Case Details
- Citation: [2025] SGHC 59
- Title: DJY v DJZ and another
- Court: High Court of the Republic of Singapore (General Division)
- Date of decision: 03 April 2025
- Originating Application No: OA 530 of 2022
- Summons No: Summons No 3752 of 2024
- Judges: Wong Li Kok, Alex JC
- Applicant/Plaintiff: DJY
- Respondents/Defendants: (1) DJZ (2) DKA (the Bank)
- Legal area: Civil Procedure — Erinford injunctions
- Type of application: Interim injunction pending appeal (Erinford injunction) restraining demand/payment under a standby letter of credit
- Key procedural posture: Applicant sought an Erinford injunction after the High Court dismissed its earlier application (OA 530) and the appeal was pending
- Judgment length: 27 pages, 7,464 words
- Referenced earlier High Court decision: DJY v DJZ and another [2024] SGHC 301 (“Judgment”)
- Erinford injunction name source: Erinford Properties and Another v Chesire County Council [1974] 2 WLR 749
- Relevant dates in the underlying contract/security arrangement: Contract (19 December 2003); SBLC issued (20 February 2008); SBLC extended up to 16 April 2025; FAC appeal dismissed (27 July 2022); SBLC called (22 August 2022); OA 530 commenced (9 September 2022)
Summary
DJY v DJZ and another [2025] SGHC 59 concerns an application for an interim injunction pending appeal—commonly known as an “Erinford injunction”—in the context of a standby letter of credit (SBLC) used to secure a contractual “Balancing Payment” arising from exchange-rate and market rebalancing. After the High Court dismissed DJY’s earlier application to restrain DJZ from demanding and the Bank from paying under the SBLC, DJY sought an Erinford injunction to preserve the status quo while its appeal was heard.
The High Court (Wong Li Kok, Alex JC) dismissed the application for an Erinford injunction. In doing so, the court clarified and reaffirmed the proper test for Erinford injunctions in Singapore, emphasising that the inquiry should involve a balancing exercise. While the court accepted that the “two primary factors” remain (likelihood of success on appeal and whether the appeal would be rendered nugatory), it held that the court must also weigh the balance of prejudice, including whether any prejudice can be compensated by damages. Applying that framework, the court found a reasonable likelihood that DJY would succeed on appeal, but concluded that the balance of prejudice lay against granting the interim relief.
What Were the Facts of This Case?
The dispute traces back to a contract entered on 19 December 2003 between DJY and DJZ under which DJY was to construct an oil and gas production platform (the “Contract”). The Contract was amended several times, including amendments that increased the amount payable to DJY by US$52,876,543.21 to adjust for appreciation of Country [X]’s currency against the US dollar.
In 2007, the Federal Audit Court of Country [X] (“FAC”) initiated an audit into the Contract and its amendments. On 17 October 2007, the FAC ordered suspension of payment relating to the “rebalancing” (the “Balancing Payment”). Subsequently, on 21 November 2007, the FAC permitted DJZ to continue making the Balancing Payment, but only on condition that DJY provide security in the form of a guarantee. At DJY’s request, an irrevocable standby letter of credit was issued in favour of DJZ on 20 February 2008, and later replaced by the SBLC that is central to the present proceedings.
The SBLC contained specific conditions for payment. One key condition (the “First Condition”) required DJZ, among other things, to present a copy of the notification receipt from the FAC with the final decision issued by the FAC “declaring the [Balancing Payment] is null and void”. The SBLC was extended repeatedly and was extended up to 16 April 2025.
On 7 December 2011, the FAC directed DJZ to retain certain balances, liquidate bank letters of guarantee, and, if necessary, recover remaining amounts from contractors. Both DJY and DJZ appealed. The FAC appeals were dismissed on 27 July 2022 (the “FAC Appeal Decision”). On 22 August 2022, DJZ called on the SBLC by presenting the notification receipt from the FAC to the Bank. Importantly, the notification receipt did not annex the FAC Appeal Decision; instead, it contained a link to the FAC portal where the decision could be accessed (the “Link”).
DJY commenced OA 530 on 9 September 2022 seeking to restrain DJZ from demanding payment and restrain the Bank from effecting payment under the SBLC. DJY argued that the SBLC was more properly categorised as a performance bond rather than a letter of credit, and therefore DJZ’s call did not fall within the SBLC’s terms. In the earlier decision (DJY v DJZ and another [2024] SGHC 301), the High Court accepted that the SBLC was a performance bond, but still held that DJZ’s call complied with the SBLC’s First Condition because the notification receipt with the Link satisfied the requirement. DJY appealed, with the appeal scheduled for July 2025.
What Were the Key Legal Issues?
The High Court identified two issues. First, it had to determine the proper test for granting an Erinford injunction in Singapore. This required the court to consider whether the test should be limited to the two primary factors (likelihood of success on appeal and whether the appeal would be rendered nugatory) or whether it should also include a balancing of prejudice (including whether prejudice can be compensated by damages).
Second, applying the correct test, the court had to decide whether DJY should be granted an Erinford injunction to restrain the SBLC call and payment pending the appeal. This required the court to assess (i) the likelihood of success on appeal and (ii) whether the appeal would be rendered nugatory if the injunction was not granted, and then to weigh the balance of prejudice between the parties.
How Did the Court Analyse the Issues?
1. Clarifying the test for Erinford injunctions
The court began by situating the law. It noted that the current test for Erinford injunctions had been set out by Tan Siong Thye J (as he then was) in SH Design & Build Pte Ltd v BD Cranetech Pte Ltd [2018] SGHC 133 (“SH Design”) and affirmed in subsequent decisions, including the court’s own decision in Shanghai Chong Kee Furniture & Construction Pte Ltd v Church of St Theresa [2024] SGHC 5 (“Shanghai Chong Kee”). Under SH Design, the “two primary factors” are: (a) whether there is a likelihood that the appeal will succeed; and (b) whether the appeal will be rendered nugatory if a stay was not granted.
However, the parties’ submissions revealed a live disagreement on whether the test also includes a balancing exercise of prejudice. DJY argued that the court should conduct a balancing exercise of prejudice caused to the parties and whether any prejudice can be compensated by damages. DJZ argued that the test does not include such a balancing exercise, citing Shanghai Chong Kee.
The High Court accepted that Erinford injunctions occupy the space between decisions and appeals, and that the procedural urgency often results in brief written decisions. But in this case, the court accepted the invitation to clarify the area under Singapore law. The court also addressed the conceptual relationship between an Erinford injunction and a stay pending appeal. It observed that in Erinford itself, Megarry J suggested that the injunction granted achieves a similar practical effect to a stay of execution, even if it is not technically a stay. The court also noted that SH Design used “stay” and “injunction” interchangeably when framing the nugatory inquiry.
To further illuminate the approach, the court drew on principles governing stays pending appeal. In Strandore Invest AS v Soh Kim Wat [2010] SGHC 174, Quentin Loh J (citing the Court of Appeal in Lian Soon Construction Pte Ltd v Guan Qian Realty Pte Ltd [1999] 1 SLR(R) 1053) set out principles including: the court generally does not deprive a successful litigant of the fruits of litigation; the appeal must not be rendered nugatory; and an appellant must show special circumstances, including that damages and costs would not be reasonably recoverable if the appeal succeeds.
2. The court’s conclusion on the structure of the test
Against this background, the court held that the test for Erinford injunctions should involve a balancing exercise. While the two primary factors remain central, the court must weigh the balance of prejudice. This is consistent with the stay pending appeal framework, where the court considers whether the appellant can be compensated by damages if the appeal succeeds, and whether the respondent would be unjustly deprived of the fruits of judgment.
Accordingly, the court’s analysis proceeded in stages: first, assessing likelihood of success on appeal; second, assessing whether the appeal would be rendered nugatory absent an injunction; and third, performing the balancing exercise of prejudice, including whether prejudice can be compensated by damages.
3. Likelihood of success on appeal
On the first factor, the court found that DJY had a reasonable likelihood of succeeding on appeal. This finding is important because it indicates that the court was not treating the Erinford application as a mere formality after dismissal of OA 530. Instead, the court engaged with the merits sufficiently to conclude that DJY’s appeal was not hopeless.
Although the earlier decision had held that DJZ’s call complied with the SBLC’s First Condition, the Erinford application required the court to consider whether DJY’s arguments on appeal had sufficient traction. The court’s conclusion that there was a reasonable likelihood of success suggests that there were arguable issues on the interpretation and operation of the SBLC conditions, particularly in relation to what constitutes compliance with the requirement for the FAC declaration and the sufficiency of the notification receipt and Link.
4. The balancing exercise and the balance of prejudice
Even though DJY satisfied the likelihood of success factor, the court ultimately refused the interim relief. The decisive element was the balance of prejudice. The court held that the balance of prejudice lay in favour of DJY only to a limited extent, and overall it lay against granting the Erinford injunction.
The practical effect of an Erinford injunction in this context would be to restrain DJZ from demanding and the Bank from paying under a very large SBLC sum (US$126,569,231.12). Such restraint directly affects the respondent’s ability to realise the security. The court therefore treated the prejudice to DJZ and the Bank as weighty, particularly where the SBLC is designed to provide prompt payment upon compliance with its terms.
At the same time, the court considered whether any prejudice to DJY from not granting the injunction could be compensated by damages if DJY ultimately succeeded on appeal. The court’s conclusion that the balance of prejudice lay against DJY indicates that the court was not persuaded that DJY’s position could be adequately protected through damages alone, or that the respondent’s prejudice from being restrained outweighed DJY’s prospective harm.
In short, the court’s reasoning reflects the logic of interim relief: even where an appellant shows a reasonable likelihood of success, the court will not automatically preserve the status quo if doing so would impose disproportionate prejudice on the respondent, especially where the respondent has already obtained a favourable decision at first instance.
What Was the Outcome?
The High Court dismissed DJY’s application for an Erinford injunction pending the appeal. As a result, DJZ was not restrained from demanding payment and the Bank was not restrained from effecting payment under the SBLC.
Practically, this meant that the SBLC remained capable of being called and paid in accordance with its terms, notwithstanding DJY’s pending appeal. The court’s decision underscores that interim preservation of rights pending appeal is not guaranteed even where the appellant demonstrates a reasonable likelihood of success; the court will still require a favourable balance of prejudice.
Why Does This Case Matter?
DJY v DJZ and another [2025] SGHC 59 is significant for practitioners because it clarifies the structure of the Erinford injunction test in Singapore. While earlier authority framed the inquiry around two primary factors—likelihood of success and whether the appeal would be rendered nugatory—the court expressly held that the test should involve a balancing exercise of prejudice. This provides clearer guidance for litigants and counsel when preparing Erinford applications, especially in urgent contexts where the court must decide quickly.
Second, the decision reinforces the conceptual link between Erinford injunctions and stays pending appeal. By drawing on the stay framework (including the principle that courts generally do not deprive a successful litigant of the fruits of judgment), the court signals that interim relief should be approached with caution and proportionality. This is particularly relevant in cases involving payment instruments such as SBLCs and performance bonds, where the commercial purpose is to enable timely realisation of security upon compliance.
Third, the case illustrates that a finding of reasonable likelihood of success on appeal is not determinative. Even where the appellant clears the merits threshold, the court may still refuse interim relief if the balance of prejudice does not favour the appellant. For practitioners, this means that Erinford applications should be supported not only by arguments on the appeal’s prospects, but also by evidence and submissions addressing prejudice, recoverability of damages, and the practical consequences of restraining payment.
Legislation Referenced
- No specific statutes were identified in the provided extract.
Cases Cited
- Erinford Properties and Another v Chesire County Council [1974] 2 WLR 749
- DJY v DJZ and another [2024] SGHC 301
- SH Design & Build Pte Ltd v BD Cranetech Pte Ltd [2018] SGHC 133
- Shanghai Chong Kee Furniture & Construction Pte Ltd v Church of St Theresa [2024] SGHC 5
- Strandore Invest AS v Soh Kim Wat [2010] SGHC 174
- Lian Soon Construction Pte Ltd v Guan Qian Realty Pte Ltd [1999] 1 SLR(R) 1053
- [2017] SGHC 3
- [2018] SGHC 133
- [2024] SGHC 301
- [2024] SGHC 47
- [2024] SGHC 5
- [2025] SGHC 59
Source Documents
This article analyses [2025] SGHC 59 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the full judgment for the Court's complete reasoning.