Mega Enterprise v Sunway [2014] SBCA 21; SICOA-CRAC 04 of 2014 (17 October 2014)

IN THE SOLOMON ISLANDS COURT OF APPEAL

NATURE OF JURISDICTION:	Appeal from Judgment of the High Court of Solomon Islands (Faukona J)
COURT FILE NUMBER:	Civil Appeal Case No. of 04 of 2014 (On Appeal from High Court Civil Case No. 36 of 2011
DATE OF HEARING:	15TH OCTOBER 2014
DATE OF JUDGMENT:	17TH OCTOBER 2014
THE COURT:	Justice Goldsbrough JA, President Justice Williams JA Justice Margaret Wilson JA,
PARTIES:	MEGA ENTERPRISE Appellant -V – SUNWAY Respondent
Advocates:	J KENIAPISIA Appellants M TAGINI Respondent
Key words	Undertaking as to damages. Assessment of damages.
EXTEMPORE/RESERVED:
ALLOWED/DISMISSD	ALLOWED
PAGES	1- 6

1. This appeal is against a decision made in the High Court on 6 December 2013 wherein an order was made assessing damages to be paid on an undertaking given to the High Court in Civil Case 36 of 2011. The damages were assessed at $63,024.45.
   
2. Notice of appeal was filed on 10 January 2014. In the normal course of an appeal this appears to have been filed out of time, but consideration of the time of year and the intervening Public Holidays and even the possibility that the Chief Justice may have ordered the Registry closed during certain periods suggests that even if technically out of time by a day or two the late filing may be condoned by this Court. That order is made and the appeal is heard accordingly.
   
3. To obtain the restraining orders they sought in 2011 the Appellants, through counsel, provided the High Court with an undertaking for damages, referred to in the interim order as "the usual undertaking as to damages". Whilst moot, it is doubtful that they would have obtained the order absent such an undertaking and no submissions were made to that effect.
   
4. Such an undertaking is provided for in the Solomon Islands Courts (Civil Procedure) Rules 2007 (CPR). It is defined as:-
   

'usual undertaking as to damages' means that the party giving the undertaking undertakes that, in the event that the party is ultimately (un)successful in the proceeding or it is otherwise shown that the order to which the undertaking relates ought not to have been made, then the giver of the undertaking shall be liable (without further order) to pay such damages as any other party or person may have suffered as a result of the order being made, such damages to be assessed if not agreed.

The interim relief sought was obtained on 17 February 2011 but was short lived.

5. The proceedings within which the undertaking was given came to a conclusion when the Appellant filed a notice of discontinuance on 13 April 2012. Before that notice was filed there had been an inter partes hearing the result of which was the discharge of the interim injunction on 2 March 2011, the effect of which was that the interim relief was only in force for a period of nine days. Following discontinuance the Respondents had available to them the power to seek costs under CPR Rule 9.60 and, quite separately, the right to seek recompense for damages that may have resulted from the order. The period between discharge of the injunction and the discontinuance was just over one year.
   
6. The application for assessment of damages was filed on 7 May 2013, again just over one year later, being finally determined on 6 December 2013. The period of damages was from 17 February 2011 to 2 March 2011.
   
7. There are four grounds of appeal. The first concerns whether the usual undertaking was in fact given at the time or prior to the injunctive relief being granted, the second whether the damages sought were a direct consequence of the injunctive relief, the third the nature of the undertaking given (in the event that it is found an undertaking was given) and finally that damages were not payable under the undertaking because there had been no trial of the issues.
   
8. On the face of the order granting interlocutory relief there appears the usual recital noting the fact of the usual undertaking as to damages having been given. In the absence of evidence to the contrary that demonstrates the fact of the undertaking having been given. Whilst it is correct to say that the Registry file from the Court below does not contain any written undertaking, counsel may give the undertaking to the Court orally during a hearing. That suggests that the mere fact of there being no filed written undertaking is not conclusive or even indicative of there being no undertaking given. We note there is nothing filed to confirm that the then counsel was not instructed to provide an undertaking or even that no undertaking was given. The ground arises, so it seems, solely as a result of present counsel not finding a written undertaking within the Court file. This ground of appeal must fail.
   
9. The nature of the undertaking is questioned in Ground 3 of this appeal. Where an interlocutory injunction or interim relief is sought a Court will require the applicant, as a condition of its interference in its favour, to enter into an undertaking to abide by any order the Court may make as to damages. Even though the undertaking is given to the Court it provides for damages to any party to the proceedings or any other person, whether or not that party was itself the subject of the restraint. Damages are payable under the undertaking without further order. Only assessment need take place and then only where the quantum cannot be agreed.
   
10. The submission that the Appellant seeks to rely on in this regard is that the Court in dealing with damages should assess whether the order was made with good cause or otherwise. As the interim relief was in fact discharged at the inter partes hearing, that issue has already been determined. Given that it is not an issue on this appeal that the damages are confined to such damages as any other party or person may have suffered as a result of the order being made, there is no substance in the balance of this ground. This ground must also fail.
    
11. There was no trial of issues in this action as the action was discontinued. That does not prevent any party suffering damage as a result of the effect of the injunctive order seeking damages. It is not a pre-condition of the undertaking that the issues must have been determined at trial. Ground four, which raises this issue, must also fail.
    
12. There was evidence before the trial judge on the assessment of damages that the losses incurred by the party restrained were loss of production for the nine days of the order. That was based on an average production over time divided to give a daily rate then multiplied by the number of days of the injunction. That calculation was audited by Yam & Co and the certification of the same as reasonable was exhibited at trial as an exhibit to the sworn statement of Yu Yuebo, Managing Director of the Second Respondent. In his judgment, the trial judge at paragraph 8 refers to their being "no dispute that the Second Defendant incurred loss of business earnings when the interim restraining orders were in place for nine (9) days."
    
13. In this case, the Respondent was required to stop logging operations for a period of days. They have claimed for loss of production based on an average over time. It is not entirely clear what this figure covers but it should be pointed out that the Respondent does not produce anything. It fells trees and if it cannot fell a tree today that tree lives to be felled another day. The costs properly recoverable are those fixed costs such as labour and machinery that cannot be utilised for making a profit for the days of the restraint. The profit that can be made from the sale of felled timber was not lost, merely postponed. In our view, the material presented on this assessment was not sufficient to identify those losses and the basis on which the assessment was done was therefore in error. Under different circumstances that would suggest this matter should be sent back for a rehearing.
    
14. Finally, we turn to a matter raised in submissions which does not feature in the Notice of Appeal, which is the time taken for the Respondents to seek an assessment of damages. From the chronology set out above it is clear that the relief was ordered and discharged in 2011, the claim finally discontinued in April 2012 and the assessment of damages requested in May 2013. Between the final determination of the claim and the application for assessment of damages a period of thirteen months elapsed. That period, in our view, was an unreasonable delay. It was well outside the period envisaged in some of the authorities referred to e.g. Smith v Day (1882) 21 Ch.D. 421. A long delay took place between the order being discharged and the proceedings being discontinued. There is no evidence before this Court to explain such a delay. The assessment of damages could not be requested until the proceedings had been completed. Then there was a further delay until the application for assessment was requested.
    
15. As Apaniai J said in HCSI 96 of 2005 on 14 May 2014 delay is a factor which any Court will take into account when an assessment of damages is requested. He cited Smith v Day (1882) 21 Ch. D. 421 and referred to time limits discussed therein. He came to the conclusion that a delay of one and one half years was unreasonable and refused to grant an assessment hearing. This case is not dissimilar. At our request counsel for the Respondent was asked if there was any material explaining the delay.
    
16. The question of delay was not raised at first instance. Indeed, there is material to suggest the trial judge was led to believe the application had been filed just one month after the discontinuance, an error found in supporting sworn statement and repeated in counsel's submissions before this Court. Nor was it a question raised as a ground of appeal. We do feel, however, that the delay must be taken into account when consideration is to be given to sending the matter back for a further hearing.
    
17. The Respondent sought an assessment on an incorrect basis. They did so after a substantial delay. That delay itself came after a long delay before the proceedings were discontinued against the Appellants. It seems to us that such delay dictates that it would be wrong, now, to send the matter back. Whilst we do not adopt entirely the dicta from Smith v Day in 1882, we do consider that delay is a factor that should be taken into account. In 1882 delay per se sufficed. A more modern approach is to consider delay together with the reasons for it and the potential prejudice to the parties to the action before determining whether the Court's discretion should be exercised.
    
18. The appeal is allowed. The order of the Court below is quashed. Costs of this appeal and the costs incurred in dealing with the application for assessment are awarded to the Appellant, such costs to be agreed or taxed.
    

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Justice Goldsbrough JA, President

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Justice Williams JA

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Justice Margaret Wilson JA,