CAROLUS J
Background
- Judgment was delivered by the Supreme Court in the case of Eastern European Engineering Ltd v Vijay Construction (Pty) Ltd (CS23/2019) [2020] SCSC 350 (30 June 2020) on 30 June 2020 declaring two Orders of the High Court of England and Wales to enforce an international arbitral award in favour of the applicant (“EEEL”), executory and enforceable in Seychelles (“the Supreme Court Judgment”). In terms of the Supreme Court Judgment the respondent (“Vijay”) was ordered to pay EEEL various sums of money, amounting in excess of Euro twenty million. This judgment was upheld by the Court of Appeal in Vijay Construction (Pty) Ltd v Eastern European Engineering Ltd (SCA 28/2020) [2020] (2nd October 2020). The Court of Appeal judgment was subsequently set aside (See (MA24/2020 arising in SCA28/2020) [2022] SCCA 8 (21 March 2022)) and the appeal re-heard, pursuant to which another panel of three Justices of Appeal dismissed the appeal and upheld the Supreme Court Judgment in its entirety in Vijay Construction (Pty) Ltd v Eastern European Engineering Ltd (SCA 28 of 2020) [2022] SCCA 58 (21 October 2022).
- Several applications were filed by the parties after delivery of the Supreme Court Judgment including the following: EEEL filed an application dated 17th August 2020 with the Registrar of the Supreme Court (“the Registrar”) for attachment of funds belonging to Vijay held by various banks in Seychelles which was granted by Order dated 20th August 2020. By Notice of Motion in MA150/2020 filed on 3rd September 2020 EEEL applied for the validation of the attachment order which is still pending, given that the Supreme Court Judgment was the subject of appeal proceedings which were only finally concluded on 21st October 2022. It is to be noted that the Court of Appeal had granted a stay of execution of the Supreme Court Judgment (See SCA MA23 & SCA MA24/2020) after this Court had granted a stay of execution in MA101/2020 subject to a condition which Vijay failed to fulfill (See also MA131/2020 & MA132/2020). The Court of Appeal also granted another stay of execution in SCA MA15/2022 pending the hearing of the appeal de novo. EEEL also applied to the Registrar by application dated 17th August 2020 for execution of the judgment but execution could not ensue given the orders for stay of execution of the Supreme Court Judgment. It seems that the process of execution is now under way after the delivery of the Court of Appeal judgment of 21 October 2022.
Injunction Application
- The present application for an injunction was filed by EEEL on 12th March 2021 (MA51/2021). However it was agreed by counsels for the parties that some of the applications arising from the main case CS23/2017 including the present application should be kept pending whilst awaiting the decision of the Court of Appeal.
- The application is made by way of Notice of Motion supported by an affidavit of Vadim Zaslonov who avers therein that he is authorised to make the affidavit as a director of EEEL. Exhibited to the affidavit are a number of documents. In terms of the Notice of Motion, EEEL seeks –
… an urgent order of injunction pending the determination of the applications for (i) execution of judgment and (ii) validation of attachment by the Supreme Court:
- preventing the Respondent herein from disposing and/or transferring any of its assets including but not limited to the assignment of contractual rights and profitable contracts to any person;
- preventing the use of any of the vehicles, machineries, plant and equipment of the Repondent by any person;
- preventing the Respondent herein from disposing, dissipating and/or diverting any payment(s) due or received from the sale of any of its vehicles or other machineries, plant, and equipment or any payment due and payable for the use of any of its machineries, plant, and equipment including but not limited on any construction sites from 5th October 2020.
- The grounds for the application are set out in Vadim Zaslonov’s affidavit. He avers that EEEL filed applications for execution of the Supreme Court Judgment and for validation of attachment which are now pending before the Supreme Court. Further that on 5th October 2020, VIJAY filed a winding up petition in the Supreme Court on the grounds of inability to pay its debt which was dismissed by Govinden CJ, on 2nd March 2021.
- He avers that in an incidental application made by Vijay for a stay of execution of the Supreme Court Judgment, Vijay maintained that if the Court of Appeal dismisses its appeal against the said Judgment, the company’s machineries, plant and equipment would be available to satisfy the Judgment Debt, and provided a valuation of its assets including the aforementioned plant and equipment to the Court and to EEEL in support of its application. Exhibited is Vijay’s valuation of its assets (Exhibit VZ5) as well as a copy of the list of machineries, plant and equipment registered in the ownership of Vijay as at March 2020, which was obtained from the Seychelles Licensing Authority (Exhibit VZ4).
- Vadim Zaslonov avers that it has now come to his attention that after the delivery of the Supreme Court Judgment Vijay transferred several vehicles which was in its ownership. Exhibited is a copy of a letter dated 13th January 2021 from Seychelles Licensing Authority confirming that the vehicles listed in the letter have been transferred from Vijay (Exhibit VZ6). He further avers that after the delivery of the Court of Appeal Judgment on 2nd October 2020, Vijay has caused and/or authorized the use of its machineries, plant and equipment by Vijay Construction (Seychelles) Limited (“Vijay Seychelles”) on various construction sites including but not limited to Eden Island, Banyan Tree, Ex Pirates Arms and the site next to the Victoria South Petrol Station at Roche Caiman. In support are exhibited photographs showing Vijay’s machineries, plant and equipment at work on different construction sites (Exhibit VZ7). He states that in selling its vehicles after delivery of the Supreme Court Judgment and causing and/or authorizing the use of its machineries, plant and equipment by Vijay Seychelles, Vijay has acted maliciously, deceitfully and with the intention of circumventing the execution of the Supreme Court Judgment so as to deny EEEL the fruits of the Supreme Court Judgment. Moreover, that the use of Vijay’s machineries, plant and equipment by Vijay Seychelles on the different construction sites are calculated purely and simply to dissipate income due and payable to Vijay, to Vijay Seychelles, and that it is highly likely that such income are diverted to different entities including but not limited to affiliated companies, partners and into the personal accounts of Vijay’s directors and shareholders. In addition, it is averred that Vijay Seychelles has been awarded contracts for several construction projects for which it is highly probable that Vijay’s plant and equipment will also be used, as Vijay Seychelles only started operating in the construction business since 15th October 2015, when it obtained a building contractor license class 1.
- Vadim Zaslonov avers that he is advised by EEEL’s Attorney and believes that there are serious questions to be decided by this Court in the application for validation of attachment; and that the matters averred in his affidavit show a deliberate and calculated act on the part of Vijay to dissipate its assets so as to deprive EEEL the fruits of the Supreme Court Judgment and the Court of Appeal Judgment of 2nd October 2020, and circumvent the determination of the serious questions for determination by this Court in the application for validation of attachment.
- He further avers that if the order of injunction prayed for is not granted as a matter of extreme urgency, all the assets of Vijay including its vehicles and other machineries, plant and equipment, and any income due and payable to Vijay under the various contracts that it had prior to the commencement of the winding up proceedings, income payable or paid in respect of the sale of Vijay’s vehicles and the use of Vijay’s plants and equipment by Vijay Seychelles on various construction sites after the 15th October 2020, will be dissipated to the detriment of EEEL who will not be able to execute the judgment debt.
- Vadim Zaslonov states that the acts of Vijay as described in the affidavit are malicious, deliberate and calculative, and confirms the stance repeatedly taken by Vijay in proceedings between the parties in CS33/2015 that it would rather be wound up than settle the judgement debt.
- He states that he is advised that based on the aforementioned matters the balance of convenience in granting the order of injunction prayed for lies in favor of EEEL, and given the judgment debt, the loss to EEEL cannot be adequately compensated by damages. Further, given the Vijay’s declaration of cessation of business since 2nd October 2020 because of inability to pay its debts, VIJAY does not stand to make any loss by the granting of the orders of injunction prayed for, and in the very unlikely event of VIJAY incurring any loss through its own decision to commence the winding up and declaration of cessation of business, such loss can be compensated by way of damages.
- Finally he avers that based on the matters stated in the affidavit, it is urgent and necessary in the interests of justice that this Court grants the orders of injunction prayed for as a matter of extreme urgency.
Reply to Injunction Application
- Vijay opposed the application for injunction and filed a reply dated 5th April 2021, raising the following points:
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- The application for an injunction is not maintainable in that it does not arise in and out of a Plaint filed before this Court and fails to meet the requirements of the law for the grant of an injunction.
- The plaint in CS23/2019 has been the subject of a judgment and an appeal such that the suit therein has abated.
- The application is bad in law for not giving an undertaking in damages as a condition of the grant of an injunction.
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- Vijay’s reply is supported by an affidavit of Kaushalkumar Patel who avers that he is empowered to make the declarations therein, in his capacity as a director of Vijay. He avers that Vijay has not dissipated, and has no intention of dissipating any of its assets pending the final conclusion of the matters in lite between the parties, and furthermore it has never been the intention of Vijay to circumvent the application of the law. He avers that Vijay has a responsibility to ensure that all its assets are maintained in a good order, are replaced where necessary and any use of these is properly accounted for,until matters between the parties are finally resolved. He further avers that he is able to categorically state that the net worth of Vijay at the time of deponing to the affidavit is substantially similar to that which has prevailed since the commencement of litigation between the parties.
- Kaushalkumar Patel admits as correct the statements in paragraphs 1 to 7 of Vadim Zaslonov’s affidavit as set out at paragraphs [5] and [6] hereof. However in regards to the sale of the vehicles registered in Vijay’s name, he only admits to the company having sold vehicles S17607, S194447, S16136, S18565, and a vehicle to Mr. Patrick Thomas out of the ten vehicles listed in Exhibit VZ6. He states that he has no knowledge of the other vehicles. He avers that Vijay has sold all these vehicles for value and banked the proceeds into Vijay’s account; that the vehicles sold were surplus to requirements as the company had purchased seven cars prior and that it is company practice to replace vehicles from time to time. He states that details of the seven cars purchased are exhibited as Exhibit KP1 but no such documents are exhibited.
- He admits that Vijay authorised the use of its machineries, plant and equipment by Vijay Seychelles but avers that they need to be utilized to keep them functioning and that all such use is accounted for by Vijay. Additionally, some of Vijay’s assets were retained by clients when Vijay filed for liquidation, and are being used by these clients in pursuance of valid construction contracts, to complete works started by Vijay.
- He denies that the sale of Vijay’s vehicles and authorising the use of its machineries, plant and equipment by Vijay Seychelles was done with malicious and deceitful intent and with the intention of denying EEEL the fruits of the Supreme Court Judgment. He further denies that such use is calculated to dissipate income due and payable to Vijay and to divert them to Vijay Seychelles or other entities and persons. In that regard he states that Vijay is challenging the judgment ordering it to pay damages to EEEL, and that until these challenges are exhausted, Vijay is continuing to operate within the law and it is neither disposing of this assets nor damaging them and reducing their value. Further, insofar as concerns the operation of Vijay Seychelles, the affairs of that company are kept separate from those of Vijay and any use of Vijay’s equipment by Vijay Seychelles will be accounted for. In addition, although some of Vijay’s plant and equipment will be used by Vijay Seychelles pending the acquisition by Vijay Seychelles of its own plant and equipment, the use of Vijay’s plant and equipment are accounted for financially to Vijay as the two companies are separate.
- Kaushalkumar Patel avers that contrary to what is averred by Vadim Zaslonov, Vijay has no intention of dissipating any of its assets or rendering them incapable of being seized and sold in execution of judgment, or diminishing their value. He states that in fact, Vijay’s assets have increased in value since the judgment in 2020 by the acquisition of new vehicles. He denies that there is any need for an injunction to be granted in this matter, and states that Vijay’s assets have not and will continue not to be reduced in value.
- Finally he avers that he is informed by Vijay’s lawyer and believes that the application for an injunction is wrongly brought and an injunction is not capable of being issued in this matter for legal reasons.
Submissions
- Written submissions were filed by counsel for both parties. Mr Georges’ representing Vijay, is dated 10th September 2021. His submissions deal with the first two legal points raised in Vijay’s reply to the present application for an injunction, which is reproduced at paragraph [13] hereof, and which he states have the capacity to dispose of the application. Submissions on the third legal point as well as on the substance of the application are reserved. The submissions of Ms Madeleine representing EEEL are dated 4th October 2021. In her submissions she also deals with only the two points of law raised by Vijay and reserves the right to make further submissions on the merits. I have considered both submissions with care and they will be referred to as appropriate in the analysis below.
Analysis
- In this analysis I will deal with the first two points of law raised by Vijay as set out at paragraph [13] above. I will not address the third point at this juncture, given that counsels reserved submissions thereon.
The injunction application is not maintainable
- The first objection raised by Vijay is that the application for an injunction is not maintainable in that it does not arise in and out of a Plaint filed before this Court and fails to meet the requirements of the law for the grant of an injunction.
- The legal provisions specifically relating to injunctions are sections 304 and 305 of the Seychelles Code of Civil Procedure (“SCCP”). They provide as follows:
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- It shall be lawful for any plaintiff, after the commencement of his action and before or after judgment, to apply to court for a writ of injunction to issue to restrain the defendant in such action from the repetition or continuance of the wrongful act or breach of contract or injury of a like kind, arising out of the same contract or relating to the same property or right, and such writ may be granted or denied by the said court upon such terms as to the duration of the writ, keeping an account, giving security, or otherwise, as shall seem reasonable and just.
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- Application under section 304 shall be made by way of motion in court upon due notice given to the defendant.
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- Relying on these provisions, Counsel for Vijay Mr Georges, submits that three conditions must be satisfied in order for an injunction to be granted.
- Firstly that “there must have been an action commenced (action being defined as a civil proceeding commenced by plaint)”. He concedes that this first condition was satisfied in that EEEL had filed an action by plaint seeking recognition of a judgment of the High Court of England.
- The second condition is that “the action must be based on a wrongful act, breach of contract or injury”. In that regard he submits that section 304 is restricted in its scope and is meant to deal with “the cessation of behaviour on the part of a defendant prompting the issuance of an action by a plaintiff … pending the determination of the action or continuing even after judgment”. He gives examples of such behaviour such as trespass, blocking of a right of way, eviction of a tenant and nuisance. He submits that in order to obtain an order of restraint – which is what an injunction is – there must have been behaviour which requires restraining, or in the words of section 304, behaviour the “repetition or continuance” of which is sought to be prevented. Mr. Georges submits that the action in the present case was not based on a wrongful act, breach of contract or injury and that “[t]he Plaint was simply an application … seeking the mechanistic recognition of a UK Order by reason of the alignment of a checklist of conditions necessary for this to happen” and further that “[t]he prayers sought do not seek anything other than an executory order and orders deriving therefrom, namely registration and execution”. In his view the second condition is therefore not satisfied.
- The third condition is closely related to the second and is that “the need for an injunction must arise from the same contract or relate to the same property or right”. This means that the behaviour the “repetition or continuance” of which is sought to be prevented by an order of injunction, must be the same behaviour i.e. the “wrongful act, breach of contract or injury of the like kind” which gave rise to the action in the first place. It is Mr. Georges position that given that the second condition has not been met, the third cannot arise and the injunction cannot be obtained.
- Ms Madeleine, counsel for EEEL disagrees with Mr. Georges submission that section 304 is limited in scope. She submits that section 304 first provides for applications for injunctions to be made after judgment, as is the case in the present application. She submits that secondly a writ of injunction may be sought for restraining not only the repetition and continuance of the wrongful act or breach of contract that gave rise to the main case but also to restrain “an injury of a like kind, arising out of the same contract, or relating to the same property or right”. She contends that although the cause of action in the plaint in CS23/2019 was for registration and enforcement of British judgments, EEEL had brought the plaint for the purpose of enforcing its rights arising from the said British judgments – which rights had been confirmed by the Supreme Court Judgment of 30th June 2020 which had been in turn affirmed by the Court of Appeal.
- She goes on to state that that it is unlikely that the intent of the legislator would have been to limit injunctions post judgment to only matters of wrongful acts or breaches of contract, given the multitude of possible causes of actions in civil proceedings. She submits that read in the right context, section 304 encompasses post judgment applications for injunctions in the very circumstances of the present application, that is to restrain “injury of a like kind relating to the same right” i.e. restraining injury to EEEL’s right to enforce the British Judgments against Vijay in Seychelles.
- On that basis she submits that Vijay’s submission that the other conditions of section 304 are not fulfilled does not stand. She reiterates that the British judgments gave a right to EEEL. This right formed the basis of the plaint for registration and enforcement of the said judgments. The need for the injunction arises from that same right to register and enforce the judgments.
- In order to determine the point under consideration it is important to consider the matters which gave rise to the plaint from which the present application for injunction arises. The matter stems from a breach of a contract entered into between the parties. This gave rise to an arbitration award in EEEL’S favour which was made enforceable in England by means of the British judgments referred to above. The plaint in CS23/2019 sought the registration of the British judgments by the Supreme Court to render them and consequently also the arbitral award, enforceable in Seychelles. The plaint does not seek a remedy for a wrongful act or breach of contract or “injury of a like kind, arising out of the same contract or relating to the same property or right” for which section 304 permits an injunction to be granted, to prevent the repetition or continuance of such act, breach or injury. The breach of contract was dealt with at arbitration and culminated in an arbitral award which EEEL sought to enforce by means of filing of the plaint in CS23/2019. The proceedings commenced by plaint is therefore more a means of enforcement than seeking a remedy, which as stated was obtained in the arbitration proceedings.
- The present application for an injunction is to prevent Vijay from continuing to dispose of or dissipate its assets and funds and thereby deprive EEEL the fruits of the Supreme Court Judgment. It is not to prevent the continuation of the breach of contract which gave rise to the arbitral award which was rendered enforceable by the British Judgments and which in turn was subsequently rendered enforceable in Seychelles by the Supreme Court Judgment. I am therefore of the view that section 304 is not applicable in the circumstances.
- Ms Madeleine has submitted that “if ever this Court should find that section 304 is inapplicable to the present application given that its scope is limited as submitted by the respondent, then section 6 of the Courts Act would find application in the very circumstances of the present case as then there would be no sufficient legal remedies when civil proceedings are brought outside the limited scope of section 304 …”
- Section 6 of the Courts Act provides for the equitable powers of the Supreme Court:
Equitable powers
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- The Supreme Court shall continue to be a Court of Equity and is hereby invested with powers, authority, and jurisdiction to administer justice and to do all acts for the due execution of such equitable jurisdiction in all cases where no sufficient legal remedy is provided by the law of Seychelles.
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- Injunctions are equitable remedies. Mr Georges submits that it could be argued that the Supreme Court could, occasion arising, grant an injunction outside the bounds of section 304 SCCP. He states that in the United Kingdom, an injunction can be sought and obtained outside of the bounds of a filed action, and can even be obtained prior to filing an action but submits that, in the present case this would fail for two reasons.
- The first reason is that, given that the equitable jurisdiction of the Supreme Court can only be exercised in the absence of “sufficient legal remedy”, and that section 304 SCCP affords a party a sufficient legal remedy, then the exercise of the Court’s equitable jurisdiction becomes unnecessary. I fail to understand the reasoning behind this argument. If section 304 is not applicable – as this Court has found – then EEEL is left with no sufficient legal remedy and section 6 of the Courts Act would apply.
- For the same reason, I find no merit in the second reason given by Mr. Georges, namely that the present application is not brought de novo as one might be brought before the courts in England, but as an incidental application to CS23/2019.
- In my view therefore, given that “no sufficient legal remedy is provided by the law of Seychelles” the Court may still entertain the present application in the exercise of its equitable jurisdiction under section 6. The first preliminary objection therefore fails.
The Supreme Court is Functus
- The second point raised by Vijay is that the plaint in CS23/2019 has been the subject of a judgment and an appeal such that the suit therein has abated. It is to be noted that at the time of filing of submissions, the Court of Appeal had dismissed Vijay’s appeal against the Supreme Court Judgment and the procedure at the appeal was being questioned before the Court of Appeal but no order had yet been made for the appeal to be heard de novo.
- It is Mr. Georges’ submission that the cause of action had thus abated and had been overtaken by the appeal, and that therefore this Court has no jurisdiction to take back the case and make a determination on it or make accessory orders in relation to it. He submits that the Court of Appeal is the only Court with the power to entertain any application concerning protection of the assets of the respondent as the matter is still live before that Court. Mr Georges submits that firstly if there had been no appeal against the Supreme Court Judgment and secondly if, for instance, this Court had made an order restraining the defendant from doing something but the defendant was, notwithstanding such order, continuing with the act or breach or injury, then this Court would have had the jurisdiction under section 304 to act, even after judgment. He states that however in this instance this Court has already dealt with the matter and has not made any order on a wrongful act, breach of contract or injury and therefore it is functus and must decline jurisdiction to entertain the application.
- I take into account that the Court of Appeal has now heard the appeal against the Supreme Court judgment de novo and dismissed the appeal. Mr. Georges’ argument that it is the only court that can deal with the present injunction application because the matter is live before that court is therefore no longer applicable. I find no necessity to deal with the question of whether this Court has jurisdiction to entertain an injunction application arising in a matter which is on appeal.
- As to his argument that the Supreme Court Judgment contained no order restraining the defendant from doing something which the defendant failed to comply with and continued doing, thereby excluding the jurisdiction of this Court from dealing with the present application, this Court has found that it has the jurisdiction to entertain the present application under section 6 of the Courts Act as EEEL would otherwise have no sufficient legal remedy.
- Further section 304 allows for the making of applications for writs of injunction after judgment. The relevant part of that provision reads “[i]t shall be lawful for any plaintiff, after the commencement of his action and before or after judgment, to apply to court for a writ of injunction …”. Although I have found that section 304 is not applicable, I find no good reason why an injunction granted pursuant to section 6 of the Courts Act cannot, by analogy, be applied for and granted post judgment.
- Ms Madeleine also makes the point that notwithstanding the completion of CS23/2019 by the Supreme Court Judgment of 30th June 2020, the Supreme Court still has the power to grant certain applications such as for attachment and validation of attachment under section 248 of the SCCP, and the Registrar to execute judgment under section 239 of the SCCP. She submits that while the Court would be functus to amend or vary its judgment, the Court is empowered to hear and determine certain specific applications post judgment including post judgment injunctions. I agree.
- I therefore find no merit in the second objection raised by Vijay.
Decision
- For the reasons given above, I find no merit in the preliminary points 1 and 2 raised by Vijay in his reply. These points are therefore dismissed and the application for injunction stands. It now remains for the Court to hear counsels on the third point raised by Vijay namely that “t]he application is bad in law for not giving an undertaking in damages as a condition of the grant of an injunction”, as well as on the merits of the application.
Signed, dated and delivered at Ile du Port on 25th November 2022
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E. Carolus J