Tomongo Shipping Company Ltd v Heng Holdings SEA (Pte) Ltd

• Jurisdiction: Singapore
• Judgment Date: 31 January 1997
• Date: 31 January 1997
• Docket Number: Suit No 1676 of 1996 (Summons in
• Court: High Court (Singapore)

Tomongo Shipping Co Ltd

Plaintiff

and

Heng Holdings SEA (Pte) Ltd

Defendant

[1997] SGHC 28

Warren L H Khoo J

Suit No 1676 of 1996 (Summons in Chambers No 6406 of 1996)

High Court

Injunctions–Application–Circumstances under which ex parte application justified–Injunctions–Mandatory injunction–Factors to be considered in granting mandatory injunction–Injunctions–Mareva injunction–Risk of dissipation of assets–Factors to be considered

The plaintiff company Tomongo Shipping Co Ltd (“Tomongo”) was the owner of the Arosa (“the vessel”). Tomongo agreed to release cargo that was shipped on its vessel to a company Nicco without the production of the original bill of lading, in consideration of a letter of indemnity provided by the defendant company Heng Holdings SEA (Pte) Ltd (“Heng Holdings”). In fact, another company, Kanematsu was the holder of the original bill of lading and required immediate delivery of the cargo. Kanematsu notified Tomongo of its claim for US$1,385,000 for misdelivery of the cargo. Tomongo's solicitors asked Heng Holdings to take immediate steps to settle Kanematsu's claim, but it failed to do so. The vessel was subsequently arrested in an English port, under an admiralty action brought by Kanematsu in the High Court of England. Tomongo's solicitors wrote to Heng Holdings informing it of the arrest and requiring it to fulfil its obligations under the letter of indemnity, including providing security for the release of the vessel. Heng Holdings refused. The vessel was released pursuant to Tomongo's payment of security. Tomongo filed a writ against Heng Holdings. It obtained, on an ex parte basis, a Mareva injunction and a mandatory injunction against Heng Holdings, which required Heng Holdings to provide security to the P & I club. Heng Holdings applied to discharge the injunctions.

Held, dismissing the application:

(1) The reason for not giving notice to the opposite side should be stated in the affidavit in support of an ex parte injunction. However the omission to do so in this case was not material. Given the urgency in the matter and that Heng Holdings had not responded to the letters from Tomongo's solicitors, there were adequate reasons for having proceeded ex parte: at [12] to [14].

(2) In considering whether there was a risk of dissipation of assets, so that it was appropriate to issue a Mareva injunction, the court was entitled to take into account Heng Holdings' past conduct. Heng Holdings had largely ignored Tomongo's claim. Heng Holdings also had a history of defaults in discharging its debts, and there had been instances where it had only paid debts when execution proceedings had been taken against it. Also relevant were Heng Holdings' financial practices as evidenced by the fact that most of Heng Holdings' assets had been mortgaged to secure overdraft and other facilities, and its receivables were noted in its accounts as unsecured, interest-free and with no fixed term of payment. There was therefore a risk of dissipation of assets: at [16].

(3) The “high assurance” test was a useful and practical, albeit not immutable, guide to the grant of mandatory injunctions. The fundamental principle in issuing a mandatory injunction was that the court should take whichever course that appeared to carry the lower risk of injustice if it should turn out to have been wrong at trial in the sense of granting relief to a party who then failed to establish his rights at the trial, or failing to grant relief to a party who then succeeded at trial. The stronger the case appeared at the interlocutory stage, the lesser the risk of being proved wrong at trial: at [19] and [20].

(4) In this case it was clear that the mandatory injunction should be allowed to stand. Here there was no dispute that Heng Holdings undertook the obligation to provide security and relieve Tomongo from the burden of having to do so itself. It was only right that Heng Holdings should be compelled to specifically perform what it undertook to perform in the first place, instead of compelling...