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2012 MarsdenLR 1327
HIGH COURT MALAYA KUALA LUMPUR
PUTEH AMAN POWER SDN BHD – Appellant
Versus
BITTERSWEET ESTATES (SABAH) SDN BHD – Respondent
[Suit No: S-22NCVC-953-10/2011]
A Mareva Injunction aims to prevent asset dissipation; the applicant must establish a strong arguable case and demonstrate a real risk of asset removal.
Headnote:(A) Mareva Injunction - Law on Mareva Injunction application - The applicant must prove a strong arguable case, the existence of defendant's assets within jurisdiction, and a real risk of asset dissipation (Paras 32, 74).
(B) Breach of Warranty - Plaintiff claims breach of warranty under the sale agreement regarding land cultivation of oil palms (Paras 11, 17).
(C) Entire Agreement Clause - Prior negotiations deemed superseded by written agreement; all claims must rest on the agreement's mutual terms (Paras 55, 56).
(D) Corporate Veil - The court exercises its right to lift the corporate veil to clarify the control and ultimate ownership of the defendant's assets as necessary for justice (Paras 79, 84).
Facts of the case:
Plaintiff alleges breach of a warranty in a sale agreement with defendant regarding the percentage of cultivated land, claiming damages of RM 5.5 million; ex parte Mareva Injunction was sought to prevent asset dissipation (Paras 11, 12).
Findings of Court:
Court found a strong arguable case for the plaintiff; ruled to restrain the defendant from dissipating assets, emphasizing community of interest between defendant and BESB (Para 96).
Issues: Whether the plaintiff established a strong arguable case, whether the Mareva order should be granted based on risk of asset dissipation and corporate control (Paras 72, 74).
Ratio Decidendi: The court concluded that the plaintiff established a strong arguable case based on evidence of breach, and lifted the corporate veil to prevent asset dissipation (Para 100).
Result: Enclosure 5 is allowed, Enclosure 26 is dismissed, and Enclosure 31 is allowed.
| Table of Content |
|---|
| 1. background facts of the defendant and land sale. (Para 5 , 6 , 7 , 8 , 9 , 10) |
| 2. claim for breach of warranty and mareva injunction applications. (Para 11 , 12 , 13 , 14 , 15) |
| 3. defendant's argument against misrepresentation, asserting 'as is where is' principle. (Para 39 , 42 , 51) |
| 4. court rejects defendant's claim of 'as is where is' regarding land condition. (Para 58 , 59 , 65) |
| 5. evidence of risk of dissipation of assets by defendant. (Para 70 , 72 , 74) |
| 6. court considers lifting corporate veil due to potential asset dissipation. (Para 78 , 80 , 86 , 92) |
| 7. need for injunction to cover assets outside jurisdiction. (Para 100 , 121 , 122) |
| 8. conclusion on applications and costs awarded. (Para 124) |
[1] Enclosure 5 is the application by the plaintiff for an inter partes Mareva Order.
[2] Enclosure 26 is the defendant's application to set aside the ex parte Mareva Order dated 6 October 2011.
[3] Enclosure 31 is the application by the plaintiff to vary the ex parte Mareva Order which was granted on 6 October 2012 for an order that the defendant, BESB but not limited to Messrs Mariadass Lock & Ainuddin or any of them, be restrained from removing from Malaysia, the assets of the defendants in Malaysia whether it be in the defendant's name or otherwise up to the value of RM5,521,960.
[4] Given the nature of the application and that they are all premised on the same facts, the three enclosures were heard together and the grounds for the decision of the same are stated herein below.
Background
[5] The defendant is a company incorporated under the laws of Malaysia with its business address at Sabah located at Solai Estate, Mile 22, Off Kim Loong Oil Mill Road, Keningau, Sabah.
[6] It is not disputed that the defendant's sole business was in palm oil plantation located in Sabah held under Country Lease No 155310115 District of Pensiangan, Sabah (hereinafter referred to "the land"). It is also not disputed that the sole asset of the plaintiff was the land.
[7] The land measures about 2,427 acres.
[8] The plaintiff and the defendant entered into a sale and purchase agreement dated 11 May 2011 (hereinafter referred to as "the said agreement") wherein the defendant sold and the plaintiff purchased the palm oil plantation for a consideration sum of RM 30,337,500.
[9] The said agreement was executed by the parties and it was concluded on 27 September 2011.
[10] The said land is currently held by the plaintiff.
[11] The plaintiff's claim herein is for purported breach of a warranty of cl. 16.1(d) of the said agreement and the plaintiff claims damages of RM 5.5 million against the defendant.
[12] By a Mareva Injunction application dated 3 October 2011, the plaintiff had obtained an ex parte Mareva Order against the defendant on 6 October 2011 restraining the defendant from disposing, dealing with its assets up to the amount of RM5,521,960.
[13] Subsequently an inter partes hearing of the Mareva Injunction (encl. 5) was set for hearing.
[14] At the same time the defendant filed an application to set aside the ex parte Mareva Injunction (encl 26).
[15] Due to some change in circumstances, the plaintiff in turn filed an application for a variation order of the original Mareva Order dated 6 October 2011 (encl 31).
[16] The terms of payment as stated in the said agreement for the consideration sum of RM30,337,500 are as follows:
(i) 2% earnest deposit amounting to RM606,750 to be paid prior to the execution of the agreement;
(ii) 8% (ie, the remainder of the earnest deposit) amounting to RM2,427,000 to be paid upon the execution of the agreement;
(iii) The remainder 90% of the consideration price, ie, RM27,303,750 minus RM8,595,203.63 paid to HSBC, to be paid upon the fulfillment of the disbursement condition set out in cl. 9.1.
[17] The plaintiff alleged that (pursuant to recital A and B and cl. 16.1(a), (d) and (t) and cl. 16.2 and 16.3 of the said agreement) the defendant had represented and warranted that at least 75% of the land is cultivated /deve
