Shipbuilding (Fiji) Ltd v Murphy [1997] FijiLawRp 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.

 

Cases cited:
 

Bank of Mellak v. Nikpour  (1985) FSR 87

Brinks - MAT Ltd v. Elcombe  [1983] 3 All ER 188

Dormeil Freres v. Nicolian Ltd  [1988] 3 All ER 197

London Borough of Hounslow v. Twickenham Garden Developments Ltd [1970]  3 All ER 326

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

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

Winter Garden Theatre (London) Ltd. v. Millenium Productions Ltd  [1947] 2 All ER 331
 
Interlocutory applications in the High Court.
 
D. Sharma for the Plaintiff
R. Naidu for the Defendants
 
Fatiaki J:
 
On the 17th of February 1997 this Court granted ex parte to the plaintiff company an interim injunction restraining the defendants “... from levying distress ... or from re-entering the premises (Shed No. 11) occupied by the plaintiff ...”
 
The injunction was further made conditional upon the payment into Court of the sum of $18,957.99 being the amount demanded in a letter of the second defendant company for reimbursement of rental and other charges paid in relation to the premises occupied by the plaintiff company.
 
By inter partes summons dated the 17th of March 1997 the defendants now seek the dissolution of the above injunction on the following grounds :
 

(a)        lack of jurisdiction ;

(b)        absence of a valid cause of action;

(c)        material non-disclosure ; and

(d)        changed circumstances viz. cancellation of the contract.
 
It is necessary to refer to some of the factual background in order to gain some meaningful understanding of the case. Very briefly this case has its origins in a ship-building contract entered into by a Tahitian organisation (ACP) and a Fiji ship-building company (United) in November 1994 and later amended in 1995 and 1996.
 
As part of its efforts to facilitate the building of the vessels United entered into a tenancy agreement to lease a suitable premises (Shed No.11) belonging to the Ports Authority of Fiji (PAF) situated at Walu Bay in Suva. In August 1996 United went into receivership and the 1st defendant was appointed its receiver.
 
Subsequently, through a novation agreement dated 13.9.96 the ship-building contract which was originally entered into between United and ACP, was to be continued to completion by the second defendant company Sarl Tahitian’s Shipbuilders (STS) ‘... as though (STS) had originally contracted with ACP in terms of the contract ...’
 
Furthermore and in terms of a Schedule C to the novation agreement United entered into a deed granting STS :
 

“... a licence to occupy the premises (leased from PAF) for the exclusive purpose of performing the works prescribed by the Contract ... on condition that (STS) ... perform and observe all the agreements and conditions 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 Amend No. 03/96, ACP or its nominee STS entered into a subcontract with the plaintiff company Ship Building Fiji Limited (SFL) to build the remaining vessels in terms of United’s original contract. Article 6 of this latter contract expressly provided inter alia :
 

“SFL agrees to 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 vessels No. 92 and No. 93 ...”
 
By letter dated 30th September 1996 a representative of STS wrote to SFL in the following relevant terms :
 

“I hereby grant you authority to commence work on the vessels, known as the Tahiti Project. If final agreement 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 sufficiently plain 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 SFL and STS ; on SFL’s part, 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 :
 
In this regard counsel for the defendants submits that the Court has no jurisdiction in the proceedings since the plaintiff is ‘bound by a contract subject to the laws of French Polynesia’ and counsel drew the Court’s attention to Art 14 of United’s original contract with ACP which deals with Arbitration ; and Art 2 of the General Conditions applicable to EEC-funded contracts which provides that :
 

“The Law of the Contract shall be the law of the state of the Contracting Authority unless otherwise stated in the Special Conditions.”
 
Counsel for the plaintiff company submits, however, that there is no contract in existence between STS and SFL in so far as Amend No. 3/96 is an agreement strictly entered into between ACP and SFL but in any event the agreement is prima facie 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 to say that without 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.
 
That right (if any) is traceable in large part to STS’s letter of 30th September 1996 (op. cit at p.3) and as counsel for the plaintiff company submits, it is a right that was granted in Fiji, relates to a Fijian licensee, refers to premises situated in Fiji and owned by a Fijian statutory Authority.
 
Professor Dicey in his leading work concerning the conflict of laws states the applicable rule with regard to immovables in the 4th edition of his work in the following terms at p.353 :
 

“The common law has avoided all difficulties by a simple and uniform test. It declares that the law of the situsshall exclusively govern in regard to all rights, interests, and titles in and to immovable property. Of course, it cuts down all attempts to introduce all foreign laws, whether they respect persons or things or give or withhold the capacity to acquire or dispose of immovable property. All questions concerning the property in immovables including the form of conveyance are decided by the lex situs”.
 
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 ? and even if it could (which I very much doubt), how could such an 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 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 : ‘The defendants say that SFL is nothing more than a mere licensee’.
 
It is not entirely clear 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 considered opinion the plaintiff company was a contractual licensee with a contractual licence to occupy the premises.
 
In London Borough of Hounslow v. Twickenham Garden Developments Ltd  [1970] 3 All E.R. 326 Megarry J. said at p.333 :
 

“The threefold classification of licences is well known. There are licences coupled with an interest, contractual licences, and bare licences.”
 
and then at p.337 in considering the nature of the particular licence granted in the case before him his lordship said (in words that are, with slight variations, equally applicable to the present case before me) :
 

“... 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 there was an implied negative obligation not to revoke the licence until the performance had concluded.”
 
and later on the same page 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 settled practice of the courts of equity is to do what they can by an injunction to preserve the sanctity of a bargain. To my mind, as at present advised, a licensee who has refused to accept the wrongful repudiation of the bargain 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 ...”
 
and Megarry J. continues :
 

“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 contractor moving his equipment on to a site, hiring his labour, making 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.”
 
The final citation I wish 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 :
 

(1)     A licence to enter land is a contractual licence if it is conferred by a contract ; it is immaterial whether the right to enter the land is the primary purpose of the contract or is merely secondary.

 

(2)     A contractual licence is not an entity distinct from the contract which brings it into being, but merely one of the provisions of that contract.

 

(3)     The willingness of the Court to grant equitable remedies in order to enforce or support a contractual licence depends on whether or not the licence is specifically enforceable.

 

(4)     But even if a contractual licence is not specifically enforceable the Court will not grant remedies in order to procure or aid a breach of the licence.”
 
The learned judge then added ‘four points’ of which I need only refer to the second and third - where he says at pp.343/344 :
 

“... in the light of the Winder Garden Case I find it difficult 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 not his contract is specifically enforceable.”
 
and :
 

“Third, there may be another road to the irrevocability of a licence, namely, the doctrine of a licence acted upon.”
 
In similar vein is the more recent judgment of Lord Denning M.R. in Verrall v. Great Yarmouth B.C.  [1980] 1 All E.R. 839where he said at p.844 :
 

“Since the Winter Garden case, it is clear that once a man has entered under his contract of licence, he cannot be turned out. An injunction can be obtained against the licensor to prevent his being turned out. ... So I hold that the observations in Thompson v. Park are no longer good law. I agree with what Megarry J. said about them inLondon Borough of Hounslow v. Twickenham Garden Developments Ltd.”
 
Taxed with the judgment of Megarry J. in the Hounslow case defence counsel sought to rely on that part of the express wording of the STS letter (op.cit at p.3) which reads : “If final agreement between (SFL) and (STS) is not reached you agree to vacate immediately at the request 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 ‘the 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 agreement must be reached. But in 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 above there is no doubt in my mind that the plaintiff’s claim against the 2nd defendant company, although it might have been more clearly drafted, nevertheless, raises serious issues to be tried. Grounds (a) ; (b) & (d) are accordingly dismissed. I turn next to deal with the defendant’s remaining ground (c).
 
Material Non-Disclosure
 
In this regard defence counsel forcefully submits that the plaintiff company in seeking the ex parte injunction was in serious breach of its duty to make the fullest and frankest disclosure of all material facts both favourable and unfavourable to its application. (per Donaldson L.J. in Bank of Mellak v. Nikpour  (1985) F.S.R. 87 and per Warrangton L.J. in R. v. Kensington Income Tax Commissioners  [1917] 1 K.B. 486 at 509)
 
In particular defence counsel submits that the plaintiff company in its application, failed to disclose the existence of a binding contract between itself and STS viz Amend No. 3/96 and the guarantee letter and accordingly the ex parte injunction ought to be discharged in limine. This defence counsel submitted was ‘trite law’.