Grenada Technical and Allied Workers Union Claimant v Liberty Club Ltd (Trading as La Source) Defendant [ECSC]
| Jurisdiction | Grenada |
| Judge | Mohammed, J |
| Judgment Date | 24 April 2013 |
| Judgment citation (vLex) | [2013] ECSC J0424-2 |
| Docket Number | CLAIM NO. GDAHCV 2007/0045 |
| Court | High Court (Grenada) |
| Date | 24 April 2013 |
IN THE SUPREME COURT OF GRENADA
AND THE WEST INDIES ASSOCIATED STATES
HIGH COURT OF JUSTICE
CLAIM NO. GDAHCV 2007/0045
Mrs. Celia Edwards QC and Mrs. P. Nicola Byer for the Claimant
Mr. Dickon Mitchell for the Defendant
Mohammed, J.: The Defendant has applied for permission to appeal ("the instant application") to the Court of Appeal against a decision rendered by this court on the 5 th December, 2012 ("the December order") which varied the terms of an injunction order granted by Rhudd J on the 24 th October, 2012 ('the October order").
The October order restrained the Defendant, its servants/or agents "from disposing of, alienating, selling, mortgaging, removing from the jurisdiction assets or cash in the equivalent of EC$2,000,000.00 until 14 th December 2012 or further order in the meantime." It also directed the Defendant to " deposit into Court or such place asThis Honourable Court shall direct the said sum of EC$2,000,000.00 until trial and determination of this action or further order in the meantime."
The December order did not discharge the October order but it varied it by reducing the sum from EC$2,000,000.00 to EC$1,100,000.00 and directed that the said sum be deposited into court on or before the 6 th December 2012. It also ordered the injunction to continue until trial and determination of the action unless furthered ordered and assessed the costs of the application in the sum of $2,500.00.
The instant application is based on five grounds, namely
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(a) The court failed to adequately take into account that the substantive claim was for damages;
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(b) The court failed to adequately consider the effect the injunction would have on the Defendant paying its genuine trade creditors;
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(c) The court failed to adequately consider that there had been material nondisclosure by the Claimant when it obtained the October order;
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(d) The court failed to adequately consider that there was no reason given by the Claimant for making the application without notice; and
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(e) The December order failed to reflect any undertaking in damages given by the Claimant.
Counsel for the Claimant opposed the instant application on the basis that all the grounds (which I will later address) would fail in law.
The issue to be determined is whether the Defendant has demonstrated that the intended appeal has a realistic prospect of success. For the reasons set out hereafter I was not persuaded that the Defendant had discharged this burden. The Defendant's application is dismissed with the Claimant's costs to be assessed if not agreed.
The Court will only grant leave to appeal an interlocutory decision where the Applicant establishes that the intended appeal has a realistic prospect of success 1. In Othneil Sylvester v Faellesje, A Danish Foundation2, Barrow JA described the burden on the appellant as "The appellant needs to show that the intended appeal has a realistic prospect of success 3 which is a heavier burden than showing only that he has an arguable appeal". In The Attorney General of Grenada v Andy Redhead and Ors4 Edwards JA at paragraph 15 was of the view that a realistic prospect of success is more than a fanciful prospect of success. I will now address the five grounds of the instant application.
Counsel for the Defendant submitted that the court failed to adequately consider that the substantive claim is for damages and that a litigant should not be granted an injunction to restrain actionable wrongs for which damages are an appropriate remedy. As such the court erred in law when it varied the terms of the October order since the injunction ought to have been discharged.
Counsel for the Claimant contended that the nature of the injunction sought was a freezing order under the inherent jurisdiction of the court and Part 17 of the CPR. The freezing order is a specific type of injunction to preserve a Defendant's assets in the jurisdiction, and as such the principle of whether damages are an adequate remedy does not apply.
I agree with Counsel for the Defendant that according to the principles set out by Lord Diplock LJ in American Cyanamid Co v Ethicon Ltd.5, a court should not grant an injunction if damages are an adequate remedy. In this action it is undisputed that the substantive claim is for general damages for wrongful dismissal and special damages for loss of income, meal allowance, overtime pay and payment in lieu of termination notices. Paragraph 3 of the affidavit of Bert Patterson filed on 23 rd October 2012 confirmed this position and he has even given an estimate of the measure of damages which the Claimant is seeking to recover in the sum of EC$1,097,539.14. However, the nature of the injunction granted in the October order was to preserve the Defendant's assets in the event the Claimant succeeds, the Defendant has property available to satisfy the judgment.
In Third Chandris Shipping Corporation and others v Unimarine SA6 Lord Denning MR set out the guidelines which a court should follow in granting freezing orders. They are:
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(i) The applicant should make full and frank disclosure of all matters in his knowledge which are material for the judge to know;
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(ii) The applicant should give particulars of his claim against the Defendant, stating the grounds of his claim and the amount thereof, and fairly stating the points made against it by the Defendant;
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(iii) The applicant should give some grounds for believing the assets are in the jurisdiction;
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(iv) The application should give some grounds for believing that there is a risk of the assets being removed before the judgment or award is satisfied; and
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(v) The applicant must give an undertaking in damages in case it fails or the injunction turns out to be justified.
In explaining the nature of the non-proprietary freezing order (which is the nature of the October order) the authors of the Caribbean Civil Court Practice7 stated that "if an actual or intending claimant can establish a good arguable case against a defendant and can also establish that there is a real risk that the defendant will dissipate or conceal his assets so as to defeat any judgment, a non-proprietary order freezing some, or even all of the defendant's assets may be granted."
The freezing order is a subset of the injunctive orders which the court can grant. However, noticeable absent from the guidelines which the court must consider when exercising its discretion is the question of whether damages is an appropriate remedy.
I have no doubt that damages are an adequate remedy in the instant action, however, I agree with Counsel for the Claimant that this was not a relevant factor to be considered by the Court when it made the October order and the December order. I therefore find no merit with this ground.
The Defendant contended that the failure by the court to discharge the October order and instead to vary it in the December order prevented it from paying its "genuine trade creditors" and placed the Claimant in a preferential position over the Defendant's other genuine trade creditors. Paragraph 32 of the affidavit of Leon Taylor filed 13 th November 2012 sets out some of the "several outstanding creditors of the Defendant" as "immediate staff of the Defendant who are owed salaries and other benefits, its trade creditors, utility companies (including water, telephone and electricity), guests who are to be refunded booking money as a result of closure of the hotel, the Government of Grenada and the NIB for insurance contributions for the staff. The total outstanding sums payable to these respective creditors of the Defendant totals approximately $7.8 million EC".
The Claimant disagreed with this submission on the basis that the evidence before the court was the secured creditors were paid, the court has retained jurisdiction over the sum of $1,100,000.00, and it is open to the unsecured creditors to apply to the court to access the sum deposited in court.
A party who has obtained a freezing injunction does not acquire a proprietary interest in the assets frozen nor is given any preference over creditors 8. In Boeing Capital Corporation v Wells Fargo Bank Northwest9 the Claimant had judgment for delivery-up on its security claim on a Boeing 737, but was not allowed to enforce the order for delivery-up on the aeroplane until after first obtaining a variation to the Mareva injunction obtained by a third party. Similarly in Iraqi Ministry of Defence v Arcepey Shipping Co SA (The Angel Bell)10 a third party who was owed £200,000 by the Defendant before the Mareva Order was made, was able to have the order varied to allow the Defendants to repay the loan from the enjoined assets. Notably, in both cases the freezing orders were varied after successful applications by creditors and not the Defendant.
There was no evidence before the court of any secured creditors who would be prejudiced by the freezing order. According to...
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