PSONS Ltd v UPF Holding Pte Ltd and others

• Jurisdiction: Singapore
• Judge: Choo Han Teck J
• Judgment Date: 31 March 2014
• Neutral Citation: [2014] SGHC 55
• Court: High Court (Singapore)
• Docket Number: Suit No 750 of 2013 (Summons No 5068 of 2013)
• Published date: 19 June 2014
• Year: 2014
• Hearing Date: 17 March 2014,31 March 2014
• Plaintiff Counsel: Pradeep Pillai, Stephanie Wee and Ng Wenling (Shook Lin & Bok LLP)
• Defendant Counsel: P Padman and Aaron Wham (Tan Kok Quan Partnership)
• Subject Matter: Equity,Remedies,Injunction
• Citation: [2014] SGHC 55

Choo Han Teck J:

This is an application by the defendants to set aside the mareva injunction granted pursuant to Summons No 4333 of 2013. Summons No 4333 of 2013 concerned an application by the plaintiff in this case, before me on 29 August 2013, for an injunction against the defendants in this case, prohibiting the disposal of their assets in Singapore up to the value of US$900,000. For the first defendant, the injunction extended to monies in its corporate bank accounts, whereas for the second and third defendants, the injunction extended to their shares in the first defendant.

The plaintiff is a company incorporated in Hong Kong, engaged in the business of mining and trading minerals. The first defendant is a trading company primarily involved in the wood and pulp business, incorporated in Singapore. The second and third defendants are directors of the first defendant, and are involved in the day-to-day running of the business. Each of them owns 50% of the shares of the first defendant.

On 18 November 2009, after some negotiations, the plaintiff and the first defendant signed a Memorandum of Understanding (“MOU”). Under the MOU, the plaintiff was to pay US$610,000 to the first defendant in exchange for the first defendant’s help to procure a mining licence for the plaintiff in Laos. This sum was to be paid in stages. When the first defendant accomplished a certain goal in the process of obtaining the licence, a portion would be due. Altogether, the plaintiff had paid the first defendant an aggregate sum of US$841,350 (including expenses). However, no licence was obtained. The plaintiff and the defendants tried many times to resolve their dispute through negotiations. On 25 July 2012, parties arrived at a further agreement (“the Bangkok Agreement”), through which the plaintiff gave the defendants two to three weeks more to obtain the licence, failing which the defendants had to return the sum of US$841,350 to the plaintiff. However, the licence was not obtained, nor was the plaintiff repaid.

On 20 August 2013, the plaintiff commenced Suit No 750 of 2013 in the High Court. It pleaded two causes of action, namely, breach of contract and the tort of deceit. On 29 August 2013, the plaintiff appeared before me seeking an urgent ex parte injunction order. I allowed the application. On 10 December 2013, proceedings against the first defendant were stayed in favour of arbitration – the plaintiff commenced arbitration against the first defendant and filed the notice of arbitration on 11 March 2014. The plaintiff wishes to continue the proceedings in Suit No 750 of 2013 against the second and third defendants. As such, the plaintiff prayed for the injunction order to remain in force against all three defendants.

5 Having now had the benefit of hearing submissions from both parties, I find that the foundation on which this mareva injunction was based is untenable. I am thus allowing the defendants’ application to set aside the injunction. When counsel appeared before me, both sides seemed keen to delve into whether the elements of the test for granting a mareva injunction had been made out. Both sides agreed there was a good arguable case, and the contention was on whether there was a risk of dissipation. I find it more appropriate, however, to review the equitable nature of a mareva injunction. It is from this perspective that I am allowing the defendants’ application, for I have found that the plaintiff did not come to this court with clean hands. I explain my decision by first highlighting the background as it was presented to me by parties both in their written and oral submissions. Second, I will briefly elaborate on the “clean hands” doctrine.

Much revolves around the MOU, the negotiations that led up to it, and the subsequent attempts at negotiation when the first defendant allegedly failed to perform its side of the “bargain”. Based on the facts as presented in [3], two questions arise: what was the plaintiff paying the defendant for? And why did the plaintiff need the defendants? The plaintiff is a company with experience in the mining industry. The defendant is not – it is a trading company primarily involved in the wood and pulp business. When parties appeared before me on 17 March 2014, I posed these questions to counsel for the plaintiff. Counsel for the plaintiff responded that the plaintiff had made the payments totalling US$841,350 with the understanding that the would be used by the defendants towards paying “facilitation fees” and “costs for the relevant applications to liaising with the various government departments to...