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HIGH COURT OF SOLOMSOLOMON ISLANDS
Civil App. No. 005 of 1999
EASTERN DEVELOPMENT ENTERPRISES LIMITED
v
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ISABEL TIMBER COER COMPANY LIMITED
In the High Court of Solomon Islands
(FRANK KABUI, J.)
Civil App. No. 005 of 1999
ring: 11th August 1999
Judgment: 12t: 12th August 1999
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G. Suri for the Appellant
P. Tegavota for the Respondent
RULING
(Frank Kabui J.):-
The Notice of Motion filed by the Applicant on 20th July 1999
sought a Court Order that the execution and further proceedings on the
interlocutory injunction Order
of the High Court dated 10th
June 1999 be stayed pending the Applicant�s appeal to the Court of
Appeal. The Notice of Appeal was dated 15th June 1999. An
Amended Notice of Motion was later filed by the Applicant on 5th
August 1999 amending the first Notice of Motion. The Amended Notice of
Motion sought as an alternative to the
requested Order sought in the
first Notice of Motion a Court Order that the undertaking as the
condition for
the granting of the interlocutory injunction referred to
above, be varied to the extent that the undertaking be in the
form of a
bank guarantee for the payment of the sum of $5 million in lieu of a
bare undertaking. The Amended
Notice of Motion contains all the Orders
sought by the Applicant. They are as follows:-
�1. �1. that the execution and all further proceedings on the interlocutory
injunction order of the High Court
dated the 10th day of June
1999 be stayed until the appeal therefrom of which the
Applicant/Defendant has given notice of appeal
dated 15 June 1999 shall
have been heard and decided.
<
2. th2. that alternatively, the order for undertaking be varied so that the
First Defendant provides bank guarantee
as security in the amount of $5
million dollars in lieu of a bare undertaking.
3. And an order that that the costs of this application abide the result of
the appeal.
4. Further or other orders aers as the Court deems meet.�
Stay of execution of the iocutory injunction
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Mri, Counsel for the Applicant, argued that because of the efhe effect
of rule 11(5) of the Court of Appeal Rules
1983 (L.N. N. 66183), it was
necessary for his client to apply for a stay of the interlocutory
injunction Order
made by Pal J, on 10th June 1999 as an
appeal was pending against that Order. Mr. Suri argued that in the
absence of a staying Order
as requested, his client would suffer
enormous loss in terms of costs that would be incurred up until the
appeal
was heard. In support of this argument, Mr. Suri referred to
Exhibit �RT3�, attached to Mr. Tiang�s affidavit filed on 20th
July 1999 which stated the monthly cost of maintaining machinery,
buildings, roads and the camp site was $842,143.94.
However, Mr. Suri
qualified this figure as being an estimate only but maintained that
whatever the cost would
be, it would be substantial indeed against his
client. Mr. Suri further argued that should his client succeed in its
appeal, any cost incurred up to that time would not be recoverable
although his client would be mindful of mitigating
its losses. Mr. Suri
pointed out that there was no evidence to show that the Respondent would
be capable of meeting
such costs in the event that his client should win
its appeal. Also, Mr. Suri argued that in any event, the Order made
by
Palmer, J. on 10th June 1999 did authorise the payment of 10%
of FOB value of log proceeds to be paid into an interest bearing deposit
account in the names of the solicitors of the parties an automatic
benefit to the Respondent without any sweat.
Mr. Suri concluded on this
point by suggesting to the Court that in the event that the Court should
rule against
him on this point, the Court should however vary the
undertaking provided by the Respondent to the satisfaction of his
client.
r. Tegavota�s response on behalf of the Respondent was simp simple and
straight forward. He argued that the fact was
that both the Applicant
and the Respondent had valid licences and competing with each other. He
therefore argued
that their rights must be preserved. That is to say,
the status quo must be maintained for the benefit of both parties.
Mr.
Tegavota then argued that the provisions of the Court of Appeal Act
(Cap. 6) as read with rule 11(5) of the Court of Appeal Rules above
would seem to suggest that only a single
judge of the Court of Appeal
could order a stay of execution and not a High Court Judge. He concluded
that because
of this, I as a High Court judge would not be able to order
a stay of execution of the interlocutory injunction order made
by
Palmer, J. on 10th June 1999.
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g on the stay of execution requested by the Applicant
In my view, Rule 11 of the Court of Appeal Rules above governs erns the
application for special conditions at
any time after filing the notice
of appeal. Rule 11 states:-
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�(1) At any time after the filing of the notice of appeal or
application, any party may apply to the Registrar
to impose such special
conditions precedent, whether as to giving deposit, or security for
damages with the Court
or for staying execution, or giving undertakings
to the Court or making such other interim orders to prevent prejudice
to
the claims of any party pending the determination of the appeal or
otherwise.
(2) An application under this rule shall be made by notice of motion
supported by affidavit and the notice shall
be served not less than two
days before the return date.
(3) The Registrar may impose such such special conditions.
(4) Notwithstathstanding the generality of the foregoing, the Court or a
judge may at any time impose such conditions
precedent on an appeal or
the continuation thereof as the Court sees fit, in the interests of
justice, to impose.
(5) Except so faso far as is otherwise ordered under this rule or by the
Court or a judge:-a) an appeal shall
not operate as a stay of execution
or a stay of any proceedings pursuant to a decision of the High Court;
andb)
no intermediate act or proceeding shall be invalidated by an
appeal.
/p>
(6) .......................................................�
It can therefore be seen that because of the effect of sub-rule 5, an
application for special conditions such
as for stay of execution must be
made to the Registrar of the Court of Appeal under sub-rule 1 by notice
of motion.
By virtue of section 8 of the Court of Appeal Act (Cap. 6),
the Registrar of the High Court of Solomon Islands shall be the
Registrar of the Court of Appeal. However,
sub-rule 4 does not seem to
exclude any application under sub-rule 1 being made to a Judge of the
Court of Appeal.
Both sub-rules 4 and 5 do seem to me to permit any
staying order being made by a judge of the Court of Appeal under rule
11
or independently of it. In terms of section 85(2)(b) of the
Constitution, a puisne judge of the High Court
of Solomon Islands shall
be a judge of the court of Appeal ex officio. That being so, I am
entitled to hear any
application such as this present application. As
correctly pointed out by Mr. Suri, judges of the High Court of Solomon
Islands have sat on many occasions as members of the Court of Appeal to
hear applications pertaining to appeals
to the Court of Appeal. Turning
now to the point to be decided in this case. The question is can an
interlocutory
injunction be stayed pending an appeal? The principle in
general is that a Court would not deprive a litigant who succeeds
the
fruits of his or her litigation and thus lock up moneys due to the
litigant pending appeal (See The Annet Lyle [1886] UKLawRpPro 31; (1886) 11 P.D. 114
at 116). As against this principle is the opposing principle that
when a party appeals, that is an exercise of a right to do so
and a
Court ought to order a stay of proceedings even if the appeal, if
successful, would be pointless in the
absence of a stay of proceedings.
(See Wilson v Church (No. 2) (1879)12 Ch. D.454 at 458).
The weighing scale is therefore the discretion of the Court, the weights
being the evidence on both sides (See
Solomon Islands Plantations Ltd
v Commissioner of Inland Revenue Civil Case No. 12 of 1998
(unreported). Whilst these opposing principles have been discussed
in the context of tax appeal cases elsewhere and in this jurisdiction
as
above, they have not been so discussed and applied in any appeal cases
against interlocutory injunction Orders.
I believe this is the first
time, this point has arisen in this jurisdiction in the context of an
Order being
sought to stay an interlocutory injunction pending an
appeal. In this case, the injunction was conditional upon the
undertaking by the Respondent to abide by any Order the Court makes as
to damages. The undertaking was filed in
the High Court on 6th
July 1999 twenty-nine days after Palmer, J. made the Order on 10th
June1999. The interlocutory injunction took effect from that date. The
injunction remains in force until it is
earlier lifted or until the
trial to determine the rights of the parties has been concluded by the
entry of a
judgment against one of the parties to the dispute. As a
matter of fact, I do not understand the effect a staying order
would
have on an injunction that is already in force. It continues in force
until lifted by the Court. It is
a self-executing interlocutory
injunction that needs no further execution. It cannot be stayed. It can
however
be lifted, spent or set aside. The purpose of the imposition of
the interlocutory injunction was to maintain the status
quo between the
parties pending the trial of the issues between them. In practical
terms, it makes no sense to-ask
the Court for an Order to stay the
execution of the interlocutory injunction in this case. I can find no
authority
which supports the Applicant on this point.
t is to say an authority which says that an injunction can can be stayed
pending an appeal if the circumstances
of the case should permit it. I
therefore refuse to make the order sought by the Applicant.
Variation of the Undertaking
<
Mr. Suri�s position in this matter was that if the Court should refuse
to make an Order to stay the execution
of the interlocutory injunction
then the Court should vary the undertaking provided by the Respondent.
Mr. Suri
however conceded that the sum of $5 million mentioned in
paragraph 7 of Mr. Tiang�s affidavit filed on 20thJuly 1999
was an estimate only and the Court was at liberty to choose a lesser sum
at the Court�s discretion.
The sum was based upon a calculation of the
sum of $842,142.94 in Exhibit �RT3� referred to above against 6
months, the period it takes the appeal to be heard and emerging with the
figure of
$5 million. Mr. Tegavota, Counsel for the Respondent, in
opposition, argued that whilst the Court was permitted to set
aside any
judgment under Order 13, rule 8 of the High Court (Civil Procedure Rule)
1964, the Court should be
mindful of the fact that the costs enumerated
in Mr. Tiang�s affidavit above in Exhibit �RT3� were only rough
estimates. Mr. Tegavota further pointed out that the sum of $842,143.94
in Exhibit �RT3� was maintenance cost per month which was
unnecessary and was a poor guide in this case. He argued that the
Applicant
must mitigate its losses in a situation such as this.
Ruling on the requested Variation
It is clear from the content of Exhibit �RT1� to Mr. Tiang�s
affidavit above, being a letter written by Mr. Suri, addressed to the
General Manager of the Respondent
that the undertaking filed on 6th
July 1999 by the Respondent was inadequate or simply put, a �bare
undertaking� and therefore was not acceptable to the Applicant. The
Respondent�s response was that Exhibit �RT2� attached to Mr.
Tiang�s affidavit above wherein the Assistant General Manager of the
Respondent said that the
undertaking was a valid one was signed by the
General Manager of the Respondent. As stated at pages 436 - 437 in
EQUITABLE REMEDIES Injunctions and Specific Performance, I.C.F.
Spry, First Edition, 1971.
As regards the matter of sufficiency or otherwise wise of an undertaking, the
author at page 438 - 440 says
�.......If, moreover, the, there is a substantial doubt whether the
defendant will be sufficiently protected by the undertaking
of the
plaintiff himself, the court may see fit to require that it be given by
some other person. Thus although
generally an undertaking by a company
or by its liquidator, as the case may be, will be regarded as
sufficient,
yet in exceptional circumstances, such as where the company
does not satisfy the court as to the sufficiency of its assets,
the
undertaking of an officer of the company or of some other responsible
person may be required. On principle,
indeed, there is no reason why a
similar requirement should not be made, if the court considers it
appropriate,
wherever the plaintiff, although not a company, is shown to
be in such circumstances that his personal undertaking may
not
sufficiently protect the defendant. Thus, for example, where a plaintiff
is outside the jurisdiction an undertaking
will generally be required to
be provided by a person within the jurisdiction, such as by his
solicitor. Indeed,
the preferable view appears to be that as to the
sufficiency of particular undertakings the court does not consider
itself to be bound by definite rules, and that in every case it will
require the particular undertaking which appears
to be most appropriate
by reference to the balance of justice between the parties and the
probability with which
it appears that the plaintiff will ultimately
succeed at the final hearing, and especially with a view to enabling
adequate final relief to be given.
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The general considerations whic which govern the giving of an undertaking as
to damages where appropriate often
lead to the imposition of other
conditions upon the plaintiff. Thus a question may arise whether he
should be
required, not only to make an appropriate undertaking as to
damages, but also to lodge an amount as security, or to undertake
to do
so, in order that the satisfaction of any order as to damages or
otherwise may
be ensured.
/p>
Indeed, it apit appears that wherever there is a substantial doubt as to the
ability of the plaintiff to provide
the amount of damages that he may be
obliged to pay pursuant to his undertaking he may, if it appears to be
desirable
to do so, be required to lodge security as a condition of the
grant of relief, either because on the balance of convenience
no other
order in his favour would be fair and reasonable, or else because the
court regards it as in any case
desirable that it should be enabled to
do justice recompensing the defendant should the case so require.
�Indeed, the power of the court, whether in its exclusive or auxiliary
jurisdiction, to require an undertaking
of any kind from the plaintiff
or to impose any condition before granting an interlocutory injunction
is very
wide, and is not limited to particular classes of undertakings
or conditions; and as has been seen already, it may be exercised,
not
only wherever the balance of convenience would otherwise be found to
incline against the grant of relief,
but also if the giving of an
undertaking or the imposing of a condition of the kind in question is of
material
effect in enabling the court more easily to do justice between
the parties in subsequent proceedings. Thus the precise
conditions or
undertakings which will be considered appropriate in any particular case
depend upon the circumstances
in question and, especially, upon the
balance of convenience as between the parties.�
What then is the position in this case? The basis of the Applicant�s
doubt over the credibility of the undertaking
was clearly explained in
Exhibit �RT1� attached to Mr. Tiang�s affidavit above. That is to
say, the undertaking had not been signed by the Respondent�s Solicitor,
the identity of the person who signed it was not clear as to whether or
not it was a personal undertaking or
the Respondent�s undertaking and
that it was a bare undertaking on behalf of the Respondent. As I have
said,
these points were answered in Exhibit �RT2� attached to Mr.
Tiang�s affidavit above. That is to say, the Court Order stated clearly
that the undertaking
was to be provided by the Respondent, that it had
been signed by the General Manager of the Respondent and that the
Applicant�s allegation that the undertaking was a bare undertaking was
not consistent with the Court Order made
by Palmer J. on 10th
June 1999. It should however be noted that the Applicant had never said
why the undertaking was inadequate and
insecure. There was no evidence
to suggest that the Respondent had no financial ability to meet its
undertaking
at the relevant time. It was obviously an allegation based
upon the $5 million estimate in Exhibit �RT3� attached to Mr.
Tiang�s affidavit above. The items of cost and their stated costs in
Exhibit �RT3� were estimates only. The details of these costing
and their supporting documents were lacking. They were vague and
imprecise. Also, these costings were not the assessment of damages
envisaged by the undertaking on the interlocutory
injunction. The true
assessment of damages will be done at the end of the trial of the issues
between the parties
if necessary. In my view, the Applicant�s allegation
that the undertaking was inadequate was premised on its estimation
of
cost set out Exhibit �RT3� referred to above. The allegation had
a punitive element in it for obvious reasons. If there was any ring of
truth in the allegation, why had it not been raised by the Applicant
before Palmer, J. on 10th June 1999? That would have been the
appropriate time to raise it. It is now too late to do so when the whole
of the Order made by Palmer J. is being appealed by the Applicant. If
the Applicant succeeds in its appeal, the whole of
the Order would be
set aside and disappears. What the Applicant should now do is to speed
up the trial of the
issues between the parties so that the interlocutory
injunction can be spent as soon as possible and minimise any costs
to
the Applicant. I therefore refuse to make the alternative order
requested by the Applicant. Even if I were
to decide this point alone on
the evidence before me, I would still refuse the Application on the
ground that
there was no evidence of the Respondent�s inability to
honour its undertaking filed on 6th July 1999 thus calling
for a variation. The Application is therefore refused.
Cost be cost in the appeal.
F.O. Kabui
Judge
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