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Austree Enterprises Pty Ltd v Shiyao Guo [2012] SBHC 102; HCSI CC 381 of 2011 (31 August 2012)

IN THE HIGH COURT
OF SOLOMON ISLANDS
(Civil Jurisdiction)

Civil Case No. 381 of 2011

Austree Enterprise Pty Ltd
First Claimant

And

Zong Wu Zhou
Second Claimant

And

Lin Yun Zhou
Third Claimant

-V-

Shiyao Guo
First Defendant

And

China United (SI) Corporation Ltd
Second Defendant

And

Ray Chu
Third Defendant

And

Junbin Guo
Fourth Defendant

And

Junzong Guo
Fifth Defendant

Hearing: 27 August 2012
Judgment: 31 August 2012

For the Claimants: J. Sullivan Q.C. and R. Kingmele;
For the first Defendant: M. Bird (Ms.);
For the second Defendant: G. Suri;
For the third, fourth and fifth Defendants: M. Pitakaka

Palmer CJ:

1. The claimants seek interlocutory orders inter alia, to restrain:
   
   • - the First, Third, Fourth and/or Fifth Defendants from dealing with any shares currently registered with the Second Defendant;
     
   • - evicting or demanding the eviction of the First Claimant and any of its officers etc. from the premises at Town Ground known as the Sol Plaza;
     
   • - demanding or taking possession of the books, records, documents plant equipment, and chattels of the First Claimant or the Second Defendant located on the premises at Sol Plaza; and
     
   • - interfering with the enjoyment of the First Claimant and its directors, officers etc. at the Sol Plaza.
     
2. On 4 October 2011, the Court made orders on an undertaking given by the First and Second Defendants, not until determination of the Claimants application or further order, inter alia as follows:
   
   • - not to interfere in any way with the First Claimant’s present access to and occupation of Room 141, Apartments 212, 215, 218 and 220 and Shops G28A-G28C and G31 at Sol Plaza, Town Ground.
     
3. This order was imposed it appears to preserve the status quo as it related to the application of the Claimants based on their claim for specific performance of an Agreement dated 30 August 2007 (“the Agreement”),whereby 90% of the shareholding in the Second Defendant would be transferred to the First Claimant.
   
4. There is material before this court which supports the claim of the Claimants that following execution of that agreement, they expended a huge sum of money, they claim to the tune of some $53 million Solomon dollars, although only about SI$15.5 million is conceded by the First Defendant as a loan.
   
5. On 2^nd March 2012, following an application to strike out, the court upheld the application of the Defendants that the Agreement relied on was inadmissible in that the Claimants had not paid stamp duty and penalties under the Agreement. By order dated 20 April 2012, the Defendants were discharged from their undertaking not to interfere in any way with the First Claimant’s access to and occupation of the premises at Town Ground.
   

(i) Are there serious issues to be tried?

6. I do not think it can be denied and has not been disputed there are serious triable issues with prospect of success at trial. The Claimants rely on an agreement which if accepted as binding and capable of being enforced alter the shareholding of the Second Defendant and ultimately control of the company. This will vest control on the Claimants as the majority shareholder and in turn enable them determine the management and operational control of the company. They want that prospect protected and preserved. It seems at one stage they had gone to some lengths to exercise control over the operations of the company until the orders of the court which purported to exclude the Agreement as a valid agreement which could be relied on. That scenario has subsequently changed to the original position.
   

(ii) Monetary damages an adequate remedy?

7. The next issue which the Court is required to consider is whether if injunction is not ordered, the damage that the applicant will incur by the time the case is finally determined, if in favour of the applicant, will not be adequately compensated for by award of money damages, or whether the damage is such that money is not at all the relief for it. If money will not be adequate compensation, the Court may allow the application and order interlocutory injunction. If money will be adequate compensation, the Court will decline to order interlocutory injunction although the applicant will have established serious triable issue. If the damage to the applicant will be such that money would not adequately compensate for, and the Court is inclined to granting injunction, the Court should also consider the converse as well, whether if the respondent should win at the final determination, the damage suffered if the injunction had been imposed, will be such that money will not adequately compensate for or money will not be a relief at all. The Court is required in such situations to balance the convenience to parties.
   
8. The circumstances of this case show that damages will be an adequate relief. There is however, an added element of capacity of which has been adverted to by the Claimant in this application. They raise the concern that the Defendants may not be in a position to adequately compensate them for damages for breach of contract should they win their case at the end of trial.
   
9. To some extent there is some evidence in support of this proposition by the concession of a loan of some SI$15.5 million.
   

(iii) Balance of Convenience.

10. The balance of convenience in this case lies in trying not to disturb so much the status quo pending determination of the serious triable issues in this case. This raises the question as to what is the status quo.
    
11. In my view, the status quo in this case is that the work of the Second Defendant in the construction process must not be abated in anyway by the Claimants or Defendants. They all have duty to ensure that the project runs to completion successfully.
    
12. Secondly, the management of the Second Defendant at this point of time by the First, Third, Fourth and Fifth Defendants must be open to scrutiny by the Claimants for they have at least an equitable interest in the matter, which if successful at final determination of trial will give them majority control over the Second Defendant. The continued management of the Second Defendant should be done by consultation and dialogue. For that purpose, access to, ingress to and egress from the site should be permitted on notice or by agreement.
    
13. Thirdly, access to the books and accounts of the Second Defendant should be open to them as well for inspection by consultation and on agreement.
    
14. Fourthly, any books, records, documents, plant, equipment and chattels of the First Claimant should be returned forthwith. They should also be permitted to have these stored in a safe place/room in the premises. I understand some rooms were referred to in the application which the Claimants initially had access to, these can be resolved by discussion and agreement as to which or what rooms will be needed for that purpose; access and or usage etc. of any of the items mentioned to be by consent or agreement only of the Claimants.
    
15. On the issue of ingress and egress, with the exception of what I have stated above, I come to the conclusion that the factual issues which prevail do not permit the granting of part of the orders sought by Claimants for occupancy of the rooms sought in this application for that would be contrary to the glaring fact that the Town Ground complex is still and remains a construction zone and no order for occupation of any room or part of the building should be granted to anyone until completion of the site, other than for the purposes of management, construction, storage and related matters thereto, such as building inspectors who may be required by virtue of their duties to attend at the work site.
    
16. I am satisfied therefore that some sort of interlocutory relief should be considered in favour of this application. Apart from what I have stated above, any other form of interlocutory relief should be arrived at by discussion and agreement between the parties.
    
17. In terms of the orders that relate to the shares is concerned, these are not objected to and so the orders issued by this court should continue until trial or further orders of the Court. I grant orders accordingly as set out in the Schedule attached herewith.
    

The Court

SCHEDULE TO JUDGMENT

Orders of the Court:

1. Grant orders to restrain the Defendants, their servants or agents or otherwise from transferring, disposing, or dealing with any of the shares in the Second Defendant currently registered in their respective names;
   
2. Grant orders restraining until judgment or further order the Second Defendant from –
   
   • (i) Allotting or issuing any further shares in the Second Defendant;
   • (ii) Approving or registering any transfer, disposition or other dealing in any shares in the Second Defendant, whether by the other Defendants or any of them or otherwise whosoever;
   • (iii) Granting or creating any security (other than in favour of the First claimant) over the assets and undertaking of the Second Defendant or over Parcel No. 191-014-104 situated at Town Ground, Honiara.
     
3. Grant orders to restrain the Defendants from –
   
   • (i) Interfering with the Claimant’s access to, ingress to and egress from the site as defined in the judgment and/or by notice or agreement;
     
   • (ii) Interfering with the storage of books, records, documents, plant, equipment and chattels of the First Claimant on designated sites as agreed to;
     
   • (iii) Using, removing or interfering with/disposing of/removing in any way, books, records, documents, plant, equipment, and chattels of the First Claimant except by agreement;
     
4. Grant orders that the Defendants return all property (personal) to the premises or as agreed with the Claimants.
   
5. Grant orders that the Claimants be able to access the books and accounts of the Second Defendant for inspection by consultation and on agreement.
   
6. Liberty to apply on two days notice for variation or any other orders.
   
7. Costs in the cause.
   

The Court.