Wenda Co Limited v Wang Jinhong & Ors

An application to discharge an injunction may be an abuse of process where the respondent had an earlier opportunity to challenge it, unless there is good cause, usually a material change of circumstances or newly discovered facts.

A material change permitting the application does not necessarily establish that the underlying claim has ceased to be seriously arguable. A non-deliberate failure of full and frank disclosure does not invariably require discharge. The court must consider the interests of justice, including the continuing risk of dissipation, and may maintain the injunction while marking the breach through an indemnity costs order.

The claimant obtained proprietary and freezing injunctions without notice against three defendants in November 2021. The fourth defendant was not made subject to the orders. The defendants did not pursue the listed return hearing and applied to discharge the injunctions in April 2024.

In the meantime, the claimant amended its case. It accepted that Syner, rather than the claimant, had been named as seller in the relevant sales contracts, but maintained that Syner and Effs were obliged to account for monies received from invoice financing arrangements. The defendants argued that this was a material change, that the claim was no longer seriously arguable, and that the claimant had failed to make full and frank disclosure concerning duplicate invoices and double financing.

The issues were whether the discharge application was abusive, whether the amended claim remained seriously arguable, whether disclosure had been inadequate, and what sanction, if any, should follow.

1. Discharge application. The application was not an abuse of process. The claimant’s change from alleging that it was the seller and that Syner and Effs were payment agents to alleging that Syner and Effs were the sellers but held receipts on trust for the claimant was a material change affecting the whole claim. The defendants therefore had good cause to challenge the injunctions.
2. Seriously arguable claim. The amended case still raised a serious issue to be tried. The court could not determine on an interlocutory application whether the parties had agreed a trust relationship or a purely contractual arrangement. A contractual obligation to account could support a freezing injunction, although it would not itself support a proprietary injunction. The amendments concerning Effs’s entitlement to interest were clarificatory and did not remove the serious issue.
3. Full and frank disclosure. The claimant should have disclosed the existence of two sets of sales documents and the double-financing arrangement. Those matters were material because they could have affected the judge’s assessment of where the dishonesty lay and whether equitable relief should be granted. The claimant had failed to conduct the rigorous investigation required before seeking draconian without-notice relief.
4. The court could not find, without cross-examination, that the claimant’s witness had deliberately advanced a false case or knowingly withheld the information. The allegation had also not been properly raised in the discharge application. The failure was therefore non-deliberate.
5. Sanction. The interests of justice required the injunctions to continue until trial or further order. The risk of dissipation remained and had increased as trial approached. The appropriate sanction was an order that the claimant pay the defendants’ costs of both applications on the indemnity basis, including the costs of the additional evidence and submissions.