Mobil Oil New Guinea Ltd v Yakainga Business Group (Inc) [2014] PGNC 370; N6851 (1 August 2014)

N6851

PAPUA NEW GUINEA

[IN THE NATIONAL COURT OF JUSTICE]

WS 577 OF 2014

BETWEEN:
MOBIL OIL NEW GUINEA LIMITED
Plaintiff

AND:
YAKAINGA BUSINESS GROUP (INC)
Defendant

Waigani: Hartshorn J
2014: 10^th July&1^st August

Application for interlocutory injunctive orders

Cases Cited:
Papua New Guinea Cases

Chief Collector of Taxes v. Bougainville Copper Limited (2007) SC853
Craftworks Nuigini Pty Ltd v. Allan Mott (1977) SC525
Golobadana No 35 Ltd v Bank of South Pacific Ltd (2002) N2309
Koang No 47 Ltd v Mondo Merchants (2001) SC675
Markscal Limited v. MRDC [1996] PNGLR 419
Robinson v. National Airlines Commission [1983] PNGLR 478

Overseas Cases

American Cyanamid Company v. Ethicon Limited [1975] UKHL 1; (1975) 2 WLR 316
Films Rover International Ltd v Canon Films Sales Ltd [1987] 1 WLR 670

Counsel:

Mr. J. Brooks, for the Plaintiff
Mr. J. Apo, for the Defendant

1^st August, 2014

1. HARTSHORN J: Mobil Oil New Guinea Limited (Mobil) operates a service station at five mile, Port Moresby, and has done for over 20 years. This is pursuant to a lease agreement with Yakaingi Business Group (Inc) (YBG). The lease contains an option to renew for a further period of ten years. Mobil claims that it exercised this option but YBG claims otherwise and has given Mobil a notice to vacate. Mobil has commenced this proceeding seeking specific performance and damages in lieu or in addition, and interim and permanent injunctive relief preventing YBG from evicting Mobil or from taking any steps that are prejudicial to Mobil’s interests.
   
2. Mobil now seeks interlocutory injunctive orders which are opposed by YBG. YBG has given an undertaking not to evict Mobil until I deliver this decision.
   

Preliminary

3. YBG submits that Mobil’s notice of motion should be struck out as it does not contain a correct reference to the National Court Rules which gives the power and jurisdiction to this court to grant the orders sought in the notice of motion. This is because there is no such Rule as Order 4 Rule 39 (Motions Amendment Rules). Further, Order 12 Rule 1 and Order 10A Rule 16 do not specifically provide for the relief that Mobil seeks.
   
4. YBG also relies upon Order 4 Rule 49(8) National Court Rules, which is as follows:
   

“All Motions must contain a concise reference to the court’s jurisdiction to grant the orders sought. Motions not containing such reference will not be accepted for filing. If accepted by the Registry staff without such reference, and it goes before the Motions Judge, the Court may strike out the motion for being incompetent and for lack of form.”

5. This Rule curiously provides that all motions must contain a concise reference and those that do not will not be accepted for filing. The Rule then goes on to provide that, if the motion is accepted, the Court may strike out the motion.
   
6. I am satisfied that this court can make the orders that are sought, if it thinks fit, under Order 12 Rule 1 and Order 10A Rule 16 National Court Rules. If however, that is not sufficient, I exercise my discretion under Order 4 Rule 49(8) National Court Rules and allow the motion to proceed on the basis that I have said - that is, I am of the view that Order 12 Rule 1 and Order 10A Rule 16 give this court its power to make the orders sought, if it thinks fit.
   

Application for interlocutory injunctive relief

7. The principles upon which the court can grant an interlocutory injunction are well settled. The leading authority is a decision of the House of Lords in American Cyanamid Company v. Ethicon Limited [1975] UKHL 1; (1975) 2 WLR 316. This case has been followed on many occasions in this jurisdiction and cited with approval by the Supreme Court in Craftworks Nuigini Pty Ltd v. Allan Mott (1977) SC525. The principles contained therein have been reaffirmed by the Supreme Court in Chief Collector of Taxes v. Bougainville Copper Limited (2007) SC853.
   
8. The first consideration is whether Mobil has a serious question to be tried. What that means is:
   

“What the plaintiff must prove is that he has a serious, not a speculative case which has a real possibility of ultimate success...” : Robinson v. National Airlines Commission [1983] PNGLR 478 and

“....... a strong case which, on the evidence presented would support a permanent injunction”: Markscal Limited v. MRDC [1996] PNGLR 419.

9. The parties have filed affidavits in support of their respective positions. As to the court’s consideration of that evidence at this stage, I am mindful of the words of Lord Diplock in American Cyanamid (supra) at 323:
   

“It is no part of the court’s function at this stage of the litigation to try to resolve conflicts of evidence on affidavit as to facts on which the claims of either party may ultimately depend nor to decide difficult questions of law which call for detailed argument and mature considerations.”

10. YBG submits that Mobil does not have a serious question to be tired as amongst others, Mobil failed to exercise its option to renew the lease as required by serving upon YBG the required notice, not more than six months prior to the expiration of the lease.
    
11. Mr. Jack Tepu, the Marketing Manager for Mobil, deposes however, that after telephoning Ms Roselyn Inuga, the Chairwoman of YBG, he arranged to meet her at the five mile Mobil service station. That night on 5^th September 2013, he personally delivered to Ms Inuga at about 6:00pm, a notice of exercise of option to renew the lease and a non-binding letter of intent attaching a proposed renewed lease. There is also email correspondence in evidence, in which Ms Inuga requests copies of documents. Significantly, Ms Inuga does not deny receiving the documents and states that she forget to get copies.
    
12. On the documents before me, I am satisfied that a serious question to be tried has been established that Mobil did exercise its option under the lease. This is not speculative, but has a real possibility of success to my mind.
    
13. Having found that Mobil has established that it has a serious question to be tried, the next question is whether damages are an adequate remedy. If they are, the interlocutory injunction sought should be refused.
    
14. Lord Diplock explained the rationale for the court considering whether damages would be adequate remedy in American Cyanamid v. Ethicon (supra) when he said at 323:
    

“.....the court should first consider whether, if the plaintiff were to succeed at the trial in establishing his right to a permanent injunction, he would be adequately compensated by an award of damages for the loss he would have sustained as a result of the defendant’s continuing to do what was sought to be enjoined between the time of the application and the time of the trial. If damages .... would be adequate remedy and the defendant would be in a financial position to pay them, no interlocutory injunction should normally be granted, however strong the plaintiff’s claim appeared to be at that stage.”

15. Matters to be considered in determining whether damages would be an adequate remedy in circumstances such as this, according to the authorities are:
    

a) Whether damages are able to be calculated; and

b) That claims concerning real property are generally matters in which damages are not considered to be an adequate remedy particularly where the remedy of specific performance is available: Koang No 47 Ltd v Mondo Merchants (2001) SC675.

16. In this instance specific performance is being claimed. One of the principles pertaining to specific performance is that a contract for the grant of an interest in land will normally be specifically enforced.
    
17. Another consideration is that although damages maybe an adequate remedy, are they an available remedy – will the party liable to pay the damages be able to do so.
    
18. In this instance, the evidence is to the effect that Mobil five mile service station is the largest service station in Papua New Guinea and in the whole Pacific Region. Mobil submits that damages would not be an adequate remedy. Mr. Tepu has deposed that the service station in question generates between K4 million and K6 million in profit annually for the plaintiff. Mobil submits that in circumstances where Mobil has a contractual right to a further 10 years lease of the premises, the loss that Mobil stands to suffer is enormous and YBG could not possibly compensate Mobil in damages to the value of the loss that may be sustained if the injunction is not granted. In the submissions of YBG, the question of whether Mobil can be adequately compensated by an order for damages is not specifically addressed with reference made only to earlier submissions. Those earlier submissions also do not address the question of whether damages would be an adequate remedy.
    
19. As to whether damages would be an adequate remedy, as this matter concerns Mobil’s interest in the land upon which it has its service station and in respect of which it seeks specific performance of the lease and option therein, and given the profit that it generates, and the lack of any submissions on the point by YBG, particularly as to whether YBG would be able to pay such damages, I am of the view that damages would not be an adequate remedy. Further, even if they were an adequate remedy, it is rather unlikely that they would be an available remedy.
    
20. Given this, the next consideration is the balance of convenience. This has been described as the weighing of the advantage of taking action against the disadvantage of not taking action.
    
21. Mobil submits that the following factors indicate that the balance of convenience favors the grant of the injunctions sought:
    

a) Mobil has a clear contractual entitlement to the renewed lease for a period of ten years;

b) There is a strong prima facie case that Mobil will succeed in the substantive proceeding;

c) Damages are not an adequate remedy in matters involving land and/or occupation of land and in any event the damage that Mobil stands to suffer could not possibly be compensated by YBG;

d) Mobil has at all times remained ready and willing and able to perform its contractual obligations and has negotiated in good faith with YBG to try and resolve this matter but has nevertheless been forced to come to court to protect its position;

e) Mobil is currently in possession of the premises pursuant to the contractual arrangements between the parties;

f) Mobil constructed the service station and all improvements on the land and ought to be able to continue in occupation of the premises until such time as the court determines its substantive claim;

g) Mobil continues to pay rent and YBG suffers no real prejudice as a result of Mobil’s continued occupation of the premises;

h) The undertaking as to damages provided by Mobil gives YBG considerable comfort that if it suffers any damages as a result of the injunctions sought then it will be adequately compensated. Mobil is a significant corporate entity that is able to meet any subsequent damages claim that may arise as a result of the grant of the injunctive orders it seeks.

22. YBG submits as to the balance of convenience that a consideration of the issue incorporates the question of whether irreparable damage will occur if the injunction is not granted. It relies on the case of Golobadana No 35 Ltd v Bank of South Pacific Ltd (2002) N2309.
    
23. Further, YBG submits that Mobil’s affidavit material does not disclose the likelihood of any irreparable damage being suffered by Mobil if the injunction is not granted and the balance of convenience does not favour an injunction being granted to maintain the status quo.
    
24. As to there not being any evidence of irreparable damage that will be caused if the injunction is not granted, this is only one facto to take into account in considering the balance of convenience.
    
25. I am mindful of the following passage of Hoffman J in Films Rover International Ltd v Canon Films Sales Ltd [1987] 1 WLR 670 at 680:
    

“The principal dilemma about grant of interlocutory injunctions, whether prohibitory or mandatory, is that there is by definition a risk that the Court may make the ‘wrong’ decision, in the sense of granting an injunction to a party who fails to establish his right at the trial (or would fail if there was a trial) or alternatively, in failing to grant an injunction to a party who succeeds (or would succeed) at trial. A fundamental principle is therefore that the Court should take whichever course appears to carry the lower risk of injustice if it turns out to have been ‘wrong’ in the sense I have described.”

26. After considering the submissions and taking into account that YBG will continue to receive rental and will not suffer any real prejudice if no injunction is granted, that there is an undertaking as to damages given by Mobil, that Mobil has a serious question to be tired, has been operating the service station at the subject site for over 20 years and built the premises, I am satisfied that the balance of convenience favours, and the course that appears to carry the lower risk of injustice if granting an injunction turns out to be wrong, is that the injunctive relief sought should be granted.
    
27. Consequently, the Orders sought in paragraphs 1 (a) (i) and (ii) and 2 and 4 are granted.
    

_________________________________________________________________
Ashurst Lawyers : Lawyers for the Plaintiff

Jema Lawyers : Lawyers for the Defendant