Niugini Glass and Aluminium Ltd v Star Mountains Plaza Ltd [2018] PGNC 605; N8548 (25 June 2018)

N8548

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS 610 OF 2018

BETWEEN:
NIUGINI GLASS AND ALUMINIUM
LIMITED
Plaintiff

AND:
STAR MOUNTAINS PLAZA
LIMITED
First Defendant

AND:
AUSTRALIA AND NEW ZEALAND
BANKING GROUP (PNG) LIMITED

Second Defendant

Waigani: Hartshorn J
2018: 22^nd, 25^th June

INJUNCTION - Application for a mandatory injunction

Cases Cited:
Papua New Guinea Cases

Canopus No 16 Ltd v Maisi Trust Company Ltd (2008) N3401
Talisman Energy Niugini Ltd v Bismark Maritime Ltd (2015) N0800

Overseas Cases

Shepherd Homes Limited v. Sandham [1971] Ch. 340, 351
Nottingham Building Society v. Eurodynamics Systems [1993] FSR 468
Zockoll Group Limited v. Mercy Communications Limited [1997] EWCA 2317.

Counsel:

Mr. E. Asigau, for the Plaintiff
Mr. M. Andrew, for the Defendant

Oral decision delivered on
25^thJune 2018

1. HARTSHORN J: This is a decision on a contested application for a mandatory injunction

Background

2.On 26^th October 2016, the Plaintiff (Niugini Glass) and First Defendant (Star Mountain) entered into a contract for Niugini Glass to supply and install the external façade of the Star Mountain Plaza Hotel at Waigani.

3. Under the Contract, Niugini Glass is required to provide a contractor’s bond in the form of a bank performance guarantee in the sum of K1,463,556.88 in favour of Star Mountain. The contractor’s bond was required to be in place until completion of the works carried out by Niugini Glass.

4. The bank performance guarantee was given by Australia & New Zealand Banking Group (PNG) Limited (ANZ) on 15^th December 2016 and was to expiry on 18^th September 2017.

5. The expiry date of the bank performance guarantee was extended on several occasions and as a result was to expire on 31^st May 2018.

6. On 23^rd May 2018, Star Mountain issued a letter to Niugini Glass that it would make a call on the bond if Niugini Glass failed to meet certain requirements, one of which was the extension of the expiry date for the bond.

7. On 28^th May 2018, Niugini Glass responded that it would extend the expiry date of the bond to 6^th July 2018.

8. On 30^th May 2018, Niugini Glass filed an urgent application which sought injunctive orders against Star Mountain and ANZ from dealing with the bond. The orders were granted ex parte by the Court.

9. On 31^st May 2018, the bank performance guarantee expired.

10. When the ex parte orders returned to Court, they were discharged as they were no longer needed as the bank performance guarantee had expired.

11. Since then, Niugini Glass has not provided a replacement contractor’sbond.

This application

12. Star Mountain applies pursuant to Order 12 Rule 1 National Court Rulesand Section 155 (4) Constitution for a mandatory injunction which requires Niugini Glass to provide a replacement contractor’s bond by procuring a Bank Performance Guarantee in favour of Star Mountain in the sum of K1,463,556.88.

13. Star Mountain submits that a mandatory injunction should be granted as;

1. it is a term of the contract between Star Mountain and Niugini Glass. Niugini Glass is in breach of the contract in not providing a contractor’s bond;
   
2. it would remedy the breach of contract and reduce Niugini Glass’ risk against a claim by Star Mountain;
   

c) it would preserve the status quo;

4. there is a high degree of assurance that Star Mountain will be able to establish its right to the contractor’s bond at trial as there is no dispute that:

(i) Star Mountain is entitled to the bank performance guarantee;
(ii) the bank performance guarantee has expired, and
(iii) Niugini Glass has failed to provide a replacement bond.

5. there is a greater risk of injustice and prejudice to Star Mountain if the mandatory injunction is not granted because the Court would be permitting Niugini Glass to operate in breach of the contract. This would cause greater loss and damage as a result.
   

14. Niugini Glass does not dispute its obligation to provide a contractor’s bond.

15.Niugini Glass submits however, that it is unable to request ANZ to provide a Bank Performance Guarantee as ANZ has refused to extend the previous Bank Performance Guarantee purportedly because of a lack of funds being paid into Niugini Glass’ account by Star Mountain.

16. Niugini Glass is willing however, to pay the amount of the bond into a trust or escrow account.

Consideration

17. Notwithstanding that Star Mountain is the defendant in the proceeding, it is entitled to seek mandatory injunctive relay. I refer in this regard to my decision in Canopus No 16 Ltd v.Maisi Trust Company Ltd (2008) N3401 in which I said at [5]:

“5. Maisi seeks its orders pursuant to Order 12 Rule 1 National Court Rules. This provision in essence allows the court at any stage of the proceedings on the application of any party, to make such orders as the nature of the case requires notwithstanding that the applicant does not make a claim for those orders in the originating process.

6. This provision provides for what was permitted in Collison v. Warren [1901] UKLawRpCh 65; [1901] 1 Ch 812. In that case a defendant successfully obtained a mandatory injunction against a plaintiff even though he had not filed a counterclaim, as what he was seeking arose out of the same contract upon which relief was beingsought in the proceedings.”

18. As to the principles that are applicable in deciding whether a mandatory injunction should be granted, I refer to my cases of Canopus No 16 Ltd v.Maisi Trust Company Ltd (supra) and Talisman Energy Niugini Ltd v.Bismark Maritime Ltd (2015) N6800. In these cases, I reproduced the following from Nottingham Building Society v. Eurodynamics Systems [1993] FSR 468 which was referred to in Zockoll Group Limited v. Mercy Communications Limited [1997] EWCA 2317.

“In my view the principles to be applied are these. First, this being an interlocutory matter, the overriding consideration is which course is likely to involve the least risk of injustice if it turns out to be ‘wrong’ in the sense described by Hoffman J.

Secondly, in considering whether to grant a mandatory injunction, the court must keep in mind that an order which requires a party to take some positive step at an interlocutory stage, may well carry a greater risk of injustice if it turns out to have been wrongly made than an order which merely prohibits action, thereby preserving the status quo.

Thirdly, it is legitimate, where a mandatory injunction is sought, to consider whether the court does feel a high degree of assurance that the plaintiff will be able to establish this right at a trial. That is because the greater the degree of assurance the plaintiff will ultimately establish his right, the less will be the risk of injustice if the injunction is granted.

But finally, even where the court is unable to feel any high degree of assurance that the plaintiff will establish his right, there may still be circumstances in which it is appropriate to grant a mandatory injunction at an interlocutory state. Those circumstances will exist where the risk of injustice if this injunction is refused sufficiently outweigh the risk of injustice if it is granted.”

10. Waller L.J in G & A Limited (supra) referred with approval to the comment of the otherjudge in Zockoll’s case (supra), Simon Brown LJ, who did not disagree with the above formulation but was inclined to put the matter quite shortly in relation to the granting of a mandatory injunction as follows:

“Where does the balance of convenience lie?” or, to my mind the preferable formulation of the issue: “which course carries the lower risk of injustice?” ”

........

13. Adopting the above principles, given that this is an interlocutory matter, which course is likely to involve the least risk of injustice if it turns out to be ‘wrong’? By this is meant, “the granting of an injunction to a party who fails to establish its 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” Megarry J. in Shepherd Homes Limited v. Sandham[1971] Ch. 340, 351.” ”

19. From a perusal of clause 3 of the subject contract, I am satisfied that Star Mountain has established that there is a high degree of assurance, or it is highly likely that if will succeed in establishing its right to the contractor’s bond to be provided by Niugini Glass.

20. This is not disputed by Niugini Glass.In circumstances where Niugini Glass, against which the mandatory injunction is sought, does not seriously oppose the injunction and concedes that it has an obligation under the subject contract to provide a contractor’s bond and is willing to pay the amount of the bond required, albeit into either a trust account or escrow account, I am satisfied that in considering which course is likely to involve the least risk of injustice if it turns out to be ‘wrong’, the course which carries the lower risk of injustice, is for the mandatory injunction that is sought, to be granted.

21. Consequently, given this it is not necessary to consider the other submissions of counsel.

22. The court orders as follows:

1. A mandatory injunction is issued requiring the Plaintiff to provide a replacement contractor’s bond pursuant to and in respect of the contract entered into between the parties and as described in paragraph 3 of the affidavit of Mark Bennett sworn 29^th May 2018 filed herein, by procuring a Bank Performance Guarantee in favour of the First Defendant in the sum of K1,463,556.88 on the same terms and conditions previously provided under Guarantee No. GO275028803, within 7 days from today.
   
2. The Plaintiff shall pay the First Defendant’s costs of and incidental to theNotice of Motion of the First Defendant filed 7^th June 2018.
   

c) Time is abridged.
__________________________________________________________________
Andrews Lawyers: Lawyers for the Plaintiff
Norton Rose Fulbright PNG: Lawyers for the Defendant