Kelly v Fujigmo Ltd

• Jurisdiction: Cayman Islands
• Judge: (Smellie, C.J.)
• Judgment Date: 17 October 2012
• Court: Grand Court (Cayman Islands)
• Date: 17 October 2012

Grand Court, Civil Division

(Smellie, C.J.)

KELLY and FOUR OTHERS

and

FUJIGMO LIMITED, PORT AUTHORITY and ATTORNEY GENERAL

Dr. L. Barnett, Q.C. and P. Ebanks for the plaintiffs;

M. Imrie and S. Alexander for the first and second defendants;

W. Bardswell, Crown Counsel, for the third defendant.

Cases cited:

(1) American Cyanamid Co. v. Ethicon Ltd., [1975] A.C. 396; [1975] 2 W.L.R. 316; [1975] 1 All E.R. 504; [1975] F.S.R. 101, dicta of Lord Diplock considered.

(2) Cable & Wireless (C.I.) Ltd. v. Information & Communications Technology Auth., 2007 CILR 273, referred to.

(3) Cayman Islands Stock Exchange v. Nealon, 1999 CILR 359, referred to.

(4) London & Blackwall Ry. Co. v. CrossELR(1886), 31 Ch. D. 354, referred to.

(5) Mothercare Ltd. v. Robson Books Ltd., [1979] F.S.R. 466, dicta of Megarry, V.-C. referred to.

(6) National Comm. Bank Jamaica Ltd. v. Olint Corp. Ltd., [2009] 1 W.L.R. 1405; [2009] Bus. L.R. 1110; [2009] 1 CLC 637; [2009] UKPC 16, referred to.

(7) R. v. Kensington Income Tax Commr., ex p. de Polignac, [1917] 1 K.B. 486, referred to.

(8) Series 5 Software Ltd. v. Clarke, [1996] 1 All E.R. 853; [1996] CLC 631; [1996] F.S.R. 273, dicta of Laddie J. considered.

(9) Smith v. Inner London Education Auth., [1978] 1 All E.R. 411, considered.

Injunctions-interlocutory injunction-conditions of availability-serious issue to be tried and real prospect of success; damages inadequate remedy; and balance of convenience favours plaintiff-whether serious issue involves some assessment of evidence, but court not to reach conclusions on merits-to recognize only obvious strengths in parties” cases-difficult conflicts of evidence/questions of law to be resolved at trial-same conditions for mandatory interlocutory injunctions

The plaintiffs claimed proprietary rights in an area of public dockland.

They had operated their water sports and tour boat businesses from the disputed site for over 20 years and had established docks and other facilities there at their own expense. Their use had been acquiesced in by the Crown and, later, its successor in title, the Port Authority. Subsequently, the first defendant, a private developer, contracted with the Government and the Authority for the development of the area, including the construction of a public park and marina, and a 99-year lease in respect of the land was granted to it. The agreement provided that the disputed site and other adjoining areas would be excavated to create the marina basin and waterways of the project, but it required suitable replacement berthing facilities to be created on an interim-and ultimately permanent-basis.

In order to commence construction, the first defendant required all water sports and tour boat operators to relocate from the disputed site to the interim sites provided. The plaintiffs, however, refused to vacate the site, alleging that the interim facilities were, and the permanent facilities would be, unsuitable and unsafe for their operations. In response, the first defendant dismantled some of the plaintiffs” property and facilities at the site and sought to prevent their access to it.

The plaintiffs claimed (i) easements to use and access the disputed site; (ii) similar statutory prescriptive rights; (iii) similar rights by virtue of a proprietary estoppel; and (iv) a constructive trust binding on the defendants, which obliged them to protect the plaintiffs” rights. They further applied for an interim injunction restraining the defendants from preventing their access to the disputed site. The defendants were given notice of that application, albeit one day less than the rules required, but objected to

having been given shorter notice and declined to participate. The Grand Court (Williams, J.) granted the interim injunction for a limited period until the application was set to be heard on the inter partes basis. The defendants applied by way of preliminary objection for the discharge of that interim injunction on the basis of the plaintiffs” alleged failure to make full and frank disclosure to the court and the plaintiffs applied for it to be continued and, additionally, for a mandatory injunction requiring the defendants to remove the debris which had been piled on the access route to the site and to restore all docking facilities which had been dismantled.

The plaintiffs submitted that (i) ejection from the disputed site could destroy their businesses and the consequential loss of credibility and goodwill could not be adequately compensated by damages; (ii) it could further result in significant loss of reputation for the Islands” tourism; (iii) the defendants could arrange for adequate and safe alternative facilities for the plaintiffs, but had not done so; (iv) the first defendant”s private interests, in respect of its adjacent private development, were the true impetus behind the project, to the detriment of the proposals for the public marina and berthing facilities; (v) the balance of convenience therefore favoured the plaintiffs; and (vi) even if the parties” competing interests were evenly balanced, the court should favour the status quo.

The defendants submitted in reply that (i) the plaintiffs could successfully operate from the interim sites or other locations; (ii) even if their concerns about the suitability of the interim and permanent sites were reasonable, damages would be the appropriate remedy; and (iii) the marina project was in the public interest, undertaken by a public authority, and the court should therefore be slow to interfere.

Held, granting the application:

(1) The court would not hear the defendants” application by way of preliminary objection. The duty of full and frank disclosure imposed on applicants for injunctions was to be strictly applied when applications were made on the ex parte basis, as the other side would not be present to put such matters as may test the applicants” case before the court. The hearing before the Grand Court (Williams, J.) could not, however, be properly characterized as an ex parte hearing as the defendants had been notified. A party who resolved not to participate in such circumstances could not later complain that the applicant failed to explain his defence to the court for the purpose of blocking the further enquiry altogether. It would, therefore, be just and proper in the circumstances to hear the plaintiff”s substantive application for the continuation of the injunction (paras. 3–5).

(2) The court set out the proper approach to interim injunction applications. First, it would consider whether there was a serious issue to be tried and whether it had a real prospect of success. This inevitably involved some degree of assessment of the evidence, but it was not appropriate to reach conclusions on the merits-difficult conflicts of evidence and questions of law would remain to be resolved at trial. The court would

therefore recognize only obvious strengths or weaknesses in either party”s case. Secondly, the plaintiffs had to prove that damages would not be an adequate remedy if they were to succeed at trial; but, even if they discharged this burden, they could still be required to give an undertaking to indemnify the defendants for any damage found wrongfully to have been caused to them by the injunction, if the defendants were to prevail at trial. Thirdly, taking into account all the circumstances of the case, the court would assess whether the ‘balance of convenience’ lay in favour of granting the application. These basic principles applied equally to the grant of mandatory interim injunctions (paras. 8–15; para. 19).

(3) The court would grant the interim injunctions. There were serious issues to be tried in respect of the plaintiffs” easement, prescriptive and proprietary estoppel claims, all of which had real prospects of success. Further, damages would be an inadequate remedy, as the refusal of the injunction would have resulted in the immediate and irreversible destruction of the disputed site and its facilities, on which the plaintiffs” businesses depended. Although the court would have particular regard to the fact that the second defendant was a public authority, acting in the public interest, in all the circumstances, the balance of convenience favoured the preservation of the status quo-in particular (i) the refusal of the injunction would effectively put an end to the proceedings; (ii) there were concerns about the adequacy of the interim sites; (iii) significant loss could result to the plaintiffs” businesses and the Islands” tourism; and (iv) there were concerns that the private objectives of the first defendant were the real impetus behind the project (paras. 16–18; paras. 24–35).

1 SMELLIE, C.J.: This is...