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Bironda Fiji Ltd v Naidu [2015] FJHC 777; HBC128.2007 (15 October 2015)

IN THE HIGH COURT OF FIJI
[WESTERN DIVISION] AT LAUTOKA
CIVIL JURISDICTION


Civil Action No.: HBC 128 of 2007
Consolidated With Civil Action
No. 130 of 2010


BETWEEN:


BIRONDA FIJI LIMITED t/a TRUE BLUE HOTEL is a limited liability company incorporated under the Laws of Fiji.
FIRST PLAINTIFF


AND:


SHANIL NAIDU father's name Chinmunsami Naidu of Koala Way, Horsley Park, New South Wales 2175, Australia, Businessman/Managing Director.
SECOND PLAINTIFF


AND:


AVINESH CHANDRA NAIDU father's name Muthu Krishan Naidu of Sigatoka, Nadroga/Navosa, Fiji, Medical Practitioner as a Trustee of the Sigatoka Club.
FIRST DEFENDANT


AND:


SIGATOKA CLUB a club duly registered under the Registration of Clubs Act (as amended).
SECOND DEFENDANT


Appearances:
Mr S. Krishna for the Plaintiffs
Mr E. Narayan for the Defendants


INTERLOCUTORY JUDGMENT


Introduction


  1. By an Ex-Parte Notice of Motion dated 04th September, 2015 the Plaintiff sought inter-alia the following Orders from Court;

agents from levying distress of rent until date of trial of this matter (30/11/15).

agents from levying distress of rent until date of trial of this matter (30/11/15).


(ii) An Interim Order restraining the Sigatoka Club and/or their servants and agents from interfering with the possession and occupants of the Plaintiff of the premises until further Order of the Court being 30th November, 2015.
  1. The Ex-Parte Notice of Motion is supported by an Affidavit sworn by the 2nd

Plaintiff, Shanil Naidu on 3rd September, 2015.


  1. Based on the said Ex – Parte Notice of Motion and Affidavit an "Ex- Parte Interim Injunctive Order" was made restraining Sigatoka Club from interfering with the possession and occupant of the Plaintiff of the premises till Monday the 7th September 2015.
  2. On 7th September 2015 the said Injunctive Order was extended till the 14th of September 2015.
  3. The Defendants filed Summons on 11th September, 2015 supported by an Affidavit sworn by the Manager and Secretary of Sigatoka Club, Suresh Chand Naidu and sought an Order to set aside the Ex-Parte Injunctive Order granted on 4th September, 2015. Upon hearing the Oral submissions of the Learned Counsel on 15th September, 2015 the said Injunctive Order was extended till further Orders of this Court.
  4. The 2nd Plaintiff filed a response to the Affidavit of the Defendant on 29th September, 2015.
  5. The Defendant's thereafter filed a further Affidavit in Reply to the Plaintiff's Affidavit in Response on 5th October, 2015 without the Leave of the Court. However, it was withdrawn by the Defence Counsel due to the objections raised at the hearing.

Affidavit in Support


  1. The 2nd Plaintiff in his Affidavit states inter alia that;

Affidavit in Reply


  1. In the Affidavit in Reply sworn by the Manager and Secretary of Sigatoka Club, Suresh Chand Naidu, it is stated inter alia that;

(i) On or about 6th February, 2012, the Club filed a Motion and Affidavit to vacate "an injunctive interim order" dated 23rd July, 2010 against the Club and in favour of the True Blue Hotel and which were in terms:


"That the Plaintiff and/or its agents and/or its workers are restrained from interfering with the Defendants' business in any manner whatsoever including but not limited to locking up the premises located on this land contained in Lots 3 and 4 of CT. No. 24215, DP 6271 from which the Defendant conducts its business until 4.00pm Monday 26th July, 2010."


(ii) The said application was supported by two Affidavits namely the Affidavit of Dolin Shivani Sen and the Affidavit of Suresh Naidu.


(iii) Following the hearing of the said application this Court on 7th July, 2015 duly granted the Clubs' application and vacated the interim injunctive Order made in favour of True Blue Hotel.

(iv) Following the grant of the said Order dated 7th July, 2015 the Club took advice from its Solicitors in relation to the accumulated arrears of rental owed by True Blue Hotel since December 2013 and totaling $18400.00 as at August, 2015 and owing under the Lease Agreement executed on 6th June, 2003.

(v) Based on the said Legal advice, Distress proceedings were duly instituted in terms of the Distress of Rent Act and a registered Bailiff Keshwa Nand was instructed to levy Distress.

(vi) The said Bailiff filed in Magistrates Court, Sigatoka, Civil Action No. 88 of 2015 with the sanction of the Club to assist the execution of the Notice of Distress and to prevent the servants and or agents of the True Blue Hotel interfering with the due execution of the Distress.

(vii) There are two sets of proceedings pending in the Lautoka High Court which are Civil Action Nos. 128 of 2007 and 130 of 2010 respectively which were consolidate and are set down for Hearing on 30th November and 1st December, 2015.

(viii) The True Blue Hotel are in unlawful possession of the premises as it has defaulted in its payment of rental amounting to $18,400.00 till August, 2015 having breached the terms of the Lease Agreement and the said Agreement terminates on 1st November, 2015.

(ix) The bookings allegedly taken by True Blue Hotel beyond 1st November, 2015 are clearly matters which are irrelevant in that it has no bearing on the Lease document or the position of the Tenant/Lessee and are in any event speculative and irrelevant as True Blue Hotel are legally obliged to pay the rental as per the Lease Agreement. No evidence of forward bookings or deposits have been given or provided in any event.

(x) There are no particulars or evidence provided to substantiate the claimed value of the assets of the business. The items in the premises as are listed in the Inventory compiled by the Bailiff (Plant, Equipment, etc.) are generally very old and in substantial state of disrepair and not in working condition.

(xi) The Notice of Distress is not defective as there are no legal requirement to seek consent from the Director of Lands as regards the Lease Agreement as the premises concerned is a freehold property comprised in the Certificate of Title No. 24715 Lot 3 and 4 in the DP No. 6271.

(xii) True Blue Hotel has failed to produce any evidence of receipts of rent from the period January 2014 to August 2015 and such failure is clear evidence of non-payment by True Blue Hotel.

(xiii) The settlement annexed and marked 2, relates to rental payments preceding December 2013, levying of Distress by the Plaintiff is lawful and pursuant to provisions of the Distress of Rental Act and Section 91 of the Property Law Act Cap 130.

(xiv) The continuous failure of True Blue Hotel to pay rent as due under the Lease Agreement is clearly in breach of the Lease Agreement executed between the parties; as a result of failure to pay rent, the Club has been denied its legitimate income of $18400 and which income is necessary and critical to the viability of the Club and its loan obligations to the Bank.

(xv) That the Ex-Parte application granted on 4th September, 2015 has been obtained on material misrepresentation and non-disclosure as set out in the Affidavit and there is no serious question to be tried as True Blue Hotel have been held to have failed to pay rent since December and are in the premises, in breach of the Lease Agreement.

(xvi) The deponent is authorized to give a cross undertaking for damagers that Tue Blue Hotel may suffer as a result of refusal of the Ex-Parte Injunction; such undertaking being fortified by the Club's property which the deponent is advised and verily believe has a market value in excess of Three and half Million Dollars.

Affidavit in Response


  1. The 2nd Plaintiff in his Affidavit in Response to the Affidavit filed by the

Defendants states inter alia that;


(i) The Affidavit does not disclose all payments made to the Club. Some of the payments that Club missed are exhibited and marked "SN1".

(ii) There is no rental arrears, in fact he still has a credit balance remaining and as such he is entitled to remain in occupation.

(iii) The Sigatoka Magistrate Court matter has no cause of action against him and it cannot proceed as currently there is a High Court Injunction in place.

(iv) The Defendant is fully aware that the tenancy now expires in November, 2018, the renewal and extension has been informed to the Club.

(v) He has taken forward bookings beyond November 2015 and the issue is very relevant as he has till November, 2018 for the tenancy to expire.

(vi) Marked as "SN4" is a copy of part of a letter from Fiji Islands Trade and Investment Board (FTIB) which sets out the total investment and as such that should give more than enough indication as to "undertaking as to damages". He further exhibits marked "SN5" a copy of his Tax Returns for the year ending 2014.

(vii) He denies the inventory compiled by the Bailiff as the Bailiff has no qualification as a valuer. The Bailiffs own admission says true value will become known after the auction.

(viii) Apart from the $20000 which is credited to his account as stipulated and set out below he paid a cheque of $4000.00 and two separate cheques of $800.00. The extra monies were paid because Suresh Naidu and other Committee Members of the Club said they need the money for the Club as the Club was not doing well financially and they also said that the advance money taken will be credited towards the rental as the tenancy of the lease is till November, 2018.

(ix) He has exercised his option for extension of renewal, which can be determined at the trial of this action. The Tenancy expires in November, 2018. Rental monies have been paid in advance.

(x) Jack Prasad was never authorized to enter into any sort of agreement with the Defendants. Jack Prasad unlawfully with full knowledge by the Defendants paid out $20,000.00 from the 1st Plaintiff's (Bironda Fiji Limited) to the 2nd Defendant (Sigatoka Club). The payment was not authorized by the Plaintiff and it was the Defendants that said they will take that amount towards rental. The Defendants took the payment of $20,000.00 and credited it towards rental as paid by the Plaintiffs.

(xi) On top of credit that is available from the $20,000.00 he has paid extra monies as well as rental.

(xii) Under the Agreement he is entitled to the occupying for a further period of 3 years commencing from November, 2015 and that he has already advised the Defendants that he has elected the option of the tenancy for a further period of 3 years. The Tenancy now expires in November, 2018.

(xiii) No undertaking is required as the Tenancy Agreement is in place and argued by the parties. If the Court believes that an undertaking is required than they have supplied evidence of the same.

Hearing


  1. When this matter was taken up for hearing on 6th October. 2015, Counsels for both parties made oral submissions and submitted their written submissions as well.

Law and Analysis


  1. The Legal principles and the approach a Court takes in considering an application for Interlocutory Injunction are those laid in American Cyanamid Co - - Ethican Limited – [1975] UKHL 1; 1975 AC 396.

Those Principles are;


  1. Whether there is a serious question to be tried
  2. Whether damages would be adequate remedy; and
  3. Whether balance of convenience favour granting or refusing interlocutory injunction.

Whether there is a serious question to be tried


  1. Having gone through the affidavits of the 2nd Plaintiff I find that this injunctive orders are sought by them mainly to prevent the 2nd Defendant Sigatoka Club from levying distress of rent until the commencement of the Trial of this action. The Defendant in their Affidavit deposes that the Plaintiff is in arrears of rent from January 2014 to August 2015 and they have duly instituted Distress proceeding in terms of the Distress of Rent Act.
  2. The Defendants have also referred to paragraph 9 and 10 of my Ruling dated 7th July, 2015 in consolidated matter HBC 130 of 2010 where I have said that the Defendant has failed to adduce any evidence to prove that it is not in arrears of rent as alleged by the Plaintiffs. It is relevant to quote paragraph 9, 10 and 11 of aforementioned Order at this point:

"9. By the Affidavit evidence adduced the Plaintiff's now contends that the Defendant has failed to pay rent since December, 2013 and is in arrears of rental and VAT.


10. The Defendant has failed to adduce any evidence to prove that it is not in arrears of rent as alleged by the Plaintiffs'. Therefore, I have no alternative but to accept the Affidavit evidence of the Plaintiffs' and hold that the Defendant has failed to pay rent since December 2013 to the Plaintiffs.


11. It is evident from paragraph 13 of the aforementioned Order dated 02 November, 2012 that the Plaintiffs' are entitled to apply forthwith for the vacation of the interim injunction if the Defendant defaults the payment of rents for the ensuing month or month thereafter."


  1. When the Plaintiffs in Action No. 130 of 2010 first made the application by way of Notice of Motion dated 25th July, 2012 to vacate the Injunctive Order granted on 23rd July, 2010, the Court has ruled that it will not make an Order to that effect due to the Compromise Agreement reached between the parties.
  2. The Compromise Agreement between the parties which is incorporated in the Ruling of Justice Nawana dated 2nd November, 2012. The Agreement reads as follows:
    1. The Defendant in HBC 130/2010 shall commence payments of the rents to the Plaintiff in a sum of $800.00 forthwith from November 2012.
    2. The Defendant is also directed to make arrears of payments from October 2008.
    3. The arrears of rents from the month of October 2008 to be paid in four equal installments within a space of one year from 2 November 2013.
    4. If there is any overpayment or underpayment depending on the outcome of the two cases being HBC 130/10 and HBC 128/07 such overpayments and underpayments is to be set off against the Judgment sum that may be awarded to the Plaintiff or the Defendant in the two cases.
    5. If the Defendant defaults the payment of rents for the ensuing month or month thereafter, or default the payment of one of the four installments of arrears, this Plaintiff are entitled to applying forthwith for the vacation of the interim injunction which is in favour of the Defendant.
  3. Though the Plaintiff (Defendant in action No. 130 of 2010) did not adduce any evidence in proof of the rental payments made when the Defendant made the application to dissolve the interim injunction issued in HBC 130 of 2010, the Plaintiffs now provides evidence to prove that they have paid the rental in advance and there is now a credit towards the rentals. The 2nd Plaintiff deposes in his Affidavit that in the year 2013 the 2nd Defendant settled this matter with him. The copy of the settlement is exhibited marked "2".
  4. It appears from the copy of the settlement marked "2" that the parties have resiled from the earlier compromise agreement which was incorporated in the Order of His Lordships Justice Nawana and reached a fresh agreement.
  5. In the Affidavit filed by the 2nd Plaintiff on 29th September, 2015 he refers to an unlawful payment of $20,000 made out of the 1st Plaintiff by one Jack Prasad to the Defendants and the Defendants agreeing to take that amount towards rental. There are two entries in the Settlement marked as Exhibit "2" which refers to $20,000.00. Those entries are as follows:

"Less Bond deposit $20,000.00 (as per 2nd Agreement) Jack Prasad 5/10/20 "

"Total of $20,000.00 (Remaining balance cheque No. 3502 issued)".


  1. The sum of $20,000.00 claimed by the Plaintiff as rental advance is not denied by the Affidavit in Reply filed by the Defendants. They only state that contents of the Settlement annexed marked "2" relates to rental payments preceding December, 2013. Suresh Chand Naidu in his Affidavit in Reply refers to Affidavit dated 30th October, 2014 filed in HBC 130 of 2010 annexed as Annexure "1".
  2. In paragraph 7 and 8 of the Affidavit annexed as annexure "l" it is stated that the Defendant entered into an agreement whereby rent was deemed to be paid up to December 2013 except the VAT. It is further stated that the settlement was reached on 1st November 2013, however, rent for July 2013 was never paid into the bank account of Anil J Singh Lawyers as alleged.
  3. In perusing the agreement dated 1st November, 2013 it is not clear whether $20,000.00 was deducted for the rental payments preceding December 2013. It does not reflect the breakdown of the rental payments and how the $20,000.00 was set off. According to the agreement, rent for July 2013 is paid by cheque No 3482 to Anil J Singh Lawyers. However by his Affidavit sworn on 30th October, 2014 (Annexure "1") Suresh Naidu denies that rent for July 2013 was paid into the trust account of Anil J Singh Lawyers.
  4. What is more interesting is he goes on to say in the Affidavit marked Annexure "1" that the agreement reached was not correct and the Defendant (The Plaintiff in this action) did not acknowledge the agreement and has failed to pay the rent since.
  5. In answer to the allegation of the Defendants the Plaintiff has deposed in his Affidavits the following facts which I think are important to this issue.
  6. Having gone through the affidavits and the documents attached thereto I find that there is a confusion regarding the rental payments in this matter. The Plaintiff exhibit "SN1" annexed to their Affidavit in Response filed on 29 September, 2015 indicates three payments of $2000 made to the members of the Club, the said payments being made on 25th September, 2013, 1st November, 2013 and 4th November, 2013. Though the Defendants state these payments are for rentals preceding December 2013 as I said before Defendants don't give a breakdown of the payments to prove that fact.
  7. As discussed above I find that there is an issue to be tried in this matter; that is whether the Plaintiff is in arrears of rentals from January 2014 as alleged by the Defendant or whether the Plaintiff has a credit balance remaining. This question is enough for me to determine that there is a serious question to be tried in this matter. Whether the Plaintiff is entitled to have a further tenancy of the said premises granted to him to a further period of three years after the expiration of the Lease Agreement on 01st November 2015 are questions which should be determined after hearing of evidence at the Trial.
  8. I will now draw my attention to my earlier Ruling dated 7 July, 2015 in Action No 130 of 2010 by which I vacated the Interim Injunction issued in favour of the Defendant (Plaintiff in this action) on 23rd July, 2010.
  9. The Defence Counsel submits that in the said Ruling I have said the Defendant has failed to adduce any evidence to prove that he is not in arrears of rent. I made the said determination due to the Defendant not adducing any evidence by way of Affidavits opposing the Plaintiff's application for the desolution of the Injunction. However, that does no prevent the Plaintiff in this matter (Defendant in HBC 130.2010) from seeking an injunction when he was served with a copy of a Notice pursuant to the Distress for Rent Act. If the Plaintiff had no fear of the Defendant's disturbing his possession prior to the said Distress proceedings it is fair enough for him to refrain from adducing any evidence to prove that he is not in arrears of rent. Now due to the change of circumstances; the Defendants instituting Distress proceedings against the Plaintiff they are entitled to place before Court evidence in regard to the payment of rent and seek an injunction to prevent the Defendants from interfering with their possession.
  10. It is clear from Lord Diplock's words in American Cyanamid case that this type of serious issues should be resolved at a trial.

Lord Diplock at page 407 said


"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 matter to be dealt with at the trial".


Are Damages an Adequate Remedy


  1. The Plaintiffs submits that the damages are not an adequate remedy due to the following reasons:
  2. The 2nd Plaintiff submits Exhibit "SN2" with his Affidavit in order to prove that Bironda Fiji has forward bookings. Exhibit 2 is only a hand written document which discloses Advance Room and event bookings. The said document in my view is not sufficient to substantiate the fact that the Plaintiff has forward bookings.
  3. Exhibit "SN 3" is the License granted to True Blue Hotel to keep and manage the Hotel for a period of one year from 1st January, 2015. Though I cannot rely on the documentary evident "SN2" produced in proof of the forward bookings of the Hotel, it is evident that True Blue Hotel has a Licence to conduct its business till end of December, 2015. Therefore any eviction of the Plaintiffs might cause them damages which cannot be assessed. I agree with the Learned Counsel for the Plaintiff that in such an event the Plaintiff would lose its business reputation and also lose the approval granted by the Fiji Trade and Investment Board.
  4. On the other hand the Defendants have particularized or quantified their damages. According to the Defendants they have initiated Distress proceedings due to the non-payment of rentals amounting to $8,400.00. As such I cannot accept the contention of the Defendants that they are suffering irreparable losses.
  5. I will next consider whether the Plaintiffs have given sufficient undertaking as to damages. The Court of Appeal in Natural Waters of Fiji Ltd v Crystal Clear Mineral Water (Fiji) Ltd ABU 0011 of 2004S (26 Nov 2004) said that the Applicants for interim injunctions who offers an undertaking as to damages should always provide sufficient evidence of their financial worth in support of their undertaking.
  6. In this matter the 2nd Plaintiff states in his Affidavit in Support that he has all his belongings, plants and equipment and other assets up to the value of $250,000.00. Suresh Chand Naidu in his Affidavit in Reply states that there are no particulars or evidence provided to substantiate the claimed value of $250,000.00 and that to his knowledge information and belief the items in the premises of which a inventory is compiled by the Bailiff (Annexure "3") are generally very old and substantial state of disrepair and not in working condition. He also deposes that the true value of such plant and equipment will become available upon completion of distress and the said items being subject to public auction.
  7. The inventory of items at True Blue Hotel prepared by the Bailiff and annexed to

the aforesaid Affidavit prove that the Plaintiffs are in possession of plant and equipment. I cannot believe those assets are generally not in working condition as Trade Blue Hotel is currently operating its business using the equipment it has.


  1. Furthermore the project report Exhibit "SN4" annexed to the Plaintiffs Affidavit in Reply shows that Bironda Fiji is to invest a total sum of $250,000.00 as initial capital for the establishment of the proposed project. The said report is signed by Harold Pannikar for Chief Executive of Fiji Islands Trade and Investment Bureau. According to the said report the amount to be invested as initial Capital has been considered as a reason to justify the approval.
  2. In addition to the above evidence the Plaintiffs Tax Return for 2013/2014 is produced marked Exhibit "SN5". It is evident from the said return that the 2nd Plaintiff had a taxable income of $44,965.00 during that year.
  3. As discussed above I find that the Plaintiff has provided sufficient evidence of their financial position in support of its undertaking as to damages.

Whether the balance of convenience favours granting or refusing Interlocutory
Injunction


  1. In this matter if an interim injunction is not granted as I have said herein before the Plaintiff could be evicted from the premises and as a result lose his Licence to run the Hotel. They will also lose their approval for Fiji Trade and Investment Board and also their business reputation. Those losses in my view are losses which cannot be assessed. Even if the Injunctive Orders remain till the determination of this action the Defendant could recover the arrears of rent and damages from the Plaintiff if the Court grants judgment in their favour after trial. Therefore I find that the balance of convenience lies in favour of the Plaintiffs in this matter.

Conclusion


  1. Having considered and analysed all the factors and the principles applicable to a grant of an interim injunction as above, I am of the view that the status quo should be maintained till the hearing and final determination of this matter. Therefore I make the following Orders:

Lal S. Abeygunaratne
[Judge]


At Lautoka
15th October, 2015

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