Egan v Collier [2005] TOSC 34; CV 256 2005 (23 May 2005)

IN THE SUPREME COURT OF TONGA
CIVIL JURISDICTION
NUKU’ALOFA REGISTRY

NO. CV. 356/2005

BETWEEN:

SHANE EGAN
Plaintiff

AND:

1. PROFESSOR GREGORY ROYCE COLLIER
2. DR. KENNETH RUSSEL WALDER
3. PETER JULIAN MACKAY
Defendants

BEFORE THE HON MR JUSTICE THOMAS

Counsel: Miss Helu for the Plaintiff

On the Papers

JUDGMENT

This is an ex parte application for an interim injunction to prevent the defendants from withdrawing funds from the company account of a private company, Intermed Limited. The plaintiff and the 3 defendants are the shareholders and directors of the company, which was incorporated in Tonga in 2000.

There has arisen a dispute between the plaintiff and the defendants concerning the management of the company, which is disadvantaging the plaintiff. The statement of claim refers to allegations of various breaches of the company constitution and the Companies Act and inter alia seeks damages and the winding up of the company.

The principles governing such applications are well known and set out in American Cyanimid v.Ethicon [1975]1 All E.R. 504.A party must show there is a serious issue to be tried, that damages are not an adequate remedy and that the balance of convenience favours the granting of the orders sought. In addition ex parte applications have an additional burden of establishing an exceptional urgency.

The application is supported by the affidavit of the plaintiff who briefly details the setting up of the company and exhibits exchanges between him and the defendants over the past few months. He also confirms the arrival of a cheque for $50,000 at the office of the company secretary and seeks an order that the cheque is not banked to the credit of the company because the defendants have the power to transfer the funds electronically from Australia.

I have no evidence of how this company has operated previously nor how the cheque was to be used or who even provided it. It is apparent there is a credit in the company account. I do not know what effect preventing these funds from being banked will have on the company. The evidence is quite simply inadequate and the plaintiff has not disclosed sufficient information about the financial operation of the company to allow any court to make a meaningful decision.

The issue between the parties concerns the internal management of a private company. Any court would be reluctant to interfere in such internal disputes on behalf of a minority shareholder even if the case was clear-cut. That plainly is not the case here.

In terms of the appropriate principles there may well be a serious issue between the parties but damages are always going to be an adequate remedy and there is simply insufficient material to decide where the balance of convenience lies.

For these brief reasons the application is refused. The plaintiff is to file an application supported by affidavit to serve the proceedings out of the jurisdiction pursuant to Order 12. Any further applications for injunctive relief are required to be on notice.

NUKU’ALOFA: 23 May 2005

JUDGE