Lex; in Breve
The online supplement to our eponymous journal features concise and insightful articles penned by law students from the University of Malaya, as well as guest writers.
Erinford injunction is one of the types of injunctions provided in court. Although it has not been formally introduced in Malaysian statutes, this does not restrict its usage and development in the courts of Malaysia.
An injunction is a relief in the form of a court order, which forbids or compels a specified party from doing a certain act. Based on equitable principles, it is normally granted when damages is not an adequate remedy. There are different types of injunctions available, namely temporary (interlocutory or interim) injunctions, perpetual (final) injunctions, injunctions to perform a negative agreement, and special injunctions. The subject matter of this article, the Erinford injunction, is one of the few special injunctions developed through case law.
Named after the English case of Erinford Properties Ltd v Cheshire County Council, an Erinford injunction is an interlocutory injunction granted by the court under its inherent jurisdiction to an applicant for interim postponement pending the hearing of an appeal. In other words, when the applicant brings an appeal against a court decision, he may at the same time apply for an Erinford injunction to restrain the other party from dealing with the subject matter of the action until the disposal of the appeal. The rationale behind this form of injunction is to maintain the status quo so as to prevent the appellate court’s decision from being rendered nugatory should the appeal succeed. Simply put, the nature of an Erinford injunction is such that it protects the justice of the case, especially when the judge doubts his judgment or recognises the possibility that the judgment may be reversed by the appellate court.
While the principle enunciated in Erinford Properties case has been adopted in numerous Malaysian cases, the Erinford injunction is not specifically provided for in Malaysian statutes. Nevertheless, the High Court in Tahan Steel Corp Sdn Bhd v Bank Islam Malaysia Bhd (No. 2) held that S.43 of the Courts of Judicature Act 1964 recognises the inherent power of the High Court to hear an application for an Erinford injunction in order to ensure that the appeal to the Court of Appeal is not rendered nugatory. The jurisdiction to grant orders in the nature of an Erinford injunction is also reflected in ss.44 and 80 of the CJA, which stipulate the powers of the Court of Appeal and the Federal Court respectively in issuing any interim order ‘to prevent prejudice to the claims of parties’ pending the hearing of the proceedings. However, the appellate courts’ powers are not to be exercised unless the High Court has no jurisdiction to grant an Erinford injunction. In Jawi a/k Landu v Sunny Inspiration Sdn Bhd & Anor, the High Court held that the Erinford injunction should only be granted by the same judge who made the initial decision to dismiss the plaintiff’s previous application for injunction. Since the previous application was not heard and dismissed by the judge hearing the application for Erinford injunction, S.44 of the CJA confers power on the Court of Appeal to grant similar orders to the plaintiff.
Now that it is clear that courts in Malaysia have jurisdiction to grant Erinford injunctions, the question now is when will an Erinford injunction be granted? This article focuses on identifying the factors considered by courts in granting an Erinford injunction by analysing three Malaysian cases, namely, Kilang Kosfarm Sdn Bhd v Kosma Nusantara Berhad, Philip Morris Brands Sarl v Goodness for Import and Export & Ors (No 2), and Envipure Sdn Bhd v Esstar Vision Sdn Bhd.
II. KILANG KOSFARM SDN BHD v KOSMA NUSANTARA BERHAD
A. Background Facts
Under the Oil Palm Plantation Operation and Maintenance Contract, the plaintiff was appointed as a contractor to operate and maintain an oil palm estate owned by the defendant for a period of 20 years. Tasked with collecting oil palm fruits from the said estate, the plaintiff was also entitled to purchase the harvested fruits. However, the parties’ relationship became strained, and the defendant terminated the contract and ordered the plaintiff to leave the said estate and stop collecting the fruits.
Following the termination of the contract, the plaintiff filed an ex parte injunction against the defendant to compel the latter to surrender vacant possession of two pieces of land. The injunction was also applied to restrain the defendant from interfering the plaintiff from carrying out its obligations under the contract. Upon expiry of the said ex parte application, the plaintiff filed an inter partes application for injunction to continue restraining the defendant.
Nevertheless, the inter partes application was dismissed on the ground that the balance of convenience lies in favour of the defendant and damages is a suitable and adequate remedy for the plaintiff. Following the dismissal, the plaintiff filed an appeal and also applied for an Erinford injunction pending disposal of the appeal by the Court of Appeal. Upon considering all relevant principles, the High Court dismissed the application for an Erinford injunction with costs.
B. Analysis of the Court Decision
While recognising that a stay of execution is different from an Erinford injunction in both nature and effect, the court agreed with the plaintiff’s contention that the same legal principles apply to an application for stay of execution and an application for an Erinford injunction. This was supported by the case of See Teow Guan v Kian Joo Holdings Sdn Bhd & Ors, in which the Court of Appeal held that the paramount consideration is whether upon balancing all the relevant factors, the appeal would be rendered nugatory if successful. If the answer is in the affirmative, a stay or other appropriate interim relief should be directed. Acknowledging that the factor is similarly propounded in the Erinford Properties case, the court summarised the legal principles expounded by Megarry J as far as the present application is concerned:
Taking into consideration the above Erinford principles and a few local cases that have adopted a similar position, the court proceeded to address these issues:
1. Maintenance of status quo
Following the decision in Garden Cottage Foods Ltd v Milk Marketing Board, the court held that the relevant status quo is the state of affairs existing during the period immediately before the plaintiff filed the writ of summons and its ex parte application for injunction against the defendant. This would mean that the status quo which the plaintiff sought to preserve is the termination of the contract and the eviction of the plaintiff from the said estate. If the status quo were to be maintained it would defeat the purpose of the plaintiff to remain on the said estate. The court also stated that the issue of the status quo is only relevant in cases where a balance of convenience is achieved, not in the present case where the balance of convenience is clearly in favour of the defendant. Based on these reasons, the court ruled that the question of maintaining status quo does not arise in the present case.
Although Garden Cottage is a reliable authority for the definition of status quo, it ought to be distinguished from the present case. In the former case, the plaintiff applied for an interlocutory injunction to restrain the defendant from refusing to supply butter to them. The injunction was granted to preserve the status quo pending the hearing of the action — trade between both parties. If this was not preserved, the refusal to supply would effectively force the plaintiff out of business. In the present case, the court failed to recognise that status quo is not necessarily constituted by the state of affairs in the period immediately before the filing of the writ, but a matter that must be carefully determined by the court based on the facts of the case. Instead of applying the definition of status quo in a literal sense, the court should have considered the plaintiff’s purpose behind the application for an Erinford injunction, which is to remain on the said estate. In essence, the status quo should be the state before the termination of the contract, not after. By interpreting the status quo to be the latter state, the court had rendered the application redundant.
2. Balance of convenience
In line with American Cyanamid Co v Ethicon Ltd, the court weighed the balance of convenience by considering the consequential harm that the parties may suffer if an Erinford injunction is granted or refused. It was held that the balance of convenience lies more in favour of the defendant on the ground that the defendant would suffer greater hardship if the injunction is granted. The court was of the view that the continuation of the contract may not be commercially viable in the future and the defendant may suffer long term losses that could not be compensated as the contract does not contain provision for such losses. Since the plaintiff did not adduce any new material evidence to prove that it would suffer greater losses without an Erinford injunction, the balance of convenience clearly lies in favour of the application being refused.
3. Appeal rendered nugatory
The court looked at whether there would be an impediment to the plaintiff enforcing any judgment in its favour should the plaintiff succeed in their appeal. If the answer is in the affirmative, the appeal would be rendered nugatory unless an Erinford injunction is granted. The rationale behind this is that despite the pendency of an appeal, the successful party to the action may be free to act and deal with the subject matter of the action, resulting in the possibility that the unsuccessful party may not be able to be restored to his or her original position in the event the appeal is successful. Considering the absence of evidence to show that the defendant was not financially capable to honour any judgment obtained by the plaintiff should the appeal succeed, the court held that the plaintiff would not be impeded from enforcing any judgment in its favour. Therefore, there is no likelihood that a successful appeal would be rendered nugatory without the injunction. Clearly, the approach taken by the court in examining the nugatoriness of an appeal is effective as it considers the unsuccessful party’s concern on his or her legal position in light of the possibility that the judgment may be reversed or varied.
4. Damages as an adequate remedy
It is trite law that an injunction will not be granted unless there are no suitable and adequate damages available. Hence, in granting an Erinford injunction, the court would examine whether the plaintiff will be adequately compensated for the damage suffered before hearing of the appeal. This question is answered in the affirmative when the court pointed out that the contract contained a clause on liquidated damages, which requires the defendant to compensate the plaintiff upon wrongfully terminating the contract. Furthermore, the fact that the plaintiff claimed for general and exemplary damages indicates that damages is indeed a more suitable remedy for the plaintiff.
The court considered factors such as maintenance of status quo, balance of convenience, nugatoriness of a successful appeal, and adequacy of damages as a remedy before making the decision to dismiss the application for an Erinford injunction. These factors aside, the court’s recognition of the contention that the same principles are applicable to both a stay of execution and an Erinford injunction opens up the possibility to consider special circumstances in making the decision to grant Erinford injunction. However, at the time the present case was decided, the case of See Teow Guan was the binding precedent which, as opposed to other cases on stay of execution, held that it is not necessary to demonstrate special circumstances to warrant a stay. If the Federal Court case of Kosma Palm Oil Mill Sdn Bhd v Koperasi Serbausaha Makmur Berhad were decided before the present case, the court would have required the plaintiff to prove the existence of special circumstances.
III. PHILIP MORRIS BRANDS SARL v GOODNESS FOR IMPORT AND EXPORT & ORS (NO 2)
A. Background Facts
Considering the defendant’s ‘MALIMBO’ cigarettes and packaging to be an infringement of its cigarettes’ trademark, the plaintiff filed a writ against the defendant to seek a permanent injunction to restrain the latter from dealing with the ‘MALIMBO’ cigarettes and containers. Subsequently, the defendant filed an application to set aside the writ, on the ground that the High Court had no jurisdiction over the matter. The High Court allowed the defendant’s application, and following this decision, the plaintiff appealed to the Court of Appeal. The plaintiff also sought an Erinford injunction from the High Court to restrain the defendant from claiming, seeking for the release of, taking possession, custody or control of, accepting delivery of, dealing with, or disposing of the cigarettes. The High Court allowed the application for Erinford injunction on the condition that the plaintiff undertakes to pay damages to the defendant should the appeal fails.
B. Analysis on the Court Decision
1. Special circumstances
The court started off by holding that in granting an Erinford injunction, the plaintiff has to show that special circumstances exist. With regard to this, the court referred to the Kosma Palm Oil Mill case, in which Justice Augustine Paul (as he then was) laid down examples of special circumstances, including situations where an appeal would be nugatory if stay was refused by reason of the respondent’s poverty, or the payment of a judgment debt destroys the substratum of the appeal. It was also held that special circumstances and nugatoriness are not separate heads. Put simply, nugatoriness is a special circumstance.
Based on this principle, the court in the present case found that there exists a special circumstance on the basis that the plaintiff’s appeal would be rendered nugatory if successful. Such a finding was due to the fact that there was an imminent danger that the defendant will remove the ‘MALIMBO’ cigarettes from the Malaysian market, which would result in the substratum of the appeal being destroyed as the case will no longer be in the jurisdiction of Malaysia.
Evidently, the lines between the special circumstances test for stay of execution and the nugatoriness test for an Erinford injunction are blurred. In a way, it is easier establish grounds to merit courts to grant Erinford injunction. Aside from showing that the appeal will be rendered nugatory, applicants for Erinford injunction can demonstrate other factors that constitute special circumstances. What may amount to special circumstances are clearly a question of fact, and they include but are not limited to these scenarios:
2. Balance of convenience
Next, the court decided on the balance of convenience by looking at whether it is necessary to maintain the status quo in case the appeal be rendered nugatory. The court took into account the plaintiff’s established good business reputation in the industry and opined that the defendant’s act may cause irreparable damage to the latter’s credit, goodwill, and business reputation. Such a damage would not be adequately compensated by damages, and this factor constitutes a special circumstance to warrant the granting of an Erinford injunction. Hence, the balance of convenience was in favour of the plaintiff.
On the other hand, the court also considered the plaintiff’s financial position and ability to provide monetary compensation to the defendant should the appeal fail. While the court did not further elaborate, it can be reasonably inferred that the court tried to ensure that any damage suffered by the defendant due to the injunction would be adequately remedied. A successful litigant who has obtained a judgment in his favour should not be deprived of the fruits of his litigation.
While the court is correct to hold that the plaintiff’s trademark will be infringed if the defendant is allowed to continue selling their ‘MALIMBO’ cigarettes, the court seemed to have neglected the fact that the plaintiff, being one of the leading manufacturers of cigarettes in Malaysia, has well-established business goodwill and customer base. The presence of the defendant would not impact the plaintiff’s business so drastically to the extent that the latter will be forced out of the industry. In fact, the plaintiff’s position in the industry will still remain, and it will not be impeded from enforcing the judgment of the Court of Appeal against the defendant. The court should not merely look at the damage that could be suffered by the plaintiff — consideration must be given to the question of whether the plaintiff is restrained from enforcing any judgment in its favour after the appeal is allowed.
The approach taken by the court in granting the Erinford injunction is similar to that taken by the Kilang Kosfarm case, that is by considering nugatoriness of a successful appeal. However, the difference is that in the present case, the court treated a stay of proceedings and an Erinford injunction similarly by holding that nugatoriness is one of the many factors that constitutes a special circumstance. The court’s agreement with the Kosma Palm Oil Mill case that special circumstances must be demonstrated indicates a more liberal approach towards the granting of Erinford injunction. Provided that the court is of the view that the ground on which the plaintiff applies for the injunction fits as a special circumstance, the court can exercise its discretion to grant the injunction.
IV. ENVIPURE SDN BHD V ESSTAR VISION SDN BHD
A. Background Facts
A bank guarantee was issued in favour of the appellant in the amount of USD 70,000 to secure the delivery by the respondent of certain pressure vessels for use in the oil and gas industry. Due to the respondent’s failure to deliver the vessels, the appellant called on the guarantee. This resulted in a legal dispute between both parties. The High Court allowed the appellant’s appeals in respect of three suits commenced before the Sessions Court. The respondent subsequently sought leave to appeal from the Court of Appeal and applied for an Erinford injunction to stay this order. After considering principles relevant to interlocutory injunction, the High Court dismissed the application with costs.
B. Analysis on the Court Decision
The court first looked at the applicable principles in making a determination whether an Erinford injunction ought to be granted. The respondent contended that the appeal would be rendered nugatory if the injunction was not granted. In response, the appellant submitted that instead of only considering the nugatoriness of an appeal, the court ought to apply principles relating to the granting of interlocutory injunctions as well. Agreeing with the appellant’s contention, the court referred to See Teow Guan case, in which the Court of Appeal held that while the approach is that no successful appeal should be rendered nugatory, it does not automatically justify the granting of a restraining order. In fact, the requirements laid down in the case of American Cyanamid are to be met before a court exercises its discretion to grant an injunction:
The court also looked at the Erinford Properties case, which held that factors such as the balance of justice and convenience, whether the appeal would be frivolous, and whether the injunction would cause greater hardship are to be taken into account alongside nugatoriness of an appeal.
1. Balance of convenience
The court held that the balance of convenience lies with the appellant. The value of the original contract was SGD 2.6 million, and the appellant made an advance payment of SGD 700,000. The sum payable under the bank guarantee is USD 70,000 (approximately SGD 95,000), an amount that is relatively small as compared to the value of the contract and the payment made by the appellant. Based on this reason, the court opined that as opposed to what the respondent contended, the call on the guarantee would not cause irreparable harm to the respondent.
The respondent also argued that damages would not be an adequate remedy on the ground that the release of money under the guarantee would affect its reputation, which in turn may affect its other banking facilities. Disagreeing with such contention, the court opined that the reputation is irrelevant as the respondent has already been embroiled in litigation. In fact, the respondent should have just paid the amount of the guarantee directly to the appellant in avoiding any adverse reputational consequences.
Besides discussing the consequential harm that may be suffered by the respondent in the event the Erinford injunction is refused, the court also considered the appellant’s financial position and the possible effects suffered by the appellant if the injunction is granted. It would not be just to deprive the appellant of the benefit of the proceeds of the guarantee, given that the appellant had forked out far more than USD 70,000, and the payment of the guarantee would not adequately redress the balance. Clearly, the court has served justice in weighing the balance of convenience in the present case.
2. Serious issue to be tried
The appellant argued that an Erinford injunction is strictly interlocutory in nature and it ought not to be granted after a trial because there would be no serious issue to be tried. Put simply, one of the requirements in granting interlocutory injunctions is the existence of serious issues to be tried, which would be the same issues pertaining the merits of the appeal. Since the merits will be determined in the main action, the granting of Erinford injunction after a trial would defeat its purpose as an interlocutory injunction.
The court rejected the contention and held that it is not necessary for the respondent to establish serious issues to be tried. Recognising the same principles that apply to interlocutory injunctions also apply to application after determination of the main action, the court was of the view that the Erinford injunction can also be granted after a trial or an appeal so long as special circumstances are shown to exist. Special circumstances would not include the merits of the appeal, and hence, serious issues to be tried is not a requirement to be fulfilled before seeking an Erinford injunction after determination of the main action.
There are two key takeaways from the case. First, taking into consideration that an Erinford injunction is an interlocutory injunction, the general principles relating to interlocutory injunctions should be followed in addition to the usual nugatoriness approach. In a way, following these general principles limits the granting of Erinford injunctions by courts as applicants cannot merely argue that the appeal will be rendered nugatory if their applications are refused.
Second, the Erinford injunction’s interlocutory nature does not justify courts to limit the granting of the injunction to only the trial stage. Erinford injunction can be granted after the determination of a main action and the requirements will be slightly different from normal interlocutory injunctions — that it is not necessary to prove serious issues to be tried. Instead, special circumstances should be the factor to be taken into account.
From the analysis of the above three cases, it is clear that the principles of an Erinford injunction have developed over the years. The concept behind Erinford injunction originated from the case of Wilson v Church (No 2), in which Cotton LJ, which spoke of an appeal from the Court of Appeal to the House of Lords, held:
‘When a party is appealing, exercising his undoubted right of appeal, this Court ought to see that the appeal, if successful, is not nugatory.’
Clearly, the main consideration in granting an Erinford injunction is the nugatoriness of an appeal. This was enumerated in the Erinford Properties case, in which the court held that the nugatoriness factor is dependent upon the possibility that the judgment may be reversed or varied. The court further extended the considerations to include balance of convenience, which requires courts to look at whether the comparative effects of granting or refusing an injunction pending appeal are such that it would be right to preserve the status quo pending the appeal.
In Malaysia, most courts adopt the similar position and take into consideration the factors of balance of convenience and nugatoriness of an appeal in deciding whether to grant Erinford injunction. The first case, Kilang Kosfarm comprehensively laid down two more factors in addition to balance of convenience and nugatoriness. They are the maintenance of status quo pending disposal of the appeal and the adequacy of damages as a remedy. Moving on to the second case, Philip Morris Brands Sarl, the court considered similar factors propounded in Kilang Kosfarm. However, instead of merely applying the factors, the court looked at the approach taken in granting a stay of proceedings, that is to demonstrate the existence of special circumstances. The court recognised special circumstances and nugatoriness of appeal not as separate factors on their own but followed the decision in Kosma Palm Oil Mill to hold that nugatoriness of appeal is one of the many examples of special circumstances. In short, special circumstances is a factor considered in granting an Erinford injunction and it is in the courts’ discretion to decide whether a ground of application for Erinford injunction falls within the ambit of special circumstances. In the third case, Envipure Sdn Bhd, it was held that aside from nugatoriness of appeal, the principles applicable to general interlocutory injunctions should be considered as well. This approach was in line with the fact that Erinford injunctions are interlocutory but taking into account that merits of the appeal may not be considered in granting the injunction, the court ruled that serious issues to be tried is not a factor.
In conclusion, the position of the Erinford injunction in Malaysia has developed to require courts to consider more factors other than simply the nugatoriness of appeal. The test for Erinford injunctions has indeed become less strict with the inclusion of the special circumstances test. While discretionary power is conferred upon courts to decide whether to grant or refuse applications for Erinford injunction, this power must be exercised cautiously to ensure that the floodgates will not be opened and the spirit of the Erinford injunction will not be defeated.
Written by Jean Lee, a final year law student of the Faculty of Law, University of Malaya.
Edited by Ahmad Muntazar Ali.
Disclaimer: The opinions expressed in this article are those of the author and do not necessarily reflect the views of the University of Malaya Law Review, and the institution it is affiliated with.
  2 All ER 448
 Cheong, May Fong, Contract Law in Malaysia, (Subang Jaya: Sweet & Maxwell, 2010).
 Jawi a/k Landu v Sunny Inspiration Sdn Bhd & Anor  8 MLJ 38.
 Cheong, May Fong and Lee, Yin Harn, Civil Remedies, 2nd ed., (Subang Jaya: Sweet & Maxwell, 2016)
 See footnote 1 above
 See footnote 1 above
  6 CLJ 131
 Act 91. Hereinafter known as ‘CJA’
 See Subashini a/p Rajasingam v Saravanan a/l Thangathoray  2 MLJ 147
  8 MLJ 38
  2 AMR 2364
  9 MLJ 484
  MLJU 534
  3 AMR 3733
 See footnote 1 above
 Cocoa Processors Sdn Bhd v United Malayan Banking Corp Bhd & Ors (No 2)  3 MLJ 497; Ooi Meng Sua v Aetna Universal Insurance  1 AMR 467; Perumahan Wira Seberang Sdn Bhd v Lim Teng Huat & Ors and Third Party  MLJU 156
  AC 130
 See footnote 17 above
 Talacko v Talacko  VSC 349
  AC 396
 Ooi Meng Sua v Aetna Universal Insurance  1 AMR 467
 See footnote 1 above
 See London & Blackwell Rly Co v Cross  31 Ch D 354; Associated Tractors Sdn Bhd v Chon Boon Heng & Anor  2 MLJ 408
 See footnote 14 above
  5 AMR 758
  1 MLJ 257
 Re Kong Thai Sawmill (Miri) Sdn Bhd  1 MLJ 131
 See footnote 27 above
 Government of Malaysia v Datuk Haji Kadir Mohamad Mastan  3 MLJ 514
 Brett Andrew Macnamara v Kam Lee Kuan  4 AMR 781
 Kwong Hing Sauce Factory v Pengarah Tanah dan Galian Wilayah Persekutuan Kuala Lumpur  8 MLJ 826
 Wong Seng Kau v Chong Chin Fook  8 MLJ 561
 Tan, Kee Heng, Civil and Criminal Appeals in Malaysia, 3rd ed., (Subang Jaya: Thomson Reuters, 2016), 275
 See footnote 11 above
 See footnote 26 above
 See footnote 14 above
 See footnote 20 above
 See footnote 1 above
 (1879) 12 Ch D at 458
 See footnote 1 above
 See footnote 11 above
 See footnote 12 above
 See footnote 26 above
 See footnote 13 above