Court discharged injunction for specific performance of unascertained goods where damages are adequate.

[*483] 1982 June 7

(ARTEMIS, S.D.J.)

IN THE DISTRICT COURT OF LIMASSOL

Souleiman (Sleiman) Soumeidi,

Plaintiff,

v.

Roussos Trading Co. Ltd. and Another,

Defendants.

(Action No. 1726/82).

Interlocutory injunction - Section 4 of the Civil Procedure Law, Cap.6 and section 32 of the Courts of Justice Law, 1960 (Law 14/60) - Principles applicable - Contract of sale of goods - Claim for specific performance and damages for breach of and damages for non-delivery of the goods - Application for interlocutory injunction restraining defendants from selling and/or departing with possession of the goods - Goods not specific or "ascertained" within the meaning of the Sale of Goods Law, Cap.267 - Plaintiff not likely to succeed in his claim for specific performance - Plaintiff could be easily compensated in damages which will not be difficult at all to assess if he succeeds in the action - Application refused.

Sale of Goods Law, Cap.267 - Contract - Sale of goods - Specific performance - "Specific" or "ascertained” goods within the meaning of section

58 of the Law.

Chr. Pourghourides, for Appiicant-Plaintiff.

P. Pavlou, for Respondents-Defendants.

RULING

The following ruling was delivered by:-

ARTEMIS, S.D.J.: On 21.5.82 an Interim [*484] Injunction was granted ex parte on this Application, which was in due course opposed by the Respondents, and on 3/6/82 the Application was heard and was tried on the affidavits of both sides. Both counsel argued ably and extensively on the matter and what the Court has now to decide is whether to make the Interim Order absolute or discharge it at this stage.

The Application is based on Section 32 of the Courts of Justice Law, 1960 (Law 14/60) and on Section 4 of the Civil Procedure Law, Cap.6. Before going into the nature and details of the Application, I find it convenient at this stage to set out the two relevant sections and analyse the principles upon which interlocutory injunctions are granted. Section 32 of Law 14/60 reads:

"Subject to any Rules of Court every Court, in the exercise of its civil jurisdiction, may, by order, grant an injunction (interlocutory, perpetual or mandatory) or appoint a receiver in all cases in which it appears to the Court just or convenient so to do notwithstanding that no compensation or other relief is claimed or granted together therewith:

Provided that an interlocutory injunction shall not be granted unless the Court is satisfied that there is a serious question to [*485] be tried at the hearing, that there is a probability that the Plaintiff is entitled to relief and that unless an interlocutory injunction is granted it shall be difficult or impossible to do complete justice at a later stage.

“……………………………………………………….................................................."

Section 4 of Cap.6 reads:

"(1) The Court may at any time during the pendency of any action therein make in the action an order for the Sequestration, preservation, custody, sale, detention, or inspection of any property, being the subject of the action, or an order for preventing any loss, damage, or prejudice which but for the making of the order might be occasioned to any person or property, pending a final judgment on some question affecting such person or property or pending the execution of the judgment."

In England for a long time doubts existed as to how far the Plaintiff should go in order to satisfy the Court that there was a serious question to be tried and the probability that he was entitled to relief. The view was expressed on many occasions that a prima facie case should be established, something that would entail a partial examination of the merits of the case and to some extent the forecast of the outcome of the trial. Another test suggested was that it should be made out that the Plaintiff had a probable cause. (See the cases of Preston v. Luck (1884) 27 Ch.D. 497; Smith v. Grigg Ltd.(1924) 1 K.B. 659 ; Jones v. Pacaya Rubber & Produce Co. Ltd.(1911) 1 K.B. 445; see also Donmar Productions Ltd. v. Bart (1967) 2 All E.R.338; Harman Pictures N.V. v. Osborne (1967) 2 All E.R.324). [*486]

Finally,

the situation in England was resolved in the famous decision of the House of Lords in American Cyanamid Co. v. Ethicon Ltd.

(1975) 1 All E.R.504, where it was held that the strength of the Plaintiff’s case should be judged on its face value without an investigation into the

merits of the action. The effect of this Judgment was very clearly summarized in the case of Fellowes and Another v. Fisher

(1975) 2 All E.R.829.

In Cyprus the principles expressed in the above cases should always be viewed in the light of the requirements set out in the proviso to Section 32 of Law 14/60 which must be satisfied before an order is granted. As it was said in the case of Acropol Shipping Co. Ltd. and Others v. Petros Rossis (1976) 1 C.L.R. 38 at p.56:

"....in Cyprus in granting an interim injunction, the Courts followed closely the principles formulated in Preston v. Luck (supra)…."

And,further down at Ρ.57 the following was stated:

"Having given this matter our best consideration, we are of the opinion that this is one of those individual cases in which the Courts should go by the clear and unambiguous language of our Statute, section 32, of the Courts of Justice Law, 1960,...... rather than the principles stated by the House of Lords in the American Cyanamid case."

The relevant extract from the decision in Preston v.Luck (supra), which has application in Cyprus, appears on p.505 of the report and reads as follows:

"Of course in order to entitle the plaintiffs

to an interlocutory injunction though the Court is not called [*487] upon to decide finally on the right of the parties,

it is necessary that the Court should be satisfied that there is a serious question to be tried at the hearing, and that on the facts before it there is a probability that the plaintiffs are entitled to relief.”

The present case concerns an alleged contract for the sale by the Defendants to the Plaintiff of a quantity of American cigarettes which the Plaintiff intended to export and sell abroad. By his indorsement on the writ of summons the Plaintiff claims:

(1) Specific performance and/or

(2) Damages for breach of contract and/or

(3) Damages for non-delivery of the goods.

His version appears in the two affidavits filed in support of the Application and is, in brief, as follows:

On or about 14th May, 1982 the parties concluded an agreement for the sale to the Plaintiff of 3,822 cartons of Marlboro cigarettes of U.S.A. origin at USS151 per carton. For this sale it appears that it is common ground that the Plaintiff paid to the Defendants the full value of the goods. It is the allegation of the Plaintiff that the goods are contained in four containers now lying at the Limassol Customs Terminal and that, even though the Defendants, made arrangements and had the containers with the goods brought along the ship chartered especially by the Plaintiff for loading, they later gave directions to remove some to the Terminal and since then they refused delivery of the goods. Furthermore the Plaintiff alleges that the cigarettes in question were already re-sold abroad and the refusal of the Defendants to deliver them to him renders it impossible for the Plaintiff to perofrm his obligations. [*488]

The Defendants in an affidavit sworn by Defendant 2 state that they deny the allegations and claims of the Plaintiff and express the view and belief that they have a good defence to the claim without giving any further details.

By the Interim Injunction on the ex parte Application the Defendants and/or their servants and/or agents are restrained from selling and/or departing with possession and/or in any way interfering with the said containers and their contents now lying at the Limassol Customs Terminal. It is common ground that, bearing in mind the nature of the goods, the way they are now stored and the condition of the weather at present, if the goods remain as they are, there is a strong likelihood, if not certainty, that serious damage or destruction may be cause within a few days or perhaps a month.

It is plain from the claim indorsed on the writ of summons that the Application for an Interlocutory Injunction is connected only with the claim for specific performance and not with the claims for damages as the goods cannot be said to form the subject-matter of such a claim. So, and this is accepted by Counsel for both sides, the Interim Order can only be made if specific performance would have been granted in the case.

The relevant legal provision on which a claim for specific Performance of an agreement for the sale of goods is based is section 58 of the Sale of Goods Law, Cap.267 which is identical to Section 52 of the corresponding English Act and which reads as follows:

"In any action for breach of contract to deliver specific or ascertained goods, the Court may, if it thinks fit, on the application of the plaintiffs, by its judgment direct [*489] that the contract shall be performed specificially, without giving the defendant the option of retaining the goods on payment of damages. The judgment may be unconditional, or upon such terms and conditions as to damages, payment of the price or otherwise, as the Court may deem just, and the application of the plaintiff may be made at any time before the judgment.”

Bearing in mind the above legal enactments and principles and having in mind the affidavit evidence before me as well as the arguments put forward by respective Counsel, I am of the view that the matter boils down to three basic issues as follows:

(a) Were the goods specific or ascertained in the meaning of the Law? If the answer is in the negative, then there is no question of specific performance and, therefore, no basis for the Application for an Interim Injunction in respect of the goods. If the answer to(a) is in the affirmative, then,

(b) Is this an instance where there is a likelihood that the Court would exercise its discretion in favour of granting an Order for specific performance? If the answer is in the negative, then for the same reason the Application for an Interim Injunction should fail. If the answer to

(b) is in the affirmative, then,

(c) Should the Court make the Order absolute or is it an instance where the facts and the legal principles indicate that the Order should be discharged?

I intend now to proceed by examining each of these issues in the order I have set them out above.

(a) Were the goods specific or ascertained in the meaning of the Law? [*490]

Section 2 of Cap. 267 defines "specific goods” as "goods identified and agreed upon at the time a contract of sale is made".

The following appears in Benjamin’s Sale of Goods, 1974 Edition, paragraph 106 on the meaning of "specific goods";

"Goods cannot he specific in the statutory sense unless they are so at the time of the contract: they cannot become ’specific’ (although they may become ’ascertained') at a later stage. Specific goods are by the agreement of “the parties designated as the unique goods which can be delivered by the seller in performance of his obligations; their individuality is established; so that there is no room for further selection or substitution."

In his affidavit the Plaintiff states the following in paragraph 2 :

"On or about 14/5/82 I concluded an agreement with Mr George Roussos of Limassol who was acting on behalf of G.Roussos Trading Co. Ltd,, of Limassol and/or in his personal capacity whereby he agreed to sell and deliver to me 3,822 cartons of Malborough cigarettes of U.S.A, origin at 151 United States dollars per carton."

This is the only evidence I have before me as to the agreement, and it is plain from this that there was a general agreement to buy cigarettes which were in no way identified and, therefore, cannot be held to have been "specific".

One should now examine whether the goods were "ascertained". According to Atkin, L.J. in Re Wait (1927) 1 Ch. 606,630, "ascertained goods’ probably means identified in accordance [*491] with the agreement after the time a contract of sale is made," i.e. goods which were unascertained at the time the contract was made.

In Thames Sack and Bag Co. Ltd. v. Knowles & Co. Ltd. (1918) 88 L.J.K.B.585, 588 it was ruled that"’ ascertained' in section 52 of the Sale of Goods Act, 1893 means that the "individuality of the goods must in some way be found out, and "when it is, then the goods have been ascertained." In this case the contract referred to 10 out of a particular parcel of 45 bags and the Judge held that this was insufficient ascertainment of the goods for the purposes of Section 52.

In the case of Re Wait (supra) the majority of the Court of Appeal held that a contract to sell 500 tons out of a consignment of 1,000 tons of wheat was not a contract for specific goods because the 500 tons were neither specific nor ascertained goods. (However, one of the Judges spoke of "clearly specific goods in a specific place, identified and ascertained as the subject-matter of the contract.") Therefore, an unappropriated part of a larger, ascertained, bulk cannot be "ascertained" for the purposes of Section

52 and, in consequence, of Section 58 of our Law.

In the present case the Plaintiff in his affidavits mentions that the cartons of cigarettes bought are contained in four specific containers lying at the Limassol Customs Terminal. However, Defendant 2 in his affidavit swears to the fact that the said containers contain 3,880 cartons, that is, 58 cartons in excess of what the subject-matter of the sale was. [*492]

On the above authorities , therefore, in my judgment, the goods never became" ascertained "goods within the meaning of Section 58. In my judgment, in the light of the above, the goods, being neither specific nor ascertained, Section 58 of the Law would have no application. The argument of Counsel that the excess was delivered by mistake and the Plaintiff could keep it, cannot stand as on the evidence there was in my view no delivery. Even the Plaintiff claims damages for non-delivery. But, in case I am reversed on this point on appeal, I shall now proceed to examine whether the claim for specific performance would have had any likelihood of success if the goods were considered to be "ascertained".

(b) Is this an instance where there is a likelihood that the Court would exercise its discretion in favour of granting an Order for specific performance?

The equitable remedy of specific performance in England before the Act was discretionary but the Courts did not decree specific performance for the sale of commodities which could be ordinarily obtained in the market where damages were a sufficient remedy even though in Re Wait (supra) it was held that possibly the statutory remedy (Section 52) was intended to be available even in those cases. Before the Act, specific performance could foe granted to compel sellers to transfer rare or unique articles and, in some cases, goods which possessed a special value to the plaintiff. After the Act, similar orders have been made in several cases. in Behnke v.Bede Shipping Co .Ltd. (1927) 1 K.B.649, 661, it was held that a ship was a specific chattel within the Act and a decree of specific performance was granted, the Court taking [*493]

the view that the ship in question "was of peculiar and. practically unique value” to the buyer; that the buyer wanted the ship for immediate use, and that damages would not be an adequate remedy. However, no order should be made if the goods are of ordinary description and not alleged to be "peculiar” in the sense that, similar goods cannot be obtained elsewhere. (Fothergill v. Rowland (1873) L.R.17 Eq.132, 139; see Cohen v. Roche. (1927) 1 K.B.169, 180). The discretion of the Court under Section 52 and, in consequence under Section

58 of our Law, is wide and, in addition to considering the type of goods, the Court is entitled to look at all the circumstances of the case including the conduct of the parties and to consider the hardship which an order would inflict on the seller.

Recently doubt has been thrown on the traditional idea that an unidentified part of a specific whole was not specific or ascertained goods. In Sky Petroleum, Ltd. v. VIP Petroleum, Ltd. (1974) 1 All E.R.954, the plaintiffs obtained an interlocutory injunction, which was treated, in effect, as a decree of specific performance, to restrain the defendants from breaking a contract to supply the plaintiffs with all their petroleum requirements for ten years. Goulding, J. , held that the general rule was inapplicable where damages would clearly not be an adequate remedy and in the case before him, as he stated, there was a real danger that the plaintiffs would be forced out of business if the defendants broke their contract in the very peculiar circumstances then holding.

In the present case it cannot, and has not been argued, that the goods were of any special value or special description [*494] that would justify a decree of specific performance. However, it was argued on behalf of the Plaintiff that, as there was a shortage in the market of this type of cigarettes, which would last up until next August, and as the Plaintiff has already re-sold the cigarettes to a client abroad and failure to deliver would damage his trading reputation, damages would not be an adequate remedy. It is obvious, however, that this case cannot be tried and Judgment delivered before next August and, therefore, part of this argument will be rendered obsolete. On the other hand, I cannot see howe the trading reputation of the Plaintiff will be damaged since non-delivery to his buyer will not be due to any fault of his own and in any case he will be in the same position whether specific performance is granted or not as in either case he will be unable to deliver at once. I am, therefore, of the view that his loss, if he succeeds in the action, can be easily assessed and he can be adequately compensated in damages. In the light of the aforesaid, on this ground also I would be inclined to hold the view that there would be no likelihood of success in his claim for specific performance.

Even though my answer is in the negative on this point as we11, I shall proceed for the same reason to examine ground (c) above :

(c) Should the Court make the Order absolute or is it an instance where the facts and the legal principles indicate that the Order should be discharged?

Bearing in mind the evidence as to the claim before me, which is contained, in the affidavits of the Plaintiff, as there [*495] is only a general denial on behalf of the Defendants without giving any particulars as to their defence, I can easily hold that there is a serious case to be tried at the hearing and a likelihood of success on the daim for damages. Assuming also that I am reversed on the question of specific performance and the Court above holds that this is a case where a likelihood of success on that issue as well exists, I must now examine whether on this assumption the Interim Injunction should be made absolute. What remains to be examined is the third prerequisite of Section 32 of Law 14./60, that is, whether if the Interim Injunction is not granted, it would be difficult or impossible to do justice at a later stage. I have already analysed this point under (b) above and I am of the opinion that the Plaintiff could easily be compensated in damages which will not be difficult at all to assess if he succeeds in his action. In addition, bearing in mind that one of the objects of an injunction under Section 4 of Cap. 6 is the preservation of the subject-matter - and in this case it is common ground that, if the goods are kept as they are for a short period, they run the serious risk of being damaged or destroyed - it would be wholly inappropriate for the Court to make an order which may lead to the destruction instead of the preservation of the goods. For these reasons I hold that the Interim Injunction should not be kept in force.

In the light of all the above, the Interlocutory Injunction granted on the ex parte Application of the Plaintiff is hereby discharged. Costs of the Application, to be assessed by the Registrar, are awarded against the Plaintiff.

Interlocutory injunction

discharged.