DECORE FURNITURE COMPANY and Another v UNION TRUST BANK LIMITED (C.C.534/07 ) [2009] SLHC 6 (12 February 2009);

C.C.534/07    2007   D.   NO. 15




FREETOWN                                                                -1st PLAINTIFF/APPLICANT



FREETOWN                                                               2ND PLAINTIFF/APPLICANT




FREETOWN                                                               - DEFENDANT/DEFENDANT




By Notice of Motion dated 6th day of July 2007 the Plaintiffs/applicants herein prayed for mainly an injunction restraining the Defendants by themselves their servants or agents or otherwise from exercising their right under the Deed of Mortgage dated 11th May 1993 expressed to be made between Decore Furniture Company. Adel Abess and Hussein Margie and the defendants and registered as No. 76/93 at page 2 in volume 68 in the Book of Mortgages pending the hearing and determination of this action.

The plaintiffs/applicants' said application was supported by the affidavits of Samuel O. Taylor and Susan Sisay both sworn to on the 6th July 2007 and 23rd July 2007 respectively.

The Defendant in opposing this application filed and relied on the affidavit of Septimus Sigismond Cole sworn to on the 12th July 2007.

The brief facts of this case are these:

By a Mortgage Deed dated 11th May 1993 (i.e. Exhibit SOT1 attached to the affidavit of Samuel O. Taylor) the 1st plaintiff was granted banking facility by the Defendants who were then Meridian Bank (SL) Ltd. The plaintiffs provided the leasehold of property situate at 51A 51C Wilkinson Road as security regarding the banking facility so granted to them. See exhibit SOT1. Over time the plaintiffs' indebtedness to the Defendants increased considerably mainly due to the interest which it continued to attract. In 2003 the Defendants wrote to the plaintiffs warning them of the increase in their indebtedness and demanded settlement by liquidating the account. Then, according to the plaintiffs, certain representations were made and that some time in 2005 when the plaintiffs' indebtedness was over Le800,000,000 the plaintiffs agreed with the defendants that the said indebtedness was to be satisfied by the payment of the lesser sum of Le205,504,468.41. which was the principal sum owing less interest accrued on the debt. The defendants however contend that there was no such agreement that the plaintiffs will liquidate their indebtedness by the payment of a lesser amount as alleged. The defendants contend that the plaintiffs were and continue to be indebtedness to them in the sum now over Le 1 billion. The Defendants by letter dated 14th June 2007 and marked Exhibit SSC 17 in the affidavit of Septimus Sigismond Cole gave notice pursuant to the said mortgage deed of their intention to exercise their right there under.. The plaintiffs have thus commenced this action claiming among other things a declaration that having paid the lesser sum to the Defendants as agreed they were no longer indebted to them. They then filed this motion praying for an injunction as contained therein and already stated above.

It is clear that the instant case is different from the common injunctions frequently sought in land disputes where a party seeking to restrain another from trespassing upon some land to which he claims immediate possession, title as the case may be. It is trite law that the court's jurisdiction to grant injunction is certainly not limited to the run of the mill instances of restraining trespass to land and the like. I am satisfied in my mind that this application may be dead with by applying the well known principles governing the grant of interlocutory injunctions whilst of course giving due and careful regard to its own facts and circumstances.

Order 35 Rule 1 of the High court Rules 2007 indeed empowers this court to "grant an injunction by interlocutory order in all cases in which it appears to the court la he convenient

Whilst the principles laid down in the AMERICAN CYANAMID CO. V ETMICGN [1975] A C 396 are admitted to be of general application, the guidelines in that case often provide a useful guide to any court in dealing with applications for interlocutory injunction.

In the instant case the plaintiffs are contending that they have a right, interest or a arguable case which they want to protect or guarantee at the trial, whilst preserving same by an interlocutory injunction pending the outcome of the trial. WHAT IS THIS CASE?

There does not seem to be any dispute as to the fact that the plaintiffs were heavily indebted to the defendant in a sum in excess of Le 800,000,000. Again it is agreed that the plaintiffs secured this indebtedness by their leasehold interest in property situate at 51A - 51C Wilkinson Road Freetown as evidenced by the Mortgage Deed exhibited as SOT 1 dated 11th May 1993. The plaintiffs however now allege that there was an agreement between them and the defendants for the variation of the above, to the effect that by payment of the lesser sum, which the plaintiff allegedly paid to the defendants, they were discharged from all liabilities under the original mortgage deed. But was there such an agreement between the plaintiffs and the defendants? There is also a question which perhaps the plaintiffs would think irrelevant or unnecessary, that is to say: Was there consideration provided by the plaintiffs in respect of this agreement?

There is indeed ample evidence that the Plaintiffs requested, pleaded with and/or urged the Defendants to waive or freeze the interest and accept a lesser sum in satisfaction of the whole. The plaintiffs were requesting that they "pay the principal amount owing of Le205,564.468.41 and 10% of the interest amount on the debt and the freezing of further interest........." See exhibit SSC2 attached to the affidavit of Susan Sisay which is a letter dated 20th July 2005 written by the plaintiffs to the Defendants. The Defendants are certainly not denying that the plaintiffs asked them to accept a lesser sum in satisfaction of their entire indebtedness. See paragraphs 5. 7.S & 12 of the affidavit in opposition sworn to by Septimus Sigismond Cole. See also letter dated 15th October 2003 (exhibit SSC 4), letter dated 24th January 2005 (Exhibit SSC 6), letter dated 11th April 2005 Exhibit SSC7 etc.

But did the Defendants accept? Was there an acceptance on the part of the Defendants of the proposal/ request put forward by the plaintiffs? The Defendants, 1 must state here, deny the allegation or claim by the plaintiffs that they (the Defendants) accepted the proposal.. Sec paragraphs 10 of affidavit of Septimus Sigismond Cole.

I have carefully perused the various affidavits filed as well as the documents exhibited. It appears that the Plaintiffs contention that the Defendants had accepted their proposal is not supported or confirmed by any letter,, memorandum or any written instrument for that matter. The plaintiffs are mainly relying on representations that were allegedly made orally at meetings and discussions held between them and senior officers of the Defendants. Mindful of the fact that everything else (including the mortgage Deed, the plaintiffs request or proposal, the defendants demands for full payment) arc all evidenced in writing or contained in one written document or the other, it is rather curious that the alleged acceptance by the Defendants is not contained in or evidenced by any written document The Plaintiffs themselves must have perhaps acknowledged how significant this was as was conceded in paragraph 9 of the affidavit of Susan Sisay when she deposed that the Plaintiffs had requested a formal letter of acceptance of their proposal. My review of the evidence and materials before me have only been provisional as 1 am aware of my duty to only consider them in the light of an interlocutory application and not to make or draw full and final conclusions from them. And in my provisional examination and assessment of the facts and documents before me 1 am not convinced or satisfied that the Defendants agreed to accept the payment by Plaintiffs of a lesser sum in satisfaction of their entire indebtedness or to waive or freeze what I would call unspecified interest for unspecified periods. Again a court must no doubt be cautious when called upon to protect by injunction a right or interest the existence of which is so doubtful. What if at all was actually agreed upon? In other words what percentage of the interest did the Defendants agree to waive and for what period was the interest frozen?. Indeed the evidence before me does not support the Plaintiffs1 assertion that there was such an agreement..

My coming to the above conclusion does not in any way suggest my final determination of the principal issues in dispute in this action. The plaintiffs may well avail themselves of the process of discovery and inspection of documents including minutes of meetings allegedly held at the Bank which may perhaps record facts that may affect or be extremely useful to the plaintiffs' case at the trial.

I must now go on to deal with the issue of whether, if there was such an agreement, the Plaintiffs had in fact given any consideration for the alleged agreement for the defendants to accept a lesser sum in satisfaction of the whole or indeed whether such an agreement was binding and enforceable.. The Plaintiffs would want me to accept that there was no requirement that the plaintiff must have given some consideration. For this, counsel for the Plaintiffs referred to a passage in the judgment of Lord Denning in the case of COMBE V COMBE 1957 2 KB 215 @ 220. It is clear however in the entire judgment of Lord Denning that in such circumstances as the present case the issue of consideration can never be done away with. This was what Lord Denning had to say @ page 220-221 of his judgment: "The principle, as I understand it, is that, where one parly has by his words or conduct, made to the other a promise or assurance which was intended to affect the legal relations between them and to he acted on accordingly, then, once the other party has taken him at his word and acted on if, the one who gave the promise or assurance cannot afterwards he allowed to revert to previous legal relations as if no such promise or assurance has been made by hint, but he must accept their legal relations subject to the qualification which he himself has so introduced even though it is not supported in point of law by any consideration but only by his word. Seeing that the principle never stands alone as giving a cause of action in itself it can never do away with the necessity of consideration when that is an essential part of the cause of action. The doctrine of consideration is too firmly fixed to be overthrown by a side-wind. Its ill-effects have been largely mitigated of late but it still remains a cardinal necessity of the formation of a contract, though not of its modification or discharge. I fear that it was my failure to make this clear which misled Byrne.J. in the present case. He held that the wife could sue on the husband's promise as a separate and independent cause of action bv itself although, as he held, there was no consideration for it. That is not correct. The wife can only enforce it if there was consideration for it"

Similarly in the instant case the Plaintiffs are seeking to enforce an alleged agreement which seeks 10 vary rescind or replace another which was by deed.

Again counsel for the Defendants in argument submitted that the original agreement between the plaintiff and the defendant was by a deed (mortgage deed) and that the plaintiffs cannot be seen to vary or rescind it by oral agreement or parol evidence.

in the case of FOAKES V BEER (1884) (1 881 - S5) All ER 106 HOL it was held among other things that payment of a lesser sum than the amount of a debt due cannot be a satisfaction of the debt unless there is some benefit to the creditor added so that there is an accord and satisfaction. Where there's alleged to be a second agreement in existence which seeks to vary or replace the original one the Earl of Solborne, L.C. held as follows @page 109

"But the question remains whether the agreement is capable of being legally enforced. Not being under seal it cannot be legally enforced against the respondent unless she received consideration for it from the appellant, or unless, though without consideration it operates by way of accord and satisfaction, so as to extinguish the claim or interest. "

Agam in D & C BUILDERS LTD V REES 1965 3 ALL E.R 837, Lord Winn had this to say on accord and satisfaction:.

"In my judgment it is an essential element of a valid accord and satisfaction that the agreement which constitutes the accord should itself be binding in law and I do not think that any such agreement can be so binding unless it is either made under seal or supported by consideration." See also the case of SYROS SHIPPING V ELAGHILL TRADING CO. (1981)3 ALLER 189.

In the instant case there is serious doubt that there was in fact such an agreement. If there was, it is certainly not under seal nor is their evidence that it was supported by any consideration by the plaintiffs.

The above has cast a serious doubt as to whether the plaintiffs have a case or right or interest worthy of protection or preservaton by an injunction. Can it seriously be said that they have a real prospect of succeeding at the trial? See the dictum of Lord Diplock in AMERICAN CYANAMID case cited above.

For my pan I do not think that damages would adequately compensate the Defendants in the instant case. As has been stated by the Defendants the Plain tiffs have been indebted to the defendants for so long, the debt being due and owing for several years before the Defendants finally wrote letter dated 14th June 2007 or indeed the date of the commencement of this action which is 17th June 2007. Again the plaintiffs would have further opportunity to resist or defend any legal or judicial proceeding that the Defendants may institute in a bid to exercise their alleged "rights" under the mortgage deed whether by an independent action or by counterclaim herein as the case any be. ! do not think it would be just or fair in all the circumstances of this case to restrain the Defendants from exercising their "right" to pursue such legal or judicial steps pursuant the Mortgage deed. In this regard I find the following dictum of Lord Buckley in the case of BRVANSTON FINANCE LTD V DE VKIES (No 2) [1976] 1 ALL E.R 25 @ page 36 to be very useful;

"In his speech in the American Cyanamid case Lord Diplock recognized that there might be special factors to be taken into consideration in the particular circumstances of individual cases. In my judgment, the fact that the second action is an action designed to prevent the commencement of proceedings in limine is such a special factor. In such a case the court should not, in my judgment, interfere with what would otherwise be a legitimate approach to the seat of justice unless the evidence is sufficient to establish prima facie that the plaintiff will succeed in establishing that the proceedings sought to be restrained will constitute an abuse of process." 1 therefore find myself unable to grant the orders prayed for and I make the following orders.

1. The Plaintiffs application for injunction is refused.

2. The costs of this application assessed at Le 3,million be borne by the plaintiffs-

12th FEB 09