Premier Makira/Ulawa Province v Universal Graphics & Designs Ltd [1996] SBHC 18; HC-CC 107 of 1996 (15 April 1996)

HIGH COURT OF SOLOMON ISLANDS

Civil Case No. 107 of 1996

THE PREMIER MAKIRA ULAWA PROVINCE

-v-

UNIVERSAL GRAPHICS AND DESIGNS LGNS LTD

Before: Awich, Commissioner

Hearing: 11 April 1996 - Ruling: 15 April 1996

Counsel: C. Ashley for the Plaintiff; A. Radclyfr the Defendant

INTERLOCUTORY JUDGMENT

Sam Awich (Commissioner) :

The Premier of Makira Ulawa Province, representing that provincial government, filed a Writ of Summons on 10.4.1996, suing the defendant, Universal Graphics and Design Limited trading as Universial Shipping Services. In the writ, the province claimed:

1. $125,000 being arrears of hire fees for the vessel M.V. Bulawa for 2 112 months, accruing in a charterparty dated 13.12.1995, and further sums that continue to accrue;
2. Possession of the vessel the subject of charterparty;
3. Injunction restraining the defendant from removing from the vessel, anything which belonged to the plaintiff and;
4. Injunction restraining the defendant from removing the vessel from Honiara.

At the same time as the writ was filed and issued, the plaintiff took out summons by which he sought to have an application heard on 11.4.1996. The summons applied for:

" . . .injunction in the following terms:-

1. To return the M.V. Bulawa with all its equipment to the plaintiff forthwith;
2. Not to remove the M.V. Bulawa from Honiara;
3. Not to remove any equipment from the vessel. "

The summons application was filed together with affidavit of Peter Baewa, who described himself therein as premier of Makira Ulawa Province. Except for the first paragraph, that affidavit simply repeated what was stated in the statement of claim. To the affidavit, was annexed- the charterparty. When I was considering this judgment, it occurred to me that the plaintiff did not mention anywhere in his application papers that he seeks the three injunction orders by way of interlocutory relief, namely interlocutory injunction. Submission of learned counsel Mr. Radclyffe, for the plaintiff did not refer to the orders sought as interlocutory. It was only in reply to the submission made by learned counsel Mr. Ashley for the defendant that Mr Radclyffe submitted on the question of triable issue and the uncompensatability of damages. Had I noticed that uncertainty in the application at the time of hearing, I would have asked counsel for plaintiff to address the court about that or to amend his application so as to reflect intention to apply for interlocutory injunction, if that was the intention. If the submission and or amendment could not rectify the position, I would have struck out the application as irregular proceeding, if the intention was to secure those orders as final reliefs. I appreciate that urgency in the matter may have called for haste in the preparation of papers, nevertheless counsel must ensure that case papers filed do reflect the correct nature of their case and the nature of the order sought.

Mr. Ashley submitted in opposition to the application of the plaintiff, on the assumption that it was application for interlocutory injunction. As the result, Mr. Radclyffe in reply had to sound more and more like one making application for interlocutory reliefs. I accordingly considered the application as one for interlocutory reliefs. The primary purpose of interlocutory injunction compelling a party to carry out or restrain him from undertaking a particular course of action is to preserve the status quo, the state of things, until the rights of the party have finally been determined in the trial of the case.

Often the grant of interlocutory injunction effectively ends the case because it renders further proceedings unnecessary. If the plaintiff succeeds in his application in this case, that may well be the position. His application must however, state clearly whether the relief he seeks is interlocutory.

The starting point in granting interlocutory injunction is that there must be particularised in the substantive case a cause of action. That presents no difficulty at all in this case because the claim in this case at paragraphs 2, 3 and 4 clearly stated that there was charterparty between the parties in terms of which the defendant was obliged to pay in advance, the sum of $50,000 per month for the hire of the vessel. It has been alleged that the defendant has failed to pay timeously and was in arrears to the extent of $125,000 by the 10th April 1996, the date the statement of claim was signed and the case filed.

That being the case the next step is to determine from the affidavits filed or oral evidence, if

1. From the cause of action, a serious issue to be tried has been raised;
2. If serious issue has been raised, then the court must pose the questions, whether award of monetary damages will be adequate compensation;

2.1 For the plaintiff if interlocutory injunction was refused, but at the final determination of the case the plaintiff succeeds in obtaining final permanent injunction, or

2.2 For the defendant, if interlocutory injunction was granted to the plaintiff, but at the final determination of the case, the plaintiff loses his bid to obtain final and permanent injunction.

If the answers to the two questions do not produce clear guidance then a third question must be posed; does the balance of uncompensatable losses lie unfavourably with the plaintiff or with the defendant? In other words, with whom would the greater part of hardship lie? This is the test now described technically as balance of convenience.

In this case the plaintiff has alleged that he has not been paid the sum of $125,000 which is due and now in arrears in terms of the charterparty. That is as serious an issue as can be in any successful application. The plaintiff must, however, go a step further to establish that his complaint is not frivolous. The evidence he presents must satisfy the court that the plaintiff has real prospect of succeeding in obtaining the arrears and to secure the return of the vessel on account of the alleged default in the terms provided in the charterparty.

The plaintiff's affidavit states that the defendant owes the sum of $125,000 in arrears and that the defendant is unable to pay. From that, the plaintiff would like the court to rule that monetary compensation to the plaintiff is an unlikely prospect and so interlocutory injunction is called for. The charterparty provided for the plaintiff withdrawing the vessel if the defendant is, "in default", of payment of the hire fee. From the papers filed, I must find that the defendant admits default in payment. Annexture MM3, a letter dated 13th March 1996 written by financial controller of the defendant to the Minister of Finance and Investment, of the province, admits default for 2 1/2 months. It would appear from that letter that the defence of the defendant will be that the-plaintiff in turn owes the defendant money for spare parts and Mechanical work for repairs done at the beginning of an earlier charter preceding the present. The defendant intends to urge that the repairs were necessary to put the vessel in seaworthy condition. It appears that at trial, the issues will include the question as to whether the present charter is one in a series or is related to the preceding one, and whether at the start of it all, the plaintiff was not obliged to provide a seaworthy vessel or at least to undertake to diligently make the vessel seaworthy. The plaintiff's affidavit is silent on the points although the defendant had made it known to the plaintiff that there was that claim of money due to the defendant.

That silence leaves a gap in the case of the plaintiff to sufficiently establish prospect of success. If the plaintiff is found to owe the defendant, as alleged by defendant, a sum far in excess of the plaintiff's claim the prospect of the plaintiff's success becomes very unlikely.

This case is about time charter including the usual provision for the shipowner withdrawing the vessel, "in default" of payment. That expression has often been interpreted to mean in default of payment and, for so long as default continues, giving leeway to the charterer who pays off his default before the shipowner withdraws the ship. That advantage is not open to the charterer in a clause providing for, "failing punctual and regular payment". The position in this case is that the plaintiff has already sought withdrawal of the vessel before payment of hire. There are however, case authorities that suggest that the charterer must pay the hire punctually unless there are special circumstances which excuse it; see Akt Tankexpress -v- Campagnie Financere BeIge des Petroles (194) AC 76. In this case the defendant met the plaintiff's application with among others, the statement that it was always the understanding between the parties that the plaintiff must pay for the initial expenses to make the vessel seaworthy. That has not been referred to in any way by the plaintiff. It appears to me that unless challenged, and I do not mean disproved, that statement may well constitute special circumstance to excuse punctual payment of hire, especially in view of the fact that the sum is a large one, $435,458.00, far in excess of the arrears claimed by the plaintiff. That position may change if hire arrears continue to accumulate.

It is the decision of the court that the plaintiff has failed on the evidence so far availed by affidavits, to present a case that discloses issue with real prospect of succeeding. The interlocutory injunction is refused with costs to the defendant/respondent.

It is not necessary to decide whether monetary damages might have been sufficient compensation, and the question of arbitration contained in clause 15 of the charterparty. I may, however, mention that the question of arbitration is best presented by way of application to stay the proceedings once appearance to the writ of summons has been entered by the defendant.

There is some urgency in the case which I consider warrants the court making order for direction in pleadings so as to ensure speedy progress towards the final determination of the case. The court directs that:

1. Memorandum of appearance be filed within 2 days of making this order for direction, if it is intended to defend the action;
2. Defence be filed within 3 days thereof;
3. Reply within 3 days thereafter;
4. Rejoinder, surrejoinder, rebutter and surrebutter if any, all to be filed one day after the other;
5. Discovery, if any, be done by both parties within 4 days of filing defence or the last pleading in direction 4;
6. Inspection within 2 days thereof;
7. The plaintiff to apply for listing not later than 30 days after discovery and inspection;
8. Parties are granted liberty to apply for further direction.

p>Dated at Honiara thra this 24th day of April 1996

SAM AWICH
COMMISSIONER OF HIGH COURT