 of the High Court Rules and was supported by an affidavit sworn by on 27th April, 2010.The application was supported on 5th May, 2011, and the Court informed counsel for the plaintiff that an undertaking as to damages has not been filed. The plaintiff thereafter filed an undertaking as to damages, with evidence of its financial status. Notice had been given to the defendant and the defendant have filed its statement of defence.

2. When the matter was taken up on 31st May, 2011, counsel for the plaintiff urged that his application for relief be heard. Counsel for the defendant informed the Court that he was willing to argue the matter, although the defendant had not filed an affidavit in reply.
   
3. The plaintiff's case
   

The plaintiff, in its statement of claim, state that nine cheques to the value of $150,000 issued by the defendant had been presented for payment by the plaintiff, and were dishonoured. This is undisputed. In its statement of defence, the defendants contend that the plaintiff had agreed to hold on the cheques until a later date.

The plaintiff states that a further sum of $ 35,005.33 is due from the defendant, for timber sold and delivered by the plaintiff to the defendant. This claim is disputed by the defendant .

Upon receipt of a notice of demand dated 5th April, 2011, from the plaintiff's Solicitor, the defendant's Barristers and Solicitors had replied by letter dated 11th April,2011, that the " assets of the (defendant) company are presently being sold to a prominent purchaser with a view to satisfy the company's creditors. The terms of the sale are presently being finalized by way of a sale and purchase agreement".

At the hearing, counsel for the plaintiff supported his application for a Mareva injunction. It was contended that the defendant company is in the process of disposing its assets and winding up the company. Counsel for the plaintiff cited the cases of Mareva Compania Naviera SA V International Bulkcarriers SA(the Mareva) (1980) 1 All ER 213, Creatanor Maritime Company Ltd v Irish Marine Management Ltd (1978) 1 WLR 966 and Prasad v Prasad (Civil Action No.411 of 1992).

4. The defendant's case
   

Counsel for the defendant contended that the essence of a Mareva injunction was the existence of a risk that the assets would be removed out of the jurisdiction. The answer to this contention, is that the Mareva injunction has shed all limitations of its genesis. Its scope has been expanded to cover the dissipation of assets within the jurisdiction.

In Z Ltd v A, (1982)1 All ER 556 at 561, Lord Denning MR quoted his passage in Rahman v Abu-Taha, (1980) 3 All ER 409 at 412, which reads as follows:

"So I would hold that a Mareva injunction can be granted against a man even though he is based in this country if the circumstances are such that there is a danger of the assets being removed out of the jurisdiction or disposed of within the jurisdiction, or otherwise dealt with so that there is a danger that the plaintiff, if he gets judgment, will not be able to get is satisfied." (emphasis added)

Sir Robert Megarry VC in Barclay-Johnson v Yuill, (1980) 3 All.ER 190 at page 195, held that the injunction lies against local residents as much as against foreign residents.

Counsel for the defendant, also submitted that the plaintiff, is an unsecured creditor, who has not obtained judgment against the defendant. There is support for this proposition in the case of Mills v Northern Railway of Buenos Ayres Co [1870] UKLawRpCh 73; (1870) LR 5 Ch App 621 at 628, where the following view was expressed:

The only remedy for a creditor in that case...... [i.e. an unsecured creditor] is to obtain his judgment and take out execution...... It would be a fearful authority for this Court to assume [i.e. to prevent a defendant from dealing with his assets] for it would be called on to interfere with the concerns of almost every company in the kingdom against which a creditor might suppose that he had demands, which he had not established in a court of justice, but which he was about to proceed to establish.

This established precedent has been watered down after the Mareva regime. In Mareva v International Bulkcarriers (1975) 2 Lloyd's Law Reports 509,from which case, the rubric "Mareva injunction" was derived, Lord Denning MR stated at page 510:

" In my opinion that principle (to grant an injunction )applies to creditors who has a right to be paid the debt owing to him,even before he has established his right by getting judgment for it. If it appears that the debt is due and owing, and there is a danger that the debtor may dispose of his assets so as to defeat it before judgment, the court has jurisdiction in a proper case to grant an interlocutory judgment so as to prevent him disposing of those assets".(emphasis added)

Finally, counsel for the defendant submitted that the plaintiff has only satisfied the first guideline laid down by Lord Diplock in American Cyanamid v. Ethicon Ltd [1975] UKHL 1; (1975) 1 All ER 504, for the grant of an interlocutory injunction, viz, that there was a serious issue to be tried. As the claim was for a liquidated amount, it was submitted, damages would be an adequate remedy. Halsbury, Laws of England, Vol 3(1),(4th Ed), paragraph 332, states the plaintiff must establish a "good arguable case" for the grant of a Mareva injunction.
Be that as it may, it is necessary to ascertain whether the plaintiff has satisfied the prerequisite for the grant of the exceptional remedy sought.

5. A Mareva injunction lies to pre-empt any action by a defendant to remove his assets from the jurisdiction of court or otherwise dissipating its assets within the jurisdiction, where there is a danger that the assets will be dissipated.

There is no evidence before the Court, that there is a danger of default upon the proposed sale nor that the defendant company is taking steps to wind up, as alleged. The letter dated 11thApril, 2011, which the plaintiff relies on, only instructs that the assets of the defendant company are being sold. I am unable to infer a risk of the defendant's assets being dissipated.

Sir Robert Megarry VC in Barclay-Johnson v Yuill (op cit) stated:

"..it must appear that there is danger of default if the assets are removed from the jurisdiction .Even if the removal of risk is great, no Mareva injunction should be granted unless there is also a danger of default." (emphasis added)

Lawton L.J. in the Third Chandris Shipping v Unimarine, (1979) 2 All ER 972 at page 987 stated:

"In my judgment an affidavit in support of a mareva injunction should give enough particulars of the plaintiff's case to enable the Court to assess its strength and should set out what enquiries have been made about the defendants business and what information has been revealed, including that relating to its size, origins, business domicile, the location of its known assets and the circumstances in which the dispute has arisen. These facts should enable a commercial judge to infer whether there is likely to be a real risk of default".

This passage was cited with approval by Fatiaki J (as he then was) in Prasad v Prasad(op cit).

In the circumstances, I make the following orders:

1. The plaintiff's application is dismissed.
2. The plaintiff is to pay the defendant's costs, summarily assessed at $ 500.
   

A.L.B.Brito-Mutunayagam
Judge

At Suva
8th June,2011