FINNEGAN v. GALADARI HOTELS (LANKA) LTD

029-SLLR-SLLR-1989-V-2-FINNEGAN-v.-GALADARI-HOTELS-LANKA-LTD.pdf


272
Sri Lanka Law Repons
1198912 Sri LR
FINNEGAN
v.
GALADARI HOTELS (LANKA) LTD.
SUPREME COURTH.A.G. DE SILVA, J.
BANDARANAYAKE, J., AND KULATUNGA. J.
S.C. APPEAL NO. 21/89
A. REVISION APPLICATION NO. 528/89.
C. COLOMBO NO. 3000/SPL.
SEPTEMBER 18,19,20, 21 &
OCTOBER 3, 4, AND 5, 1989.
Civil Procedure Code – Enjoining order – Inherent powers – Suspension of enjoiningorder – Civil Procedure Code, section 839 – Can enjoining order be suspended exparte? – Inter partes order
A management agreement, A was entered into between the Galadari Hotels (Lanka) .Ltd. the plaintiff and Societe Des Hotels Meredian (Meridien) – a Company residentnot in Sri Lanka but in Paris – whereunder the 2nd and 3rd floors comprising 80 rooms(which as they were not commissioned as guest rooms) were allocated to theInternational Irrigation Management Institute (IIMI) for use as office accommodation.The defendant Paul Finnegan was the General Manager of the Galadari MeridienHotel. The management and operation of the Hotel were entrusted to the Societe DesHotels Meridien (Meridien). The plaintiff-respondent Galadari Hotels (Lanka) Limitedfiled action on 27.6.89 against the defendant – petitioner Paul Finnegan, praying for adeclaration that defendant, is not entitled under the terms of the managementagreement "A” to allocate the 2nd and 3rd floors of the Galadari Meridien Hotel or anyportion thereof to the IIMI and for a permanent and interim injunction restraining theallocation and conversion of the furnished equipped guest rooms on the 2nd and 3rdfloors into official accommodation or the making of structural alteration thereto. On thesame day (27.6.89) on the application of Counsel an enjoining order was issuedretaining the allocation, conversion alteration, along with notice of the application for aninterim injunction. The enjoining order was not to apply to rooms 318 and 320 as theyhad already been converted. The enjoining order was served on the same day.
On 3.7.89 the defendant filed objections moving for a suspension of the enjoiningorder, refusal of the injunction and dismissal of the action. When Counsel moved tosupport the objections on the same day Mr. Balasubramaniam appeared for theplaintiff and moved that the matter be supported the following day as he had had nonotice and did not have the papers. The Court held it was not obliged to hear theplaintiff and on the defendant's application suspended the enjoining order. The plaintiffmoved the Court of Appeal in revision. The Court of Appeal stayed the suspension andlater on 25.7.89 vacated the suspension order of 3.7.89. Against this order the-defendant moved the Supreme Court.
sc
Finnegan v. Galadari Hotels (Lanka) Ltd.
273
Held –
The Court has an inherent power under section 839 of the Civil Procedure Codeto vacate or set aside or suspend an enjoining order, but it must be done inter partesin an appropriate case as it is an interference with a benefit already granted.
An enjoining order in the first instance is in the nature of an immediate prohibitionmade against a person at the discretion of the Court pending the hearing anddetermination of the application for interim injunction. It is different to an injunction inthe sense that'normally an injunction may be granted only after the petition ofapplication with the accompanying affidavit testifying to the truth of the averments isserved on the opposite party. An exception is made only where the object of grantingthe injunction would be defeated by delay. The exercise of the Court's discretionarypowers gives the Court, in a sense, a broad undefined jurisdiction to act fairly toprevent wrongs and its effect is immediate. Then it is imperative that accurate,complete and compelling grounds be adduced when praying for the exercise of suchdiscretionary jurisdiction. If the grounds do not justify the exercise of such jurisdictionthen even in the absence of express powers, inherent powers of the Court to makeorders to meet the ends of justice and prevent abuse of the process of the Courtwould be in place and could properly be exercised.
The order of the District Judge was based on the finding that the defendant is nota party to the agreement and cannot be injunct but this was the question to be arguedand decided inter parts, at a later stage of the action and not to be decided ex parteby the Court. By deciding that the defendant was not rightly before Court the Judgehas prejudged an issue to the prejudice of the plaintiff.
Mr. Balasubramaniam appearing for plaintiff on 3.7.89 and stating that he came toknow about the application only that morning and he had no papers with him andmoving the matter be postponed for the following day does not make the proceedingsinter partes. The proceedings of 3.7.89 were ex parte.
There must be fair procedure and the plaintiff should have been heard on theallegation of non – disclosure of material facts.
The plaintiff is impeaching the legality or propriety of the order of the DistrictJudge* of 3.7.89 on fundamental issues including the failure to hold a fair inquiry.Considerations of urgency and the balance of convenience demand an immediatereview of the Judge's order. There were thus exceptional circumstances warranting theexercise of the revisionary jurisdiction of the Court of Appeal.
Cases Referred to:
Thomas A. Edison Ltd. v. Bullock (1912) 15 CLR 679, 682
W.S. Alphonso Appuhamy v. L. Hettiarachchi 77 NLR 131, 135, 139
Rex v. Rensington Income Tax Commission (vide 77 NLR 131)
Seneviratne v. Abeykoon (1986) 1 CALR 434, 440
Sirinivasa Them v. Suddassi Them 63 NLR 31
Salim v. Santhiya 69 NLR 490
London City Agency v. Lee and others (1969) 3 All ER 1376, 1379
Duwearatchchi v. Vincent Perera (1984) 2 Sri LR 94, 103
Hounslow v. Twickenham Garden Development Ltd. (1970) 3 All ER 326, 347
Stassen Exports Ltd. v. Hebtuiabhoy & Co. (1984) 1 Sri LR 129
274
Sri Lanka Law Reports
(1989} 2 Sri LR
Hotel Galaxy Ltd. v. Mercantile Hotel Ltd. (1987) i Sri LR 5, 26. 27 • 30
Fernando v. Dias (1980) 2 Sri LR 48
Andradie v. Jayasekera Perera (1985) 2 Sri LR 204
Cooper v. Wandsworth Board of Works (1863) 143 ER 414
Lewis v. Heffer (1978) 3 All ER 354
Wiseman v. Borneman (1969) 3 All ER 275, 286, 287, 288
ft v. Wareham Magistrates' Court (1988) 1 All ER 746
Anisminic v. Foreign Compensations Commission (1969) 1 All ER 208, 233
Rasheed Ali v. Mohamed Ali And another (1981) 1 Sri LR 262
APPEAL from order of the Court of Appeal
K. Kanag – Iswaran, P.C., with M.S.M. Suhaid. Anil Tittawela, Ms. Jesmin Gafoor andMs. Inoka Perera for defendant – petitioner
Eric Amerasinghe, P.C., with C. Manohara, ft. Balasubramaniam and EardleySeneviratne for plaintiff – respondent.
Cur. adv. vult.
November 09, 1989
A. G. DE SILVA, J.
I have had the advantage of reading the.judgments prepared bymy brothers Bandaranayake, J., and Kulatunge, J. I agree with theconclusion arrived at by them that the District Court order of 3.7.89should be set aside and the reasons therefor. I also agree with theorder as to costs.
BANDARANAYAKE, J.
The Plaintiff-Respondent, Galadari Hotels (Lanka) Ltd., brought anaction in the District Court of Colombo on 27.6.89 against theDefendant-Petitioner, Paul Finnegan, the General Manager of the.Galadari Meridian Hotel praying for-
an order and decree declaring that the Defendant is not entitledunder the terms of Management Agreement marked 'A' to allocatethe second and third floors of the said Galadari Meredien Hotel orany portion thereof to the International ' Irrigation ManagementInstitute; (referred to hereafter as IIMI)
a permanent injunction-restraining the Defendant from
so allocating, renting or leasing to the Institute the saidsecond and third floors of the said Hotel,
sc
Finnegan v. GaladariHotels (Lanka) Ltd. (Bandaran'ayake, J.)
275
placing the Institute in occupation of the said floors.,
permitting the conversion of furnished equipped guestrooms on the said second and third floors into 'officialaccommodation,
causing structural alterations to alter or modify thestructural form of the said guest rooms on the said floorsetc.
An interim induction restraining the Defendant from doing any actsought to be prevented by the aforesaid .permanent injunctionpending final determination.
On the same day the Court havings heard Senior Counsel for thePlaintiff, Mr. Eric Amerasinghe, P.C., ex parte issued an EnjoiningOrder restraining the matters referred to in prayer (C) above arid alsoissued notice of application for an interim injunction to the Defendant.The order was declared not to apply to rooms 318 and 3,20 as theyhad. already been so converted. Summons and notice of applicationissued returnable on 17.7.89. Defendant admits that the order andconnected documents were served on the defendant the same day. Itis common ground that the said Enjoining Order dated 27.6.89 ;was alawful order made ex parte within jurisdiction in terms of s.664 of theCivil Procedure Code.
However, on 3.7.89 before the aforesaid notice returnable andsummons returnable date, the . Defendant-Petitioner filed hisobjections by petition and affidavit -r S.C. 21 – praying for,
suspension of the operation of the Enjoining Order or for itsdischarge and vacation;
refusal of the application for an injunction;
Dismissal of the action as having been instituted wrongfullyand unlawfully and without a cause of action ex facie andwithout jurisdiction.
On the same date (ie) 3.7.89 the Court heard Senior Counsel forthe Defendant-Petitioner, Mr. Kanag-lswaran, P.C; In the course ofthe proceedings of that day – S.C. 25 – the Court has made thisobservation “At this stage Mr. R. Balasubrama'niam appearsinstructed and states he has come to know about the application ( ofthe Defendant ) only this morning and he has no papers with him
although it is an ex parte applicationand makes submission? and
wants the case to be heard tomorrow. Mr. Kanag-lswaran for the
276
Sri Lanka Law Reports
11989) 2 Sri LR
Defendant vehemently objects to the application on behalf of thePlaintiff. In the light of this situation I propose to make an order thatthe original order was made on an application made by the Plaintiff,and now the Defendant seeks by his submissions to vary, suspend ordismiss the Enjoining Order so given on the material facts placedbefore me by the plaintiff. In this connection it is my view that I amnot obliged at this stage to hear the Plaintiff. I propose to make anorder on the facts represented by the Defendant today.” The Courtthen made the following order:- “ Addressing my mind to the factssubmitted by Mr. Kanag-lswaran the agreement … ( marked A ) …appears tb have been made by the Plaintiff and Meridien as evincedin the preamble to the Agreement A.”
“ In the first instance it is my view that the Defendant is not a partyto this agreement.”
“ Secondly, flowing from this, it is my view that the Defendantcannot be injunct which the Plaintiff seeks to do. Adverting to matters
of fact the purported, renting of the two floors has already been __
done by letter of 9th JuneFurther, though alleged by the Plaintiff
that the 80 rooms in floors 2 and 3 …. are guest rooms they have notbeen commissioned which fact is borne by letter marked B’ annexedto the plaint.”
“ In the light of these facts I suspend the Enjoining Order issued.
Copy of this order to be served on the Plaintiff Counsel for
Plaintiff takes notice of this order made today. Call case on 17th July1989.”
The Plaintiff thereupon moved the Court of Appeal in Revision toset aside the order of the District Court made on 3.7.89 suspendingits earlier order. The Court of Appeal then first made order stayingthe aforesaid order of suspension and proceeded to consider thelegality of the said order of suspension. By its decision of 25.7.89 theCourt of Appeal allowed the application made by the Plaintiff -Petitioner and vacated the suspension order of 3.7.89 and directedthe District Judge to proceed to inquiry.
The Defendant-Petitioner then moved the Supreme Court to make- an interim order staying the op'eration/execution of the judgment ofthe Court of Appeal; and for special leave to appeal against thejudgment of the Court of Appeal. Special leave to appeal having beengranted on the questions referred to in sub-paragraphs a-f of
sc
Finnegan v. Galadari Hotels (Lanka) Ltd. (Bandaranayake.'J.)
277
paragraph 33 of the petition the matter now comes up for our
consideration.
Learned President’s Counsel for the Defendant-Petitioner made the
following assertions among others by way of background facts:
that the Management Agreement marked ‘A’ was between thePlaintiff Galadari Hotels (Lanka) Ltd and " Societe Des HotelsMeredian(Meridien)” and not between the Plaintiff and theDefendant. This fact was brought to the notice of the DistrictJudge on 3.7.89.
the Defendant was an agent of Meridien though employed andpaid by the Plaintiff,
Meredien was the foreign principal not resident in Sri Lanka withthe power of dismissal over the Defendant.
Meredien was the only party who could have sued and thereforea necessary party but not made a party.
the 2nd and 3rd floors of the hotel comprising 80 rooms werenever commissioned nor taken over as guest rooms – vide -para 1 of document 'B' and para 4 of document ‘D’ annexed toplaint but that fact was suppressed and not brought to theattention of the District Court in the first instance;
that the said 80 rooms were in a bad state of repair from theoutset and therefore* never commissioned as guest rooms. Thesefacts were not brought to the notice of the District Court.
the letter C’ indicated that as at 16.6.89 the 2nd and 3rd floorshad already been let to IIMI which fact had been suppressed bythe Plaintiff.
All these facts of suppression were brought to the notice of theDistrict Judge on 3.7.89 by the Defendant. Upon the foregoing,Counsel for petitioner argued:
that as the Agreement A’ was not one entered intobetween the Plaintiff and the Defendant, the Defendantcannot be injuncted there being no cause of action;
that the renting of the two floors had already taken place;
that there was suppression and non-disclosure of materialfacts uDon which Plaintiff obtained relief in the first
278
Sri Lanka Law Reports
(198912 Sri LR
instance; that if on an ex parte application the Plaintiff doesnot make sufficient disclosure the application will bedismissed upon discovery of such non-disclosure andsuppression. This was a rule based on Public Policydesigned to prevent abuse of procedure of Court whenCourt was dealing with a matter ex parte. Thus uberrimaefidei is required. Counsel relied on paragraphs from thejudgements in the cases of Thomas A. Edison Ltd. v.Bullock (1), W.S. Alphonso Appuhamy v. L. Hettiarachchi(2), Rex v. Rensington Income Tax Commission referred toin the 77 NLR case cited (3), Seneviratne v. Abyekoon (4),Srinivasa Thero v. Suddassi Thero (5), Salim v. Senthiya
. Counsel also cited SPRY – Equitable Remedies, 3rdEd. P.329, 476 et seq and FRIDMAN – Law of Agency, 5thEd, pp. 188,217.
that the rule of audi alteram partem, the absence of whichwas the complaint of the Plaintiff regarding the proceedingsof 3,7.89 which made the suspending order, did not apply •to those proceedings because that suspending order wasitself an interim order which could be made ex partedepending on the imminent urgency of a matter in thediscretionary opinion of the Court. The matter of theinjunction is yet pending before the District Court.
In support learned Counsel relied upon the decisions in thefollowing cases. London City Agency v. Lee and Others (7)Halsbury’s Laws of England, 4th Ed, para 1111,Duwearatchchi v. Vincent Perera (8) Hounslow v.Twickenham Garden Development Ltd (9) per Hegarry, J.,“Natural Justice" by Paul Jackson, 1979 2nd Ed, p. 104.
the matter before the District Judge on 3.7.89 was in factinter partes as is borne out by the record which refers toMr. Balasubramaniam making submissions and wanting thecase to be heard “tomorrow” (supra). It was submittedtherefore that submissions were made and the request fora postponement until tomorrow was objected to andrefused. The Respondent cannot contradict the record.
On the question whether an enjoining order can besuspended in the absence of express provision permittingsuch a course, it was submitted that it can on the twin
sc
Finnegan v. Galadari Hotels (Lanka) Ltd. (Bandaranayake, J.)
279
application of the principle of –
inherent powers of Court an<^,
the doctrine of uberrimae fidei – full disclosure.Counsel distinguished the case of Stassen ExportsLtd v. Hebtulabhoy & Co. (10) which it was submittedwas authority only for the proposition that an interiminjunction cannot be suspended in the exercise ofinherent powers under s.839 of the Civil ProcedureCode as there is express provision in s.666 for thedischarge, variation or setting aside of an interiminjunction with no provision to suspend; and inherentpowers cannot be invoked to violate or overrideexpress provisions of the Code. It follows that powerto suspend interim orders including enjoining ordersstems from the Court's inherent powers securedunder the provision of s.839 of the Code in theabsence of provision to vary, set aside or dischargean enjoining order under s.666 aforesaid. It wasfurther submitted that this principle' was expresslyreaffirmed and re-established in the Galaxy case’ —
' vide Hotel Galaxy Ltd. v. Mercantile Hotels Ltd. (11)and it extended to the exercise of such inherentpowers ex parte.
that the Plaintiff-Respondent could not have moved the
Court of Appeal in Revision •-
without first seeking to have the order suspending theenjoining order canvassed before the District Courtitself. The cases of Fernando v. Dias (12), Andradiev. Jayasekera Perera and Hotel Galaxy Ltd v. ■Mercantile'Hotels Ltd (11) were cited.
in any event the petition did not disclose anyexceptional circumstances warranting the exercise ofthe extraordinary discretionary jurisdiction of revision.Such circumstances must be' shown.
where an alternate remedy exists – to wit: with leavefirst had and obtained from the Court of Appeal interms of s. 754(2) of the Civil Procedure Code,
280
Sri Lanka Law Repons
11989] 2 Sri LR
revisionary powers will not be exercised. Thisalternate remedy which should have been first soughtwas not sought.
the petitioner had suppressed material facts anddocuments from the Court of Appeal, to wit: that the2nd and 3rd floors had never been commissioned andnever handed over by the contractor because ofseveral defects in the rooms itemized in thosedocuments. Wilful suppression is a violation of Rule46 of the Supreme Court Rules – 1978 which havebeen held to be mandatory. The petitioner also hadfailed to produce at the time it supported theapplication before the Court of Appeal the order of theDistrict Judge dated 3.7.89. Several authorities werecited in this regard.
It was also contended that there were grave errors andmisdirections of law in the judgment of the Court of Appeal whichwarrants that it be set aside. Counsel for Petitioner submitted that theCourt of Appeal has come to the following among other wrongconclusions and propositions.,
that there is no statutory authority to suspend an enjoining orderbefore the decision on the application for injunctions;
that where express provisions of the Code request steps to betaken, inherent powers of the Court cannot be invoked;
, that the course adopted by the District Judge was in violation of
provisions of s.666 of the Code.
The Defendant-Petitioner seeks in this appeal to have –
the order of the Court of Appeal set aside,
the District Court’s order of suspension dated 3.7.89 restored,and for any consequential orders.
The questions that arise for adjudication are –
(a) .. whether the enjoining order dated 27.6.89 having been lawfullymade by the District Court ex parte within jurisdiction asprovided for in s.664 of the Civil Procedure Code and normally• operative until the hearing and determination of the applicationfor interim injunction could be lawfully suspended by that Court.
sc
Finnegan v. Galadari Hotels (Lanka) Ltd. (Bandaranayake, J.)
281'
even if so, whether on the averments in the Defendant’s petitiondated 3/7/89 the District Judge had the judicial power tosuspend its earlier enjoining order granted ex parte to thePlaintiff without hearing the Plaintiff.
in any event were the grounds set out in the Order ofsuspension correct and were. they matters upon which theDistrict Court could have taken a decision at that stage of theapplication for interim injunction?
should the judgment of the Court of Appeal be affirmed ?
Under the provisions of the Civil Procedure Code – ss.664 and 666usually an enjoining order granted ex parte in the exercise ofdiscretion is valid until the determination of the interim injunctionapplication. There is no right of appeal from such an order or refusalto grant such order. A party aggrieved by the grant of such orderusually abides the disposal of the application for interim injunctioninter partes in due course. Similarly there is no right of appeal froman order granting or refusing to grant an interim injunction in the firstinstance ex parte. An aggrieved party must follow the expressprocedure laid down in s.666 for relief. In view of such expressprovision *he District Court has no residual inherent powers to dealwith the matter.
Then again, a District Court has no inherent power to vary its ownorder except to the extent permitted by s. 189. Section 404 and s.408 of the Code may be relevant in such situations. Thus usually a. District Judge has no judicial power to vary his earlier order upon achange of mind-even if he later thought that the earlier order waswrong. In this case it has^ been contended for theDefendant-Petitioner that the District Court had an inherent power interms of s. 839 of the Code to make such orders as may benecessary for the ends of justice Or the prevention of abuse of theprocess of the Court; that in the light of the suppression of materialfacts and the absence of a cause of action, the District Judge had inthis case an inherent power, in the absence of express provisions tovacate, discharge, suspend or set aside an enjoining order made inthe first instance under s. 664 of the Code. Indeed it has not beencontended for the plaintiff-respondent that the Court had no inherentpower in an appropriate case to vacate or suspend an enjoiningorder. For the purpose of this action, Counsel for theplaintiff-respondent has submitted that the Court did have such a
282
Sri Lanka Law Reports
11989] 2 Sri LR
power. But it was contended for the plaintiff-respondent that theDistrict Court could not have exercised such a power in the mannerit did on 3.7.89 without hearing the plaintiff against the application ofthe defendant.
It was submitted that the order of suspension was therefore bothillegal and void.
In the absence of any positive or express provision in the Code fordealing with an enjoining order before the stage of determination ofan injunction application and in the absence of a prohibition one mayconsider situations and appropriate remedies where an enjoiningorder has been obtained on inadequate or incorrect or impropergrounds. An enjoining order in the first instance is in the nature of animmediate prohibition made against a person at the discretion of theCourt pending the hearing and determination of the application. It is^different to an injunction in the sense that normally an injunction maybe granted only after the petition of application with theaccompanying affidavit testifying to the truth of the averments isserved on the opposite party. An exception is made only where theobject of-granting the injunction would be defeated by delay. Theexercise of the Court’s discretionary powers gives in a sense theCourt a broad undefined jurisdiction to act fairly to prevent wrongsand its effect is immediate. Thus it is imperative that accurate,complete and compelling grounds be adduced when praying for theexercise of such discretionary jurisdiction. If the grounds do not justifythe exercise of such jurisdiction then it is my view that even in theabsence of express powers, inherent powers of the Court to makeorders to meet the ends of justice and prevent abuse of the processof the Court would be in place and could properly be exercised. TheHotel Galaxy Ltd v. Mercantile Hotels Ltd (11) and other cases citedthere are on point. Incidentally the inherent power exerciseddisturbing the earlier ex parte order has been made inter partes inthe Galaxy case.
One ground urged for the suspension or setting aside of theenjoining order was that the Plaintiff was in law not entitled toinjunctive relief against the Defendant as the ManagementAgreement ’A’(301) was not between the Plaintiff and the Defendantbut between the Plaintiff and a foreign company to wit: Meredien ofFrance and that the Defendant in his capacity as General Managerwas “managing agent and an instrument of Meredien”. Therefore it
sc
Finnegan v. Galadari Hotels (Lanka) Ltd. (Bandaranayake,.J.)
283
was contended that this ‘agent’ could not be sued vis a- vis theagreement 'A'. It was contended for the Defendant that all acts doneby the Managing agent were in terms of the Management agreement'A'. Thus it was contended in the first place that there was no causeof action against the Defendant. The learned trial Judge has usedthis submission of Counsel for the Defendant as a ground for makinghis order of suspension. As already stated elsewhere in this judgmentthe District Judge in his order of 3.7.89 has stated “…. the agreementpurported to have been made between the Plaintiff and theDefendant as stated by the Plaintiff appears to have been madebetween the Plaintiff and Meredien …. the Defendant is not <a party tothis agreement …. flowing from this …. the Defendant cannot beinjunct which the plaintiff seeks to do…" Learned Counsel for thePlaintiff-Respondent has on the other hand submitted – relying oncertain Articles in the agreement that the agreement ‘A’, does notauthorise the Defendant to let guest rooms to the Institute as Officespace. Counsel has cited paragraph 5(1 )(3) of the plaint where thePlaintiff relies on the provisions of Article 4.1 of the Agreement aspermitting ‘Meredien’ to perform “ those duties coming within thescope of th^management and marketing of the hotel …. it shall notset up in the Hotel any other activities except for ancillary andcomplementary activities as normally connected with this- type ofoperation or becoming so connected as a result of changes in-thestandard practices of the international hotel trade. Again Counselreferred to Article 4.5.1 of the agreement where it is stated that‘‘Meredien shall perform successfully on behalf of and for the accountof the Contracting Party (the plaintiff) all appropriate and necessary
management services including at Article 4.5.1(b) … negotiating
contracts which are normally entered into within the scope of the
hotel operation ’’ Thus it was Plaintiff-Respondent’s Counsel’s
submission that the Defendant has acted outside the scope of hisauthority wrongfully in letting out two floors to the Institute to be usedas office space in consequence of which the plaintiff suffers loss. Inany event the plaintiff is entitled to establish a right which is disputed.Counsel thus submits that the Defendant is liable in tort. In supportThe Law of Agency by Raphael Powell, 2nd Ed, pp.277,283 wascited. At page 277 the writer deals with the Personal Liability of anAgent and states: “Any person who commits a tort is himself liablefor that tort. It follows that an agent who commits a tort is liablewhether he acted on behalf of a principal or not and even if he actedfor his principal’s benefit. He cannot escape liability by pleading that
284
Sri Lanka Law Reports
11989/ 2 Sri LR
he-acted with the authority of his Principal, unless the existence ofthat authority means that the agent has not committed a tort at all..”At page 283 the author states “where the principal and agent areboth liable for a tort committed by the agent, they are said to be jointtort feasors and their liability is joint and several. The Plaintiff can sueeither principal or agent separately or he can sue both togetherjointly.” Thus it was contended for the Plaintiff that there was indeeda cause of action against the Defendant in tort and that theDefendant has rightly been made a party to the action. It may be thatthe Defendant disputes the Plaintiff’s position as to the nature andextent of the Agreement ‘A’. Indeed the Defendant takes the positionthat letting of the floors to the Institute was warranted by theAgreement ‘A’ – vide – Article 4.5.1 (e). But it is the submission forthe Plaintiff that this first ground upon which the District Judge's orderwas based was a question to be argued and decided inter partes ata later stage of the action and not to be decided ex parte by theCourt as it did. It is my view that there is merit in the submissions ofPlaintiff’s Counsel that this is a question that must be determined atthe inquiry inter partes into the application for injunction. The DistrictCourt was in error in coming to its conclusion on this question at thisstage as to whether the Defendant is rightly before the Court. It hasreached this conclusion at this stage no doubt because the Courtonly heard one party. By this process the Court has prejudged anissue to the prejudice of the Plaintiff. This can never be a properexercise of inherent powers as it does not meet the ends of justice.The question as to whether the Defendant is properly before theCourt can only be decided at a later stage inter partes and istherefore still open for decision. Thus it seems to me that a DistrictJudge may in the exercise of inherent powers under s.839 of the CivilProcedure Code in the absence of express provision, suspend or setaside an enjoining order already made – vide Hotel Galaxy Ltd casecited but it must be done inter partes in an appropriate case as he isinterfering with a benefit already granted to 'a Plaintiff by a Courthaving been satisfied on the averments in the petition and affidavitand it is therefore nothing but fair procedure in appropriatecircumstances, before interfering with the earlier exercise ofdiscretion, to give the Plaintiff a fair chance of meeting such graveaccusations (eg) of wilful suppression of material facts or the lack ofa cause of action as the suspension or setting aside of an earlierdiscretionary order remains the exercise once again of discretionarypower.
sc
Finnegan v. Galadari Hotels (Lanka) Ltd. (Bandaranayake, J.)
285
There is the further ground whether there was wilful suppression bythe Plaintiff of material facts when supporting his petition forinjunction. The Defendant-Petitioner relies on documents SC 8 and 9.By SC 8 dated 1.6.89 the Defendant informs the Executive Managerof Galadari Hotels that the 2nd and 3rd floors are to be given out toIIMI as (the rooms) were never commissioned. SC 9 dated 9.6.89 isa copy of an agreement between the Defendant and IIMI…. “As ofthis date the hotel will rent to IIMI the entire 2nd and 3rd floorscomprising 80 rooms for a period of 27 months. The occupancy ofthose rooms will commence today. Rental payment will commencefrom 1.9.89 for a rental of US$ 20833/33 per month.” TheDefendant-Petitioner states that these matters were communicated tothe Plaintiff-Company by letter of 16.6,89 – SC 11, blit the Plaintiffhad failed to.mention them in the plaint. Instead the Plaintiff averredthat only 2 rooms had been rented when it applied for injunction relieffrom the Court on 23.6.89. The Plaintiff’s answer is that theagreement SC 9 is not an agreement between Meredien and IIMI. SC9 is merely signed by the Defendant and the General Manager of IIMIand is a private communication between them and the Plaintiff wasunaware of the facts set out therein. It is not a notarially executedagreement and is of no force or avail in law to create any proprietaryor real right in the Institute. The Plaintiff therefore does not need totake cognisance of SC 9 which has also been referred to as ‘X3’.Hence it was submitted there was no suppression of a material fact.It is my view" that this question of fact should have been consideredat a later stage at the inquiry into the injunction application interpartes. The District Court has prejudged an issue that goes to themerits. This ground too for the exercise of discretionary power exparte in this case is unsupportable.
The next contention of Defendant-Respondent was that theproceedings of 3.7.89 was inter partes. In aid of this submissionreference was made to that part of the record – SC 25 (Supra) whichstated ”… Mr. Balasubramaniam appears instructed by Mr. EardleySeneviratne and states he has come to know about the applicationonly this morning and he has no papers with him although it is an exparte application. Mr. Balasubramaniam makes submissions andwants case to be heard tomorrow.”
This contention is: unconvincing. It is apparent that the Counsel forPlaintiff Respondent was not. informed of the application ofDefendant-Petitioner that day. They have been taken by surprise.
286
Sri Lanka Law Reports
(198912 Sri LR
The Attorney said he had no papers. He asks tor a postponement. Itmay well be that this submission was that Senior Counsel for thePlaintiff had had no chance of considering the charges levelledagainst the plaint. The papers filed in this appeal clearly state onbehalf of the Plaintiff that proceeding was ex parte. The record of theproceedings is to my mind quite consistent with that position. It is myview that the Plaintiff Respondent has satisfied this Court that theDistrict Court proceedings of 3.7.89 was ex parte.
In deciding whether the' Court of Appeal could have heard theapplication in Revision one has to consider the factual situation thathad arisen before the District Court. An ex parte inquiry was held on
upon art application of the Defendant-Petitioner which had fullyset out the objections of the Defendant to the issue of interiminjunction in the course of which an application for a postponement ofthe inquiry made by the Plaintiffs was refused on the footing that theCourt was not obliged to hear the Plaintiff. Order was made ex partesuspending the operation of the earlier enjoining order and an ordermade “ call case on 17.7.89 ”. There was no indication that theCourt would hear the Plaintiff against the order of suspension on
or on a later date. Earlier, when the enjoining order wasmade the Court had given the summons and notice returnable dateas 17.7.89. That date would in the ordinary course be a date onwhich objections are received and an inquiry date fixed. After therefusal by the Court to hear the Plaintiff in position to the Defendant’sapplication for dismissal of the Plaintiff's case at an adjournedhearing and the act of the Court in suspending its earlier order exparte there seems to have been little purpose in making the order for‘call case’ that the Court did. This does not indicate whether thePlaintiff would be given a chance on 17.7.89 to meet the Defendant'sallegations and have the enjoining-order once again restored. Theprobabilities are that that would have been most unlikely. The Courthad already reached findings of fact. The order for “Call Case” on
means just what it says. There must be fair procedure andthe facts as stated above suggest that there was an end to the exparte enjoining order matter. In this situation the justice of the caseshould relieve the Plaintiff from further pursuing the matter of theenjoining order before the same Court. There were thus exceptionalcircumstances which justified the course of action taken in this casethereafter:
sc
Finnegan v. Galadari Hotels (Lanka) Ltd. (Bandaranayake, J.)
287
Next, the fact that the order of 3.7.89 was before the Court ofAppeal is supported by the reference to the District Court order in asentence from the order of the Court of Appeal – viz: “I am notobliged at this stage to hear the Plaintiff". The Court of Appeal couldhave permitted it to be filed later. This matter must be considered inthe peculiar circumstances of this case. It has been contended thatthere has been a violation of Rule 46 of the Supreme Court Rules inthat the Petitioner failed to produce at the time it supported theapplication before the Court of Appeal the order Of the Judgecomplained of with a certified copy of the proceedings of 3.7.89. TheCourt has dealt with the petition and disposed of it. The application inrevision has been made the very next day (ie) 4.7.89 because ofurgency. Taking the facts and circumstances into consideration theCourt of Appeal was within jurisdiction in proceeding to hear thePlaintiff's complaint in the exercise of its revisionary powers.
There is left the question of the correctness of the findings of theCourt of Appeal. That Court, dealing with the general question as towhether a District Judge could have in the exercise of discretionarypower made order suspending an enjoining order held that it couldnot as (i) there is no statutory authority to suspend an enjoining orderbefore th^ decision on the application for injunction, (ii) whereexpress provisions regulate steps to be taken, inherent powerscannot be invoked and, (iii) that the course adopted by. the DistrictJudge was a violation of s.666 of the Code. These findings are wrongand are set aside.
It is my view as I have already stated that a District Judge could inthe exercise of discretionary power make an order such as ofsuspension, or vacation or setting aside of an earlier enjoining orderprovided that in a suitable case the proceedings are had inter partes.The contest before the District Judge on 3.7.89 went to the root ofthe case – whether there was a cause of action at all against theDefendant as well as a challenge that the Plaintiff had wilfullysuppressed material facts and misled the Court earlier. In such asituation it was appropriate for the District Judge to have dealt withthe Defendant’s application inter partes before interfering with hisearlier order.
The order of the District Court of 3.7.89 is set aside. The DistrictJudge is directed to proceed to fix the inquiry into the interiminjunction and the trial if parties so agree and conclude itexpeditiously. Paragraph 2 of the order of this Court made on 21.8.89
288
Sri Lanka Law Repons
IW89] 2 SnLR
requiring the District Court to conclude the inquiry into the interiminjunction before 31.10.89 cannot be implemented as that date haspassed. The Defendant-Petitioner is liable in costs fixed at Rs. 1500/-in the Court of Appeal and Rs. 1500/- in this Court.
KULATUNGA, J.
The principal issue in this appeal concerns the legality or proprietyof an order of the District Court in the above action by which itsuspended an enjoining order which had been issued for restrainingthe defendant, The General Manager of Galadari Meridien Hotel,Colombo owned by the plaintiff company from proceeding with certainproposals for allocating the entire 2nd and 3rd floors of the Hotel tothe International Irrigation Management Institute for use as officespace. The enjoining order had been issued on 27.06.89 ex parte interms of Section 664 of the Civil Procedure Code until the hearingand determination of the application for an interim injunction. Thenotice of the said application was returnable on 17.07.89. Howeveron 03.07.89 the defendant filed his objections alleging that –
the action has been instituted without a cause of action. against the defendant ex facie on the averments in the
plaint;
the enjoining order had been obtained by fraudulantsuppression of material facts relevant to the plaintiff’s rightto sue the defendant and the acts sought to be restrained;and praying for;
suspension of the operation of the enjoining order orfor its discharge or vacation;
refusal of the application for an injunction;
dismissal of the action instituted without a cause ofaction.
On the same day the District Judge heard the defendant's applicationex parte despite an application by the plaintiff’s junior Counsel to fixit for hearing the next day and suspended the enjoining order anddirected that the case be called on 17.07.89 which is the dateoriginally fixed for return to the notice of the application for. an interiminjunction.
On 04.07.89 the plaintiff made a revision application to the Court of
sc
Finnegan v. Galadari Hotels (Lanka) Ltd. (Kulatunga, J.)
289
Appeal against the order of the District Judge. The Court of Appealhaving stayed the operation of the impugned order proceeded to hearthe matter and made order setting it aside inter alia on the groundthat it had been made without giving a hearing to the plaintiff anddirected the District Judge to proceed to hear the objections to theissue of the interim injunction. The defendant has appealed to thisCourt from the judgement of the Court of Appeal and seeks to havethe order of the District Judge suspending the enjoining orderrestored.
Despite the lengthy submissions in support'of the appeal and thenumerous authorities cited, we have informed Counsel that speciallyin view of the fact that all the proceedings and orders in the DistrictCourt which constitute the subject of this appeal have been ex parte,we propose to determine this appeal without expressing any viewswhich may prejudice the parties in the adjudication of their claims inthe application for the interim injunction or the main action pending inthat Court.
Mr. Kanag-lswaran, PC for the defendant-appellant justifiablycriticised the view expressed by the Court'.of Appeal that theimplication of the provisions of Sections 664 and 666 of the CPC isthat the District Court cannot in the exercise of inherent powersuspend an enjoining order until the hearing and determination of theapplication for the injunction. This view is plainly erroneous in thelight of the case law on the subject and in particular the decision ofthis Court in Hotel Galaxy Ltd. v. Mercantile Hotels Ltd. (11). TheCourt also appears to have entertained the erroneous view that theDistrict Judge revising an enjoining order is always bound to hear theparty affected. There can be ho such restriction on the inherentpower of the Court under Section 839 of the CPC. This power is verywide both as regards its content and the procedure the Court mayadopt in a particular case. The scope and extent of inherent powerwas examined by this Court in T.W.U. Seneviratne v. FrancisFonseka Abeykoon (4). Tambiah J. cited the following passage fromChitaley and Rao Code of Civil Procedure 3rd Ed. Vol. 1 on thecorresponding section in the Indian Civil Procedure Code.
‘‘Every Court, whether a Civil Court or otherwise, musttherefore, in the absence of express provision in the Code forthat purpose, be deemed to possess, as inherent in its veryConstitution, all such powers as are necessary to do the rightand to undo a wrong in the course of the Administration of
290
Sri Lanka Law Repons
(1989J2 SriLR
Justice” (p. 1199).
He also cited Sarkar (Code of Civil Procedure) Vol. 1 at page 842where it is stated –
“Where a contingency happens which has not been anticipatedby the framers of the Civil Procedure Code, and therefore noexpress provision has been made in that behalf, the Court hasinherent power to adopt such procedure, if necessary to inventa procedure, as may do substantial justice, and shortenneedless litigation”.
On the question of the duty of hearing the affected party indischarging or varying an injunction granted ex parte Counsel for thedefendant-appellant cited London City Agency (JCD) Ltd. andanother v. Lee and others (7). Megarry J. said –
“The Court will grant an interlocutory injunction on an ex parteapplication if a case of sufficient cogency is made, and noreason has been suggested why, if an application ex parte todischarge or vary such an injunction is supported by sufficientlycogent grounds, the Court should not do what is sought. If timepermits, it is plainly preferable that any such application shouldbe made on due notice, but in a case of sufficient urgency, I donot see why an injunction granted ex parte should be immunefrom being varied or discharged on an ex parte application.”
Mr. Eric Amarasinghe, PC for the plaintiff-respondent concedesthat the Court has the inherent jurisdiction in an appropriate case tovacate an enjoining order but contends that in the circumstances ofthis case it could not have lawfully suspended the enjoining orderwithout hearing the plaintiff. He also questions the propriety of theorder in particular on the first ground i.e. the lack of a cause of actionagainst the defendant and complains that the District Judge haspre-judged the main and sole issue in the action; and already formedan opinion ex parte on a question upon which the plaintiff had theright to be heard. On this and other grounds, he submits that theorder of the Court of Appeal is right and ought to be affirmed.
On the other hand, the Counsel for the defendant-appellant whilstnot denying the necessity for hearing the affected party in anappropriate case confidently contends that in the instant case theCourt was not obliged to hear the plaintiff at that stage; that theplaintiff had, particularly in view of the suppression of material facts,
sc
Finnegan v. Ga/adari Hotels (Lanka) Ltd. (Kulatuhga, J.)
291
lost his right to be heard on the merits of the defendant’s application;and that the Court had the jurisdiction to vary its order so soon as itdiscovered such suppression.
Thus the question whether the District Judge was right insuspending the enjoining order without hearing the plaintiff is crucial.There are two other issues namely whether the plaintiff could havemaintained his application in the Court of Appeal without first havingcanvassed the order of suspension before the District Court andwhether there were exceptional circumstances which warranted theCourt of Appeal setting aside the order of suspension' by way ofrevision. All these issues can be determined only after anexamination of the facts of the case. In this connection, the Counselfor the defendant-appellant in his written reply contends that theGalaxy judgment is binding authority for the principle that a partyseeking to canvass an ex parte order must first apply to the Courtthat made it; that this principle as affirmed in the Galaxy case isunqualified; the judgment cannot be distinguished; the principlecannot be restricted in any form; and if that is to be done, the matterought to be referred to a fuller bench. Since the Galaxy case is beingrelied upon by Counsel on more than one issue it would beappropriate to first examine the facts of that case.
Counsel for the plaintiff-respondent does not deny the binding forceof the principle affirmed in the Galaxy judgment that the DistrictJudge had the power to vary the enjoining order. He however doesnot concede that the plaintiff was required in the circumstances ofthis case to apply to the District Judge before seeking to revise hisorder in the Court of Appeal particularly for the reason that theDistrict Judge was not ready and willing and did not intend, to hearthe plaintiff on the order of suspension. In the submission of theCounsel for the defendant-appellant the principle is unqualified andcannot be waived except perhaps in an extreme case where accessto the original court is denied by Act of God, force majeure and suchperils.
In the Galaxy case, the plaintiff company exercising rights ofmanagement, control and operation of a hotel on behalf of theowning company under a management agreement complained thatthe owning company had with the assistance of thugs interfered withtheir rights of control and management and forcibly ejectedSamarakoon, The General Manager of the plaintiff from the hotel.
292
Sri Lanka Law Reports
1198912 Sri LR
The plaintiff prayed, inter alia, for a declaration that it was entitled tooperate and manage the hotel without interference by the defendants,their servants and agents; that its rights had been unlawfullyinterfered with by the defendants, their servants and agents; for anorder for the ejectment of all persons who had no authority from theplaintiff; and for an interim and a permanent injunction restraining thedefendants, their servants and agents from interfering with theplaintiff's rights.
The District Judge directed notice of the application for an interiminjunction on the defendants and issued an enjoining order restrainingthem from committing the acts the commission of which the plaintiffsought to restrain by way of an interim injunction. Subsequently, thedefendants applied to the Court to vacate the enjoining order, interalia, on the ground of wilful suppression of a material fact namely anorder of the Primary Court in proceedings instituted by the Policeunder Section 66 of the Primary Courts Procedure Act, No.44 of 1979declining to make an interim order restoring to the plaintiff the rightsof management of the hotel. The affidavit of Samarakoon filed withthe plaint only stated –
"I made complaint to the Police…. The Police have referred thematter to the Fort Magistrate’s Court and the matter is pendingtherein”
After receiving the written objections of the plaintiff and hearing theparties the District Judge vacate'd the enjoining order on the groundof wilful suppression of a material fact without going into the merits ofthe defendant’s application to vacate the enjoining order.
This Court affirmed the order of the District Judge on the followinggrounds:
That in view of the Scott v. Avery Clause in themanagement agreement, the plaintiff had no cause ofaction to sue; the action should fail in limine for want of acause of action and the District Judge should have refusedto entertain the plaint as disclosing no cause of action.
That the relationship between the defendant company andthe plaintiff being that of principal and agent or master andservant the only remedy available to the plaintiff wasdamages and not specific performance. The plaintiff cannotsustain the reliefs of declaration and injunction prayed forby him. Hence the enjoining order was misconceived.
sc
Finnegan v. Galadari Hotels (Lanka) Ltd. (Kulatunga, J.)
293
that the order of the District Judge suspending theenjoining order on the ground of a material fact was right;and there were no exceptional circumstances for the Courtof Appeal to have exercised revisionary powers; theexercise of such power on the assumption that the plaintiffwas in lawful possession of the hotel was untenable sinceit was the defendant company which was in possession ofthe hotel of which the plaintiff was only the managing agenton behalf of the defendant company.
That It was legally competent for the District Judge tovacate the enjoining order which was made by him exparte.
Consequently, this Court set aside the judgment of the Court ofAppeal and proceeded to direct the District Court to take further stepsaccording to law in the light of the judgment of this Court.
I presume that pursuant to the direction of this Court, the DistrictJudge would have dismissed the plaintiff’s action. This was possiblein view of the fact that the District Judge had held a full inquiry afterhearing the parties; all the facts were before the Court of Appeal andthis Court and the issues were exhaustively argued by Counsel; andin the end this Court was in a position to give a clear directiontouching the rights of parties. In the case before us, there has beenno such proceedings or determination of facts; as stated earlier wecan only decide the limited question whether the ex parte order of theDistrict Judge suspending the enjoining order is valid and anyincidental issues but without causing prejudice to the claims of theparties pending before the District Court. In reaching a decision, Iwould have to refer to the salient facts and set out the contendingpositions advanced by the parties in relation to such facts. In theLondon City Agency (JCD) Ltd. v. Lee (Supra) Megarry J. inconsidering an application to discharge an interlocutory injunctionsaid –
"I therefore turn to the facts of the case. I propose to deal withthem as briefly as possible, bearing in mind that there is anacute conflict of evidence, and that therefore it would be quitewrong for me to attempt to resolve this conflict at this stage”
In the instant case, affidavits and documents have been filed by bothsides; the case has reached us before there had been any inter parte
294
Sri Lanka Law Reports
[198912 Sri LR
hearings on evidence in the District Court; and Counsel have madediametrically opposed submissions touching the available evidence.The caution exercised by Megarry J. should therefore guide us withequal force.
Details of the dispute which culminated in the filing of this actioncan be gathered from the correspondence copies of which areannexed to the plaint. The entire correspondence commencing on30.05.89 and ending on 16.06.89 relating to the proposed allocationof the 2nd and 3rd floors of the hotel as office space to theInternational Irrigation Management Institute (hereinafter called IIMI)has been produced. The plaintiff also produced with the plaint a copyof the agreement under which the management and operation of thehotel on behalf of and for the account of the plaintiff had beenentrusted to a company called ‘Societe des Hotels Meridien'(hereinafter called ‘Meridien’) situated in Paris. Admittedly Meridienhas no place of business in Sri Lanka; and the plaint states that thepowers and discretions granted to Meridien under the agreementwere at all times material to this action exercised by the defendant asGeneral Manager of the Hotel. Under the agreement the relevantprovisions of which have been fully reproduced in the plaint, theselection, transfer and dismissal of the General Manager is byMeridien; and he shall be under Meridien’s exclusive control butemployed and paid by the plaintiff.
The two floors in question consist of 80 guest rooms. Thecorrespondence shows that they are furnished and equipped. Thus inone of his letters the defendant states –
“The furniture on the two floors in question will be suitablystored on.another floor of the hotel. The client will be basicallyusing his own office furniture”.
The correspondence bears out the fact that these guest rooms will beconverted for use as office space. Defendant’s letter to IIMIcontaining the terms of the proposed lease shows that the use of therooms by IIMI would involve alterations and damage. One such termstates –
“The cost of rehabilitating the rooms or corredors consequent toany breakage of or damage to furniture, furnishings, fittings andequipment must be borne by IIMI….”.
A copy of this letter had not been furnished to the plaintiff at the
sc
Finnegan v. Galadari Hotels (Lanka) Ud. (Kulatunga, J.)
295
time of instituting this action. The only information in the possessionof the plaintiff regarding follow up action on the proposal consisted ofa letter from IIMI which states –
We reached an agreement with the General Manager of theGaladari Meridien Hotel whereby the Institute would rent officeson this hotel’s second and third floors”, and a letter from thedefendant in which he states –
“We have …. given out the 2nd and 3rd floors of the hotel toIIMI in the manner we mentioned to you by our earliercorrespondence”.
In one of the letters produced with the plaint the defendant states –
“Space to be allotted consists of the 2nd and 3rd floors of thehotel. These floors never having been commissioned since theopening of the hotel and being presently in a very bad state ofrepair i.e. wall paper peeling off walls, carpets stained etc. etc.”
The plaint alleges, inter alia, that the defendant has, in pursuanceof his proposal allocated two of the guest rooms of the 3rd floor ofthe said hotel bearing numbers 318 and 320 as office space in thepurported exercise of his alleged rights as General Manager of thehotel and states that the plaintiff reasonably apprehends that thedefendant will, wrongfully and unlawfully and in violation of themanagement agreement, proceed to allocate the 2nd and 3rd floors;and that thereupon by such wrongful and unlawful allocation theInstitute will use the said space for office purposes by converting thelay out of the guest rooms; effect structural alterations andmodifications and cause the furniture fixtures, fittings and otheramenities of the guest rooms to be shifted; and that in such eventgrave and irreparable loss and damage will be thereby caused to theplaintiff. The plaintiff prays for a declaration that the defendant is notentitled under the management agreement to allocate the 2nd and3rd floors to the Institute for office space; for permanent injunctionrestraining the defendant from allocating, renting and/or leasing to theInstitute the 2nd and 3rd floors or committing the other actsenumerated above; and for an interim injunction in the same terms.An affidavit from K. Abootty, Executive Manager of the plaintiffaccompanied the plaint.
On the basis of this plaint, affidavit and documents and afterhearing Counsel for the plaintiff, the District Judge issued anenjoining order but excluded from its operation rooms 318 and 320 in
296
Sri Lanka Law Reports
(1989] 2 Sri LR
view of the fact that the plaintiff's Counsel informed the District Judgethat these rooms had already been converted into offices. Hissubsequent order reads –
“Addressing my mind to the facts submitted by Mr.Kanag-lswaran the agreement purported to have been enteredbetween the plaintiff and the defendant as stated by the plaintiffappears to have been made by the plaintiff and Meridien asevinced in the preamble to the agreement 'A'.
In the first instance, it is my view that the defehdant is not a partyto this agreement.
Secondly, following from this it is my view that the defendantcannot be injuncted where the plaintiff seeks to do so.
(Advertising) to the facts of this case, it appears to me thatpurported renting of the two floors has already been done by theletter dated 9th June, reflected in the document marked 'C' annexedto the plaint. Further, though alleged by the plaintiff that the 80 roomsin floors 2 & 3 of this building are guest rooms they have not beencommissioned which fact is borne by letter marked ‘B’.
In the light of these facts, I suspend the enjoining order issued inthis case.
Copy of this order to be served on the plaintiff…. call case on 17th July, 1989”
According to this order, the plaintiff had stated that themanagement agreement was between the plaintiff and the defendant.Counsel for the plaintiff-respondent complains that this observation isbased on the erroneous record of submissions made in support ofthe application for an injunction; that the agreement with Meridienwas annexed to the plaint; relevant portions of the agreement werealso cited in the plaint; and it is inconceivable that Counsel wouldhave misrepresented the agreement. It is true that a party to a suitwill not be permitted to contradict the record; but Counsel informedus that he had no opportunity of suggesting corrections to theseproceedings. It is not possible for this Court to decide whatsubmissions Counsel in fact made before the District Judge. I canonly observe that had the District Judge held an inter partes inquiryinto the defendant’s application, there would have been no room forsuch complaint.
Counsel for the defendant-appellant confidently submits that this
sc
Finnegan v. Galadari Hotels (Lanka) Ltd. (Kulatunga, J.)
2 97
being an action based on the agreement, Meridien who is thedisclosed foreign principal of the defendant alone can be sued andnot its agent the defendant. He has cited authority for thisproposition. (Fridman – Law of Agency 5th Ed. pp.187-188; Chesire,Fifoot and Furmston’s Law of Contract 11th Ed. p.510). Counsel forthe plaintiff-respondent submits with equal confidence that thedefendant can be sued for his acts which are not authorised by theagreement. He pointed out that the agreement prohibits the setting .up of any other activities except for ancillary and complimentaryactivities, as normally connected with hotel operation according tonormal practices of the international hotel trade; he submits that thequestion whether the proposed conversion of 80 guest rooms intooffices is a permitted practice ought to be decided at the trial. To aquestion by Court he stated that this action is based on tort.
In his written submissions, he has cited authority in support of theprinciple that an agent who commits a tort is liable whether he actedon behalf of a principal or not, and even if he acted for his principal’sbenefit. He cannot escape liability by pleading that he acted with theauthority of his principal. Where the principal and the agent are bothliable for a tort committed by the agent, they are said to be jointtortfeasors, and their liability is joint and several. The plaintiff can sueeither principal or agent separately, or he can sue both togetherjointly. (The Law of Agency by Raphael Fowell 2nd Ed. pp. 277,283).
The dispute relating to the classification of the cause of action isnot an issue for our decision. It is an issue for the District Court. ThisCourt will therefore not pursue the matter except to observe that aCourt should not reach even, a provisional decision on so serious aquestion without hearing the affected party.
The District Judge appears to have taken the view that the plaintiffhad suppressed the fact that the renting of two floors had alreadybeen done by letter dated 9th June reflected in the document marked‘G’. The defendant had not furnished to the plaintiff the letter dated9th; document ‘G’ is a letter wherein the defendant informed theplaintiff that he had ‘given out’ the 2nd and 3rd floors of the hotel toIIMI; it is vague. Besides, Counsel for the plaintiff-respondent stronglycontends that on the face of it the letter of the 9th is ^not anagreement by Meridien acting for and on behalf of the plaintiff. Onthe basis of these facts and circumstances, I hold that the DistrictJudge should have heard the plaintiff before forming.his view in thematter.
298
Sri Lanka Law Repons
11989J 2 SnLR
The District Judge has also formed the view that the plaintiffsuppressed the fact that the 80 guest rooms had not beencommissioned. Counsel for the plaintiff-respondent submits that thequestion whether any facts were suppressed and whether they arematerial facts should be decided inter partes. I am in agreement withthis submission. Incidentally, if the 2nd and 3rd floors were nevercommissioned and never handed over by the contract as submitted inSC 30 A, and "never taken over by the plaintiff-respondent” asstated in the petition of appeal, it is a moot question how Meridien orthe defendant as their agent could have taken over and rented thosefloors under the management agreement. If dealing with suchproperty is unlawful, how should such wrong be classified? Is itbased on contract or tort? These are matters for decision in thepending action.
The enjoining order in question was issued upon a consideration ofthe plaint, the affidavit, the documents and submissions of Counsel.It is an order which is exfacie regular and made in the exercise of theordinary jurisdiction of the Court, for maintaining the status quo untilthe hearing and determination of the application for an interiminjunction. Section 664 of the CPC empowers its issue exparte in thediscretion of the Court, upon considerations of urgency and thebalance of convenience.
It is the plaintiff’s position that the hotel was established with theapproval of and with tax and other concessions by governmentalauthorities which would be forfeited if 80 guest rooms are convertedinto office space; this would result in irremediable loss and damageto the plaintiff. Even assuming that the letter of 9th June constitutesan agreement, the plaintiff’s submission is that the enjoining order isa continuing restraint against further acts such as the physicaloccupation of the rooms except 2 rooms already occupied by IIMI,the conversion of, the rooms, structural alterations, shifting of furnitureand equipment etc., As against this, the defendant’s ground for thesuspension of the enjoining order is the hardship to the defendantand to IIMI. This is presumably the loss of rent money and the delayin providing office space to IIMI. As the lease is on behalf of theplaintiff the loss of rental is no loss to the defendant as much. Evenif hardship to IIMI is relevant, it is nothing more than a delay inshifting its office to Colombo from Digana in Kandy where its centreis presently situated. Assuming that the plaintiff has a right of action,
sc
Finnegan v. Galadari Hotels (Lanka) Ltd. (Kulatunga, J.)
299
urgency and the balance of convenience would therefore appear tobe in favour of the plaintiff. This is relevant to the question whetherthe plaintiff should have been given a hearing before suspending theenjoining order.
The dissolution of the enjoining order was effected in the exerciseof the inherent power on the ground that the plaintiff had no right ofaction, which fact the plaintiff has suppressed; and that in any eventthe lease had already been signed and the guest rooms given foroccupation which facts had also been suppressed. The question iswhether the District Judge had failed to exercise this power accordingto law by declining to hear the plaintiff. No such issues arises as.regards the procedure for vacating an interim injunction for whichthere is express provision in Section 666 of the CPC. That sectionrequires an application to be made by way of summary procedurewith notice to the plaintiff. This procedure does not apply to anenjoining order; it may be discharged or varied ex parte. However, asMegarry J. said in London City Agency (JCD) Ltd. v. Lee (Supra)
“If time permits, it is plainly preferable that any such applicationshould be made on due notice.”
Such applications should gent. -<lly be on notice – Halsbury 4th Ed.Vol. 24 para 1111; The Principles of Equitable Remedies, Spry 3rdEd. 490. Notice is dispensed with only where, considerations ofurgency and the balance of convenience would warrant suchprocedure.
The rule audi alteram partem or the principle of fairness is rootedin Common Law. In Cooper v. Wandsworth Board of Works (14)Byles, J. called it “justice of the Common Law”. Principles of naturaljustice which are discussed in numerous cases reviewing the ordersof administrative authorities exercising ‘quasi judicial’ powers wereoriginally applied' to the process by which Courts themselves madetheir decisions. Constitutional and Administrative Law, Hood Phillips& Paul Jackson 6th Ed. p. 602; that these principles apply toproceedings in a Court of Law “is hardly open to question”. NaturalJustice, Paul Jackson 2nd Ed. 104.
Counsel for the defendant-appellant submits that as the order1 suspending the enjoining order is a temporary order, the complaint ofbreach of audi alteram partem rule at this stage cannot be takenseriously. The decisions in Lewis v. Heffer (15) and London Boroughof Hounslow v. Twickenham Garden Developments Ltd. (9) cited by
3 00
Sri Lanka Law Reports
11989/2 SriLR
Counsel do not assist us. In the first case, an injunction to restrainthe suspension by the Labour Party of certain officers andcommittees of a local branch pending inquiries was refused. In thesecond case, the plaintiff applied for an injunction to restrain abuilding contractor whose contract had been terminated fromtrespassing on the building site. This was refused mainly on theground that the balance of convenience was in favour of thecontractor. The dicta of Megarry J. on the principles of natural justicerelied upon by Counsel before us were made in relation to theArchitect’s notice by which the contract was terminated which noticewas attacked by the contractor inter alia on the ground that it wasgiven in breach of the principles of natural justice.
In Wiseman v. Borneman (16) Lord Wilberforce said –
“…. I cannot accept that there is a difference in principle as tothe observance of the principles of natural justice, between finaldecisions and those which are not final….”
Lord Wilberforce continued
“Secondly, in my opinion, a residual duty of fairness rests withthe tribunal. I would, therefore, think them empowered, if in anycase where they are exercising their functions under Sub S. (5)they consider exceptionally that material has been introduced ofsuch a character that to decide on it ex parte would be unfair, totake appropriate steps to eliminate that unfairness. I do not thinkthat rules need be formulated or procedures laid down….”
In R. v. Wareham Magistrates' Court (17) the transfer of anapplication for the revocation of an order for maintenance to a Court300 miles from the recipient of maintenance resided was quashed onthe ground that such transfer was without notice to her, even thoughthe rule under which the Magistrate acted required no such notice tobe given.
McCullough, J. said (at 753)
“Thus the question is not one of the implication into theprovision under consideration a rigid requirement applicable inevery case. It is one of fairness. In some cases fairness willrequire steps to be taken which in other cases it will notrequire”. I
I am of the view that having regard to the complicated questions of
sc
Finnegan v. Galadari Hotels (Lanka) Ltd. (Kulatunga, J.)
301
law and the serious allegation of fraudulent suppression of facts bythe plaintiff including a suggestion that the plaintiff’s Counsel himselfhad misled the Court in stating the case for an interim injunction, theDistrict Judge should have heard the plaintiff before suspending theenjoining order. In the Gataxy case the enjoining order was vacatedafter hearing the plaintiff. In Lee’s case although the application wasex parte, Counsel for the plaintiffs was present and considerablyassisted the Court. It is significant that Megarry J. did not dischargethe interlocutory order but varied it only to the extent of enabling thedefendants to draw a sum not exceeding £625 from the bank accountmentioned in the order.
I cannot see what serious mischief it would have caused to thedefendant if the District Judge acceded to the request of the juniorCounsel for the plaintiff to fix the matter for hearing on the next day.On the other hand, mischief to the plaintiff would appear to beirremediable. Besides the conversion of 80 guest rooms into officesthe defendant had selected as a tenant IIMI which claims inviolabilityof premises and mmunity from every form of legal process in SriLanka under Act No. 6 of 1985. If this is correct, in the absence of anorder restraining the defendant from completing the transaction withIIMI,' steps for converting two flo> *s of the hotel would continue andIIMI would be installed there. In that event, any judgement which theplaintiff may obtain would become completely ineffectual.
Counsel for the defendant-appellant has placed much reliance onthe rule that the complaint of a party found guilty of wilful suppressionof facts will be dismissed on that ground alone and he would inparticular be liable to have any ex parte order obtained by himvacated at once.
Counsel cited –
Spry Equitable Remedies 329, 476,
Thomas A. Edison Ltd. v. Bullock (1) Alponso Appuhamy v.
Hettiarachchi (2) Galaxy case (Supra)
Halsbury 4th Ed. Vol. 24 para 1112.
These authorities are of no assistance in deciding whether theDistrict Judge was wrong in suspending the enjoining order ex parte.In the decisions cited relief was refused or an order made wasvacated after hearing the parties. The effect of suppression is tomake the offender liable to have his claim thrown out of Court withoutgoing into the merits of the ease. There is no authority for the
302
Sri Lanka Law Reports
(198912 Sri LR
proposition that an allegation of suppression by itself forfeits to aparty the right to be heard before his claim is rejected.
I am of the view that whilst the District Judge has the power tovacate or suspend the enjoining order, he has on the facts andcircumstances of this case failed to properly exercise his power bydeclining to hear the plaintiff. In other words, the particular order hemade lacks jurisdiction. In Anisminic v. Foreign CompensationsCommission (18) Lord Pearce said –
“Lack of jurisdiction may arise in various ways…. or whileengaged in a proper inquiry, the tribunal may depart from therules of natural justice. Thereby it would step outside itsjurisdiction”.
It remains to decide the two incidental issues raised in this appeal,namely, whether on the authority of judicial decisions the plaintiffcould not have maintained his application in the Court of Appealwithout first seeking to have the order suspending the enjoining ordercanvassed before the District Court, and whether there wereexceptional circumstances warranting the exercise of the revisionarypowers of the Court of Appeal. On the first question, Counsel relieson the decisions in Fernando v. Dias (12) and the Galaxy case(Supra).
Fernando's case is authority for the proposition that a defendantcannot seek to have an interim injunction issued by the District Courtrevised in the Court of Appeal without first having recourse to theCourt which issued it to have it set aside in terms of Section 666 ofthe CPC. In his judgment, Rodrigo, J. refers to certain otherjudgments in which it had been held that a party seeking to set asidean ex parte order not covered by any express provision for setting itaside must first apply to the Court which made it, which is alwayscompetent to set it aside. Atukorale J. in his judgment in the Galaxycase cites more decisions on this point for determining the questionwhether the District Judge was competent to vacate the enjoiningorder. These are cases in which a decree or an order had beenmade without due notice to the defendant. In one case, the Courtwithout fixing a date for the answer of the defendant fixed the casefor ex parte trial on the basis that the defendant was in default andentered decree nisi against her. Atukorale, J. said “these authoritiesclearly establish the principle that a Court which makes an ex parteorder without notice to the party who is adversely affected by it is
SCFinnegan v. Galadari Hotels (Lanka) Ltd. (Kulatunga.J.)303
entitled to set it aside on the application of such party in the samecase”.
In the instant case, the issue before us is not whether the DistrictJudge is or is not entitled to suspend the enjoining order but themanner in which he made his decision to suspend it. The plaintiffconcedes the inherent power of the Court in an appropriate case tovacate an enjoining order but contends that the Court did not in thecircumstances of this case have the power to make such orderwithout hearing him; that the Court formed an opinion ex parte on thefundamental issue of maintainability of the action by the plaintiff uponwhich he had the right to be heard; that the Court fixed thecase tobe called on 17.07.89, the date on which notice on the application foran interim injunction .was returnable; that the Court was thus notready and willing and did not intend to hear the plaintiff in themeantime against the order of suspension. I am of the view that thedecisions relied upon by the defendant have no application to theissue before us and the plaintiff was entitled to seek to have theorder of the District Judge revised by the Court of Appeal.
On the question whether there was exceptional circumstances forthe exercise of revisionary powers of the Court of Appeal, Counselcited several decisions in particular Rasheed Ali v. Mohamed Ali andothers (19) and the Galexy case (Supra). In Rasheed Ali’s case theapplicant who was in occupation of the premises in suit resistedexecution of the decree. This Court held that he was in possessionon a sham transaction and was without a legal interest to prefer abona fide claim to resist the judgment creditor; the District Judge hadrejected his claim and directed that the judgment creditor be placedin possession of the premises; and his remedy was to institute actionin terms of Section 329 of the CPC to establish his right of title tosuch property; there were no exceptional circumstances, and that thefact that the Judge’s order may be merely wrong would not be asufficient ground for the exercise of the powers of revision. It isapparent that this decision does not assist the defendant-appellant.
In the Galaxy case, the Court of Appeal took the view that thedefendants had by employing thugs forcibly ejected the plaintiff whowas in lawful possession of the hotel taking the law into their ownhands and this constituted exceptional circumstances to exercise itsrevisionary powers. Atukorale J. held that the plaintiff was only theManager of the hotel of which the 1st defendant as owner always
304
Sri Lanka Law Reports
p989j2SriLR
was and continued to be in possession through its Manager, theplaintiff and hence the approach of the Court of Appeal to the vitalissue as to whether there were or were not exceptionalcircumstances to warrant the exercise of revisionary powers wasuntenable. It also failed to address its mind to the important questionwhy the plaintiff, without pursuing the application for an interiminjunction pending in the District Court invoked the revisionaryjurisdiction to vacate the order of the District Judge setting aside theenjoining order.
The facts of this case are different. As discussed above, theplaintiff is impeaching the legality or propriety of the order of theDistrict Judge on fundamental issues including the failure to hold afair inquiry. Gosiderations of urgency and the balance of conveniencedemanded an immediate review of the Judge's order; there were thusexceptional circumstances warranting the exercise of the revisionaryjurisdiction of the Court of Appeal.
For the above reasons, I dismiss the appeal and affirm thejudgment of the Court of Appeal subject, however, to the rulings asregards the errors of law contained therein which have beenenumerated earlier in this judgment; the defendant-appellant isdirected to pay a sum of Rs. 1500/- as costs of this appeal and thesum of Rs. 1500/- which has been ordered in the judgment of theCourt of Appeal, as costs in that Court.
Appeal dismissed.
Order of District Judgeset aside.