Threeways Shipping Services Group Ltd & Anor v Standard Chatered Bank (U) Ltd (Miscellaneous Application No. 1226 of 2016)
Observed later treatment
No later-treatment classification is recorded for this judgment.
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Holding
The court granted a temporary injunction restraining Standard Chartered Bank from enforcing security documents and selling mortgaged property for 90 days. The applicants alleged the bank misrepresented that USD 1,500,000 bridge financing would be released to turn their company into a going concern, and that failure to release these funds breached the contract. The court held the suit would be rendered moot if sales proceeded, making an injunction appropriate, but limited it to 90 days to allow mediation given depositors' interests.
Outcome
Temporary injunction granted for 90 days pending mediation or expedited hearing of the underlying suit
Facts
The applicants obtained a banking facility from Standard Chartered Bank and provided security by mortgaging properties comprised in Plots 1-5 Mpanga Link. The facility letter was signed on 14 March 2016. The applicants alleged that in their correspondence dated 9, 10, and 15 March 2016, they had requested bridge financing of USD 1,500,000 to turn their company into a going concern, and that the bank represented it would release these funds. The applicants relied on this representation when surrendering their titles as security. The bank proceeded with restructuring of past due loans but did not release the USD 1,500,000. The applicants alleged this failure breached the contract and caused their business to collapse, leaving them unable to meet loan obligations. The bank sought to enforce the security and sell the mortgaged properties.
Issues
- Whether a temporary injunction should be granted to restrain the respondent bank from enforcing security documents and selling mortgaged property.
- Whether the respondent misrepresented that additional funding of USD 1,500,000 would be released under the facility agreement.
- Whether the matter would be rendered moot if the mortgaged properties were sold pending determination of the suit.
Orders
- Application for temporary injunction granted.
- Respondent and their representatives ordered to stay all steps towards realization of the mortgage until the matter is disposed.
- Injunction to remain in place for 90 days from the date of this ruling or until further orders.
- Parties directed to proceed through mediation, failing which the matter would be fast-tracked through hearing.
Rules and key headnotes
Full judgment
The original judgment as reported. Read the original PDF before relying on any passage.