Timothy Lim Kok Chuan v Simon Goh Say Ben and Tong Cho Chin (2004) N2538

• Jurisdiction: Papua New Guinea
• Judge: Injia DCJ
• Judgment Date: 18 May 2004
• Citation: (2004) N2538
• Court: National Court
• Year: 2004
• Judgement Number: N2538

Full Title: Timothy Lim Kok Chuan v Simon Goh Say Ben and Tong Cho Chin (2004) N2538

National Court: Injia DCJ

Judgment Delivered: 18 May 2004

1 Civil Law—Contract for sale of auto–repair business on walk–in walk–out basis—Contract part oral and part in writing—Breach of—Action for specific performance and damages—Interim injunctions to preserve plaintiff's possession of company assets and records—Whether contract of a kind which could be required to be specifically performed by a party by interim injunctive relief—Interim injunction previously granted discharged.

2 Clifford v Turrell [1861] 62 ER 826, Cogent v Gibson [1864] 55 ER 485, Craftworks Niugini Pty Ltd v Allan Mott [1998] PNGLR 572, Employers Federation of Papua New Guinea v Papua New Guinea Waterside Workers and Seamen's Union (1982) N393, Mainland Holdings Ltd v Paul Robert Stobbs (2003) N2522, Modilon Automotive Pty Ltd v Kevin Southcomb [1997] PNGLR 158, Robinson v National Airlines Commission [1983] PNGLR 476, Turner v Bladin (1951) 82 CLR 463 referred to

___________________________

N2538

PAPUA NEW GUINEA

IN THE NATIONAL COURT OF JUSTICE

WS 415 of 2004

BETWEEN:

TIMOTHY LIM KOK CHUAN

- Plaintiff-

AND:

SIMON GOH SAY BEN

- First Defendant-

AND:

TONG CHO CHIN

-Second Defendant-

WAIGANI: Injia DCJ

2004: May 10th, 17th. 18th

Civil – Law – Contract for sale of auto-repair business on walk – in walk- out basis – Contract part oral and part in writing - Breach of – Action for specific performance and damages – Interim injunctions to preserve plaintiff’s possession of company assets and records – Whether contract of a kind which could be required to be specifically performed by a party by interim injunctive relief– Interim injunction previously granted discharged.

Cases cited in the judgment:

Clifford v Turrell [1861] 62 E.R. 826

Cogent v Gibson [1864] 55 E.R. 485

Craftworks Niugini Pty Ltd v Allan Mott Unreported Supreme Court Judgement No. SC 525 dated 1997.

Employers Federation of PNG v Waterside Workers and Seaman’s Union Unreported National Court judgement No. N 393 dated 1982.

Mainland Holdings Ltd v Paul Stobbs N2522 (2003).

Modilon Automotive Pty Ltd v Kevin Southcomb & Others [1997] PNGLR 158.

Robinson v National Airlines Commission [1983] PNGLR 476.

Turner v Bladin & Others [1951] C.L.R. 463

Counsels:

Mr Manjin for the Plaintiffs

Mr Kua for the Defendants

18 May 2004

INJIA DCJ: The parties in these proceedings are non-citizens. The Plaintiff is a registered accountant and the owner of the accounting firm of Lim Samuel Caris & Co. The Defendants are spouses. They own the business described as Active Engineering (“the business”) through their ownership of Auto Parts (PNG) Ltd.

Sometimes in July 2000, the parties entered into some kind of an oral agreement for the Plaintiff to buy from the Defendants the business for K2.78 million but this agreement was never reduced to writing and signed by the parties. Pursuant to the agreement, on or about 1 August 2000, the parties entered into further mutual arrangement for the Plaintiff to take control of the daily business operations. A new bank account was opened under the business name. The Plaintiff was to run the business for which service he was paid a monthly salary of K8,000.00.

Between September 2000 and June 2003, the Plaintiff says he paid a total of K750,000.00 towards the purchase price. In around October 2003 the parties agreed on a scheme for accelerated payment, whereby the Plaintiff would pay the sum of K2.3million to buy off the company completely. The offer of accelerated payment was made by the Defendants in writing and accepted in writing by the Plaintiff. Under this agreement, the Plaintiff was to pay a deposit of K300,000.00 by 7th October and the balance by 17th October. The Plaintiff’s acceptance of the Defendants’ offer of accelerated payment was endorsed by hand on the letter of offer but with one variation – the sum of K300,000.00 would be paid on 7th October and the balance by 7th November 2003. There is no evidence that this variation was accepted by the Defendants. On 2nd October the Plaintiff secured a K1.7 million loan facility from the Bank of South Pacific to finance the purchase of the business. A written contract of sale of the business prepared and submitted to the defendants by the Plaintiff was never signed by the parties. On 6th October 2003 the Plaintiff took out two bank cheques totaling K260,000.00 which were raised in favour of the Defendants and paid to the Defendants. The Plaintiff did not pay the balance on 7th November. On 12th November, the Defendants returned the payments of K260,000.00 in two bank cheques to the Plaintiff. Problems between them over the sale/purchase agreement started and intensified. The Defendants insisted on remaining in the business premises and

refused to hand over the business assets, keys to the business premises and business accounting and other records. The Defendants then convened a meeting of the board of directors of Auto Parts (PNG) Ltd and resolved to request the Plaintiff to return the assets and records. They also took steps to lock out the Plaintiff from the business premises and demanded the return of the records, keys etc.

After an earlier unsuccessful attempt to obtain interim injunctive relief in OS 9/04, the Plaintiff filed these proceedings on 22nd April 2004. He sought specific performance of the oral contract and damages for breach of contract or alternatively a refund of the sum of K1,525,395.90 being monies by the Plaintiff to the Defendants. On 27th April, 2004 the Plaintiff sought urgent interim orders ex parte pending determination of the substantive proceedings, which I granted. The interim orders were returnable on 29th April. It is the issue of extension of these interim orders which is the subject of this ruling.

The interim orders I granted on 27th April are:

1. The Defendants are restrained from demanding financial, banking and company records, files, documents, vehicles, computer, keys, gate remote, including funds and other assets that are the property of the company within 24 hours from 1700 hrs on Monday 26th April from Samuel Caris & Co. Ltd.

2. The Defendants are restrained from demanding financial, banking and company records, files, documents, vehicles, computer, keys, gate remote, including funds and other assets that are the property of the company within 24 hours from 1700 hrs on Monday 26th April 2004 from Samuel Caris & Co. Ltd.

3. The Defendants and their servants and agents are restrained from harassing or intimidating the Plaintiff.

Both counsel made detailed submissions on the issue with reference to case law precedent and relevant provisions of various statutes governing regulation of foreign business enterprises, stamp duty on agreements, and so on. The arguments were centred around the requirements on the grant of or extension of interim injunctive relief first established in Employers Federation of PNG v Waterside Workers and Seaman’s Union & others N393 (1982) per Kapi Dep CJ (as he then was) which have been since adopted and applied in many National Court cases. These principles were adopted by the Supreme Court in Craftworks Niugini Pty Ltd v Allan Mott SC 525 (1997) (Amet CK, Kapi Dep CJ & Los J). There are three basic requirements: A

Plaintiff must show there is a serious issue to be tried, the balance of convenience favour the grant of the interim injunction in order to maintain the status quo and damages is not an adequate remedy.

In the cases decided by the National Court including the Supreme Court case of Allan Mott, I am unable to locate a case on point where a prospective purchaser of a business under an oral contract of sale is seeking to preserve his rights to acquire and operate the business as his own against the prospective vendor/owner of the business, pending the determination of the substantive relief for specific performance and damages. The grant of interim relief in effect may amount to ordering a party to...