Imbar Maritima SA v Republic of Gabon

• Jurisdiction: Cayman Islands
• Judge: (Kerr, J. A.)
• Judgment Date: 14 March 1989
• Court: Court of Appeal (Cayman Islands)
• Date: 14 March 1989

Court of Appeal

(Kerr, J. A.)

IMBAR MARITIMA S.A. and FIVE OTHERS

and

REPUBLIC OF GABON

R. Potts, Q.C. and C. Quin for the appellants;

A. Jones for the respondent.

Cases cited:

(1) American Cyanamid Co. v. Ethicon Ltd., [1975] A.C. 396; [1975] 1 All E.R. 504, applied.

(2) Doherty v. AltmanELR(1878), 3 App. Cas. 709, dictum of Lord Blackburn considered.

(3) Grimford Properties Ltd. v. Cheshire C.C., [1974] Ch. 261; [1974] 2 All E.R. 448, considered.

(4) Wilson v. Church (No. 2)ELR(1879), 12 Ch. D. 454, considered.

Companies-compulsory winding up-stay of winding up-court may grant stay pending appeal if balance of convenience in applicant”s favour-no stay if winding up no detriment to applicant and deferral unjust to other party

Companies-compulsory winding up-stay of winding up-preservation of company pending outcome of independent proceedings involving creditor no reason for granting stay-if receivership in place, creditor”s interest would be protected even if company liquidated.

The appellants applied for an injunction pending an appeal against an order of the Grand Court refusing their application for an injunction.

The appellants had applied for an injunction to restrain the respondent from proceeding with winding-up proceedings against an affiliate company pending the determination of an originating summons brought by them against the respondent for the enforcement of an award in their favour.

All of the appellants and the company against which the winding-up proceedings had been started were owned by the same person. The company, acting in its own right and on behalf of the appellants, had previously obtained an arbitral award against the respondent. In the same proceedings the respondent was also awarded a much greater sum in respect of a counterclaim against the company; after the award, the company assigned to the appellants that part of the award which it acknowledged it had obtained on a fiduciary basis on their behalf. As a result of the respondent”s instituting proceedings to have its own

liabilities set off against the company”s liabilities to it, the appellants sought leave by originating summons to enforce that part of the award that the respondent had to pay to the company on their behalf. In the meantime, the respondent started proceedings for the winding up of the company which the appellants sought to prevent until after their originating summons had been heard.

The appellants” application for an interlocutory injunction was dismissed by the Grand Court, after which they unsuccessfully applied for an injunction pending appeal. They filed a notice of appeal but in the meantime, the originating summons was heard and determined in their favour, a decision which was being appealed against by the respondent. These proceedings are reported at 1988–89 CILR 226 and 277.

The appellants once again applied in the present proceedings for an injunction pending the hearing of the appeal. They pursued the application on the basis that their original claim for the interlocutory injunction rested on an alleged agreement between their attorneys that the respondent would desist from pursuing the winding up until a final determination of the originating summons and that a final determination in this context extended to the appellate proceedings which were being pursued by the respondent.

The appellants submitted that (a) the Grand Court (Collett, C.J.) had wrongly refused them the injunction pending appeal by basing its decision on the balance of convenience, which was not the proper test to be applied; (b) it should have considered instead whether its refusal of the injunction would render the appeal nugatory; (c) in this context, the respondent should be restrained from pursuing the winding up in order to preserve the status quo; and (d) additionally their original claim for the interlocutory injunction rested on a negative covenant (an undertaking by the respondent not to pursue the winding up) to which the court would normally give effect in full, thereby cancelling its discretion and requiring it to validate the agreement by granting an injunction to like effect.

Held, dismissing the application:

(1) The court would not grant the appellants an injunction pending appeal. It would normally make an order for staying proceedings under the judgment appealed from if it would thereby prevent a successful appeal from being nugatory. However, there were circumstances which could justify the court not granting such an injunction; in each case it would have to consider where the balance of convenience lay and the trial judge, given his particular knowledge of a case, was best able to weigh the relevant factors and so decide appropriately (page 293, lines 8–40).

(2) In the present case the balance of convenience was in the respondent”s favour since the court had found that allowing the winding up to proceed would cause no detriment to the appellants who were deliberately attempting to delay the proceedings, whereas the respondent would be seriously prejudiced if they were deferred. Moreover, a

declaration and damages were appropriate and adequate remedies to meet the claim, if successful, that the respondent had broken an agreement which committed him to postponing the winding-up proceedings. In any event, although this factor would have weighed eavily in the appellants” favour, it would not have automatically cancelled the discretionary power of the court in deciding whether or not to grant the injunction (page 295, lines 4–26).

(3) The claim that the company should remain in existence until the final determination of the respondent”s appeal against the judgment enforcing an award in the appellants” favour, the full sum of which might have to be deducted from another award made in favour of the respondent against the company, was too remote. The appellants could not justifiably seek to restrain the respondent from pursuing the winding up on this basis as the two sets of proceedings and their results were entirely independent of each other. In particular, should the company be liquidated, the appellants” interests would be protected by the receiver who had been appointed to the company for that purpose. Consequently the application for an injunction failed on this ground also (page 297, lines 6–33).

KERR, J.A.: This was an application for an injunction pending
an appeal against an order of Collett, C.J., made on February
30	20th, 1989, refusing the appellants” application for an injunction.
The appellants had applied for this injunction seeking to
restrain the respondent and persons acting for or on its behalf
from proceeding with winding-up proceedings against the Swiss
Oil Corporation (‘SOC’), pending the determination of an
35	originating summons brought by the appellants against the
respondent (Cause No. 137 of 1988).
On the learned Chief Justice”s dismissing the application, the
appellants indicated their intention to appeal and sought, unsuc-
cessfully, an injunction pending appeal. Notice of appeal having
40	since been filed, the appellants now apply to me for an injunction
pending the hearing of the appeal. In the interim the originating

summons was heard and determined in favour of the appellants.
Notwithstanding, the appellants pursued this application on the
basis that the claim for the interlocutory injunction rested on an
alleged agreement between the attorneys on either side not to
5	proceed with the winding-up proceedings against SOC until a
final determination of the originating summons against the
respondent and that ‘final determination’ in this context meant
determination by or in appellate proceedings. Accordingly, the
prayer in this application was extended to keep the application
10	alive. I dismissed the application but as the question arose as to
what was the proper test for a judge of first instance in deciding
whether or not to grant an injunction pending appeal, I now set
out herein as promised the reasons for my decisions.
A brief chronological outline of the collateral and incidental
15	proceedings will be sufficient to indicate the position of this cause
in the litigation between the parties.
The appellants were shipowners and inter-related foreign
companies. The Swiss Oil Corporation was a Cayman company
and a business associate of the appellants. By an originating
20	summons (Cause No. 328 of 1987), the Republic of Gabon (‘the
Republic’)

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