Arrow Trading Ltd v New Ireland Development Corporation Ltd [2016] PGNC 431; N7277 (6 May 2016)

N7277

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

OS 799 of 2015

BETWEEN:
ARROW TRADING
LIMITED
Plaintiff

AND:
NEW IRELAND DEVELOPMENT
CORPORATION LIMITED
Defendant

Waigani: Hartshorn J
2016: 4^th, 6^th May

INJUNCTIONS - Whether interim injunctive relief should continue

Cases Cited:
Papua New Guinea Cases

Chief Collector of Taxes v. Bougainville Copper Ltd (2007) SC853
Craftworks Niugini Pty Ltd v. Allan Mott (1997) SC 525
Koang No 47 Ltd v. Mando Merchants (2001) SC 675
Markscal Ltd v. MRDC [1996] PNGLR 419
Mobil Oil New Guinea Ltd v. Yakainga Business Group Inc. (2014) N6661
Robinson v. National Airlines Commission [1983] PNGLR 478

Overseas Cases

American Cyanamid Company v. Ethicon Limited [1975] UKHL 1; (1975) AC 396
Films Rover International Ltd v. Canon Film Sales Ltd (1987) WLR 670

Counsel:

Mr. S. Ketan, for the Plaintiff
Mr. L. Henao and Mr. G. Gaudi, for the Defendant

Oral decision delivered on
6^th May, 2016

1. HARTSHORN J: This is a decision on whether interim injunctive relief that was granted on an ex parte basis, should continue. Application was and is made by the plaintiff pursuant to Order 12 Rule 1 National Court Rules and s.155(4) Constitution. No issue was taken regarding these provisions relied upon.
   

Background

2. The plaintiff Arrow Trading Limited, leased a property from the defendant, the New Ireland Development Corporation Limited (NIDC) in Kavieng Town for a period of five years from 31^st November 2010 to 1^st December 2015.
   

This application

3. Clause 22 of the lease provides an option for Arrow Trading to renew the lease. A written request to review is to be given by Arrow Trading between not more than 6 months and not less than 3 months before the lease expires. Arrow Trading contends that such a request was given by letter dated 20^th July 2015. NIDC concedes that if the requisite written request was given within the requisite three month period, then it would have to grant the renewal of the lease. Such a request was not given in this instance NIDC contends.
   
4. Arrow Trading further claims that as there is a dispute between the parties as to whether the requisite written notice was given pursuant to clause 22 of the lease, the dispute should be referred to “the expert” as provided in clause 18 of the lease, or to Arbitration.
   
5. Arrow Trading seeks various declaratory relief in the originating summons in support of its position.
   

Application for interlocutory injunctive relief

6. The principles upon which the court may grant an interlocutory injunction are well settled. The leading authority is the decision of the House of Lords in American Cyanamid Company v. Ethicon Limited [1975] UKHL 1; (1975) AC 396. This case has been followed on many occasions in this jurisdiction and cited with approval by the Supreme Court in Craftworks Niugini Pty Ltd v. Allan Mott (1997) SC 525. The principles contained therein have been reaffirmed by the Supreme Court in Chief Collector of Taxes v. Bougainville Copper Ltd (2007) SC853.
   
7. The first consideration is whether Arrow Trading 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 Ltd v. MRDC [1996] PNGLR 419.

8. 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):

“It is not 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.”

9. NIDC contends that Arrow Trading does not have a serious question to be tried. It contends that it is clear that the requisite clause 22 request for a renewal notice was not given in time, and so the lease came to an end. Further, clause 18 of the lease concerning disputes does not apply here as there is no dispute concerning the terms of the lease such as rent and maintenance.
10. As to whether the letter of 20^th July 2015 from Arrow Trading constitutes the requisite letter under clause 22, although it is clear that the wording of the letter does not directly request a renewal of the lease, it can be argued that the last paragraph of that letter demonstrates an intention to renew. This factor, together with the discussions that were held by representatives of the parties concerning a proposed renovation of the subject property, those discussions not being denied by NIDC, together with the fact that the word “dispute” is not defined in the lease, or in the badly drafted clause 18, lead me to the view that Arrow Trading does have a serious question to be tried.
11. Having found that Arrow Trading has a serious question to be tried the next question is whether damages are an adequate remedy. If damages are an adequate remedy, the interlocutory injunction sought, should be refused.
12. Lord Diplock explained the rationale for the Court considering whether damages would be an adequate remedy in American Cyanamid Co v Ethicon Ltd (supra) at 408:

“[t]he court should go on to 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 an adequate remedy and the defendant would be in a financial position to pay them, no interim injunction should normally be granted, however strong the claimant’s claim appeared to be at that stage.”

13. Matters to be considered in determining whether damages are an adequate remedy in circumstances such as these include:
    1. Whether damages are able to be calculated;
    2. That matters involving real property are generally matters in which damages are not considered to be an adequate remedy where the remedy of specific performance is available – Koang No 47 Ltd v. Mando Merchants (2001) SC 675; Mobil Oil New Guinea Ltd v. Yakainga Business Group Inc. (2014) N6661.
14. In this instance, although a permanent injunction is claimed and not specific performance, the effect of the injunction sought if granted, is for NIDC to specifically perform the renewal of the lease. 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.
15. Another consideration is that although damages may be an adequate remedy as they may be calculable, as is likely in this instance, is it an available remedy? – meaning will the person who is liable to pay the damages be able to do so? In this instance, there is no evidence concerning whether NIDC would be able to pay damages.
16. As to whether damages would be an adequate remedy, as this matter concerns Arrow Trading’s interest in leasing the property for a further five years, the income and profit that it generates for its business, that the property is also the residence of Arrow Trading’s employees and that it has occupied the property together with its employees and their families for over eleven years to the extent that it is now their home, I am of the view that in this instance, damages would not be an adequate remedy.
17. Given this, the next consideration is where does the balance of inconvenience lie? This has been described as the weighing of the advantages of taking action against the disadvantages of not taking action.
18. The parties did not really address this issue apart from submitting the standard arguments that favored their respective client’s positions.
19. In considering this issue, I am mindful of the following passage of Hoffman J in Films Rover International Ltd v. Canon Film Sales Ltd (1987) 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 trail. 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.”

20. After considering all of the submissions and taking into account that NIDC will continue to receive an increased rental if the injunction is continued, that NIDC will not suffer any real prejudice, that there is an undertaking as to damages given by Arrow Trading, that Arrow Trading has established that it has a serious question to be tried and that it has been operating a business at this site for over eleven years, I am satisfied that the balance of convenience favours, and the course that appears to carry the lower risk of injustice if it turns out to be wrong, is that the injunctive relief sought should be continued.

Orders

21. Consequently, it is ordered that:
    1. The interim relief already granted shall continue until the determination of this substantive proceeding;
    2. The costs of and incidental to the hearing of this matter on 4^th May 2016 shall be costs in the cause.
    100. Time is abridged.

__________________________________________________________________
Ketan Lawyers: Lawyers for the Plaintiff
Henaos Lawyers: Lawyers for the Defendant