Helipro v Sanctuary Fiji, LLC [2014] FJHC 874; HBC207.2014 (28 November 2014)

IN THE HIGH COURT OF FIJI
AT SUVA
CIVIL JURISDICTION

Civil Action No. HBC 207 of 2014

BETWEEN:

HELIPRO (FIJI) LIMITED
a limited liability company having its registered office at 1st Floor Anderson Fong & Sons Building, Main Street, Savusavu, PO Box 153, Savusavu, Vanua Levu, Fiji
Plaintiff

AND:

SANCTUARY FIJI, LLC
a limited liability company having its registered office at R Patel Lawyers, 5th Floor, Development Bank Centre, Suva in Fiji
Defendant

Appearance : Mr F. Haniff of Haniff Tuitoga Lawyers for the Plaintiff

Mr Devanesh Sharma of R Patel Lawyers for the Defendant

Date of Judgment : 28 November 2014

JUDGMENT

on Interlocutory Injunction and Interim Injunction

[1] The summons for interlocutory injunction dated 29July 2014 and inter-parte summons for interim injunction dated 29 July 2014 were filed on 29 July 2014 and the ex-parte summons was taken up for hearing on 31 July 2014 and this court made the following orders to the effect that:

(a) The Defendant was restrained from evicting the Plaintiff from that part of land described as CT No. 35617 being Lot 2 on Plan No. DP8892;

(b) The Defendant was restrained from interfering and/or causing and/or interfering in any way with the quite enjoyment of the land described in paragraph 1 above.

(c) The Defendant is restrained from obstructing and/or preventing the Plaintiff's current access of the land described in paragraph 1 above;

(d) The Plaintiff was restrained from removing any buildings/development done by him to the land until final determination of this matter;

(e) Orders (a); (b) and (c) were inforce and valid until 9.30am on 6 August 2014.

The Order was thereafter extended.

[2] The reliefs claimed in the inter-parte summons for interim injunction were same as the Ex-parte summons and the matter was taken up for hearing on 20 November 2014.

[3] At the commencement of the Trial Mr N Barnes appeared and informed the court that he is appearing for the Rick Lucas Helicopters New Zealand Limited which is presently under receivership and the said company had leased Helicopters to the Plaintiff Helipro (Fiji) Limited and his client's interest to be recorded in the proceedings which was noted. Mr Barnes did not participate in the proceedings thereafter, with the leave of the court.

[4] At the outset, Mr Haniff counsel for the Plaintiff stated that he should be granted leave to make his submissions first since there is no application was made by the Defendant pertaining to the interlocutory injunction granted. Mr Sharma for the Defendant stated that he should be heard first since the interlocutory injunction orders were obtained on ex-parte basis. Considering circumstances specifically the Plaintiff was heard at the time of granting interlocutory injunction orders on ex-parte, Mr Sharma was allowed to make his submissions first.

[5] The counsel Mr Sharma referred to the 3 Affidavits filed in this case, the Affidavit dated 29 July 2014 sworn by Graeme Hedge, the Affidavit in Response dated 4 September 2014 sworn by Fred Vosloh and the Affidavit in Reply dated 30 September 2014 by Graeme Hedge and the statement of claim filed in this action. In the Statement of Claim paragraph 9 states:

"Assurance

9. The Plaintiff received an assurance from the Defendant that it met with the terms of the Lease Agreement, it would grant the Plaintiff a lease of at least 20 years or more."

[6] The Interlocutory Injunction orders were granted on the basis that there was an assurance by the Defendant to the Plaintiff to grant lease of 20 years. In this regard it is important to peruse the terms agreed in the Lease Agreement dated 1 December 2012 (GH20).

This agreement specifically was made for a fixed term of one year from 1 December 2012 ending on 30 November 2013 at a monthly rental of $1.00 including of VAT (Clause 1).

Clause 2 of the Agreement provides for a review of the agreement on or around 30 June 2013.

[7] The Defendant is the proprietor of property described in Certificate of Title No. 35617 being Lot 2 on DP 8892 on which is situated the entire Aerodrome area known as "Nanuku Resort Aerodome" formerly known as "Taunovo Bay Aerodrome" at Pacific Harbour.

[8] The Plaintiffs rights were described in the Clause 2 of the Agreement and I specifically draw my attention to the Clause 2.7 which states:

"2.7 Sanctuary's (the Defendant) permission to make improvements and modifications to the existing hanger and house for staffing facilities, engineering, storage, offices search and rescue services see Note 3. Helipro (the Plaintiff) however, shall not reduce the size of or demolish any buildings or any portion of any building without express written consent first had and obtained from Sanctuary (the Defendant)."

It is evident that the land and property was leased to the Plaintiff Helipro for a rental of $1.00 per month for Helipro to develop and improve the hanger and the other building to a usable condition with the prior permission of the Defendant. Having heard the submissions and perusal of the Affidavits this court concludes that the Plaintiff was charged a nominal monthly rental for the reason that the Plaintiff had to incur expenses to develop the property to a usable condition.

[9] As stated in the Clause 4 of the Agreement, the Defendant obligated to:

"4.1 Permit and allow Helipro the intended use of the Aerodrome, hanger and house as stated in Note 4 herein;

4.2 Permit and allow Helipro unlimited landing rights."

As per terms stated in the Note 3 of the Agreement, the Plaintiff had to replace the roof of the hanger building and the photographs annexed to the Affidavits by Graeme (sworn on behalf of the Plaintiff) reveal that there was no necessity of structural changes to the hanger building (GH 25 annexed to the Affidavit dated 29/7/2014 and GH 4 annexed to the Affidavit dated 30 September 2014). The photographs show the Plaintiff had completed the roof of the hanger, interior clean up and other work to make the hanger to be in a usable position.

[10] I now draw the attention to the Clause 5 of the Agreement which states:

"5. Termination

5.1 Sanctuary shall have the right to terminate this agreement:

(a) Without any notice if for any reason whatsoever-

(i) the Aerodrome facility cannot be used due to closure of the same by the relevant authorities allow Helipro to continue operations at the hanger (Appendix 1, area B);

(ii) if as a result of Helipro operations Sanctuary's Aerodrome license is imminent written danger of being revoked by the relevant authorities;

(iii) if Helipro abandons the Aerodrome for a period of 30 days or longer.

(b) If Helipro in breach and/or in default of any of its obligations herein and fails to comply with the same after receiving a fourteen (14) day notice (or as agreed between the parties) from Sanctuary specifying the breach/default and Helipro fails to remedy the breach/default.

5.2 Helipro shall have the right to terminate this agreement at any time by giving 7 days notice in writing.

5.3 Any termination by either party shall be without prejudice to the rights of the parties to take any action or claim any damages for any breach of the other party's obligations herein."

The above provisions are very clear either party had the right to terminate the agreement at their discretion. What conclusion the court can arrive is that this lease agreement does not give rise to a promise or an assurance of long term lease by the Defendant. As stated in the clause:

"2. Review

The term of this agreement and the rental payable shall be reviewed on or around 30 June 2013 with a view to establishing a long term arrangement."

This is the only clause in the agreement which contains that after a review parties to decide on long term arrangement.

There is no covenant in the agreement to the effect that what means a "long term". Further there is no covenant even for an extension of the agreement. In such a situation, the only conclusion this court can make is that there was no obligation by the Defendant to extend the agreement for further period.

Accordingly, the averment in paragraph 9 of the Statement of Claim (stated in paragraph 5 of this Judgment) is misrepresentation and suppression of the facts. There is no provision in the agreement that there is a commitment by the Defendant to grant 20 years lease to the Plaintiff.

This is not only a misrepresentation of the facts but also material non disclosure of the relevant clause in its true sense. Accordingly, I agree with the argument of Mr Sharma that this is a false pleading. The Plaintiff's counsel failed to substantiate with evidence even at a latter stage there was an agreement for 20 year lease. Mere offer by the Plaintiff will not have a binding agreement as submitted by Mr Haniff at the hearing:

1. The Plaintiff had stated in the email dated 21 November 2012 –"we look forward to a lasting relationship with your team" (GH 14). There is no acceptance by the Defendant and long lasting relationship does not mean a long term lease. Further, the question arises that if it was not incorporated in the lease agreement signed on 1 December 2012, fixing the agreement for a long term (for 20 years).

2. The Plaintiff had annexed GH18 an email by the Defendant dated 13 December 2012 (after signing the agreement) which states "Dave and I look forward to a long term relationship with Helipro." This court cannot infer that this email is any intention for a long term lease. The Plaintiff fails.

3. The Plaintiff also referred to an email dated 23 November 2013 by the Defendants (GH 33) and cited 2 paragraphs of the said email and stated Mr Williams of the Defendant back tracked on the obligation. On perusal of the email in its totality, it clearly establishes that the intention of the Defendant at the time of signing on of the agreement. I draw my attention to the following statement in GH 33:

"Thank for your letter of 21 November 2013. I am going to respond directly to you, so we can keep from spending additional money on legal. As I mentioned on the phone, the more legal, time and effort we spend talking about a potential lease extension, the less interest we gradually have in potentially having you continue to lease our hanger at Nanuku Aerodrome.

Overall we are quickly running out of time. Our proposal, as we have mentioned in the past many times is:

1) 2 year additional agreement;

2) F$ 5000/month rental payment.

You told us that you do not like the proposal, but never actually responded with a proposal of your own. Please do as soon as possible, so we can figure out whether it is worth continuing to talk, or whether you should quickly start to make alternative arrangements for your Helicopter base."

The failure of the Plaintiff's counsel to draw the attention of this court to the full contents of the letter shows it had attempted to show the court the contents which are beneficial to his client.

The principles governing injunctions clearly establish that the parties applying for an injunction to bring to the notice of the court all facts material to the determination of his right. Always the practitioners should be frank in their submissions, disclosure to the court. In other words lawyers must do what they can do to ensure that the law is correctly applied to the case. In the present case, failure to make frank disclosures/misrepresentation of the facts and stating false averment in the Writ of Summons at the hearing of the ex-parte summons clearly shows the Plaintiff had not come to the court with clean hands for interim relief as such the ex-parte injunction should be dissolved.

[11] I also cite the case of Ship Building Fiji Ltd vs. Brian Murphy and Another Civil Action No. 0057 of 1997 decided on 10 April 1997 which quoted the case of Brinks MAT Ltd vs. Elcombe (1983) 3 All E.R. 1988, it was stated:

"Whether a fact, not disclose is of sufficient materiality to justify or require immediate discharge of the order without examination of the merits depends on the importance of the fact to the issue to be decided by the judge on the application. The fact that non disclosure was innocent, in the sense that it was not known to the applicant or that its relevance was not perceived, is an important, but no decisive, consideration in deciding whether to order immediate discharge. However, the court has a discretion not with standing proof of material non disclosure which justifies immediate discharge of an ex-parte order to continue the order or to make new order on terms." (emphasis mine)

The Plaintiff's conduct of deliberating paragraph 9 in the Statement of Claim and the averments stated in his Affidavits on the same basis referring to emails and telephone conversations does not establish that there was an undertaking, assurance or agreement by the Defendant to extend the period of lease and I conclude all those materials tendered as evidence do not justify that there was an assurance made by the Defendant as pleaded by the Plaintiff in paragraph 9 of the Statement of Claim.

I cite Lord Denning M.R. in case of Hubbard and Another vs. Vosper and Another [1972] 2 Q.B. 84:

".............In considering whether to grant an interlocutory injunction, the right course for a judge is to look at the whole case. He must have regard not only to the strength of the defence, and then decide what is best to be done. Sometimes it is best to grant an injunction so as to maintain the status quo until the trial. At other times it is best not to impose a restraint upon the Defendant but leave him free to go ahead. For instance, in Fraser vs. Evans [1969] 1 Q.B. 349, although the Plaintiff owned the copy right, we did not grant an injunction, because the Defendant might have a defence of fair dealing. The remedy by the interlocutory injunction is so useful that it should be kept flexible and discretionary. It must not be made the subject of strict rules."

The evidence before me is the Defendant had acted fairly. It had offered the Plaintiff the lease for further 2 years, before the agreement came to an end. Presently, the Plaintiff is occupying the property without any leave, license or permission by the Defendant and carrying on with his business as a trespasser. In case of continuation of the interim injunction and restraining the Defendant evicting from the property is prejudicial to the rights of the Plaintiff.

By the email dated 23 November 2013 (Agreement was due to expire on 30 November 2013), the Defendant had requested the Plaintiff to make alternative arrangements. Until July 2014, the Plaintiff had not taken any steps to extend the lease for 2 years or to vacate the premises. The Defendant also has written to the Plaintiff through their lawyers GH 32 to extend the lease for further 2 years. But the Plaintiff was insisting on long term lease alleged to be obliged by the Defendant which I find no evidence to substantiate. The Plaintiff's claims for interim reliefs are with no basis vexatious and frivolous. I hold with the Defendant.

[12] 12.1 The Defendant's counsel made submissions with regard to undertaking as to damages. I agree with him that the Plaintiff relying on the Construction cost (GH 47) is not sufficient evidence for such damages since the expenditure incurred on the property is not substantiated by the receipts and invoices. Further the Plaintiff annexed GP 46 Helipro Fiji Limited balance sheet unaudited with covering letter by a Director Peter Scollary as at 31 December 2013. For the following reasons I deny to accept the finances stated therein i.e.:

1) It is unaudited balance sheet as at 31.12.2013, which was filed in July 2014 in this matter. It shows the annual audited balance sheet is not completed until July 2014 which is unsatisfactory conduct of the company's financial affairs.

2) The Plaintiff had not divulged the up to date financial position of the company at least as at June 2014 even as an unaudited statement.

It is a fact that undertaking as to damages should be supported by evidence placed before the court. In case of Natural Waters of Viti Ltd –v- Crystal Clear Mineral Water (Fiji) Ltd (unreported) ABU 00011 decided on 26 November 2004, the court stated:

"...........Applicants for interim injunctions who offer an undertaking as to damages should always proffer sufficient evidence of their financial position." (p.12)

The findings in paragraph 1 and 2 above, is supported by the above statement made by the Court of Appeal. The relevant financial information was not tendered to the court as admissible evidence which does not support the Plaintiff's undertaking as to damages. In this case, the Plaintiff operates its business from the property owned by the Defendant. The Plaintiff's right to stay as a lessee expired in December 2013 and it is established that the Plaintiff is occupying the property as a trespasser relying on alleged assurance by the Defendant which is disputed. If the Defendant is awarded damages after hearing, substantive damages has to be awarded. As such there should be sufficient evidence, assets and/or finances of the company. The Plaintiff failed to substantiate its financial ability to meet such damages by way of evidence.

Accordingly, I conclude that the Plaintiff had failed to give an acceptable undertaking as to damages.

12.2 The Plaintiff also made submissions with regard to pending contracts with its clients and stated that in case if the Defendant is not restrained from evicting the Plaintiff cannot fulfill its obligation to the clients on the contracts, and will cause damages. I find this matter cannot be taken into consideration:

1) The Plaintiff was well aware of the uncertainty of the term of the lease period and as such it should have not entered into contracts for services with the clients putting them in jeopardy.

2) If any event, the risk taken by the Plaintiff cannot be taken as a reason to make orders to restrain the Defendant.

3) In a substantive hearing if the Plaintiff is successful, it could claim damages from the Defendant to compensate for the damages (if any) incurred on breach of its contracts with clients.

12.3 On the other hand the Defendant had stated that in case at the substantive hearing if damages are ordered, the Defendant too should be in a sound financial position to pay such damages. This argument can be considered in two folds:

1) The Plaintiff is accepting damages would be an adequate remedy.

2) In such instance the Defendant should have sufficient assets.

It is a common ground the Defendant owns this land which has a value and the Plaintiff itself stated the expenditure incurred on the said land for the development work is over $200,000.00. The counsel submitted that the Plaintiff is unaware that whether the land is mortgage and there is adequate value to cover the damages if awarded. The Plaintiff should have checked and perused the Title prior to entering into the lease agreement for encumbrances. There is no evidence before me that the land is encumbered by a Mortgage and onus of proof lies with the Plaintiff.

As such I conclude the Defendant's property can be taken as its undertaking as to damages and in this matter damages is adequate remedy as concluded in the preceding paragraphs of this Judgment.

[13] The Plaintiff also submitted that balance of convenience lies with the Plaintiff. The court is satisfied and the parties admitted that no rental was paid to the Defendant after the Agreement came to an end in December 2013. The Plaintiff occupies the property without any right and causing damages to the Defendant. The Plaintiff is causing injustice to the Defendant and the principles in the cases cited by the Plaintiff are in favour of the Defendant. The Plaintiff's claim that the Defendant had previously offered the land to a car club in 2008 for 20 years does not support the claim of the Plaintiff's long term lease. Commercial decisions are made by businessman considering circumstances prevailing at that juncture. It cannot be applied for each and every project or claim as of right. Decisions depends on the business proposals and the argument of the Plaintiff does not carry any merits and unfounded.

[14] This matter has to be decided on the basis of the agreement entered between the parties and the subsequent discussions, and unwritten promises (if any) for a long term lease of 20 years. If the Plaintiff is successful it will be entitled for damages. The assurance alleged to be made by the Defendant for a long term lease will depended upon, on the evidence and onus of proof lies with the Plaintiff. Considering all the material before me, I conclude the balance of convenience lies with the Defendant and the damages is an adequate remedy.

[15] Accordingly, I make the following Orders:

1) The interim orders made by this court on Summons for Interlocutory Injunction dissolved forthwith.

2. Inter-parte Summons dated 29 July 2014 dismissed.
   
3. The Writ of Summons to take its own cause.
   

4) The Plaintiff is ordered to pay $2,500 summarily assessed cost within 30 days of this Judgment.

Delivered at Suva this 28th Day of November 2014

......................................

C. KOTIGALAGE

JUDGE