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Soltuna Ltd v Paradise Supermarket Ltd [2019] PGNC 433; N8168 (18 November 2019)

N8168

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS 670 of 2018

BETWEEN:
SOLTUNA LIMITED
Plaintiff

AND:
PARADISE SUPERMARKET
LIMITED
Defendant

Waigani: Hartshorn J
2019: 18^th November

Application for setting aside of interim orders and for security for costs

Cases Cited:
Papua New Guinean Cases

Yama Group of Companies Ltd v. PNG Power Ltd (2005) N2831
Canopus No. 16 Ltd v. Maisi Trust Co. (2008) N3401
National Council of Young Mens Christian Association of PNG Inc. v. Firms Service Limited (2010) N4569
Mobil Oil New Guinea Ltd v. Yakainga Business Group (Inc) (2014) N6851
Talisman Energy Niugini Ltd v. Bismark Maritime Ltd (2015) N6800
In re JCA Lumber Co (PNG) Ltd (2015) N6040
Behrouz Boochani v. State (2017) SC1566

Overseas Cases

Films Rover International Ltd v. Canon Films Sales Ltd [1987] 1 WLR 670

Counsel:

Mr. A. Edo, for the Plaintiff
Mr. J. Kola, for the Defendant

18^th November, 2019

1. HARTSHORN J: This is a decision on a contested application to set aside ex parte interim orders and for amongst others, security for costs.

Background

2. The plaintiff (Soltuna) pleads that amongst others, that it is a company registered in the Solomon Islands, it is involved in the manufacturing and selling of tinned fish and is the registered proprietor of the registered trademark, “Solomon Blue” Registered no. A74739 Class no. 29 in respect of tinned fish registered under the Trade Marks Act Ch. 385 (Trade Mark).

3. Soltuna pleads that the defendant (Paradise) has infringed its Trade Mark by importing nine cans of canned fish from Singapore bearing the name of “Solemoon Bleu”. Further, Soltuna pleads that Paradise has been engaged in the tort of passing off by importing and intending to promote “Solemoon Bleu”.

4. Soltuna seeks declaratory relief to the effect that the cans of “Solemoon Bleu” infringe the Trade Mark. Ancillary orders including for a permanent injunction are also sought.

5. An ex parte interim injunction granting a provincial seizure order was granted to Papua New Guinea Customs to detain the nine cartons of canned fish (Interim Orders).

This application

6. Paradise submits that the Interim Orders should be set aside as amongst others:

1. Soltuna relied on irrelevant evidence in support of its application for the Interim Orders;
   
2. cans of Solemoon Bleu were imported irregularly and they are of a perishable nature;
   

c) the Interim Orders were granted on an erroneous legal basis;

d) the Interim Orders were granted in the absence of Paradise;

5. this court was misled as to the urgency and by reliance on the relevant evidence.
   

7. In regard to the application for security for costs, Paradise submits that Soltuna is a foreign entity with no known assets or business operations in Papua New Guinea.

8. Soltuna submits that the Interim Orders should not be set aside as amongst others:

a) it has a strong arguable case in both trademark infringement and passing off;

b) damages will not be an adequate remedy as the damage to the reputation or goodwill of its product is very difficult to ascertain;

c) the balance of convenience favours the continuation of the Interim Orders particularly given the small quantity of the goods being detained, whereas that same small quantity of goods may cause significant damage to Soltuna’s reputation and goodwill in the minds of consumers in Papua New Guinea;

d) it is in the interests of justice. Also an undertaking as to damages has been given.

9. In regard to the application for security for costs, Soltuna submits that amongst others, the application is being used oppressively.

Consideration

10. The law concerning whether to discharge or vary an interlocutory order was applied by Gabi J in National Council of Young Mens Christian Association of PNG Inc. v. Firms Service Limited (2010) N4569. In that case his Honour said that there are six considerations to be taken into account in deciding whether to discharge or vary an interim injunctive order. The six considerations are:

“First, has there been any change in circumstances since the previous orders were made, which render their continuation unnecessary or inappropriate? Second, what has been the relative conduct of the parties since the earlier orders were made? Third, are there previously undisclosed relevant facts, which have been discovered since the interim orders were made? Fourth, has it subsequently been discovered that the order was granted on an erroneous legal basis? Fifth, where (sic) the grounds relied on to support the setting aside or variation of the interim order argued before the Court when it granted the earlier order? Or did the party wanting to discharge or vary the earlier order have the opportunity to raise those grounds? Finally, was the court misled when it issued the ... order? If yes, was that attributable to the conduct of the party which sought the ... order?”

11. Paradise submits that there has not been a material change of circumstances, that Soltuna’s conduct in using the evidence that it did was improper, there are undisclosed facts, the interim orders were granted on an erroneous legal basis, the orders were made ex parte and the court was misled.

12. Paradise also submits however, at [52] of its submissions and it is conceded in evidence filed on its behalf, that it accepts that there are serious questions to be tried. Given this acceptance, the question to be determined now in my view,following the established principles concerning the grant or otherwise of injunctive relief, see Behrouz Boochani v. State (2017) SC1566 at [30] – [33] and the cases referred to therein,is whether this court should set aside the Interim Orders on the ground either that damages are an adequate remedy or if they are not, then on the ground that the balance of convenience does not favour the interim orders continuing.

13. In regard to these grounds Paradise submits that damages are an adequate remedy and that the balance of convenience favours the Interim Orders being set aside given the likelihood that the goods will perish and the lack of material evidence about Soltuna’s reputation and goodwill.

14. In regard to whether damages would be an adequate remedy, Soltuna submits that they would not be as proof of diverted sales and the tarnish to a reputation or goodwill are difficult to demonstrate.

15. To my mind, a reduction in sales of Soltuna’s product may be capable of calculation, but as to whether it would have been as a direct result of Paradise’s product is not. Similarly, a calculation as to the effect and damage upon the reputation and/or goodwill of Soltuna and its product would very likely not be capable of accurate calculation. Consequently, I am not satisfied that damages would be an adequate remedy.

16. As to where the balance of convenience lies, for the reasons that I am satisfied that damages would not be an adequate remedy, I am also of the view that the balance of convenience lies in favour of continuing the Interim Orders.

17.In the circumstances, I am also mindful of the following passage of Hoffman J in Films Rover International Ltd v. Canon Films Sales Ltd [1987] 1 WLR 670 at 680:

“The principal dilemma about grant of interlocutory injunctions, whether prohibitory or mandatory, is that there is by definition a risk that the Court may make the ‘wrong’ decision, in the sense of granting an injunction to a party who fails to establish his right at the trial (or would fail if there was a trial) or alternatively, in failing to grant an injunction to a party who succeeds (or would succeed) at trial. A fundamental principle is therefore that the Court should take whichever course appears to carry the lower risk of injustice if it turns out to have been ‘wrong’ in the sense I have described.”

18. The principles contained within this passage have been affirmed in Yama Group of Companies Ltd v. PNG Power Ltd (2005) N2831; Canopus No. 16 Ltd v. Maisi Trust Co. (2008) N3401; Talisman Energy Niugini Ltd v. Bismark Maritime Ltd (2015) N6800 and Mobil Oil New Guinea Ltd v. Yakainga Business Group (Inc) (2014) N6851.

19. After taking all factors into account I am satisfied that the lower risk of injustice if my decision turns out to be wrong, is to permit the continuation of the Interim Orders.

Security for costs

20. The next consideration is whether security for costs should be given by Soltuna.

21. Order 14 Rule 25 National Court Rules is as follows:

“25. Cases for security. (53/2)

(1) Where in any proceedings, it appears to the Court on the application of a defendant—

(a) that a plaintiff is ordinarily resident outside Papua New Guinea; or

(b) that a plaintiff is suing, not for his own benefit, but for the benefit of some other person and there is reason to believe that that plaintiff will be unable to pay the costs of the defendant if ordered to do so; or

(c) subject to Sub-rule (2), that the address of a plaintiff is not stated or is mis-stated in his originating process; or

(d) that a plaintiff has changed his address after the commencement of the proceedings with a view to avoiding the consequences of the proceedings,

the Court may order that plaintiff to give such security as the Court thinks fit for the costs of the defendant of and incidental to the proceedings and that the proceedings be stayed until the security is given.

(2) The Court shall not order a plaintiff to give security by reason only of Sub-rule (1)(c) if it appears to the Court that the failure to state his address or the mis-statement of his address was made without intention to deceive.”

22. I reproduce the following passage from my decision in In re JCA Lumber Co (PNG) Ltd (2015) N6040:

“There is a discretion given to the court as to whether to give security if the criteria in either (a) – (d) are met. There are numerous cases on a security for costs application in this jurisdiction and the court’s discretion in considering such an application. As an example I refer to Yartlett v. New Guinea Motors Ltd [1984] PNGLR 155. In an application under Order 14 Rule 25 (1) (a), McDermott J followed Sir Lindsay Parkinson & Co Ltd v. Triplan Ltd [1973] 2 All ER 273 at 285, and held that:

“An order for security for costs is within the discretion of the court and all the circumstances of the case must be considered. In determining whether an order for security of costs should be made the following matters, inter alia, may be taken into account:

a) whether the claim is bona fide;

2. whether there is a reasonably good prospect of success;

100. whether there is an admission on the pleadings or elsewhere that money is due;

d) whether money has been paid into account;

5. whether the application for security is being used oppressively;
6. whether want of means has been brought about by any conduct of the parties.”

9. As to the discretion conferred by Order 14 Rule 25 (1), I refer to the following statement that I reproduced in Albright Ltd v. Mekeo Hinterland Holdings Ltd (2013) N5774 at para 21. It is a statement by Bowen LJ in Gardner v. Jay (1885) 29 Ch 50, at p59:

“When a tribunal is invested by Act of Parliament or by Rules with a discretion, without any indication in the Act or Rules of the grounds upon which the discretion is to be exercised, it is a mistake to lay down any rules with a view of indicating the particular grooves in which the discretion should run, for if the Act or the Rules did not fetter the discretion of the Judge why should the Court do so?”

10. This statement was also quoted by Lord Wright in the House of Lord’s decision of Evans v. Bartlam [1937] AC 473; 2 All ER 646, and recently in Albright v. Mekeo Hinterland Holdings Ltd (2014) SC1400 at para 29.

11. As there is no indication in Order 14 Rule 25 (1) of the grounds upon which the discretion is to be exercised once the criteria in either (a) – (d) are met, I am of the view that the discretion is unfettered and should be exercised with regard to all of the circumstances of the case.

23. I consider first the submission of Soltuna that the application for security for costs is being used oppressively.

24. Paradise submits that amongst others, that as Soltuna is a foreign entity, Paradise should not be burdened with the additional cost of enforcing a judgment in the Solomon Islands if it were to succeed in its defence and cross claim. The amount of US$50,000.00 proposed as security for costs is based on the reasonable costs estimate put into evidence. The court however has the discretion to make an order for a lesser amount and submits that the court could make an order for US$16,500.00 being a third of the amount claimed.

25. Soltuna submits that Paradise reasons that the Interim Orders are the cause of the seizure by Customs of other goods of Paradise. The intention of Paradise is to set aside the Interim Orders, which concern only the nine cartons of Solemoon Bleu tinned fish, so that its other goods also under seizure by Customs are released. In addition, Paradise has sought an order for Soltuna to pay US$50,000.00 into court as security. Whilst Paradise has given evidence that it estimates spending of K20,755.00 to defend this proceeding, there is no justification for the payment of US$50,000.00. This is an abuse of process it is submitted and is a clear indication that Paradise intends to oppress Soltuna. Paradise states that it has also budgeted K30,000.00 for travel costs. There is no basis for this estimate it is submitted and there is no evidence provided by Paradise as to why it would need to spend such an amount on travelling especially when its registered office address and its headquarters are in the National Capital District. Further, there is no basis for this court to also order security for costs for an appeal to the Supreme Court.

26. In its notice of motion, Paradise seeks US$50,000.00 per security for costs. The evidence given on behalf of Paradise as to its projected costs is in PNG kina and is to the effect that K80,000.00 will be its costs. This is on the basis that its costs in the National Court will be K25,000.00 (notwithstanding that its lawyers estimate their costs to be about K21,000.00), in the Supreme Court K25,000.00 and its associated travel expenses - K30,000.00.

27. I concur with Soltuna, that there is no basis for this court to order security for costs in relation to an appeal to the Supreme Court. Further, as the registered office and headquarters of Paradise are in the National Capital District, the sum of K30,000.00 is plainly excessive. This, together with the amount sought in US currency being rather considerably more than what Paradise can legitimately claim are likely to be its costs, leads me to the conclusion that Paradise is using its application for security for costs oppressively against Soltuna and consequently its application for security of costs should be refused on this basis. Given this, it is not necessary to consider the other submissions of counsel.

Orders

28. The Court orders that:

a) All of the relief sought in the notice of motion of the defendant filed 9^th July 2018 is refused;

b) The defendant shall pay the costs of the plaintiff of and incidental to the said notice of motion;

c) Time is abridged.
_________________________________________________________________
Ashurst: Lawyers for the Plaintiff
Noel Kera Legal: Lawyers for the Defendant