Failure to meet critical requirements for Mareva injunction due to unexplained delay and lack of a clearly arguable case.

(Enclosure 54)

Introduction

[1] The defendant applies for a Mareva injunction against the 1st to 5th plaintiffs. The defendant sought to restrain the plaintiffs from disposing of assets up to the value of RM1,880,953.20 ("Impugned Sum") pending disposal of the present action. This amount represented the sum claimed in the defendant's counterclaim.

[2] Additionally, the defendant sought for an order to compel the 1st to 5th plaintiffs to deposit the Impugned Sum into a joint account. The joint account is to be operated jointly by the solicitors of both parties.

[3] The underlying dispute stemmed from a share sale agreement dated 1 December 2021 ("SSA") between the parties. The SSA pertains to the sale of shares in the 6th plaintiff company which owned agricultural land utilized for durian cultivation and swiftlet farming. The defendant alleged that the SSA was terminated as a result of the plaintiffs' breach. Specifically, it was alleged that the plaintiffs failed to resolve substantial debts owed by the 6th plaintiff to its directors, that is the 1st to 5th plaintiffs.

[4] Conversely, the plaintiffs asserted that they had lawfully terminated the SSA. They contended the termination arose from the defendant's failure to pay the second tranche of the agreed purchase price.

[5] Upon perusal of the defendant's application in encl 54 and the affidavits and consideration of the deliberations of both learned counsel, I found that the defendant failed to meet the necessary requirements for the grant of a Mareva injunction. The evidence presented did not satisfy the necessary threshold to justify such a relief. Consequently, I dismissed the defendant's application. The defendant was not satisfied with the decision and appealed.

Brief Background Facts

[6] The 1st to 5th plaintiffs are shareholders of the 6th plaintiff, Karak Organic Durian Farm Sdn Bhd ("Karak Farm"). Karak Farm owned two plots of land identified as Geran 9875 Lot 4056 and Geran 9876 Lot 4057, both located in Mukim Sabai, Daerah Bentong, in the State of Pahang ("Lands"). The Lands were utilized for agricultural purposes, specifically fruit cultivation and swiftlet farming.

[7] Sometime in August 2021, the defendant entered into initial negotiations with the 1st and 2nd plaintiffs to lease the farm for an annual rent of RM150,000.00. However, the parties later revised their arrangement. They reached an agreement for the defendant to purchase the shares held by the 1st to 5th plaintiffs in Karak Farm. This agreement was formalized through the SSA.

[8] Pursuant to the terms of the SSA, the defendant made payments to the 1st to 5th plaintiffs amounting to RM1,410,714.90 in total. This sum included an earnest deposit of RM 150,000.00 which was paid as a demonstration of the defendant's commitment to the transaction, the balance deposit amounting to RM320,238.30 and payment of the first tranche payment in the sum of RM940,476.60. These payments collectively represent the amounts disbursed by the defendant in compliance with the obligations stipulated in the SSA.

[9] Sometime in March 2022 after completing due diligence, the defendant discovered that Karak Farm owed significant debts exceeding RM3.5 million to its directors who were the 1st to 5th plaintiffs. The defendant asserted that these debts needed to be fully resolved before it would proceed with the second tranche payment of RM3,291,668.10. This position was based on the defendant's interpretation of its obligations under the SSA.

[10] On 28 September 2022, the plaintiffs through their then solicit