BMC GLOBAL LTD AND ANOTHER v. TOR ASIA CREDIT MASTER FUND LP AND OTHERS

HCA 2392/2016

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

HIGH COURT ACTION NO 2392 OF 2016

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REASONS FOR DECISION

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INTRODUCTION

1. I have before me the plaintiffs’ summons dated 27 September 2016 seeking various injunctive relief against the 1^st and 2^nd defendants, in particular:-

(1)   an interlocutory injunction to restrain the 1^st and 2^nd defendants from disposing of and/or dealing with the assets of the 1^st plaintiff and the 3^rd defendant (including but not limited to the shares in the 3^rd defendant held by the 1^st plaintiff and the mining titles owned by the 3^rd defendant) on or before 30 November 2016;

(2)   an interlocutory injunction to restrain the 1^st and 2^nd defendants from enforcing or exercising any powers stated in any of the “Transaction Security Document” (as defined in the Facility Agreement concluded between the 1^st plaintiff, the 1^st defendant and the 3^rd defendant dated 31 August 2015) on or before 30 November 2016 including but not limited to –

(a)  the Borrower Debenture between the 1^st plaintiff and the 1^st defendant;

(b)  the Guarantor Debenture between the 1^st defendant and the 3^rd defendant; and

(c)  the Guarantor Share Mortgage (defined in the Facility Agreement to mean the “Equitable Share Charge” relating to the shares in the 3^rd defendant) between the 1^st plaintiff and the 1^st defendant,

all dated 31 August 2015; and

(3)   an interlocutory injunction to restrain the 2^nd defendants from acting or continuing to act as the receivers and managers of the 1^st plaintiff and the 3^rd defendant and/or their assets.

2. The plaintiffs’ summons came before me on 30 September 2016.  At that hearing, Mr Chong (for the plaintiff) indicated he would seek the following interim relief pending the substantive hearing of the summons, namely, an interim injunction to restrain the 1^st and 2^nd defendants from:-

“entering into an agreement to sell or otherwise dispose of the shares in and assets of [the 3^rd defendant] held by the [1^st plaintiff] and/or [3^rd defendant] on or before 30 November 2016”.

3. The plaintiffs’ application was opposed by the 1^st defendant.  After hearing Mr Chong (for the plaintiff) and Mr Charles Sussex SC (for the 1^st defendant), I made an order that the plaintiffs’ application for the interim injunction be dismissed with costs to the 1^st defendant (with certificate for 2 counsel), with reasons to be given later.  This I now do.

Background facts

4. The 1^st plaintiff was incorporated in Hong Kong on 27 January 2014.  Yip Hei Man (“Mr Yip”) was originally the sole registered shareholder of the 1^st plaintiff holding 100 issued shares in it, of which 55 shares were held on trust for the 2^nd plaintiff (Lim Ho Sok) and 45 shares for Pang Ngoi Wah (“Mr Pang”).

5. The 1^st defendant is a Cayman Islands exempted limited partnership.

6. In around March 2014, the 1^st plaintiff acquired 858 shares[1] in the 3^rd defendant, which represented approximately 83.7% of the total issued share capital of the latter.  According to the 2^nd plaintiff:-

(1)   the 3^rd defendant, through a branch in Argentina, held 19 mining titles in the Puna region of Argentina with the one in Salar de Pozuelos being the most valuable;

(2)   the equity value of the 3^rd defendant was between US$269 million and US$358 million (according to a draft report prepared by PricewaterhouseCoopers (“PwC”) in 2014);

(3)   the mining titles held by the 3^rd defendant had a value of US$261.6 million as of December 2015 (according to a valuation report dated 8 June 2016 compiled by PwC); and

(4)   on or about 25 July 2015, the 3^rd defendant entered into a licence agreement with POSCO, a multinational steel‑making company based in South Korea, to enable the 3^rd defendant to use POSCO’s patented lithium extraction method to extract lithium from the 3^rd defendant’s mining sites.

7. On or about 31 August 2015, the 1^st plaintiff borrowed from the 1^st defendant the sum of US$15 million (“the Loan”) pursuant to a “USD15,000,000 Senior Secured Term Loan Facility Agreement” dated 31 August 2015 (“the Facility Agreement”).  Various securities were provided by the 1^st plaintiff, the 3^rd defendant and Mr Yip (as trustee for the 2^nd plaintiff and Mr Pang) to the 1^st defendant for the Loan pursuant to a number of documents described in the Facility Agreement as the “Transaction Security Document”, including:-

(1)   the “Borrower Debenture” dated 31 August 2015 under which the 1^st plaintiff mortgaged, charged or assigned all its rights, title and interest from time to time in the whole of its property, assets, rights and revenues in favour of the 1^st defendant;

(2)   the “Borrower Share Mortgage” granted by Mr Yip in favour of the 1^st defendant in respect of his registered shareholding in the 1^st plaintiff;

(3)   the “Guarantor Debenture” dated 31 August 2015 under which the 3^rd defendant mortgaged, charged or assigned all its rights, title and interest from time to time in the whole of its property, assets, rights and revenues in favour of the 1^st defendant; and

(4)   the “Guarantor Share Mortgage” (defined to mean the “Equitable Share Charge”) dated 31 August 2015 granted by the 1^st plaintiff in favour of the 1^st defendant in respect of its shareholding in the 3^rd defendant.

8. Under the Facility Agreement, the Loan was to be repaid on the “Repayment Date”, which was defined to mean the date falling 12 months following the “Utilisation Date”.  It is not in dispute that the original Repayment Date was 31 August 2016.

9. Apparently, the 1^st plaintiff was unable to repay the Loan on the due date.  In or about August 2016, the 1^st plaintiff requested the 1^st defendant to extend the Repayment Date of the Loan.  There were a number of meetings between the 1^st plaintiff and the 1^st defendant in August 2016 during which the proposed extension was discussed.  According to the 2^nd plaintiff, at a meeting held on 31 August 2016 (attended by the 2^nd plaintiff and various representatives of the 1^st defendant), an oral agreement was reached under which the 1^st defendant agreed to extend the repayment date to 30 November 2016 and would not take enforcement action in respect of the securities for the Loan in the meantime. The alleged oral agreement is disputed by the 1^st defendant.  I shall come back to this matter later in this decision when I consider the merits of the plaintiffs’ claim against the 1^st defendant.

10. On 1 September 2016, the 1^st defendant sent a default notice to the 1^st plaintiff. On 12 September 2016, the 1^st defendant appointed the 2^nd defendants as the joint and several receivers and managers of the assets of the 1^st plaintiff and the 3^rd defendant under the Borrower Debenture and Guarantor Debenture respectively.  Currently, the 2^nd defendants are in the process of selling the 1^st plaintiff’s shareholding in the 3^rd defendant, which the plaintiffs seek to restrain by the present application.

11. The writ in this action was issued on 15 September 2016 and amended on 27 September 2016.  In the amended indorsement of claim, the plaintiffs seek, inter alia:-

(1)   a declaration that the 1^st defendant was not entitled to appoint the 2^nd defendants as the joint and several receivers and managers over the Charged Assets (paragraph 1);

(2)   an injunction to restrain the 1^st defendant and 2^nd defendants from disposing of and/or dealing with the assets of the 1^st plaintiff and the 3^rd defendant (including but not limited to the shares in the 3^rd defendant held by the 1^st plaintiff and the mining titles owned by the 3^rd defendant) on or before 30 November 2016 (paragraph 7);

(3)   an injunction to retrain the 1^st defendant and/or the 2^nd defendants from enforcing or exercising any powers stated in any of the Transaction Security Document on or before 30 November 2016 including but not limited to the two Debentures dated 31 August 2015 (ie the Borrower Debenture and the Guarantor Debenture) and the Equitable Share Mortgage relating to the shares in the 3^rd defendant dated 31 August 2015 (paragraph 8); and

(4)   an injunction to restrain the 2^nd defendants from acting or continuing to act as the receivers and managers of the 1^st plaintiff and the 3^rd defendant and/or their assets (paragraph 9).

12. As earlier mentioned, the plaintiffs took out the present summons on 27 September 2016, which was supported by the affirmation of the 2^nd plaintiff filed also on that date.

13. In opposition to the plaintiffs’ application, the 1^st defendant has filed two affirmations on 29 September 2016:-

(1)   an affirmation of James Gerard Sweeney (“Mr Sweeney”), a director of Tor Investment Management (Hong Kong) Limited (being an advisor to the 1^st defendant), who attended the meeting on 31 August 2016; and

(2)   an affirmation of Kenneth Fung (“Mr Fung”), one of the joint and several receivers and managers of various assets and undertakings of the 1^st plaintiff and the 3^rd defendant.

14. In his affirmation, Mr Fung states that the 2^nd defendants adopt a neutral position in relation to the plaintiffs’ application.

15. For the sake of completeness, I should mention that, as stated in paragraph 62 of the 2^nd plaintiff’s affirmation, the 3^rd defendant has been joined as a nominal defendant in this action.  Neither the 2^nd nor the 3^rd defendants participated at the hearing on 30 September 2016.

merits of plaintiffs’ claim

16. The plaintiff’s case is based entirely on a bare assertion by the 2^nd plaintiff that there was an oral agreement reached at the meeting on 31 August 2016 that the Repayment Date would be extended to 30 November 2016.  As I understand it, Mr Sussex accepted that there is a serious issued to be tried in respect of this matter.  With some reservation, I am prepared to accept this concession made by experienced counsel on behalf of the 1^st defendant.

17. Nevertheless, for reasons which I shall explain below, this is a case where the court is entitled to examine the merits of the plaintiffs’ claim a little more closely.  I bear in mind that the court should normally not undertake a detailed examination on the merits or conduct a mini‑trial on affidavit evidence in an application for an interlocutory/interim injunction.  However, the court is not bound to accept the 2^nd plaintiff’s bare assertion at face value.  I also consider that, in a commercial setting, the court is entitled to examine a deponent’s assertion in a robust manner.

18. In the present case, I consider the 2^nd plaintiff’s assertion of an oral agreement reached at the meeting on 31 August 2016 to be highly questionable, for the following reasons.

19. First, the context of the relevant transaction is important.  I am here dealing with a substantial commercial transaction between two apparently substantial business enterprises.  In relation to the Loan, they entered into a series of complicated written agreements which obviously were carefully negotiated and drafted.  An allegation that they would enter in an oral agreement to vary an important provision in the Facility Agreement (namely, one relating to the Repayment Date) without any written note, memorandum or record of the oral agreement is inherently improbable.

20. Second, the alleged oral agreement is a complicated one containing many detailed terms set out in nearly 5 typed written pages in the affirmation of the 2^nd plaintiff. It is highly unlikely that the parties could have agreed those terms orally without any written note, memorandum or record.  If some such note, memorandum or record exists, it has not been produced or mentioned by the plaintiffs.

21. Third, on 1^st September 2016 (the day immediately after the making of the alleged oral agreement), the 1^st defendant sent a default notice to the 1^st plaintiff and the 3^rd defendant. The 1^st defendant’s conduct was inconsistent with the alleged oral agreement having been reached on 31 August 2016.  The 2^nd plaintiff’s explanation for this default notice is another assertion that Mr Sweeney told him orally at the said meeting that a notice of default would be sent to the 1^st plaintiff and the 3^rd defendant as a matter of “formality” which “would not be taken seriously since the [1^st defendant] would not be enforcing its rights under the security documents in relation to the Loan in the absence of a fresh event of default”.  The allegation that the default notice was sent as a matter of “formality” is difficult to understand, there being no suggestion that there was any internal or external rule, regulation or practice which required a default notice to be issued by the 1^st defendant in the circumstances of this case.

22. Fourth, upon receipt of the default notice, the 2^nd plaintiff replied in an email dated 1 September 2016 stating simply: “Well Noted”.  His email went on to state that “[w]e look forward to receiving the Extension Termsheet as we agreed in the meetings earlier”.  This email from the 2^nd plaintiff was heavily relied upon by Mr Chong in support of the plaintiffs’ case of the alleged oral agreement.  In my view, far from supporting the plaintiffs’ case, this email in fact suggests that no binding agreement for an extension of the Repayment Date was reached at the meeting on 31 August 2016.  At the highest, this email is evidence that what had been agreed between the parties at the meeting was that the 1^st defendant would send an “Extension Termsheet” to the 1^st plaintiff.  As a matter of fact, a draft termsheet dated 25 August 2016 had previously been sent by the 1^st defendant to the 1^st plaintiff.  It is plain on the face of that draft termsheet that it was meant to set out only “indicative terms and conditions for the potential extension” of the Loan facility which “[were] not exhaustive and [were] indicative and subject to relevant internal approvals … of the Lender and should not be construed as a commitment from the Lender to provide any extension of the financing”.  There is nothing on the evidence to show that the “Extension Termsheet” that the parties referred to at the meeting was intended to be fundamentally different in nature from the previous one that the 1^st defendant had sent to the 1^st plaintiff.

23. Fifth, in none of the contemporaneous emails that the 2^nd plaintiff has produced in his affirmation was there any reference to the alleged oral agreement having been reached at the meeting.

24. In all, while I am prepared to accept the 1^st defendant’s concession that there is a serious issue to be tried in respect of the alleged oral agreement, the plaintiffs’ case is, in my view, a weak one.  This has an important bearing on the issue of the balance of convenience which I shall deal with later in this decision.

ADEQUACY OF DAMAGES

25. It has not been suggested by the Mr Sussex that damages would be an adequate remedy for the plaintiffs in the event that the interlocutory/interim injunction sought by the plaintiffs is refused, although he did not accept the plaintiffs’ suggestion that if the 3^rd defendant’s mining titles are sold off, the 1^st plaintiff and the 3^rd defendant would be “completely ruined”.  Mr Sussex relied on the evidence of Mr Fung which suggests that the 2^nd defendants’ ongoing sale process is anticipated to take several months, and that completion of any sale may take place as late as February 2017. From this, Mr Sussex argued that the refusal of the interlocutory injunction would not have a material or detrimental impact on the 1^st plaintiff or 3^rd defendant at all, or lead to any “irreparable damage” suffered prior to 30 November 2016.  However, it is at least possible, on the basis of the current timetable relating to the proposed sale of the 1^st plaintiff’s shares in the 3^rd defendant, that a contract may be concluded prior to 30 November 2016.  Once a contract for the sale of the shares in the 3^rd defendant is made with a third party, it may not be easy to rescind the contract.  There would also be difficulties in assessing damages arising from the sale of the shares in the 3^rd defendant should the plaintiffs be able to prove, ultimately, that there was an oral agreement to extend the Repayment Date and hence the appointment of the 2^nd defendants as receivers and manager was wrongful.  I therefore consider that damages would not be an adequate remedy as far as the plaintiffs are concerned.

26. On the other hand, it may be argued that damages would be an adequate remedy for the 1^st defendant because all that the 1^st defendant is interested in would be the recovery of the outstanding Loan.  However, an award of damages in the 1^st defendant’s favour may well be an empty award, having regard to the fact that that 1^st plaintiff plainly has difficulty in meeting its repayment obligation under the Facility Agreement.  For this reason, Mr Sussex submitted that should the court be minded to grant the injunction sought by the plaintiffs, it should be conditional upon fortification of the undertaking in damages in the sum of US$15 million.  When this matter was raised with Mr Chong in the course of his reply submissions, he informed the court that the plaintiff could only make payment of US$2 million into court within 7 days.

27. There are two other matters relevant for the purpose of the present discussion. First, the 1^st defendant is holding various securities for the Loan.  The major security would appear to be the shares in the 3^rd defendant held by the 1^st plaintiff, or the mining titles held by the 3^rd defendant. In paragraph 115 of Mr Sweeney’s affirmation, he explains why PwC’s valuation of the mining titles in its report dated 8 June 2016 is not reliable.  Although the concerns about PwC’s valuation were specifically raised in paragraph 47(4) of Mr Sussex’s skeleton submissions, Mr Chong did not make any submission to address those concerns.  In this regard, it is also relevant to note that, according to the 2^nd plaintiff:-

(1)   in or about September 2015, the 1^st plaintiff purchased 167 shares in the 3^rd defendant (representing 16.3% of the total issued shares) at the price of US$407,480 only; and

(2)   in or about March 2016, the 1^st plaintiff sold 156 shares in the 3^rd defendant for US$234,000 and 11 shares for US$2,783,000.

28. I consider that they are many questions regarding the value of the shares in the 3^rd defendant held by the 1^st plaintiff, or the mining titles held by the 3^rd defendant, which have remained unanswered.  For the purpose of the present application, I am not prepared to give any weight to PwC’s valuations referred to in paragraph 8 of the 2^nd plaintiff’s affirmation.

29. Second, the 1^st plaintiff has apparently entered into a Funding Agreement with the provincial government of the Jianyan District of Taizhou Jiangsu Province (“the Taizhou Government”) dated 24 August 2016, under which the Taizhou Government agreed to subscribe for an interest in the “Battery Park Fund” and commit to making a capital contribution of US$200 million no later than 30 November 2016.  It is, however, apparent from the copy of the Funding Agreement produced by the 2^nd plaintiff that the proposed funds to be provided by the Taizhou Government are meant to be used to “finish construction of lithium processing plants located in Salta, Argentina and Taizhou City, China, of 40,000 tonnes capacity each”, instead of for repayment of any loan due from the 1^st plaintiff to the 1^st defendant. In an attempt to get around this obvious difficulty, the 2^nd plaintiff alleges that there was an agreement with or consent by the Taizhou Government that a portion of the funds to be injected could be applied to discharge the Loan and other charges due to the 1^st defendant.  He has not, however, produced any evidence originated from the Taizhou Government in respect of this “agreement”.  In this regard, it is of note that clause 6.1 of the Funding Agreement expressly provides that any waiver or consent given by any party under the agreement would only be effective and binding if it is given or confirmed in writing, and clause 6.4 further provides that no amendment to the agreement will be effective unless it is in writing and executed by all the parties.  In any event, it is questionable whether the funds made available under the Funding Agreement could be utilised by the 1^st plaintiff to honour its undertaking in damages.

30. In all, I consider that, on the basis of the existing materials before me, damages would not be an adequate remedy for either the plaintiffs or the 1^st defendant.

BALANCE OF CONVENIENCE

31. Mr Chong submitted that the 1^st plaintiff and the 3^rd defendant would suffer catastrophic and irreparable harm should the court deny the interim relief sought by the plaintiffs, in that if the shares in the 3^rd defendant or the mining titles are sold by the 2^nd defendant, the 1^st plaintiff and 3^rd defendant’s business would effectively be extinguished.  On the other hand, it is said that the 1^st defendant would suffer very little (if any) damage should the injunction sought by the plaintiffs turn out to have been wrongly granted, because (i) the securities held by the 1^st defendant are worth over US$260 million, which is more than sufficient to cover the amount of the Loan, and (ii) the injunction would only cause a 2-month delay in the realisation of the secured assets.

32. I have already dealt with the value of the securities above.  In so far as the delay in the realisation of the secured assets is concerned, Mr Fung has explained that the granting of an injunction will likely depress the value of the shares in the 3^rd defendant due to the likelihood of potential purchasers withdrawing their offers or willingness to continue to participate in the process for the sale of the shares, resulting in a reduction in the number of bids offered from potential purchasers and lowering of the realisation value of the shares, the extent of which is difficult to predict at this stage.

33. Taking everything into account, if this were an ordinary application for an interlocutory injunction, I would hold that the balance of convenience lies in favour of granting the injunction sought by the plaintiffs.

34. However, it is obvious that the purpose, or at least a major purpose, of this action by the plaintiffs, of which the present application forms a part, is to obtain an extension of the Repayment Date to 30 November 2016.  If the court grants the interlocutory injunction sought by the plaintiffs, they will substantially achieve their purpose or major purpose of this action.  This can be seen clearly from the fact that the relief sought in the plaintiffs’ summons is in all respects the same, or materially the same, as the relief sought in paragraphs 7, 8 and 9 of the amended indorsement of claim.  In view of the fact that the alleged extension of the Repayment Date would expire on 30 November 2016, there is no realistic prospect that the trial of this action can take place and conclude before that date.

35. It is well established that where the grant or refusal of an interlocutory injunction would in effect dispose of the action finally the court will have more regard to the plaintiff’s prospect of success, this being treated as a factor in the consideration of the balance of convenience: see Lai Hoi Ping (suing on his own behalf and on behalf of all other members of Hog Kong Taxi Association) v Persons Occupying Portions of Nathan Road near to and between Argyle Street and Dundas Street to Prevent or Obstruct Normal Vehicular Traffic from Passing and Repassing the Occupied Areas, HCMP 2975/2014, at paragraph 10 per Cheung CJHC.

36. Various tests have been formulated by the courts in relation to this higher regard to the prospect of success, for example-

(1)   whether the defendant has “no real chance of succeeding at the trial” (Mak Chi-sing v A & A Continental Commodities Ltd [1983] HKLR 430 at 408 per Roberts CJ, recently applied by Harris J in Speedy Brilliant Investments Ltd v China Health Group Limited, HCCW 816/2016, 2 June 2016 at paragraph 13);

(2)   whether the plaintiff is “at least likely to succeed at trial” (Sunlink International Holdings Ltd v Wong Shu Wing [2010] 5 HKLRD 653, at paragraph 10 per Harris J);

(3)   whether the plaintiff is “at least very likely to succeed at trial” (Fast - Link Express Ltd v Falcon Express Ltd, HCA 2040/2005, 30 December 2005, at paragraph 9 per Deputy High Court Judge Carlson); or

(4)   whether the plaintiff has shown “an overwhelming balance on the merits” in its favour (Cayne v Global Natural Resources Plc [1984] 1 All ER 225, at 236f per Kerr LJ).

37. In my view, it is neither possible, nor appropriate, for the court to seek to formulate a precise threshold that the plaintiff must meet before the court may grant an injunction in his favour in circumstances where the grant of an injunction would in effect dispose of the action finally.  The following observation by Butler-Sloss LJ in Lansing Linde Ltd v Kerr [1991] 1 WLR 251 at 269D-E (part of which was quoted with approval by Cheung CJHC in Lai Hoi Ping at paragraph 11) is worth reciting:-

“The jurisdiction to grant the relief sought is, however, statutory, section 37 of the Supreme Court Act 1981 providing for the grant of an injunction in all cases in which it appears to the court to be just and convenient to do so. The speech of Lord Diplock in the American Cyanamid case set out guidelines which could not and, as subsequent decisions of the House of Lords and of this court have shown, did not cover every eventuality. The American Cyanamid case was one in which two large companies were battling over pharmaceutical patents. The interlocutory injunction was granted with the knowledge that the case was unlikely to come to trial for two to three years. In N.W.L. Ltd. v. Woods [1979] 1 W.L.R. 1294 Lord Diplock recognised that American Cyanamid was not dealing with a case in which the grant or refusal of an injunction would have the effect of disposing of the action, and such an exceptional case brought into the balance of convenience an important additional element. In Cayne v. Global Natural Resources Plc. [1984] 1 All E.R. 225, where the grant of an interlocutory injunction would have summarily decided the case in favour of the plaintiffs, Eveleigh L.J. said, at p. 232: ‘this case is one that the court has to approach on a broad principle: what can the court do in its best endeavour to avoid injustice?’

The question arises in each application for an interlocutory injunction as to the point on a broad spectrum at which the particular circumstances of the case in question may fit in, and what additional factors there may be to place into the balance of convenience.”

38. In other words, the significance of the merits of the plaintiff’s case as a factor in considering the issue of balance of convenience would vary according to the particular context and circumstance of each case.  Ultimately, the court’s task is to arrive at a result which would carry the lowest risk of injustice as a result of the grant or refusal of an injunction.

39. In this regard, it does not seem to me to matter that the plaintiff has raised other claims or sought other relief in the writ (as in the present case where the plaintiffs also seek declaratory relief in respect of the 2^nd defendants’ appointment as joint and several receivers and managers as well as their appointment as directors of the 3^rd defendant) so that, strictly speaking, the grant of the interlocutory/interim injunction sought would not dispose of the action finally.  In my view, if the interlocutory/interim injunction would have the practical effect of finally disposing of the claim for an injunction, being a substantive claim in the action, the court is entitled to have a higher regard to the merits of the plaintiff’s case so far as relevant to that particular claim.

40. For this reason, the plaintiffs’ position in the present application is not improved by Mr Chong’s indication at the hearing that the plaintiffs intended to further amend the writ to include a claim for damages arising out of POSCO’s notice of termination dated 26 September 2016 in respect of the licence agreement with the 3^rd defendant.  I should add that, in any event, it is plain on the face of POSCO’s notice that the termination was, apparently, the consequence of the 3^rd defendant’s breach of contract which was the subject matter of an earlier notice dated 23 August 2016, and had nothing to do with the 1^st defendant’s breach of the alleged oral agreement.  The proposal to include this claim in the writ is, in my view, a desperate attempt on the plaintiffs’ part to salvage their application for the injunction.

41. As explained above, I consider the plaintiffs’ case based on the alleged oral agreement to be a weak one.  If it had been necessary to apply one or another of the tests mentioned in paragraph 36 above, I would have no difficulty in rejecting the proposition that the 1^st defendant has “no real chance of succeeding at the trial”, or the plaintiffs are “at least likely/very likely to succeed at trial”, or the plaintiffs have shown “an overwhelming balance on the merits” in their favour.

42. In the context of the present application, I consider the weakness of the plaintiffs’ case to be an important, and ultimately decisive, factor in the overall assessment of the justice of the case.  At the hearing, Mr Chong repeatedly emphasised that the grant of the injunction sought by the plaintiff would cause no prejudice to the 1^st defendant, as if that factor of itself would be sufficient to justify the court granting the injunction.  In my view, such approach is wrong in principle.  The grant of an injunction by the court is always a serious matter and must be fully justified. The court should not grant an injunction merely because it may be said that the defendant would suffer no prejudice.  The absence of prejudice is only one factor in the overall assessment of the balance of convenience.

43. In all, I decline to exercise my discretion to grant the interim injunction sought by the plaintiffs in view of the fact that the grant of the injunction would have the practical effect of finally disposing of a substantive claim of the plaintiffs in this action while their case is patently weak.  I do not consider that justice would be served by granting an injunction in such circumstances.

DISPOPSITION

44. For the foregoing reasons, I dismiss the plaintiffs’ application for the interim injunction.  I also order that the 1^st defendant shall have the costs of that application, to be taxed if not agreed, with certificate for 2 counsel.

45. I shall leave it to the parties to agree on the further conduct of the plaintiffs’ summons dated 27 September 2016, which technically has not yet been disposed of, with liberty to apply in the event of disagreement.

46. Lastly, it remains for me to thank counsel for the assistance that they have rendered to the court.