Tealive loses bid to stay injunction order

Appeals court has dismissed Loob Holding’s bid to halt the injunction order sought by Chatime Taiwanese owner La Kaffa International Co Ltd. (Facebook pic)

PETALING JAYA: Tealive operator Loob Holding Sdn Bhd failed today in its bid to stay an injunction order granted by the Court of Appeal to Chatime Taiwanese owner La Kaffa International Co Ltd.

In rejecting the stay application, Justice Hamid Sultan Abu Backer said there were no special circumstances to stop the injunction order as Loob Holding had not filed to seek leave to the Federal Court.

Loob Holding was hoping to maintain the status quo in running its business pending an appeal at the Federal Court.

“We have instructed our lawyers to seek leave to appeal to the Federal Court against the Court of Appeal’s decision last week and the leave application was filed yesterday.

“They will also make the necessary application to the Federal Court to maintain the status quo,” a spokesman said.

Loob Holding’s statement did not specify whether it would adhere to the injunction order to stop its business, pending the apex court’s leave hearing.

Last week, the Court of Appeal granted La Kaffa an injunction to stop Loob Holding, which is its former franchise holder, from carrying out a similar business as Chatime.

Hamid said the High Court had erred in dismissing the injunction against Loob Holding on the grounds that the livelihood of its outlets and employees would be affected if they were barred from running the business.

“The complaint of La Kaffa, in crude terms, means that Loob had changed the Chatime business overnight to ‘Tealive’.

“Their conduct is not only in breach of legal obligations related to restraint of trade but also a breach of franchise law which does not encourage criminal or tortious conduct of business,” he said in the court’s 41-page written judgment.

He added the injunction is needed as the prohibition supports the breach of obligation and it was a fact that Loob Holding was using its former franchiser’s assets to run its Tealive business.

Last year, then High Court Judicial Commissioner Wong Kian Kheong ruled that an injunction on Loob Holding would cause a great risk of injustice to the business and also its associates.

On Feb 17 last year, La Kaffa had sought an injunction to stop Loob Holding from selling products like theirs.

Company director Chen Zhao, through his affidavit, claimed Loob Holding had breached the terms of the main franchise agreement, leading to its termination.

He said the Taiwanese company began to have doubts about its then Malaysian counterpart in January 2016 when Loob Holding reduced its order of raw materials.

“This was in contrast to the increasing number of Chatime stores and growth in sales revenue,” Chen said.

Chen also claimed Loob Holding had failed to pay La Kaffa a sum of US$713,273.72 (about RM3.1 million) for the purchase of raw materials.

This amount was later reduced to US$644,536.32.

The dispute between La Kaffa and Loob Holding started in early December 2016, when the Taiwanese company terminated the master franchise agreement between the two parties even though there were more than 20 years left on the deal.