Read the full judgment text of CACV 83/2015 on BabelCite. This Court of Appeal judgment was delivered on 9 October 2015 before Yuen JA, Barma JA.
Civil law – interlocutory injunction – proprietary injunction over proceeds of sale of shares – balance of convenience – non-disclosure – appeal. The plaintiffs, BVI investment companies connected to the chairman of Powerlong Real Estate, entered into a Stock Secured Financing Agreement with the 1st defendant, a Bahamas loan company, for a non-recourse loan of US$22,867,382.87 secured by 288,520,000 Powerlong shares deposited with Haitong. Three versions of the loan agreement existed, the plaintiffs contending that the 'Authentic Agreement' (allowing sale of shares only on borrower default) represented the true bargain, while the 1st defendant relied on the 'Altered Agreement' entitling it to sell shares regardless of default. The 1st defendant sold all the shares by the end of May 2014. After ex parte injunction relief was obtained from Anthony Chan J, Chow J continued the injunction over the proceeds of sale and made a disclosure order. Whether the injunction was properly continued turned on the balance of convenience, even where the injunction was proprietary in nature rather than a Mareva injunction – whether the injunction was proprietary or Mareva, it remained necessary to show the balance of convenience favoured the grant and that it was just and convenient – whether non-disclosure of the Singapore injunction obtained by the plaintiffs against the intermediary Miss Lam justified discharge of the injunction – the court invited submissions on the balance of convenience point although it had not been raised in the notice of appeal – two signed versions of the agreement existed, leaving a serious question to be tried on which version governed – the judge was entitled to assume the Singapore order was properly obtained since it had not been challenged – the 1st defendant was able to place Miss Lam's account of events before the court via an attendance note – non-disclosure regarding the Singapore proceedings was not of sufficient materiality to discharge the injunction – however, requiring the 1st defendant to set aside a sum of money to satisfy a money claim would have significant adverse impact on its lending business – credit must be given for the unrepaid USD 22,867,382 loan, substantially reducing any eventual judgment sum – the 1st defendant's overall assets, though possibly illiquid, were not shown inadequate to meet a money claim – balance of convenience came down clearly in favour of the 1st defendant – appeal allowed – injunction and disclosure order set aside – no order as to costs here or below, as the 1st defendant succeeded on a ground raised by the court itself rather than the ground on which leave was granted.
Legal issues: Whether non-disclosure of Singapore injunction against Ms Lam justified discharge of the proprietary injunction · Whether the balance of convenience favoured the grant of a proprietary injunction over the proceeds of sale of shares
Outcome: Appeal allowed; the order below continuing the injunction and the ancillary disclosure order set aside.
Cited by 19 cases