Shipbuilding (Fiji) Ltd v Murphy [1997] FJLawRp 14; [1997] 43 FLR 83 (10 April 1997)

[1997] 43 FLR 83

HIGH COURT OF FIJI ISLANDS

SHIPBUILDING (FIJI) LIMITED

v

BRIAN MURPHY (as receiver and manager
appointed for DONALD PICKERING &
SONS ENTERPRISES LTD)

&

SARL TAHITIAN’S SHIPBUILDERS

[HIGH COURT, 1997 (Fatiaki J) 10 April]

Civil Jurisdiction

Practice: Civil - application to dissolve interlocutory ex parte injunction- relevance of and principles to be applied when disclosure alleged.

Conflict of laws - contractual licence to occupy- contract governed by non Fiji law - whether High Court of Fiji has jurisdiction to prevent eviction of licencee.

A party claiming to be a contractual licencee obtained an interlocutory injunction ex parte preventing his eviction from premises said to be occupied pursuant to the contract. The licensor sought to have the injunction set aside. Dismissing the application the High Court HELD: (i) that the High Court of Fiji had jurisdiction to prevent the eviction notwithstanding that the contract was governed by foreign law and (ii) that although there had been material non disclosure by the Plaintiff the Court had a discretion to decide whether or not to extend the injunction further.

Caseed:

Bank of k vlak v. Nikpour (1985) FSRp>

Brinks -nks - MAT Ltd v. Elcombe [1983] 3 All ER 18

DoDormeil Freres v. Nicolian Ltd&#1988] ER 1>

London Borough of Hounslow v. Twickewickenham Garden Developments Ltd&#160 [1970];3 All ER 326<326

>R v. Kensington Income Taxe Tax Commissioners [1917] 1 KB 486

VeVerrall v. Great Yarmouth B.C. [1980] 1 All ER 839

Winter Garden Th (London) Ltd. v. Millenium Productions Ltd [1947]1947] 2 Al331
&#16>
Interlocutory aations ions in the High Court.

D. Sharma for the tiff
R. NaiduNaidu forDefendants

;
Fatia/b>&#16>On16>On the 17th of F of February 1997 this Court granted #160;ex parte to the plff company an inte interim injunction restrainingdefen “... from from levying distress ... or from re-enterentering the premises (Shed No. 11) occupied by the plaintiff ...”
By inter partes&#ummons dans dated the 17th of March 1997 the defendants now seek the dissolution of the above injunction on the following grounds :

(a) & ;䃘 600; la jura jurisdiction ;

(b) ټ&##160;< a60; absence of a vaause ouse of action;

(c) &##160;;ټ material non-diure ; and; and; and

(d

(d) ـʔ changed circucircumstances viz.<160iothe cone contrcontract.

As pa its efforts to fato facilitate the building of the vessels United entered into a tenancy agreement to lease a suitable premises (Shed No.11) belonging to the PAuthority of Fiji (PAF) situated at Walu Bay in Suva. In AuIn August 1996 United went into receivership and the 1st defendant was appointed its receiver.

Furthermore and in terms of a Schedule C to the novation agreement United entered into a deed granting STS :

&#... a licence to e to occupy the premises (leased from PAF) for the exclusive purpose of performing the works prescribed by the act ... on condition that (STS) ... perform and observe all the agreements and conditions cons contained in the Tenancy Agreement as though (STS) were the tenant thereunder including ... United agreement to pay rental.”

Finally on 1st October 1996 by an agreement entitled , ACP or i or its nominee STS entered into a subcontract with the plaintiffany Ship Building Fiji Limited (SFL) to build the remaining vessels in terms of United̵’s original contract. Article 6 of this latter contract expressly provided inter alia :

0;SFL agrees to payo pay for additional costs, specifically the actual cost of rental on the shipbuilding facility currently operated by United Engineers (i.e. PAF’s shed) to complete ve No. 92 and No. 93 ...̶”

By letter dated 30th mbptember 1996 a representative of STS wrote to SFL in the following relevant terms :

<220;I hereby grant yont you authority to commence work on the vessels, known as the Tahiti ct. If final agreement betw between (SFL) and (STS) is not reached you agree to vacate immediately at the request of (STS), the premises leased by (United) from (PAF).”

It is sufficieplain fron from the correspondence subsequently exchanged between representatives of the SFL and STS that from the outset problems were encountered with two aspects of the contract between SFLSTS ; on SFL’s part, art, concern was raised with STS as to SFL’s rights ; liabilities and legal status in relation to its occupation of the premises in which it was constructing the vessels namely, PAF Shed No. 11 ; and, on the part of STS, concern was raised as to the provision of a satisfactory performance guarantee by SFL in terms of Clause 1 of a contractual letter dated 30th September 1996 executed by STS and SFL on 1st October, 1996 (the ‘guarantee letter’). Furthermore the seeming inability or unwillingness of the parties to amicably resolve these two issues has resulted in a hardening of attitudes culminating in STS’s letters of 16th January 1996 and 6th February 1997 to SFL threatening inter alia ‘... to consider its legal alternatives’ and demanding ‘... all work should cease and SFL should vacate the premises,’ respectively. So much then for the background to the case. I turn next to consider in greater detail the various grounds urged by the defendants in seeking the dissolution of the ex parte injunction.

Jurisdiction & cause of action :

“The Lawhe Cohe Contract shall be the law of the state of the Contracting Authority unless otherwise stated in the Special Conditions.”

Counsel for the plff coff company submits, ho, that there is no contracttract in existence between STS and SFL in so far as Amend No. 3/96 is an agreement strictly entered into bn ACP and SFL but in any event the agreement is prima faciefacie void ab initio being in direct contravention of Art 7.5 of the General Conditions which expressly prohibits contractual relations between the Contracting Authority and sub-contractors and in the event that that is so, counsel submits that the appropriate conflict of laws rule is that the contract is governed by the law of the territory where the premises is situated and/or where the contract is being or to be performed which, in both instances, is Fiji.

Suffice it tothat withowithout necessarily accepting the submissions of counsel for the plaintiff company, I reject the arguments of defence counsel. The particular and limited nature of the dispute in this case namely, SFL’s right to occupy the premises in question is nowhere expressly dealt with in either Amend No. 3/96 or in United’s original Contract nor for that matter, in STS’s Novation Agreement. True enough Art 6 of Amend No. 3/96 indirectly refers to the premises but other than setting out an obligation on the part of SFL to pay for the rental, does not expressly authorise SFL’s occupation of the premises.

Pror Dicey in his leadileading work concerning the conflict of laws states the applicable rule with regard to immovables in the 4th edition of his work in the folg terms at p.353 :

&;The common law hlaw hlaw has avoided all difficulties by a simple and uniform test. It declares that the law of the situslex situs”.#16>
The jurisdiction question in my view may be further tested by asking the question how can a Court in French Polynesia lawfully order vacant possession of land situated in Fiji ? ven icould (which I ve I very much doubt), how could such an ordn order be enforced ? Whatever might be the answer to that rather vexed question I am satisfied that this Court has jurisdiction on this rather limited question. What then is the legal status of the plaintiff company’s occupation of the premises in question ?

The 1st defendant&#s af;s affidavit dated 19th March 1997 para.14 describes SFL as being ‘... no more than STS’s licensee in Shed No. 11' and later at para.33 : &#8216defendants say that SFL is nothing more than a mere licensecensee’.

It is not enticlear whar what is meant by a mere licensee but if it may be equated with a bare licensee then with all due regard to such a view I cannot agree. In my considerinion the plaintiff company was a contractual licensee with with a contractual licence to occupy the premises.

In [1970] 3 All E.R. 326 Megarry J. said at p.333 :
;

#8220;The threefold classification of licences is well known. There are licences nces couplcoupled with an interest, contractual lice and bare licences.”

“... in this case the contract is one for the execution of specified works on the site during a specified period which is still running. The contract confers on each party specified rights on specified events to determine the employment of the contractor under the contract. In those circumstances, I think there must be at least an implied negative obligation of the borough not to revoke any licence (otherwise than in accordance with the contract) while the period is still running, just as in Hurst’s case ther an implied negatiegative obligation not to revoke the licence until the performance had concluded.”

and later on ame page hage his lordship cited the observations of Lord Uthwatt in Winter Garden Theatre (London) Ltd. v. Millenium Productions Ltd. [1947] 2 All E.R. 331 at p.343 where he said :

“The settledtice of the courts of equity is to do what they can by an injunction to preserve the sanctianctity of a bargain. To my mind, as at pr advised, a licensee who has refused to accept the wrongful repudiation of the bargain whic which is involved in an unauthorised revocation of the licence is as much entitled to the protection of an injunction as a licensee who has not received any notice of revocation ...”

“the case of building operations is really a fortiori a cinema performance, because it must be obvious to all from the outset that far more is involved in the building contractorng his equipment on to a site, hiring his labour, making hing his subcontract and so on and then in putting a stop to all operations, than is involved in a member of a cinema audience, going in, sitting down and then getting up and leaving.”

inal citation I wish tosh to read from the judgment of Megarry J. is to be found at p.343 where the learned judge summarises :

“... the position relating to contractual licences as follows :
<160;

< A licence to ented iana co a contractual licence if it is conferred by a contract ; it is immaterial whether the right to enter thd is rimarpose e con or is merely seconsecondary.

(2) &160; #1660t A co A contractual licis n is not an entity distinct from the contract which brings it into being, but merely one of the provisions of that contract.

3)҈& The wiheinillingness of thof the Court to grant equitabletable remedies in order to enforce or support a contractual licence dependwheth not the licence is specifically enforceable.

(40;&#160  Ben ev a cotualctual licenlicence is not specifically enforceable the Court will not grant remedies in order to procure or aid a breach of the licence.&#822>&#16>The ed judge then added ‘four points’#8217; of ; of whichwhich I need only refer to the second and third - where he says at pp.343/344 :

“..the light ight of the Winder n Case Iase I find it difficolt to see how a contractual licensee can be treated as a trespasser so long as his contract entitles him to be on the land ; and this is so whether or notcontrs specifically enly enforceable.”

and :&#/p>

>

“Third, there may be another road to the irrevocability of a licence, namely, the doctrine of a licence acted upon.”

In similar is the more more recent jud of Lord Denning M.R. in&#1in Verr. Great Yarmoutrmouth B.C.&#a h;ord">[1980] 1 All E.R. 839where he said at p.844 :

“ the&Wint>Winter Garden cit is clear that once a ma a man has entered under his contract of licence, he cannot be tuout. An injunction can be obtained against the licensor to prevent his being turned out. ..t. ... So I hold that the observations in Thompson v. Park are no l good law. I agree gree with what Megarry J. said about them inLondon Borough of Hounslow v. Twickenham Garden Developments Ltd.”

Taxed wit judgment of M of Megarry J. in the Hounslow case defencesel sought to r to rely on that part of the express wording of the STS letter (op.cit at p.3) which reads : “If agre betwSFL) anL) and (STS) is not reached you agree to vacate immediately at the requestquest of ( of (STS), the premises leased by (United) from (PAF).” Counsel’s rather simplistic submission on this aspect is that by STS’s letter of 6th February 1997 such a ‘request’ was made and in terms of the above sentence, SFL was obliged to ‘vacate (the premises) immediately’. I cannot agree.

The making of &#82e reqe request’ is conditional upon no final agreement being reached between the parties (as to what is not known) nor is there a time frame or limit imposed in the letter when such agre must be reached. But in anin any event the very next day, 1st October, 1996, Amend No. 3/96 and the guarantee letter were executed by the relevant parties. In this latter regard I am satisfied despite counsel for the plaintiff’s submissions to the contrary, that a binding final agreement has been concluded between the parties and accordingly the outlet sought to be invoked by defence counsel in his submissions was no longer available to STS as from 1st October, 1996. A fortiori where the plaintiff company was allowed to remain on the premises performing an unconcluded contract for over 4 months.

In the light of the abhve there is no doubt in my mind that the plaintiff’s claim against the 2nd defendant company, although it might have been clearly drafted, nevertheless, raises serious issues to be tried. Grounds (a) ; (b) & amp; (d) are accordingly dismissed. I turn next to deal with the defendant’s remaining ground (c).

Material Non-Disce

In this regarence counscounsel forcefully submits that the plaintiff company in seeking the ex parte injunction was in serious breach ofduty ke the fullest and frankest disclosure of all matl material facts both favourable and unfavunfavourable to its application. (per Donaldson L.J. in Bank of Mev. Nikpourr (1985) F.S.Rand per Warrangrrangton L.J. in R. v. Kensington Income Tax Commissioners [1917] 1 K.B. 4 509)
&#1r>
In particularnce counseounsel submits that the plaintiff compa its cation, failed toed to disclose the existence of a binding contract between itself and STS& STS viz;Amend No. 3/96 a/96 and thrantee letter and accordingrdingly the ex parte injunction ought to be discharged in limine. This defence counsel submitted was &#821te law’.

In my vieever, upon an n an appn application inter partes to dissolve or discharge an ex parte injunction the Court has the opportunity and the duty to examine the entire matter anew upon the basis of all the affidavits and suions pons placed before it at the inter partes hearing and may, in exercising its discretion afresh in the matter, dissolvey, su or extend the ex parte injunction and may even grant a fresh injunction as in itin its diss discretion appears just.

I rtified by the observbservations of Browne-Wilkinson V.C. in il Freres v. Nicolian Ltan Ltd. [1988] 3 All E.R. 197 wthe learned Vice Chancellor said at p.199 :

“... ifthe cihe circumstcumstances existing when the matter comes e the Court inter partes jues justice requires an order continuing the ex parte injunction or the grant of a fresh injunction, such aer can be made notwithstandstanding the earlier failure to make such disclosure. Moreover, there is authority that, contrary to the law as it was originally laid down, there is no absolute right to have an ex parte order obtained without due disclosure set aside : there is a discretion in the Court whether to do so or not.”

In consideriis ground Iund I am also guided by the headnote to Brinks - Md. v. Elcombe [1983] 3 .R. 188 which cont contains the following relevant pasdealing with non-disclosure in ex parte applications :
&

&#8220her a fact not diot disclosed is of sufficient materiality stify or require immediate iate discharge of the order without examination of the merits depends on the importance of the fact to thee to be decided by the judg judge on the application. The fact that the 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 not decisive, consideration in deciding whether to order an immediate discharge. However the Court has a discretion notwithstanding proof of material non-disclosure which justifies the immediate discharge of an ex parte order, to continue the order or to make a new order on terms.”

Gibson L.J. in his juds judgment at pp.192/193 (ibid) enumerated no less than seven relevant principles of which the second reabr>

“(ii) the material facts are those which it is material for the judg judge to know in dealing with the application as made ; materiality is to be decided by the Court and not by the assessment of the applicant or his legal advisors.”

In the light of the abtve, the non-disclosure complained of by defence counsel, namely, the failure to disclose the existence of a binding contract between the parties is in my considered opinion not material to the narrow ambit of the plaintiff company’s claim. Indeed the disclosure of Amend No. 3/96 only serves to reinforce that view in so far as it is common ground that Amend No. 3/96 nowhere expressly authorises or spells out or deals with the nature of the plaintiff company’s legal right to occupy the premises in question.

In all the cstances I as I am firmly of the view that the injunction ought to be continued against the second defendant company until the final determination of the action. To that extent the defendant&#8 application is dismissed. sed. In so far as the first defendant is concerned, as presently advised and pleaded, I am not at all satisfied that the plaintiff company has any cause of action against him and accordingly the injunction is discharged in respect of the first defendant who is sued in his capacity as the receiver and manager of United. The parties having both partially succeeded in this matter there will be no order as to costs.

Thereafter the acti to s to follow its normal course.

(Application partially allowed; injunction against second defendant extended until further order).