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Pacific Vendors Ltd v United States of America [2000] TOLawRp 7; [2000] Tonga LR 27 (25 February 2000)

IN THE SUPREME COURT OF TONGA

Pacific Vendors Ltd

v

United States of America

Supreme Court, Nuku'alofa
Finnigan J
C 57/2000

25 February 2000

Practice and procedure — setting aside interim order — damages would be sufficient remedy — order set aside

A Disclosure Directive was issued in Hawaii against the plaintiff. The plaintiff in the substantive proceedings applied for a declaration that the Directive was ineffective in Tonga, and an injunction that forbade any bank in Tonga from disclosing the first plaintiff's bank records and damages. An interim order had been made nullifying the Disclosure Directive in Tonga until further order. The defendants applied to set aside the interim order.

Held:

1. The Court was satisfied that (1) the substantive proceedings raised a serious issue for trial; (2) the interim order was not necessary in order to preserve the subject matter of the substantive applications for declaration and injunction and for damages; and (3) damages would be a sufficient remedy.

2. The Court ordered the setting aside of the interim order.

Counsel for applicants to set aside/defendants: Mr Niu
Counsel for respondents/plaintiffs: Mr Foliaki

Judgment

There has been today a chambers hearing of an application by the Defendants to set aside an interim order which nullified in Tonga a document issued in Hawaii and called a Disclosure Directive ("DD"). The DD was signed in Hawaii by the second plaintiff, pursuant to an order to do so made in the District Court in Hawaii.

I shall call the first plaintiff "PVL". The plaintiffs in their substantive proceedings have applied for a declaration that the DD is ineffective in Tonga, and an injunction forbidding any bank in Tonga from disclosing bank records of PVL, and damages. The grounds include claims:

- that bank records concerned are documents of PVL and PVL has not authorised disclosure;

- AND that the second plaintiff is not a signatory of any PVL account, therefore cannot lawfully consent even if voluntarily;

- AND that his consent if involuntary - even if otherwise effective - is unlawful.

On 31 January 2000 I made an interim order nullifying the DD in Tonga till further order, reserving for the defendants liberty to apply.

Some relevant terms of the DD are as follows:

I, NATHAN H. SUZUKI, hereby authorize and direct any bank at which I may have or may have had a bank or loan account of any kind, in my name or any other name, for which account I am, was, or may be a relevant principal, signatory or beneficiary, to disclose all information and deliver copies of all documents of every nature an its possession to ...

This direction is intended to be construed as a consent to disclosure under the laws of the Kingdom of Tonga ... with respect to any of the bank accounts for which I may be a relevant principal.

The wording is the life of the document, particularly (1) its first four lines and (2) its specific consent to its use to obtain disclosure in Tonga and (3) its specific consent to disclosure in Tonga "with respect to any of the bank accounts for which I may be a relevant principal".

Relevant Facts

The second plaintiff was asked to sign the DD, and refused. He took legal advice and decided he would continue to refuse but if ordered by a court to sign would obey the court order. The matter came before a District Judge who ordered him to sign, pursuant to the jurisdiction of that court. The order went only that far, and attorneys for the second plaintiff made it clear in court that they would litigate in Tonga the issue of the enforceability of the consent, it being given under duress.

Hence the substantive proceedings. The interim order is only until further order, i.e. pending today's argument, but if it is set aside that may also nullify the application for permanent injunction.

There is an investigation in Hawaii, in preparation for a trial of one Boulware. It is said (Seabright affidavit #7) that PVL was set up by the second plaintiff, a US national, and a Tongan national Hawaiian resident, and registered in Tonga. The first directors' meeting was held in Hawaii. The two mentioned and another US national are the officers and the second plaintiff holds 4/5ths of the shares. The voting members are the second plaintiff and the Tongan national.

It is said further (Seabright affidavit #9 & 10) that the second plaintiff and a representative of Boulware subsequently set up a company in Hong Kong (HIKCL), and that 99% of its shares are controlled by PVL. Further to that, it is said that Boulware has sent money, which may be money with which the investigation is concerned, to HIKCL, and that part of that money has been sent by HIKCL to accounts held by M in two (named) banks in Tonga.

Hence the interest of the investigators in the Tongan bank accounts of PVL.

The Issue

The question for me, in today's application to set aside and from Counsels' submissions, is simply whether my interim nullification of the DD should continue in the meantime. One would normally expect to decide this issue on arguments about –

(1) whether there is a serious issue to be tried in the substantive proceedings, (2) whether the interim order is necessary in order to preserve the subject matter of the trial, (3) whether damages will be a sufficient remedy to the party affected if the interim order is set aside or is not set aside, and (4) what is the balance of convenience of the matter. Little of that has been raised, but I have considered all those matters, as I am required by the law of Tonga to do. I have considered the affidavits filed by both parties. In accordance with principle I have taken these as untested statements which are capable of proving the truth of what they say. I have also taken account of Counsel's submissions.

I am satisfied (1) that the substantive proceedings raise a serious issue for trial. The issue is whether a DD signed under protest but in obedience to an order of a court of competent jurisdiction is effective under the law of Tonga. In respect of (2), I tend more strongly towards the conclusion that the interim order is not necessary in order to preserve the subject matter of the substantive applications for declaration and injunction and for damages. I am not persuaded (3) that the reputation of the second plaintiff is likely to suffer seriously from the setting aside of the interim order, if the interim order is set aside, nor that it will be adversely affected if these proceedings become known in Hawaii (which they may or may not). I am satisfied that if the interim order is set aside and if this action subsequently is shown to have damaged either or both plaintiffs, then any injury done to them from that cause may adequately be remedied by damages. This includes any injury from disclosure in accordance with the DD, and injury to reputation.

In my view the applicable principles, including the balance of convenience, when applied to the facts of the matter as presently disclosed, direct that I should now set aside my interim order and allow these proceedings to take their course. I now make that order accordingly. The questions of costs on the interlocutory application and the application to set it aside are reserved, and will become costs in the cause.

Conclusion

Counsel for the defendants should now file and serve a statement of defence in the substantive proceedings and a directions hearing will then set a date for trial.
I have not proceeded to make the injunctive order for which counsel for the defendants applied. It is beyond my jurisdiction in these proceedings, in my view, to require the two named banks to do something on the footing that it is compliance with an obligation under United States law. In any event, the proposed order seeks to require those banks to act in terms wider than those of the DD. To impose those wider obligations is to introduce, without power to do so, new factors into the DD. That application is refused.

Finally, I direct that a copy of these notes be served by counsel for the defendants on the managers of the two banks concerned. I direct the defendants, if approaching any other bank within this jurisdiction in order to serve the DD, to serve with the DD also a copy of these notes. For the sake of confining the issues to what is presently stated in the statement of claim, and because of what is contained in the affidavits, I caution all concerned in the compliance with the DD to ensure that the words of the DD are fully understood and carefully construed.