Board of Trustees of South Seas Club v Chung Lee [2022] FJHC 183; HBC101.2021 (13 April 2022)

IN THE HIGH COURT OF FIJI
AT LAUTOKA
CIVIL JURISDICTION

HBC 101 of 2021

BETWEEN :
THE BOARD OF TRUSTEES OF SOUTH SEAS CLUB
PLAINTIFF

AND :

CHUNG LEE of Simla, Lautoka; MANSUR KHAN of Waiyavi Stage II, Lautoka; RAJENDRA

SWAMI of Naviyago, Lautoka; JOHN MAHENDRA, of Malamala Street, Simla, Lautoka; SANJAY

PRASAD of Simla, Lautoka; HAROON MOHAMMED of Vomo Street, Lautoka; BEN SINGH of

Kuata Street, Simla, Lautoka; CECIL JAMES of Malamala Street, Simla, Lautoka; KANDA SAMI

MUDALIAR of Lautoka; BRIJESH CHAND of Banaras, Lautoka; ANIL KUMAR of Lautoka;

RAYMOND SINGH of Drasa, Vitogo, Lautoka; RAMESH CHAND of Simla, Lautoka; NARENDRA

SAMI of Rifle Range, Lautoka.
1^st TO 14^th DEFENDANTS

Appearances: Mr. Aman Ravindra Singh in person as a member of the Board of Trustees
Mr. Wasu Pillay for the Defendants
Date of Hearing: 25 March 2022
Date of Ruling: 13 April 2022

R U L I N G

INTRODUCTION

1. The background to this case is set out in my judgment dated 04 March 2022 (see Board of Trustees of South Seas Club v Chung Lee [2022] FJHC 90; HBC101.2021 (4 March 2022).
   
2. The Orders I made in the said judgment were as follows:
   

CONCLUSION

78. As of now, all I am prepared to make is a declaration that the meeting held on 07 April 2021 at 6.00 p.m. by seventeen of the twenty-four foundation members was validly constituted and perfectly constitutional in terms of clause 103.
    
79. In saying the above, I am also saying that the dismissal of the defendants was unconstitutional.
    
80. Accordingly, the resolutions passed at the meeting of 07 April 2021 meeting were perfectly within the powers of the foundation members to make.
    
81. The purported amendment to clause 116 of the constitution is hereby declared to be invalid and unconstitutional with the result that the original clause 116 shall remain in force.
    
82. I also order the plaintiff to pay costs to the defendants which I will summarily assess at $5,000-00 (five thousand dollars only).
    
83. Parties are at liberty to apply for further orders.
    

(emphasis added)

3. The overall effect of all the above Orders was that the Board of Trustees was no longer validly in power and control over the affairs of the South Seas Club. Pursuant to the said Orders, the defendants took steps to enforce the Orders by writing to the Trustees to step down. However, in seeking to oust the plaintiffs from “control” of the South Seas Club, the defendants were met with such resistance and recalcitrance by the plaintiffs.
   
4. This forced the defendants to file an application to this Court on 25/02/22 seeking the following Orders:
   
   • (1) That the Plaintiff’s immediately handover and/or cause to handover the administration and physical control of the Southseas Club to the Interim Administration Committee consisting of Mr. Raymond Singh, Mr. Cecil James and Mr. Sanjay Prasad appointed by the Foundation Members on 7 April 2021 at the meeting of the Foundation Members convened by requisition under clause 103 of the Southseas Club Constitution and that such handover include:
     
     1. All keys to the Southseas Club premises and all associated buildings in the asset register of Southseas Club; and
     2. Keys to the Southseas Club safe; and
     100. All Southseas Club fixtures and fitting; and
     4. All Southseas Club documentation including, but not limited to, archived documents that are previous minutes of the Southseas Club, correspondences and lease documentation; and
     5. Financial documentation and records of the Southseas Club, including but not limited to, all creditors and debtors listing, stock/inventory records, cheque books, receipt books, payment vouchers with associated invoices, unpaid invoices and all things in progress; and
     6. Passwords, usernames and all things associated with all social media accounts of Southseas Club; and
     7. All banking details, including but not limited to, details of current accounts, new accounts opened, signatories to accounts and all details associated with all bank accounts of Southseas Club; and
     8. All records that are material and relevant to all tenants of Southseas Club; and
     9. All and any things that is required and/or necessary in the transition from an existing management committee to a new management committee.
        
   • (2) That alternatively, that the Fiji Police Force render any and all assistance to the Interim Administration Committee consisting of Mr. Raymond Singh, Mr. Cecil James and Mr. Sanjay Prasad appointed by the Foundation Members on 7 April 2021 at the meeting of the Foundation Members convened by requisition under clause 103 of the Southseas Club Constitution, to immediately takeover and/or cause to take over the administration and physical control of the Southseas Club with the reasonable use of force, if required, and to take physical possession and control of:
     
     1. All keys to the Southseas Club premises and all associated buildings in the asset register of Southseas Club; and
     2. Keys to the Southseas Club safe; and
     100. All Southseas Club fixtures and fitting whether in the Southseas Club premises or elsewhere; and
     4. All Southseas Club documentation including, but not limited to, archived documents that are previous minutes of the Southseas Club, correspondences and lease documentation; and
     5. Financial documentation and records of the Southseas Club, including but not limited to, all creditors and debtors listing, stock/inventory records, cheque books, receipt books, payment vouchers with associated invoices, unpaid invoices and all things in progress; and
     6. Passwords, usernames and all things associated with all social media accounts of Southseas Club from Social Media platforms, if required, and if the Plaintiff’s do not give the relevant information required by the Interim Administration Committee; and
     7. All banking details, including but not limited to, details of current accounts, new accounts opened, signatories to accounts and all details associated with all bank accounts of Southseas Club from all or any Bank that may hold records relevant to Southseas Club; and
     8. All records that are material and relevant to all tenants of Southseas Club that are immediately available in the Southseas Club premises or other properties belonging to the Southseas Club; and
     9. All and any things that is required and/or necessary from the new management committee to take over the management and control of Southseas Club.
        
   • (3) That by way of clarification, the costs awarded against the Plaintiff on 18 February 2022, are costs to be paid by Aman Ravindra Singh, Sheikh Irshad Ali Sahib and Jan Nissar Mohammed.
     
   • (4) That the Fiji Police Force render all and any assistance necessary to enforce the orders of the Court, if the Court grants orders in terms of prayer 2.
     
   • (5) That costs of this action and this application be paid by Aman Ravindra Singh, Sheikh Irshad Ali Sahib and Jan Nissar Mohammed.
     
   • (6) That the parties be at liberty to apply for further orders.
     
   • (7) Such further or other order(s) that the Honorable Court may deem fit, just, expedient and necessary in the circumstances.
     
5. Clearly, in filing the said application, the plaintiffs were relying on that part of the Orders where I had granted the following:
   

“Parties are at liberty to apply for further orders”

STRIKING OUT APPLICATION

6. Admittedly, my orders were merely declaratory in nature. That was all I was prepared to order at that stage. As I said at paragraph 78:
   

As of now, all I am prepared to make is a declaration that the meeting held on 07 April 2021 at 6.00 p.m. by seventeen of the twenty four foundation members was validly constituted and perfectly constitutional in terms of clause 103.

7. Admittedly also, my declaratory judgment provided no relief or order enforcement. All I did was make declarations of the rights of the parties vis a vis the constitution.
   
8. Upon being served with the above application, the plaintiffs then filed a cross-application to strike it out on the following grounds:
   
   1. it discloses no reasonable cause of action;
   2. it is otherwise an abuse of the process of the Court.
      

ISSUES

9. The basic question which presents itself at this time is – how might the court’s coercive powers be engaged to enforce a binding declaratory order? This, in turn, raises the following issues:
   
   • (a) is a declaration of right binding?
     
   • (b) if so, then is it open to a party to claim a consequential relief from a declaratory judgment?
     
   • (c) if the answer to (a) is “yes”, then what should the successful party do to enforce a right declared by the court? Is the Court functus officio once it grants declaratory orders? If so, then should the successful party institute fresh proceedings to enforce a right?
     
   • (d) what if, as I did in this case, the court had included a “liberty to apply” provision after setting out the declaratory judgment. Is the court still then precluded from entertaining any further application for consequential relief in the same proceedings?
     

IS A DECLARATION OF RIGHT BINDING?

10. A declaratory order is binding. I say this for two reasons. Firstly, a court is only concerned with legal rights. Hence, where a court declares a legal right, that right is assertable through an enforcement process. Secondly, the fact that a declared legal right is enforceable makes it a binding legal right.
11. As Lord Diplock said at p.501 in Gouriet v Union of Post Office Workers [1977] UKHL 5; [1978] AC 435 per.
    

"...The only kinds of rights with which courts of justice are concerned are legal rights; and a court of civil jurisdiction is concerned with legal rights only when the aid of the court is invoked by one party claiming a right against another party, to protect or enforce the right or to provide a remedy against that other party for infringement of it, or is invoked by either party to settle a dispute between them as to the existence or nature of the right claimed. So for the court to have jurisdiction to declare any legal right it must be one which is claimed by one of the parties as enforceable against an adverse party to the litigation, either as a subsisting right or as one which may come into existence in the future conditionally on the happening of an event ...

(my emphasis)

12. Hence – as Diplock LJ went on to say:
    

"... the jurisdiction of the court is not to declare the law generally or to give advisory opinions; it is confined to declaring contested legal rights, subsisting or future, of the parties represented in the litigation before it and not those of anyone else."

(my emphasis)

(see also Mrs. Justice O'Farrell’s judgment in Office Depot International (UK) Ltd v UBS Asset Management (UK) Ltd & Ors [2018] EWHC 1494 (TCC) (15 June 2018); Governor and Company of the Bank of Scotland v A Ltd [2001] EWCA Civ 52 per Lord Woolf CJ).

13. The court's power to make a declaration of right was derived from the Court of Chancery (Office Depot International (UK) Ltd v UBS (supra). Originally, the power was restricted to declaratory judgments as to existing private rights (see Guaranty Trust Company of New York v Hannay [1915] 1 KB 536). However, over time, that power was extended to judicial review proceedings to control the abuse of executive power. The power (to make a declaration of right) has been extended to other situations where the court’s advisory declaration is sought.
    
14. I must emphasize that while a declaration may not necessarily provide relief or order enforcement, the rights declared are nonetheless enforceable, albeit the process by which the court’s coercive powers is invoked to enforce a declaratory order may be slightly different.
    
15. Order 15 Rule 8 of the High Court Rules 1988 provides:
    

Declaratory judgment (O.15, r.18)

18. No . No action or other proceeding shall be open to objection on the ground that a merely declaratory judgment or order is sought thereby, and the Cour make binding declarations of right whether or not any cons consequential relief is or could be claimed.

16. The above provision was interpreted in England to mean that a Court should only make declaratory orders in cases where the plaintiff, at his election, may pursue consequential relief. William G. Rice Jr., The Constitutionality of the Declaratory Judgment, 28 W. Va. L. Rev. (1921)^[1] describes this point as follows:
    

The first general use of the declaratory judgment in a common law jurisdiction was in England, where it was introduced in a limited form from Scotland by the Chancery Procedure Act of 1850. An amendment of 1852 provided that "No suit . . . . shall be open to objection on the ground that a merely declaratory decree or order is sought thereby, and it shall be lawful for the court to make binding declarations of right, without granting consequential relief." This was interpreted to empower the court at the plaintiff's option to give declaratory relief only in those cases in which he might have gotten consequential relief (Rooke v. Lord Kensington, [1856] EngR 808; 2 Kay & J. 753, 760 (1856).

17. Hence, it would seem that - where a declaratory judgment has not provided relief or order enforcement, as I have done in this case, consequential relief is still available at the option and election of the successful party – who may pursue it either in association with or as a supplement to the declaratory relief.
    

SO HOW SHOULD CONSEQUENTIAL RELIEF BE PURSUSED BY THE SUCCESSFUL PARTY?

18. The question is - whether or not the successful party who has had a declaratory order pronounced in his favor but without any provision for relief or order for enforcement – can apply for consequential relief in the same proceedings? Is not the court functus officio? If the court has determined any legal issue which forms the subject matter of the declaration, is the issue then not res judicata by virtue of the making of the declaration?
    
19. There is a view that, given that a declaratory order merely declares the rights of parties, it is dormant and has no coercive force.
    
20. As Karibi Whyte JSC of the Supreme Court of Nigeria said in the case of Okoya v. Santili (1994) All N.L.R. 387, this does not mean that the right declared is unenforceable. It simply means that the party whose right has been affirmed by a declaratory order must go back to court to seek an order to enforce it.
    

“...It is a matter of general consensus among academic writers and judicial decisions that a declaratory judgment which is an embodiment of the recognition of a particular right may be the basis for subsequent proceedings to enforce such rights, where such right is threatened or is being violated. It seems to me correct to postulate that a declaratory judgment or order is a recognition of a dormant right. Hence a declaratory order or judgment remains a dormant right until subsequent proceedings have been taken to protect the threat to or violation of the rights so declared in the judgment or order.”

21. Zamir & Woolf: The Declaratory Judgment (Lord Woolf & Jeremy Woolf eds) (Sweet & Maxwell, 4th Ed, 2011) (“Zamir & Woolf”) aptly states at para 1-07:
    

A declaration by the court is not a mere opinion devoid of legal effect: the controversy between the parties is determined and is res judicata as a result of the declaration being granted.

22. In Zavarco plc v Tan Sri Syed Mohd Yusof Bin Tun Syed Nasir [2021] EWCA Civ 1217^[2], Sir David Richards defined the issue broadly at paragraph 1 as follows:
    

The issue raised by this second appeal is whether the doctrine of merger, whereby a judgment on a cause of action precludes a new action for further relief on the same cause of action, applies where the judgment is for declaratory relief only. It appears that this is an issue on which there is no decided case either in this country or in any other Commonwealth country. The current edition of a leading textbook, Spencer Bower & Handley: Res Judicata (5th ed. 2019), expresses the view that merger does not apply in the case of a purely declaratory judgment, as have all previous editions since the first edition published in 1924

23. After citing various authorities to explain how the doctrine of merger works, Sir David Richards went on to comment as follows:
    

38. It has been stated in all editions of Spencer Bower that the doctrine of merger does not apply to a declaration...... No authority is cited for that proposition, but none can be when, so far as known, it has never previously been contended that it does apply to a declaration. It is, however, consistent with the underlying rationale of the doctrine. Moreover, it is hard, indeed I would say impossible, to think of a sound reason why a declaration of legal right or obligation should automatically bar a subsequent claim for enforceable relief.

39. There is a further consideration as regards declarations. As the authorities demonstrate, merger (or former recovery) is a very longstanding doctrine of the common law. Declaratory relief was an equitable remedy, and declarations as a sole remedy were virtually unknown until the mid-nineteenth century: see Zamir & Woolf: The Declaratory Judgment (4th ed. 2011) para 2-01 et seq. It is clear from judgments given in the early years of the nineteenth century that the doctrine of merger was by then fully formed and well understood. In view of the growth in other means to prevent abuse of the court’s process, there is no case for expanding the scope of the rigid doctrine of merger or for applying it to a remedy that was never in the contemplation of the judges who developed it.

40. On any footing, in my view, Birss J was right to hold that the declaration made in this case did not prevent Zavarco from bringing its second action to recover judgment for the unpaid calls. He considered and rejected the argument that any abuse of process, or unfairness to Mr. Nasir, was involved in bringing the second action seeking judgment for payment of €36 million, having previously obtained declaratory relief. In circumstances where Zavarco was intending to operate the forfeiture mechanism in its articles of association and Mr. Nasir was contending that his shares were fully paid up, it made good sense to resolve that issue by proceedings for a declaration without necessarily at the same time seeking judgment for the unpaid calls. If Zavarco had been able to sell the shares after forfeiture, it would not have been entitled to judgment for the full amount but only for the amount, if any, remaining after giving credit for the net sale proceeds.

41. On one matter, I respectfully disagree with Birss J. While he considered that the application of merger to declarations would depend on the terms of the declaration, it is my view that the basis and development of the doctrine shows that it has no application at all to declarations. Of course, depending on the circumstances of the case, a claimant who first seeks only declaratory relief may be precluded, by the other principles designed to prevent abuse, from bringing further proceedings.

24. The doctrine of merger treats a cause of action as extinguished once judgment has been given upon it; the claimant’s sole right then becomes the right to enforce the judgment. Hence, if the doctrine hpliapplied to a declaratory judgment, the effect would be that once a declaratory judgment is made, then the party to whose benehe declaration was made, would be precluded from filing a subsequent application to enforceforce the judgment.
    
25. However, as Sir David Richards has said above:
    

.... it is hard, indeed I would say impossible, to think of a sound reason why a declaration of legal right or obligation should automatically bar a subsequent claim for enforceable relief.

26. Notably, the issue had never before been raised in any commonwealth country until Zavarco v Nasir in England in 2021.
    
27. Hence, against that background, it would seem to be perfectly in order for this court to include a &#82berty to apply” proviprovision amongst the declaratory orders.
    
28. Mr. Pillay has filed extensive written submissions citing various authorities on the effect of such provision (Sungei Biak Tin Mines Ltd v Saw Choo Theng & Anor (No 2) [1970] 2 MLJ 226; Cristel v Cristel [1951] 2 KB 725; [1951] 2 All ER 574; Tan Yeow Khoon & Anor v Tan Yeow Tat & Anor (No 2) [2000] 3 SLR 323; Koh Ewe Chee v Koh Hua Leong & Anor [2002] 3 SLR 643; Kanawagi s/o Seperumaniam v Penang Port Commission [2001] 5 MLJ 433 and in particular the following words of Lord Mackay of Clashfern in Halsbury’s Laws of England^[3]:
    

The circumstances or the nature of a judgment or order often render necessary subsequent applications to the court for assistance in working out the rights declared. All orders of the court carry with them inherent liberty to apply to the court, and there is no need to reserve expressly such liberty in the case of orders which are not final. Where in the case of a final judgment the necessity for subsequent application is foreseen, it is usual to insert in the judgment words expressly reserving liberty to any party to apply to the court as he may be advised. The judgment is not thereby rendered any the less final; the only effect of the declaration is to permit persons having an interest under the judgment to apply to the court touching their interest in a summary way without again setting the case down. It does not enable the court to deal with matters which do not arise in the course of working out the judgment, or to vary the terms of the order except possibly on proof of change of circumstances. Should the declaration be omitted, application may be made to have the judgment rectified by inserting it. It will not, however, be made or implied in favour of a defendant as against whom the claim has been dismissed for any other purpose than for enforcing the terms of the order, nor in favour of a claimant whose cause of action disappeared before trial but who fears that the circumstances giving rise to the cause of action may recur.

29. I am particularly drawn to Mr. Pillay’s submissions on the application of the “liberty to apply” provisions on consequential orders, which is on all fours with the situation in this case, and which I whole heartedly adopt. Here, I had granted the declaratory orders and made a “liberty to apply” provision to the parties in anticipation of further application to “work out the main order” and to “implement and give effect to” the main declaratory orders granted.
    

CONCLUSION

30. For all the reasons stated above, I find that the application to strike out Gordon & Company’s summons is without cause and I dismiss it accordingly with costs to the Gordon & Company which I summarily assess at $1,000-00 only.
    

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

Anare Tuilevuka

JUDGE

Lautoka

13 April 2022

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^[1] Available at: https://researchrepository.wvu.edu/wvlr/vol28/iss1/2

^[2] Zavarco Plc v Nasir [2020] EWHC 629 (Ch) (20 March 2020) (bailii.org)
^[3] Halsbury’s Laws of England, 4th Ed, Reissue, Vol 37, 2001, para 1230.