Gazelle Ventures Pte Ltd v Lim Yong Sim & 2 Ors

Facts

No Signboard Holdings Ltd, a restaurant company listed on the Catalist Board, had its shares suspended from trading on 24 January 2022. Its chief executive and executive chairman, Lim Yong Sim, owned 93.6% of GuGong Pte Ltd, which held 54.91% of No Signboard's shares. Gazelle Ventures Pte Ltd, an investment holding company, agreed to rescue the company: under a Super Priority Financing Agreement it lent $450,000 as rescue financing, and under an Implementation Agreement it would invest up to $5m, of which $500,000 would buy a 75% stake, with $4.5m in convertible redeemable preference shares. Completion depended on conditions to be met by 31 December 2023, including shareholder approvals at an EGM and a whitewash waiver from the Securities Industry Council.

Mr Lim and GuGong executed deeds on 8 November 2022 in favour of No Signboard undertaking to vote for the required resolutions, which were passed on 30 November 2022. GuGong's undertaking was given in return for an IP sale and a consultancy, but those agreements were terminated on 28 February 2023 because the Council would not grant a fresh waiver while they stood, and GuGong began proceedings over the termination. On 16 June 2023 GuGong requisitioned an EGM to remove all directors except Mr Lim, appoint five new directors and annul the 30 November 2022 resolutions. Gazelle applied in HC/OA 781/2023 for a precautionary (quia timet) injunction or, alternatively, a so-called freestanding injunction to stop the resolutions being passed. No Signboard was a nominal defendant and was not represented.

Issues

1. Whether Gazelle had a contractual right against Mr Lim and GuGong under their deeds that an injunction could protect.
2. Whether passing the resolutions would likely amount to causing loss by unlawful means or to an unlawful or lawful means conspiracy against Gazelle.
3. Whether No Signboard would breach the Implementation Agreement and whether Gazelle faced grave and irreparable harm.
4. Whether the court can grant a freestanding injunction without any cause of action.

Holding

Philip Jeyaretnam J dismissed the originating application entirely, with costs to the defendants against Gazelle, to be fixed by the court if not agreed within 14 days. He stressed that the dismissal did not endorse the resolutions and did not shut out any damages claims Gazelle might have.

Reasoning

A precautionary injunction requires a strong probability that the defendant will breach the claimant's rights and, if so, harm so grave and irreparable that damages would be inadequate. The first stage failed. The deeds were given to No Signboard, not Gazelle, and excluded third-party rights, so Gazelle had no standing to enforce them; provisionally, the undertakings also ended at the close of the November 2022 EGM after being performed.

The unlawful means tort also failed. Gazelle was a creditor, not a shareholder, so any breach of the majority's duty to vote in good faith for the company as a whole would be a wrong to the company or its minority, not to Gazelle; and on the evidence the court could not find a strong probability of such a breach. There was no direct evidence of an intention to injure Gazelle, and Mr Lim and GuGong might be acting in their own interests. The conspiracy claims fell with these findings, since they relied on the same acts and intention. Gazelle pointed to no term No Signboard would breach; the completion conditions were not promises, and the undertaking to convene an EGM did not bar later meetings. Nor was irreparable harm shown, since completion might fail anyway and the loss could not be identified in advance.

On the alternative claim, the court declined to follow dicta in Sulzer Pumps and Tanoto Sau Ian. The power to grant injunctions where just or convenient is broad, but it is exercised only in support of a substantive legal right. Freestanding describes procedure, such as an application made where the main dispute is elsewhere, not a separate basis for relief.

From the judgment