Mirsand Town Planning and Architects Ltd Appellant v Samuel S. Conde Associados C. Por A. Respondent
| Jurisdiction | British Virgin Islands |
| Judge | BYRON, C.J. |
| Judgment Date | 03 April 2003 |
| Judgment citation (vLex) | [2003] ECSC J0403-5 |
| Court | Court of Appeal (British Virgin Islands) |
| Docket Number | CIVIL APPEAL NO.20 OF 2000 |
| Date | 03 April 2003 |
IN THE COURT OF APPEAL
The Hon. Sir Dennis Byron Chief Justice
The Hon. Mr. Ephraim Georges Justice of Appeal [Ag.]
The Hon. Mr. Adrian Saunders Justice of Appeal [Ag.]
CIVIL APPEAL NO.20 OF 2000
Mr. Terrence Neale for the Appellant
Mr. Sydney Bennett with Ms. Michelle Matthew for the Respondent
This is an appeal against the decision of d'Auvergne J. discharging a Mareva injunction restraining Conde from removing assets up to the value of US$300,000.00 from the British Virgin Islands. It was the second Mareva injunction which had been discharged in this case. When the first Mareva was discharged the action became subject to a stay imposed by order of Benjamin J on 6 th June 2001 with the consent of the parties. It is Conde's position that the terms on which the stay had been granted settled the dispute between the parties and made it improper for a second Mareva injunction to exist.
On the 27 th February 1998 the Government of the British Virgin Islands contracted Conde to design and construct the new Beef Island Bridge. By a subcontract dated 18 th April 1998, Mirsand agreed to provide services in connection with the construction of the bridge and Conde agreed to pay:
The contract specifically provided that Conde's obligation to pay those percentages would arise only if and when it received payment from the Government on account of the above stated heads of liability.
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[i] 13% of any sum paid on account of the adjusted contract sum resulting from the approved designed budget; and
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[ii] 10% of any amount paid on account of the value of any variation or change under the contract.
On 5 th May 2001, shortly before the completion of the bridge, Mirsand issued a writ of summons and made an application without notice to Conde for an injunction to prevent Conde from removing assets up to the value of US$176,054.26 from the British Virgin Islands. This was intended to secure the sum of US$54,853.66, the amount alleged in the action to be due and owing and the sum of US$121,260.00, which, it was alleged, would fall due if and when Conde received payment of US$1,212,200.00, from the Government. On the 16 th of May 2001 that injunction was granted. On 18 th May 2001 Conde wrote Mirsand confirming its intention to honour the terms of the sub-contract and restating its commitment to pay 10% of the specified sum if and when the Government paid the respective sums to Conde. A substantial part of the dispute is about the effect of the last paragraph which reads as follows:
"We would be obliged if you would confirm by signing below that upon payment by Conde to Mirsand of the said sum of US$121,200.60 and US$9,300.87 the sub-contract made 18 April 1998 between our companies will come to an end and neither Conde nor Mirsand will thereafter have any further obligations to each other."
The letter was signed by both Conde and Mirsand and on the same day Conde paid over the sum of US$54,853.66 in full satisfaction of the amount claimed as having fallen due for payment. On 6 th June the injunction was discharged by Benjamin J in chambers with the consent of the parties under terms which included a declaration that Mirsand would become entitled to the sum of US$121,200.60 if and when Conde received payment of the sum of US$1,212,000.60 from the Government of the Virgin Islands and an order that the action was stayed except for the purpose of carrying the Order into effect.
The dispute resurfaced after an adjudication process between Conde and the Government resulted in an award to Conde in the sum of US$3.6 million and costs, which was compromised at US$3,000,000.00. On 4 th April 2002, Mirsand applied for an injunction, without notice, to restrain Conde from removing assets up to the value of US$300,000.00 from the jurisdiction, to secure a claim for 10% of the amount awarded to Conde.
On 8 th April 2002, d'Auvergne J. granted the application but on 22 nd May 2002, after hearing both parties, discharged the injunction and ordered that the stay of action mandated by the consent judgment of 6 th June 2001 remain in place. Counsel informed us that Conde has since received payment from the Government and has paid over to Mirsand the sum of US$121,200.60 in accordance with the terms of the agreement of 18 th May 2001.
There were many grounds of appeal but in my view the issues that emerged could be compressed as follows:
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[1] Procedural.
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[i] Whether Mirsand could have been granted an interlocutory injunction in the absence of a cause of action?
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[ii] Whether there was a cause of action?
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[iii] Whether the consent order of 6 th June 2001 could be reopened?
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[2] The effect of the letter of 18 th May 2001.
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[i] Whether it constituted a binding agreement which settled the matter?
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[ii] Whether Mirsand's agreement had been induced by Conde's misrepresentation.
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[iii] Whether Mirsand was prevented from presenting the claim for US$300,000.00 on the basis of the doctrine of promissory estoppel?
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[3] The Merits.
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[i] Whether Mirsand had any entitlement to the sums claimed as resulting from the approved design budget or any variation or change order under the contract.
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[ii] Whether the term "variation or change order" included the sums awarded on the adjudication?
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Mirsand submitted that the learned trial Judge erred in law in holding that it did not have a present right to the payment of the US$300,000.00 as there was no existing cause of action and the right to hold or obtain an interlocutory injunction being merely ancillary and incidental to a pre-existing cause of action could not stand on its own.
The facts show that the terms of the subcontract provided that Mirsand's right to payment of monies under the agreement arose when Conde had received money from the Government on account of the contract sum or of some variation or change order of the contract. Mirsand was in effect claiming a declaration to the future entitlement to payment for monies that Conde had not yet received. The learned trial Judge ruled that this was not a sufficient interest or right to found an entitlement to an injunction.
The case of Carpenter v Ebblewhite and Others (1937) 1 KB 347, is authority for the proposition that a claim for a declaration of a future or hypothetical liability is not a cause of action which could sustain proceedings. The claimant had sued a driver, the owner of the car and the car owner's insurers for injuries sustained in a collision alleged to caused by the negligence of the driver. The claim against the insurers for a declaration that they would be obliged to satisfy any judgment that was obtained against their insured was struck out. In the Court of Appeal Greer L.J. at 357 said that the making of such a claim is contrary to anything that has ever been decided in regard to actions for declarations. He opined that no dispute can arise between the plaintiffs and the insurance company until after the disposal of the action by the plaintiffs against the establishment of a right of indemnity by Ebblewhite against the insurance company. He concluded:
"It would, I think, be wrong and entirely premature to determine in this action, or even in a separate action, at the present time a dispute which has never as yet arisen between the parties."
This seems to be identical with the position that confronted the parties at the time of the consent order in the present action. There was no present liability, and it was possible that there might never be liability, because the liability to pay was contingent on the respondent receiving payment from the Government. It is unlikely that the court would have made a declaration based on a possibility of a contingent liability that might arise in the future.
The well established principle that an interlocutory injunction is dependant on a pre-existing cause of action and could not be granted to support a claim for a future or possible liability was outlined by Lord Diplock in the locus classicus The Siskena (1977) 3 All ER 803 at 824:
"…A right to obtain an interlocutory injunction is not a cause of action. It cannot stand on its own. It is dependant on there being a pre-existing cause of action against the defendant arising out of an invasion, actual or threatened, by him of a legal or equitable right of the plaintiff for the enforcement of which the defendant is amenable to the jurisdiction of the court. The right to obtain an interlocutory injunction is merely ancillary and incidental to the pre-existing cause of action. It is granted to preserve the status quo pending the ascertainment by the court of the rights of the parties and the grant to the plaintiff of the relief to which his cause of action entitles him, which may or may not include a final injunction."
Mirsand contended that this case was distinguishable from the Siskena because there could be no dispute that there was a cause of action if only for a declaration that the appellant was entitled be paid when the respondent received payment from the Government.
This argument, however, has already been judicially rejected in The Steamship Mutual Underwriting Association (Bermuda) Ltd v Thakur Shipping Co Ltd (1986) 2 Lloyds LR 439 which is clear authority for the principle that a court has no jurisdiction to grant security for a cause of action which might arise in the future but had not yet come into being. In the Court of Appeal Sir John Donaldson M.R. said:
"Justice and convenience in this context is not an abstract conception. It predicates that there is a cause of action in respect of...
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