Jersey Unreported Judgments

Injunctions - reasons regarding the lifting of interim injunctions.

[2015]JRC141

Royal Court

(Samedi)

29 June 2015

Before     :		J. A. Clyde-Smith, Esq., Commissioner, and Jurats Fisher and Grime
Between	Shane Holmes		Plaintiff
And	Harry James Lingard		First Defendant
And	HJL Holdings Limited		Second Defendant
And	Angel Fish Limited		Third Defendant

The Plaintiff appeared on his own behalf.

Advocate M. H. D. Taylor for the First, Second and Third Defendants.

judgment

the commissioner:

1.        On 27^th May, 2015, the Court lifted interim injunctions that had been obtained by the plaintiff ("Mr Holmes") ex parte on 17^th March, 2014, and we now set out our reasons. 

2.        In his Order of Justice, Mr Holmes alleged that he and the first defendant ("Mr Lingard") had entered into an agreement in June 2011 to develop the Hotel La Tour, St Brelade, which was owned by the third defendant, Angel Fish Limited ("Angel Fish"), a subsidiary of the second defendant, HJL Holdings Limited ("HJL") which was in turn beneficially owned by Mr Lingard.  As part of that alleged agreement, he asserted that HJL (a bridging finance lender registered with the Jersey Financial Services Commission as such) was to make available what Mr Holmes described as "Side Funding" to enable certain project works to be undertaken on the hotel site, which funding would be secured over a separate development Mr Holmes was undertaking through his company Home Farm Developments Limited ("Home Farm"). 

3.        The Order of Justice alleges that Mr Lingard breached and repudiated this agreement in October/November 2012 and sought damages inter alia:-

(i)        In the sum of £190,000 in respect of the direct costs and expenses incurred by Mr Holmes in the development. 

(ii)       In the sum of £900,000 being the uplift in the value of Hotel La Tour brought about by Mr Holmes as a consequence of his involvement in the development. 

(iii)      In the sum of £686,000 being losses in expected sales value in the units being separately developed by Home Farm. 

4.        The Order of Justice and supporting affidavit sworn by Mr Holmes were presented to the Deputy Bailiff and signed by him on 17^th March, 2014, some sixteen months following the alleged breach and repudiation, under which an interim injunction was imposed ex parte effectively restraining Mr Lingard from dealing with his shares in HJL and from either HJL or Angel Fish disposing of their assets or obtaining any mortgage, loan or security over them. 

5.        The defendants filed an answer on 25^th April, 2014, and by an amendment on 27^th March, 2015, a counter-claim for the repayment of certain unsecured loans made to Mr Holmes between February and August, 2012, but they did not apply to have the interim injunction lifted until a summons was issued on 26^th February, 2015.  They filed their affidavits in support of that application in mid-April, 2015, some five weeks or so before the hearing.  Mr Holmes applied unsuccessfully for an adjournment on 18^th May, 2015, on the basis that he needed more time to prepare his case and he applied again for an adjournment on 27^th May, 2015.  He reiterated, however, an offer he had made earlier to vary the interim injunctions to allow a mortgage or loan to be secured on Hotel La Tour. 

6.        The Court declined both applications for an adjournment applying Goldtron Limited v Most Investments Limited [2002] JLR 424, where Birt, Deputy Bailiff, said this at paragraph 36:-

"(b) Readiness of the plaintiff to respond to an application to set aside an injunction.

36       In this case, despite having agreed a hearing date for the defendant's application to set aside the injunctions, the plaintiff applied for an adjournment on the basis that the affidavit filed on behalf of the defendant was lengthy and complex and required a response from the plaintiff's deponent, Miss Minaeva, who was on holiday.  The court refused the application to adjourn.  We wish to emphasize that, if a plaintiff takes the step of restraining a person from dealing with his assets - a drastic invasion of a person's rights- he has to anticipate that there may be a prompt application to set aside or vary the injunction.  The plaintiff must therefore be at the ready to respond to such an application.  It is not acceptable for a plaintiff, having set the court's procedure in motion, to then argue that it needs a lengthy period to justify the continuation of the ex parte relief.  Of course, the court will not be unreasonable.  It is right that a plaintiff should have the opportunity to respond to evidence produced by a defendant in support of an application to set injunctive relief aside.  However, it is also incumbent upon the plaintiff to act as a matter of urgency."

7.        Even though the defendants had delayed in bringing their application to lift the interim injunctions, Mr Holmes was under a duty to be ready to respond and had had more than enough time to do so. 

8.        Two grounds were put forward by the defendants for lifting the interim injunction, which we take in turn. 

Failure to give notice

9.        It is a basic principle of justice that an order should not be made against a party without giving him an opportunity to be heard.  In Milner v Milner Laboratories, Leech, Smith and Sim [2000] JLR 266, Bailhache, Bailiff, cited this extract from the judgment of Hoffmann J in the Times Law Reports, 1991 TLR 439:-

"Mr Justice Hoffmann said that he was firmly of the view that it was wrong for the application to have been made ex parte.  It was a basic principle of justice that an order should not be made against a party without giving him an opportunity to be heard.  The only exception was when two conditions were satisfied:

First, that giving such an opportunity appeared likely to cause the applicant injustice, by reason either of delay or action which it appeared likely the respondent or others would take before the order could be made and

Second, when damage to the respondent was compensatable under a cross-undertaking or when the risk of uncompensatable loss was clearly outweighed by the risk of injustice to the applicant if the order were not made.

Applicants tended to think that a calculation of the balance of advantage and disadvantage in accordance with the second condition was sufficient to justify an ex parte order.

That attitude should be discouraged.  One did not reach any balancing of advantage and disadvantage unless the first condition has been satisfied.

The principle audi alteram partem did not yield to a mere utilitarian calculation and could be displaced only by invoking the overriding principle of justice which enabled the court to act at once when it appeared likely that otherwise injustice would be caused.

Here there was nothing to preclude an inter partes hearing."

10.      In his affidavit, Mr Holmes had given the following reasons for the imposition of an interim injunctions without notice:-

"(c)      Hotel La Tour (wholly beneficially owned by Angel Fish Limited) has been demolished in the last few months and the development site has been actively marketed for sale with planning permission.  The site could therefore be purchased by a third party imminently;

(d)       I am of the belief that the First Defendant came to Jersey in 2005 on a "J" Category licence to own and operate Hotel La Tour.  As the hotel ceased operations in 2012 and is now demolished, it is not known if the First Defendant intends to remain in Jersey, or if he indeed is permitted to do so pursuant to the Housing (Jersey) Law 1949; and

(e)       The First Defendant's residential address Affaric, La Route Orange, St Brelade, JE3 8GP was purchased on 18th August 2006 by Hotel La Tour Limited.  I have conducted company researches (through the medium of my legal advisers) at the Jersey Financial Services Commission, which researches reveal that the entire share capital of Hotel La tour Limited is issued to HJL, and in conjunction with the point made in (d) above, Mr Lingard has ultimate control of Hotel La Tour Limited and may take steps to alienate Affaric imminently, particularly once the Order of Justice is issued."

11.      Mr Homes had not filed a further affidavit in response to the defendants' applications to lift the interim injunction, but at the hearing, he accepted that nothing had happened or was about to happen in March, 2014 (sixteen months after the relationship between him and Mr Lingard had broken down) that justified imposing an interim injunction ex parte. 

12.      The Hotel La Tour had been actively marketed for sale for the whole of the period of his involvement - it was nothing new.  Whether Mr Lingard might leave the Island was pure speculation - there was no evidence to suggest that he might.  Affaric had been on the market for some time and there was no evidence that it was about to be sold. 

13.      There had been no correspondence between the parties in relation to Mr Holmes' claim and no letter before action.  The defendants therefore had no intimation either of the claim or of the application for the interim injunctions.  Mr Holmes informed us that the trigger for the claim was actually his being forced to repay the loans made to Home Farm by HJL and secured over Home Farm.  He felt aggrieved that through these loans, Mr Lingard had "scuppered" the sale of the units at Home Farm. 

14.      In the view of the Court, there was no justification in this case for depriving the defendants of an opportunity of being heard on the application for the interim injunctions - a drastic invasion of their rights.  Mr Holmes had failed to satisfy the first of the two conditions referred to by Hoffmann J. 

Material Non-disclosure

15.      The Order of Justice said this in relation to the alleged agreement between Mr Holmes and Mr Lingard:-

"5        In June 2011, following Lingard's confirmation that Scheme 1 had received ministerial approval, Holmes and Lingard agreed to enter into a part exchange/profit share agreement ("the Agreement") to develop La Tour into 5 new Georgian town houses in accordance with Scheme 1 ("the Project"). ....

10       The Agreement, incorporating the above Key Terms, was exchanged between Lingard and Holmes, agreed in June 2011 and conducted and performed by the parties thereafter."

16.      A copy of the Agreement was exhibited to Mr Holmes' affidavit.  It is headed "Agreement For Sale of Hotel La Tour - Heads of Terms" and shows Mr Holmes as the purchaser of the hotel.  It is unsigned and undated. 

17.      Mr Daniel Young, a solicitor of the Royal Court, had acted for Mr Lingard in relation to these matters.  He exhibited to his affidavit a succession of similar looking (although different) "Heads of Terms" which had been scribbled over.  To try and bring clarity to the discussions of the parties and to focus their minds, he had himself drafted an agreement, which he circulated for discussion on 1^st August, 2011, and which contained numerous blanks where agreement was required.  That came to nothing.  All the proposals put forward by Mr Holmes appeared to him to involve an "equity release" on the Hotel La Tour site in order to pay Mr Lingard and which did not involve Mr Holmes introducing any money.  He deposed that to the best of his knowledge, no agreement was ever entered into. 

18.      Both Mr Young and Mr Lingard deposed that the loans made by HJL to Home Farm were straightforward loans made because Mr Holmes was in need of funding for his own development at Home Farm and had no connection to any agreement to develop Hotel La Tour.  Mr Young exhibited each of the bonds signed by Mr Holmes on behalf of Home Farm which constituted straightforward loans and made no reference to any side funding for the Hotel La Tour. 

19.      In addition, the agreement exhibited to Mr Holmes' affidavit makes reference at Paragraph 6a) to an existing planning permission dated 1^st September, 2011.  If this agreement had been entered into in June, 2011, as alleged by Mr Holmes, how, asked Advocate Taylor, could it have referred to a permission issued three months later?

20.      Mr Lingard exhibited to his affidavit a letter written by Mr Holmes on behalf of his company Strata Developments Limited on 6^th December, 2011, to Mr Lingard putting forward fee proposals for providing consultancy, project management and contracting services for the development of the site.  Such an approach is hardly consistent with a part exchange/profit share agreement for the development of the hotel entered into six months earlier. 

21.      Mr Holmes himself passed up to us an email of 26^th September, 2011, in which he had sent to Mr Lingard another "Heads of Terms" which he said appeared to be a fair interpretation of what had been agreed that day and which could be topped and tailed the next day.  He produced no evidence that this draft had been agreed, let alone signed.  The fact that he was writing in these terms in late September 2011 was a clear indication that no agreement could have existed in June of that year.  He also produced a letter from Advocate Mark Renouf who had attended upon both him and Mr Lingard on 11^th October, 2011, following which he had drafted a further "Heads of Terms" which he forwarded to them on 16^th November, 2011, which expressly provided in the preamble that "These Heads of Terms do not initially form a binding agreement".  Again, that evidence is inconsistent with the existence of an agreement in June of that year. 

22.      Advocate Taylor, for the defendants, elaborated further on the issue of lack of disclosure but it is not necessary this Court to go any further.  The duty of full and frank disclosure upon Mr Holmes is summarised in Goldtron at Paragraph 15:-

"15     The scope of the duty of disclosure of a party applying ex parte for injunctive relief is, in broad terms, agreed between the parties.  Such an applicant must show the utmost good faith and disclose his case fully and fairly.  He must, for the protection and information of the defendant, summarize his case and the evidence in support of it by an affidavit or affidavits sworn before or immediately after the application.  He must identify the crucial points for and against the application, and not rely on general statements and the mere exhibiting of numerous documents.  He must investigate the nature of the cause of action asserted and the facts relied on before applying and identify any likely defences.  He must disclose all facts which reasonably could or would be taken into account by the Judge in deciding whether to grant the application.  It is no excuse for an applicant to say that he was not aware of the importance of matters he has omitted to state.  If the duty of full and fair disclosure is not observed, the Court may discharge the injunction even if after full enquiry the view is taken that the order made was just and convenient and would probably have been made even if there has been full disclosure."

23.      In the view of the Court, it was manifest that Mr Holmes had failed in his duty to make full and frank disclosure when applying for the interim injunctions in relation, at least, to whether or not an agreement between him and Mr Lingard could have existed in June 2011. 

24.      On the basis of both the failure to give notice of the application and the failure to make full and frank disclosure, the Court lifted the interim injunctions and went on to consider whether or not they should be re-imposed.  

25.      As to the delay in bringing the application to lift the injunctions, they constituted an on-going invasion of the rights of the defendants and the delay was no bar to the relief they sought.  For so long as they remained in place, Mr Holmes was duty bound to justify their continued existence when called upon to do so and he had been given more than sufficient time in which to do this. 

Re-imposition of interim injunction

26.      The appropriate test is that laid down in American Cyanamid Co. v Ethicon Ltd [1975] AC 396, usefully summarised in Alpha Print v Alphagraphics [1989] JLR 152:-

"1       Has the plaintiff shown on the evidence before the court that there is a serious question to be tried?  If not, then no injunction is granted.

2         If there is a serious question to be tried, then the court considers whether the damages awarded at the trial would be an adequate remedy for the plaintiff.  If so, then no injunction is granted.

3         If damages would not be an adequate remedy for the plaintiff, the court then goes on to consider if damages would be an adequate remedy for the defendant: if so, then normally an injunction will be granted.

4         If damages would not be an adequate remedy for the defendant, the court goes on to consider the factors affecting the balance of convenience, i.e. which party will suffer more uncompensatable damage from the grant or refusal of the injunction.

5         If the balance of convenience is fairly even, then it is prudent for the court to seek to preserve the status quo.

6         Finally, where there is approximately equal uncompensatable damage to both parties, it is proper to look at the relative strength of the parties' substantive cases.  Where one is disproportionately stronger than the other, this may swing the balance."

27.      Mr Holmes passed up to us what he described as "bits of evidence" which did show that he had some involvement in the development of the Hotel La Tour and indeed for a few weeks had been appointed a director of Angel Fish.  It would seem from the affidavit he produced sworn by Philip William Syvret, a solicitor of the Royal Court, who acted for a neighbour, that in that capacity he had attended a meeting with Mr Syvret, together with Mr Young, in July 2012 to discuss a contract of transaction in relation to the proposed development of the hotel site.  According to Mr Lingard, Mr Holmes had requested to be appointed to the board so as to make it easier for him to speak to planning officers, professionals etc.  If Mr Holmes was simply attempting to infiltrate the development, as Mr Lingard suggests, then it seems curious that he should have been appointed a director of Angel Fish with capacity to conduct negotiations in this way without some agreement or understanding as to the nature of his involvement. 

28.      Even so, it did not seem seriously arguable to us that an agreement had been entered into in June 2011 in the terms of the document appended to Mr Holmes' affidavit-the first of many drafts.  It is that agreement that underpins all of the claims made in the Order of Justice.  As the Order of Justice is currently drafted, therefore, we could not see that there was a serious issue to be tried and therefore, the injunctions would not be re-imposed. 

29.      If we were wrong in this respect, then damages would be an adequate remedy for Mr Holmes.  Indeed, it is the only remedy he seeks.  There are serious questions as to the level of damages being claimed, but even so, the defendants would appear to have assets of substance to meet a claim for damages. 

30.      Damages would not be an adequate remedy for the defendants, as it is clear that Mr Holmes is impecunious and as for the balance of convenience the evidence of Mr Lingard was that the development was at a critical stage where it was necessary to utilise the site to raise funding for the building works to commence. It would be the defendants therefore who would suffer more uncompensatable damage from the re-imposition of the injunctions than Mr Holmes will from a refusal to do so. 

31.      For all these reasons, we declined to re-impose the injunctions. 

Authorities

Goldtron Limited v Most Investments Limited [2002] JLR 424.

Milner v Milner Laboratories, Leech, Smith and Sim [2000] JLR 266.

American Cyanamid Co. v Ethicon Ltd [1975] AC 396.

Alpha Print v Alphagraphics [1989] JLR 152.