Construction and Industrial Equipment Ltd Claimant/Respondent v Societe Antillaise De Travaux Public Defendant/Applicant [ECSC]
| Jurisdiction | St Lucia |
| Judge | Mason J |
| Judgment Date | 15 November 2005 |
| Judgment citation (vLex) | [2005] ECSC J1115-3 |
| Court | High Court (Saint Lucia) |
| Docket Number | SLUHCV 2002/608 |
| Date | 15 November 2005 |
THE EASTERN CARIBBEAN SUPREME COURT
IN THE HIGH COURT OF JUSTICE
(CIVIL)
SLUHCV 2002/608
This is an application for an inquiry to be carried out into damages alleged to have been suffered by the Applicant as a result of the Order given on the Claimant's/Respondent'sapplication for a freezing injunction and service thereof made by the High Court on 2nd July, 2002 and entered on 3rd July, 2002.
The application also includes a claim for costs.
I do not believe at this stage that the facts of the substantive claim are strictly relevant but the uncontroverted facts regarding the pleadings are as follows:
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1. On June 28th 2002 the Claimant/Respondent (hereafter referred to as the Respondent) filed an application for an interim freezing injunction against the Defendant/Applicant (hereafter referred to as the Applicant).
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2. This application was heard on 2nd July, 2002 and an order was granted and made returnable on 18th July, 200The Order included the usual undertaking on the part of the Respondent to pay any damages which the Applicant may or was likely to suffer as the result of the issuing of the injunction.
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3. Affidavit of Service entering service of the Order on the Applicant was filed on 4th July, 2002.
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4. On 16th July, 2002 the Applicant filed an Affidavit of Service indicating its intention to defend the claim
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5.. The next day 17th July, 2002 the Respondent filed an Application seeking an extension of the Application. On the same date 17th July, 2002 the Applicant filed an application for:
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(a) 6rdischarge of the injunction and
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(b) for the Claim Form and Statement of Claim to be set aside and
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(c) that any further proceedings be stayed.
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6. On 18th July, 2002 the injunction was discharged and it was entered on 19th July. The other 2 limbs of the application made by Applicant i.e. to set aside the Claim Form and Statement of Claim and to stay the proceedings were adjourned to 25th July, 2002.
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7. However on 22nd July, 2002 the Respondent filed an application for an Order to discontinue the suit.
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8. An order to discontinue the action was made on 25th July, 2002. thus rendering nugatory the adjourned part of the Order of 18th July, 2002 i.e. the application to set aside the Claim Form and the Statement of Claim and the staying of this proceedings.
And there the matter rested until 27th April, 2005 when the Applicant made an Application for a judgment summons to be issued against the Respondent.
That application was dismissed on 1st June, 2005. Perusal of the Court's file does not reveal the reason for the dismissal. I am not sure that the fact is relevant to our application however.
The present application was filed on 28th June, 2005.
The grounds for the application are:
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(1) that the injunction was discharged by Order of the Court made ……………on 18th July, 2002 and entered on 19th July, 2002
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(2) that the ……….Respondent gave an undertaking to compensate the …….Applicant Company for any loss which it may have suffered should the injunction have wrongly been granted.
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(3) that as a result of the unwarranted imposition of the said injunction the Applicant suffered loss and
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(4) ……………….
The parties have identified the issues for determination by the Court. These are:
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(i) whether an inquiry into damages based on the undertaking given by the Respondent should be heard and granted or refused;
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(ii) whether the Court should make an order for security for costs against the Applicant should an order for an inquiry be granted, and there was a third issue identified by the Applicant:
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(iii) whether the Applicant can show that loss was suffered as a direct result of the injunction.
It appears to be the admission by counsel for the Applicant that the most glaring objection t o any enquiry would be the length of time that has passed since the discharging of the I Injunction.
However he says, the undertaking as to damages is a promise of the Respondent to pay his opponent if he later fails to establish his right to the injunction. This undertaking is enforced by an inquiry into what loss the Applicant has suffered because of the injunction.
The Applicant reiterates the principle regarding undertakings, that is, that the undertaking is given not to the Applicant but the Court which has a discretion whether or not to enforce it.
Thus, notes Counsel, any loss sustained is occasioned not by a legal wrong but in consequence of an order of the Court. Therefore since there is no cause of action, there is no period of limitation either and so prejudice cannot be a factor in the court determining whether it should enforce the undertaking or not.
I shall return to this later.
Counsel makes the point that the court's discretion is to be exercised having regard to all the circumstances of this case, bearing in mind that since the injunction should not have been obtained, prima facie, the Respondent ought to bear the loss.
Counsel then sets out to justify the delay in making the application: he speaks to the nature of the work carried on by the Applicant, to the Applicant being an international corporation which undertakes numerous governmental projects around the world, these projects lasting for a year at a time.
In this particular instance, after completion of the project here in St. Lucia — the project which was the cause of the application of the injunction — the Applicant undertook other projects in other parts of the world, and its Managing Director, the only person with sufficient knowledge of this matter to initiate an inquiry into damages is not ordinarily in St. Lucia.
In fact he has only been in St. Lucia on a few occasions and then only for a few hours at a time to meet the Government Officials before flying out again. Counsel states that he has only met with the Managing Director on two or three occasions over the past two years.
According to Counsel, this is the first time since the discharging of the injunction that the Applicant has been in a position to request an inquiry into damages and that given the misrepresentation upon which the injunction was obtained in the first place, the Applicant should not be denied relief.
[Counsel for the Respondent agrees with Counsel for the Applicant with regard to the principle on the undertakings, that is, whenever an undertaking as to damages has been given and it is established before trial that the injunction ought never to have been granted as in the present case an inquiry as to damages will be granted.
However, this is s discretion inherent to the Court and the Court may refuse an inquiry based on special circumstances.
The Court may refuse an application for an inquiry as to damages of it is likely to be fruitless, if the damages are too remote, if the loss and damage were caused as a natural and direct consequence of the injunction.
An application may also be refused if there is great and unexplained delay in making the application and this may be so even where the applicant has shown a prima facie case.
The Court may also refuse an inquiry in order to prevent an abuse of the process.
A number of authorities have been provided by both sides, all quite relevant and helpful. They all reiterate the principle and provide guidance.
I shall begin by quoting Bacon CJ — in the case ofExparte Hall. In Wood (1883) 23 Ch. D). 644 et 647.
"This subject of undertakings to be answerable in damages whenever injunctions are granted is, no doubt, an important one. The Court has reserved to itself in exacting an undertaking, the power of dealing with the question of damages. It is not an undertaking to pay such damages as the party proceeded against may think he has sustained, but it is to pay such damages as the Court may think fit to award in respect of the injunction as in respect of the subject matter of the suit for injunction".
Having established that the discretion is the Court's Peter Gibson CJ, in the case ofCheltenham & Gloucester Building Society V Ricketts (1993) IWLR ISIS at 1556, states It is clear that in ordinary circumstances if it should subsequently appear that the interlocutory injunction should not have been granted and that the respondent may have suffered loss in consequence, the Court will exercise its discretion in favour of enforcing the undertaking".
And later "save for special circumstances the court will exercise its discretion in favour of enforcing the undertaking.
Given these statements, the Applicant is prima facie entitled to have his...
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