Bemobile Ltd v Digicel (PNG) Ltd [2013] PGNC 22; N5064 (9 February 2013)

N5064

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS NO. 1349 OF 2012

BETWEEN:

BEMOBILE LIMITED
Plaintiff

AND:

DIGICEL (PNG) LTD
Defendant

Waigani: Davani, J
2013: 5th, 9th February

INJUNCTIONS - interim injunction obtained ex parte – applicants duty to fully disclose information/evidence to Court – effect of non disclosure – discussed principles of non disclosure - interim ex parte orders to be dissolved or discharged.

PRACTICE AND PROCEDURE – applicant applying ex parte – applicant must formally apply to dispense with service – Court must make orders to dispense with service before proceeding ex parte.

INJUNCTIONS – interim, obtained ex parte – is always interim in nature – must be made returnable for hearing inter parties – interim ex parte order must always bear a return date – Rule 5 (2) (e) of Motions (Amendment) Rules 2005.

INJUNCTIONS – must be an arguable case – agreement between parties – dispute – a clause in the agreement providing for applicant to continue to pay interconnection charges pending resolution of dispute – default by applicant – did not pay – no arguable case – interim injunction, premature.

Facts

On the return of an interim ex parte injunction, the Court heard that the applicant did not disclose to the Court that heard the ex parte application, that clause 22.1 of the governing agreement between parties, that provided inter connections services, notwithstanding a dispute and that the parties will continue to pay until the matter is resolved by a Court of law or by other means. The Court heard also that notwithstanding that condition, the applicant stopped paying. The Court held that the interim injunction was prematurely obtained because the parties were obliged to comply with clause 22. 1 of the agreement and so, set aside the interim injunction.

The interim injunction was set aside, also because the applicant did not formally apply to dispense with service, and the Court did not make orders to dispense with service.

Additionally, interim injunction was set aside because those orders were not made returnable for hearing inter parties, in direct contravention of the Rules of Court.

The applicant's statement of claim also, did not plead and seek a permanent injunction.

Held

The interim ex parte orders of 21st December, 2012, is set aside.

Counsel:

Mr C. Sweeney and Mr S. Nutley, for the Plaintiff/Applicant
Mr R. Webb and Mr M. Varitimos, for the Defendant/Respondent

RULING

9th February, 2013

1. DAVANI J: Before the Court is the return of Ex parte Orders made by the National Court Waigani on 21st December, 2012. The orders are restraining/injunctive in nature and were obtained during the court vacation as an urgent application. I discuss the relevance of this later below.
   
2. The plaintiff now returns to this Court as per par. 4 of those orders, to ask the Court for the continuation of these orders until the substantive hearing of the matter. However, as I will point out later below, par. 2 of those ex parte orders more particularly, do not provide for that and are confusing to a certain extent.
   
3. The respondent opposes the application and submits that the orders should be dismissed.
   
4. I address all submissions by counsel below but will firstly set out a brief background.
   

Background

5. The important facts on which Bemobile's application was made, is briefly summarised as follows:

(a) Both Bemobile and Digicel are licensed to operate mobile telephone networks in PNG;

(b) But for a written agreement made between them on 17 April, 2010, ("the DIA"), a customer of the Digicel network could not call or send a text message to a customer of the Bemobile network, and vice versa;

(c) The DIA makes calls and text messages between the customers on the two networks possible on the basis set out in it. In brief terms, Digicel accepts calls and text messages from the Bemobile customers to its customers and in exchange, Bemobile accepts calls and text messages from Digicel customers to its customers. The services provided by Digicel and Bemobile, in accepting calls and text messages from customers of the other, are referred to as 'interconnections' in the DIA;

(d) By the DIA, each of Digicel and Bemobile agreed to pay the other for its provision of the interconnection services. The amount paid by each is calculated by multiplying the number of phone call minutes and text messages for which the interconnection services are provided by fixed amounts (the 'interconnection charges');

(e) The interconnection charges are set out in clause 5 of the DIA. They are the same for both Digicel and Bemobile;

(f) Clause 6 of the DIA provides that Digicel and Bemobile will issue invoices to each other in respect of the interconnection services provided in the preceding month and imposing payment obligations in relation to those monthly invoices. It also includes a procedure for the resolution of disputes about the amounts charged in the monthly invoices. The detail of the procedure varies according to whether it is a 'manifest error' or a 'billing error' as defined.

6. The mechanisms for the resolution of each type of dispute are designed to lead to the resolution of disputes about invoices quickly, efficiently, and without recourse to the Court:
   

(g) Clause 8.1 of the DIA gives each party the right to suspend its provision of the interconnection services to the other in the event of the non-payment of an invoice by it. Relevantly, the provision is in the following terms:

"8.1 Either Party (the Suspending Party) may immediately suspend (in whole or in part) or restrict the provision of an interconnection Service by serving notice on the other Party. Any such notice shall only be given when:

a Party fails to pay any sum for which that Party has been invoiced within the required time and then fails to pay such sum within 7 days of delivery of a notice of non-payment from the Suspending Party; or..."

(h) Bemobile has failed to pay invoices rendered to it by Digicel pursuant to the DIA for the months of September 2012 and following. The amount outstanding on the invoices for the months of September to December 2012 is K4,682,643.54;

(i) Pursuant to clause 8.1 (a), Digicel gave notice of its intention to suspend the interconnection services provided to Bemobile for non-payment of the September invoice on 26 October 2012 and, again, on 2 November 2012;

(j) According to the Statement of Claim, Bemobile asserts that the unpaid invoices contain "manifest errors" within the meaning of the DIA or that it otherwise had valid disputes in respect of them.

The Application

7. Because the orders were taken out ex parte, the applicant now returns for the hearing inter-parties to ask and seek the continuation of those orders. This is allowed under the Motions (amendment) Rules 2005 at r. 5 (2).
   
8. The applicant relies also on the Writ of Summons and Statement of Claim filed on 21st December, 2012 where the applicant seeks several Declarations apart from asserting that unpaid invoices issued by the respondent to it contained "manifest errors" which the respondent denies. The respondent has referred the Court to clause 22. 1 of the DIA which states that notwithstanding any dispute in relation to the DIA, that each party must continue to perform its obligations under the DIA until the matter is resolved by a competent jurisdiction. I set out in full clause 22.1 which reads:
   

"22.1 Acknowledging that the interests of the Parties and their respective customers require that:

(a) As far as reasonably practicable and subject to this Agreement, 1nterconnection Services be continuously available, and when in use, continuous and fault-free; and

the Parties agree that, in the event of any dispute about the validity or enforceability of this Agreement or of its implementation (in either case in whole or in part), each Party shall continue to perform its obligations in accordance with the terms of this Agreement until a court of competent jurisdiction (or the person responsible for resolving the dispute under Clause 11) determines that this Agreement or its implementation (in either case in whole or in part), is invalid or unenforceable."

(my emphasis)

9. The applicant and respondent rely on several affidavits which I will refer to, where appropriate.
   
10. It is not the role of this Court to discuss the merits of the matter. However this Court must decide whether the injunctions should continue. Whilst discussing this, I note that Mr Sweeney for the applicant handed up to the Court, draft orders which are not in the terms sought in the Notice of Motion, however which he asks that the Court endorse. I discuss this later below and whether such orders can be made.
    

Analysis of Evidence and the Law

11. The applicant wants the Court to confirm the interim orders earlier issued.
    
12. The principles applicable to interim injunctions are well settled in our jurisdiction. These principles are set out in Employers Federation of Papua New Guinea v. Papua New Guinea Waterside Workers and Seaman's Union and Arbitration Tribunal (unreported judgment of Kapi DCJ, N393 dated 11 October 1982) at pages 3-4, where the Court said:
    

"However, the House of Lords had the opportunity to reconsider this principle in the case of American Cyanamid Company v. Ethicon Limited [1975] UKHL 1; [1975] 1 All E.R. 504. The House of Lords laid down the following principles in this case.

1. Is there action not frivolous or vexatious?

Is there a serious question to be tried?

Is there a real prospect that the applicant will succeed in the claim for an injunction at the trial?

All these questions laid down the same test... See Smith v. Inner London Education Authority [1978] 1 All ER. 411 at 419.

2. The Court must then consider whether the balance of convenience lies in favour of granting or refusing interlocutory relief.

3. As to the balance of convenience the Court should first consider whether if the applicant succeeds, he would be adequately compensated by damages for the loss sustained between the application and the trial, in which case no interlocutory injunction should normally be granted.

4. If damages would not provide an adequate remedy the Court should then consider whether if the applicant fails, the defendant would be adequately compensated under the applicant's undertaking in damages, in which case there would be no reasons on this ground to refuse an interlocutory injunction.

5. Then one goes on to consider all the matters relevant to the balance of convenience, an important factor in the balance should, other things being even, preserve the status quo; and

6. When all other things are equal it may be proper to take into account in tipping the balance of the relative strength of each party's case as reviewed by the evidence before the Court hearing the interlocutory application.

This passage was set out in the recent Supreme Court decision Craftworks Niugini Pty Ltd v. Allan Mott (unreported Judgment SC 525 dated 27th June, 1997) at .p. 4.

13. In Golobadana No. 35 Ltd v. Bank of South Pacific Limited (formerly Papua New Guinea Banking Corporation), Kandakasi J., reviewed all case authorities on point from Mt Hagen Airport v. Gibbs and Public Employees Associations v. Public Service Commission to subsequent ones being Markcal Limited & Robert Needham v. Mineral Resources Development Co. Pty Ltd and AGK Pacific (NG) Ltd v. William Brad Anderson Karson Construction (PNG) Ltd & Downer Construction (PNG) Ltd. His Honour then concluded as follows:
    

"A reading of these authorities show consistency or agreement in all of the authorities that the grant of an injunctive relief is an equitable remedy and it is a discretionary matter. The authorities also agree that before there can be a grant of such a relief, the Court must be satisfied that there is a serious question to be determined on the substantive proceedings. This is to ensure that such a relief is granted only in cases where the Court is satisfied that there is a serious question of law or fact raised in the substantive claim. The authorities also agree that the balance of convenience must favour a grant or continuity of such a relief to maintain the status quo. Further, the authorities agree that, if damages could adequately compensate the applicant, then an injunctive order should not be granted."

14. I now discuss the principles as applicable to the facts of this case.
    
15. Bemobile must establish that it has "real prospects of succeeding in its claim for a permanent injunction" (See American Cymanid Company (supra) p 408).
    
16. The respondent submits the following:
    
    • (a) Sections 50(2) and (4) of the ICCC Act do not prevent the enforcement of a contract which did not offend s.50 (1) at the time it was made. In the latter sub-section the "likely effect" is assessed at the time the contract is entered into. In this case, Bemobile expressly acknowledges that the contract did not contravene that section in 2010. Indeed, it could hardly assert to the contrary given that the ICCC approved and registered it as satisfying the pricing principles referred to in the Telecommunications Act.
      
    • (b) Digicel is not "taking advantage" of any power in a market within the meaning of s.58(2) of the ICCC Act by insisting on payment pursuant to the DIA. Rather, it is insisting on adherence to a lawful contract freely made.
      
    • (c) Further, Bemobile would not obtain a permanent injunction if it otherwise succeeded at trial. In that event, the DIA would be re-written, damages paid, and the permanent injunction would be unnecessary.
      
    • (d) Even if those legal answers to the claim by Bemobile are not accepted, the evidence adduced on the interlocutory application by Bemobile simply does not establish any contravention of either provision of the ICCC Act by Digicel. In particular:
      
      1. The affidavit of Mr Ah Koy does not adduce any admissible
         evidence of any weight to provide a factual basis for the allegations made;
         
      2. The affidavit of Ms Lannigan is entirely irrelevant. It speaks about trends in the setting of interconnection charges in other parts of the world and does no more than speculate about possible effects which the interconnection charges in the DIA may have on competition without any analysis of the facts relevant to PNG, including that the ICCC has analyzed and approved the charges as complying with the pricing principles determined for this market at the time of the agreement.
         
17. In response, Mr Sweeney for the applicant submits, amongst others, that I should call for the Judicial Review File OS 682 of 2012 to assist me in making a decision. Mr Sweeney has not put before the Court a copy of the Originating Summons filed in the judicial review proceedings or the Statement filed in those proceedings, to assist me in determining how it is that the proceedings now before me and the Judicial Review proceedings are related. It is the applicant who wants the interim injunctive orders to continue. It is the applicant who must ensure that all necessary evidence and materials are before me. I cannot just make assumptions based on submissions from the bar table.
    
18. Mr Sweeney also submits that the applicant raises matters which are serious indeed and which must be allowed to go to trial, during which time, the restraining orders are to remain in place.
    
19. However, that does not take account of the fact that whilst the interim injunctions are in place, Bemobile will continue to default in the payment of its debts to the respondent for the interconnection. And also that Bemobile has not given to Digicel any notice of manifest error (or indeed billing error) in respect of the currently unpaid invoices. It has not triggered the contractual dispute resolution mechanisms in clause 6 of the DIA.
    
20. Further, that clause 3.5 of the DIA provides that Digicel is not obliged to provide the interconnection services under the DIA until Bemobile has paid to it the outstanding debt.
    
21. In my view, there is no serious issue to be tried, especially when the DIA speaks for itself, that the applicant must continue to perform its obligations under the terms of the DIA and that it is to pay what is due to the respondent until the matter is resolved by a Court of competent jurisdiction (clause 22.1 of the DIA).
    
22. Obviously, this matter is prematurely before the Court more particularly the interim injunctive order stopping or preventing Bemobile from paying its dues to Digicel.
    

Are damages an adequate remedy?

23. The applicant claims, more particularly at par. 5 of its reliefs sought that "...the defendant pay compensation to the plaintiff for any and all sums incurred by the plaintiff above those replacement rates in the application of the DIA interconnection and in the alternative."
    
24. Obviously that is a claim for damages. The applicant seeks, that in the event all Declarations are granted, that the Court should then, assess the amount of compensation to be paid to it.
    
25. I have heard also that the quantification of that sum would not involve any difficulty or uncertainty because the interconnection charges in the DIA are known and the interconnection charges which Bemobile wants inserted in their place are identified with specificity. I have heard further that the calculation of the quantum of the pecuniary reliefs would be a simple matter of arithmetic.
    
26. Clearly damages are an adequate remedy and that the injunction should not lie.
    

Balance of Convenience

27. Because damages are an adequate remedy, that the balance of convenience does not arise for consideration.
    

Should the injunction continue or should it be discharged?

(i) Full disclosure

28. Apart from the principles of law raised above, it is also important to point out that any party appearing at an ex parte hearing is under an obligation to bring all material before the Court and must act with the utmost good faith. The applicant must also point out matters that may be in favour of the defendant. I have heard that this was not done, more particularly, clause 22.1 of the DIA and its relevance was not put to the Judge at the ex parte hearing of the application for interim injunctive orders.
    
29. This role of full and proper disclosure must be made because if that is not done, then the interim injunction can be dissolved or discharged. These principles are settled in the case Associated Installation Ltd v. Air Niugini Limited (2011) SC 1129 at par. 28 to 30.
    
30. Consistent with the authorities in Papua New Guinea, an applicant's duty when seeking an ex parte order and the consequence of failing to satisfy them were succinctly stated by Bingham .J (as His Lordship then was) in Siporex Trade SA v. Condel Commodities Limited (1986) 2 Lloyd's Rep. 429 at 437 as follows:
    
    • (i) An applicant must show the utmost good faith and disclose his case fully and fairly;
      

(ii) It must, for the protection and information of the defendant, summarise his case and the evidence in support of it by affidavit evidence;

(iii) It must identify the nature of the cause of action asserted and the facts relied on and not rely on general statements;

(iv) It must indentify any likely defences;

(v) It must disclose all facts which reasonably could or would be taken into account by the Judge in deciding whether to grant the application; it is no excuse for an applicant to say that he was not aware of the importance of matters he had omitted to state;

(vi) If the duty of full and fair disclosure is not observed, the Court may discharge the ex parte order even if after full enquiry, its view is that the order made was just and convenient and would probably have been made even if there had been full disclosure.

(vii) In other words, the order may be discharged entirely as a punitive measure for failing to fully disclose.

(ii) Permanent Injunction

31. Additionally, I have on perusal of the statement of claim noted that the plaintiff does not plead and seek relief for a permanent injunction. A party must always claim or plead the remedy that it is seeking. As was held Gobe Hongu Ltd v. National Executive Council, the Independent State of PNG Barclay Bros. (PNG) Ltd and Southern Highlands Gulf Highway Ltd (1999) N1920, a party is not entitled to a remedy he has not pleaded in his claim. In Gobe Hongu the plaintiff did not ask for a permanent injunction in its statement of claim. That was one of the reasons the Court dismissed the application for the injunctions.
    
32. The applications for the injunctions to continue or to be reinstated will be or can be refused on that basis alone.
    

(iii) Form of Interim Orders

33. The interim order taken out by the Plaintiff reads at par. 2 that it will continue "until further or pending the determination of these proceedings". Rule 5 (2) (e) of the Motion (Amendment) Rules states what should or ought to be stated in the orders. They are:
    

- an order dispensing with requirements of service;

- an interim order which provides some solution, until the return date;

- service of the order, the originating process, motion, supporting affidavit, undertaking as to damages (where appropriate) and any other documents filed in the proceeding on or by a specified date;

- giving "liberty to apply";

- giving a specific return date when the interim orders become returnable before a Judge;

- affidavit of service of documents referred to above.

34. The only time an interim order is made "pending the determination of these proceeding" is after it has been heard inter parties at the return of the hearing of the ex parte order. (my emphasis) In this case, the orders of 21st December, 2013 are very badly drafted and is misleading to a very large extent in that not only does it state that the order will remain until further order but it also states that the order will remain, pending the determination of this proceedings. That is clearly incorrect because the application was moved ex parte so the orders must be interim in nature, pending the outcome of the inter parties hearing. (my emphasis)
    
35. Obviously, the form of the orders is incorrect and should not be allowed to remain.
    
36. The interim orders can be dismissed on that basis alone.
    

Conclusion

37. I have found that the principles on the grant of interim injunctions have not been made out. I have also found that not only have the principles not been satisfied but the form of the interim ex parte order is misleading.
    

Costs

38. The Respondent has asked that I order that the applicant pay costs assessed on a solicitor/client basis because of its breach of its duty of Uberrimae Fides to the court.
    
39. When making those submissions, Mr Webb for the Respondents, referred me to the transcript of proceedings before the Judge who granted the interim injunctive orders. The transcript is attached to the affidavit of Atahliah Makanuey, lawyer with Young & Williams Lawyers sworn on 21st January, 2013 and filed on 22nd January, 2013. This transcript of 21st December, 2012 shows that the applicant's lawyer, before proceeding to move the application as an ex parte application, did not specifically ask for orders that service of the documents in support of the application, be dispensed with. That application should have been made as a preliminary threshold application and an order made by the Judge, before the application is then moved ex parte, if granted. Having said that, I note that par. 1 of the order of 21st December, 2012 is an order dispensing with the requirement of service. However, the transcripts demonstrate that the Judge did not hear the application to dispense with service but rather went directly to hearing the applicant's lawyer ex parte without first dispensing with service. That is clearly very unethical and unprofessional in that orders were taken out, more particularly par. 1, when it was not sought at the hearing of the application, and orders were not granted.
    
40. And I echo similar sentiments with par. no. 2 of the ex parte orders which state that the orders are taken out "pending the determination of these proceedings" when the rules do not allow for that.
    
41. I find that the respondent has been unnecessarily brought to this Court to oppose and set aside an order which, in my view, was improperly obtained, breaching procedures set down by the Court in its rules and also not disclosing to the court information that should have been disclosed.
    
42. For this and all the above reasons raised, prompts me to order that the applicant pay the respondents cost assessed on a solicitor/client basis.
    

Formal Orders

43. The Court's formal orders are:
    
    1. The ex parte order of 21st December, 2012 is dismissed or discharged forthwith;
       
    2. The applicant will pay the respondent's costs of the application, assessed on a solicitor/client basis, to be taxed if not agreed;
       
    3. I certify that the applicant pay the respondent's senior counsel's costs; and
       
    4. Time is abridged to time of settlement to take place forthwith.
       

________________________________________________________________

Leahy Lewin Nutley Sullivan Lawyers: Lawyer for the Plaintiff/Applicant
Young & Williams Lawyers: Lawyer for the Defendant/Respondent