Injunctions l5-l6

“A democracy is nothing more than mob rule, where fifty-one percent of the people may take away the rights of the other forty-nine.” ― Thomas Jefferson--

PART I

INJUNCTIONS

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“Let the first act of every morning be to make the following resolve for the day: - I shall not fear anyone on Earth. - I shall fear only God. - I shall not bear ill will toward anyone. - I shall not submit to injustice from anyone. - I shall conquer untruth by truth. And in resisting untruth, I shall put up with all suffering.” ― Mahatma Gandhi

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Introduction Meaning of an injunction Nature of injunctions Characteristics of injunctions Legal principles Types of injunctions No grant of injunctions Injunction to perform negative agreement Powers of the court to grant damages Case law Analysis Comparative Studies Syariah Perspective Critical Comments Conclusion

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INJUNCTIONS Introduction •An

injunction is an order of the court directing a person or persons to refrain from doing or continuing some particular act or thing complained of, or less often, to do some particular act or thing. In other words, an injunction is an order of court to prohibit threatened or continuing illegal conduct of certain kinds. Thus, where a beneficiary has reasons to believe that a trustee is about to commit a breach of trust he or she need not wait until it has happened before taking action. Instead he or she may obtain an injunction to restrain the threatened breach. •Examples

of instances in which the court has granted injunction to prevent breaches of trust abound in the law reports. Case Law Analysis •Fox

v Fox (1870) LR 11 Eq 142 an injunction was granted to prevent trustees distributing the trust property other than in accordance with the terms of the trust instrument. •overriding

objective of an injunction is “to protect and preserve legal rights and interests and to prevent the commission or . of a legal wrong”.

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INJUNCTIONS Meaning of an injunction/Nature of injunctions: •An

injunction is an order to restrain the person to whom it is directed from performing a specified act, or requiring him to perform a specified act, as the case may be. In other words, an injunction is an order by the court to a party to do or refrain from doing a particular act. •It

is important therefore to note that a court may be able to restrain a party from committing a breach of trust by issuing an injunction. Thus, in Malaysia the general power of the High Court to grant injunctions can be found under paragraph 6 of the Schedule to the Courts of Judicature Act 1964, and under the Specific Relief Act 1950, sections 50 and 51 •Para

6 of the Schedule of the Courts of Judicature Act 1964 deals with preservation of property and provides: “Power to provide for the interim preservation of property the subject-matter of any cause or matter by sale or by injunction or the appointment of a receiver or the registration of a caveat or a lis pendens or any other manner whatsoever”.

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INJUNCTIONS General characteristics of an injunction The

granting of an injunction is discretionary

•Injunction

is a discretionary remedy based on the inadequacy of common law remedies. However, it is not conferred according to ‘the caprice of the judge, but according to sufficient legal reasons or on settled legal principles’. (See sections 50 and 53 of the Specific Relief Act 1950) •The

plaintiff must have an interest to protect that would allow the courts to exercise the discretion in granting it.

An injunction will be refused if damages are considered to be an adequate remedy •Damages

must be shown not to be an adequate remedy i.e. plaintiff will suffer irreparable harm if the injunction is not granted. Case Law Analysis •Although

this is the situation, it should be noted that damages in lieu of an injunction should not be awarded where this would, in effect, be depriving an individual of specific private rights as per the English case of Elliot v Islington Borough Council (1990) The Times 6 July- the decision of the COA.

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INJUNCTIONS General characteristics of an injunction Refusal to obey an injunction may result in the criminal penalty of contempt of court, with the risk of fine and/or imprisonment •Non-compliance

with an injunction (or an undertaking given in lieu) is contempt of court, punishment by imprisonment or fine. As disobedience may lead to imprisonment, the injunction must be expressed in exact terms, so that the defendant (trustee) knows precisely what to do, or refrain from doing.

Injunction is a remedy in personam •In

granting an injunction the ‘court acts in personam and will not suffer anyone within its reach to do what is contrary to the notions of equity.

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INJUNCTIONS Legal principles that govern the granting of injunctions: •legal

principles governing the granting of injunctions can be summarised by looking into the different types of injunctions e.g. like temporary injunction may be granted at any period of a suit. On the other hand, perpetual injunction can only be granted by a decree made at the hearing and upon merits of the suit. Hence the defendant is thus perpetually enjoined from the assertion of a right, or from the commission of an act, which would be contrary to the rights of the plaintiff. (See sec 52(2) of the Specific Relief Act 1950) • •The

Law

•a

mandatory injunction (which requires a defendant to reverse the effect of an existing breach- see sec 53 of the Special Relief Act 1950); •a

prohibitory injuction (which orders a defendant not to do something in breach of trust/contract- see sec 53 of the same Act)

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INJUNCTIONS Types of injunctions •First

and foremost, injunctions may be classified in several ways, and the Specific Relief Act 1950 provides in respect of temporary (or interlocutory or interim), perpetual (or final) and mandatory/prohibitory injunctions. •Perpetual •Sec

injunctions

51(2) of the Specific Relief Act 1950

•a

perpetual injunction can only be granted by a decree made at the hearing and upon merits of the suit; the defendant is thus perpetually enjoined from the assertion of a right, or from the commission of an act, which would be contrary to the rights of the plaintiff. •to

prevent the breach of an obligation existing in favour of the applicant, whether expressly or impliedly (see sec 52(1); and when the obligation arises from contract, the court shall be guided by the rules and provisions as provided in Chapter II of the Act which deals with specific performance of contracts (see sec 52(2) of the Specific Relief Act 1950)

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INJUNCTIONS Types of injunctions 

Perpetual injunctions

Case Law Analysis It is vital to make reference to the case of Muniandy Subramanian & Ors v Majlis Perbandaran Langkwi Bandaraya Pelancongan & Anor (2003) plaintiffs were the committee members of the Sri Muniswaran temple at Jalan Kisap, Kuah, Kedah. They applied for an interim injunction against the defendants, the Majlis Perbandaran Langkawi and the State Government of Kedah, to restrain them from demolishing the said temple. The issues were: (1) whether a local authority was a government department; (2) whether an interim injunction could be issued against a government body in view of s.54(d) of the Specific Relief Act 1950; (3) whether there was a serious question to be tried; and (4) whether the balance of convenience lay in favour of the plaintiffs. The court held that: the local authority is not a government department; sec 29(1)(a) of the Government Proceedings Act 1956 specifically prohibits the court to grant an injunction against a government department; and disagreed with the plaintiffs submission that if the interim injunction was not allowed the subject matter would perish. This was because the two newspaper reports exhibited in court showed that the plaintiffs were willing to accept an alternative site for the temple if granted.

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INJUNCTIONS Types of injunctions Perpetual

injunctions

sec 52 which address the issue of ‘perpetual injunctions when granted’. For example sec 52(1) states that a perpetual injunction may be granted to prevent the breach of an obligation existing in favour of the applicant, whether expressly or by implication. •Sec

52(2) states that when such an obligation arises from contract, the court shall be guided by rules and provisions contained in Chapter II (which deals with specific performance). In other words, in granting an injunction by the court in the context of a breach of contract, reference must be made to Chapter II of the Act as part of the procedure.

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INJUNCTIONS Types of injunctions Perpetual injunctions •sec

52(3) deals with a situation where the defendant invades or threatens to invade the plaintiff’s right to, or enjoyment of, property, the court may grant a perpetual injunction in cases such: •(a)

where the defendant is trustee of the property for the plaintiff;

•(b)

where there exists no standard for ascertaining the actual damage caused, or likely to be caused, by the invasion; •(c)

where the invasion is such that pecuniary compensation would not afford adequate relief; •(d)

where it is probable that pecuniary compensation cannot be got for the invasion ; and •(e)

where the injunction is necessary to prevent a multiplicity of judicial proceedings. (See the explanation to this sec viewing a ‘trademark’ as property)

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INJUNCTIONS Types of injunctions Perpetual injunctions



operation of sec 52 on perpetual injunctions when granted better especially, it becomes inevitable to make reference to some few illustrations given under the sec. The following are some of the illustrations: •

A lets certain land to B, and B contracts not to dig sand or gravel thereout. A may sue for an injunction to restrain B from digging in violation of his contract. •

A trustee threatens a breach of trust. His co-trustees, if any, should, and the beneficial owners may, sue for an injunction to prevent the breach. •

The directors of a public company are about to pay a dividend out of capital or borrowed money. Any shareholders may sue for an injunction to restrain them. •

The directors of a fire and life insurance company are about to engage in marine insurances. Any of the shareholders may sue for an injunction to restrain them. •

A, an executor, through misconduct or insolvency, is bringing the property of the deceased into danger. The court may grant an injunction to restrain him from getting the assets. •

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Note: These are not the only illustrations and thus reference must be made to Sec 52 of the Specific Relief Act 1950 for further illustrations.

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INJUNCTIONS Types of injunctions Perpetual injunctions



Case Law Analysis In addressing the operation of perpetual injunction, reference could be made to the local case of Neoh Siew Eng & Anor v Too Chee Kwong [1963] MLJ 272 plaintiffs were the tenants of rent-controlled premises and the defendant was the landlord. One of the terms of the tenancy agreement was that the defendant as landlord and registered consumer in respect of water supply to the whole of the premises would pay $2 towards the water charges and that the plaintiffs would pay the amount in excess of that sum. To put that in different words, the landlord covenanted not to interrupt the tenants water supply. As a result the plaintiffs had an uninterrupted flow of water to their part of the premises from the date of the commencement of the tenancy in January 1962 until 24 Dec 1962 when the water supply stopped. Following inspection of the pipes, the Waterworks Engineer wrote a letter dated 2 Jan 1963 stating that the common pipe serving the premises was badly corroded and recommending that early action be taken to have the whole of the communication pipe replaced through PWD registered plumber. The defendant did not take any action to have the corroded pipe replaced. The plaintiff sued for, inter alia, restoration of water supply and damages. On 20 Feb 1963, the Court made an interim injunction requiring the defendant to restore the water supply. The corroded pipe was finally replaced on 17 March Page 14

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1963. It was held that a perpetual injunction would issue against the defendant requiring her to keep the water supply open and for that purpose to comply with all regulations of the Waterworks Department. The plaintiffs were awarded damages for such damage as they had suffered as a result of the lack of water from the date by which the defendant could reasonably have had the corroded pipe replaced to the date of restoration of the water supply.

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INJUNCTIONS Types of injunctions Mandatory injunctions •restrains

the act or omission by directing a person to perform a positive act. In other words, mandatory injunctions would order the performance of an act or acts. Mandatory injunction is an order of court directing the defendant (s) to do something. •legislative •sec

framework for the grant of mandatory injunction

53 of the Specific Relief Act 1950 which provides

“When, to prevent the breach of an obligation, it is necessary to compel the performance of certain acts which the court is capable of enforcing, the court may in its discretion grant an injunction to prevent the breach complained of, and also to compel performance of the requisite acts”.

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INJUNCTIONS Types of injunctions Mandatory injunctions illustrations

•

A, by new buildings, obstructs lights to the access and use of which B has acquired a right by prescription. B may obtain an injunction, not only to restrain A from going on with the buildings, but also to pull down so much of them as obstructs B’s light. •

A builds a house with caves projecting over B’s land. B may sue for an injunction to pull down so much of the caves as so project. •

In the case put as illustrations (i) to sec 52, the court may also order all written communications made by B, as patient, to A, as medical advisor, to be destroyed. •

In the case put as illustration (v) to sec 52 the court may also order A’s letter to be destroyed. •

A threatens to publish statements concerning B which would be punishable under Chapter XXI of the Penal Code. The court may grant an injunction to restrain the publication, even though it may be shown not to be injurious to B’s property. •

Note: These are not the illustrations to sec 53 and thus reference must be made to the other illustrations as well under the sec.

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INJUNCTIONS Types of injunctions Mandatory injunctions



Case Law Analysis In addressing or discussing mandatory injunctions, it is vital to make reference to some case law. TR Hamzah & Yeang Sdn Bhd v Lazar Sdn Bhd [1985] 2 MLJ 45 “The grant of mandatory injunction is entirely discretionary. Every case must be upon its own particular circumstances. It is a jurisdiction to be exercised sparingly and with caution but in a proper case unhesitatingly. When the court decides to grant such an injunction then the court must see to it that the person against whom is granted knows exactly what he has to do…” (per Lee Hun Hoe CL (Borneo)). In TR Hamzah & Yeang Sdn Bhd, the respondent employed the appellant, a firm of architects to build a 27 storey office at Jalan Ampang on the usual terms as defined by the Pertubuhan Arkitek Malaysia (P.A.M.) conditions of engagement. The overall fee agreed was 4% of the total contract cost of the project. While approval of the plans was still under consideration by the relevant authority, the appellant sued the respondent for balance of the professional fee of $514, 000.00. The respondent denied the claim and counterclaimed for breach of contract. Subsequently the appellant terminated its services as architects on the ground of failure of payment of fees. The respondent requested that the dispute be referred to the P.A.M. for decision and pending reference that the appellant should issue a letter Page 18

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of release to enable them to engage another architect to continue with the work. The appellant denied the request and said until all the fees were paid they would not issue a letter of release.

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INJUNCTIONS Types of injunctions Mandatory

injunctions

Case Law Analysis TR Hamzah & Yeang Sdn Bhd- The respondent applied by summons-inchambers for an order that the appellant forthwith issue the respondent with a letter of release to enable the responded to engage another architect to proceed with the proposed construction of the building. The learned judge of the High Court made an order in terms. The appellant appealed. On appeal, the court held that in the circumstances of this case, the court could not allow the architect to withhold the letter of release as to do so would mean “that the architect can hold the client to ransom”. Case Law Analysis Co-operative Insurance Society Ltd v Argyll Stores (Holdings) Ltd [1998] AC 1. House of Lords refused to grant mandatory injunction to compel a party to carry on a business; on the other hand, such a grant may be justified in respect of orders requiring him to achieve a result.

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INJUNCTIONS Types of injunctions: (.) Mandatory injunctions



Case Law Analysis TSC Education Sdn Bhd v Kolej Yayasan Pelajaran Mara & Anor [2002] 2 CLJ plaintiff and the first defendant entered into an agreement wherein the plaintiff was appointed by the first defendant as independent advisers to recruit students from China to pursue courses and programmes with the first defendant. The plaintiff successfully recruited the first batch of students. Subsequently, the plaintiff was requested to stop taking the second batch of students which were already scheduled to arrive in the country. Further, the plaintiff was requested to transfer the first batch of students currently with the first defendant to other colleges. The plaintiff now applied to the court, inter alia, to compel the first defendant to comply with the terms of the agreement. The second defendant was subsequently added as a party. The court held that the second defendant was a corporation established under Majlis Amanah Rakyat Act 1966 and pursuant to the Majlis (Yayasan Pelajaran MARA) Order 1969. Under r.2 of the Order, the creation of the second defendant was confined to the provisions relating to the training and educational facilities of Bumiputras only. It did empower the second defendant to provide training and educational facilities to nonBumiputras. The question as to whether the defendants should be compelled to carry on with the agreement under sec 56 of the Specific Page 21

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Relief Act 1950 did not arise at as the agreement was not valid in the first place being contrary to the Act and the Order.

INJUNCTIONS Types of injunctions Prohibitory injunctions



A prohibitory injunction is an order directed to a person to refrain from the commission, . or repetition of a wrongful act. This form of remedy represents the original form injunction. In other words, a prohibitory injunction would prohibit certain act or acts. Hence, a prohibitory injunction orders a defendant not to do something say in breach of contract. •

It is important to note that there is a difference between prohibitory and mandatory injunctions i.e. prohibitory injunctions would prohibit certain act or acts, and mandatory injunctions would order the performance of an act or acts. Also, with prohibitory injunctions, a court, in the exercise of its discretion, will not be influenced by the fact that the defendant’s compliance with the injunction would be unduly onerous or that the breach would cause the plaintiff little prejudice. However, with mandatory injunctions, a court will apply the ‘balance of convenience’ test, refusing relief if the hardship caused to the defendant by compliance with the order outweighs the consequential advantages to the plaintiff. •

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INJUNCTIONS Types of injunctions Interlocutory (or interim) injunctions



Interlocutory (also referred to as temporary or interim) injunctions are such as to continue until a specified time, or until further order of the court, and may be granted at any period of a suit. Hence, interlocutory injunctions are designed to regulate the position of the parties pending a hearing. Case Law Analysis Dr David Vannisingham Ramanathan v Subang Jaya Medical Centre Sdn Bhd [2007] 1 MLJ 713 •

appellant was a surgeon who sought an interlocutory injunction the effect of which would have been to prevent the respondent employer from dismissing him until his claim against the employer was finally decided. Delivering the judgment of the COA, Abdul Aziz Mohamad JCA said that the learned trial judge had rightly relied on Penang Han Chiang as authority that bars granting of the interlocutory injunction to enable a workman to remain in his job until his representations are finally settled.

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INJUNCTIONS Types of injunctions Interlocutory (or interim) injunctions



Case Law Analysis Penang Han Chiang Associated Chinese Schools Association v National Union of Teachers in Independent Schools, West Malaysia [1988] 1 MLJ 302- where the appellant was the employer of certain teachers who were members of a trade union, the respondent. Disputes arose between the appellant, as employer, of the one part and the teachers in the former employment of the appellant, of the other part. A complaint was made to the Ministry of Labour and the Minister referred the trade dispute to the Industrial Court for determination under the Industrial Relations Act 1967. Following the reference to the Industrial Court, the respondents filed a civil suit. The respondent obtained an interlocutory injunction restraining the appellant from terminating the services of the teachers pending the outcome of the proceedings before the industrial court. The appellant appealed. The SC held that sec 20(1)(b) of the Specific Relief Act 1950 gives statutory force to the well established rule that a contract for service contract cannot be specifically enforced. And sec 54(f) of the same Act enacts that an injunction cannot be granted to prevent the breach of a contract of performance of which would not be specifically enforced. On the basis of, inter alia, these statutory provisions, the appeal was allowed. •

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Note: An injunction will not normally be granted to prevent either an employer or an employee from breaching a contract of service.

INJUNCTIONS Types of injunctions Interlocutory (or interim) injunctions



It is important to note that the procedural aspects in respect of the application, orders and related manners are governed by the Rules of the High Court, Order 29. •

Case Law Analysis Cheah Cheng Lan v Heng Yea Lee [2001] 1 AMR 981; [2001] 1 MLJ 433where the COA held that the inherent power under Order 29 r 4 is not to be used to extend the life span of an ex parte interim injunction in view of Order 29 r 1 (2B) which provides that unless sooner revoked or set aside, an interim injunction obtained in an ex parte application shall automatically lapse at the end of 21 days from the date on which it was granted, holding that such position is required “in order to prevent injustice or to prevent an abuse of the process of the court that its life span must be limited” at p 986, per Lamin bin Mohd Yunus). •

Case Law Analysis Cheah Cheng Lan v Heng Yea Lee, the applicant prayed for an order that the order of the High Court setting aside an ex parte injunction order be set aside and the ex parte injunction order continue to be in force and effect until disposal of the applicant’s appeal. The issue •

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before the court was whether the court has an inherent power to extend an ex parte injunction order from time to time until the disposal of the main suit. The court held that by virtue of O 29 r 1(2BA) of the Rules of the High Court, the life of ex parte injunction cannot go beyond the period of 21 days. The court has no power to extend the life of an ex parte injunction beyond 21 days because of the words ‘shall automatically lapse’.

INJUNCTIONS Types of injunctions Interlocutory (or interim) injunctions The principle purpose of the remedy is to protect the plaintiff against injury by violation of his or her right for which he or she could not be adequately compensated in damages recoverable in an action if the uncertainty were resolved in his favour at the trial. Case Law Analysis American Cyanmid Co v Ethicon Ltd [1975] AC 396, per Lord Diplock). Case Law Analysis •Lord

Hope in the case of AG v Punch Ltd [2003] 2 WLR 49, he said that the purpose of interlocutory injunction is to regulate, and where possible to preserve, the rights of the parties pending the final determination of the matter which is in issue by the court. That purpose should not be confused with court’s reason for deciding that it would be appropriate to grant interlocutory injunction. Page 26

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•It

is important therefore to note that the purpose of interlocutory injunction is “to prevent a litigant, who must necessarily suffer the law’s delay, from losing by that delay the fruit of his litigation. INJUNCTIONS Types of injunctions Interlocutory (or interim) injunctions In addressing the discussion of interlocutory injunctions, it becomes vital to deal with the issue of the test applicable since it is considered only a temporary or interim injunction that the applicant or plaintiff is seeking. The following is the test: •

(Prior to American Cyanamid The often-cited test here was a strong prima facie case that the applicant’s rights had been infringed. He or she had to show that damages would be inadequate remedy, and that the balance of convenience favoured the grant. In other words, in order to obtain the injunction, an applicant has to show that it was more likely than not that he or she would succeed in securing a final injunction at the trial. Note: A more flexible approach found favour in Hubbard v Vosper [1972] 1 All ER 1023- where Lord Denning: “In considering whether to grant an interlocutory injunction, the right course for a judge is to look at the whole case. He must have regard not only to the strength of the claim but also to the strength of the defence, and then decide what is best to be done…”

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INJUNCTIONS Types of injunctions d)

Interlocutory (or interim) injunctions

(ii)

The test in in American Cyanamid

The court must be satisfied that the applicant’s case is not frivolous or vexatious and that there is a serious question to be tried. Once this is satisfied, the crucial element would then be the balance of convenience i.e. the claimant need establish only a real possibility of success not a probability. •

Case Law Analysis American Cyanamid Co v Ethicon Ltd [1975] AC 396 the House of Lords decided that there was no need for the plaintiff to establish a prima facie case. The courts should address themselves to whether there was an important point at issue, and the paramount consideration should be the ‘balance of convenience’. If the balance of convenience did not clearly favour either party then the relative strengths of the parties should be considered. In no circumstances should the court attempt to act in a manner which would, in effect, be a full trial in action. Note: This test does not affect the rules pertaining to the grant of interim injunction in defamation cases. Case Law Analysis

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Herbage v Pressdram Ltd [1984] 1 WLR 1160- where the court stated that the American Cyanamid has not affected this principle, which might, therefore, be regarded as a “special factor.”)

INJUNCTIONS Types of injunctions Interlocutory (or interim) injunctions 

The test in American Cyanamid

In addressing the issue of not turning the process of granting interlocutory injunction to look like a case of full trial or anything resembling a trial of the action upon the conflicting affidavits. •

Case Law Analysis Eshwara Engineering Sdn Bhd v Delta Structure Sdn Bhd [2003] 4 MLJ 18 •

whether interlocutory injunction relief should be granted or not. The court held that at this stage, it was not justified in embarking upon anything resembling a trial of the action upon the conflicting affidavits. •

Case Law Analysis Mohamed Zainuddin bin Puteh v Yap Chee Seng [1978] 1 MLJ 40

•

a Notice of Motion for an order that the interlocutory injunction granted on Oct 11, 1976, be set aside. It would appear from the notice as well as the affidavits supporting the application that the sole ground for the application that the injunction be set aside was that the plaintiff •

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had not stated the facts fully and accurately to the court and that he had not disclosed all material facts. Applying the principles in American Cyanamid Co v Ethicon, the court held that the motion to dissolve the injunction should be dismissed, as there was a serious question to be tried and therefore measures should be taken to preserve the status quo. INJUNCTIONS Types of injunctions Interlocutory (or interim) injunctions 

The test in American Cyanamid

In addressing the issue of not turning the process of granting interlocutory injunction to look like a case of full trial or anything resembling a trial of the action upon the conflicting affidavits. •

Case Law Analysis Eshwara Engineering Sdn Bhd v Delta Structure Sdn Bhd [2003] 4 MLJ 18- where the court held that it was not justified in embarking upon anything resembling a trial of action upon the conflicting affidavits in addressing the issue of whether interlocutory injunction relief should be granted or not. Case Law Analysis Mohamed Zainuddin bin Puteh v Yap Chee Seng [1978] 1 MLJ 40where there was a Notice of Motion for an order that the interlocutory injunction granted on Oct 11, 1976, be set aside. It would appear from the notice as well as the affidavits supporting the application that the Page 30

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sole ground of the application that the injunction be set aside was that the plaintiff had not stated the facts fully and accurately to the court and that he had not disclosed all material facts. The could held that applying the principles in American Cyanamid Co. v Ethicon, the motion to dissolve the injunction should be dismissed, as there was a serious question to be tried and therefore measures should be taken to preserve the status quo.

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INJUNCTIONS Types of injunctions Interlocutory (or interim) injunctions 

The test in American Cyanamid

It is equally important to point out that probably in dealing with this test i.e. the ‘balance of convenience’ test as laid down in American Cyanamid, we need to consider the test based on factors such as: (a) If the applicant could be adequately compensated were he to succeed at the trial and the defendant would be in position to make the compensation, the application for an interlocutory injunction should be rejected, even if his or her claim appears strong. •

Case Law Analysis Perbadanan Setiausaha Selangor v Metroway Sdn Bhd [2003] 4 AMR550. (b) If the application could not be rejected on account of (a), the court must go on to consider whether , if the injunction is granted but the defendant is successful at the trial proper, the defendant would receive adequate monetary compensation from the plaintiff and the plaintiff is in position to pay them. If the answers to both are in the affirmative, interlocutory injunction may properly be granted. (c) If there is doubt as to the sufficiency of the respective remedies in damages available to either party or to both, then the question of the balance of convenience becomes relevant. •

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INJUNCTIONS Types of injunctions d)

Interlocutory (or interim) injunctions

(ii)

The test in American Cyanamid

Another issue to address while dealing with this test is that of the factors which may be relevant in determining ‘balance of convenience’. Case Law Analysis American Cyanamid, Lord Diplock mentioned three considerations and they are: (i) the preservation of the status quo; (ii) strength of the case in relation to the opponent; & (iii) other special factors (i.e. public interest argument etc). •

‘balance of convenience’ test. Case Law Analysis Azman bin Mohd Yusoff v Vasaga Sdn Bhd [2001] 2 AMR 2040, a case founded on nuisance coming from unlicensed disco and pub business. Here the plaintiff applied for an injunction to restrain the defendant from operating a disco and pub business called ‘Vasaga Exclusive Dance Club & KTV’ on the grounds that the business disturbed their peace, tranquillity and safety resulting from the loud music till late at night, vibration to the building and others. The defendant denied the accusations and said that the plaintiff’s complaint was frivolous, baseless and vexatious. The defendant only operated during the trial •

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run and the sound of the music was under control. There was no objection from the authorities which controlled the operation of the business. The defendant claimed that the plaintiff acted with mala fide. Allowing the plaintiff’s application for an injunction after scrutinising all the facts, the court held the defendant be restrained by an injunction from causing nuisance to the plaintiff until the disposal of the trial of the plaintiff’s claim against the defendant.

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INJUNCTIONS Types of injunctions Interlocutory (or interim) injunctions The test in American Cyanamid Case Law Analysis •UMAS

Sdn Bhd v RHB Bank Bhd [2001] 1 AMR 1024- where the plaintiff brought an action against the first and second defendants, alleging trespass of a certain site, and conversion of its equipment and machines and an injunction was granted in their favour preventing the defendants from entering the site or, among others, removing the machines. _

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INJUNCTIONS Types of injunctions Interlocutory (or interim) injunctions The

test in American Cyanamid

•It

is equally important to address the issue or question of whether the factors relevant to the ‘balance of convenience’ test should be considered on a step-by-step basis, or considered together at one go while trying to apply the test in a given case or scenario. Case Law Analysis •Pekeliling

Triangle Sdn Bhd v Chase Perdana Bhd [2003] 1 AMR 378; [2003] 1 MLJ 130- where the Court of Appeal dealt with this issue by saying that: “…the balance of convenience test must be applied in the manner intended by American Cyanamid, that is, a step-by-step approach as reflected in the dicta of Lord Diplock. The first step is to ask whether the applicant could be adequately compensated by damages, and if the answer to this is affirmative, that would be the end of the matter. In this respect, in so far as the steps were not followed, the High Court had erred…”

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INJUNCTIONS



Types of injunctions



Interim mandatory injunction



•

grant of interlocutory mandatory injunctions.

Case Law Analysis Syed Agil Barakbah SCJ in Tinta Press Sdn Bhd v Bank Islam Malaysia Bhd [1987] 2 MLJ 192 where he said: “The discretionary power of the court to grant mandatory injunction is provided by sec 53 of the Specific Relief Act 1950. By judicial process the power is extended to the granting of an interlocutory mandatory injunction before trial. Such discretion however must be exercised and an injunction granted only in exceptional and extremely rare cases….The case must be unusually strong and clear in that the court must feel assured that a similar injunction would probably be granted at the trial on the ground that it would be just and equitable that the plaintiff’s interest be protected by immediate issue of an injunction, otherwise irreparable injury and inconvenience would result”. •

Case Law Analysis Tinta Press Sdn Bhd v Bank Islam Malaysia, the respondents had leased certain printing equipment to the appellants. The appellants having defaulted in payment of the monthly rentals, the respondents brought an action to recover possession of the equipment and to recover the arrears of rent. The respondents also made an ex parte application for an obtained a mandatory injunction to enable the respondents to recover possession of the equipment. The appellants •

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then appealed to dissolve and set aside the mandatory injunction. This was refused and the appellants appealed. The learned judge on the facts and circumstances of the case rightly concluded that this was an exceptional case where the court was justified in granting a mandatory injunction on an ex parte application before trial.

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INJUNCTIONS Types

of injunctions

Interim

mandatory injunction

•Probably

in addressing interim mandatory injunction.

Case Law Analysis Timbermaster Timber Complex (Sabah) Sdn Bhd v Top Origin Sdn Bhd [2002] 1 AMR 25; [2002] 1 MLJ 23 where the Court of Appeal noted that an interlocutory mandatory injunction would be appropriate where the applicant show “an unusually strong and clear case and that there are special circumstances before the court”. •

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INJUNCTIONS When injunctions cannot be granted •It

is important to note that there are instances where the court may refuse to grant an injunction based on some reasons or arguments. For example, sec 54 of the Specific Relief Act 1950 provides that injunctions cannot be granted in the following cases: (a) To stay a judicial proceeding at the institution of the suit in which the injunction is sought, unless such restrain is necessary to prevent a multiplicity of proceedings; (b) To stay proceedings in a court not subordinate to that from which the injunction is sought; •To

restrain person from applying to any legislative body;

•To

interfere with the public duty of any department of any Government in Malaysia, or with the sovereign acts of a foreign government. •To

stay proceedings in any criminal matter;

Note: These are not the only cases where an injunction cannot be granted by the court. There are other cases as well under the sec.

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INJUNCTIONS When injunctions cannot be granted In order to understand the provision of sec 54 better, reference must be made to some of the illustrations given under the sec. The following are some of the illustrations: •

(a) A seeks an injunction to restrain his partner, B, from receiving the partnership debts and effects. It appears that A had improperly possessed himself of the books of the firm and refused B access to them. The court will refuse the injunction. (b) A manufactures and sells crucibles, designating them as “patent plumbago crucibles” though, in fact, they have never been patented. B pirates the designation. A cannot obtain an injunction to restrain the piracy. (c) A sells an article called “Mexican Balm” stating that it is compounded of divers rare essences, and has sovereign medicinal qualities. B commences to sell a similar article to which he gives a name and description such as to lead people into the belief that they are buying A’s Mexican Balm. A sues B for an injunction to restrain the sale. B show that A’s Mexican Balm consists of nothing but scented hog’s lard. A’s uses of his description is not an honest one and he cannot obtain an injunction. Case Law Analysis

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Dr David Vanniasingham Ramanathan v Subang Jaya Medical Centre Sdn Bhd (2006)

INJUNCTIONS Injunction to perform negative agreement •The

issue of an injunction to perform a negative agreement is dealt with under sec 55of the Specific Relief Act 1950 which provides: “Notwithstanding paragraph 54(f), where a contract comprises an affirmative agreement to do a certain act, coupled with a negative agreement, express or implied, not to do a certain act, the circumstances that the court is unable to compel specific performance of the affirmative agreement shall not preclude it from granting an injunction to perform the negative agreement: Provided that the applicant has not failed to perform the contract so far as it is binding on him. Case Law Analysis •Medlux

Overseas (Guernsey) Ltd v Faber Medi-Serve Sdn Bhd [2001] 3 AMR 3664-where Gopal Sri Ram JCA explained: “In our judgment, where there is a breach of a negative covenant, the court in this jurisdiction ought to treat it no differently from any other application for an interlocutory injunction…”

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INJUNCTIONS Injunction to perform negative agreement Case Law Analysis •Pertama

Cabaret Nite Club Sdn Bhd v Roman Tam [1981] 1 MLJ 149where the appellants were the owners of a night club in Kuala Lumpur. The respondent was a well known singer from Hong Kong. The respondent had signed a contract agreeing to appear and sing at the appellant’s night club for a number of days. Clause 15 of the contract provided that if the respondent breached any of its terms, the appellant could terminate the contract; and that in the event of such termination, the respondent was not to perform in Kuala Lumpur for a fixed period of three months thereafter. The respondent declined to honour his contract and began performing to another night club. The appellant sued and applied for an ex parte interim injunction to restrain the defendant from appearing at any opera house, theatre, concert hall or other public or private entertainment in Kuala Lumpur until the hearing of the summons. The SC granted an interim injunction restraining the defendant from singing in any place in Kuala Lumpur given that in the contract with the plaintiffs, the defendant had covenanted not to perform in the stipulated area during the validity of the contract or three months thereafter. Page 43

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INJUNCTIONS Injunction to perform negative agreement Case Law Analysis It is important to note that under English law, an injunction may be granted as to restrain breaches of negative covenants. See the case of Doherty v Allman (1978)-where the court stated that: “If parties for valuable consideration, with their eyes open, contract that a particular thing shall not be done, all the court of equity has to do is to say, by way of injunction, that which the parties have already said by way of covenant, that the thing shall not be done; and in such case the injunction does nothing more than give the sanction of the process of the court to that which already is the contract between the parties…” Case Law Analysis Lumley v Wagner (1852)- where Miss Wagner, an opera star, had agreed with Lumley that she would sing at Her Majesty’s Theatre during a certain period, and would not sing anywhere else without his written permission. She made another engagement with Gye to sing at Covent Garden and abandoned her previous commitment to Lumley, who sought an injunction to restrain her from singing for Gye. Lord St. Leonards held that an injunction should be granted to restrain the Page 44

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breach of the negative stipulation; it would not of course have been possible to obtain specific performance of the promise to sing).

INJUNCTIONS Injunction to perform negative agreement Case Law Analysis an injunction to perform a negative agreement. Common law position or approach is, the court will not normally grant an injunction to restrain a defendant from acting in breach of a negative undertaking if to do so would compel performance of an agreement otherwise unenforceable in equity. Case Law Analysis Dayang Nurfaizah bte Awang Dowty v Bintang Seni Sdn Bhd [2004] 2 AMR 555, [2004] 2 MLJ 39- where Muhamed Hishamudin J found that the management agreement entered into by the parties was in essence a contract for personal services and was thus unenforceable (see sec 20(1(b) of the Specific Relief Act 1950). In Dayang Nurfaizah, the first defendant applied for an interlocutory injunction against the plaintiff to restrain the plaintiff from appointing or engaging any person, other than the first defendant , as her personal manager and to restrain the plaintiff from making any public performance without the consent of the first defendant. The court held Page 45

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that in deciding whether or not to grant the interlocutory injunction, the court was duty bound to consider whether the first defendant had a cause of action against the plaintiff. For, should the court find that the first defendant had no cause of action against the plaintiff, it must dismiss the interlocutory injunction. As the defendant, was seeking to enforce the performance of a contract for personal services, a remedy which is barred by sec 20(1)(b) of the Specific Relief Act 1950, she therefore had no cause of action against the plaintiff.

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INJUNCTIONS Injunction to perform negative agreement In order to understand the provision of sec 55 of the Specific Relief Act 1950 better, it would be vital to make reference to some few illustrations given under the sec. The following are the illustrations: •

(a) A contracts to sell to B for $1,000 the good-will of a certain business unconnected with business premises, and further agrees not to carry on that business in Kelang. B pays A the $1,000 but A carries on the business in Kelang. The court cannot compel A to send his customers to B, but B may obtain an injunction restraining A from carrying the business in Kelang. A contracts to sell to B the good-will of a business. A then sets up a similar business close to B’s shop, and solicits his old customers to deal with him. This is contrary to his implied contract, and B may obtain an injunction to restrain A from soliciting the customers, and from doing any act whereby their good-will may be withdrawn from B. •

Note: These are not the only illustrations to sec 55 of the Specific Relief Act 1950. Thus, reference could be made to other illustrations under the sec as well.

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INJUNCTIONS Powers of the court to grant damages in lieu of injunction •It

is important to note that since the granting of an injunction is considered discretionary in nature (i.e. See sec 50 of the Specific Relief Act on preventive relief how granted. See sec 53 of the Specific Relief Act 1950 on granting of mandatory injunctions), the courts may not grant an injunction if damages are considered to be an adequate remedy.

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INJUNCTIONS Conclusion •overriding

purpose of an injunction is “to protect and preserve legal rights and interests and to prevent the commission or . of a legal wrong”. •injunction

is a matter of discretion, in general, an order to restrain the breach of a negative contract may be obtained almost as of right. •sec

55 of the Specific Relief Act 1950 does not take away the fundamental that a grant of an injunction remains a matter a of judicial discretion. •

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•

Q & A Session

•Source: attorneys-sc.com

•“A democracy is nothing more than mob rule, where fifty-one percent of the people may

take away the rights of the other forty-nine.” ― Thomas Jefferson

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TUTORIAL QUESTIONS Discuss, explain and analyse the following with good case support :1. 2. 3. 4. 5. 6. 7. 8.

Meaning of an injunction Nature of injunctions Characteristics of injunctions Legal principles Types of injunctions No grant of injunctions Injunction to perform negative agreement Powers of the court to grant damages

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PART II

INJUNCTIONS

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“As my sufferings mounted I soon realized that there were two ways in which I could respond to my situation -- either to react with bitterness or seek to transform the suffering into a creative force. I decided to follow the latter course.” ― Martin Luther King Jr.

Introduction Injunctions in public law Mareva injunction Conditions for the grant of Mareva injunctions Activities of third parties Anton Piller order Conditions for Anton Piller order Case law Analysis Comparative Studies Syariah Perspective Critical Comments Page 53

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Conclusion

INJUNCTIONS Introduction •Injunctions

are private law remedies that are available in ‘judicial review’ proceedings as far as public law is concerned. For example, in public law injunctions are understood as orders that prevent an administrative body, including a minister, from acting unlawfully. They can be interim (temporary) or permanent. Injunctions in public law Injunctions in public law can be understood by way of making reference to the operation of the concept of judicial review involving public bodies. These public bodies provide services for and regulate the public across a huge range of activities. A list of such activities would include: education, health, housing, •

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employment, social security, town planning, transport, fuel, immigration, licensing and taxation. It is important to note that the state regulates and provides for us through powers given to various administrative authorities such as ministers, central government departments, governmental agencies, local authorities, tribunals, public corporations and so on. These persons and bodies are provided by statute with necessary powers, either duties or discretions to carry out their tasks. •

INJUNCTIONS Injunctions in public law Therefore, injunctions in public law play an important role by acting as a remedy in protecting people from arbitrary and an affair actions and decisions of these public bodies. •

Injunctions in public law can be used in a situation where a public body reached a decision acting outside its powers given under a given statute i.e. ultra vires. •

Injunctions though considered a private law remedy, they are still available as a form of remedy even in public law cases e.g. they may be granted by the court in administrative law cases or even in criminal law cases. •

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INJUNCTIONS Mareva injunctions The Mareva injunction is a specialised form of injunction. It is a judicially crafted remedy. •

Case Law Analysis

•

Mareva Compania Naviera SA v International Bulk Carriers SA [1975] 2 Loyd’ Rep 509. •

According to Lord Denning MR, a Mareva injunction is interlocutory, not final; it is ancillary to a substantive pecuniary claim for debt damages; it is designed to prevent the judgment… •

The principle aim of a Mareva order or injunction is to restrain a defendant from disposing or otherwise dealing with any of •

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their assets within the jurisdiction of the court . In other words, the essential purpose of this injunction is to prevent foreign parties from causing assets to be removed from the jurisdiction, in order to avoid the risk of having to satisfy any judgment which may be entered against them pending proceedings in this country. To put it in a different way, a successful plaintiff sometimes finds that he is unable to satisfy the judgment because the defendant may have spirited his assets out of the jurisdiction. In extreme cases, the defendant may do this as soon as he becomes aware of the possibility of a suit being instituted against him. Where a plaintiff apprehends a real risk of this happening, he may apply ex parte to the court for an injunction restraining the defendant in a pending action from removing the assets from the jurisdiction. •

INJUNCTIONS Mareva injunctions It is important to note that the restraint is not restricted to prevent the removal of assets from jurisdiction but extends to their dissipation within jurisdiction as well. •

All in all, the object of a Mareva injunction (freezing order) is to prevent the frustration of a monetary judgment by preventing the dissipation or removal of the defendant’s assets 

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(“judgment proofing"). A Mareva injunction does not effect seizure of an asset. It restrains a defendant from dealing with an asset in certain ways. Mareva injunctions act in personam against defendants, not in rem against their assets. It does not confer any property rights.

INJUNCTIONS Conditions for the grant of Mareva injunctions The legal basis for the grant of a Mareva injunction is the risk that the defendant may deal with its property in such a way as not to satisfy judgment in favour of the plaintiff, and for the purpose, the order or injunction may be granted whenever it is just and convenient to do so. •

Case Law Analysis

•

Zainal Abidin bin Haji Abdul Rahman v Century Hotels Sdn Bhd [1982] 1 MLJ 260- This was an appeal from the decision of Hashim Yeop A. Sani J. The respondent had let the third floor of a nine-storey building belonging to them to the appellant for •

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purposes of running a recreation centre. The respondent subsequently decided to close the hotel business run by them and they informed the appellant that there would no longer be guests of the hotel requiring the services provided by the appellant. The appellant issued a writ claiming wrongful repudiation of the contract & damages. The appellant then filed a notice of motion to restrain the respondent from selling, transferring or in any manner whatsoever disposing of the land and building until the hearing and disposal of the suit or until further order. He claimed that if the land and building were sold he would be deprived of the fruits of any judgment he might obtain against the respondent. Hashim Yeop A Sani J. dismissed the application as he held inter alia that the relief sought by the appellant was unknown in our law as there was no equivalent to sec 45 of the English Court of Judicature (Consolidation) Act, 1925. He also held that the appellant had not disclosed sufficient grounds to justify any intervention by the court. In allowing the appeal, the court held that the High Court in Malaysia has jurisdiction to grant Mareva injunction in appropriate circumstances, as the provisions of para 6 of the Schedule to the Courts of Judicature Act, 1964, are equivalent of the provisions of sec 45 of the English Court of Judicature (Consolidated) Act, 1925. In this case although the appellant has raised a serious question to be tried on the question of damage he has suffered by reason of alleged wrongful Page 59

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repudiation of the lease agreement, there was no evidence to show that there was a danger that the available assets of the respondent would be dissipated to prejudice the appellant’s claim. In the circumstances it would not be proper to make the order sought by the appellant against the respondent.

INJUNCTIONS Guidelines for the grant of Mareva injunctions Case Law Analysis

•

Poly Electronic & Electrical (M) Sdn Bhd v Daewoo Corp (No.1) [2003] 2 MLJ 310- where the plaintiff had obtained a Mareva injunction. By the Mareva injunction, the defendant was restrained until further order of the court, whether by themselves, their servants, agents or howsoever, from disposing of or dealing with its assets within the jurisdiction, in so far as the same does not exceed the sum of RM5,263,475 save such sums as are reasonably necessary for the defendant’s Page 60

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ordinary operational expenses. The plaintiff discovered that they could not ascertain whether the defendant had in fact set aside assets to the value of RM5,263,475 pursuant to the Mareva injunction. The stand of the plaintiff was that there was a need for the defendant to disclose to this court that the sum of RM5,263,475 had, in fact, been retained in the bank account of the defendant within jurisdiction in compliance with the Mareva injunction that was issued. This was an application by the plaintiff for an order that the defendant discloses all its assets within the jurisdiction to the value of RM5,263,475 by way of an affidavit. In allowing the application, the court held that a Mareva injunction is an in personam order. It becomes in rem when it is brought to the notice of a third party not to aid in dealings with the assets of the defendant. INJUNCTIONS Guidelines for the grant of Mareva injunctions: guidelines governing the grant of the injunction or order

•

The applicant must have a good arguable case- See the case of Hock Hua Bank (Sabah) Bhd v Yong Liuk Thin [1995] 2 MLJ 213where Gopal Sri Ram stated that in the present case there was an added consideration in that the appellants were applying for a Mareva injunction. As such, the relative strength or weakness of the defence filed during the early stages of action was Page 61

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extremely relevant in assessing whether the appellants had an arguable case, which must be established to a higher standard than that applicable to the usual application for an injunction.

INJUNCTIONS Guidelines for the grant of Mareva injunctions The following are the guidelines governing the grant of the injunction or order: •

•

The applicant must have a good arguable case-

•

Case Law Analysis

Ang Chee Huat v Engelbech Thomas Joseph [1995] 2 MLJ 83where in dismissing the appeal the court held that the three essential requirements for granting a Mareva injunction had been considered by the judicial commissioner. With regard to Page 62

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the requirement of a good arguable case, after reading the pleadings and the affidavits, the respondent has shown that he has a good arguable case in respect of his claim for the return of the RM500,000. Case Law Analysis

•

Kembara Dinamik Corporation Sdn Bhd v Bahtera Sensasi Sdn Bhd [2004] 3 AMR 312.

INJUNCTIONS Guidelines for the grant of Mareva injunctions Case Law Analysis



The applicant must make full and frank discloser of all the material matters. 

Creative Furnishing Sdn Bhd v Wong Koi @ Wong Khoon Foh t/a Syarikat Sri Jaya [1989] 2 MLJ 153- In allowing the appeal, the court held that it is incumbent on the applicant to make Page 63

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frank and full disclosure of all material facts. Every material representation must not be misleading and there must not be any suppression of material facts. Failure to do so at the crucial time of making the ex parte application would invariably be fatal. In this case the respondent had sued the appellant and another defendant for alleged partnership debt for materials supplied and work done in respect of millworks on two floors of the Shangrila Inn, Penang under the terms of sub-contract. On the date of the issue of the writ the respondent obtained ex parte a Mareva injunction against the appellant and the other defendant to restrain them from disposing or otherwise dealing with their assets not exceeding $95,000. The appellant applied to set aside the ex parte Mareva injunction. This was dismissed and the appellant appealed. INJUNCTIONS Guidelines for the grant of Mareva injunctions The applicant must make full and frank discloser of all the material matters. 

Case Law Analysis



Aspatra Sdn Bhd v Bank Bumiputra Malaysia Bhd [1988] 1 MLJ 97- where the court held that in ex parte or inter parte Mareva proceedings by the court all relevant affidavits filed must be considered by the court…In this particular case the 

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learned judge was satisfied on the evidence before him that the respondents had shown that they had a good arguable case, that the defendant had assets within the jurisdiction and that there was a risk of the assets being removed before judgment could be satisfied. In the circumstances the learned judge not only had jurisdiction to grant the Mareva injunction prayed for but he had also granted the injunctive remedy on correct principles. In this case, the respondent had brought an action against Lorrain Osman, who was a director of the respondent and the chairman of the second respondent, for the total sum of $27,625,853.06 which they claimed to be secret profits made by Lorrain without their knowledge and approval. The respondents also made an ex parte application for a Mareva injunction to restrain Lorrain from transferring his assets out of jurisdiction and also for an order of discovery for Lorrain to disclose the value, nature and whereabouts of all his assets. The orders which were made on January 10, 1985 could not be served on Lorrain and the learned trial judge, on the application of the respondents, extended the Mareva injunction to Lorrain’s assets in 32 other banks in addition to the 6 banks cited in the earlier order and also to his shares in 104 other companies apart from Aspatra Sdn Bhd and the 4 companies mentioned in the original order. INJUNCTIONS Page 65

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Guidelines for the grant of Mareva injunctions The applicant must state the grounds of his claim and the amount, as well as state the points made against it by the defendant. Case Law Analysis

•

Bank Bumiputra Malaysia Bhd v Lorrain Osman [1985] 2 MLJ 236- In this case the first plaintiff is a company incorporated in Malaysia and carries on the business of banking. The second plaintiff is a wholly owned subsidiary of the first plaintiff and is a company incorporated under the laws of Hong Kong. The defendant, Lorrain Osman, was at all material times a director of the first plaintiff company and Chairman of the Board of Directors of the second plaintiff company. The plaintiffs brought an action against the defendant. The plaintiffs alleged that the defendant received the sum of $27,652,853.06 through his solicitors in Kuala Lumpur wrongfully and without the knowledge and approval of the plaintiffs and in breach of his fiduciary duty as a director of the 1st plaintiff and Chairman of the Board of Directors of the 2nd plaintiff. They asked the court to order the defendant to return to them the sum of $27,652,853.06 which they claim are secret profits made by the plaintiffs and made an ex parte application for a Mareva injunction to restrain the defendant from transferring his assets out of jurisdiction. The application also asked the court to order Page 66

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the defendant to disclose the value, nature and whereabouts of his assets. An order was obtained… See also the case of Pacific Centre Sdn Bhd v United Engineers Bhd [1984] 2 MLJ 143.

INJUNCTIONS Guidelines for the grant of Mareva injunctions Case Law Analysis

•

Pacific Centre Sdn Bhd v United Engineers Bhd [1984] 2 MLJ 143. In this case, an application for Mareva injunction was made inter partes. This was because it was a sequel to a successful application by the defendants to discharge an ex parte order made earlier by the court under sec 19 of the •

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Debtors Act 1957. The targets of the said application were two parcels of land belonging to the defendants, or the proceeds of sale thereof, insofar as the same did not exceed M$16,823,443 until the hearing of the action or until further order. The two properties were “the Sungei Besi property” and the Petaling Jaya property”.

INJUNCTIONS Guidelines for the grant of Mareva injunctions The applicant should provide some grounds of believing that there is some risk of the assets being removed before satisfaction. Case Law Analysis

•

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Ang Chee Huat v Engelbech Thomas Joseph [1995] 2 MLJ 83where in dismissing the appeal the court held that there was a clear inconsistencies between the declaration of trust and the title to the land, and between the appellant’s statement of defence and his affidavit in reply. Having considered the evidence, the conduct of the appellant was lacking in probity and honesty. In the circumstances, there was a real risk that the assets of the appellant would be dissipated should the respondent succeed at the trial.

INJUNCTIONS Guidelines for the grant of Mareva injunctions Case Law Analysis

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Metrowangsa Asset Management Sdn Bhd v Ahmad bin Hj Hassan [2004] 4 AMR 30. In granting a Mareva injunction to the plaintiff, the court held that a Mareva injunction in the context •

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of the present case serves as a remedy for the purpose of restraining a judgment debtor or a potential judgment debtor from committing the abuse of dissipating or hiding clandestinely assets that the judgment creditor might lawfully attach for the purpose of satisfying a judgment that is to be given or likely to be given in his favour. In this case, the plaintiffs had earlier taken out an action against the defendants over a purported embezzlement of funds belonging to Lembaga Tabung Haji. Two applications were before the court in this case. In the first application, the plaintiffs applied for a Mareva injunction over the bank accounts and properties of the first, fourth and fifth defendants. In the second application, the first defendant applied for an order that an earlier Mareva injunction granted on 21 Feb 2003 be varied to allow the first defendant to withdraw and/or to spend a sum of money amounting to RM150,000 or a reasonable sum thereof from two named banks for payment of legal fees…The court held that evidence before the court showed that the first, fourth and fifth defendants had conspired to defraud the plaintiffs out of the investment sums that were rightly due to them. Thus, to sum up, there was a real risk that the defendants together or on a separate basis have and would dissipate the assets.

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INJUNCTIONS The applicant must give undertaking in damages. It is important to note that in deciding to grant a Mareva injunction given the possible drastic effect of the grant, considerable caution should be exercised. •

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Case Law Analysis

RK Nathan JC in Best Electronics Sdn Bhd v Chen Li Yeng [1997] 1 CLJ supp 572 illustrates the application of the leading principles of law governing the grant of Mareva injunction. In Best Electronics Sdn Bhd, the plaintiff company alleged that the defendant had misappropriated company funds by false pretext and applied for a Mareva injunction not on ex parte basis but inter partes. The defendant resisted this by alleging that the money had been credit to her account with the company’s consent being her reward for helping the company to evade tax. The company had earlier lodged police report, and the defendant in turn had been in touch with the Inland Revenue. The company submitted that the defendant might dispose of her immovable assets to defeat the claim. The action was filed some 16 months after the plaintiff first discovered the alleged •

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misconduct. The court concluded that on the facts of the application of the plaintiff company must be rejected. Among the reasons given for the rejection are: (i) the fact that the claim is made inter partes may indicate that the fear of the defendant disposing of the property may not always be justified; (ii) the fact that a claimant fails to commence proceedings immediately or within a reasonable period of time may persuade the court not to exercise its discretion in favour of the plaintiff save where the delay could be explained; (iii) an application may appropriately be denied if he comes to equity with unclean hands.

INJUNCTIONS Guidelines for the grant of Mareva injunctions

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RK Nathan JC in Best Electronics Sdn Bhd v Chen Li Yeng dealt with the law surrounding the granting of Mareva injunction by the court by considering the following issues: •

An application for a Mareva injunction made at an inter partes hearing would be determined on its merit and after hearing arguments from both the plaintiff and the defendant. •

The fact that the application is made inter partes may indicate that the fear of the defendant disposing of the property may not always be justified. •

The fact that a claimant fails to commence proceedings immediately or within a reasonable period of time may persuade the court not to exercise its discretion in favour of the plaintiff save where the delay could be explained. •

The conditions for the grant of a Mareva injunction, namely (i) that the plaintiff has a good arguable case, (ii) that the defendant has assets within jurisdiction, and (iii) that there is real risk of the assets being dissipated or removed before judgment. On the facts of the case, (ii) was satisfied but not (i) and (iii). •

An application may appropriately be denied if he comes to equity with unclean hands. •

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The applicant is required to provide an undertaking as to damages if in case the ruling is not in his favour. •

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INJUNCTIONS Activities of third parties Case Law Analysis

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Cardile v LED Builders Pty Ltd (1999) 162 ALR 294- the Australian High Court stressed that the expression that there ought to be a flexibility in the grant of Mareva orders ought not to be understood as to allow it “to cloak a lack of analytical rigour and to escape the need to find a doctrinal and principled basis for orders that are made. In so far as the substantive law is concerned, a distinction is to be maintained between its grant so as not to defeat satisfaction of the plaintiff’s claims and orders which extend to third parties who cannot be shown to have frustrated, actually or prospectively, the administration of justice. •

The court (Kirby J) went further and explained that it would be necessary for the party seeking it to show, in addition to the conditions ordinary to the grant of relief injunctive in nature that (i) there is a danger that the non-party will dispose of the relevant assets or property in its possession or under control; and (ii) that the affairs of the actual or potential judgment debtor and the non-party are closely intermingled, and that the actual or potential judgment creditor has a vested or accrued •

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cause of action against the non-party or may otherwise become entitled to have recourse to the non-party, its property and assets to meet the claim.

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INJUNCTIONS Anton Piller order The Anton Piller Order, an exceptional and powerful prelitigation mechanism, can be resorted to by a plaintiff to preserve evidence against infringers. •

Essentially, an Anton Piller Order is an Order from a Court, obtained ex parte, ordering an infringer, and sometimes more than one infringer, to let the plaintiff’s solicitor search its premises and deliver up evidence of infringement of the plaintiff’s rights. •

From the above foregoing paragraph, it would appear that the order is designed to prevent the defendant from concealing, removing or destroying vital evidence such as documents, or other moveable property, prior to an inter partes hearing of the pending action. In other words, the purpose of the order is to prevent the removal or destruction of evidence before inter partes application. •

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Case Law Analysis

Anton Piller KG v Manufacturing Processes Ltd [1976] 1 All ER 779 while addressing purpose of this important concept. In •

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Anton Piller KG, Lord Denning explained that: “…if the defendant were forewarned, there is a grave danger that vital evidence will be destroyed, that papers will be burnt or lost or hidden, or taken beyond the jurisdiction, and so the ends of justice can be defeated…” The order allows the plaintiff to enter the premises of the defendant and to look at and make copies of any documents or similar material. Hence, failure to comply with an Anton Piller order is punishable by contempt of court. •

All in all, such orders are rarely made, and will only be considered by the courts if there is no suitable alternative method of securing justice for the plaintiff. •

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INJUNCTIONS Conditions for granting an Anton Piller order •

A plaintiff needs to show the following:

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An extremely strong prima facie case

In keeping with the extraordinary nature of the remedy, the Court has emphasized the strength of the case which the plaintiff is required to put forward in order to obtain an Anton Piller order: not only must it be a strong one, but plaintiffs have been required to establish that they have a “very” or “extremely” strong prima facie case. •

Very serious potential or actual damage to the plaintiff A plaintiff must establish that, in the absence of the requested Anton Piller order, the defendant’s actions cause it harm that will potentially or actually cause it losses. •

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INJUNCTIONS Conditions for granting an Anton Piller order Clear evidence that the defendant is in possession of incriminating materials. Given that the strategic advantage and the uniqueness presented by the execution of Anton Piller orders is the preservation of evidence for the purpose of trial, the plaintiff is correspondingly required to establish that, should the infringer be given advance notice of the remedy sought, there is a real danger that important evidence will be destroyed, concealed or taken out of the jurisdiction. •

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INJUNCTIONS Conditions for granting an Anton Piller order Real possibility that they may, unless restrained, destroy such material before the marking of inter partes application. Abuses associated with the execution of this order are real, it becomes vital that certain requirements be fulfilled from the very beginning. •

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Execution of an Anton Piller order

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Case Law Analysis

Universal Thermosensors Ltd v Hibben [1992] 1 WLR 840 where Sir Donald Nicholls VC laid down the rules & followed in the local case of Arthur Anderson & Co v Interfood Sdn Bhd [2005] 2 AMR 650, CA; [2005] 6 MLJ 239). The requirements are: •

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The order should normally contain a term that before complying the defendant may obtain legal advice, provided this is done forthwith. •

Unless this is clearly not appropriate, the execution of orders must be restricted to working days and normal working hours. •

The order may contain an injunction to restrain the defendant from informing others of the existence of the order for a period as may be appropriate in the circumstances of the case, save a communication with a legal advisor for the purposes of securing legal advice. •

Except where there are good reasons for doing otherwise, the order should not be executed at business premises save in the presence of a responsible officer or representative of the company or trader in question. •

In general the orders should expressly provide that, unless this is seriously impracticable, a detailed list of the items being removed should be prepared at the premises before they are removed, and the defendant should be given an opportunity to check the list at the time. If the order is to be executed at a private house, and it is likely that a woman may be in the house and alone, the solicitor serving the order must be, or must be accompanied by, a woman. 

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Ideally, the court should consider the desirability of providing, by suitable undertaking or otherwise (i) that the execution of the order should be supervised by a solicitor who is not from the firm representing the plaintiff; (ii) that the said solicitor should be suitably experienced in the execution of Anton Piller orders; (iii) that the said solicitor should prepare a written report as to what had transpired in the execution of the orders; (iv) that a copy of the report should be given to the defendant; and (v) the plaintiff is to present that report at the inter partes hearing. 

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INJUNCTIONS Conditions for granting an Anton Piller order •

Execution of an Anton Piller order

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Case Law Analysis

Arthur Anderson & Co v Interfood Sdn Bhd [2005] 6 MLJ 239the respondent had applied and on 9 March 1999 was granted several interim reliefs against the appellant, mainly a Anton Piller order (‘the Order’). The appellant then applied to set aside the Order while the respondent sought an order to continue to retain the documents seized pursuant to the Order. The same High Court judge who granted the Order (1) allowed the respondent’s application to retain the documents; but (2) dismissed the appellant’s application to set aside the order. The appellant appealed against both orders. In allowing both appeals, the court held that even with the absence of any Practice Direction, the application and execution of an Anton •

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Piller order is subject to stringent requirements, guidelines and safeguards. In other words, any departure would be contrary to the common law of Malaysia as such point has already been well established. (See the requirements mentioned above)

INJUNCTIONS Privilege from self-incrimination In respect of the local law as to the applicability of the privilege from self incrimination and the application for an Anton Piller order in the context of interlocutory proceedings, there are two conflicting views. •

Position 1

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The privilege remains applicable.

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Case Law Analysis

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PMK Rajah v Worldwide Commodities Sdn Bhd [1985] 1 MLJ 86- where the court held that the defendants were entitled to the privilege not to give discovery of documents, the disclosure •

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of which would incriminate them. In this case, the first, second, sixth and seventh defendants sought for an order of the court to discharge an Anton Piller order granted on Dec 30, 1982. The defendants contended that (a) the plaintiff had misled the court by stating in his affidavit in support of the ex parte application that the first defendant was required by law to keep a segregated bank account in respect of the plaintiff & (b) it was not possible to show the trading statements to solicitors of the plaintiff without disclosing particulars of other clients which were confidential in nature. The production of the documents referred to in the order would incriminate the defendants by providing evidence on which they could be prosecuted for offences under the Commodities Trading Act 1980 and for conspiracy and fraud. In respect of the local law as to the applicability of the privilege from self incrimination and the application for an Anton Piller order in the context of interlocutory proceedings, there are two conflicting views. •

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The privilege remains applicable.

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Case Law Analysis

Riedal-de Haen AG v Liew Keng Pang [1989] 2 MLJ 400- where the court held that before the privilege against selfincrimination (‘the privilege’) can be claimed successfully, it •

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must be shown that that there is a real risk that incriminating answers would expose the person concerned to arrest or prosecution for any criminal offences. In this case, the plaintiffs obtained an Anton Piller order against the defendant ordering the defendant inter alia to disclose the names of their suppliers and customers of goods bearing the plaintiffs’ trademarks. The defendant applied to discharge the order on the ground that it infringed the privilege against self-incrimination.

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INJUNCTIONS Privilege from self-incrimination •

Case Law Analysis

Arjunan a/l Ramasamy & 9 Ors v Kesatuan Kebangsaan Pekerja-Pekerja Ladang & 12 Ors [1993] 1 MLJ 326- where the court held that the defendants were entitled to the privilege not to give discovery of documents because such disclosure would incriminate them. In this case, one the issues before the court was whether the defendants must give discovery documents which might subject them to prosecution. The counsel for the defendants argued that under sec 55(3) of the Trade Unions Act 1959, the account should be verified by statutory declaration and if not true, would subject their members (of the Trade Union/defendants) to prosecution. •

In respect of the local law as to the applicability of the privilege from self incrimination and the application for an Anton Piller order in the context of interlocutory proceedings, there are two conflicting views. •

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INJUNCTIONS Privilege from self-incrimination •

Position 2

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The privilege no longer exists.

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Case Law Analysis

Television Broadcasts Ltd v Mandarin Video Holdings Sdn Bhd [1989] 2 MLJ. •

AG of Hong Kong v Zauyah Wan Cik [1995] 2 MLJ 620- where the court held that in Malaysia, the common law privilege against self-incrimination has been removed by sec 132(1) of the Evidence Act. The section applies where a court in this country is recording evidence in municipal proceedings or in aid of proceedings pending before a foreign tribunal. •

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INJUNCTIONS Conclusion Both types of injunctions do play vital roles in helping the plaintiff in his or her journey or quest for justice. For example, Mareva injunction would restrain a defendant from disposing or otherwise dealing with any of their assets within the jurisdiction of the court, in such a way as not to satisfy judgment in favour of the plaintiff. On the other hand, an Anton Piller order would prevent the defendant from concealing, removing or destroying vital evidence such as documents, or other moveable property, prior to an inter partes hearing of the pending action. •

courts are aware of the dangers associated with both types of injunctions and thus rules or guidelines have been formulated in the process of granting these two types of injunctions. •

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Q & A Session •

•Source: attorneys-sc.com

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TUTORIAL QUESTIONS Discuss, explain and analyse the following with good case support :1. 2. 3. 4. 5. 6.

Injunctions in public law Mareva injunction Conditions for the grant of Mareva injunctions Activities of third parties Anton Piller order Conditions for Anton Piller order

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