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Morgan v Lal [2016] FJHC 566; HBA2.2016 (23 June 2016)

In the High Court of Fiji
At Labasa


Civil Appeal No. HBA 2 of 2016


BETWEEN:


Ammit Morgan
Appellant


AND:


Ravindra Kumar Lal
Respondent


Appearances : Mr P.R.Lomaloma for the appellant
Mr A. Sen for the respondent
Date of argument :14th June,2016


Judgment

  1. This is an appeal from a judgment of the Magistrates Court extending an ex parte interim injunction restraining the appellant from entering therespondent’s land and threatening or intimidating him.
  2. The appellant appeals on the following grounds of appeal:

That the learned Resident Magistrate, erred in fact and in law and/or mixed fact and law:-

  1. When he failed to properly identify all the material facts of the case before trying to apply the law to them;
  2. When he found that the Respondent/Respondent had a lease over the land;
  3. When he failed to apply the principles of equity to the facts of the cases advanced by the Appellant/Appellant in his written submissions;
  4. When he failed to properly apply the principles of the law of injunctions to the facts of the case;
  5. When he granted the application for and the continuation of the injunction without an undertaking from the Respondent/Respondent as to damages.
  6. When he took into account irrelevant matters in his Ruling;
  7. When he failed to address at all in his Ruling the orders sought by the Appellant/Appellant in his motion and affidavit in support filed on 24 July 2015.

The proceedings in the lower court

  1. The respondent,as plaintiff, in hisstatement of claim and affidavit in support of interim relief filed in the Magistrates Court stated that he is entitled to possession of the land in Naravuka S/D, Stage 2, Wailevu West, Cakaudrove containing 65.2724 hectares,as lessor.An offer to lease was given to him by the iTLTB and he paid for the tenancy. He developed the land as a sheep farm.
  2. The appellant, a foreign citizen wanted to engage with the respondent in business as a partner and was “aware of (his) negotiations in acquiring and development of (his) farm”.The respondent declined the appellant’s offer to invest in the land.On 11 July,2015, the appellant entered the land “without any colour or right”,threatened the respondent stating that he would take over the farm and refused to leave. The grounds for interim relief were that the appellant had:
  3. In his affidavit in opposition to dissolve the interim injunction, the appellant,(Emmett Morgan), a citizen of the US residing in Savusavu, stated that the respondent and he own one share each in “Balaga Bay Farm(Fiji)Limited”,(the company) formed inter alia“To lease or purchase large tracts of land.. for..setting up commercial farms.”
  4. On 15 April 2013, he signed a Memorandum of Understanding with the company to lend money to the company as start-up capital. Since the company had difficulties in opening a bank account, he sent funds from US to the company bank account. He sent a total sum of $173,319.67 to the company’s Bank account, as set out in the attached Bank statement. The account was operated only by the respondent.
  5. The affidavit in opposition continues to state that the respondent located a piece of native land at Vunisitisiti, near Batiri, Macuata, that was suitable for sheep farming. The landowners allowed the respondent to occupy the land, while the lease was processed. He applied for the lease in his own name and paid $10,211.95 to the iTLTB with a company cheque. A receipt was issued showing that funds were paid by the company. He bought about 500 sheep with company funds.
  6. The affidavit in opposition concludes stating that the appellant went to the iTLTB to stop the issue of the lease to the respondent and the landowning unit, to protect the sheep. He demanded an account of the company funds on at least six occasions, but the respondent refused to provide same.The respondent has admitted converting company funds for his personal use.
  7. In his affidavit in reply, the respondent stated that the appellant “is not entitled to own a share in the company”, as he does not have the necessary statutory approval.The company was incorporated with shareholders who had Fiji citizenship. He admits that monies were deposited into the account of the company by the appellant and sheep were purchased with company funds.The appellant has no right to stop him from acquiring the land as lawful shareholder of the company.The respondent has “all rights and entitlements to use the monies without any interference or authority from the appellant”.
  8. The Learned Resident Magistrate held as follows:

The determination

The first ground of appeal

  1. The first ground of appeal takes issue that the lower court “failed to properly identify all the material facts of the case before trying to apply the law to them”.
  2. Mr Lomaloma, counsel for the appellant submitted that the Learned Resident Magistrate failed to identify the following undisputed facts: the appellant and the respondent are Directors of the company.The actions of a director of a company are valid,despite any defect that may be discovered in his appointmentby section 182 of the Companies Act,(cap 247); the respondent was not authorized by a Resolution of the company to use its funds to payfor the lease application in his name; the iTLTB has not issued a lease and 465 sheep were bought with company funds.
  3. In my view, the fact that the parties are Directors of the company is nota material fact.Section 182 does not arise for consideration.
  4. I find that the Learned Resident Magistrate has,in effect,referred to the other matters complained of. The Ruling states that the appellant and the respondent formed the company; the appellant established that he transferred a sum of $173,319.67 to the account of the company and his main ground of dispute is that the respondent misused company funds and bought properties under his name.
  5. In my judgment, the first ground of appeal cannot be maintained.

The second ground of appeal

  1. The next ground of appeal is that the lower court erroneously found that the respondent had a valid lease over the land.
  2. On a perusal of the Ruling, I find that the lower court has referred to the appellants’ submission that no lease has been issued by the iTLTB and found that the iTLTB has mentioned in its letter that they will not proceed with the lease.
  3. In my view, the second ground of appeal fails.

The third and fourth grounds of appeal

  1. The third and fourth grounds of appeal contend that the Learned Resident Magistrate “failed to properly apply the principles of equity..and the principles of the law of injunctions to the facts of the case”.
  2. Under this ground, it was submitted that there was non-disclosure of the following material factsin the affidavit in support of the respondent’s ex parte application, that :
    1. The appellant was a Director of the company;
    2. The respondent was a director of the company.He used company funds when he made an application to lease the said piece of land as admitted.
    1. There was no company resolution to approve the purchase of the lease in his own name using the company funds.
    1. He purchased sheep with company funds as stated in his affidavit.
  3. Mr Lomoloma cited Bank ofMellat v Nikpour, (1985) FSR 87and Eastern Express Ltd v Merchant Bank of Fiji Ltd, [2001] 1 FLR 247for the proposition that an injunction obtained ex parte cannot stand, if a full disclosure of material facts was not made.
  4. In my judgment, the non-disclosure of the above matters is not material,in light of the terms of the Memorandum of Understanding entered between the Company and the appellant.
  5. The Memorandum provides that the appellant lent money to the company as start up capital. The company agreed to repay him with 50% of the total profits of the company, until the loan is paid in full.
  6. In my view, the loanto the companydoes not give the appellant the right to intimidate the respondent and refuse to leave the land.
  7. In this context, I would refer to the judgment of Calanchini J(as he then was ) in Nand v Prasad, [2011] FJHC 85 citing Ralph Gibson LJ inBrinks MAT Ltd v Elcombe and Others, [1988] 3 All ER 188 as follows :

Whether the 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 issues which were to be decided by the judge on the application....


Finally it is not for every omission that the injunction will be automatically discharged...the court has a discretion, not withstanding proof of material non-disclosure which justifies or requires the immediate discharge of the ex parte order, nevertheless to continue the order, ot to make a new order on terms...(emphasis added)


  1. The third and fourth grounds of appeal fail.
  2. The fifth ground of appeal argues that the lower court granted the application for the continuation of the injunction without an undertaking from the respondent as to damages.
  3. It was submitted the respondent’s affidavit in reply tendered after the grant of the injunction provides that he has owned his house on CT No. 10371,Lot 2 ON DP7753 in Savusavu for more than 30 years worth a substantial amount, is inadequate, as it is not supported by evidence of ownership, encumbrances and a valuation by a registered valuer.

  1. The law is settled. An applicant for interim injunctive relief who offers an undertaking as to damages must also proffer sufficient evidence of his financial position: Honeymoon Islands (Fiji) Ltd v Follies International Limited,(unreported Civil Appeal No. 63 of 2007 delivered on 4th July 2008).
  2. In the present case, the lower court reached a finding that it was not necessary for the respondent to adduce evidence of his financial position, since the appellant has not claimed damages from the respondent nor stated the losses that would arise, if the injunction continued.
  3. The appellant has not stated the loss or damage that he would suffer by the extension of the interim relief. The affidavit in opposition of the only states that the Company has expended considerable amounts of money at the farm and the plaintiff has declined to give him an account.
  4. In the circumstances, in my view, the Learned Resident Magistrate reached a correct finding that evidence of the respondent’s financial position was not necessary.
  5. I would cite Lord Diplock in the American Cyanide case at page 509:

The object of the interlocutory injunction is to protect the plaintiff against injury by violation of his right for which he could not be adequately compensated in damages recoverable in the action if the uncertainty were resolved in his favour at the trial; but the plaintiff’s need for such protection must be weighed against the corresponding need for the defendant to be protected against the injury resulting from his having been prevented from exercising his own legal rights for which he could not be adequately compensated under the plaintiff’s undertaking in damages if the uncertainty were resolved in the defendant’s favour at trial. The court must weigh one need against the other and determine where the balance of convenience lies.(emphasis added)


  1. I decline the fifth ground of appeal.
  2. The penultimate ground of appeal argues that the Learned Resident Magistrate took into account irrelevant matters in his Ruling,namely that the appellant is not a lawful shareholder of the company.
  3. The Memorandum of Understanding provides that the shareholders of the company are (i) Peter Russel, (ii) the respondent and (iii) Aliki Benjamin holding one share until the appellant obtained approval from Fiji Investment.
  4. Admittedly, the appellant was not a shareholder and had not obtained the required approval. In my view, that was a relevant matter, which disproved the appellants averment in his affidavit in opposition that he owned one share in the company.
  5. I dismiss this ground of appeal.
  6. Mr Sen, counsel for the respondent drew my attention to the interim orders obtained by the appellant in Action no. HBC 261 of 2015, whichhe filed against the respondent and the iTLTB
  7. I note that the appellant rights in equity are well protected by the following orders, which read as follows:
    1. The I Taukei Land Trust Board is restrained from issuing a lease over the land known as Naravuka S/D Stage 2 in the Tikina of Wailevu West, Province of Cakaudrove containing an area of 65.2724 Hectares (the “land”) to the First Defendant until further orders of this Court.
    2. The First Defendant is restrained by himself or through his servants or agents from killing, selling, or removing or in any way dealing with any sheep currently on the said land until further orders of this Court.
    3. The First Defendant is restrained by himself or through his servants or agents from removing any machinery, buildings, building materials, fencing or other improvements from the said land until further orders of this Court.
    4. The ANZ Bank is to freeze the First Defendant’s Bank Account Number 05497 494 at the Savusavu Branch of the ANZ Bank until further orders of this Court.
    5. The ANZ Bank is to provide the High Court in Suva with a Bank Statement of the First Defendant’s Bank Account Number 05497 494 at the Savusavu Branch of the ANZ Bank from 26 February 2013 until now.
    6. The First Defendant is to provide to the Court within 3 days an affidavit listing all his assets.
    7. The First Defendant is restrained from transferring, selling, disposing, destroying or otherwise dealing with any asset bought with funds sent to him by the First Plaintiff directly or through Balaga bay Farms (Fiji) Ltd.
  8. The final ground of appeal provides that the lower court failed to address in his Ruling the orders sought by the appellant in his motion and affidavit in support filed on 24 July, 2015.
  9. Mr Lomaloma was unable to establish that such a motion was in filed in the lower court.Mr Sen, pointed out quite correctly that it was the duty of the appellant to ensure that the appeal brief was complete and write to the Registry of the lower court if it was not so.
  10. The final ground also fails.
  11. Orders

A.L.B. Brito-Mutunayagam

Judge

23rdJune , 2016


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