Court grants amended interim order for safekeeping of disputed goods pending final action determination.

[*450] 1982 May 8

(FR. NICOLAIDES, Ag.S.D.J.)IN THE DISTRICT COURT OP NICOSIA

Maximos Ltd.,

Plaintiff,

v.

Andreas Mavrokefalos,

Defendant,

(Action No. 6407/81).

Interim order - Principles applicable - Discretion of the Court - Sections 4 - 8 of the Civil Procedure Law, Cap. 6 and section 32 of the Courts of Justice Law, 1960 (Law 14/60) - Safe keeping of-goods pending determination of the action - Said goods constituting bona fide subject-matter of the action - Need to preserve status quo until the final determination of the action - Interim order granted.

M.Vassiliou for E . Theodoulou for Applicant.

C. Gavrielides, for Respondent.

RULING

The following ruling was delivered by:-

FR. NICOLAIDES,Ag,S.D.J::This is an application by [*451] plaintiffs for an interim order for the safe keeping under the custody of the plaintiffs or the mukhtar of the appropriate quarter, of certain goods, tools and furniture mentioned in three lists attached to the application.

The application in the first place was made ex-parte under ss. 4-8 of the Civil Procedure Law, Cap. 6 and on 29.12.1981 an order was given by another Judge, for the safe custody of the afore-mentioned articles by the plaintiffs. When-the order was served on the defendantrespondent he appeared and opposed the application.

Before embarking on the grounds of opposition I feel that a brief reference to the cause of-action as disclosed in the specially indorsed writ would be useful.

According to the writ of summons the plaintiffs entered into a joint-venture with the defendant. The agreement was that the plaintiffs would pay the rent of a shop in Nicosia, supply the necessary furniture, goods and tools and the defendant would contribute to the Jointventure the necessary labour. The two parties would then split the, profits evenly. On or about 15.5.1981 the above agreement came to an end by consent but in spite of the relevant stock-taking, the defendant failed to deliver possession of the tools and goods which the plaintiffs contributed to the joint-venture and later on he removed them to other premises. [*452]

The plaintiffs instituted the present action claiming damages and in the alternative the return of the afore-mentioned furniture, goods, and tools.

The value of the said articles is estimated in the writ of summons as over C£11,000.

The grounds of the respondent's opposition as stated in his affidavit filed in support can be summarised as follows:-

(1) The order given is ultra vires and contrary to the principles set down in the case of Michael v. Brevinos (1969) 1 C.L.R. 578.

(2) The order was given on insufficient grounds.

(3) The articles, the safe custody of which is applied for, are not the subject-matter of the action and therefore ss. 4-8 of Cap. 6 are inapplicable.

(4)The plaintiff’s claim is twofold and therefore the plaintiffs—are debarred and/or estopped and precluded from claiming the said articles.

(5)The defendant is entitled in law or he has a lien on the share of the said articles.

The opposition is based on ss. 4-8 of Cap. 6 and on s.32 of the Courts of Justice Law, No. 14/60. [*453]

Regrettably the address of learned counsel for the respondent, was very short. Actually he only said that the order should not be made absolute because the affidavit of the plaintiffs was not satisfactory, and because the order contravenes the principles enunciated in the case of Michael v. Brevinos Ltd., (1969) 1 C.L.R. 578.

Having outlined the facts of the case and the grounds of opposition I shall now proceed to examine the legal position.

The power of the Court to make interim or interlocutory orders or injunctions is discretionary and is founded on s. 4-9 of the Civil Procedure Law, Cap. 6, and s.32 of the Courts of Justice Law, No. 14/60.

Section 4(1) of Cap. 6 refers to the power of the Court to make an_order. for the sequestration, preservation, custody, sale, detention or inspection of any property being the subject matter of the action.

As regards s.4 of Cap. 6 there is clear authority to the effect that the Court has no power under it to make an

order affecting property not itself the subject-matter of the action (See_Sofocles Mamas & Co. v. Carl P. W., Borgward and the Chartered Bank of Nicosia , 1962 C.L.R. 209 at 215; Cyprus

Palestine Plantations v. Olivier & Co. Ltd., 16 C.L.R. p.122). [*454]

I feel that the first question which poses for determination is whether the tools, machinery and furniture for which the interim order is applied for, do or do not constitute the subject-matter of the action.

From the statement of claim and the contents of the affidavit filed both by the plaintiffs and the defendants it is obvious that the dispute concerns the contract entered into by the parties for the joint-venture, the alleged breach of same, and the wrongful detention of goods belonging to the plaintiffs by the defendant.

One of the reliefs prayed for by the plaintiffs is the return of the said goods to them.

It is not my Intention to enter at this stage, deeply, into the nature of the plaintiffs’ claim or whether they are entitled to the reliefs they pray for, or not. What concerns me at the moment is whether the property is bona fide the subject-matter of the action (See Scott v. Merchantile Accident Insurance Co, (1892) 8 T.L.R. 320).

Although the respondent did not file

his defence as yet, from his affidavit filed in support of the opposition it is more than_obvious that he admits that he

entered into an agreement with the plaintiffs and that the articles for which the interim order is applied for, were delivered by the plaintiffs to him. It is also obvious that these articles had never been returned to the plaintiffs. [*455]

I feel that one of the main issues of the action is the possession of the machinery in question. The object of an interlocutory injunction is, as a rule, to preserve the position under which the dispute arose and to preserve the property involved, pending the determination of the action.

In the light of the above I am of the opinion that the articles in question constitute bona fide the subjectmatter of the action and therefore s.4 of Cap. 6 is applicable, if, of course, all the other requirements of the law are satisfied.

Respectfully I do not find any foundation on the defendant's contention that as the plaintiffs’ claim is twofold, i.e. for the delivery of the articles or in the alternative for damages the interim order should not be granted.

When a property constitutes the subject-matter of an action, the mere_fact that the plaintiff includes in his pleading alternative remedies does not, it appears to me, mean that he is not. entitled to an interim order for the preservation of such property.

Another ground put forward in the defendant’s affidavit is his allegation-that the plaintiffs collected out of the joint-venture a substantial amount before its termination. [*456] An agreement or any other legal relationship can produce profits before something goes wrong. The claim of the plaintiffs is not in fact based on the joint-venture itself but on its termination.

Therefore, the fact that the agreement was profitable to the parties before its termination cannot influence in any way either the application for an interim order or the outcome of the action.

Another allegation of the respondent is that he is entitled to half share of the articles in question and therefore the plaintiffs are not entitled to the protection of an interim injunction, I am of the opinion that such an allegation in fact strengthens the application of the plaintiffs. An interim order is not decisive of the rights of the parties but its object is mainly to preserve the status quo ante until the final determination of the dispute.

Again the allegation of the respondent that most of the articles have worn out is in essence an allegation advocating for the preservation of the articles until the final determination of the action.

Although the application of the plaintiffs was mainly based on s.4 of Gap. 6, nevertheless s.32 of Law 14/60 was mentioned. Therefore I feel it useful to refer briefly to the requirements of s.32 as well:- [*457]

The afore-mentioned section gives-to the Court the power to grant an injunction provided that it is satisfied that -

(a) there is a serious question to he tried at the hearing;

(b) there is a probability that the plaintiff is entitled to relief, and

(c) unless an interlocutory injunction is granted it shall be difficult or impossible to do complete justice at a later stage.

Fortunately enough s.32 was made the subject of judicial interpretation both in Cyprus and in England.

For quite some time it was rather uncertain as to how far the plaintiff should go in order to satisfy the Court on the existence of the first two prerequisites of s.32.

Sometimes it-was suggested that the plaintiff ought to establish a prima facie case.

The

test that the plaintiff should make out a probable cause laid down in Preston v. Luck (1884) 27 Ch.D. 497 was applied

by the Cyprus Courts in many occasions.

In the recent decision of the House of Lords in American Cynamid Co. v. Ethicon Ltd. - (1975) 1 ALL E.R. 504, it was held that the Court should not investigate the merits_ of the action, but the strength of the plaintiff's case should be judged on its face value and unless the action is frivolous or vexatious there is a serious case to be tried and no attempt should be made to foretell the outcome of the action. [*458]

However, in Acropol Shipping Co. Ltd. and Others v. Petros Rossis (1976) 1 C.L.R. 38, Hadjianastassiou J. said at p.56:

"Having reviewed at length what are the principles in granting an interlocutory injunction in England and having regard to the weighty judicial pronouncements, we think that we can safely conclude that until the recent judgment of the House of -Lords in the American Cyanamid case, an interlocutory injunction would normally he granted only when the party seeking it can show a prima facie case or a strong prima facie case and/or a probable case in support of his right and that he was likely to suffer substantive, i.e. irreparable injury if an injunction is not granted.

On the contrary, in Cyprus in granting an interim injunction, the Courts followed closely the principles formulated in Preston v. Luck (supra) that a party seeking it would show that there was a serious question to be tried at the hearing and that on the facts before the Courts there is a probability that the plaintiff was entitled to relief".

We may add here that the wording of s.32 is obviously founded on the authorities constituting the common law approach on the matter at the time of its enactment. [*459]

Further reference can also be made to Karydas Taxi Co. Ltd. v. Komodikis (1975) 1 C.L.R. 321; Constantinides v. Makriyiorgou and Another (1978) 1 C.L.R. 585, and a number of other cases, but I feel that a more complete exposition of the law on s.32 can wait for a more opportune moment.

One might argue that, but for the special provision of s.4 of Cap.6, applicable in the case at hand, the order applied for could not have been made as the third requirement of s.32 - i.e. that unless the interim order is grantedit shall be difficult or impossible to do complete justice at a later stage - is not satisfied. The point has not been raised, but anyhow the present case falls within the ambit of the special provision of s.4. It is a well known principle that a special provision always prevails.

Concluding I find that the plaintiffs-applicants have satisfied the Court that the requirements of s.4 of the Civil Procedure Law, Cap. 6 exist and that they are entitled to protection.

It is correct that the onus cast on the plaintiff under s.4 of Cap. 6 is. slightly heavier than the one cast under s.32 of the Courts of Justice Law, No. 14/60, where the applicant must show only that there is a serious question to be tried at the hearing and that there is a probability that he is entitled to relief. [*460]

It is also correct that the power of the Court to grant interim injunctions is discretionary.

The plaintiffs proved that the articles for which the order is applied for, constitute the subject-matter of the action and that there is a need to preserve the status quo until the final determination of the action.

Pausing here for a moment, I want to stress that in interlocutory proceedings the Court must avoid disposing any of the main issues in the action. This is the reason why I examined the question whether the tools, machinery and furniture constituting the subject-matter of the action in a rather superficial way.

The possession of the above articles is in issue and the Court must avoid making an order enabling one of the parties to take the articles in dispute in his possession so that in consequence of the order that party to be in possession of the disputed articles for its exclusive benefit (See Frixos Michael v. Brevinos Ltd. (1969) 1 C.L.R. 582).

For this reason I feel obliged, to amend, with all due respect, the order given by the learned Judge as follows:-

(1) The articles in dispute, i.e. the tools, machinery and furniture mentioned in. the schedule filed, to be placed under the custody and control of the appropriate civil authority (which in this case, is the mukhtar of the appropriate quarter) pending hearing [*461] and final determination of the action or until further order.

(2) Subject to any further order, the articles in question are not to be put into any use whatsoever, either by the parties or by any other person.

Lastly learned counsel for the plaintiffs contended that the defendant-respondent had no right to be heard as he did not as yet comply with the order given on the ex parte application of the plaintiffs.

It is correct that in Theofylactos Mavfommatis and 2 Others v. Cyprus Hotels Co. Ltd. (1967) 1 C.L.R. 266 from the Bench it was intimated to counsel on behalf of the. appellants by the Honourable President of the Supreme Court that the intention of the Court was to see that the interim order in question was complied with before the Court would deal with the appeal against it; the Court was not prepared to listen to any argument on the merits of the appeal, before being assured that the said order of the District Court appealed against had been complied with.

In the present case two different orders were served on the respondent. The first drawn up on 29.12.81 ordered the respondent to deliver to the plaintiffs the articles in question. The second one drawn up on 31.12.81 and served again on the respondent in substitution of the previous one, ordered for "the goods, tools and furniture mentioned in the attached lists A, B. C, to be taken and [*462] preserved under the safe custody of the plaintiffs’ company” I must admit that the wording of the last order is rather vague and strictly speaking did not in. essence impose any obligation to the respondent to deliver the articles in dispute to the plaintiffs.

For this reason I cannot accept that the respondent is in contempt, and therefore his argument could be heard.

In view of all the above and for the reasons I have endeavoured to explain the interim order as amended, is made absolute pending the final determination of the action or until further order.

Costs in cause.

Interim Order made absolute.

Costs in cause.