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Whittaker v National Bank of Fiji Ltd [2009] FJHC 275; HBC155.2009L (9 December 2009)

IN THE HIGH COURT OF FIJI
AT LAUTOKA
CIVIL JURISDICTION

Civil Action No. HBC 155 of 2009L

BETWEEN:

BRETT WHITTAKER and LOUISE WHITTAKER
Plaintiffs

AND:

NATIONAL BANK OF FIJI LTD
TRADING AS COLONIAL NATIONAL BANK
Defendant

INTERLOCUTORY JUDGMENT

Of: Inoke J.

Counsel Appearing: Messrs. I D Roche & P A Lowing for the Plaintiffs
Messrs. J Apted & M Cokanasiga for the Defendant

Solicitors: Lowing Nandan & Associates for the Plaintiffs
Munro Leys for the Defendant

Date of Hearing: 2 and 3 December 2009
Date of Judgment: 9 December 2009

INTRODUCTION

[1] This is the inter-parte hearing of an application by Mr and Mrs. Whittaker to restrain the Colonial Bank from proceeding with mortgagee sale of their properties. On 27 August 2009 I gave orders in favour of Mr and Mrs Whittaker restraining the Colonial Bank until further order and published my reasons on 31 January 2009. This application is to determine whether that restraint should continue. The Colonial Bank vigorously opposes the application. This is my judgment on notice.

THE INTERIM ORDERS

[2] The Orders made on 27 August 2009 were:

1. Until further order, the Defendant by its officers, solicitors, servants and agents be restrained from taking any steps to act upon or in furtherance of the exercise any of the powers referred to in documents purporting to be Notices addressed to the Plaintiffs and dated 4 June 2009 and 22 August 2009 including advertising and sale of any land being the land described in Schedule A attached to this Order (hereinafter referred to as the Land).

2. Until further order the Defendant whether by its servants or agents be restrained pursuant to Sections 125 and 127 of the Fair Trading Decree (as amended) from howsoever dealing with any of the Land or part thereof (including but not limited to) selling the Land, foreclosure or appointment of a Receiver/Manager over the Land.

3. Until further order the Defendant whether by its servants or agents be restrained from howsoever exercising any power of sale or any of its powers as first mortgagee over the Land or part thereof (including but not limited to) selling, foreclosure or appointment of a Receiver/Manager or in anyway whatsoever over the Land.

4. That this Order in the first instance be served on the defendant immediately by facsimile to its Suva office on 330 4481 and that a sealed copy of this order, a sealed copy of the Writ of Summons and Affidavit of Brett Whittaker dated 27 August 2009 be served on the defendant at its registered office by 12 noon on Friday 28 August 2009.

5. Costs be reserved.

6. That this notice be returnable on 2 September 2009 at 9.30 am.

THE ISSUES AS PRESENTED AT THE EX-PARTE HEARING

[3] The application was supported by a substantive and comprehensive affidavit sworn by Mr Whittaker, the facts from which I have set out in my reasons published on 31 August 2009 and I repeat them here for ease of reference.

[4] Mr Roche took me through the affidavit which showed two things. Firstly, there are several serious issues between the parties. There is the issue of whether the Bank’s demand notice was valid and compliant with sections 77, 78 and 79 of the Property Law Act [Cap 130] so as to give the Bank the right to proceed with mortgagee sale. It is clear also that the parties have fallen out and the Bank may have acted in bad faith and in breach of contract by reneging on a previous loan agreement and by its change of attitude which appears to have come about simply because of a change in management. There is the issue of promissory estoppel. The Statement of Claim also alleges misleading and deceptive conduct by the Bank and seeks specific performance of that loan agreement.

[5] Secondly, there was a real likelihood of the Plaintiffs being damaged in their reputation as “high end” builders in the building market in Fiji if the Bank was allowed to proceed with the threatened mortgagee sale. It is clear that the attitude of the Bank is that it is no longer willing to talk to Mr Whittaker and is determined to proceed with the mortgagee sale.

PLAINTIFFS OBJECTIONS TO AFFIDAVITS

[6] Mr Lowing, second Counsel for the Whittakers, handed up 15 pages of objections to the Bank’s 6 affidavits. I quote some of the bases of objections:

- not admissible-conversations need to be in first person,

- documents speak for themselves,

- the witness cannot quote from or analyse a document,

- no annexure provided – however this is inadmissible as documents speak for themselves,

- the witness cannot say what Whittaker “understood”,

- the words “7 weeks after it had been promised” are argumentative and not admissible,

- all comments on documents are inadmissible,

- the email speaks for itself

- any reference to conversations should be in the first person and the deponent cannot simply quote from documents. This paragraph is wholly inadmissible,

- this is a submission and argumentative,

- the deponent needs to say how he was informed of the Plaintiffs falling into arrears of interest payments,

- the deponent’s duty is to give evidence of fact-not to make submissions or express his opinion in relation to the evidence of other witnesses.

[7] All objections were in one or the other of those listed. Indeed, the same objections could be raised against the Plaintiffs own affidavits.

[8] Challenges to affidavits in this jurisdiction rarely succeed and I think rightly so. In saying this I am in no way saying that sloppy drafting is acceptable. But objections based on technicalities or on credibility of deponents such as the ones raised by Mr Lowing are equally as unacceptable. Due notice must be given to the fact that most deponents and drafters of affidavits in this country do not have English as their first language. Secondly, this is not originating process. It is interlocutory and the rules allow some flexibility. Thirdly, such affidavits are often drawn up in a hurry with limited time for collection of evidence. Fourthly, one must give some credit to the judge or magistrate that he or she has some common sense and fair judgment in assessing the evidence.

[9] Although I was minded to reject all the objections, I did not make any formal orders but gave Mr Lowing the benefit of doubt in that I will consider the affidavit material from both sides with his objections in mind.

THE INTER-PARTE HEARING

[10] The inter-parte hearing took the best part of two days totalling about 8 hours. It was necessitated by the way Mr and Mrs Whittaker had pleaded their case which required the Colonial Bank to respond in detail. I am mindful that this is only an interlocutory hearing so my Judgment will be brief so it will not reflect the efforts put in by both Counsels but it by no means disregards or meant to insult their industry. Indeed, it is because of their case presentation, both documentary and oral, that I am able to deliver this Judgment in this short period of time and with brevity.

[11] The onus is on the Plaintiff. The Court of Appeal so held in Westpac Banking Corporation v Prasad [1999] FJCA 2; [1999] 45 FLR 1 (8 January 1999):

When the matter comes back into the list, it will not be for the defendant to establish why the injunction should be dissolved. It carries no onus. Instead, the plaintiff has the task of persuading the court that the circumstances of the case are such as to require the injunction to be continued.

THE PLAINTIFFS CASE

[12] Mr and Mrs Whittaker’s claim relies primarily on an allegation that the Colonial Bank induced them to leave the ANZ Bank and move their banking business to the Bank. They allege that the Bank did this through a series of representations by its servants and agents. Acting on the faith and truthfulness of these representations they say they did just that. However, soon after and over a period of about two years, they allege that the Bank failed to honour the promises that it made and withdrew and varied the banking facilities that the parties agreed upon. They refer in their Statement of Claim and in Mr Whittaker’s affidavit of 27 August 2009 to instances where they say support their contention that the Bank’s new General Manager and its lending staff did not act in good faith and unilaterally changed the agreed lending facility. These were the facts as presented to me when I heard the application ex-parte.

[13] Part of the Claim relied on an alleged invalidity of the demand notices. Mr Roche explained that at the time his client’s claim was drawn up and the ex-parte application filed they did not have a copy of the mortgage document. When provided with a copy subsequently, he conceded that this part of the claim cannot be sustained.

[14] Mr Roche submitted that the injunctions should continue because, in line with the Cyanamid,¹ principles:

A. There are serious issues to be tried

B. Damages are not adequate

C. Balance of convenience lies in favour of his client.

SERIOUS ISSUE TO BE TRIED

[15] There are serious issues because, he says, the Plaintiffs claim consists of breach of contract, promissory estoppel and conduct in breach of the Fair Trading Decree. The Plaintiffs contention is that because of the Bank’s new Managing Director’s manifestly clear intention not to honour the Bank’s financial commitment to their construction business, the Bank “embarked upon internal ‘bootstrapping’ in order to justify (it)”.² The Plaintiffs submit that there are serious issues of fact and law to be decided at trial.

[16] The test that is used in Fiji is not the “prima facie case test”³ but that formulated by Lord Diplock in Cyanamid:⁴

The Court no doubt must be satisfied that the claim is not frivolous or vexatious; in other words, that there is a serious question to be tried.

So unless the material available to the court at the hearing of the application for an interlocutory injunction fails to disclose that the plaintiff has any real prospect of succeeding in his claim for a permanent injunction at the trial, the court should go on to consider whether the balance of convenience lies in favour of granting or refusing the interlocutory relief that is sought.

[17] I think the nine affidavits filed in this application disclose that the Plaintiffs have a claim that is not frivolous or vexatious. The conflicting evidence cannot be resolved by me on the affidavits. If I were to accept the Plaintiffs evidence as deposed to in their affidavits, I think they have some prospect of obtaining a permanent injunction at the trial. According to principle therefore, the Plaintiffs should be given the benefit of testing their case in a hearing. As was said in Cyanamid:⁵

It is no part of the court’s function at this stage of the litigation to try to resolve conflicts of evidence on affidavit as to facts on which the claims of either party may ultimately depend nor to decide difficult questions of law which call for detailed argument and mature considerations. These are matters to be dealt with at the trial.

[18] Similarly, the Court of Appeal said this in Air Pacific Ltd v Air Fiji Ltd [2006] FJCA 63; ABU0066U.2006S (10 November 2006):

[23] If there is a contest of evidence, a Court dealing with such an interlocutory application should not attempt to make an assessment, on affidavits, of where the preponderance of evidence might lie, a point Lord Diplock made strongly in American Cyanamid at 406-7. The respondent’s submissions endeavour to present the issue as a conflict of evidence. But in this respect this is an extreme case. Not only is there a paucity of evidence on the plaintiffs side, the defence has produced evidence from persons in a much better position to be aware of the existence of any "Accord" saying categorically that they had no knowledge of any such agreement.

[24] The two stages in American Cyanamid are not to be regarded as an inflexible process, and in the end the question is where overall justice lies: Klissers Farmhouse Bakeries Ltd v Harvest Bakeries Ltd [1985] 2 NZLR 110, 128 (NZCA). However, as the High Court of New Zealand has said, the establishment of a serious issue is not a step to be brushed over lightly: "It is not sufficient for a plaintiff just to say there is a tenable cause of action from a legal point of view, and a conflict of evidence on the facts": Ansell v NZ Insurance Finance Ltd Wellington A434/83, judgment 30 November 1983, Eichelbaum J. In the present case the Judge dealt with the facts relating to this issue in a single sentence and, with respect, may not have appreciated that despite the considerable quantity of material, on analysis the evidence gave little if any support for the assertions made by the plaintiff in its statement of claim and affidavits. We conclude that on the existence of an agreement, there was insufficient material to allow the Judge to find there was a serious issue.

[25] When we look at the terms of any agreement, the plaintiff faces another significant difficulty. Any agreement was made more than 30 years ago, and the plaintiffs contention must be it was to continue in perpetuity. It has not been suggested it might be subject to termination on reasonable notice. If as the plaintiff contends it contained a provision to the effect that the first defendant would not compete with the plaintiff on domestic routes, plainly it was an agreement in restraint of trade. To be enforceable, it would need to pass the test of reasonableness. An agreement preventing Air Pacific from competing in perpetuity cannot be regarded as reasonable. It is quite contrary to current concepts of legitimate free competition that a trader’s entry into a market should be constrained by vague assertions of an agreement in restraint of trade made such a length of time ago. On this ground too the plaintiffs case for an interim injunction, based on the alleged "Accord", must fail.

[19] I do not accept Mr Apted’s submission that I should follow the approach used by McClelland J in Kolback Securities Ltd v Epoch Mining NL (1987) 8 NSWLR 533, 535-536 by “evaluating the strength of the plaintiffs case for final relief” at this interlocutory stage. It is, with respect, inconsistent with Lord Diplock’s statement in Cyanamid⁶ that the court is not justified in embarking upon anything resembling a trial of the action upon conflicting affidavits in order to evaluate the strength of either party’s case. Such an evaluation is limited to the special case of where the “uncompensatable disadvantage to each party would not differ widely” and “it is apparent upon the facts disclosed by evidence as to which there is no credible dispute that the strength of one party’s case is disproportionate to that of the other party.”⁷

[20] The facts here are, in my view, very different from those in Air Pacific in that whether the Whittakers’ case will be made out will depend on the evidence that is given at the trial. The parties evidence on affidavit is at odds with each other but it is certainly not a case where there is a paucity of evidence to support the claim. The Bank’s affidavits and the presentation of its case were directed to show that Mr Whittaker had not been truthful in disclosing the facts to this Court. As such, it is a matter of credibility of Mr Whittaker as a witness, a matter which I am unable to resolve in this case by pitting one affidavit against another. I think the threshold question of whether there are serious issues to be tried is satisfied and the Plaintiffs have discharged the onus of proof.

[21] Before I consider the question of damages and balance of convenience, I wish to consider the principles that apply to mortgagor/mortgagee cases such as the present.

THE RULE IN “INGLIS” AND THE EXCEPTIONS

[22] That the Cyanamid principles apply in an application to restrain the exercise of a mortgagee’s power of sale is now settled. See the Court of Appeal decision in Westpac Banking Corporation v Prasad [1999] FJCA 2; [1999] 45 FLR 1 (8 January 1999) where the Court said:

Subject to some special considerations which apply in relation to an application to restrain the exercise of a mortgagee’s power of sale, the principles are those propounded by the House of Lords in American Cyanamid Co v Ethicon Ltd [1975] UKHL 1; [1975] AC 396.

[23] Mr Roche for the Plaintiffs referred to Re Langworth Pty Ltd and Lindsay James Thompson v Metway Bank Limited [1992] FCA 449 (11 September 1992) in which Cooper J said:

12. It was submitted that his Honour fell into error when he held that the general rule in Inglis v Commonwealth Trading Bank of Australia [1971] HCA 64; (1972) 126 CLR 161 that an injunction restraining the exercise by a mortgagee of his power of sale will not be granted unless the mortgagor brings into court the amount claimed by the mortgagee as due under the mortgage, was not excluded where the mortgagor had a claim in damages for a contravention of s. 52 of the Trade Practices Act against the mortgagee. It was conceded before Neaves J that the first applicant was unable to bring into court the $784,646.00 claimed to be due under the mortgage. His Honour said of this submission:

"The circumstance that the mortgagor claims to be entitled as against the mortgagee to set off against the amount due under the mortgage damages, including damages for a contravention of s. 52 of the Trade Practices Act, is not sufficient to displace the general rule ... The rule is, however, not an inflexible one and the court has a discretion to depart from the full stringency of the rule and to mould its order so as to require payment into court of so much only as will suffice to give adequate protection to the mortgagee ... The ordinary rule will more readily be departed from where the amount claimed by the mortgagee is obviously wrong ..., where there is a serious question whether the mortgagee's power has become exercisable at all ... or where the mortgagor seeks to impugn the validity of the mortgage transaction itself."

13. It appears from what his Honour said about the first and third limbs of the applicants' case at pp 13 - 15 of his reasons that he took the view that there would only be an impugning or impeachment of the mortgage transaction, so as to require consideration to be given to whether the mortgagor should be relieved from the full rigour of the rule in Inglis, where the mortgagor's claim attacked the validity of the mortgage itself.

14. There is, I think, reason to doubt whether the circumstances in which a mortgagor who seeks to restrain his mortgagee from enforcing the security can obtain injunctive relief without having to bring the amount claimed as owing by the mortgagee into court are as limited as this.

15. The general rule is that a claim for damages by a mortgagor against a mortgagee (including a claim for damages arising from a contravention of s. 52 of the Trade Practices Act) will not provide any reason for relieving the mortgagor from the rule in Inglis where he is seeking to restrain the mortgagee from enforcing his security. See Inglis at page 165 and Glandore Pty. Ltd. v Elders Finance and Investment Co. Ltd. [1984] FCA 407; (1984) 4 FCR 130 at 135. There is also authority that this is so even if the mortgagor's damages claim would amount to an equitable set-off against the claim by the mortgagee for payment of moneys owing under the mortgage: see Altarama Ltd. v Camp (1980) 5 ACLR 513, 518.

16. However, there is authority to the contrary. This suggests that, while a claim sounding in damages by the mortgagor against the mortgagee will not generally provide a ground for relieving a mortgagor who seeks to restrain a mortgagee from exercising his powers under the mortgage from the obligation to bring into court the amount claimed as due by the mortgagee, if the mortgagor's damages claim is so closely connected with either the circumstances in which the mortgage was granted or with the demand for payment made by the mortgagee so as to amount to an equitable set-off against the mortgagee's demand for payment, then the mortgagor might be entitled to the injunction sought without having to bring the amount claimed by the mortgagee into court or to otherwise secure it to the mortgagee.

17. In Cunningham v National Australia Bank (1987) 77 ALR 632 at 638, Jenkinson J said:

"If the claim for damages were so connected with the mortgages or any of them as to impeach the mortgagee's title, in the sense in which that concept is expounded in relation to equitable set-off, then it may be that the relief sought could be granted free of the condition that the amount secured be paid into court."

18. In Graham v Commonwealth Bank of Australia (1988) ATPR 40-908, French J granted an interlocutory injunction restraining a mortgagee from exercising its power of sale in a case in which the mortgagor was claiming damages in respect of misleading conduct by the mortgagee that induced the mortgagor to enter into the loan transaction, as well as an order setting aside the loan agreement; his Honour adopted a broad view of the discretionary jurisdiction he was there exercising (see page 49,758) and, even though not prepared to say that the applicant had demonstrated a strong case, he granted the injunction on condition that the applicant brought into court about $34,000.00 in respect of arrears of interest out of a total of nearly $400,000.00 claimed as owing by the mortgagee under the security.

19. If the approach reflected in Cunningham and Graham is correct, an equitable set-off in respect of an amount less than that claimed by the mortgagee as owing gives rise to a different kind of dispute from a mere dispute between mortgagor and mortgagee as to what is the amount due under the mortgage: the latter is, according to Harvey v McWatters [1948] NSWStRp 58; (1948) 49 SR (N.S.W.) 173 at 174, "the ordinary case" in which the rule referred to in Inglis applies. Where an equitable set-off is raised, the mortgagor does not merely dispute the proper amount due under the mortgage, rather does he set up the existence of an "equitable ground for being protected against the (mortgagee's) demand": Rawson v Samuel (1841) Cr and Ph 161 at 179.

20. I think Neaves J's view that the existence of jurisdiction to restrain a mortgagee from exercising his default powers without requiring the mortgagor to bring into court the amount claimed by the mortgagee as due under the mortgage is limited to cases in which the mortgagor sets up a claim which attacks the validity of the mortgage itself is open to doubt.

21. I therefore think that if the applicant here made out a strong enough case to show that there was a serious question to be tried as to whether it had a good equitable set-off that exceeded in amount the respondent's claim for payment, it may well have been open to the court to have granted the applicant an interlocutory injunction, without requiring it to bring the moneys claimed by the mortgagee into court. If, on the other hand, the applicant made out a good case of an equitable set-off but for an amount less than the respondent's claim for payment, it may have been appropriate, to adopt the words of Morling J in Glandore Pty. Ltd. v Elders Finance and Investment Co. Ltd. [1984] FCA 407; (1984) 57 ALR 186, at 191-2, "to mould an order so as to ensure adequate protection to the mortgagee and to otherwise do justice between the parties during the period pending the final hearing" by granting an interlocutory injunction, but on terms that the applicant brought into court the difference between the respondent-mortgagee's claim for payment and the amount of the first applicant's set-off.

[24] Counsel submitted that there is a direct challenge to the exercise of Colonial Bank’s power of sale. In addition, he claims an equitable set-off which the Plaintiffs assert impeached the Bank’s right to exercise the power of sale.

[25] Because of the concession made in paragraph 13 above and the admission of default, the challenge against the exercise of the power of sale fails. The main thrust of the Plaintiffs claim, that is that they were induced to transfer their business to the Colonial Bank, without expressing a view as to the strength of their case, in my view, according to Graham v Commonwealth Bank of Australia, brings the Plaintiffs claim within the equitable set-off exception to Inglis. The result is therefore, the Whittakers are not required to pay the full amount of the debt into Court as a pre-condition to the injunction continuing.

However, that is not the end of the matter because I am required to consider other aspects of this case and the overall justice as between both parties. Such a consideration is necessary according to the passages cited above from Air Pacific⁸ and Re Langworth Pty Ltd⁹ and the cases cited therein.

THE DEFENDANT’S CASE

[27] The Bank vigorously opposed the continuation of the injunction. Mr Apted in his written submissions summarised the Bank’s argument as follows:

In summary ... (the Bank) contends that in view of the material that is now before your Lordship and based on the authorities and submissions set out below, the Orders should be discharged as –

(a) In their original affidavit in support of the injunction, the Whittakers failed to make full and frank disclosure of the material facts;

(b) There is on the material now before your Lordship no serious issue to be tried;

(c) Alternatively if there is any serious triable issue, damages are an adequate remedy for the Whittakers;

(d) Even if there is any serious triable issue, the balance of convenience or justice is clearly in favour of (the Bank); and

(e) The Whittakers have unduly delayed seeking interlocutory injunctive relief.

[28] Alternatively, he submits that should the Court think that some injunctive order should be maintained, then the Whittakers should be required to pay the debt into Court or an order to similar effect.

[29] The Bank filed six affidavits. As Mr Apted explained in his submissions: "due to the number of causes of action pleaded by the Whittakers, but more so because of the incomplete, inaccurate and misleading evidence that the Whittakers originally placed before this Court on their ex-parte application, these submissions are lengthy".

[30] As I have already said, it also made it necessary for the Bank to provide extensive affidavit material on the facts and its Counsel to make detailed submissions at the hearing. For current purposes, I do not think it appropriate or necessary to set out in detail the facts pointed out during the hearing as some of these facts will be contested at the trial and I do not wish to make any findings of fact that are not necessary for now. I therefore propose to refer to the facts as put by the Bank in a summary way only, as I have done for the facts according to the Whittakers affidavits.

[31] The Bank put forward evidence that the Bank had made a whole series of accommodation of the Whittakers banking needs. I accept the Bank’s affidavit material in this respect. The original facility was changed by mutual consent to accommodate the Whittakers change in their business proposal from a principally construction business to one of principally speculation in the real estate market. Further changes to the facility were made for this purpose. As Mr Whittaker says in his affidavit, he moved to Australia because his construction business was no longer viable.¹⁰ Interest was capitalised several times and the Whittakers made no payments towards interest. Mr Whittaker admits that one of the reasons he moved over to the Colonial Bank was the ability to capitalise interest and that the offer in LOO1 facility was a generous one.¹¹ There was no disclosure of this and other defaults in his first affidavit. As Mr Apted submitted, the Whittakers are educated Plaintiffs.

DELAY

[32] I can quickly dispose of the delay argument because I do not think that there is delay in bringing this application. The parties have been trying to negotiate in a sense since the "falling out" after the Bank’s new manager came into the picture so I do not take the period since then as constituting delay. The Bank did not take recovery action until after 28 May 2009. The demand notice was sent on 4 June 2009. Further negotiations followed and it was not until 20 August 2009 when the Bank told Mr Whittaker that the Bank was not accepting any further proposals from him that he took out these proceedings on 27 August 2009. I do not think that it can be said that the Whittakers have waived or abandoned their rights by continuing the banking relationship since the Bank’s new manager took office.

MATERIAL NON-DISCLOSURE

[33] Mr Apted conceded that I have a discretion whether to dismiss the application on the ground of material non-disclosure: Shipbuilding (Fiji) Ltd v Murphy [1997] FJHC 45; [1997] 43 FLR 83 (10 April 1997), per Fatiaki J, as he then was:

In this regard defence counsel forcefully submits that the plaintiff company in seeking the ex parte injunction was in serious breach of its duty to make the fullest and frankest disclosure of all material facts both favourable and unfavourable to its application. (per Donaldson L.J. in Bank of Mellak v. Nikpour (1985) F.S.R. 87 and per Warrangton L.J. in R. v. Kensington Income Tax Commissioners [1917] 1 K.B. 486 at 509)

In particular defence counsel submits that the plaintiff company in its application, failed to disclose the existence of a binding contract between itself and STS viz Amend No. 3/96 and the guarantee letter and accordingly the ex parte injunction ought to be discharged in limine. This defence counsel submitted was ‘trite law’.

In my view however, upon an application inter partes to dissolve or discharge an ex parte injunction the Court has the opportunity and the duty to examine the entire matter anew upon the basis of all the affidavits and submissions placed before it at the inter partes hearing and may, in exercising its discretion afresh in the matter, dissolve, vary, suspend or extend the ex parte injunction and may even grant a fresh injunction as in its discretion appears just.

I am fortified by the observations of Browne-Wilkinson V.C. in Dormeil Freres v. Nicolian Ltd. [1988] 3 All E.R. 197 where the learned Vice Chancellor said at p.199:

"... if, in the circumstances existing when the matter comes before the Court inter partes justice requires an order continuing the ex parte injunction or the grant of a fresh injunction, such an order can be made notwithstanding the earlier failure to make such disclosure. Moreover, there is authority that, contrary to the law as it was originally laid down, there is no absolute right to have an ex parte order obtained without due disclosure set aside: there is a discretion in the Court whether to do so or not."

In considering this ground I am also guided by the headnote to Brinks - MAT Ltd. v. Elcombe [1983] 3 All E.R. 188 which contains the following relevant passage dealing with non-disclosure in ex parte applications:

"Whether a fact not disclosed is of sufficient materiality to justify or require immediate discharge of the order without examination of the merits depends on the importance of the fact to the issue to be decided by the judge on the application. The fact that the non-disclosure was innocent, in the sense that it was not known to the applicant or that its relevance was not perceived, is an important, but not decisive, consideration in deciding whether to order an immediate discharge. However the Court has a discretion notwithstanding proof of material non-disclosure which justifies the immediate discharge of an ex parte order, to continue the order or to make a new order on terms."

Ralph Gibson L.J. in his judgment at pp.192/193 (ibid) enumerated no less than seven relevant principles of which the second reads:

"(ii) the material facts are those which it is material for the judge to know in dealing with the application as made; materiality is to be decided by the Court and not by the assessment of the applicant or his legal advisors."

[34] Applying these principles, I find that the non-disclosure, though serious and material, is not sufficient on its own for me to discharge the injunction because the nub of the Whittakers’ claim, as submitted by Mr Roche, is the enticement to move from the ANZ Bank rather than the lack of default or continued financial accommodation by the Colonial Bank.

DAMAGES ADEQUATE?

[35] Mr Apted submitted that the properties involved in this case are "items of trade" and therefore takes them out of the usual rule that damages are prima facie not adequate in claims involving land. I do not think it is as simple as that. I think the fact that these are high end properties and are of limited supply in Fiji makes them unique and of special value. I think there is doubt that damages would be adequate remedy.

[36] Even if I am wrong, the approach now seems to be that even if the answer to the question, are damages an adequate remedy, is answered in the affirmative, the court still proceeds to consider the balance of convenience. For example, in Prasad, the Court of Appeal, despite expressing reservations that this was an appropriate case for the grant of an injunction because it was essentially a claim for damages for failure to insure, went on to consider where the balance lay and granted an injunction against the bank, albeit with conditions. I do not think, with respect, it is inconsistent with what Lord Diplock said in Cyanamid:¹²

As to that, the governing principle is that the court should first consider whether, if the plaintiff were to succeed at the trial in establishing his right to a permanent injunction, he would be adequately compensated by an award of damages for the loss he would have sustained as a result of the defendant’s continuing to do what was sought to be enjoined between the time of the application and the time of the trial. If damages in the measure recoverable at common law would be adequate remedy and the defendant would be in a financial position to pay them, no interlocutory injunction should normally be granted, however strong the plaintiffs claim appeared to be at that stage. [my emphasis]

[37] I do likewise here and move on to consider the balance of convenience or justice.

BALANCE OF CONVENIENCE

[38] Lord Diplock sets out the approach to be taken in Cyanamid¹³ as follows:

It is where there is doubt as to the adequacy of the respective remedies in damages available to either party or to both, that the question of balance of convenience arises. It would be unwise to attempt even to list all the various matters which may need to be taken into consideration in deciding where the balance lies, let alone to suggest the relative weight to be attached to them. These will vary from case to case.

Where other factors appear to be evenly balanced it is a counsel of prudence to take such measures as are calculated to preserve the status quo. It the defendant is enjoined temporarily from doing something that he has not done before, the only effect of the interlocutory injunction in the event of his succeeding at the trial is to postpone the date at which he is able to embark upon a course of action which he has not previously found it necessary to undertake; where to interrupt him in the conduct of an established enterprise would cause much greater inconvenience to him since he would have to start again to establish it in the event of his succeeding at the trial.

[39] Because of the way the application was run, the affidavit material did not lead any evidence as to the state of the property market for these lots. But I think I can take judicial notice of the fact that property values are depressed at the moment even for the high end market but are likely to increase in the not too distant future.

[40] If the Bank is allowed to sell the lots in this depressed market, assuming that the Plaintiffs win at the trial, I think the Whittakers will be more prejudiced than the Bank. If the Bank is restrained from selling but wins at the trial, all that it has suffered is delay, which can be compensated by an award of interest. And if the property values do rise, which is more likely than not, then the Bank will be in a better position in the future than it is in at present. I therefore think the balance of convenience lies in favour of the Plaintiffs.

[41] However, this is a case outside the Inglis general rule because of the claim for equitable set-off. The Plaintiffs ability to obtain a permanent injunction rests primarily on the success of that claim and the quantum of damages. The Plaintiffs claim in their Statement of Claim "equitable damages including expectation damages in the sum of $5.589m". The initial loan facility was for $3.5m. So the Whittakers are claiming that they can prove expectation damages of $2m. It is too early at this stage to gauge whether such an amount can be proven at trial and it may well be much less than the amount owed to the Bank.

[42] Repeating the relevant passage from Re Langworth Pty Ltd, "it may have been appropriate, to adopt the words of Morling J in Glandore Pty. Ltd. v Elders Finance and Investment Co. Ltd. [1984] FCA 407; (1984) 57 ALR 186, at 191-2, "to mould an order so as to ensure adequate protection to the mortgagee and to otherwise do justice between the parties during the period pending the final hearing" by granting an interlocutory injunction, but on terms that the applicant brought into court the difference between the respondent-mortgagee's claim for payment and the amount of the first applicant's set-off."

[43] In Graham v Commonwealth Bank of Australia the Court ordered the plaintiff to pay into Court the arrears in interest. Mr Apted in his submissions pleaded in the alternative that if I were to follow this approach, the Whittakers should be required to pay to the Bank the excess over the last approved overdraft limit and to pay monthly interest.

[44] I note from Annexure AF64 of Ali’s affidavit that based on a valuation in June 2009, the Bank’s security position was: Exposure $2.086m, Security value $1.822m leaving a deficit of $264,000. Interest on the original facility was 7% p.a. Total outstanding interest on the Bank’s exposure at this rate is roughly $140,000 p.a.

[45] Mr Whittaker annexed to his first affidavit a statement of assets and liabilities showing their net worth of a little over the bank’s exposure as at August 2009. Mr Apted pointed out that the Plaintiffs valuation of their properties and hence the value of their undertaking as to damages is exaggerated. I think the difference between the Bank’s exposure, taking no account of the security values, and the Whittakers’ net worth is not significant enough to make their undertaking to damages sufficient.

[46] Mr Roche now concedes that the Plaintiffs claim will have to be amended. That will take some months depending on how quickly he files and pursues the application to amend. The Court diary is just about full for next year. It is more likely than not that it will take a year before this matter goes to trial.

[47] Taking all these factors into account, I think the continuation of the current injunctions should be conditioned on the Whittakers minimising the Bank’s exposure. I think they should pay into Court the deficit in value between the Bank’s exposure and the securities of $264,000. As well I think they should also pay a whole year’s interest of $140,000. Rounded down, they should pay the total sum of $400,000. I will give them 3 months to pay this amount into Court otherwise the injunctions will be lifted automatically.

EARLY TRIAL

[48] Mr Roche asked for this matter be given priority and be listed for early trial. That will now depend on the amendments he makes to the Statement of Claim which will also necessitate an amended Defence. It is now into the legal vacation so it is premature to be talking early trial. When the parties are ready for trial I can revisit the application and the cause list for 2010.

COSTS

[49] I agree with Mr Apted that the voluminous affidavit material and the conduct of the hearing were made necessary by the way the Plaintiffs pleaded their case and this application. Although the non-disclosure did not affect the outcome of the application it did to a large extent impact on costs, even when some of the Defendant’s costs were absorbed internally. I think they should pay the costs of this application which I summarily assess at $6,000.

ORDERS

[50] The Orders are therefore as follows:

1. The interim injunctions granted on 27 August 2009 shall continue until 4.00pm on 1st March 2010.

2. If the Plaintiffs do not pay into Court the sum of $400,000 by 4.00pm on 1st March 2010 the said injunctions shall forthwith lift and be discharged. If the moneys are paid as ordered then the injunctions shall continue until final determination of the action or further order of this Court.

3. The Plaintiffs shall pay the Defendant’s costs of $6,000 within 21 days.

Sosefo Inoke
Judge

__________________________
End note:

1. [1975] 1 All E R 396.
2. Submissions para E.
3. ABC v O’Neill [2006] HCA 46; [2006] 227 CLR 57; HCA 46.
4. [1975] UKHL 1; [1975] AC 396,406-7
5. ibid
6. [1975] UKHL 1; [1975] AC 396, 409C
7. Op cit, 409B
8. At para 24.
9. At para 21
10. At para 3 of his second affidavit of 28/10/09.
11. At para 6 of that affidavit.
12. [1975] UKHL 1; [1975] AC 396, 408B
13. Op cit, 408F