Mega Enterprise v Sunway [2014] SBCA 21 – Concise Summary

Section 1: Case Header

Case Name/Citation: Mega Enterprise v Sunway [2014] SBCA 21; SICOA-CRAC 04 of 2014

Court: Solomon Islands Court of Appeal

Date of Hearing: 15 October 2014

Date of Judgment: 17 October 2014

Judges: Goldsbrough JA (President), Williams JA, Margaret Wilson JA

Parties: Appellant – Mega Enterprise | Respondent:Sunway

Nature of Jurisdiction / Procedural Posture: Appeal from a High Court decision (Faukona J, 6 December 2013) assessing damages under a usual undertaking as to damages in Civil Case No. 36 of 2011.

Order / Disposition (Appeal Outcome): Appeal allowed; damages assessment quashed.

Section 2: Facts

2.1 Procedural Background

The High Court assessed damages of $63,024.45 under a usual undertaking given when interim restraining orders were granted on 17 February 2011.

The injunction was discharged on 2 March 2011 after inter partes hearing. Proceedings were discontinued on 13 April 2012.

An application for assessment was filed on 7 May 2013. The appeal, filed on 10 January 2014, was condoned.

The relevant restraint period was nine days (17 February–2 March 2011).

2.2 Material Facts

(i) The undertaking was the usual undertaking as to damages under the CPR 2007, requiring payment of damages suffered as a result of the order if the applicant was unsuccessful or the order ought not to have been made.

(ii) Damages were assessed as loss of production for nine days, calculated by averaging production, deriving a daily rate, and multiplying by nine. The calculation was audited and supported by sworn evidence.

(iii) The Respondent’s operations were logging. The Court noted the Respondent “does not produce anything,” but fells trees, and trees not felled during restraint could be felled later.

(iv) There was a 13-month delay between discontinuance and the assessment application. No evidence explained the delay.

Section 3: Issues

Issue 1 — Whether the Appellant in fact gave the usual undertaking as to damages at the time (or prior to) the grant of the interlocutory injunctive relief.

Issue 2 — Whether the damages sought were a direct consequence of the injunctive relief.

Issue 3 — The nature of the undertaking given (in the event that it is found an undertaking was given).

Issue 4 — Whether damages were payable under the undertaking where there had been no trial of the issues, because the proceedings were discontinued.

Section 4: Rule

4.1 Under the CPR 2007, a party giving the undertaking is liable (without further order) to pay damages suffered as a result of the order if unsuccessful or if the order ought not to have been made, with assessment if quantum is not agreed.

4.2 An undertaking may be given orally during a hearing; absence of a written undertaking in the Registry file is not conclusive.

4.3 Interim relief is granted on condition that the applicant gives an undertaking to abide by any order as to damages, protecting parties and other affected persons.

4.4 Liability arises without further order; assessment is required only where quantum cannot be agreed.

4.5 Where interim relief is discharged at an inter partes hearing, whether the order was made with good cause is not revisited.

4.6 Discontinuance and absence of trial do not prevent damages under the undertaking; trial determination is not a pre-condition.

4.7 Damages are confined to loss suffered as a result of the order. Where logging is restrained, profit may be postponed rather than lost; properly recoverable costs are fixed costs during the restraint period.

4.8 Delay is a factor when an assessment is sought. A modern approach considers delay, reasons, and prejudice.

Section 5: Application (Court’s Reasoning)

The Court considered the four grounds of appeal and determined the appeal accordingly.

5.1 Ground 1 — Whether the undertaking was given:

The interlocutory order recorded the usual undertaking. No evidence contradicted this. Absence of written undertaking was not conclusive.

Ground 1 failed.

5.2 Ground 3 — Nature and scope of the undertaking:

The undertaking operated as a condition of relief and protected affected persons. The “good cause” issue had been resolved when the injunction was discharged.

Ground 3 failed.

5.3 Ground 4 — Whether damages require a trial of issues:

Discontinuance did not bar damages under the undertaking; trial was not required.

Ground 4 failed.

5.4 Ground 2 — Whether the damages sought were a direct consequence of the injunctive relief:

The assessment treated nine days as loss of production.

Court’s reasoning on why the assessment basis was wrong.

The Respondent stopped logging but could fell trees later.

Profit was not lost but postponed. Recoverable costs were fixed costs during restraint.

The material was insufficient to identify properly recoverable loss. The assessment basis was in error.

The Court indicated that in other circumstances the matter might be remitted.

5.5 Delay (raised in submissions) and why the Court refused to remit for rehearing:

There was substantial unexplained delay in seeking assessment.

Court’s treatment of how delay affected the outcome

Although delay was not a ground of appeal, it was relevant to whether to remit.

Given the incorrect assessment basis and substantial delay, the Court declined to send the matter back for rehearing.

Section 6: Conclusion

• The Court of Appeal held that the appeal should succeed.

1. The appeal is allowed.

2. The order of the Court below is quashed.

3. Costs of:

• the appeal, and
• the costs incurred in dealing with the application for assessment, were awarded to the Appellant, such costs to be agreed or taxed.

Section 7: Precedent / Legal Principles

7.1 A party who gives the usual undertaking as to damages undertakes that if they are ultimately unsuccessful or it is otherwise shown the order ought not to have been made, they are liable without further order to pay damages suffered as a result of the order, with damages to be assessed if not agreed.

7.2 The fact that the Registry file contains no written undertaking does not prove that no undertaking was given, because counsel may give the undertaking orally during a hearing, and the recital in the order is evidence the undertaking was given unless contradicted.

7.3 Where interim injunctive relief is sought, the Court requires the applicant, as a condition of granting relief, to enter into an undertaking to abide by any order the Court may make as to damages.

7.4 Although the undertaking is given to the Court, it provides for damages to any party or any other person, including persons not directly the subject of the restraint, if they suffered damage as a result of the order.

7.5 Once the undertaking applies, damages are payable without further order, and only an assessment is required where the amount cannot be agreed.

7.6 Where interim relief is discharged at an inter partes hearing, the question of whether the order was made with good cause is treated as already determined, and the Court assessing damages does not re-litigate that issue.

7.7 The discontinuance of proceedings and absence of a trial does not prevent a party suffering damage from the injunction from seeking damages under the undertaking, because trial determination is not a pre-condition of the undertaking.

7.8 Damages under the undertaking are confined to losses suffered as a result of the injunctive order, and the assessment must be based on losses properly attributable to the restraint.

7.9 Where logging operations are restrained, the Court held that profit from the sale of felled timber was not lost but merely postponed, and that the costs properly recoverable are fixed costs such as labour and machinery that cannot be utilised for making a profit for the days of the restraint.

7.10 Delay is a factor the Court will take into account when an assessment of damages is requested, and in this case the Court treated the delay as relevant when considering whether to send the matter back for a further hearing.

7.11 The Court indicated that while older authority treated delay itself as sufficient, the more modern approach is to consider delay together with:

• the reasons for delay, and
• potential prejudice to the parties,before deciding whether discretion should be exercised.

Section 8: Ratio Decidendi

Where damages are assessed under a usual undertaking as to damages, the assessment must be confined to losses suffered as a result of the interim order, and where the assessment is made on an incorrect basis because the material is insufficient to identify the losses properly recoverable (including that profit was not lost but merely postponed), the assessment order may be quashed; further, delay is a factor the Court may take into account when considering whether to remit the matter for a further hearing.

Published on OcLII: 20/02/2026