Slatter & Gutherine Company Ltd v Denarau Corporation Ltd [2012] FJHC 913; HBC116.2011L (7 March 2012)

IN THE HIGH COURT OF FIJI
AT LAUTOKA
CIVIL JURISDICTION

Civil Action No: HBC 116 of 2011L

BETWEEN:

SLATTER & GUTHERINE COMPANY LIMITED
Respondent/Plaintiff

AND:

DENARAU CORPORATION LIMITED
Appellant/Defendant

JUDGMENT ON LEAVE TO APPEAL

Judgment of: Inoke J.

Counsel Appearing: Mr F Koya (Plaintiff)
Ms B Narayan (Defendant)

Solicitors: Koyas (Plaintiff)
Lateef & Lateef (Defendant)

Dates of Hearing: 24 February 2012
Date of Judgment: 7 March 2012

INTRODUCTION

[1] This is the defendant's application for leave to appeal the interlocutory judgment which I delivered on 14 September 2011 in which I found the defendant liable for damages and remitted the matter to the Master for assessment of damages. The judgment is reported in Slatter & Gutherine Company Ltd v Denarau Corporation Ltd [2011] FJHC 523; HBC116.2011L (14 September 2011).

[2] The facts are not in dispute. For the defendant to succeed it must show that I made a clear error of law and that a substantial injustice would result: Kelton Investments Ltd v Civil Aviation Authority of Fiji [1995] FJCA 15; Abu0034d.95s (18 July 1995).

[3] For the purposes of deciding this application it is convenient that I set out here the analysis of the issues and the reasons which led me to my earlier decision.

THE BACKGROUND

[4] The background facts as I found them in my earlier judgment are as follows. The defendant is the company which controls and manages the various areas or precincts that make up Denarau Island in Nadi. It performs functions similar to those of a municipal council. The owners of the various areas are bound by a restrictive covenant which requires them to obtain development consent and approval from the defendant before undertaking any development or other works in their respective areas.

[5] The area that is the subject of this dispute is a Crown Lease No 16977 which is registered to a company called Tokomaru Limited. The plaintiff became a sublessee of part of Tokomaru Limited's land described as Unit GrY and Unit AU6 on SLP 30 on 27 July 2007 from which it runs a bar and restaurant at Port Denarau. In April 2009, the plaintiff commenced building an extension on Unit AU6 by erecting a verandah. The defendant's complained that the plaintiff did not consult it before hand and took the plaintiff to court.

[6] On 4 May 2009, the defendant obtained on an ex-parte application in the Nadi Magistrates Court in civil action 65 of 2009, injunctions restraining the plaintiff from carrying out development and other works on its sublease. The plaintiff then filed on 7 May 2009 an application to set aside the ex-parte injunction. That application came to be heard inter-partes on 24 May 2009. However, the learned Magistrate did not deliver his judgment until 14 April 2010.

[7] The learned Magistrate not only dissolved the injunction he dismissed the whole action. His reason was that the defendant had not obtained the written consent of the Director of Lands as required by s 13(1) of the Crown Lands Act [Cap 132] before the Court made the ex-parte order on 4 May 2009. His Worship applied the rule in the unreported decision of the Court of Appeal in Civil Aviation Authority of Fiji Islands v Limalevu Apisai [2008] FJCA; ABU 20 of 2006 (25 March 2008).

THE ORIGINATING SUMMONS

[8] The originating summons sought the following orders:

1. That the defendant is liable to the plaintiff in the sum of $361,347.52 ... pursuant to the undertaking contained in paragraph 19 in the affidavit of Brian Legge sworn on 4 May 2009 on behalf of the defendant in the Nadi Magistrates Court Civil Action No 65 of 2009;
   
2. Alternatively, that an assessment be made on the plaintiff's damages suffered by reasons of the orders dated 4 May 2009, the particulars of which are described in paragraph 10 of the Affidavit of Richard Slatter filed herein in support;
   
3. The defendant do pay the costs of this application on a solicitor/client indemnity basis;
   
4. Any further and/or other relief that this Honourable Court deems just.
   

THE ISSUES

[9] It is not in dispute that Mr Brian Legge gave an undertaking in his affidavit in support of the Magistrates Court application. Mr Legge, after swearing as to financial capability of Denarau Corporation Limited in paragraph 19, gave the undertaking in this form:

"... (Denarau Corporation Limited) would be in a position to meet any claim for damages brought by (Slatter Gutherine Company Limited) arising out of the grant of an injunction. I give the usual undertaking on behalf of (Denarau Corporation Limited) as to damages and pray for the orders in terms of the Motion for injunction filed herein."

[10] The defendant however, disputes liability because its CEO says in his affidavit that he was advised that the undertaking was a condition given for obtaining the injunction order:

... for the purpose of compensating the defendant for any loss which it may have suffered by being temporarily prevented from doing what it was legally entitled to do in the event the final hearing of the action determines that the defendant was right. [Underlining by the deponent]

[11] Counsel for the defendant then argues, as I understand it, that because there was no final hearing of the action or the application by the Magistrate, the undertaking cannot be enforced.

[12] I think there is a flaw in the argument. Firstly, if s 13(1) of the Act prohibits the action being brought then that would be the end of the matter and the Magistrate need not go further and consider the merits. Indeed the learned Magistrate could not proceed any further.

[13] Secondly, I think in the current context, the phrases "final hearing of the action" and "final decision on the merits" suggest finality in the outcome rather than in the process. This is exactly what happened in this case. The injunction and the action were prohibited by law because no consent had been given. It is not, in my view, a technicality as suggested by the defendant. It is a matter of substantive law.

[14] Section 13 of the Crown Lands Act provides, so far as relevant, that:

Whenever in any lease under this Act there has been inserted the following clause:-

"This lease is a protected lease under the provisions of the Crown Lands Act"

(hereinafter called a protected lease) ... except at the suit or with the written consent of the Director of Lands, shall any such lease be dealt with by any court of law or under the process of any court of law, ....

[15] Under s 13(5) a lease includes a sublease.

[16] It is not in dispute that the plaintiff's sublease is caught by s 13(1). It is also not in dispute that the consent of the Director of Lands to continue the Magistrates Court action was not given until after the Magistrate granted the ex-parte injunctions on 4 May 2009, namely on 7 July 2009, and before he dismissed the action on 14 April 2010. What is in dispute, however, is whether the Magistrate "dealt with" the sublease on 4 May 2009 thereby requiring the prior consent of the Director of Lands.

[17] This is what the Court of Appeal[1] said in Civil Aviation Authority of Fiji Islands v Limalevu Apisai [2008] FJCA; ABU 20 of 2006 (25 March 2008) on the point:

[11] The consent of the Director of Lands to commence proceedings can be obtained anytime before the land is actually "dealt with" by the Court – Mohammed Rasul v Jeet Singh and Hazra Singh 10 FLR 16.

[12] We interpolate here that this was a decision of Hammett Acting CJ who held that land is not dealt with by the Court until an order has been made or a judgment of the Court delivered.

[18] Later in the judgment, their Lordships said:

In our view the purpose of section 13 of the Crown Lands Act is to protect people such as the respondent from arbitrary eviction from land of which they are tenants.

[19] It seems to me that whenever a Court is required to make an order that adversely affects the rights of a lessee or sublessee of a protected lease, irrespective of whether it is an interlocutory or final order or judgment, the consent of the Director of Lands is required, and the consent must be obtained before the order or judgment is made or delivered. Further, even if the Director of Lands gave his consent subsequently, it would not matter because the order had been made and the defendant (plaintiff in this application) restrained. Its legal rights have been denied and it is therefore entitled to damages. Whether they be nominal or substantial damages is another matter to be decided on another day.

[20] I note that the defendant in this case has no interest in the plaintiff's sublease other than a right to enforce a development covenant and perhaps this is one of those situations where the lessee or sublessee needs the protection provided by s 13 from arbitrary restraint by the Courts.

[21] Much of defence counsel's submissions were on the merits and justification for the grant of the ex-parte injunctions which are not relevant, in my view, because of the very narrow point raised in this application.

[22] Finally, the consent given by the Director of Lands after the grant of the ex-parte injunctions was for the defendant "to continue legal proceedings against Slatter & Gutherine Company Limited". I express the same doubts as Hammett ACJ did in Mohammed Rasul (supra) as to the sufficiency of such consent, although the point was not raised and argued.

[23] Taking all these matters into account I think the learned Magistrate was quite correct in holding that the Court "dealt with" the plaintiff's sublease when it granted the ex-parte injunctions on 4 May 2009 and in dismissing the action.

[24] The failure to obtain consent was not pointed out to the Magistrate at the ex-parte hearing, a matter which the defendant was obliged to do to fulfil its obligations of full and frank disclosure on an ex-parte application. That alone could have justified revocation of the injunctions granted ex-parte: South Pacific Aquatic Inc v Information Technology Services (Fiji) Ltd [2001] FJHC 97; Hbc0411j.2001s (5 December 2001).

[25] I am also guided by the English decision in Ushers Brewery v King & Co [1972] 1 Ch 148 in which Plowman J held that an inquiry into damages could be ordered either at the end of a hearing on the merits or before such a hearing where it is established that the injunction ought not to have been granted in the first instance.

THE PROPOSED APPEAL

[26] There is only one point of merit in the proposed appeal, and that is whether my interpretation of the phrase "dealt with" in s 13(1) of the Act and the Court of Appeal decision in Civil Aviation Authority of Fiji Islands v Limalevu Apisai (supra) is correct. I have revisited my reasoning as I have set out above and am unable to find any error in it.

[27] Counsel for the defendant cited the New South Wales Supreme Court decision of Rail Corporation New South Wales v Leduva Pty Limited [2007] NSWSC 571 as authority for the proposition that I should exercise my discretion against enforcing the defendant's undertaking as to damages. Firstly, that is a question that is more appropriate to be argued at the appeal. Secondly, resolution of the question depends on whether the defendant would have been entitled to the injunctions ultimately. In this case, because the proceedings were effectively a nullity, the defendant cannot possibly succeed so the Court's discretion should not be exercised against enforcement of the defendant's undertaking.

[28] Even if I am wrong, I do not think the defendant would suffer a substantial injustice for the following reasons. The point could be decided on appeal after the assessment of damages is done by the Master. Secondly, the defendant failed to appeal the decision of the Magistrate when it had the opportunity. I do not think it is an answer to its failure to say that the parties were negotiating.

[29] For these reasons, I think the defendant has no prospects of success on appeal and neither will it suffer a substantial injustice by the Master proceeding to assess damages.

COSTS

[30] I summarily assess costs to be paid by the defendant at $1,000.

ORDERS

[31] I make the following orders and directions:

• (a) Leave to appeal is dismissed.
  
• (b) The defendant shall pay the plaintiff's costs of this application of $1,000 within 21 days.
  
• (c) The Deputy Registrar is to send the notice of adjourned hearing for a date suitable to the Master.
  

Sosefo Inoke
Judge

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^[1] Byrne and Shameem JJA