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2025 MarsdenLR 6222
HIGH COURT MALAYA KUALA LUMPUR
ETIHAD CONSULTANCY & ORS – Appellant
Versus
ALPHACAPITAL (M) BERHAD – Respondent
[Suit No: WA-22M-791-07/2024]
A Mareva injunction is justified when plaintiffs establish a good arguable case, demonstrate a real risk of asset dissipation, and show that the balance of convenience favors granting the injunction.
Headnote:(A) Rules of 2012 - Order 29 r 1 - Mareva injunction - Plaintiffs sought continuation of Mareva injunction against defendant to prevent asset dissipation pending suit resolution - Allegations of contractual breaches and misappropriation of funds by defendant - Court granted injunction based on established good arguable case, real risk of asset dissipation, and balance of convenience favoring plaintiffs. (Paras 1, 8, 60)
(B) Good Arguable Case - Standard for Mareva injunction requires plaintiffs to show a case capable of serious argument, not necessarily one with a better than 50% chance of success - Plaintiffs provided compelling evidence of defendant's breaches and non-disclosure of assets. (Paras 16, 17, 21)
(C) Risk of Dissipation - Evidence of significant discrepancies in financial disclosures and suspicious transactions indicated a real risk of asset dissipation by the defendant, warranting the injunction. (Paras 34, 44, 53)
(D) Balance of Convenience - The court found that the risk of irreparable loss to plaintiffs outweighed any inconvenience to the defendant, justifying the injunction. (Paras 54, 60)
Facts of the case:
Plaintiffs, including a consultancy and individual investors, alleged that the defendant defaulted on contractual obligations related to Islamic Redeemable Preference Shares, misappropriating funds for personal use while failing to disclose subsidiary holdings. (Paras 2-6)
Findings of Court:
The court found that the plaintiffs established a good arguable case, demonstrated a real risk of asset dissipation, and that the balance of convenience favored granting the Mareva injunction. (Paras 60)
Issues: The court addressed whether the plaintiffs established a good arguable case, whether there was a real risk of asset dissipation, and whether the balance of convenience favored granting the injunction. (Paras 8)
Ratio Decidendi: The court ruled that the plaintiffs met the threshold for a Mareva injunction by providing compelling evidence of breaches and risks of asset dissipation, emphasizing the importance of preserving the court's authority and ensuring justice is not rendered futile. (Paras 60)
Result: The Mareva injunction granted on 5 September 2024 shall remain in force pending final determination of the action, with costs awarded to the plaintiffs. (Paras 60, 61)
JUDGMENT
Introduction
[1] This Court is called upon to adjudicate an application by the plaintiffs, Etihad Consultancy and 63 individual investors, seeking the continuation of a Mareva injunction against the defendant, Alpha Capital (M) Berhad, pending the final determination of this suit. The injunction, initially granted ex parte on 5 September 2024, aims to prevent the defendant from dissipating its assets, thereby safeguarding the plaintiffs' ability to enforce any judgment in their favor.
Background Facts
[2] The dispute arises from Subscription Agreements governed by Islamic principles, under which the defendant solicited investments totaling approximately RM100 million for the issuance of Islamic Redeemable Preference Shares (RPS-i).
[3] The plaintiffs allege that the defendant defaulted on its contractual obligations, failing to remit monthly dividends to individual investors and commissions to Etihad Consultancy. Compounding these breaches, the plaintiffs assert that the defendant misappropriated investor funds for extraneous purposes, including the acquisition of luxury vehicles, while maintaining negligible bank balances inconsistent with the sums collected.
[4] A suit was filed on 2 July 2024, wherein on 5 September 2024, this Court granted an ex parte Mareva injunction (Enclosure 8) pursuant to O 29 r 1 of the Rules of 2012 ("the Rules"), freezing the defendant's assets. The plaintiffs now seek to continue the injunction inter parte.
[5] Central to the plaintiffs' inter parte application is a freezing order to restrain the defendant from disposing of or transferring assets up to RM19,831,440.50, including specific bank accounts at Malayan Banking Berhad and CIMB Bank Berhad, shares, credit balances, and subsidiary holdings. Additionally, the plaintiffs demand full financial disclosure within 48 hours, requiring the respondent to provide detailed accounts of all assets (domestic and international), documentation explaining the use of invested funds, and audited financial statements for 2023 to substantiate its claims of financial distress.
[6] Significantly, although an ex parte injunction was obtained mandating the full disclosure of the defendant's assets, the defendant failed to adhere to this obligation, conspicuously failing to disclose its ownership of numerous subsidiaries. Among these were wholly owned entities, such as Alphaveta Synergy Sdn Bhd and AlphaCaptech Sdn Bhd.
[7] Following submissions by both parties, I have granted an inter parte Mareva Injunction against the defendant on 22 November 2024. The defendant, however, has since sought to challenge the same, filing a Notice of Appeal on 23 December 2024 to contest the Court 's decision.
Issues
[8] The issues for this Court 's determination are:
(a) Whether the plaintiffs have established a good arguable case;
(b) Whether there exists a real risk of dissipation of the defendant's assets held within the jurisdiction; and
(c) Whether the balance of convenience favors granting the injunction.
Counsels' Contentions
Plaintiffs' Contentions
[9] The learned counsel for the plaintiff, Sachpreetraj Singh Sohanpal, anchored his submissions on three pillars. First, he contended that the defendant's contractual breaches-evidenced by bank records (Enclocures 14-15) explicitly labeling payments as "div" (dividends)-establish a good arguable case. The defendant's defense, characterizing these payments as "advances," was dismissed as irreconcilable with documentary evidence. Reliance was placed on S & F International Ltd v. Trans-Con Engineering Sdn Bhd; [1985] 1 MLJ 62; [1985] CLJ (Rep) 280, which underscores that a plaintiff need only demonstrate a case "capable of serious argument," not one assured of success.
[10] Second, learned counsel for the plaintiffs argued that the defendant's conduct evinces a real risk of dissipation. Plaintiffs highlighted the stark disparity between the RM100 million collected and the paltry sums retained in bank accounts,
