Beijing Quality Online International Trading Co Ltd v Quality Online (Fiji) Pte Ltd [2020] FJHC 220; HBC354.2019 (16 March 2020)

IN THE HIGH COURT OF FIJI
AT SUVA
CIVIL JURISDICTION

Civil Action No. HBC 354 of 2019

BETWEEN: BEIJING QUALITY ONLINE INTERNATIONAL TRADING CO. LTD of Room 715, No. 23 Huixin East Street, Chaoyang District, Beijing, People’s Republic of China

PLAINTIFF

AND: QUALITY ONLINE (FIJI) PTE LTD a limited liability company having its registered office at Lot 1 Daya Mati Road, Vatuwaqa, Suva.

FIRST DEFENDANT

AND: SANGEETA DEVI REDDY-BRIDGEMAN of Naitata Road, Navua, Director.

SECOND DEFENDANT

BEFORE: Hon. Justice V D Sharma

COUNSEL: Mr. O’Driscroll - for the Plaintiff

Mr. Ritesh Singh - for the Defendants

Date of Ruling: 16^th March, 2020 @ 9.30 am

DECISION

[Inter Parte Notice of Motion seeking Injunctive Orders pursuant to Order 29 Rules 1 and 2 of the High Court Rules 1988 and the Honourable Court’s Inherent Jurisdiction]

INTRODUCTION

[1] This is the Plaintiff’s Inter-Parte Summons seeking for the following orders:

• (i) That an early date be granted for this application to be heard;
• (ii) That the Defendants be restrained from operating HFC Bank account held in the name of the First Defendant until determination of this action;
• (iii) That the Defendants be restrained from using all the equipment and machinery to the Plaintiff shipped by the Plaintiff to the First Defendant as consignee as per the packing lists attached within, including any potential use of the same as security;
• (iv) That the Plaintiff be granted custody of and be permitted to use the equipment and machinery for itself, subject to relevant approvals, including Investments Fiji and the landlord of the existing bottling factory situated on part of Crown Grant no. 1366;
• (v) As an alternative to (iii) for the Plaintiff to have all the equipment and machinery returned to it by the Defendants from wherever it may be and to remain in the Plaintiff’s custody thereafter pending determination of this action.
• (vi) That the Defendant pay the costs of and incidental to this application.

[2] The Orders sought are relied on the grounds enumerated and contained in the Affidavit of Li Qinghan.

[3] The Application is made pursuant to Order 29 Rules 1 and 2 of the High Court Rules 1988 and the inherent jurisdiction of this Court.

[4] The Defendants opposed the Orders sought therein and filed an Affidavit in Opposition on 24^th October 2019.

[5] A Reply Affidavit was filed by the Plaintiff on 31^st October 2019.

[6] Both parties to the proceedings furnished court with simultaneous written submissions and argued their respective cases.

THE LAW

[7] Order 29 Rules 1 and 2 of the High Court Rules 1988 provides as follows:-

Application for injunction (O 29, R 1)

1 (1) An application for the grant of an injunction may be made by any party to a cause or matter before or after the trial of the cause or matter, whether or not a claim for the injunction was included in that party’s writ, originating summons, counterclaim or third party notice, as the case may be.

(2) Where the applicant is the plaintiff and the case is one of urgency and the delay caused by proceeding in the ordinary way would entail irreparable or serious mischief such application may be made ex parte on affidavit but except as aforesaid such application must be made by notice of motion or summons. [para (2) subst LN 61 of 1991 r 2, opn 15 Nov 1991]

(3) The plaintiff may not make such an application before the issue of the writ or originating summons by which the cause or matter is to be begun except where the case is one of urgency, and in that case the injunction applied for may be granted on terms providing for the issue of the writ or summons and such other terms, if any, as the Court thinks fit.

Detention, preservation etc of subject matter of cause or matter (O 29, R 2)

2 (1) On the application of any party to a cause or matter the Court may make an order for the detention, custody or preservation of any property which is the subject matter of the cause or matter, or as to which any question may arise therein, or for the inspection of any such property in the possession of a party to the cause or matter.

(2) For the purpose of enabling any order under paragraph (1) to be carried out the Court may by the order authorise any person to enter upon any land or building in the possession of any party to the cause or matter.

(3) Where the right of any party to a specific fund is in dispute in a cause or matter, the Court may, on the application of a party to the cause or matter, order the fund to be paid into Court or otherwise secured.

(4) An order under this Rule may be made on such terms, if any, as the Court thinks just.

(5) An application for an order under this Rule must be made by summons or by notice under Order 25, Rule 7.

(6) Unless the Court otherwise directs, an application by a defendant for such an order may not be made before he or she acknowledges service of the writ or originating summons by which the cause or matter was begun.

CONSIDERATION OF THE APPLICATION

[8] The issues for this court to determine are ‘whether to grant the Orders sought as in paragraph 1 (i) to (vi) hereinabove by the Plaintiff in its Inter-Parte Summons filed on 9^th of October 2019?’.

[9] All Affidavit evidence coupled with written and oral submissions have been perused and taken into consideration in order to arrive at the hereunder result.

[10] Order sought at 1 (i) has been taken care of the case management as the Application has been heard awaiting a decision.

[11] After a careful perusal of the Orders sought by the Plaintiff, it can be ascertained that the Orders sought are of restraining nature.

[12] The extent of the court’s duty in considering an interlocutory injunction is to be satisfied that the claim is not frivolous or vexatious, in other words, that there is a serious question to be tried.

[13] Reference is made to the case of Hubbard & Another v Vosper & Another [1972] 2 0.8. 84 Lord Denning said:

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 claim but also 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. .... The remedy by interlocutory Injunction is so useful that it should be kept flexible and discretionary. It must not be made the subject of strict rules.

In American Cyanamid Co. v Ethicon Ltd [1975] UKHL 1; [1975] 2 W.L.R 316, [1975] A.C. 396

The appellant, American Cyanamid Co., an American company, owned a patent covering certain sterile absorbable surgical sutures. The respondent, Ethicon Limited, also an American Company, manufactured in the United States and were about to launch on the British market a suture which the appellant claimed infringed their patent. The respondent contested its validity on diverse grounds and also contended that it did not cover their product. In an action for an injunction the appellant applied for an interlocutory injunction which was granted by the judge at first instance with the usual undertaking in damages by the appellant. The Court of Appeal reversed his decision on the ground that no prima facie case of infringement had been made out and the appellant appealed.

In this case Lord Diplock laid down certain guidelines for the courts to consider in deciding whether to grant or refuse an interim injunction which are still regarded as the leading source of the law on interim injunctions. They are:

1. Whether there is a serious question to be tried at the hearing of the substantive matter;
2. Whether the party seeking an injunction will suffer irreparable harm if the injunction is denied, that is whether he could be adequately compensated by an award of damages as a result of the defendant continuing to do what was sought to be enjoined; and
3. In whose favour the balance of convenience lie if the injunction is granted or refused.
   

[14] The Plaintiff is a foreign company registered in Beijing, China.

[15] The first named Defendant is a Limited Liability Company duly registered in Fiji, is solely owned and managed by the second named Defendant.

[16] The Plaintiff alleges that certain rights and interests over the chattels laid out in its Application for injunctive orders premised on two investment agreements annexures LQ-5 and LQ-6 allegedly entered into between the Plaintiff and the Defendants.

[17] The Terms of Agreement with the Plaintiff and the Second Defendant regarding the establishment and operation of the water bottling factory were recorded in the investment agreement dated 3^rd May 2019 – LQ-5 refers.

[18] A Supplementary Agreement was further discussed between the parties. After reviewing and making changes, the Second Defendant forwarded a signed copy to Li Qinghan.

[19] Pursuant to the Investment Agreement, the Plaintiff either threw itself or intermediaries made the payments to the Defendants as enumerated in Li Qinghan’s Affidavit at paragraph 13(a) to (d).

In total, the company sent the Defendants USD$128,000 and FJD$17,900.

[20] As per clause 3 of the Investment Agreement, the Plaintiff facilitated material sourcing and purchasing as enumerated in Li Qinghan’s Affidavit at paragraph 15(a) to (d).

[21] The Defendants deny these agreements on the basis that the same were obtained fraudulently and under duress.

[22] The Defendants have alleged illegal conduct by the Plaintiff and its servants, agents and/ employees as outlined at paragraphs 11, 12, 13, 16 and 17 of the Affidavit in Opposition.

Whether there is a serious question to be tried at the hearing of the substantive matter

[23] The Plaintiff submitted that the facts relied on are set out in the Affidavit in Support of Li Qinghan and Affidavit in Reply of Aliti Tinai which I have taken into consideration.

[24] The Plaintiff’s argument is that there has been a breakdown of relationship between the parties to the alleged Investment Agreements.

[25] However, the Defendants’ argument is that the alleged Agreements were obtained fraudulently and under duress and not a correct account of the intended agreement that the parties were to enter into.

[26] The Plaintiff further says that the Defendants’ Affidavit in Opposition confirms that there are triable issues which would then entitle the Plaintiff to the Orders sought in their application. If Orders are made to preserve assets still in Fiji, this should not affect the Defendants as assets were purchased by the Plaintiff.

[27] Injunction is a legal and equitable remedy. The Application seeking court to exercise its discretion in his favour must establish that the court has sufficient grounds for such an exercise.

[28] The Plaintiff’s Affidavit in Support establishes that the Application is premised on two Investment Agreements as per Annexures LQ-5 and LQ-6 respectively in Li Qinqhan’s Affidavit.

[29] Both parties to the proceedings, Affidavit evidence, oral and written submissions prima facie show court that there are triable issues which needs to be determined on merits. These are serious questions to be tried in particular whether-

• (a) The two agreements entered into were obtained fraudulently and under duress and were not an accurate account of intended agreement that the parties were to enter into- refer to annexures LQ-5 and LQ-6.
  
• (b) As per clause 3 of the Investment Agreement, the Plaintiff in fact facilitated material sourcing and purchasing as enumerated in the Affidavit in Support of Li Qinghan at paragraphs 15(a) to (d) inclusive.
  

[30] For the aforesaid rationale, this court finds that there are serious questions to be tried and the same to be determined on merits at the full hearing.

Whether the party seeking an injunction will suffer irreparable harm if the injunction is denied, that is whether he could be adequately compensated by an award of damages as a result of the defendant continuing to do what was sought to be enjoined

[32] The Court should go on to consider whether and if the claimant were to succeed at the trial in establishing his right to a permanent injunction, he would be adequately compensated by an award of damages for the loss he would have sustained as a result of the Defendants continuing to do what was sought to be enjoined between the time of the application and the time the trial.

If Damages would be an adequate remedy and the Defendants would be in a financial position to pay them, no interim injunction should normally be granted, however strong the claimant’s claim appeared to be at this stage.

[33] The Plaintiff confirmed depositing a sum of $12,000 as security for costs in court. He submitted that nothing has been disclosed by the Defendant in his affidavit in opposition in terms of any undertaking as to damages. He said that the Defendant cannot rely on any argument that because the Plaintiff is not a Fiji registered entity that it has no claim.

On 4^th November, 2019, the Defendants gave an undertaking to Court in terms of the order sought at 1 (iii) within the Plaintiff’s Inter Parte Summons’ that the Defendants hereby give an undertaking that they would not use, sell, or in any way dispose any machinery shipped by the Plaintiff to the Defendant as per consignee pertaining same to be used as security and further as per packing list attached to remain on the premises in Yarawa, Navua.’. The order to this extent has also been sealed and remains intact on this file.

Reference is also made to paragraph 21 of the Defendant’s affidavit in Opposition whereby the Defendants deny paragraph 23 of Li Qinghan’s affidavit and said ‘that damages are an adequate remedy in this matter. The Defendants are in a position and undertake to pay any damages that may be awarded against the Defendants in the event that the Plaintiff succeeds at the end of the trial...I operate multiple businesses throughout Fiji and own a 4 acres property located at Naitata, Navua.’

[33] The Plaintiff may be adequately compensated in damages whereas the Defendants would not be since the Plaintiff has not disclosed to Court of any sufficiency of evidence in terms of assets owned within the Fijian Jurisdiction and/or its current financial position.

[34] The Plaintiff has not shown to court what irreparable harm will be caused or suffered- whether the Plaintiff could be adequately compensated for.

[35] I find that the Plaintiff has failed to show any cause in terms of any undertaking as to damages. Security for costs of $12,000 was deposited since the law as per Order 23 Rule 1 (a) of the High Court Rules 1988 requires the Plaintiff to pay the same if ordinarily resident out of Jurisdiction.

Balance of Convenience

[31] The Court always needs to consider in determining where the balance of convenience lies. Whether the Applicant has furnished sufficient evidence to support its undertaking as to damages. It is where there is doubt as to the adequacy of the respective remedies in damages available to either party or to both, that the question of balance of convenience arises.

[32] I make reference to the case of Honeymoon Island [Fiji] Ltd v. Follies International Ltd Civil Appeal No. ABU 0063 of 2007S (4 July 2008)- wherein the Court of Appeal stated-

"[16] Applicants for interim injunctions who offer an undertaking as to damages must also proffer sufficient evidence of their financial position. "The Court needs this information in order to assess the balance of convenience and whether damages would be an adequate remedy; Natural Waters of Viti Limited v Crystal Clear Mineral Water [Fiji] Ltd [2004] ABU 0011 at p12.’

[17] The opposing party is able to test or challenge any such financial information...;

[18] ...However in every case involving an application for an interlocutory injunction the onus is on the applicant to satisfy the Court that it can meet its undertaking as to damages whether or not the Court specifically directs the applicant's attention to the matter or not."

[33] According to the Plaintiff, the assets herein were purchased by the Plaintiff. Order 29 Rule 2 of the High Court Rules, 1988 allows for preservation of the assets pending courts determination of an action. Therefore, the balance of convenience should favour the Plaintiff as they are the equitable and legal owners of the items and Defendants are constructive trustees given the situation that has arisen.

[34] The Plaintiff herein has failed to provide its undertaking as to damages nor has it satisfied this court with any sufficiency of evidence that it can meet its undertaking as to damages.

[35] Thus, the Plaintiff has failed to meet the test in Honeymoon (Supra) and Natural Waters (Supra) as stated hereinabove respectively.

[36] I find that the balance of convenience favours the Defendants in the given circumstances accordingly.

[37] Injunction is an equitable remedy granted at the discretion of the court. Any party seeking court to exercise its discretion in his favour, must establish that the court has sufficient grounds for such an exercise. The party seeking the remedy must establish that there are sufficient grounds for the court to exercise its discretion and make necessary orders.

[38] Order sought at 1 (i) in the Plaintiff’s Inter Parte Summons- has been taken care of by case management and heard currently awaiting a decision.

[39] Order 1 (ii) in the Plaintiff’s Inter Parte Summons is an injunction retraining the Defendants from operating HFC Bank account held in the name of the first Defendant until determination of this action.

According to the Plaintiff, the order for the account to be frozen should also be granted as the criteria for such an order to be made are satisfied. The Defendants have not given any information regarding any balance amount in the account or any source of funds other than the funds sent by the Plaintiff to the Defendants and to preserve any such funds this order should be granted.

The Defendants submitted that for the continued operation and administration of the first named Defendant smoothly as the first Defendant’s business is completely dependent on the continued operation of its Bank account.

Firstly there is no evidence before this court of any Bank account details held within the HFC Bank Secondly, whether there exists an account with the HFC Bank or not is for the Plaintiff to establish and not for the Defendants to do so.

I will not grant this order in light of the insufficiency of evidence in terms of any Account held with HFC Bank, if any.

[40] Order 1 (iii) and (v) in the Plaintiff’s Inter Parte Summons is an injunction restraining the Defendants from using all the equipment and machinery to the Plaintiff shipped by the Plaintiff to the First Defendant as consignee as per the packing lists attached within, including any potential use of the same as security OR as an alternative to Order 1 (v) for the Plaintiff to have all the equipment and machinery returned to it by the Defendants from wherever it may be and to remain in the Plaintiff’s custody thereafter pending determination of this action.

On 4^th November, 2019, the Defendants gave an undertaking to Court in terms of the order sought at 1 (iii) within the Plaintiff’s Inter Parte Summons’ that the Defendants hereby give an undertaking that they would not use, sell, or in any way dispose any machinery shipped by the Plaintiff to the Defendant as per consignee pertaining same to be used as security and further as per packing list attached to remain on the premises in Yarawa, Navua.’.

[41] Since the Plaintiff has given his undertaking in terms of Orders sought at 1 (iii) in the Plaintiff’s Inter Parte Summons , then it is only just and fair that I grant this restraining order accordingly against the Defendants.

In light of above Order at 1 (iii), it will not be appropriate to accede to the alternative Order sought at 1 (v). Therefore, Order 1 (v) is hereby accordingly refused.

[42] Order 1 (iv) in the Plaintiff’s Inter Parte Summons is seeking that the Plaintiff be granted custody of and be permitted to use the equipment and machinery for itself, subject to relevant approvals, including Investments Fiji and the landlord for the existing bottling factory situated on part of Crown Grant No. 1366.

[43] In light of Order (iii) hereinabove already granted by this court on 04^th November, 2019, in terms of the undertaking, it is only appropriate that the packaging list attached therein to remain on the premises in Yarawa, Navua.
For this reason, the Order sought at (iv) is accordingly refused.

[44] The matter proceeded to hearing and it is only just and fair that the Defendants are granted summarily assessed costs of $500 to be paid within 14 days timeframe.

[45] For the aforesaid rational, this Court makes the following orders-

FINAL ORDERS

[1] Order sought at 1 (i) was taken care of by case management and accordingly heard and determined.

[2] Orders sought at 1 (ii) as sought therein is refused.

[3] Order sought at 1 (iii) as sought therein is granted in terms of the undertaking given by the Defendants restraining the Defendants from using all the equipment and machinery to the Plaintiff shipped by the Plaintiff to the First Defendant as consignee as per the packing lists attached within to remain on the premises in Yarawa, Navua, including any potential use of the same as security accordingly.

[4] Order sought at 1 (iv) is refused.

[5] Order sought at 1 (v) is refused.

[6] The Plaintiff to pay the Defendants summarily assessed costs at $500 within 14 days timeframe.

[7] The File is now remitted to the SCO for assignment of a date before the Master of the High Court for further directions and completion of the cause.

[8] Orders accordingly.

VISHWA DATT SHARMA

JUDGE

SUVA

16^th Day of March, 2019

cc: O ‘Driscoll & Co., Suva
Sherani & Co., Suva.