Mauga Logging Company Pty Ltd v South Pacific Oil Palm Development Pty Ltd (No 1) [1977] PGNC 29; [1977] PNGLR 80 (16 March 1977)

Papua New Guinea Law Reports - 1977

[1977] PNGLR 80 - Mauga Logging Company Pty Ltd v South Pacific Oil Palm Development Pty Ltd 

[1977] PNGLR 80

N88

PAPUA NEW GUINEA

[NATIONAL COURT OF JUSTICE]

MAUGA LOGGING COMPANY PTY. LTD.

V

SOUTH PACIFIC OIL PALM DEVELOPMENT PTY. LTD. (NO. 1)

Waigani

Frost CJ

15-16 March 1977

PRACTICE AND PROCEDURE - Interlocutory relief - Injunction - Principles for grant of interlocutory relief - Circumstances where relief not available pursuant to principles of equity - Injunction to restrain defendant from disposing of assets pending hearing of action - Power of Court to make orders “as are necessary to do justice in the circumstances of a particular case” - Power supplemental to equitable relief - Powers on undertaking as to damages - Constitution s. 155(4)[lxxv]1

PRACTICE AND PROCEDURE - National Court - Jurisdiction to make orders “as are necessary to do justice in the circumstances of a particular case” - Interlocutory injunction - Circumstances where relief not available pursuant to principles of equity - Power supplemental to equitable relief - Powers on undertaking as to damages - Constitution s. 155(4)[lxxvi]2

In an action for damages estimated at K565,800, for breach of contract, the plaintiff sought an interlocutory judgment restraining the defendant from remitting out of the jurisdiction the sum claimed, such sum to be deducted from compensation payable to the defendant by the Government of Papua New Guinea for acquisition of its assets in Papua New Guinea pursuant to s. 18 of the Palm Oil Industry (Biala Project Re-organization) Act 1976, there being no other assets of the defendant available in Papua New Guinea for satisfaction of judgment should the plaintiff be successful in its action, and it being feared that all compensation moneys would be repatriated by the defendant to Japan, and there being no reciprocal legislation for enforcement of judgments with that country. It also appeared that the plaintiff’s financial position was such that it was unable to give an undertaking as to damages.

Held

N1>(1)      The principles of equity under which interlocutory injunctions are granted are applicable and enforceable as part of the underlying law of Papua New Guinea under the Constitution s. 20 and Sch. 2.2;

N1>(2)      One of the principles of equity in relation to injunctions is that an injunction is not available to restrain a man who is alleged to be a debtor from parting with his property.

Robinson v. Pickering (1880-81) 16 Ch. 660 at p. 661 followed.

N1>(3)      Accordingly, an interlocutory judgment was not available on the principles of equity so adopted as part of the underlying law.

N1>(4)      Section 155(4) of the Constitution, however, given its fair and liberal meaning as required by the Constitution Sch. 1.5.(2), extends to jurisdiction as well as procedure, and enables a Court to make an order in the nature of an interlocutory injunction, if the requirements of the section are met, even although no jurisdiction to make the order exists under the principles of common law or equity.

North London Railway Co. v. Great Northern Railway Co. [1883] UKLawRpKQB 111; (1883) 11 Q.B.D. 30 referred to.

N1>(5)      In deciding whether or not a particular order is under s. 155(4) of the Constitution “necessary to do justice as between the parties” full regard must be given to the balance of considerations affecting each party.

N1>(6)      In the circumstances the plaintiff was entitled to the order sought, pursuant to s. 155(4) of the Constitution.

N1>(7)      The power to require an undertaking as to damages, is within the grant of power under s. 155(4) of the Constitution to make orders in such circumstances as to the Court seems proper.

N1>(8)      In the circumstances, no order should be made requiring the plaintiff to provide adequate security for the undertaking as to damages.

Motion for Interlocutory Injunction

This was an action for damages for breach of contract, in which on notice of motion, an injunction was sought to restrain the defendant from disposing of compensation moneys payable for acquisition of its assets in Papua New Guinea, pending the hearing of the action.

Counsel

R. H. B. Wood, for the plaintiff.

G. B. Evans, for the defendant.

Cur. adv. vult.

16 March 1977

FROST CJ: In the action the plaintiff claims damages for breach in June or July 1973 by the defendant of a contract to purchase from the plaintiff 36 million super-feet of New Guinea export timber in round logs at a price of $6.00 per 100 super-feet.

It appears from affidavits filed on behalf of the plaintiff that following a preliminary agreement signed by the parties a draft contract was prepared, and then by letter dated 4th June, 1973 the defendant’s solicitors required certain amendments including a variation in price.

Apparently purchases were then made. Subsequently one of the defendant’s directors on 4th July, 1973, advised the plaintiff in a telephone conversation that the defendant Company would not be purchasing further timber at the amended price and sought a reduction in price. Following the plaintiff’s refusal no further purchases were made.

From the amended statement of claim damages estimated by the plaintiff amount to K565,800, approximately.

Both parties are companies registered in Papua New Guinea. The plaintiff was carrying on business as a timber producer and seller. The defendant, which is Japanese owned, had come to Papua New Guinea under an agreement with the Government to establish an oil palm project at Biala in West New Britain. An agreement which was made between the defendant and the Government on 2nd March, 1972 was approved under the Palm Oil Industry (South Pacific Oil Palm Development Pty. Ltd. Agreement) Act 1972. In effect that agreement provided for the establishment of the project on a large tract of land at Biala which was to be leased by the Government for 99 years. It was agreed that the defendant should erect on the land an oil mill to serve the project upon which a large number of indigenous farmers was also to be settled.

As the machinery equipment and stores were being brought mainly from Japan by overseas vessels, the defendant wished to find a cargo on a long-term basis for the return journey, and this was the reason for the defendant entering into the contract for the purchase of timber. But difficulties arose between the Government and the defendant as to the technical proposals for the construction of the mill.

As appears from the recitals in the later enactment, Palm Oil Industry (Biala Project Re-organization) Act 1976, it was eventually considered desirable in the interests of the people of Papua New Guinea and particularly for the protection of the small holders for the project to be reorganized and the agreement between the Government and the defendant to be terminated. That Act was accordingly passed for the purposes of terminating the agreement, transferring the property connected with the project to a new Project Company and repealing the former Act. The project property became vested absolutely in the State (s. 4(a)), and all rights of the companies formerly involved in the project were converted into rights to payment under the Act (s. 5). Provision was then made for settlement payments to be made to the companies formerly involved in the Biala project in respect of their former interests in the project property (s. 18).

It is not denied that compensation in the sum of K1,227,434 became payable to the defendant and a cheque in this amount dated 4th February, 1977 was raised in its favour. So far as it can be ascertained by the plaintiff the cheque has not yet been presented for payment. The plaintiff believes, as is likely, that it is the intention of the defendant to repatriate the moneys to Japan as soon as it is able.

The position that the plaintiff now finds itself in is that if it succeeds in obtaining judgment, the defendant has been deprived of all its assets in Papua New Guinea, and the only moneys available for satisfaction of the judgment constitute the settlement payments. There is no reciprocal legislation for the enforcement of judgments between Papua New Guinea and Japan.

In these circumstances the plaintiff by motion seeks an interlocutory injunction restraining the defendant from remitting out of the jurisdiction a sum in the amount claimed, that is K565,800, to be deducted from such funds as the defendant may receive from the Government of Papua New Guinea under the 1976 Act.

The difficulty in the plaintiff’s case arises from the nature of the relief sought. Under the Constitution s. 20 and Sch. 2.2, the principles and rules of common law and equity are adopted and are to be applied and enforced as part of the underlying law.

It is not suggested in this case that any written law or custom is applicable or that the principles of equity under which interlocutory injunctions are granted are inapplicable or inappropriate to the circumstances of the country. (Sch. 2.2. (1)(a)(b)(c).)

I am satisfied that there is a serious question to be tried, which is the first element the plaintiff must establish to obtain interlocutory relief. American Cyanamid Co. v. Ethicon Ltd.[lxxvii]³; Mt. Hagen Airport Hotel Pty. Limited v. Gibbes & Gibbes[lxxviii]⁴. But the application in my opinion falls outside the principles under which equitable relief is granted. It is clear that no proprietary right is relied upon. In substance what the plaintiff is claiming is an order to prevent the defendant putting its assets out of the reach of the plaintiff prior to the hearing, and therefore before any obligation is established as against the defendant. Robinson v. Pickering[lxxix]⁵ is authority that, as it was put in simple terms by Lord Justice James in argument:

“You cannot get an injunction to restrain a man who is alleged to be a debtor from parting with his property.”

The plaintiff’s financial position is in a further difficulty if resort can be had only to the principles of equity. Its liabilities far exceed its assets and in fact it is now in receivership. It is thus unable to give the undertaking as to damages, should the defendant sustain any by reason of the order, which is usually required as a condition for the grant of an injunction, or to obtain adequate security for such an undertaking which would otherwise be worthless.

When during the hearing I drew attention to these matters and also the provisions of the Constitution, s. 155(4), counsel for the plaintiff then based his case on that provision. That provision appears in Division 5. — The Administration of Justice, and is in the following terms:

N2>“(4)    Both the Supreme Court and the National Court have an inherent power to make, in such circumstances as seem to them proper, orders in the nature of prerogative writs and such other orders as are necessary to do justice in the circumstances of a particular case.”

Mr. Wood’s argument succinctly expressed is that the circumstances of the present application are sufficient to justify the grant of the order sought as being necessary to do justice as between the parties.

Mr. Evans submitted that the section should not be given an operation which would enable a judge simply to act according to his own notion as to what was necessary to do justice in the particular circumstances of the case. To ensure certainty, which is a basic ingredient in the administration of justice, he submitted that the section should only be applied in accordance with the settled principles of equity. Alternatively, he submitted, full weight should be given to the defendant’s right to invest or make use of its moneys wherever it may wish, and upon the balance of considerations the order should be refused.

Mr. Evans’ submission is supported by the view adopted by the Courts in England and Australia as to the effect of introduction of the Judicature System in England which was to fuse the administration of law and equity by conferring on the High Court of Justice as a single court the power to grant all remedies formerly granted either by the common law courts or equity. The relevant provision was that “an injunction may be granted or a receiver appointed by an interlocutory order of the Court in all cases in which it shall appear to the Court to be just or convenient that such order should be made, ...” Supreme Court of Judicature Act 1873, s. 25(8).

It was held that the Act gave no power to the High Court to issue an injunction in a case in which no court before that Act had power to give any remedy whatever — North London Railway Co. v. Great Northern Railway Co.[lxxx]⁶. Brett L.J. expressed the strong opinion that the Act had not dealt with jurisdiction at all, but only with procedure — at pp. 36-38[lxxxi]⁷. It followed that the settled principles of equity continued to apply. However, special considerations such as arose under the English legislation can have no application to the autochthonous Constitution of Papua New Guinea.

It is plain that s. 155(4) cannot be taken so far as to enable a court to make a final decision upon the circumstances of a particular case without regard to the principles of law or equity applicable for its determination.

However, I do not consider that the power to make “Such other orders as are necessary to do justice in the circumstances of a particular case” can be confined to matters of procedure only. Giving the words their fair and liberal meaning as required by the Constitution, Sch. 1.5.(2), the provision, in my opinion, extends to jurisdiction also, and enables a court to make an order in the nature of an interlocutory injunction, if the requirements of the section are met, even although no jurisdiction to make the order exists under the principles of common law or equity. The express reference “to the circumstances of a particular case”, in my opinion, leave no room for a more restrictive construction to be adopted.

Where a case for interlocutory relief falls within the well established principles of equity, there is no need for the claimant to have recourse to s. 155(4). It is sufficient for the purposes of this case to hold that full regard must be given to the balance of considerations affecting each party in reaching a conclusion whether or not a particular order is necessary under the section to do justice in the circumstances of a particular case. On the facts, in my opinion it has been shown by the plaintiff that the Court’s power should be exercised in its favour.

It remains to consider whether the plaintiff should be required to find adequate security for an undertaking as to damages. The power to require such an undertaking clearly falls within the grant of power to make the order in such circumstances as to the Court seems proper.

On the whole I do not consider that in the circumstances of this case a conditional order should be made requiring the plaintiff to provide adequate security for such an undertaking.

It is probable, as both counsel put to the Court, that if the compensation money were made immediately available to the defendant to invest on the international markets a greater return would be available than in the more limited financial opportunities in Papua New Guinea. But having regard to the original establishment of substantial assets by the plaintiff within this jurisdiction, which it is reasonable to assume was a matter taken into account by the plaintiff in assessing the defendant’s financial responsibility, followed by the conversion of those assets into a right to payment by the Government, I consider that it will be sufficient protection for the defendant to enable the money to be invested either in Government securities or in such high yielding securities as are available in Papua New Guinea and consented to by both parties.

It will be for both parties to take such action as is open to them under the rules to ensure that the case is heard as promptly as possible.

Accordingly there will be an order pursuant to the notice of motion.

Order that the defendant by its servants and agents be restrained from remitting or sending out of Papua New Guinea the sum of K565,800 being portion of the moneys received by it or its servants or agents by way of compensation, settlement payments or otherwise pursuant to the provisions of the Palm Oil Industry (Biala Project Re-organization) Act 1976 until such time as this action has been determined or further order.

Further order that the said sum be paid forthwith upon receipt by the defendant its servants or agents to its solicitors for investment in the name of its solicitors in securities of the Government of Papua New Guinea or in such other securities in Papua New Guinea as may be agreed upon by the plaintiff and the defendant or their solicitors, and shall be kept so invested pending the hearing of this action.

Costs reserved, liberty to apply.

Solicitors for the plaintiff: McCubbery Train Love & Thomas.

Solicitors for the defendant: Gadens.

R>

[lxxv]Section 155(4) of the Constitution provides:

N2>(4)        Both the Supreme Court and the National Court have an inherent power to make, in such circumstances as seem to them proper, orders in the nature of prerogative writs and such other orders as are necessary to do justice in the circumstances of a particular case.

[lxxvi]Section 155(4) of the Constitution provides:

N2>(4)        Both the Supreme Court and the National Court have an inherent power to make, in such circumstances as seem to them proper, orders in the nature of prerogative writs and such other orders as are necessary to do justice in the circumstances of a particular case.

[lxxvii][1975] A.C. 396.

[lxxviii][1976] P.N.G.L.R. 216.

[lxxix] (1880-81) 16 Ch. 660 at p. 661.

[lxxx](1883) 11 Q.B.D. 30.

[lxxxi]For a full discussion of this point see also Equity by Meagher, Gummow and Lehane (1975) paras. 2112-2114, where the learned authors express some castigation of judges who took the contrary view. See also the Australian case Mayfair Trading Co. Pty. Ltd. v. Dreyer[1958] HCA 55; , (1958) 101 C.L.R. 428.