JP Enterprises Ltd v Choe Integrated Development Ltd [2014] SBHC 52; HCSI-CC 96 of 2005 (14 May 2014)

IN THE HIGH COURT OF SOLOMON ISLANDS
Civil Jurisdiction

BETWEEN:

JP ENTERPRISES LTD
1st Claimant

And:

CHILLION MAEPIO & DONALD DEVESI
2nd Claimants

And:

JONATHAN KEKEVU & JAIRUS SALATO
3rd Claimants

And:

ELMAH KORYAR, AMBROSE NGATU &
WATSON TIVURU
4th Claimants

And:

JOSEPH BATES, LAWRENCE KILIVISI &
TIMOTHY SUSA
5th Claimants

And:

CHOE INTEGRATED DEVELOPMENT
LIMITED
1st Defendant

And:

ATTORNEY GENERAL
(representing the Commissioner of Forests)
2nd Defendant

And:

ATTORNEY GENERAL
(for and on behalf of the Western Provincial Assembly)
3rd Defendant

And:

RIMA LIMITED
4th Defendant

Mr. W. Rano for the 4th defendant/Applicant
No appearances for the claimants and the 1st, 2nd and 3rd defendants.

Date of hearing: 30 April 2014.
Date of Judgment: 14 May 2014.

RULING
Apaniai, PJ:

Introduction.

1. This is an application filed on 26 August 2011 by the Applicant, Rima Ltd, the 4th defendant, for assessment of damages pursuant to an "usual undertaking as to damages" made by the Respondent, JP Enterprises Ltd, the 1st claimant, on 21 December 2009.
   
2. The undertaking was made on an application by the Respondent seeking interlocutory orders against the defendants to restrain them from carrying out any logging activities in Choe Peka, Choe Ulu and Choe Kokorapa ("disputed areas") in the Marovo area of the Western Province.
   
3. The interlocutory restraining orders were granted that same day. As a result, the Applicant was unable to carry out any logging in the disputed areas from 21 December 2009 to 23 February 2010 (38 days). The Respondent's claim was later struck out on 23 February 2010.
   
4. The Applicant now comes to court seeking assessment of the damages suffered as a result of the undertaking.
   

The law with respect to "undertaking as to damages".

5. Schedule 4 of the Solomon Island Courts (Civil Procedure) Rules 2007 ("Rules") defines the term "usual undertaking as to damages" to mean:-
   

"that the party giving the undertaking undertakes that, in the event that the party is ultimately unsuccessful in the proceeding, or it is otherwise shown that the order to which the undertaking relates ought not to have been made, 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."

6. It was said in Air Express Limited v Ansett Transport Industries (Operations) Proprietary Limited ("Air Express")[1] that what occurs when an undertaking is made is that the court, as a condition of its grant of interim or interlocutory injunctive relief, has ensured that, should it turn out that relief should never have been granted, it will have the power, so far as monetary compensation allows, to make good the harm which the grant of the injunctive relief has done to the other party to the proceedings.
   
7. In Smith v Day ("Smith")[2], it was said that the undertaking is made to the court and not to the other party to the proceedings. As such, the undertaking only enables the other party to apply to the court for compensation for the loss he has suffered as a result of the order. It does not give rise to a cause of action in favour of the party who has suffered loss as a result of the undertaking[3].
   
8. Whether or not an inquiry into damages should be ordered is a matter for the discretion of the court[4] and, as is usual with all discretionary remedies, the court may refuse the remedy in appropriate situations or where special circumstances exist to justify a refusal to order an inquiry[5], for instance, where there has been undue delay in making the application for the inquiry[6].
   
9. I need not discuss the various principles governing the issue of undertaking as to damages. Suffice to refer to a statement by Gibbs, J. in Air Express which seems to me to summarise the basic principles.
   
10. Gibbs J. said (at pages 42 to 43):
    

"The object of requiring a plaintiff who seeks an interlocutory injunction to enter into an undertaking of this kind is to attempt to ensure that a defendant will receive compensation for any loss which he suffers by reason of the grant of the injunction if it appears that in the event the plaintiff was not entitled to obtain it. The insistence upon the giving of the undertaking is a very important, if not an essential, means of preventing injustice from being done by the court when it makes an order at an interlocutory stage, before the rights of the parties have been finally determined. The court has a discretion not to enforce such undertaking, but unless the defendant has been guilty of conduct that would render it inequitable to enforce the undertaking it would seem just, speaking generally, that a plaintiff who has failed on the merits should recompense the defendant for the damage that he has suffered as a result of the interlocutory order. However, it is perfectly clear, and it appears from the words of the undertaking themselves, that the only damages to which the defendant is entitled are those which he has sustained by reason of the grant of the injunction. The generally accepted view is that the damages must be confined to loss which is the natural consequence of the injunction under circumstances of which the party obtaining the injunction has notice. ...

In a number of authorities the court has distinguished between loss which was caused by the injunction and loss which arose from the litigation.... There is no reason to doubt that it is correct in principle to draw such a distinction if the facts warrant it. If the pendency of the litigation, rather than the making of the order, was the cause of the plaintiff's loss, the terms of the undertaking have no application since the plaintiff has not sustained the loss by reason of the order. Moreover, except in certain cases analogous to malicious prosecution, a defendant is not entitled to recover damages for loss resulting from legal proceedings brought against him – the only liability of the unsuccessful plaintiff is to pay costs. The court should no doubt scrutinize with care an assertion by a plaintiff that loss which has been suffered by the defendant has resulted from the litigation rather than from the making of the interlocutory order, since a plaintiff should not be allowed to evade payment of the price which he has agreed to pay for the grant of the injunction. In the end however the question becomes one of fact: Did the making of the order cause the loss? The onus of proof must, in accordance with general principles, lie on the defendant who asserts that he has sustained damage by reason of the order".

11. I now turn to the present application.
    
12. To succeed in this application, the first hurdle that the applicant must overcome is to satisfy the court that the application was made within a reasonable time after the dissolution of the injunction.
    
13. Unfortunately, this application must fail at this hurdle. The injunction was dissolved on 23 February 2010. This application was not filed until 26 August 2011, a delay of approximately one year and six months (18 months).
    
14. In Smith, the court noted that the injunction was granted in November 1879 and dissolved by the Court of Appeal in February 1880; that the action was dismissed by the Court of appeal in June 1881; that the application to inquire into what damage the defendant had suffered was not filed until February 1882 (some 8 months after the claim was dismissed). The court ruled that the delay was unreasonable.
    
15. In that case, Jessel M.R. was prepared to say that four months delay would be unreasonable, but the other two judges (Brett L.J. and Cotton L.J.) were not prepared to lay down any hard and fast rule as to the exact length of time. Brett L.J. (with whom Cotton L.J. appeared to have agreed) stated the principle that an application for an inquiry into what damages the defendant had suffered must be made within a reasonable time after the dismissal of the action and what is reasonable time depends on the circumstances of each case.
    
16. The justification for the urgency of making such application was explained in Wood where Bowen, L.J. said (at p.653):
    

"The application to him was an application to his discretion, though no doubt the discretion is to be exercised on legal line. A long delay might itself be fatal to the application, the reason being that the application is made to the Judge's discretion. When a man applies to the Judge's discretion to give him as damages the expenses to which he has been put by reason of the injunction, great injury might be done if he did not come promptly. The court has to consider all the facts of the case and the application should be made before these facts have passed away from the recollection of the Judge. It is a reasonable presumption that a man who sleeps on his rights has not got much right".

17. That was a case where the application was delayed for almost three and a half years. The court held that the delay was unreasonable and dismissed the application.
    
18. In the present case, no explanation was made for the 1 ½ year delay in making this application. That delay is fatal. Accordingly, the application is dismissed. No order as to costs.
    

THE COURT

James Apaniai
Puisne Judge.

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^[1] [1981] HCA 75; [1978-1981] 1 46 CLR 249.
^[2] (1882) 21 Ch. D. 421.
^[3] Air Express Limited v Ansett Transport Industries (Operations) Proprietary Limited [1981] HCA 75; [1978-1981] 1 46 CLR 249; White Corner Invetsment Ltd v Harro [2006] PGNC 82; N3089 (12 September 2006).
^[4] Smith v Day (1882) 21 Ch. D. 421.
^[5] Griffith v Blake (1884) 27 Ch. D. 474.
^[6] Smith v Day (1882) 21 Ch. D. 421; Ex parte Hall; In re Wood [1883] UKLawRpCh 125; (1883) 23 Ch D 644;