TMF Trustee Ltd & Ors v Fire Navigation Inc & Ors Re 'Megacore Honami'

In deciding whether to grant interim mandatory relief, the court must assess whether granting or refusing the relief carries the greater risk of injustice. The mandatory nature of the order and the degree of assurance available concerning the claimant’s prospects are important considerations, but they do not replace that overall assessment. Where the defendant’s proposed conduct would preserve or worsen the risk to the claimant’s security, the balance may strongly favour transferring possession. Allegations of unclean hands and inadequate full and frank disclosure must be established on the evidence. Disputed or imperfect information does not by itself justify discharge of an ex parte order where the applicant acted on information reasonably obtained and fairly presented the material issues.

The claimants sought interim relief concerning the vessel Megacore Honami, which secured financing owed by the first defendant. An ex parte order required possession of the vessel to be surrendered to the first claimant. A subsequent order permitted limited steps to preserve the position pending full inter partes argument.

At the return hearing, the defendants sought to set aside or discharge the ex parte order. They alleged that the claimants had acted with unclean hands and had failed to make full and frank disclosure. They also proposed conditions concerning security for costs, the value of any sale and the claimants’ undertaking in damages. The central issue was whether possession should remain with the first claimant pending determination of the substantive claims.

1. Interim mandatory relief. The court confirmed that the relevant question was whether, taking account of the mandatory character of the relief and the degree of assurance as to the claimants’ prospects on the merits, granting or refusing the order carried the greater risk of injustice. The court was entitled to consider the practical consequences of restoring possession to a defendant intending to lay up the vessel where that would make enforcement materially more difficult.
2. The balance overwhelmingly favoured continued possession by the first claimant. The vessel had been unable to trade and the first defendant intended to lay her up at a location where arrest would be difficult. There was also a high degree of assurance that the claimants’ substantive claims would succeed, including because the asserted defence concerning the loan-to-value notification, acceleration and maturity default was speculative on the evidence then available.
3. Unclean hands. The defendants did not establish that the claimants had materially misrepresented events concerning the vessel’s movements, the Singapore Navy, the Indonesian Marine Police, dealings with the master, the crew or the criminal complaint. The evidence disclosed disputes and one clarification concerning a photograph, but did not establish improper conduct sufficient to justify refusing equitable or discretionary relief.
4. Full and frank disclosure. The claimants had fairly drawn the court’s attention to the possible merits arguments and the defendants’ complaints about impeded sales. They were not required to anticipate and develop arguments that the defendants had not previously articulated. The complaints concerning alleged inaccuracies or omissions were therefore not made out.
5. The order of 25 September 2018 was discharged. The first defendant’s application to set aside or discharge the order of 22 September 2018 was dismissed. Further consideration was required concerning the form of the order, the undertaking in damages and arrangements ensuring that the vessel was taken into Singapore.