Injunction – Interlocutory injunction – Principles for grant – Merits of the case – Balance of convenience – Adequate compensation in damages.

Plaintiff entered into an agreement with the defendants to prospect the defendants’ mineral concession. The defendants undertook not to assign their interest to a third party. The agreement also provided that if the plaintiff decided not to proceed any further with the venture, it would notify the 1st defendant whereupon the agreement would cease without any claim by or against either party. The defendants entered into a joint venture agreement with a third party to prospect for minerals in the said concession. The plaintiff sued the defendants for perpetual injunction to restrain them and specific performance of the agreement between the parties and applied for interlocutory injunction to restrain the defendants but the trial judge declined the application. The plaintiff appealed, arguing that since the claim was not frivolous or vexatious the trial judge ought to have granted the application. The defendants argued that agreement was vague and the injunction order sought would have entailed the court's constant supervision.

Held: (1) Where a plaintiff in an application for interlocutory injunction could not show that the legal right sought to be protected really existed or where either party would suffer great disadvantage, which could not be adequately compensated in damages, it would be permissible in such case to consider the relative strength of the parties’ cases. Hubbard v Vosper [1972] 1 All ER 1023, Baiden v Tandoh [1991] 1 GLR 98, Vanderpuye v Nartey [1977] 1 GLR 428, CA referred to.

(2) Having regard to the agreement, the order of interlocutory injunction would have been valueless since the plaintiff was entitled to revoke the contract at will without any obligations to the defendants. Apart from the uncertainty in the agreement, the court would consider its fairness and convenience. On the balance of convenience the 3rd defendants stood to suffer greater hardship if the application had been granted since it had actual outlays on the land whilst the plaintiff had not. The plaintiff would be adequately compensated in damages. The trial judge’s refusal of the application was therefore proper.

Cases referred to:

Agyei-Acheampong v Donkor [1980] GLR 108.

American Cyanamid Co v Ethicon Ltd [1975] 1 All ER 504, [1975] AC 396, [1975] 2 WLR 316, 119 Sol Jo 136, [1975] RPC 513, HL.

Baiden v Tandoh [1991] 1 GLR 98.

Hubbard v Vosper [1972] 1 All ER 1023, [1972] 2 QB 84, [1972] 2 WLR 389, CA.

Fellowes & Son v Fisher [1975] 3 WLR 184, [1976] QB 122, [1975] 2 All ER 829, 119 Sol Jo 390, CA.

Vanderpuye v Nartey [1977] 1 GLR 428, CA.

Wakefield v Duke of Buccleugh (1865) 12 LT 628, (1865) 6 New Rep 288, 11 Jur NS 523, 13 WR 856.

APPEAL against ruling of High Court.

Willie Fugar for the appellant.

Quashie-Idun for the respondents.

KPEGAH JSC. This is an appeal against the ruling of an Accra High Court presided over by Kwadu-Amponsam J refusing an application for an order of interim injunction brought by the plaintiff.

The plaintiff-appellant (hereinafter referred simply as the plaintiff) is a limited liability company registered in the Isles of Man, in the British Isles. The 1st defendant, Mr Boohene, is the Managing Director of the 2nd defendant, a limited liability company registered under the laws of Ghana. The share capital of the 2nd defendant is owned by the 1st defendant. The defendants hold a mineral concession at Obuom in the Ashanti Region of the Republic of Ghana.

On 14 June 1991, the 1st defendant signed an agreement with the plaintiffs in the Republic of South Africa in respect of the defendants’ concession. The essence of the agreement was for the parties to co-operate in the mineral prospecting operations on the said concession. If the prospecting proved good, the plaintiffs and the 1st and 2nd defendants would form a company to exploit the minerals. In consideration, the 1st defendant would be given 10% of the share capital of a company to be formed with an option for more shares. The plaintiff, under the said agreement, was enjoined “to use its reasonable endeavours to raise funds necessary for the mining company to commence mining operations.” The defendants also warranted not to alienate their interest in the concession to anybody.

In breach of the said agreement, according to the plaintiff, the 1st and 2nd defendants entered into a joint venture agreement with Oro Sunkwa Inc, a company incorporated in Denver, Colorado, and they incorporated the 3rd defendant company, Obuom Goldfields Limited to prospect minerals in the concession. The plaintiff therefore brought this action against the defendants claiming the following reliefs:

“1. an order of perpetual injunction to restrain the defendants, their agents representatives or assigns from performing any acts inconsistent with the agreement of 14 June 1991 between the plaintiffs and 1st and 2nd defendants.

2.      an order of perpetual injunction to:

(a) restrain the 1st and 2nd defendants from entering any agreement or contract with the 3rd defendants, their servants or agents or other 3rd parties with the view to exploiting or developing land or proving gold at land situate in Ashanti and held by the 2nd defendants under license No AC 1550/88 and bearing Land Registry title number 123804;

(b) restrain the 3rd defendants their servants, agents, privies and or assigns from dealing with exploiting developing and or proving gold in the land in Ashanti and under license aforementioned.

3(a) an order compelling the 1st and 2nd defendants to hand over all documents on land No 12804 and concession No AC 1550/88 to the plaintiff as agreed between the plaintiff and 1st and 2nd defendants and to do all acts consistent with the agreement of 14 June 1991, executed between the plaintiff and 1st and 2nd defendants; alternatively,

(b) an order for specific performance of the agreement of 14 June 1991 executed between the plaintiff and 1st and 2nd defendants.

4. any other orders as this honourable court will deem fit to make in the present circumstances.”

The plaintiff followed up immediately with an application for an order of interim injunction. The learned trial judge refused the application. Dissatisfied with the said decision, the plaintiff appealed to this court.

Before us, learned counsel for the plaintiff, Mr Willie Fugar, argued that once the court below found that there were serious issues to be tried between the parties, (in other words, the action not being frivolous or vexatious), it should have exercised its discretion in favour of the plaintiff and granted the application as the plaintiff stood to suffer irreparable damage unless the defendants were restrained. He also castigated the court below for not considering the balance   of   convenience  after  holding  that   the   action  was  not

frivolous or vexatious.

Mr Quashie-Idun who appeared for the 1st and 2nd defendants argued that the agreement which formed the basis of the action was so vague and ambiguous that no court would order specific performance since such an order would entail the constant supervision of the court. Also, an order of interim injunction could lead to judicial sanction in case of breach. It must therefore be specific and direct in its prohibition. An order of interim injunction, the parameters of which were indeterminate, or ambigous would entail the court's constant supervision.

The case of Vanderpuye v Nartey [1977] 1 GLR 428 is often cited in our courts as the locus classicus on the principles to be applied when an application for an order of interim injunction is being considered. The decision in the Vanderpuye case is a decision of this court which under normal circumstances I am bound to follow.

Speaking per Amissah JA the Court of Appeal said:

“The governing principle should be whether on the face of the affidavits there is need to preserve the status quo in order to avoid irreparable damage to the applicant and provided his claim is not frivolous or vexatious.

The question for consideration in that regard resolves itself into whether on balance greater harm would be done by the refusal to grant the application than not. It is not whether a prima facie case however qualified and with whatever epithet, has been made.”

The case relied upon by the Court of Appeal is American Cyanamid Co v Ethicon Ltd [1975] 1 All ER 504.

In Baiden v Tandoh [1991] 1 GLR 98, I declined to follow the above decision. My main reason was that the dictum quoted above could not be said to be the ratio decidendum of the Vanderpuye case. The case involved an appeal from the ruling of Edusei J dismissing the applicant's application for an order for the interim preservation of property pending the final determination of the case between the parties. An earlier application was brought before Griffiths-Randolph J who dismissed it on the merits. The applicants repeated the application before Edusei J on new facts. He dismissed the application on preliminary grounds because a similar one had earlier been brought before and dismissed by Griffiths-Randolph J, thereby holding the first decision of Griffiths-Randolph J as res judicata.

The issue before the Court of Appeal was whether Edusei J was right in treating the matter as one of res judicata. The court held that the appellant was not advocating an unlimited right to bring such an application and that Edusei J was wrong in treating the matter as he did. I do not see how the determination of that issue by the Court of Appeal could have resulted in the enunciation of principles governing the grant of an order of an interim injunction.

I accept that decisions of the Court of Appeal are binding on me. But it is not every pronouncement of the court in a judgment that forms part of the decision, whether it is relevant or necessary for the said decision. What binds me is that which is necessary for the decision and conclusion of the court.

As indicated earlier, I have in Baiden v Tandoh (supra) adequately considered the Court of Appeal decision in Vanderpuye v Nartey (supra) and tried to give reasons why I did not consider it as an authority on the principle to be applied in interim injunction case. I do not have any good reasons to change any views. As Korsah J reminds us in the case of Agyei-Acheampong v Donkor [1980] GLR 108,

“...the first rule of Order 50 of LN 140A demands that the courts should ascertain whether there is a prima facie case. And the courts of this country have repeatedly adhered to that practice for so long that I would have thought that any departure from the accustomed practice or change in outlook must be grounded on some fundamental and justifiable reason rather than a mere adherence or respect for English authority.”

And in rule 7(1) of Order 50, it is stated:

“The Court may grant a mandamus or an injunction or appoint a receiver by an interlocutory order in all cases in which it appears to the Court to be just or convenient so to do.”

Lord Diplock in his leading opinion in the American Cyanamid case remarked that the court is not justified in embarking on a trial of the action on conflicting affidavits in order to evaluate the strength of either party's case. And in earlier case of Wakefield v Duke of Buccleugh (1865) 12 LT 628 Kindersley VC said the court must abstain from “expressing any opinion upon the merits of the case until the hearing.”

My approach has always been that a plaintiff who seeks an order for interim injunction must show that the right he seeks to protect really exists and that there has been an unjustified interference by the defendant and such an interference is likely to continue. This to me will involve an examination of the relative strength of the parties case. Lord Denning in Hubbard v Vosper [1972] 2 WLR 389 at 396 said:

“In considering whether to grant an interlocutory injunction, the right course for a judge is to look at the whole case. He must have regard not only to the strength of the claim but also to the strength of the defence, and then decide what is best to be done.”

In our jurisdiction an order of interim injunction is granted when it is “just or convenient”. And as I asked in the Baiden case, will it be just to grant an injunction when the plaintiff cannot be said to have shown that the legal right he seeks to protect really exists? And for the same reason will it also be convenient to do so? Also can one decide to grant an interim injunction without impliedly taking into account the relative strength of the case put forward by the parties and deciding whether the balance of convenience goes to the plaintiff or the defendant?

One such situation is where either party would suffer great disadvantage which could not be adequately compensated in damages. It should in such cases be permissible to consider the relative strength of the parties. Both sides are relying on serious legal arguments and the resolution of some of these points of law may have the effect of “disposing” of the case. It has therefore not been easy for me to decide this case without considering the possibility that I may exceed my jurisdiction as it is no business of a court to determine the merits of a case in an application for interim injunction. But as was pointed out in Fellowes & Son v Fisher [1975] 3 WLR 184:

“They are all cases where it is urgent and imperative to come to a decision. The affidavits may be conflicting. The questions of law may be difficult and call for detail consideration. Nevertheless, the need for immediate decision is such that the court has to make an estimate of the relative strength of each party's case. If the plaintiff makes out a prima facie case, the court may grant an injunction. If it is a weak case, or is met by a strong defence, the court may refuse an injunction. Some times it means that the court virtually decides the case at that stage. At other times it gives the parties such good guidance that the case is settled. At any rate, 99 cases out of 100, the matter goes no further.”

He then proceeded to give several examples in certain areas of the law when the matter never travelled beyond the interim injunction stage because the plaintiff took a cue from the bench.

I have already stated the arguments of both counsel before us. I only wish to recapture the gravamen of Mr Quashie-Idun’s case ie that the agreement entered into by the plaintiff and the 1st and 2nd defendants is so lose and indeterminate that the plaintiff who is seeking an order of interim injunction can conveniently walk out on the 1st and 2nd defendants without any liability. In other words there is lack of mutuality, and a court of equity ought not to decree specific performance in favour of the plaintiff, as the enforcement of the order sought would entail the constant supervision or intervention of the court.

I have read the agreement and I hold the view that there are grave legal objections to the plaintiff's claim, I say so without intending to decide the point and must not be taken to have so decided. Perhaps the most potent legal objection to the plaintiff's claim for specific performance is that such an order would be valueless since the plaintiff is entitled to revoke the contract at will without any obligation to the defendants. The plaintiff is vested with the right to walk out on the defendants in the following language:

“In the event that Centracor Resources decides on its sole discretion for whatever reason not to proceed with further prospecting operations, it shall advise Edward Boohene in writing and thereupon this agreement shall be of no further force and effect and neither of the parties shall have any claim against the other and the parties shall take all such steps as may be necessary to restore them to the positions in which they were prior to entering into this agreement”.

Clearly, the equities are not equal. Will a court grant a relief which the plaintiff can immediately revoke or will a court grant an order in relation to a contract from which a plaintiff may resile at any time without any liability to the defendant? In view of the grave legal queries that plaintiff's claim attracts I do not think it will be proper to grant him the interim relief he seeks.

On the issue of balance of convenience the evidence is that plaintiff has not made any outlay on the land but the 3rd defendants have done so. Therefore they stand the chance of suffering greater hardship.

The plaintiff seems to have an alternative remedy, namely damages for breach of contract. In such a case, the claim for specific performance becomes a doubtful claim.

Considering all the issues involved I think this appeal should be dismissed, and it is hereby dismissed.

I must say that this is a case which should have gone for an early trial rather than the delay it has suffered by this application.

AMUAH JA. I agree and these are my reasons. An essential feature of the agreement is that the parties are to co-operate to make the agreement work and that the plaintiff reserves the right to terminate the agreement. When this happens “neither of the parties shall have any claim against the other”. The decision to terminate “is at its sole discretion for whatever reason.” Clause 5 of the agreement is to this effect:

“In the event that Centracor Resources decides at its own discretion for whatever reason not to proceed with further prospecting operation it shall advise Edward Boohene in writing and thereupon the agreement shall be of no further force and effect and neither of the parities shall have any claim against the other, and the parties shall take all such steps as may be necessary to restore them to the positions in which they were prior to entering into the agreement.”

If the defendants are not co-operating it is for the plaintiff to terminate the agreement for the consequences to follow. On the other hand to order the defendants to specifically perform the agreement amounts to indirectly compelling them to enter into partnership with them. The trial judge exhibited a high regard for the authorities cited as well as the principles to be followed. The governing principle is to be  found  in  Vanderpuyje v Nartey [1977] 1 GLR 428  at page  432 and

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