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Sharma v Akhil Holdings Ltd [2006] FJHC 82; HBC155.2002L (15 December 2006)

IN THE HIGH COURT OF FIJI
AT LAUTOKA
CIVIL JURISDICTION

CIVIL CTION NO.155 OF 2002L

NO.257 OF 2006

BETWEEN

TOTA RAM SHARMA
Plaintiff

AND

AKHIL HOLDINGS LIMITED
Defendant

Appearances: Mr. Abhay Singh for the plaintiff
Mr. S. B. Patel for the defendant

Hearing: 29 November 2006
Decision: 15 December 2006

Ruling

[1] Before me is a summons by the defendant dated 30 November 2006 for an order that the mareva injunction granted in 2004 be dissolved. The application is supported by the affidavits of Mr. Akhil and Mrs. Searle sworn on 29 November 2006 and is strongly opposed.

Background to application

[2] The trial of this action began on 28 November 2006. On the second day of the trial, learned counsel for the defendant Mr. Ramrakha made an oral application to dissolve the injunction. In the afternoon session the plaintiff, Mr. Sharma said, in the course of his examination in chief that he wasn’t feeling well. A break of 10 minutes followed. I cautioned his lawyers that if the plaintiff’s condition was such that an adjournment application was likely to ensue, on the grounds that he was medically unfit to continue his testimony, a medical certificate, more detailed that the usual medical notification that "the patient was unwell and unfit to attend court," would have to be presented. It was not and I shall come to that later.

[3] I had also earlier expressed concern that time was being taken up by witnesses subpoenaed by the plaintiff, whose evidence was largely unchallenged, namely the Acting Registrar of Titles and the Accounts Officer from the Fiji Sugar Corporation. Precious time would have been saved had their main purpose, being the production of official records, been agreed to beforehand.

[4] In his ruling of 23 June 2006, on four earlier interlocutory summonses, (three weeks before the hearing dates of 28 and 29 November 2006 were assigned on 14 July 2006) Finnegan J expressed similar views concerning the delays in bringing the action to finality and stressing the imperativeness of a hearing of the substantive issues.

(i) "One hopes therefore that this action will be fortunate in obtaining a hearing date this year" – para (2)

(ii) "The industry devoted by Counsel for each party to these interlocutory matters has been impressive. Indeed much of this action has been fought by interlocutory applications and much evidence has been given by affidavit ..... Most of the issues that they have raised (excluding petty differences over compliance with timetables) really need to come to trial" – para (5)

(iii) "It would be a mercy to all concerned if 14 July 2006 were the trial date for this matter and not merely a date for setting a trial date. These parties need to bring their cases and put them before the Court in evidence so that they can be assessed, tried, and determined" – para (8)

(iv) "I urge Counsel to prepare for trial with the material they have and to desist from any further interlocutory skirmishes" – para (14)

[5] One of the summonses dealt with was an application to dissolve the injunction. Finnegan J was not persuaded that the interlocutory relief granted should be disturbed. He was of the view that it would be unwise to intervene further until the court hears evidence of what he termed series of apparently complex transactions between the parties.

[6] Notwithstanding Finnegan J’s earlier ruling and comment about the need to have the action heard and determined without any further interlocutory skirmishes, a further application was filed by the plaintiff to have the assigned trial dates vacated. I heard and dismissed the application. A further application for adjournment was made in the course of the hearing. The hearing was adjourned defeating the sentiments expressed by Finnegan J of bringing the action to finality.

Consideration of application

[7] Mr. Singh submitted that the purpose of the injunction is to "protect the fruits of any judgment or likely judgment that the plaintiff may get". He submitted that the plaintiff needs some kind of protection that judgment will not be rendered futile and that the mareva injunction should stand.

[8] The submission is misconceived to the extent of the suggestion that the plaintiff is entitled to the injunction as a form of security for his claim. The mareva injunction does not give the plaintiff any rights in the property, nor any priority over any other creditor.[1] It is not to be used as a form of security for the plaintiff’s claim.[2]

[9] The legal test for the grant of the mareva injunction (limited to assets within the jurisdiction) is conveniently set out in the head note to Bank of New Zealand –v- Hawkins,[3] a decision of Gault J:

An applicant for a mareva injunction must show that:

(a) It has a good arguable case on its substantive claim. This threshold requirement is more onerous than that normally applied in the case of interlocutory injunctions of a serious question to be determined. It is apparent from the pleadings and voluminous affidavits now before the Court that the plaintiff has an arguable case. However for reasons which I shall come to later, I am of the view that the overall justice in the circumstances of the history of this case requires that I consider afresh whether the injunction granted should be maintained.

(b) There are assets of the defendant within the jurisdiction to which the orders can apply. This requirement has been met.

(c) There is a real risk that the defendant will dissipate or dispose of assets so as to render himself ‘judgment proof’.

[10] In my view the evidence in support of the allegation that the defendant is likely to dispose or dissipate assets so as to become judgment proof, is tenuous. I am far from satisfied that the defendants proposed intentions to develop the subject land are aimed at dissipating the assets so as to render itself judgment proof. The fact that the defendant may be dealing with assets is not, of itself, sufficient. In Whitmarsh –v- A’Mon Corporation Limited[4] Hardie Boys J held that where the effect of the mareva injunction would be to prevent a defendant using legitimately an asset to pay its debts, the order would be refused. To grant an order in those circumstances would be to give the plaintiff, who had not at that stage established a claim, a preference over other creditors. Such an unwarranted interference with the rights of the defendant was unacceptable.

[11] I was informed in the course of the hearing that the defendant continues to incur substantial legal costs and needs to raise funds to meet these expenses. It cannot do so while it is restrained from legitimately using its assets.

[12] In addition to the factors listed above, Gault J noted:

Finally, against the need to protect the plaintiff so as to ensure any judgment is not rendered barren there must be balanced any prejudice or hardship to the defendant and to third parties. Generally this is a requirement that consideration must be given to the requirement for overall justice in the circumstances.[5]

[13] Having assessed the plaintiffs interests against the prejudice to the defendant and having concluded that there is insufficient evidence to support the allegation that the defendant is likely to dispose or dissipate assets so as to become judgment proof, the interests of justice in the circumstances of this case lies in favour of discharging the injunction.

Undertaking as to damages

[14] On 29 November 2006, the day before I heard this application, I pointed out to Mr. Singh that his clients undertaking to pay damages was wholly inadequate and did not comply with the requirements set out by the Fiji Court of Appeal in the cases Natural Waters of Viti Limited –v- Crystal Clear Mineral Water (Fiji) Limited[6] and more recently in Air Pacific Limited & Another –v-The Attorney General of Fiji & Air Fiji Limited.[7] I stood down the hearing of the application on the day of the hearing to enable Mr. Singh to file a supplementary affidavit. When I heard the matter later at 2.30 pm Mr. Singh had not filed the affidavit and in the course the hearing Mr. Singh sought leave to file a further affidavit addressing the undertaking as to damages. I declined leave. The plaintiff had been given the opportunity to rectify the undertaking and failed to do so. The application for leave made in the course of the hearing would have had the effect of further adjourning a hearing which characterizes the course that this action has taken since its inception.

[15] Included in the bundle of authorities Mr. Singh handed me during the hearing was an extract from the 1997 Edition of The Supreme Court Practice, page 520. I assume he read the page. The notes at paragraph 19/1/34 state:

"The Court of Appeal has held it as an abuse of process for a litigant to obtain a mareva injunction and then not to prosecute the action; a litigant is under duty either to proceed with his claim or to apply, on his own motion, to have the injunction discharged."

[16] I would go further. The plaintiff has a duty to prosecute his action promptly and without undue delay. He should not be permitted to sit on his hands after obtaining what is essentially interim injunctive relief. The history of this case shows that the plaintiff did not prosecute his claim with the urgency required having obtained a mareva injunction.

[17] I must express my dissatisfaction with the medical certificate tendered in Court on 30 November 2006. On the basis of that certificate a further application for adjournment was made. Despite my cautioning Mr. Singh the day before that I be notified of the plaintiffs specific medical condition, I was given the standard or rather sub-standard certificate which stated that the plaintiff was:

(i) unfit to travel to court

(ii) unfit to participate in and to follow court proceedings

(iii) unfit to give evidence and be cross-examined

[18] I was not satisfied given the paucity of relevant information on the certificate that the plaintiff was in fact medically unfit to continue with the hearing. To aggravate matters, Mr. Singh assumed that the hearing would be adjourned. Notwithstanding that I was informed at the commencement of the hearing that the plaintiff would be calling 14 witnesses, there were no other witnesses present on 30 November when the hearing resumed. In the circumstances I have concluded that the supposed sudden onslaught of illness was yet another ploy to delay final determination of the action.

[19] The plaintiffs undertaking as to damages does not satisfy the criteria set out by the Fiji Court of Appeal in the judgments referred to earlier. The plaintiff has not placed sufficient material before the court to fortify his undertaking. He has not proffered sufficient evidence of his financial position. There is no adequate information before me to allow an assessment of the worth of the undertaking. Given this, the balance of convenience lies in favour of discharging the injunction. This may also have the effect of halting any further delays in bringing some finality to this action.

Orders

[i] the mareva injunction is dissolved

[ii] the plaintiff is to pay the defendants costs thrown away, assessed in the sum of $2,000.00, for the adjournment of hearing. These costs are to be paid in 14 days

[iv] the hearing is to continue on 15 January 2007.

Gwen Phillips
JUDGE

At Lautoka
15 December 2006

^[1] Palmer –v- Leespower SED Ltd (1996) 8 PRNZ 694.
^[2] Property Marine Australia Pty Ltd –v- Conder Yachts [1987] NZHC 402; (1989) 1 PRNZ 251 at 256 per Barker J.
^[3] (1989) 1 PRNZ 451.
^[4] [1988] NZHC 261; (1988) 2 PRNZ 576 at 582.
^[5] Idem, at 452.
^[6] Civil Appeal Nos.ABU 011 of 2004S & ABU001A of 2004S page 12.
^[7] Civil Appeal No. ABU0066 OF 2006S at p. 12