Vete Holdings Corporation Ltd v Moapa Enterprises Ltd [2013] TOSC 22; CV76.2013 (12 November 2013)

IN THE SUPREME COURT OF TONGA
CIVIL JURISDICTION
NUKU'ALOFA REGISTRY
CV 76 of 2013

BETWEEN:

VETE HOLDINGS CORPORATION LTD
PLAINTIFF

AND:

MOAPA ENTERPRISES LTD T/A J.M. STORE
RESPONDENT

BEFORE HON. JUSTICE CATO

Mrs. Petunia Tupou for plaintiff
Lord Tupou for the defendant

JUDGMENT ON APPLICATION FOR INTERIM INJUNCTION

[1] The applicant commenced action alleging that the respondent was in breach of contract and to recover damages for the occupation of the applicant's property beyond the term of the tenancy. The allegation was that the applicant had entered into an agreement to rent the applicants' warehouse situated at Puke, Tongatapu on or about May 2011. The term of the tenancy was alleged to be for a period of 28 months. The rent was alleged to have been $2000 per month and was paid in one lump sum.

[2] It was further alleged that it was agreed that the rent would be paid for 25 months and that 3 months would be rent free. In this regard, it was admitted the respondent had paid the amount of $50,000 on or about the 20th May, 2011.

[3] It was claimed the respondent had been on the property three weeks prior to the date of the payment of the lump sum.

[4] It was further claimed that the respondent's paid 25 months tenure expired on the 31st May 2013, and a three months period said to be a free rental period had expired on the 31st August, 2013.

[5] The applicant claimed that the defendant had declined to leave the premises, when requested, on many occasions and had hired security guards to prevent or hinder access by the applicant to the premises. Further, claims were made of unauthorized use of yard for storage containers, damage to underwater pipes, and inconvenience to workers. In all, $18,000 damages were claimed.

[6] The applicant sought an interim injunction prohibiting the respondent from entering the property and warehouse and an ancillary order that the respondent be required to seek the permission of the applicant or its agents to enter the premises. Ms Una Vete swore an affidavit in support deposing to the fact that, although the rental agreement had been unsigned because the respondent had declined to sign it despite numerous request, the parties had observed the main aspects of the agreement, aside from the respondent's failure to seek consent prior to acting in relation to some activities.

[7] The respondent filed an affidavit from its manager, Mr Dharmendra Prasad. He contended that the agreement was supposed to have been the initial three months grace period to do the initial extensive construction work and then the 28 months period was to commence. He claimed the applicant had declined to sign the agreement after he had paid the $50,000. He claimed that the tenancy agreement would not expire until January 15, 2014 and that the correct starting point was June 15th 2011. He claimed that the $50,000 was paid at the rate of $2000 per month but that to compensate for the interest element on the $50,000 which it was alleged the applicant had enjoyed from the receiving the lump sum payment an additional three month period rent free was part of the agreement.

[8] The respondent also claimed that under the agreement it had a right to store containers and a right to fence to protect them was implied. It denied damage and further claimed that if an injunction were granted stock and other chattels worth more than a million pa'anga could be lost. The respondent claimed a right also to exercise its option for a renewal under the tenancy agreement. All this was claimed in correspondence from the respondent to the applicant on the 6th September 2011 or in Mr Prasad's affidavit.

[9] Then followed further affidavits from Ms Una Vete and from Mr Prasad with various allegations and recriminations concerning the agreement and other matters in it. It is unnecessary for me to canvass the contents of these upon the view I have taken of the application for an interim injunction. I record that I have some doubt as to whether this is the correct jurisdiction in which to commence these proceedings, or whether proceedings should under have issued out of the jurisdiction of the Land Court. However, on the view I have taken of this application I do not consider it matters. The plaintiff may, however, consider whether the substantive proceedings should be transferred to the Land Court as falling within section 149 (1) (e) of the Land Act.

[10] Both Mrs Tupou and Lord Tupou have filed memorandum of argument which I have read. As seems not untypical of commercial transactions in Tonga, agreements may be unsigned yet the parties commit to commercial relations. When disagreement follows, so does litigation and ultimately the Court has to resolve the dispute. Time and unnecessary expense follows.

[11] In this case, it is clear that there are disputed questions of fact which can be resolved only after evidence is called and the respective versions tested. Further, issues of law are involved as to the extent, if at all, the unsigned agreement can be relied upon to govern the parties relationship. Not only is this important for the calculation as to the correct period of tenure, but also because the defendant alleges a right of renewal also which is contained in the rental agreement.

[12] I do not propose here to grant the injunction for the following reasons;

1. The merits of the action, contrary to Mrs Tupou's assertion that they are plain, in my view are unclear, and can only be properly resolved by hearing evidence on the disputed contentions. The applicant's decision in this regard not to insist that an agreement were signed, before allowing the respondent to enter the premises, is unfortunate.
   
2. The issue of whether there is, in fact, an agreement, albeit unsigned, based on the conduct of the parties, and, if so, the extent of that agreement raises issues of law and fact of some complexity. This is not an appropriate time to consider the merits of the competing claims.
   

100. In my view, the matters the applicant urges upon me to justify the issue of an interim injunction are plainly compensable by damages, and the respondent, if unlawfully holding over, will be liable for those damages and possibly any consequential losses arising. I agree with Lord Tupou that the fact that the applicant's losses are compensable by damages is the answer to this application.
     

4. Even on the respondent's version of tenure the period will expire shortly that is in early January 2014.
   
5. The respondent claims a right to a renewal which seems to me, if sought to be exercised, is dependent on the application to the relationship of the provisions of the unsigned lease and, if so, an interpretation of the correct period of tenure because it is, at the expiration of the 28 month period, that the lease provides for the option to renew to be exercised on conditions.
   
6. The respondent also claims injury of a substantial kind to stock should he not be permitted to remain to the end of what he contends is the proper period of tenure.
   

[13] For all these reasons, I dismiss the application with costs to the respondent (defendant) to be fixed by the Registrar on application by the respondent if the parties within 14 days from the date of this judgment cannot agree on quantum.

DATED: 12 NOVEMBER 2013
JUDGE