IN THE SUPREME COURT OF BELIZE, A.D. 2011

Transcription

1 IN THE SUPREME COURT OF BELIZE, A.D CLAIM NO. 47 of 2011 CRAIG LAWRENCE WATERMAN AND APPLICANTS CHRISTOPHER STEPHEN SAMBRANO As Joint Receivers of Fresh Catch Belize Limited AND BELIZE ELECTRICITY LIMITED RESPONDENT Hearings th January 2 nd February 11 th February Mr. Darrell Bradley for the Respondent. Mr. Derek Courtenay SC for the Applicants. LEGALL J. JUDGMENT 1. Fresh Catch Belize Limited (the company) operates a fish farm and owes the respondent the sum of $820, for electricity charges. The company and the respondent agreed to convert this debt into a loan by the respondent to the company. For this purpose, a deed of 1

2 mortgage dated 11 th January, 2010 was signed by the parties under which the lands and property of the company were charged in favour of the respondent in the amount of the said $820, which was converted into the loan. The mortgage was issued by the First Caribbean International Bank. (the bank) 2. There had been a previous mortgage by the bank dated 7 th October, 2005 to the company by which a first charge on the company s land and property was secured. The mortgage dated 11 th January, 2010 was the second mortgage or charge on the companies land and property. Probably because of financial problems with regard to the first mortgage the bank, by deed of appointment dated 20 th July, 2010 appointed two persons as receivers of the company, namely the applicants. 3. Under the second mortgage the company agreed to repay the loan on or before 15 th day of May By the 30 th September, 2010 the loan was not repaid, nor did the respondent receive any payment towards the loan, nor was there any definitive commitment by the company or the receivers that the loan would be repaid by or within a particular time or period of time. The respondent indicated by the letter dated 30 th September, 2010 that if satisfactory arrangements were not put in place for repaying the loan, the respondent would disconnect the supply of electricity to the company s fish farm. 4. After several exchanges of letters between the parties; and after several postponements of the disconnection of the electricity, the 2

3 company said that the respondent threatened to discontinue the supply of electricity to the company s fish farm by 26 th January, 2011, if the loan was not repaid in full by that date. 5. The applicants therefore by an urgent exparte application dated the said 26 th January, 2011 applied for an injunction restraining the respondent from disconnecting the electricity supply to the company s fish farm. The urgency of the application was the above threat to disconnect the electricity by 26 th January, 2011, which the court was told was extended to the 27 th January, There is also evidence that the disconnection would result in the disruption in the recirculation of water in about 90 fish ponds and the danger exists that nitrate and other chemicals released by the fish in the ponds could seep into the nearby Sibun River causing a large scale environmental catastrophe : see paragraph 19 of applicants affidavit in support of the exparte injunction. 6. On 27 th January, 2011, the court, on the basis of the above, granted the exparte injunction restraining the respondent from disconnecting the electricity supply to the company s fish farm; and also ordered that unless a further order was made, the injunction would expire seven days from the date the injunction order was entered. The injunction was entered on 31 st January, On the said 31 st January, 2011 the respondent applied to discharge the injunction on several grounds, including material non disclosure by the applicants for the exparte injunction. The court fixed the 2 nd February, 2011 for an inter parties hearing which was held. By consent of the parties; and for the 3

4 purpose of arriving at a settlement in the matter, the injunction was extended on two occasions up to 11 th February, There being no settlement, the hearing commenced on 11 th February, The respondent, submitted with respect to the application to discharge the injunction, that there were three material nondisclosures. One was that the applicants failed to disclose that they had made a commitment to the respondent that they would obtain a letter from the bank that the respondent would be paid in full the amount of the loan. The applicants deny that such a commitment was given to the respondent. The trial judge would have to decide where the truth lies 8. The second alleged material non disclosure is that the applicants failed to disclose that they failed to pay current monthly electricity bills as they agreed to do under the second mortgage deed. It has been shown by Exhibit LY1 that the electricity bills are up to date to January 2011: the last payment was received on 27 th January, I do not think there is much in this alleged material non disclosure. But the third alleged material non disclosure seems to have some importance. Mr. Bradley puts this alleged material non disclosure this way: The third non disclosure relates to the capacity of the applicants to themselves provide electricity to operate Fresh Catch Belize Limited. The affidavit of Craig Waterman makes it sound as if the fish farm 4

5 will be shut down entirely if the respondent disconnects the electricity supply and they use this to say that irreparable damage will be caused (See paragraphs 19 and 20 of the affidavit of Craig Waterman). Nowhere in the affidavit does Mr. Waterman mentions that Fresh Catch Belize Limited on its own has generation capacity and can produce sufficient electricity to run the fish farm, though at an increasing cost. 9. Learned senior counsel for the applicants, at the inter parties hearing, orally agreed, if I understand him correctly, that the applicants had, to some degree, separate electrical generating capacity, though it may not have been to the same extent as the electricity supplied by the respondent. What is, however, without doubt, is that the affidavit of Mr. Waterman in support of the exparte application, failed to disclose any such extra or separate electrical generating capacity. The court was left with the clear impression, at the exparte hearing, that the only electrical supply facility to the applicants fish farm was by the respondent. Had the court been aware, at the exparte stage, that there was a separate electricity facility or capacity available to the applicants fish farm, the court would have made the matter inter parties on short notice to the respondent. The court was left from the affidavit, at the exparte stage, with the belief that disruption of electricity would result in a large scale environmental catastrophe. No mention was made of any alternative electrical facility. The court believed that that catastrophe was a real possibility. 5

6 10. The question now is: do the above amount to non disclosure of material facts? It is well known that facts which are material for the judge to know when dealing with the application, or exparte application, for an injunction are material facts. Factual information which is relevant and important to the application for an injunction, or exparte injunction, would be material facts which should be disclosed to the court. The fact that there was some separate electrical generating capacity, ought to have been brought to the knowledge and attention of the court at the exparte hearing. But as shown in the well known case of Brinks Mat Ltd. v. Elcombe and another W.L.R. 1350, the court has a discretion, although a material nondisclosure may have occurred which could justify a discharge of the exparte injunction, to continue the injunction or make a new one. The court has to look at all the facts before it, and the court may grant a new injunction if the original non disclosure was innocent and if an injunction could properly be granted even had the facts been disclosed : see Lloyds Bowmaker Ltd. v. Brittania Attom Holdings A.E.R. 178 at p Moreover, the sole affidavit by Mr. Waterman in support of the exparte application states in paragraph 19 that water is re circulated through the fish ponds by electrically powered pumps. Mr. Waterman states at the said paragraph 19 of his affidavit, that if there is a disruption in the re circulation of the water, a serious danger exists that nitrates from the fish and other chemicals in the water could seep in the nearby river causing a large scale environmental catastrophe. The impression is given by the affidavit that reliance for 6

7 this view was placed on officials from the Department of Environment. Mr. Waterman, in his second affidavit, during the inter parties hearing, but not at the exparte hearing, exhibited to the affidavit two letters dated 5 th May, 2009 and another dated 26 th April, 2010, both from the Department of the Environment. 12. In the letter of 5 th May 2009, the Department raised the concern that two concrete boxes at the claimants fish farm were found to be leaking and discharging a constant flow of waste water into the drains leading to the Sibun River. The problem therefore was the leaking concrete boxes. The department reminded the claimant in the letter that the leaking concrete boxes were issues raised in the past; and that the release of this water into the environment has the potential to create a serious environmental problem. In the second letter, which was about a year later, the department stated that the concrete box was overflowing with waste water and discharging into the drains leading to the Sibun River and that a progress report on the issues raised by the department in the previous letter was not received from the company. 13. Nowhere in these letters is there any mention of a large scale environmental catastrophe. And it can be seen that the department was complaining about leaking concrete boxes and an overflowing concrete box that caused water to go the river. Moreover, the department did not, in the letters, blame the lack of electricity for water getting in the Sibun River. These letters were not disclosed at the exparte hearing. If they were disclosed it would have been clear to 7

8 the court that the Department of Environment was not suggesting that a disruption of electricity could result in a large scale environmental catastrophe, as paragraph 19 of Waterman s affidavit seems to suggest. 14. An injunction is an equitable remedy within the discretion of the court. The equitable jurisdiction of the Supreme Court requires that applicants for injunctions, especially exparte injunctions, must be frank with the court, give full disclosure of material facts; and come to the court with clean hands. An applicant who breaches these requirements may be turned away from a court of equity. I find that the non disclosure of the alternative electrical facility was a material non disclosure; and I see no reason to exercise my discretion and continue or grant a new injunction in spite of that material nondisclosure. Moreover, I am not satisfied, on the evidence available at this stage, that if the respondent disconnects the electricity supply to the farm, this would result in a large scale environmental catastrophe or environmental disaster. 15. The applicants have given an undertaking as to damages but have failed in the affidavit to deal with the applicants ability to honour the undertaking in damages. The affidavit in support of an injunction should deal with the plaintiff s ability to honour his undertaking in damages: see David Bean Injunction 7 th Edition at page 29. A mere undertaking as to damages does not have much effect, unless it is supported by evidence of an ability to honour that undertaking, 8

9 especially in a situation where the company is in receivership, as in this case. 16. For the above reasons, I would discharge the injunction granted on 27 th January, 2011 dated 31 st January, I do not intend to detract from the industry and scholarship shown in the many other submissions made on both sides; but I feel that my finding above is enough for purposes of making a decision on this application. 17. I therefore make the following orders: (1) The exparte injunction in this matter granted on 27 th January, 2011 is discharged. (2) The applicants to pay costs to respondent, to be agreed or taxed. Oswell Legall JUDGE OF THE SUPREME COURT 11 th February,