Liberty Club Ltd (Trading as La Source) Appellant v Grenada Technical and Allied Workers Union Respondent [ECSC]

• Jurisdiction: Grenada
• Judge: Baptiste JA,Davidson Kelvin Baptiste,Justice of Appeal
• Judgment Date: 23 May 2014
• Judgment citation (vLex): [2014] ECSC J0523-1
• Court: Court of Appeal (Grenada)
• Docket Number: GDAHCVAP2013/0010
• Date: 23 May 2014

[2014] ECSC J0523-1

EASTERN CARIBBEAN SUPREME COURT

IN THE COURT OF APPEAL

Before:

The Hon. Mr. Davidson Kelvin Baptiste Justice of Appeal

GDAHCVAP2013/0010

Between:

Liberty Club Limited (Trading as La Source)

Appellant

and

Grenada Technical and Allied Workers Union

Respondent

Civil appeal — Interlocutory appeal — Damages for wrongful dismissal — Special damages — Ex parte injunction — Freezing order — Adequacy of damages — Real risk of dissipation of assets

The respondent brought a claim against the appellant seeking damages for wrongful dismissal. Subsequently, on a without notice application, it applied for and was granted a freezing order against the appellant which sought to restrain the appellant, its servants or agents from disposing, alienating, selling, mortgaging or removing from the jurisdiction assets or cash in the sum of EC$2,000,000.00. It was ordered that said sum be paid into court. The order was continued at a following inter partes hearing but was amended to reflect the frozen sum of EC$1.1 million.

The appellant took issue with the order made and has appealed on various grounds which includes, but is not limited to, (1) the judge failed to consider adequately or at all that there was no evidence that the appellant was removing its assets from the jurisdiction or dissipating its assets with the intention of not paying the respondent in the event the respondent was successful; (2) the order for payment into court had the effect of preventing the appellant from paying its genuine trade creditors and placing the respondent, whose claim is disputed, in a preferential position over the appellant's other genuine trade creditors; (3) the judge failed to appreciate or adequately consider that the appellant never sought to and did not equate its genuine undisputed trade creditors to that of its "secured creditors" and that the injunction was preventing the appellant from paying its unsecured but undisputed trade creditors; and (4) the judge failed to consider adequately or at all that there were no reasons proffered as to why the application for the injunction was made without notice.

Held: allowing the appeal; ordering that the injunction be discharged and the $1.1 million be paid out of court to the appellant; and awarding assessed costs to the appellant, that:

• 1. An applicant for a freezing order must demonstrate that there is a real risk of dissipation of assets. This burden will be satisfied if it can be shown that the defendant is removing or there is a real risk that he is about to remove his assets from the jurisdiction to avoid the possibility of a judgment, or that the defendant is otherwise dissipating or disposing of his assets, in a manner clearly distinct from his usual or ordinary course of business or living, so as to render the possibility of future tracing of assets remote, if not impossible in fact or in law. The affidavit evidence which was given to justify the granting of the injunction against the appellant fell substantially short of this bar. There was no evidence provided which demonstrated that the appellant was dissipating or attempting to dissipate its assets in the event that the respondent was successful in the claim. In actuality the un-disputed evidence of the appellant say the converse. Accordingly this ground of appeal is allowed.

  Chitel v Rothbart [1982] 39 OR (2d) 513 applied; Congentra AG v Sixteen Thirteen Marine SA (The Nicholas M) [2008] EWHC 1615 applied.

• 2. A claimant who obtains a freezing injunction is not in a position of a secured creditor and has no proprietary claim to the assets subject to the injunction; thus there can be no objection in principle to the defendant's dealing in the ordinary way with his business and with his other creditors, even if the effect of such dealings is to render the injunction of no practical value. In that regard, the freezing injunction of $1.1 million operated oppressively and prevented the appellant from paying its creditors. The appellant is entitled to operate its ordinary business dealings and a freezing order should not operate to hamper it from so doing.

  Halifax Plc v Rupert Sydney Chandler [2001] EWCA Civ 1750 applied.

• 3. An injunction may be granted on a without notice application if the court is satisfied that giving notice would defeat the purpose of the application or in the case of urgency no notice is possible. The affidavit evidence disclosed no information which could have supported a conclusion that the giving of notice would have defeated the purpose of the application. The learned judge erred in principle by taking into account or by being influenced by irrelevant factors and considerations and because of that error her decision was clearly wrong.

  National Commercial Bank Jamaica Ltd v Olint Corpn Ltd [2009] UKPC 16 applied; Rule 17.4(4) of the Civil Procedure Rules 2000 applied.

Baptiste JA

1 On 19^th January 2007, the respondent (claimant in the court below) filed a claim against the appellant (defendant in the court below) seeking general damages for wrongful dismissal and special damages. In its defence the appellant denied that it terminated or wrongfully terminated the employment of the respondent.1 The appellant further asserted that as a result of the destruction caused to the hotel, La Source, by Hurricane Ivan, the individual contracts of employment between its employees and the respondent became impossible of performance and the respective contracts of employment were frustrated.

2 On 24^th October 2012, on a without notice application made by the respondent, Rhudd J [Ag.] made a freezing order, restraining the appellant, its servants or agents from disposing, alienating, selling, mortgaging or removing from the jurisdiction assets or cash in the sum of EC$2,000,000.00 until 14^th December 2012 or further order. The judge also ordered the appellant to deposit the sum of EC $2,000,000.00 into court or such place as the court directs until trial and determination of the action or further order.2 The matter subsequently came up before Mohammed J on an inter partes hearing who, on 5th December 2012, ordered the continuation of the injunction until trial and determination of the action unless further ordered, varied the sum frozen from $2 million to $1.1 million and

further ordered that the said sum be deposited into court on or before 6^th December 2012.

3 The grounds of the without notice application:

• 1. The applicant has made a claim against the defendant company, which, if successful could result in payment in damages in excess of EC$ 2,000,000.00.

• 2. The defendant company has no other assets within the jurisdiction save and except the property known as "La Source".

• 3. The said property as of October 2012 is now closed.

• 4. Published reports in the national media are that the property is to be sold.

• 5. The applicant is therefore fearful that upon any judgment being entered in their favour that the defendant company will have no assets to satisfy the same.

• 6. The applicant therefore seeks to restrain the defendant company from removing assets or cash the equivalent of EC$2,000,000.00 pending the outcome and determination of this present suit which is now ready for trial.

4 In this appeal, the appellant seeks a reversal and setting aside of the order, a discharge of the injunction, the payment out of court of the $1.1 million EC and costs. The appellant complains that:

• (a) the judge erred in not discharging the ex parte injunction as she failed to consider adequately or at all that the substantive claim was for damages and as a basic principle of injunction law, prima facie, an injunction should not be granted where damages are a proper remedy;

• (b) the judge failed to consider adequately or at all that there was no evidence that the appellant was removing its assets from the jurisdiction or dissipating its assets with the intention of not paying the respondent in the event the respondent was successful. In the circumstances there was no basis upon which the court's discretion could be exercised to freeze orrestrain the appellant's $1.1 million or order the payment of that sum into court;

• (c) the judge failed to adequately consider that her order for payment into court and refusal to discharge the ex parte injunction but to vary it had the effect of preventing the appellant from paying its genuine trade creditors and placing the respondent, whose claim is disputed, in a preferential position over the appellant's other genuine trade creditors;

• (d) the judge failed to appreciate or adequately consider that the appellant never sought to and did not equate its genuine undisputed trade creditors of that of its "secured creditors" and that the injunction was preventing the appellant from paying its unsecured but undisputed trade creditors;

• (e) the judge failed to consider or adequately consider that there was material non-disclosure on the part of the respondent when it obtained the ex parte injunction on 24^th October 2012;

• (f) the judge failed to consider adequately or at all that there were no reasons proffered as to why the application for the injunction was made without notice. There was no evidence to establish that the giving of notice would have enabled the appellant to take steps to defeat the purpose of the injunction or that there was no time to give the notice before the injunction is required to prevent the threatened wrongful act;

• (g) the judge failed to ensure that the order reflected that the respondent ought to give an undertaking in damages should the respondent be unsuccessful in the substantive claim as the appellant would have been restrained unjustly from dealing with the $1.1 million until the determination of the substantive claim.

Arguments of the parties on first two grounds of appeal

5 The appellant argues, and the respondent takes no issue with the argument,...