Yama Group of Companies Limited and Smugglers Inn Resort Hotel Limited and Neisenal No 77 Limited and Yama Security Services Limited v PNG Power Limited (2005) N2831

• Jurisdiction: Papua New Guinea
• Judge: Lay J
• Judgment Date: 17 May 2005
• Court: National Court
• Docket Number: OS 198 of 2005
• Citation: (2005) N2831
• Year: 2005
• Judgement Number: N2831

Full Title: OS 198 of 2005; Yama Group of Companies Limited and Smugglers Inn Resort Hotel Limited and Neisenal No.77 Limited and Yama Security Services Limited v PNG Power Limited (2005) N2831

National Court: Lay J

Judgment Delivered: 17 May 2005

PAPUA NEW GUINEA N2831

[IN THE NATIONAL COURT OF JUSTICE]

OS 198 OF 2005

YAMA GROUP OF COMPANIES LIMITED

First Plaintiff

AND

SMUGGLERS INN RESORT HOTEL LIMITED

Second Plaintiff

NEISENAL NO.77 LIMITED

Third Plaintiff

AND

YAMA SECURITY SERVICES LIMITED

Fourth Plaintiff

AND

PNG POWER LIMITED

Defendant

LAY J

PORT MORESBY

2005: 2nd and 17th May

Mandatory injunction – considerations for granting – strong case that serious damage will occur- American Cyanamid principles apply—it should normally be strong and clear that the plaintiff will succeed at trial – overriding consideration, the course of least damage.

Representation

Mr. B Lomai for the Plaintiffs

Mr. S. Kassman for the Defendant

Cases Cited

PNG Cases

Leytrac Pty. Ltd v State [1982] PNGLR 148

Agutoi Trading Pty. Ltd v NCDC [1990] PNGLR 12

Robinson v National Airline Commission [1983] PNGLR 476

Employers Federation of Papua New Guinea vs. Papua New Guinea Waterside Workers & Seamens Union in N393

Overseas Cases

Shepherd Homes Ltd v Sandham [1971] Ch 340; Film Rover International Ltd v Cannon Film Sales Ltd [1987] 1 WLR 760; Redland Bricks Limited v Morris [1970] AC 625; Re BusinessworldComputers Pty. Ltd; and Australian Telecommunications Commission; Federal Court of Australia No. 850; Queensland v Australian Telecommunications Commission (1985) 59 ALJR 562 at 563; Localbail Finance Ltd v Agroexport [1986] 1 WLR 657;

Other Authorities

Spry: Equitable Remedies 5th Ed.; White Book.

Facts

The Second Plaintiffs hotel premises at Madang were disconnected from the Defendant’s electricity supply after a dispute of about 3 years duration as to the arrears of payment claimed by the Defendant in a sum now approaching K400, 000. The Plaintiffs said the electricity account had been inflated by inaccurate meter readings, errors in transferring bills to the Second Plaintiffs account with the Defendant, that it had counter claims for unpaid security services of over K300,000 and accommodation supplied of over K44,000 and a further claim for breach of contract for which it had demanded over K300,000. The Plaintiffs sought an injunction to restore the power pending litigation of the claim and counter claims.

Held

The power having been disconnected before the application was made for an injunction; the injunction sought was a mandatory injunction. Considerations for the grant of a mandatory injunction include (a) it should only be granted where a strong case that serious damage will occur to the applicant is made out; (b) the general principles for negative injunctions apply, that there is a serious question to be tried, damages are not an adequate remedy and the other factors affecting the balance of convenience favour the applicant; the case should normally be one which gives an unusually strong and clear view that the applicant will be successful at trial(c) the more likely it appeared that the plaintiff would succeed at trial the less reluctant the court would be to interfere at the interlocutory stage; (d) the cost to the defendant in performing the mandatory acts should be weighed against the likely damage to the applicant; (e) if the relief sought is such as would normally be granted after a trial it should be refused on an interim application unless the prejudice or hardship to the applicant is disproportionate to the prejudice and hardship to be caused the defendant in performing the order; (f) if the mandatory injunction is simply to restore some activity which has been previously performed by the defendant, rather than to embark on some new activity, it will be more readily granted; (g) ultimately in deciding whether or not to grant a mandatory injunction the over riding consideration is an exercise in deciding which course will do the least damage, or to put it another way, the lower risk of injustice, if it turns out that the court has made the ‘wrong’ decision; (h) if an injunction is granted the order should specify exactly what it is the defendant has to do, leaving the defendant in no doubt as to what is required to comply with the order.

The Second Plaintiff had shown a strong case that serious damage would be caused to its business, however there was no convincing evidence to support its claim that there was something wrong with the electricity metering, or the Defendants accounting, nor for its counter claims for unpaid security and accommodation charges, apart from the sums conceded by the Defendant. That still left a sum over K300, 000 due to the Defendant. There were no particulars of its claim for breach of contract in respect of a security contract with the Defendant. The claim could not be taken into account. Granting the injunction would perpetuate a failed commercial relationship. Application refused. Injunction dissolved.

.

_______________________________

By an originating summons filed on 19th April 2005 the Plaintiffs sought declarations in relation to the fact that the Defendant had disconnect the electricity supply from the Second Plaintiff’s hotel premises in Madang. The Plaintiffs moved the Court by Motion for an order to direct the Defendant to reconnect the power supply and for other orders. On 22nd April 2005 an interim mandatory injunction directing the Defendant to re-connect the electricity supply to the Second Defendant’s hotel property was given by this Court. The Court also directed the motion be argued on 2nd May 2005 when the matter came before me.

The Defendant disconnected the power supply because of alleged arrears of payment. Correspondence between the parties regarding arrears of payment and disputes over the accuracy of the meters or the accounts goes back to 2001. On 26th August 2004 the Defendant sent a letter to the First Plaintiff warning of imminent disconnection of power if arrears claimed of K319, 010.74 were not paid within 7 days. Internal correspondence from the Defendant’s Credit Controller Northern Region to the Provincial Manager at Madang puts the total of the First Plaintiff’s outstanding accounts at K398, 268.52.

In addition to allegations of erroneous accounts from the Defendant the Plaintiffs cross claim for money owing for outstanding accommodation and security charges incurred by the Defendant. By a Form 42 dated 27th January 2005 under the Companies Act the Third Plaintiff claimed K303, 723.48 for unpaid invoices for the supply of security services in Port Moresby and Madang between 2000 and 2004. In a letter to the Defendant dated 4 April 2005 the Plaintiffs claimed a total of K342, 639.12 for an alleged breach of a terminated security contract. No calculation particulars were provided of these claims.

The Plaintiffs say the hotel premises were, from the date of disconnection until the interim mandatory injunction, running on a stand by generator. Due to its lack of capacity guest services had to be curtailed and loss and damage was being suffered and will be suffered. Both parties served Form 42 notices on each other which they have allowed to expire without taking winding up proceedings.

Submissions

The Plaintiffs submitted the jurisdictional basis for an injunction was s155(4) of the Constitution and that the issues to consider were , whether there was a serious question to be tried, whether the balance of convenience favour the granting of an injunction and under that head, whether damages would be an adequate remedy and preservation of the status quo. Further they submitted that loss of goodwill and reputation are matters which will not be adequately compensated by damages and there is strong evidence that the meter readings have wildly fluctuated and inflated the electricity account.

The Defendant submitted that the form of proceeding was inappropriate because it would not give all of the relief required by the Plaintiffs as the declarations will not resolve anything and would lead to a multiplicity of actions. The Plaintiffs debt is just under K400,000 and the counter claim was recently raised for the first time. The Defendant has always had power to disconnect for non payment both under the Electricity Supply By Law and under the Customer Supply Contract clause 15 as approved by the Independent Consumer and Competition Commission. The Plaintiffs have not demonstrated a serious case, it amounts to a plea for time, the consequences of disconnection are the same for everybody, they have only made out a claim for damages, and there is substantial delay in raising the counter claim. The sales contract governs the relationship between the parties. The undertakings are inadequate, they should be signed by all Plaintiffs, there should be security provided.

Reasons

During argument I raised with counsel, that what was being sought here was a mandatory injunction, which is different in nature to an ordinary injunction. An ordinary negative injunction is one to prevent an event which is likely to cause damage to the applicant. When the event...