niquan energy trinidad limited claimant (1) world gtl...

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The Republic of Trinidad & Tobago

In the High Court of Justice

Claim No. CV2013-02699

BETWEEN

NIQUAN ENERGY TRINIDAD LIMITED

Claimant

AND

(1) WORLD GTL TRINIDAD LIMITED

(In Receivership)

(2) BRIAN HACKETT

(3) PETROLEUM COMPANY OF TRINIDAD

AND TOBAGO LIMITED

Defendant

Before the Honourable Mr Justice James C. Aboud

Dated: 12 November 2013

Representation:

For the claimant, Mr Reginald T.A. Armour SC leading Ms Vanessa Gopaul instructed

by Ms Debra Bharath-Thompson of the firm of M. Hamel Smith & Co.

For the first and second defendants, Mr Colin Kangaloo instructed by Ms Shashi

Seecharan of the firm of Fitzwilliam, Stone, Furness-Smith & Morgan.

For the third defendant, Mr Russell Martineau SC leading Mr Stephen Singh instructed

by Ms Shalini Rampersad of the firm of Johnson, Camacho & Singh.

JUDGMENT

1. This is a case that involves an application for an interim injunction to enforce what is

commonly called a lock-out agreement made between the claimant and the first and

second defendants. An injunction is also being sought to prevent the third defendant

from procuring a breach of its terms. A lock-out or exclusivity agreement is one whereby

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a person who has property for sale agrees for a specified period of time not to negotiate

with anyone other than the person with whom he has entered the lock-out agreement.

The stakes in this case are very high as the subject matter of the dispute is an asset that is

said to be worth in excess of TT$1 billion.

2. For reasons I will explain below a deeper analysis of the undisputed facts and the law is

required in order to determine whether or not the injunctions should be granted. This is

not a typical case.

Historical background

3. The first defendant is World GTL Trinidad Limited (in Receivership) (“GTL”). The

acronym GTL means Gas to Liquids, a technology that converts natural gas to diesel and

other transport fuels. The GTL plant at Pointe-a-Pierre was envisaged as one of the

largest of its type in this hemisphere. Funding for the project was arranged in 2007 with

certain lenders and one of the conditions of the loan was the completion of construction

by 2009. The loan was for US$125 million and was supported by a debenture that

captured all of the proposed GTL assets in favour of the lenders, represented by Credit

Suisse (described in the debenture as the collateral agent for the secured parties). In 2009

the plant was over-budget and behind schedule and Credit Suisse resigned as the

collateral agent. It was replaced by the third defendant, Petroleum Company of Trinidad

and Tobago Limited (“Petrotrin”) and an entity known as Petrotrin EAP Services

Limited. I am satisfied that these companies are lenders involved in the GTL Project and

that Petrotrin is the sole collateral agent under the debenture. The collateral agent is the

party to whom the assets of the GTL plant were charged. Throughout most (but not all of

the correspondence) that I will examine, the debenture is either said to be vested in

Petrotrin as sole debenture holder or in Petrotrin and Petrotrin EAP Services Limited as

joint debenture holders. As collateral agent under the credit agreement Petrotrin is the

sole debenture holder. The distinction is not, in any event, material to my decision.

4. In 2009 Petrotrin made substantial advances to Credit Suisse and, apparently, to GTL,

running into hundreds of millions of Trinidad and Tobago dollars. Eventually on 25

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September 2009 Petrotrin put GTL into receivership and appointed the first defendant as

the receiver. The first defendant is Mr Brian Hackett, the Managing Director of

PricewaterhouseCoopers Advisory Services Limited. Upon his appointment he

considered that his primary responsibility “was to realize the value represented by the

assets captured under the debenture for the benefit of [Petrotrin] as the debenture holder

and secondary, of all other creditors and shareholders as appropriate.”

5. The charged assets included the incomplete GTL plant, its licence for the patented GTL

technology, and various lapsed agreements between GTL and Petrotrin as follows:

(a) Diesel off-take agreement for the supply of product from the GTL plant for a

number of years after its commissioning;

(b) Gas supply agreement for the provision of raw materials, namely natural gas.

(c) Interconnections agreements for the supply of water and electricity from the

Petrotrin plant or passing through its land and the relevant leases to give effect to

these interconnections.

(d) Site lease agreement for the rental of the lands upon which the GTL plant was

constructed.

6. The unfinished GTL plant is located within the Petrotrin compound at Point-a-Pierre,

Trinidad. The Petrotrin compound is surrounded by security fences and has monitored

check points. Natural gas pipelines, off-take pipes, and water and electricity supplies

pass over and under the Petrotrin compound.

7. Upon his appointment, the receiver’s strategy was to complete the construction of the

GTL plant. To this end he selected a firm to project manage the construction in February

2010. However, after further consultation with Petrotrin it was decided instead to halt

construction and to commence the process of looking for a buyer.

8. According to the receiver’s uncontradicted evidence the cost of staffing the unfinished

plant, taken together with the receiver’s costs, and other costs are conservatively

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estimated at TT$ 535,000 per month. The receivership had been ongoing for almost four

years when this action was filed.

Selecting a purchaser/investor

9. To start the process of selecting a prospective buyer the receiver issued a “teaser letter”

or prospectus in May 2011. In it he stated that his primary responsibility was to realize

the charged assets for the benefit, primarily, of the debenture holder. It was no secret

then that Petrotrin was the debenture holder. He also listed the charged assets as

including the diesel off-take agreement and the gas supply agreement. The teaser letter

requested interested purchasers to submit a non-binding letter of interest detailing, among

other things, “the preferred investment form/vehicle,” “the structure of the

purchase/investment consideration being proposed” and “a clear indication of the source

of funds and, where appropriate third party corroboration of such funding sources.” It

forecast that a timeline would be provided for the prospective buyer to carry out due

diligence on the plant and its potential value and capabilities. The teaser letter also

tabulated the current shareholding in GTL. Approximately 20,000 ordinary shares were

held in almost equal division by Petrotrin and GTL. There were also 30,000 preference

shares divided among a number of prominent local financial institutions.

10. In mid-October 2011, an American corporation, NiQuan Energy LLC (“NiQuan”),

expressed an interest in acquiring the charged assets. One of the claimant’s deponents

said that 17 companies responded to the teaser letter but only five were entertained on

site and given a guided tour of the physical plant. In November 2011 NiQuan and the

receiver executed a confidentiality agreement to protect the integrity of the information

passing between them.

Proposal letter from NiQuan

11. On 29 March 2012 the receiver issued a letter captioned “Request for proposals to enter

into an exclusive arrangement for the sale of the [GTL] plant.” It is not disclosed

whether this request for proposals was sent to the other five prospects, but NiQuan

responded to it by letter dated 16 April 2012 which set out its proposals “to enter into an

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exclusive arrangement to acquire or otherwise ‘invest in’ the assets captured under the

debenture.” In this proposal letter, NiQuan set out its plans to complete the plant and

start the production of transport fuels. It said it had contracted a third party to do this

work and gave its references. It also set out its financial plan. It indicated that the

financing component would be arranged during “the planned eight-month exclusivity

period.” This is the first mention of the duration of the proposed exclusivity period and,

as will be better understood below, it is much longer than the periods that were eventually

agreed in writing. NiQuan said that the Inter American Development Bank was the

prime source of financing. It further indicated that, instead of a 100% acquisition it had

“taken the position that a joint venture arrangement with [Petrotrin] or an appointed

nominee entity is its preferred option.” The proposal called for the vesting of “an agreed

percentage carried interest” in NiQuan to Petrotrin.

12. The proposal letter recognized the interconnections between GTL and Petrotrin, stating

that NiQuan “anticipates that Petrotrin or its designee will guarantee for a period of 20

years the supply of inputs required for processing and operation of the plant and

guarantee to take 100% of the output to be derived from the plant for a period of 20 years

under a take or pay arrangement. It is anticipated that the terms and conditions for both

the supply of inputs and off-take of outputs will be the subject of good faith negotiations

between NiQuan and Petrotrin.”

13. The proposal letter indicated that NiQuan intended to incorporate a Trinidad and Tobago

entity to which the charged assets would be transferred. The claimant is that entity and it

was the assignee of all the rights created in the lock-out agreement that I will deal with

below.

14. The proposal letter had much to say about the duration of the exclusivity or lock-out

period. The final investment decision was proposed as the ultimate step in the acquisition

process. NiQuan proposed two lock-out periods. It said it expected the first lock-out

period to be 120 days “such period to be extended by up to 60 days at the request of

NiQuan and approval of the receiver; approval of the receiver not to be unreasonably

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withheld.” During this first period NiQuan proposed to complete initial due diligence,

and negotiate the supply agreements, the off-take agreements, and the joint venture

agreement with Petrotrin. After the proposed first lock-out period (120 days plus a

possible further 60 days) NiQuan proposed to enter into a memorandum of

understanding. Thereafter, it said it “would expect” as part of the lock-out agreement,

that there would be an additional 120 days to reach the stage of the final investment

decision. The expectation is also expressed for a further extension of 60 days on the

same terms as in the first proposed lock-out period. The proposal letter ends with the

statement that NiQuan “is enthusiastic about closing this transaction with

[PricewaterhouseCoopers] and the debenture holder.”

15. Finally, in the proposal letter, under the rubric “Background,” NiQuan described its

appraisal of the plant, its three site visits (one of which was attended by a representative

of the IDB) and its conference call with the receiver as “preliminary due diligence.”

The receiver’s selection letter

16. By letter dated 6 July 2012, almost three months after NiQuan had submitted its proposal

letter, the receiver wrote to advise that NiQuan had been selected as the “prospective

investor” with whom he “wishes to enter into an exclusive arrangement to acquire or

otherwise ‘invest in’ the [captured assets].” The letter expresses itself to be non-binding

and “subject to a detailed exclusivity agreement.” The letter indicates that NiQuan is

required to provide timelines for nine specified milestone events. The first milestone is

the provision of a signed agreement with a reputable engineering company to perform the

required due diligence. Next to this event the receiver inserted “10 business days [after

the execution of the exclusivity agreement].” The receiver did not insert the timelines for

any of the other eight milestone events. I take this to mean that these dates would be

fixed by agreement between the parties. The eighth milestone event was “negotiation of

the lease term of supply agreements, off-take agreements, utility and service provider

agreements and any joint venture agreements with the debenture holders.” The ninth

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milestone event was the submission of the “first draft reports to the receiver on the

schedule, cost and time to first diesel production and commercial proposal.”

The exclusivity agreement

17. On 2 October 2012 the receiver, GTL and NiQuan entered into an exclusivity agreement.

The recitals to the agreement set out certain events leading to the execution of the

agreement, including the request for proposals, the proposal letter and the receiver’s

selection letter.

18. The material clauses of the exclusivity agreement are set out below:

1. Period of Exclusivity

1.1 In consideration of the mutual promises set out in this Agreement and other

good and valuable consideration, the receipt and sufficiency of which is

acknowledged and if and so long as NiQuan complies with its obligations

herein but subject always to clauses 3.1 and 3.3 hereof, neither the Company

nor anyone acting for or on behalf of the Company shall during the period

specified in clause 1.2 below (“the Exclusivity Period”):

1.1.1. Solicit, initiate, encourage or seek out any offers or other proposal for

the sale and purchase of the Charged Assets and, accordingly, shall

withdraw all offers of the Charged Assets as of the date of the

Agreement for sale including removal of particulars of advertisement

for the sale of the Charged Assets from any website or other

publication;

1.1.2. allow any prospective buyer to view or have access to, or give

information on the Charged Assets to any prospective buyer;

1.1.3. negotiate or agree with anyone other than NiQuan any terms for the

sale of the Charged Assets or investment in the Charged Assets or any

commitment to proceed with the sale, lease, disposal or development

of the Charged Assets; or

1.1.4. hold discussions or enter into any commitment with any other party to

proceed with the sale or investment in or otherwise to deal with the

Charged Assets immediately after the expiry or termination of this

Agreement

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3. Negotiations and Termination

Throughout the Exclusivity Period, NiQuan, the Company and the Receiver shall

deal with each other in good faith and, without limiting the foregoing, if during

the Exclusivity Period:-

3.1 NiQuan decides not to purchase or invest in the Charged Assets, or becomes

unable to purchase or invest in the Charged Assets, it shall immediately give

written notice to that effect to the Company and this Agreement shall

terminate upon receipt of such notice by the Company without any liability

on the part of NiQuan.

3.2 NiQuan decides to purchase or invest in the Charged Assets, it may at any

time prior to the end of the Exclusivity Period submit an offer and its

commercial proposal in respect thereof and the Company and the Receiver

shall enter into negotiations with NiQuan with respect to such offer,

promptly. The parties shall use their best efforts to complete negotiations and

the transactions and arrangements relating thereto, expeditiously, and NiQuan

may, for this purpose, enter into agreement or arrangements with the

Company (or the Receiver as applicable) through an affiliate of NiQuan

3.3 If NiQuan does not achieve any one of the milestones by the Due Date the

Company shall have a right to issue a notice terminating this Agreement with

immediate effect.

4. Status of Agreement

This Agreement:-

4.1 does not commit the parties to the sale of the Charged Assets or to any

investment in the Charged Assets;

4.2 does not form part of any other contract;

4.3 set forth the entire agreement between the Company, Receiver and NiQuan

in connection with the exclusivity arrangement and shall not be varied in any

respect except in writing signed by or on behalf of the Company, the

Receiver and NiQuan;

4.4 does not impose any liability whatsoever on the Company and or the

Receiver for any expense and costs incurred by NiQuan for the purposes of

this Agreement and for the removal of doubt, NiQuan shall be solely

responsible for any expense and or costs incurred by it in relation to this

Agreement;

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4.5 does not in any way provide to the Company and or the Receiver any rights

or title or any of the deliverables work product produced and provided by

NiQuan.

6. Settlement of Disputes

6.2 Subject to the rights of any party, where appropriate seeking immediate

remedy for an injunction, specific performance or similar court order to

enforce the obligations of the other parties to this Agreement, any dispute

arising out of or in connection with this Agreement shall be referred (within

fourteen (14) days after notice of the dispute by one party to the other parties)

and shall finally be determined by arbitration in Trinidad and Tobago by a

sole arbitrator under the Arbitration Act. Chap. 5:01 of the Laws of Trinidad

and Tobago…

7. Notices

7.1 “Any notice or other communication to be given in connection with this

agreement shall be in writing ...”

10. Waiver

10.1 No failure or delay by the Company in exercising any right under this

Agreement shall be deemed to be a waiver thereof.

19. Attached to the agreement is the schedule setting out the timelines for the milestone

events. The first seven events are identical to those set out in the selection letter.

However, in the schedule to the agreement the negotiation of the interconnecting

agreements and joint venture agreement (milestone no. 8 in the selection letter) and the

first draft reports on the schedule, cost and time to first diesel production and commercial

proposal (milestone no. 9 in the selection letter) were condensed into one event, as

milestone 8: “First draft of the commercial proposal to acquire the charged assets.” The

complete process leading to the submission of the first draft proposal is 120 days from

the execution of the exclusivity agreement, and all the steps are accorded a specific

number of days to be accomplished. Insofar as the selection of time-line dates are

concerned I note that in the selection letter the receiver had directed NiQuan to provide

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the time lines. I can only therefore surmise that these specific timelines in the exclusivity

agreement were not accidentally or unilaterally imposed.

Analysis of the terms of the exclusivity agreement

20. Let me make some preliminary observations. Firstly, notwithstanding the request by

NiQuan in its proposal letter for a much longer lock-out period of 360 days, it committed

itself to 120 days without any express option for an extension. In fact clause 1.3

specifically provides that the agreement “shall terminate by effluxion of time” unless

NiQuan decides not to purchase or invest and gives notice, or if it does not achieve any of

the milestones and GTL terminates with notice. The period was expressed to expire 120

days after execution, namely on 30 January 2013 at 5.30 pm.

21. Secondly, there is no clause requiring the receiver or GTL to give notice that the

commercial proposal is unacceptable. The process of engagement agreed by both parties

is finalised by the submission of the first draft of the commercial proposal. Further

activities beyond that point, whether it involves an acceptance or rejection of the

proposal, or its bilateral appraisal, are not expressed. While the submission is the last

step within the 120-day process, the agreement nonetheless expressly permits NiQuan to

“submit an offer and its commercial proposal” at any time before end of the lock-out

period (clause 3.2). In the event that the offer was made prior to the 120th

day, GTL and

the receiver committed itself to “enter into negotiations with respect to such offer

promptly.” The parties also undertook, during the lock-out period, to act in good faith

and to “use their best efforts to complete negotiations and the transactions and

arrangements relating thereto expeditiously.” I do not hold the view that the agreement

creates an obligation on the receiver to promptly hold good faith negotiations in any

period outside of the lock-out period. The agreement does not say so. The related

transactions and arrangements must be taken to refer to the financing, and all the various

collateral agreements that involve third parties, including Petrotrin, NGC, the IDB and

the Environmental Management Authority. The dialogue with these third parties is not

stated to be a post-proposal event. The agreement is silent on the post-proposal period,

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and there is no event to prevent the agreement from being terminated by the effluxion of

time, save the parties’ notices of termination prior to the 120th

day.

22. Thirdly, at clause 4, the agreement is expressed to contain the entire contract between the

parties; to provide no commitment by any party to buy or invest in the charged assets;

and to free GTL and the receiver from any liability for expenses or costs during the lock-

out period. In other words, NiQuan expressly committed itself to expending a

tremendous amount of money and energy in a non-expandable period of exclusivity. Its

self-imposed burdens were heavy and, by the wording of the agreement, multi-layered

and tied to technical negotiations with third parties in a condensed period of time.

23. On 30 October 2012, NiQuan assigned all its rights under the agreement to the claimant.

The claimant is a limited liability company specifically incorporated to perform the tasks

set out in the agreement and make the commercial proposal. It is said to be a subsidiary

of NiQuan but details of its paid-up or issued shareholding were not disclosed on the

affidavits. Save for its rights under the agreement it has no assets other than the goodwill

and the reputation of its putative namesake and its own goodwill and reputation.

According to its own evidence it has no financial history.

Events during the exclusivity period: 2 October 2012 to 30 January 2013

24. The claimant then set about to complete the milestone events. These events, while

described as time-specified obligations, are, in essence all beneficial for the purposes of

any prospective purchaser. They revolve around steps designed (a) to allow the

prospective purchaser to more deeply evaluate whether it wants to proceed with an

acquisition or investment and what is required in order to achieve profitability and (b) to

empower the receiver to ensure that this deep evaluation and analysis is not protracted

and that it is a real, as opposed to a fanciful exercise. They are not, in my view,

conditions imposed as a burden on the claimant, save as regards the time element. The

purchaser of any undertaking would need to carry out due diligence, regardless of

whether they were the sole prospect or not.

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25. By letter dated 15 October 2012 the claimant submitted documents in which it said it had

achieved the first five milestone events. The submissions were all within the timelines

set out in the schedule. The submission letter was signed to acknowledge receipt by the

receiver. Milestone No. 7 which was due 45 days into the exclusivity period was

submitted on 31 October 2012 and milestone No. 6 was submitted on 15 November 2012,

both within the agreed timelines. There remained the last contemplated step, milestone

No. 8, submission of the “first draft of the commercial proposal to acquire the charged

assets,” due on or before the termination of the exclusivity period on 30 January 2013.

As previously noted, there was nothing in the agreement that prevented the claimant

from submitting the proposal before the expiry of the exclusivity period.

26. On 1 November 2012, during this 120-day period, Mr Ainsley Gill, the claimant’s

managing director attended a meeting at Petrotrin to discuss the off-take and supply of

natural gas agreements. He then sent an email on 3 November 2012 to Petrotrin’s legal

officer, Ms Radica Maraj Adharsingh, indicating that these agreements were adequate

and acceptable. The email also contained a joint venture proposal wherein the claimant

would purchase the charged assets from the receiver, complete the plant without any

further cash contribution or guarantees from Petrotrin and, in turn, Petrotrin would

receive “a carried equity interest (yet to be determined) in [the undertaking].” The email

contains this sentence: “It would be helpful to understand Petrotrin’s appetite for

receiving a carried equity position.” Ms Adharsingh responded by email on 6 November

2012, indicating, among other things, that the off-take and gas supply contracts had been

terminated, and that Petrotrin was not authorized, apart from assisting in the due

diligence exercise, to discuss new commercial terms for the acquisition in light of certain

pending arbitration proceedings. The email concludes by asking Mr Gill to “forward all

preliminary commercial terms (indicative or otherwise) directly to the receiver given that

the authority for the sale of this asset vests in the receiver.” Mr Gill says that he

understood this sentence to mean that the receiver “would be the person making the

decisions in respect of the sale.” The claimant’s senior counsel has also submitted that

this email, taken together with the fact of his appointment, made the receiver solely

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responsible to decide whether to accept or reject the proposal, and that, insofar as any

influence over his final decision emanated from Petrotrin it would amount to an

abdication of his duties. This submission will be analysed later in this judgment.

Visit of Chinese gentlemen

27. During this 120-day period, when the first draft of the commercial proposal was being

formulated, certain matters came to the attention of Mr Gill. They concerned a visit to

the GTL plant by two Chinese visitors. According to Mr Gill, he first learnt of the visit

from the receiver who called him on or about 24 December 2012 to say that someone

from Petrotrin had called him advising him to arrange the visit earlier in the month. Mr

Gill said he expressed his unhappiness to the receiver who replied that he should not be

concerned. Mr Gill says that he got further details of the visit a few days later from

Kevin Maharaj, the receiver’s agent, who sounded apologetic and who said he thought

that the receiver had sought his prior approval. Beyond these details nothing was known

in December 2012 about the nature or purpose of the visit by the two Chinese gentleman.

28. The affidavit evidence compiled for this application in June 2013 contains allegations of

two further visits by another group of Chinese gentlemen in March 2013 and June 2013.

There are therefore two groups of visitors. The second group are most likely to be

prospective purchasers. The first group cannot be so described with any level of certainty

on the evidence before the court. I say so because the evidence of the receiver is that the

December 2012 visitors were mere observers or sightseers sent there by Petrotrin to view

the facilities. Petrotrin’s evidence is that these visitors were at the Petrotrin refinery on

other business and made an enquiry about the GTL plant. Mr Imtiaz Ali of Petrotrin gave

them the receiver’s contact information. They called and made arrangements to visit the

plant. During this time they drove around the plant in a vehicle. The economy with

which Petrotrin described the identity of the December 2012 visitors was said by Mr.

Armour to amount to such a tactical non-disclosure that the court should make an adverse

finding that they were indeed prospective buyers. However, I decline to do so, as, instead

of being an adverse finding it would amount, in reality, to holding as a fact on affidavits

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what can only properly be found to be so at a trial. Mr Armour took his time to connect

many dots between the identity of the two groups of visitors and I am satisfied at this

preliminary stage that he has, to some extent, succeeded in stimulating the court’s

curiosity. But the evidence, as I’ve said, falls short of a positive finding on affidavits

alone, and the court feels reticent without the benefit of a trial and all its processes. An

order for the filing of a disclosure affidavit was sought in the claimant’s notice of

application, but it was not pursued at the hearing.

29. In relation to the contemporaneous documents the December 2012 visit did not appear to

be taken seriously enough to warrant a legal intervention by the claimant. A letter dated

2 January 2013, which I will come to below, expresses the claimant’s apprehension upon

learning of the December 2012 visit and requests the identity of the visitors and their

purpose. The receiver’s reply appears to have been a bromide: “We are not aware of the

purpose of that visit as this was arranged by Petrotrin and a request was made of us to

facilitate the visit. We are not aware of the identity of the Chinese delegation. We are

not aware that this has anything to do with viewing of the assets for the purpose of

purchase. In the circumstances we do not agree that there is any breach of clause 1of the

agreement.” Nothing further is said about this visit until the claimant’s attorneys pre-

action letter of 14 June 2013.

Events leading to the extension of the exclusivity period

30. The claimant did not elect to submit its first draft of the commercial proposal prior to the

30 January 2013 deadline. On 27 December 2012 it wrote a letter (only one page of

which is exhibited) advising that it intended to submit the proposal “by the end of the

exclusivity period as specified in the agreement.” It then asked for the receiver’s

assurance and agreement that upon submission, the exclusivity period would be

“automatically extended” during the evaluation and negotiations relative to the proposal.

The claimant wrote that this request was “reasonable and necessary in the

circumstances.” The request for an automatic extension is repeated in the claimant’s

letter of 2 January 2013.

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31. These letters demonstrate (only insofar as the law narrowly permits me to go outside the

agreement) that a concession is being sought from the receiver to extend the life of an

exclusivity period that is about to end. The pursuit of any concession indicates

something about the perceived rights of a requesting party. Secondly, the letters

demonstrate that a case is being made for an extension that is automatic and open-ended,

and meant to cover the entire post-proposal negotiations, however long it might take.

This request was, however, not entertained.

32. By letter dated 29 January 2013, on the eve of the expiry of the exclusivity period, the

receiver responded to the claimant’s requests. In this letter the receiver acknowledges

and confirms that the exclusivity period would end on the next day. He agreed to extend

the period on the basis of the request that he claimant “would like a period of time to

negotiate and arrive at an agreement” subsequent to the delivery of the first draft of the

commercial proposal.” He stated:

“In the circumstances we will agree to an extension of the exclusivity period

to 22 February 2013, time being of the essence. We believe that such a

period will allow for the submission of the first commercial proposal and

the evaluation of this proposal by the debenture holder. Further, should the

debenture holder find your proposal acceptable, we would be prepared to

enter a further period of exclusivity in order to facilitate final negotiations

and the drafting and submission of the necessary documents arising out of

the agreement. I am proposing that this further exclusivity period would

extend to 30 June 2013, again with time being of the essence.

33. The receiver’s letter also contained the following statements:

“As you will appreciate it is of critical importance to the company that it

not be bound to a very long exclusivity period as this will prevent it

negotiating with third parties that may be interested in purchasing its

assets, hence the deadline date of 30 January 2013... we cannot agree to an

open ended extension [of the existing exclusivity period] because, as

indicated above it is important for the company to be able to negotiate with

third parties as soon as possible should there be no agreement... If you

agree to the above noted initial extension of time to 22 February please let

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us know and we will prepare the necessary amendment to the agreement in

this respect.”

34. In this letter the receiver plainly admits the role of Petrotrin in the evaluation process.

What is being evaluated is the first draft of the commercial proposal. The question of an

alleged abdication of the receiver’s duties is not raised by the claimant by way of any

complaint. In addition, it is stated that the further extension from 22 February 2013 to 30

June 2013 is dependent on whether Petrotrin finds the proposal acceptable during a

specific period, namely 30 January to 22 February 2013. The proposed third extension is

envisaged for “final negotiations” and the drafting of a sales/investment contract, and for

no other stated purpose. In other words, the possible third extension is for “financial

close,” and the steps immediately preceding it where loose ends are to be tied up.

Submission of the first draft of the commercial proposal

35. On the next day the claimant submitted a document entitled “First Draft of Commercial

Proposal to Acquire the Charged Assets.” Although described as a first draft it ought not

to be thought of as merely incipient or introductory. It is, in my view, supposed to

capture the claimant’s “best shot” or bid to acquire the charged assets. The sense of Mr

Armour’s submissions is that it was something akin to a discussion paper, if I may be

allowed to paraphrase. In light of the wording of the exclusivity agreement, it is

however, the most vital step taken during a period of exclusivity that, by the

correspondence emanating from both sides, was regarded as coming to an end on 30

January 2013.

36. The cover letter to the commercial proposal renews, in an abated form, the earlier

requests for an extension beyond 30 January 2013. It asserts that “the parties to the

agreement have agreed that upon submission of a commercial proposal...the exclusivity

period in the agreement will be automatically extended during the period of

consideration...and/or ...during the period of negotiations of the said proposal.”

37. In the proposal the claimant makes the following offer on the conditions specified below:

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Commercial Offer

(a) Payment of US $5 million upon transfer of the assets and US$30 million two

years after the successful commencement of operations.

I note that the second payment, which is 85% of the total payment, is loosely

subject to the successful commencement of the operations. The cash

payment, is specifically stated to be subject to section 3 of the proposals, the

rubric of which is “Conditions of Commercial Offer.”

(b) The issuance of 5% equity to Petrotrin for a period of five years and a non-

voting seat on the board.

(c) The self-financed completion of the GTL plant without any further financial

commitments from the receiver or Petrotrin “with the exception of certain

necessary project agreements.”

Conditions of Commercial Offer

(d) All the necessary interconnecting agreements must be satisfactorily concluded

and executed with the appropriate third parties (including Petrotrin).

(e) Either Petrotrin itself, or NGC by arrangement with Petrotrin, must guarantee

a supply of natural gas for 20 years on market terms The lapsed supply

agreement is said to be generally acceptable with minor unidentified

adjustments.

(f) Petrotrin must agree to purchase 100% of the product off-take under a “take or

pay” arrangement” for 20 years, using stated international pricing indices.

The lapsed off-take agreement is said to be generally acceptable although

requiring several significant unidentified amendments.

(g) Petrotrin must renew its agreement for the supply of all interconnections and

related leases. The lapsed interconnections agreement and interconnections

lease agreement will need to be renegotiated.

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(h) Petrotrin must provide a site lease for the land upon which the plant is located

for a period of 21 years. The lapsed lease is said to be generally acceptable

but with the amendment of certain unidentified terms.

(i) Petrotrin must guarantee a constant and uninterrupted supply of electricity

from its electrical sub-station. The lapsed electricity supply agreement is said

to require review and amendment.

(j) Additional conditions include an agreement for the supply of water from

WASA, the receipt of all governmental and other approvals and licences for

the completion of construction and the future operation of the plant and,

importantly, financing agreements with undisclosed financiers for project

completion and future operation of the plant.

38. The commercial proposal contains little by way of disclosure of the financing plan. It

proposes this:

“[The claimant] is working with Ernst and Young (financial advisors) in

structuring the required funding for the project and has received expressions

of interest from potential lenders subject to the acceptance of our offer by the

receiver. The contemplated date for financial close is on or before 28 June

2013.”

The claimant also indicated this on page 9 of the proposal:

“…our due diligence of the insurance and capital markets indicated a limited

investor and bank appeal. Our pursuit of an EPC (“engineering, procurement and

construction”) contractor revealed an overall low appetite for the project. In

addition, high technical risk towards completion of the plant, negative legacy

issues, the pending law suit and the public statements that the plant is only good

for scrap, resulted in a valuation of the plant in “as is, where is” condition, all of

which NiQuan took into account in formulating its commercial offer ...”

39. I note that a financier for the project is not named. There is also no indication of any

draft agreement for off-take or gas supply, water or electricity supply, site lease, or

interconnections lease and no precision in identifying what amendments are needed to the

lapsed agreements. The business deal is back-loaded, meaning that only 15% of the cash

payment is made up front, with the balance to be paid on the successful commencement

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of operations and also satisfaction of the stipulated conditions. The words “successful

commencement of operations” are not defined. Moreover, perhaps as part of a

bargaining strategy, or perhaps because it is true, the charged assets are demeaned as less

valuable than first contemplated which is meant to explain what appears to be a

conservative bargaining approach in formulating the offer.

40. In his affidavit, the claimant’s managing director said that the first draft of the

commercial proposal did not contain all of the supporting documents: “This selective

presentation was done on the advice of the claimant’s Board of Directors due to its fear

(which was shared by me, and which I verily believe to be true) that [the receiver] would

take the claimant’s material and start shopping around. This fear arose as a result of what

was considered to be his bad faith conduct in respect of the visit by the Chinese

delegation ...” By this statement I take it that material was deliberately withheld on the

basis of the fears that were expressed and addressed in the earlier correspondence.

Having studied the proposal, it does not seem apparent that material documentation then

in existence was withheld. Mr Kangaloo pointed out that the proposal was unacceptable

for other reasons. I do not understand what “material” could be shopped around by the

receiver. The commercial proposal is, basically, a business proposition and does not

appear to contain any novelty that another purchaser could exploit. The GTL technology,

which is patented, was simply to be applied. In any event, the receiver was bound by a

confidentiality agreement to protect the claimant’s business plan and intellectual property

for a period of five years. There may be other reasons for the conservative bargaining

approach adopted by the claimant, but it does not appear to me, on the basis of the

affidavit evidence, that selective presentation due to fear of dissemination explains it.

41. Further, in the supporting affidavit, the claimant’s managing director says that he had,

prior to the 30 January 2013 submission, verbally informed the receiver that he had

several documents in his possession, namely, a commitment from the EPC contractor

dated 14 January 2013, a commitment letter from a technology provider dated 9 January

2013, a proposed verbal insurance option from AON Insurance, and a letter of interest

dated 28 December 2012 from Citibank to fund the project. The specified letters were

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attached to his affidavit. I note that the letter from the EPC contractor contains

technology information that is not rightly within the purview of the receiver, and can

properly be described as confidential between the contractor and his employer. The letter

of interest from Citibank is subject to a number of conditionalties and cannot amount to a

commitment to participate, or even a letter of comfort.

42. The commercial proposal renews the request for a lengthy extension of the exclusivity

period. It sets out what are self-described as the next steps in the transaction as follows:-

30 January – submission of proposal

15 February – receiver notifies Petrotrin of his decision on the offer and then

notifies the claimant that the offer is accepted

22 February - parties sign binding letter of intent

22 April - finalization of supply, off-take, inter connection agreements and

financial arrangement with a lender

28 June - Financial close

Agreement to extend the exclusivity period

43. On the day after the proposal was submitted the parties executed an amendment to the

exclusivity agreement. There is a dispute of fact as to whether on that day the receiver

told the claimant’s managing director that the commercial proposal was “along the lines

of what he expected.” That dispute a matter for the trial.

44. The material part of the exclusivity amendment agreement is this:

1. The agreement is hereby amended as follows:-

1.1. Clause 1.2 of the agreement is deleted and replaced by the

following:-

“Subject to clause 3 and 4 hereof, the exclusivity period shall be 143

calendar days commencing on the day of execution of this agreement and

ending at 5.30 p.m. on the 143rd

day thereafter, that is to say, on 22

February 2013 at 5.30 p.m.

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On submission of the first draft of the commercial proposal as provided

for under milestone 8 of the schedule the company shall in its exclusive

direction determine whether the commercial proposal is satisfactory for

the purposes of further negotiations with NiQuan. Where the company is

satisfied that the commercial proposal is acceptable as a basis for further

negotiations the company will inform NiQuan accordingly in writing and

the exclusivity period will thereafter be extended to 30 June 2013 at 5.30

pm, unless earlier terminated by the parties by agreement. In both

instances time being of the essence.

2. Save as varied by this agreement all the terms, covenants and conditions

contained in the agreement shall remain in full force and effect,”

45. Some observations can now be made. The retained clause 4 contains the undertaking that

the amended agreement does not commit any party to a sale and is the complete

agreement between the parties that cannot be varied except in writing. Also, the proposal

for an extended continuous time-line to 28 June 2013 is broken into two discrete periods,

one expressed as guaranteed and one expressed as conditional. In the case of the former,

the exclusivity period is now said to expire on 22 February. In the case of the latter, the

exclusivity period is expressed to expire on 30 June 2013 provided that the receiver is

satisfied that the commercial proposal is acceptable as a basis for further negotiations and

he so notifies the claimant in writing.

Receiver’s response to the commercial proposal

46. The next event in this narrative is the receiver’s response to the commercial proposal.

The letter is dated 16 February 2013, 16 days after the submission of the commercial

proposal. The letter informs the claimant that the receiver has sent the proposal together

with his comments to Petrotrin, and that the decisions on the merits and demerits of the

offer would require consideration by Petrotrin at the executive leadership and/or board

level. The major components of the offer and the major factors to be considered by

Petrotrin are set out in columnar form. These comments are said to be a summary of the

collective comments of the receiver and Petrotrin. The letter goes on to say this:

“It should be noted that these comments should not in any way be construed

as either an acceptance or rejection of the commercial offer, the conditions

thereto or any part thereof. Rather your responses to our request for

clarification and/or amendment will likely be a key determining factor in

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whether [Petrotrin] is prepared to move forward with further negotiations

and/or the extension of the exclusivity period.”

47. These are the components of the offer and what the receiver describes as the factors to be

considered by Petrotrin:

(1) Payment of US $35 million in two tranches:

The receipt of the initial payment of US $5 million is dependent on financial

close which, in turn, is dependent on gas supply, off-take, interconnection,

lease and other agreements. The receiver indicates that he does not have the

power to negotiate or execute such agreements. The criticism is then made

that there is no meaningful information in the offer on the financing for the

project: “In summary, the payment component of your commercial offer is

devoid of any meaningful information which the debenture holder can

meaningfully use to assess [the claimant’s] ability to make good on its

commitments. It is also subject to material performance risk and again,

[Petrotrin] has not been provided with any meaningful information to assess

the magnitude of such risk. Finally, no remedies have been suggested in the

event that [the claimant]n fails to perform.”

(2) Gas supply, off-take, interconnections agreements and leases and site lease:

The receiver points out that that he has been informed by Petrotrin that it has

previously informed the claimant that the gas supply agreement would need to

be negotiated directly with NGC. Moreover, all the other agreements are no

longer in effect and will need to be renegotiated

(3) Equity position of Petrotrin and offer of a non-voting seat on the board:

The receiver says that he has no comment on the offer of equity but says that a

non-voting seat on the board is meaningless.

(4) Agreement for financing of the project and completion of the project is subject

to Petrotrin’s acceptance of the offer:

The receiver indicates “noted and agreed.”

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Claimant’s response to the receiver’s comments

48. The claimant took one week to reply to these comments. It wrote a letter on 22 February

2013, on the very day that the extended exclusivity period was expressed to expire. In

this regard the letter states:

“It is noted that according to the terms of the exclusivity amendment

agreement, the exclusivity period will expire on 22 February 2013...

However, in light of the clarifications requested on our commercial

proposal and submission of the response herein, we are requesting that the

exclusivity period be automatically extended during the period of

consideration of this response by the company and the receiver and that our

response be treated in strict confidence.”

49. The claimant also indicates that it appreciates that the collateral agreements are no longer

in effect, “but anticipated that similar agreements would be negotiated” between itself

and “the appropriate parties.” I pause to note that the proposal called for amendment or

renegotiation of most of these agreements. The letter goes on to express the hope that the

receiver and Petrotrin will “collectively work together to achieve the execution of the

various agreements” and also support and facilitate meetings with NGC, WASA, T &

TEC, and other government agencies.

50. The claimant’s 22 February 2013 letter replies to the receiver’s comments as follows:

1. Payment of US $35 million in two tranches:

The claimant reiterates that the first payment of US$5 million is dependent on

financial close. I pause to note that the claimant does not, in this section,

address the issue that financial close is dependent on the conclusion of the

collateral agreements which the receiver has no authority to conclude. With

respect to the financial plan, the claimant says that it has held discussions with

multiple interested lenders which have been positive: “The potential

financiers have indicated their preparedness to further their commitment”

upon acceptance of the offer. The claimant says it is attaching the Citibank

letter that I referred to earlier as not expressing any commitment in real terms.

Further, in response to the comment on the claimant’s financial status it

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admits that it is a special purpose development established in July 2012 “and

accordingly has no historical financials.”

2. Equity position and board position:

The claimant notes the receiver’s comments

3. Related agreements for off-take, supply, interconnections and site lease:

The basic response to each related agreement is this: The claimant agrees that

every agreement would need to re-negotiated “subject to the commitment of

all three parties collectively working together” to achieve the execution of the

various agreements. In the case of the gas supply the expectation is that

Petrotrin will “facilitate and support meetings and discussions with NGC.”

4 Agreement for financing of the project and completion and operation of the

plant is subject to acceptance of the offer:

The claimant expresses this hope as a response: “We would expect [Petrotrin]

to facilitate and support meetings and discussions with certain third parties for

the supply of electricity and water for the project and other relevant

agreements as appropriate. We would also expect assistance with securing the

necessary government approvals for the project.”

51. To my mind, there is an element of uncertainty or coyness in this response, the sense of a

revolving door that is neither closed nor open. No concrete plan for funding is disclosed.

NiQuan does not make a financial commitment or pledge any finance to its own putative

subsidiary. Unnamed multiple financiers are said to be interested but nothing more. The

Citibank letter is riddled with conditionalities and escape valves and cannot, even

obliquely, be described as a commitment. Moreover, the most indispensable aspect of the

business plan (any business plan), namely, the cost of the supply of raw materials and the

sale price of finished product, is left to the vagaries of the parties (including non-

contracting third parties) “collectively working together” to negotiate and finalize. In this

regard, the receiver’s earlier statements of not wanting to be bound to a very long

exclusivity period, of not wanting to agree to an open-ended extension because he desired

freedom to negotiate with other investors, is brought sharply into focus.

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52. It is to be noted as well, that the claimant’s 22 February 2013 letter unequivocally

acknowledges that under the agreement (as amended) the exclusivity period would

terminate on that day. The fact that a request is made for an automatic extension beyond

22 February 2013 says something about the claimant’s awareness of the meaning and

intention of the parties to the exclusivity amendment agreement. It also says something

about its lack of awareness that the contract expressly provided for a further extension

from 22 February to 30 June 2013 only if the receiver was satisfied that the commercial

proposal was acceptable for the purposes of further negotiations and so notified the

claimant in writing. The receiver never responded to the request for an automatic

extension after 22 February 2013 and the request was not renewed. I do not gauge the

receiver’s letter of 16 February as an indication that he was satisfied that the offer was

acceptable for the purposes of further negotiation. In fact it was, generally speaking, a

negative response. Moreover, the claimant does not appear to have fully addressed his

concerns in its 22 February 2013 letter.

Events after 22 February 2013

53. The receiver’s case is that the exclusivity period expired by effluxion of time on 22

February 2013 and that, between that date and 16 April 2013 he verbally informed the

claimant’s chairman and managing director of that fact. The claimant contends in its

evidence that the receiver verbally informed the managing director that “there would be

no extension of the exclusivity period but that it would be taken care of once we entered

into a letter of intent.” The receiver denies having told him so, and, in any event asserts

that no letter of intent was ever entered into. Mr Hemraj Ramdath, a senior officer of

Petrotrin, says in his affidavit that he received a letter from the receiver on 1 February

2013 which attached the commercial proposal and also the commentary on the major

factors to be considered by Petrotrin. He says that Petrotrin’s Executive leadership team

did not find the proposal acceptable.

54. Approximately one month after the claimant’s 22 February 2013 letter, a not

inconsiderable period of time, the claimant’s chairman wrote a further response to the

receiver’s 16 February 2013 letter. The letter is dated 21 March 2013 and it refers to a

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meeting on 14 March in which it sought to clarify its initial response, and sets out revised

or improved responses to those indicated in its 22 February letter. I need not set out all

the revised responses, but they are clearly improvements save with regard to the inter-

connecting agreements and the financing proposals. For example, with respect to gas

supply it is stated that preliminary discussions with NGC took place in January 2013 and

that NGC confirmed that it had the capacity to supply the GTL plant. As to the terms of

agreement NGC is reported to have said only that such an agreement was subject to the

acceptance of the commercial offer. With respect to financing, the claimant indicated

that it had approached Citibank and ANSA Merchant Bank who are in the process of

carrying out due diligence and have committed to provide terms sheets around the middle

of April 2013. By way of criticism in his affidavit the receiver says that he is still

dissatisfied with the improved responses and that ANSA Merchant Bank required equity

of US $56.92 million as a condition precedent. He says that to date he still has no

objective evidence of the claimant’s ability to raise this equity.

55. The receiver says that he regarded 22 February as the end of the exclusivity period and

that thereafter he was free to treat with other investors. On 24 May 2013 a meeting was

held between the senior officers of the claimant and Petrotrin to discuss the proposal. Mr

Gill in his affidavit says that Petrotrin agreed to prioritize the entry into a heads of

agreement towards financial close. Mr Hemraj Ramdath, a senior Petrotrin officer,

denies that any such statement was made.

The receiver’s 16 April 2013 letter: the proposal is not acceptable

56. The next letter on the record is the receiver’s letter of 16 April 2013. He says this: “As

you are aware the debenture holder did not find [the commercial proposal] satisfactory.

We therefore wish to formally note that the exclusivity agreement is now at an end and

we will now approach other entities. You are however free to submit revised proposals

and we will consider them.” This letter was delivered during the course of discussions

that were taking place between the claimant and the receiver on 17 April 2013. The

claimant says that its contents were at odds with the conduct of the receiver in continuing

to treat with the commercial proposal, and conducting negotiations on it. In the

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managing director’s affidavit he says this: “I and the claimant were led to understand that

we were close to an agreed position.” Mr Armour submitted that the words “now at an

end” meant that the receiver was treating 16 April 2013 as the termination date. I do not

accept that meaning. If I say that we are now in a state of war, it does not necessarily

mean that the war began today. The word “now” has a present and retroactive meaning

in many contexts.

57. The claimant states that after 16 April 2013 it continued to negotiate with the receiver. It

says it found it objectionable that Petrotrin, and not the receiver, had decided that the

offer was not satisfactory because the decision was by law supposed to be solely that of

the receiver, without any regard to the opinion of Petrotrin. Further meetings were held

on 19 April and 23 April. In the latter meeting yet further improved responses for

insurance (from AON) and financing (from ANSA Merchant Bank) was offered. I have

already stated the receiver’s response to the ANSA Merchant Bank proposals. There was

an exchange of emails on 23 April 2013 between the receiver’s agent and the claimant

after that second meeting. In the email thread, the agent lists seven points of discussion

on items required to support the proposal. Among them is this: “7. Clear milestones and

timelines for any new exclusive period that may take effect.” To this point, the

claimant’s managing director responded by an email four hours later that item seven is

“still outstanding”.

58. On 6 June 2013 the receiver wrote to say that the revised and clarified offer was being

resubmitted to Petrotrin for final consideration but that the alterations are not likely to

have increased its attractiveness to Petrotrin. The letter reiterates that the exclusivity

period expired on 22 February and that the receiver has other options available for the

realization of the assets. On 27 June 2013, when legal letters were being exchanged the

claimant discovered that the receiver gave samples of the GTL catalyst to a prospective

buyer, Synfuels China Technology Limited.

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The substantive action against the defendants

59. On 28 June 2013 the claimant brought this action seeking the following substantive

reliefs in its claim form:

1. As against the receiver and GTL:

(a) A declaration that the purported evaluation by Petrotrin and/or

Petrotrin EAP Services Limited of the claimant’s commercial

proposal communicated by the first and second defendants’ letter of

16 April 2013 does not constitute an evaluation by them in

accordance with the terms of the Exclusivity Agreement dated 2

October 2012 as amended;

(b) Further and/or in the alternative, a declaration that the first and

second defendants’ letter of 16 April 2013 is null, void and/or of no

effect.

(c) Damages for breach of contract

(d) An order for specific performance of the exclusivity agreement as

amended that the first and second defendants communicate in writing

to the claimant their evaluation of the Claimant’s commercial

proposal as clarified and supported by documentation requested by

the second defendant.

(e) Further and/or in the alternative, as order for specific performance of

the exclusivity agreement as amended that the first and second

defendants enter into and complete negotiations with the claimant

exclusively in respect of its proposal as clarified and supported by

documentation requested by the second defendant, within a

reasonable time.

(f) An injunction restraining the first and second defendants whether by

themselves and/or their servants and/or agents or otherwise

howsoever from doing all or any of the following pending the

hearing and determination of this action, that is to say:

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(i) Soliciting, engaging, encouraging or seeking out

any offers or other proposal for the sale and

purchase of the charged assets as defined under the

exclusivity agreement;

(ii) Allowing any prospective buyer to view or have

access to, or give information on the charged assets

to any prospective buyer;

(iii) Negotiate or agree with anyone other than the

claimant any terms for the sale of the charged

assets or investment in the charged assets or any

commitment to proceed with the sale, lease,

disposal or development of the charged assets

and/or;

(iv) Hold discussions or enter into any commitment

with any other party to proceed with the sale or

investment in or otherwise to deal with the charged

assets immediately after the expiry or termination

of the said exclusivity agreement.

(g) An order directing the first and second defendants to swear and file

an affidavit within 24 hours of the making of the order listing the

names and addressed of all third parties to whom the defendants have

provided any catalyst samples and/or permitted to view and/or take

away and/or purchase any part of the charged assets during the period

2nd

October 2012 to the date of the filing of the defendants’ affidavit.

(h) An order directing the first and second defendants to recover any and

all catalyst samples from each of the third parties identified in the list

referred to within 24 hours of this order and to swear and file an

affidavit within 48 hours of the making of the order verifying the

date, time and the fact and method of recovery of the said catalyst

samples from each of the said third parties.

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2. As against Petrotrin:

(a) Damages for inducing the first and second defendants to breach the

terms of the exclusivity agreement as amended.

(b) An injunction restraining the third defendant whether by itself, its

directors, officers, servants and/or agents or otherwise howsoever

from doing any or all of the following acts, that is to say:

(i) Interfering with and/or directing the first and second

defendants in their evaluation and/or negotiation of the

claimant’s proposal and/or,

(ii) Causing and/or procuring the first and second defendants

to breach the terms of the exclusivity agreement as

amended.

60. It is to be noted that the order for specific performance of the exclusivity agreement (as

amended) is being sought to compel the receiver to complete his negotiations with the

claimant within a reasonable time. In effect, this amounts to an injunction to enforce the

exclusivity agreement but with no specific timeline for its operation.

The application for interim injunctive relief

61. Before the court is the claimant’s notice of application of 28 June 2013 seeking the

following interim relief against the receiver and GTL: the injunction restraining them

from having any dealings with prospective purchasers, and orders directing them to file

an affidavit disclosing the identity of any prospective purchasers and to recover any

catalyst samples delivered to prospective purchasers. As against Petrotrin the claimant

seeks the injunctions to restrain it from interfering with or directing the receiver in his

evaluation or appraisal of the proposal and preventing it from procuring a breach of the

agreement.

62. At the first hearing of this matter on 29 June 2013 the defendants gave undertakings in

terms of the injunctive relief before Dean-Armorer J, who gave directions for the filing of

affidavits.

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63. The issue to be determined is whether, in the circumstances of this case the claimant is

entitled to an injunction against the defendants.

Applications for interim injunctions

64. Mr Armour submitted that the modern approach to the grant of interim injunctions is set

out in the judgment of Lord Hoffman in the case of National Commercial Bank Jamaica

Limited v Olint Corp. Limited [2009] UKPC 16. He referred in particular to the

following passages:

16. ... It is often said that the purpose of an interlocutory injunction is to

preserve the status quo, but it is of course impossible to stop the world

pending trial. The court may order a defendant to do something or not

to do something else, but such restrictions on the defendant’s freedom

of action will have consequences, for him and for others, which a court

has to take into account. The purpose of such an injunction is to

improve the chances of the court being able to do justice after a

determination of the merits at a trial. At the interlocutory stage, the

court must therefore assess whether granting or withholding an

injunction is more likely to produce a just result. As the House of

Lords pointed out in American Cyanamid Co v Ethicon Ltd [1975] AC

396, that means that if damages will be an adequate remedy for the

plaintiff, there are no grounds for interference with the defendant’s

freedom of action by the grant of an injunction. Likewise, if there is a

serious issue to be tried and the plaintiff could be prejudiced by the acts

or omissions of the defendant pending trial and the cross-undertaking in

damages would provide the defendant with an adequate remedy if it

turns out that his freedom of action should not have been restrained,

then an injunction should ordinarily be granted.

17. In practice, however, it is often hard to tell whether either damages or

the cross-undertaking will be an adequate remedy and the court has to

engage in trying to predict whether granting or withholding an

injunction is more or less likely to cause irremediable prejudice (and to

what extent) if it turns out that the injunction should not have been

granted or withheld, as the case may be. The basic principle is that the

court should take whatever course seems likely to cause the least

irremediable prejudice to one party or the other. This is an assessment

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in which, as Lord Diplock said in the American Cyanamid case [1975]

AC 396, 408:

“It would be unwise to attempt even to list all the various

matters which may need to be taken into consideration in

deciding where the balance lies, let alone to suggest the

relative weight to be attached to them.”

18. Among the matters which the court may take into account are the

prejudice which the plaintiff may suffer if no injunction is granted or

the defendant may suffer if it is; the likelihood of such prejudice

actually occurring; the extent to which it may be compensated by an

award of damages or enforcement of the cross-undertaking; the

likelihood of either party being able to satisfy such an award; and the

likelihood that the injunction will turn out to have been wrongly granted

or withheld, that is to say, the court’s opinion of the relative strength of

the parties’ cases.

19. There is however no reason to suppose that in stating these principles,

Lord Diplock was intending to confine them to injunctions which could

be described as prohibitory rather than mandatory. In both cases, the

underlying principle is the same, namely, that the court should take

whichever course seems likely to cause the least irremediable prejudice

to one party or the other: see Lord Jauncey in R v Secretary of State for

Transport, ex parte Factortame Ltd (No 2) [1991] 1 AC 603, 682-683.

What is true is that the features which ordinarily justify describing an

injunction as mandatory are often more likely to cause irremediable

prejudice than in cases in which a defendant is merely prevented from

taking or continuing with some course of action: see Films Rover

International Ltd v Cannon Film Sales Ltd [1987) 1 WLR 670, 680.

But this is no more than a generalisation. What is required in each case

is to examine what on the particular facts of the case the consequences

of granting or withholding of the injunction is likely to be. If it appears

that the injunction is likely to cause irremediable prejudice to the

defendant, a court may be reluctant to grant it unless satisfied that the

chances that it will turn out to have been wrongly granted are low; that

is to say, that the court will feel, as Megarry J said in Shepherd Homes

Ltd v Sandham [1971] Ch 340, 351, “a high degree of assurance that at

the trial it will appear that the injunction was rightly granted.”

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20. For these reasons, arguments over whether the injunction should be

classified as prohibitive or mandatory are barren: see the Films Rover

case, ibid. What matters is what the practical consequences of the

actual injunction are likely to be. It seems to me that both Jones J and

the Court of Appeal proceeded by first deciding how the injunction

should be classified and then applying a rule that if it was mandatory, a

“high degree of assurance” was required, while if it was prohibitory, all

that was needed was a “serious issue to be tried.” Jones J thought it was

mandatory and refused the injunction while the Court of Appeal thought

it was prohibitory and granted it.

21. Their Lordships consider that this type of box-ticking approach does not

do justice to the complexity of a decision as to whether or not to grant

an interlocutory injunction...”

65. The essential objective of the relief is therefore to preserve the court’s freedom to do

justice at the trial and it does so, not only by an examination of the American Cyanamid

factors, but with a wider objective of achieving justice at the substantive hearing. Similar

sentiments have been echoing for some time in recent memory, suggesting that the tide of

American Cyanamid is changing. In Jetpak Services Ltd v BWIA International Airways

Ltd (1998) 55 WIR 362 Chief Justice de La Bastide rejected the notion that the adequacy

of damages due to a claimant was the sole determinative factor. In a passage at pages

369-370 he re-examined the law, and made reference to a recent trend in decided cases to

deprecate those who cynically break their contracts:

“It is a truism that facts are infinitely variable, and it is dangerous to

prescribe or apply a single formula for determining whether an interlocutory

injunction should be granted in all cases, unless it is expressed in very broad

terms. I would consider the rule that an injunction ought never to be

granted if damages can provide an adequate remedy to be one which is too

narrow to be applicable in every case. It is more obviously so if by

‘adequate’ is meant quantifiable. The trial judge relied on the statement of

Buckley LJ in Polaroid Corporation v Eastman Kodak Co. Ltd [1977] RPC

379 at page 395 which reads in part:

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‘Accordingly, if the plaintiff can be compensated in damages

for anything he may wrongfully suffer between the date of the

application and the trial, the defendant should not be restrained

save in exceptional circumstances ...’

This dictum recognises the possibility of exceptional circumstances, which

may render what is laid down as a general rule inapplicable. I would prefer,

with respect, the way in which the matter was put by Sachs L.J in Evans

Marshall & Co. Ltd v Bertola SA [1973] 1 WLR 349 at page 379 when he

suggested that:

‘The standard question in relation to the grant of an injunction,

“are damages an adequate remedy?” might perhaps in the light

of the authorities of recent years, be rewritten: “Is it just in all

the circumstances that a plaintiff should be confined to his

remedy in damages?”’

Sachs L.J. went on to identify as factors which would render it unjust to

confine a plaintiff to his remedy in damages, not only difficulty in

estimating the damages, but also ‘the creation of certain areas of damage

which cannot be taken into monetary account in a common-law action for

breach of contract. He cited as examples of such areas, loss of goodwill and

trade reputation (at page 380). Another trend that is discernible in the cases

is the growing unease of the courts with accommodating parties who

cynically break contracts because they have for commercial or other reasons

decided that they would prefer to pay damages for its breach rather than

perform the contract. This trend is reflected in another dictum of Sachs L.J.

from the same judgment when he said (at page 382):

‘The grant of these injunctions would be in conformity with

the trend of recent decisions that the court, in using its

discretion, is disposed to set its face against those who seek

abruptly to break contracts in circumstances such as obtain in

this case. That trend works in the interest of justice and also in

the interest of the proper conduct of commercial relations’

A similar consideration appears to have weighed with Hoffman J in Films

Rover International v Cannon Film Sales Ltd [1987] 1 WLR 670 at page

688, when he said:

‘Denial of the injunction may enable a party to achieve a

commercial objective by a calculated disregard of the basic

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principle of a civil society that “Men perform their covenants

made”’. ”

66. There is therefore no general rule that if damages are an adequate remedy an injunction

will not be granted. That this is a sensible approach is borne out of the prospect (as

Hoffman J (as he then was) suggested in Films Rover of cynical parties ‘red-flagging’

otherwise meritorious applications for injunctive relief by asserting that damages are an

adequate remedy. In the modern age, the conduct of commercial people has been

influenced, more than ever before, by an alarming disregard for fundamental norms of

fair play. I do not doubt that some will ask for their lawyer’s advice in these terms:

“What’s the downside if I breach this contract? Can I be injuncted?”

67. In Mr Armour’s submission, the dictum of Lord Hoffman in Olint represents the modern

approach to the grant of interim injunctions: a panoramic view is taken of all the

evidence in order to determine which course seems likely to cause the least irremediable

prejudice to one party or the other. This view also resonates in the speech Lord Jauncey

in R. v Secretary of State for Transport ex parte Factortame Ltd. (No. 2) [1991] 1 AC 603

at pages 682–683.

68. If this is true, then American Cyanamid has been side-lined and the answer to the

question of whether or not to grant the interim injunction would boil down to an

examination of where the irremediable hardship or prejudice lay. Mr Armour suggested

in his oral submissions that the court should avoid a “box-ticking approach” of the

American Cyanamid guidelines and referred to the passage in Olint (at para 20) to that

effect. He submitted that there is no longer any checklist or any individual factor to be

considered in isolation. He cited the dictum of Archie J (as he then was) in Venture

Production (Trinidad) Limited v Atlantic LNG Co. of Trinidad and Tobago Ltd.

(unreported, High Court) where he succinctly stated:

“17. The law in Trinidad and Tobago has been established by the decision of

the Court of Appeal in Jetpak and East Coast Drilling and Workover

Services Ltd. v Petroleum Company of Trinidad and Tobago Ltd (2000)

58WIR 35. The plaintiff must first establish that there is a serious

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question to be tried. It used to be thought that the enquiry then

proceeded sequentially through a consideration of whether the plaintiff

would be adequately compensated by an award of damages; whether

the defendant would be able to pay; whether if the plaintiff ultimately

fails, the defendant would be adequately compensated under the

plaintiff’s undertaking; whether the plaintiff would be in a position to

pay and finally an assessment of the balance of convenience.

18. The new approach required a simultaneous consideration of all relevant

factors and a degree of inter play between various factors. The plaintiff

is not necessarily denied relief by the consideration of any single factor

in isolation. The question, which must be posed, is where does the

balance of justice lie?

19 An assessment of the balance of justice requires a comparative

assessment of (i) the quantum of the risk involved in granting or

refusing the injunction and (ii) the severity of the consequences that

will flow from following either course.”

69. In American Cyanamid Lord Diplock defined the object of an interlocutory injunction at

page 404 D:

“The object of an interlocutory injunction is to protect the plaintiff against

injury by violation of his right for which he could not be adequately

compensated in damages recoverable in the action if the uncertainty were

resolved in his favour at the trial; but the plaintiff’s need for such protection

must be weighed against the corresponding need of the defendant to be

protected against injury resulting from his having been prevented from

exercising his own legal rights for which he could not be adequately

compensated under the plaintiff’s undertaking in damages if the uncertainty

were resolved in the defendant’s favour at the trial. The court must weigh

one need against the other and determine where ‘the balance of

convenience’ lies.”

70. To achieve this object the court must first ask itself, on the basis of the paper evidence,

whether the claimant’s case raises “a serious question to be tried,” and is not frivolous or

vexatious (at page 407 E). Elsewhere in the judgment Lord Diplock described this as a

“real prospect of succeeding in his claim for a permanent injunction at the trial.” If this is

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satisfied then the court should then sequentially examine the adequacy of damages

questions, which are already well known and do not need repetition.

71. If there is doubt as to the adequacy of the respective remedies in damages to either party,

the court should then go on to determine the balance of convenience. In assessing where

the balance of convenience lay Lord Diplock said that a significant, but not the only

factor, would be whether the disadvantage to either party “would be incapable to being

compensated” in damages at the trial. If there is no real difference in the extent of

“uncompensatable damage” it may not be improper to take account of the relative

strengths of each party’s case on the affidavits, but this exercise should not be conducted

as a mini trial, but rather, on affidavit evidence against which “there is no credible

dispute”. Lord Diplock did not provide any formula for determining this balance. In fact

he inserted a word of caution at page 408F:

“It would be unwise to attempt even to list all the various matters which

may need to be taken into consideration in deciding where the balance

lies, let alone to suggest the relative weight to be attached to them. These

will vary from case to case.”

72. Lord Diplock felt that if, after that exercise, the balance of convenience was even

between the parties, and then preservation of the status quo was the prudent course. In

American Cyanamid the injunction being sought was a prohibitory injunction, and for

some time, until Olint, it was felt that higher standards applied to mandatory injunctions,

insofar as the first question, “a serious question” or “a real prospect of success”, was

concerned.

73. Nonetheless, Lord Diplock could not be said to be codifying a robotic exercise to be

conducted by judges in deciding whether or not to grant an interlocutory injunction:

“I would reiterate that, in addition to those to which I have

referred, there may be many other special factors to be taken into

consideration in the particular circumstances of individual cases.”

(Page 409 D)

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Human activity is too idiosyncratic, and the range and complexity of disputes too

unpredictable for special factors not to be taken into account, as Chief Justice de La

Bastide also recognised in Jetpak.

74. While the modern cases articulate a need to establish “the balance of justice” or “risk of

greater injustice,” the essential objective of the interim injunction, as Lord Hoffman

articulated in Olint, is “to improve the chances of the court being able to do justice after a

determination of the merits at the trial.” At the interlocutory stage, the court must

therefore assess whether granting or withholding an injunction is more likely to produce a

just result.” Olint is not an authority for the proposition that the examination of the

adequacy of damages as discussed in American Cyanamid is thrown out, and neither is

Jetpak or East Coast Drilling. Lord Hoffman specifically paid regard to those

considerations (see paragraph 16, Olint) and there is no dicta in jetpak, East Coast

Drilling, or Venture Productions to suggest otherwise. The problem is that the adequacy

of damages and balance of convenience factors have been challenging to implement,

leading some courts to adopt mechanistic thinking that did not in practice serve the needs

of justice. They became form-bound, as the lower courts in Jamaica did in Olint and,

insofar as they were regarded as litmus tests rather than factors, they led to the errors that

Chief Justice de La Bastide referred to in Jetpak.

75. The “box-ticking” approach criticised by Lord Hoffman in Olint, and which Mr Armour

urged me to avoid, was the one that set different considerations for the grant of

prohibitory and mandatory injunctions and not the one that tabulated the factors to take

account of and set out in American Cyanamid. It must also be remembered that Evans

Marshal was decided before American Cyanamid and it cannot be presupposed that Lord

Diplock did not consider the question, “Is it just in all the circumstances that a plaintiff

should be confined to his remedy in damages?”

76. It seems to me, on a true reading of the Trinidad and Tobago decisions Jetpak and East

Coast Drilling and in the Privy Council decision in the Jamaican case of Olint that the

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methodology of comparing the adequacy of damages as discussed in American Cyanamid

has been expanded to include the following:

(a) There is no absolute rule barring the grant of an interim injunction in cases

where damages are an adequate remedy.

(b) In determining this question the court should not confine itself to damages in

the sense only of special damages, but should also consider damage to

reputation and loss of goodwill. In fact, all damages, special and general, are

on the table.

77. Further, the preservation of the status quo between the parties pending trial is not, as has

been often put about, the objective of the interim injunction and Lord Diplock never

claimed that it was. The relief is really intended to preserve the court’s freedom to be

able to do justice at the trial, when a fuller examination of the merits of each case can

take place. Obviously the attainment of this objective will depend upon the subject

matter in individual cases and a comparative analysis of the perspectives of each party in

relation to it. This approach is in harmony with the overall objective of the CPR to do

justice between the parties.

78. In considering the strength of the claimant’s case it is not, nor has it ever been intended,

that only the claimant’s case is to be weighed and measured. The relative strengths and

weaknesses of both parties’ cases fall to be considered and if the defendant’s case does

not raise a serious question to be tried or if it does not have any real prospect of raising a

defence to the claim at the trial, that weakness must be taken into account.

79. The notion that American Cyanamid required a higher standard of seriousness or a

greater prospect of success for a claimant seeking a mandatory injunction is incorrect. In

the words of Lord Hoffman in Olint “… arguments over whether the injunction should be

classified as prohibitive or mandatory are barren.” One party’s inability to act in the way

he intends to act may be more detrimental to him than to the party who is ordered to act

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in a particular way that he did not intend. It used to be thought that the expenditure of

money was the chief identifying mark and prejudice of a mandatory injunction. A

prohibitive injunction can often be more detrimental. In both cases a party’s freedom of

action is compromised. This is why Lord Hoffman preferred an analysis of the practical

consequences of the injunction, and not its nomenclature.

80. Finally, the hitherto methodical or sequential exercise, once the strength of the parties

cases had been tested on the affidavits, that was adroitly summarised by Archie J in

Venture Productions from which I quoted above, has to be undertaken with a wide-angle

view of all the factors simultaneously, and not with a “fail-pass” school teacher approach

of testing each individual step or module. This is not to say that Lord Diplock intended

to lay down any strict methodology for answering the question whether or not the

injunction should be granted or refused – indeed he was at pains to say that he didn’t –

but it was the generally held view that the consideration was modular rather than organic,

and that a “fail” in one module led to a fail in all the other modules. Clearly, this does

not serve the interests of justice because, as I have said, human activity is too

idiosyncratic and our disputes often cannot be fairly resolved by formulaic equations.

The wide-angle lens that the court must use is the one which, having regard to all the

modules as a whole, answers the question “where does the balance of justice lie?” Put

another way, as Lord Hoffman posed it in Olint “which course seems likely to cause the

least irremediable prejudice to one party or the other?” This wide angle view of all the

factors necessarily assumes that all the factors are still relevant. The submission that

those individual factors have been supplanted and replaced by one unifying quantum

principle of “avoiding irremediable prejudice” is wrong. Lord Hoffman did not suggest

this in Olint and neither did Chief Justice de La Bastide in Jetpak. A wide angle view of

a valley does not merge the river with the trees. The different modules must still be

considered, but not in the manner of the school teacher marking term papers. A fail in

Geography does not amount to a fail in all the other subjects.

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81. In applying these principles, as I understand them, to the facts of this case I must first

evaluate the relative strengths of each party’s cases as disclosed on the affidavits, paying

particular regard to the evidence against which here is no credible dispute, and being

cautious, where there is such dispute, to void a mini-trial on untested affidavit evidence.

All the authorities agree that this first step is a threshold test and a “fail” here on the

relative strengths of each party’s cases will certainly be fatal. The question to be asked is

whether there is a serious issue to be tried. As Lord Hoffman said in Olint, echoing his

earlier words in Films Rover that were approved by Chief Justice de La Bastide in Jetpak

(page 370), the court must feel a “high degree of assurance” that the injunction sought at

the interlocutory stage will be granted at the trial. I am also guided by the way Sir Robert

Megarry V.C put it in Mother Care Ltd v Robson Books Ltd [1979] FSR 466:

“The prospects of the plaintiff’s success are to be investigated to a limited

extent, but they are not to be weighed against his prospects of failure. All

that has to be seen is whether the plaintiff has prospects of success which,

in substance and reality, exist. Odds against success no longer defeat the

plaintiff, unless they are so long that the plaintiff can have no expectation

of success, but only a hope. If his prospects of success are so small that

they lack substance and reality, then the plaintiff fails, for he can point to

no question to be tried which can be called ‘serious’ and no prospect of

success which can be called real.”

Whether there is a serious issue to be tried and, if so would damages be an adequate

remedy for the claimant in the circumstances of this case.

82. The claimant’s case against the receiver is based in contract. It pleads that the exclusivity

agreement (as amended) was breached because:

(a) The receiver abdicated his responsibilities to the wishes of Petrotrin in

deciding to reject the claimant’s commercial proposal on 16 April 2013;

(b) Wrote the 16 April 2013 letter repudiating an existing exclusivity agreement;

(c) Failed to enter into and complete his negotiations with the claimant before 30

June 2013; and

(d) Allowed prospective buyers to view the GTL plant in December 2012 and

again in June 2013.

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83. The claimant’s case against Petrotrin is based in tort. It pleads that Petrotrin procured a

breach of contract by the receiver by:

(a) Its communication of a negative evaluation of the commercial proposal which

led to the receiver’s repudiation letter of 16 April 2013;

(b) It’s facilitation of the December 2012 visit of the Chinese delegation.

The relative strengths of each parties’ case

84. I do not feel that the claimant’s case against the receiver for the substantive injunctions

and the order for specific performance will succeed at the trial. The question to be tried

is not serious and the prospect of success is not real

85. A first point to note is that a court will not imply terms as to parties locking themselves

into exclusivity agreements: Walford v Miles [1992] 2 AC 128. A lock-out contract is a

special form of agreement that needs certainty as to duration. If the duration is uncertain

it cannot be enforced. If it were otherwise it would amount to an indefinite “lock-in”

agreement. One of the substantive orders (styled as an order for specific performance) is

one that requires the conclusion of good faith negotiations “within a reasonable time.” I

feel very unsure about that final relief. The interim relief now being sought is one that

prevents the receiver from having any dealing with other prospective buyers between

now and the date of the trial. This interim relief cannot stand by itself, and is hinged to

the final injunction for good faith negotiations to be completed within a reasonable time.

In order to obtain an interim injunction to prevent the receiver from dealing with third

parties the court will in effect have to find that an exclusivity period is still in existence,

and that it will continue in existence for a reasonable time after the trial. Otherwise, it

will operate as an indefinite snare. To do this the court will have to turn its back on the

sensible dicta in Walford. Unlike in the case of Jetpak, where the contract was due to

expire before the trial, this contract has already come to an end by the effluxion of time.

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86. Where a breach of an exclusivity agreement is proven the usual order is for damages and

not an injunction (see: Tye v House and Jannings (1998) 76 PCCR 188). This is so

because the exclusivity agreement confers no right in the claimant to compel the receiver

to accept its proposal. This was also the opinion of the Court of Appeal in Barbados in

M4 Investments Inc. v Clico Holdings (Barbados) Ltd Civil Appeals 2 & 4 of 2004,

unreported, undated. These cases question the substratum of the claimant’s submission

that it is entitled to a permanent injunction at the trial. The position might be otherwise if

the injunction is meant to enforce an obligation during the pendency of an existing

exclusivity period, but that is not the case here.

87. What is plain about the process of contract making between the parties, insofar as it is

relevant to the meaning of their written agreement (which, on the authority of Attorney

General of Belize & Ors v Belize Telecom Ltd & Anor [2009] UKPC 10 is of little

relevance) was that the claimant made requests by letters for much longer periods of

exclusivity but then signed the exclusivity agreement and the exclusivity amendment

agreement that mostly disregarded these very written requests. As Lord Hoffman said in

Attorney General of Belize at para 17: “If the parties had intended something to happen

the instrument would have said so. Otherwise the express provisions of the instrument

are to continue to operate undisturbed. If the event has caused loss to one or other of the

parties, the loss lies where it falls.”

88. The claimant admitted in its correspondence that the exclusivity period ended on 30

January 2013. For this reason, and because both parties agreed that further time was

needed for the receiver to determine whether the commercial proposal was acceptable,

the exclusivity period was expressly extended to 22 February 2013. There was an option

for further extension to 30 June 2013 but this was an option given solely to the receiver to

exercise. There is no ambiguity about the language used in clause 1.1 of the amendment

agreement as to that matter. It was only if the receiver was satisfied that the commercial

proposal was acceptable as a basis for further negotiations and had so notified the

claimant in writing that the exclusivity period would have been extended to 30 June

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2013. There is no such written notification in this case. The claimant’s managing

director, in his affidavit says that “it was the claimant’s view and my view that the

exclusivity period would extend automatically to cover the period of the evaluation of the

proposal as well as the negotiations, as contemplated by the parties.” Again, despite the

written request in the two January 2013 letters for an automatic extension beyond 22

February 2013, there is no such language in the amendment agreement. I note in

particular the evidence of the email exchange on 23 April 2013 where it is specifically

contemplated by both parties that a new exclusivity period needed to be agreed. This

cannot refer to a period of exclusivity after 30 June. That is not a reasonable inference.

It must refer to one after 22 February 2013, and the contemplation that a new period of

exclusivity is needed presupposes an acute awareness that none is in place.

89. The fact that the receiver continued negotiations beyond 22 February 2013 is said to

evidence either (a) the intention of the parties that there was an automatic extension in

place or (b) that the receiver waived a strict insistence on a written notification by his

conduct. A similar fact situation was examined in Labatt Brewing Co v NHL Enterprises

Canada LP 2011 Carswell Ont 12135. It was held that continued negotiations could not

operate as a waiver of the express time lines of an exclusivity period, especially when any

modifications of the timeline needed to be in writing I think that this case states

propositions that are self-evident and apposite. I feel no confidence in the submission

that a term as to an automatic extension can be implied, nor that the receiver’s conduct

amounted to a waiver. The exclusivity agreement clearly specified that no failure or

delay by the receiver in exercising any right shall be deemed to be a waiver (clause 10).

90. The claimant has submitted that the decision as to whether the commercial proposal was

acceptable was the receiver’s to make without reference to Petrotrin, or (to put it more

directly) free of the wishes of Petrotrin. The exclusivity amendment agreement provides

that if the receiver (and not Petrotrin) finds the proposal acceptable as a basis for further

negotiation, it will inform the claimant in writing. The claimant has also referred to the

wording of the debenture and the duties and responsibilities of the receiver set out there

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and in the general law. In the receiver’s 16 April 2013 letter he stated that Petrotrin did

not find that the commercial proposal was acceptable. The submission is that this is an

abdication of his duties under the law and under the agreement. I do not agree. The

physical, legal, and business linkages between the GTL plant and Petrotrin are synergetic

and interdependent. The receiver would expose himself to more forceful reproach were

he to make his decision without any input or direction from Petrotrin. This is the stark

reality of attempting to invest in a plant located in the Petrotrin compound, which is

dependent on all intakes and out-puts to pass over its property, all its production to be

acquired by Petrotrin, and part of its shareholding (with a seat on the GTL board) being

vested in it. The receiver has a duty to the debenture holder to realize the charged assets

in a manner that diminishes its (and the other creditor’s) exposure to loss. The affidavits

of the receiver and Petrotrin make it plain that the commercial proposal was

unacceptable. Arguments about whether it was the receiver or Petrotrin that found the

proposal to be unacceptable are academic and sterile. They do not address the underlying

question: did the receiver find the proposal acceptable as the basis for further negotiation

and so notify the claimant in writing on or before 22 February 2013?

91. There may be reasons other than cynicism for the receiver to have continued negotiations

knowing that the exclusivity period had expired and not immediately advising the

claimants. In the first place, he was under no contractual obligation to inform the

claimant that the proposal was unacceptable. Moreover, he might have felt it

commercially prudent to keep the claimant’s proposals on the table while entertaining

other proposals. If the exclusivity period ended on 22 February 2013 then all good faith

obligations in the conduct of the negotiations would have ceased. It seems to me that on

23 February 2013 an open season was put into effect, whether the claimant knew it or

not.

92. As I said in my analysis of the revised proposals, the receiver cannot reasonably be said

to have found them acceptable for the purposes of further negotiations on or before 22

February 2013. I would say, looking at the evidence as a whole, that at the date of filing

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this action there were still many unsatisfactory responses to the receiver’s comments. I

note in particular the financing of the project and the many unnegotiated agreements with

Petrotrin, NGC and a host of government agencies over which the receiver had no

control. I note in passing my perplexity as to why the claimant did not enter into those

agreements and leases subject to the acceptance of the proposal by the receiver. Such

conditional agreements are not uncommon.

93. In my view there is no serious question to be tried at the trial insofar as the reliefs for an

automatic or implied extension are concerned. However, in relation to the visit by the

Chinese delegation in December 2012, I feel that there is such a question. In that regard,

if after hearing the oral evidence, I come to the conclusion that the receiver entertained a

prospective buyer during the exclusivity period, the claimant would be entitled to

damages.

94. With a view to maintaining a panoramic view of all the factors, I will, despite my opinion

above, briefly state the other reasons why the injunctions should not be granted.

Adequacy of damages to both parties.

95. As I have pointed out earlier, the usual remedy for breach of an exclusivity agreement is

damages. The claimant’s damages are said to be special and general. The special

damages are wasted costs in formulating the proposal and carrying out the due diligence.

They amount to US $3.1 million. The general damages are loss of opportunity, loss of

profit and loss of reputation. The loss of profits was said in the affidavits to amount to

US $562 million. Insofar as special damages are concerned they are quantifiable and

adequate and, in light of the assets in the hands of the receiver, not beyond his reach to

pay. With respect to the other heads of general damages I must have regard to the

following: (a) The claimant is a recently formed company and save for carrying the

namesake of “NiQuan” has not itself established any reputation disclosed on the

affidavits. There is little evidence of the role or involvement of NiQuan in the affairs of

the claimant, nor can it be said by virtue of the claimant’s policy or its shareholding that

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it is the corporate alter ego of NiQuan. (b) Damages for loss of reputation are, in any

event, assessed on a yearly basis in our courts in cases involving defamation. They are

not beyond the powers of a court to quantify. (c) The loss of profits claim presupposes

that the receiver will, or would have accepted, the claimant’s proposal. The court cannot

make that presupposition, even during negotiations that are friendly and promising, far

less those, like in this case, that have now completely broken down.

96. The claimant has also not demonstrated that it would be in a financial position to honour

its undertaking in damages should the injunction be granted. According to its own

evidence it has no “financial history.”

The balance of justice question

97. The balance of justice clearly lies in favour of the receiver. If the injunction were granted

the charged assets would be effectively frozen and the cost of the receivership and the

maintenance of the plant, amounting to TT $535,000 per month would continue to

accrue. But an order for specific performance cannot create an obligation to sell, so its

grant might well be a vain adventure that leads ultimately to financial loss for the

company and the jettisoning of every other offer on the receiver’s table. If the

injunctions are not granted, the claimant is not put in a worse position as to being able to

force a sale of the charged assets. It has no inherent or other legal right to compel the

receiver to sell. The claimant’s argument of having lost an opportunity to invest in a

unique technology must be weighed against the receiver’s subsisting right to reject its

offer. This is a commercial case, brought in private law, not a public law case involving

principles of unreasonableness.

98. I am aware that I have closely examined and commented on the affidavit evidence, but I

have done so with an eye solely on the application before me, and not with a mind-set

that prevents the claimant from pursuing any and all of its reliefs at the trial. Insofar as I

have strayed into making preliminary findings or comments, I have done so because the

matter was argued like if it were a trial and the attorneys invited me to do so. Cases

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involving the seriousness of the question to be tried will invariably involve a deeper

analysis of the law and the evidence.

The injunction being sought against Petrotrin

99. Two interim injunctions are sought: one to prevent Petrotrin from causing or procuring a

breach of the exclusivity agreement, and one to prevent it from interfering with and/or

directing the receiver in the evaluation and/or negotiation of the claimant’s proposal.

These injunctions presuppose that the court is satisfied that there is a serious question to

be tried in relation to the claim for specific performance and the injunctions sought

against the receiver. I do not. Petrotrin’s role in the December 2012 visit by the Chinese

gentlemen remains a live issue at the trial insofar as damages for procuring a breach of

the exclusivity agreement are concerned. However, the evidence of the tort is not made

out on the affidavits.

100. For the reasons I have given above I dismiss the claimant’s application for the interim

injunctions against the three defendants. The cost of the application shall be the

defendants’ costs in the cause certified fit for senior and junior counsel in respect of the

third defendant, and for junior counsel in respect of the first and second defendants.

James Christopher Aboud

Judge

niquan energy trinidad limited claimant (1) world gtl...

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