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2020 MarsdenLR 451
HIGH COURT MALAYA KUALA LUMPUR
ZSCHIMMER & SCHWARZ GMBH & CO KG CHEMISCHE FABRIKEN – Appellant
Versus
PERSONS UNKNOWN & ANOR – Respondent
[Suit No: WA-22NCC-600-12/2020]
The court established that a proprietary and Mareva injunction can be obtained against unknown persons when assets are fraudulently obtained, with sufficient evidence of risk of dissipation and a serious issue to be tried.
Headnote:(A) Proprietary Injunction and Mareva Injunction – Legal Principles – A proprietary injunction is used to prevent a defendant from dealing with a claimant's proprietary interest; a Mareva injunction serves to protect against asset dissipation – The Plaintiff sought an urgent ex parte Order due to cross-border cyber fraud – Specific issues included fraudulent email impersonation and unauthorized payment transfers to named accounts – Court found significant grounds for the injunctions based on the Plaintiff's good arguable case, and a risk of asset dissipation evident from the fraudulent actions by the Defendants –
Result:
Orders for injunctions granted against Defendants and for substituted service on Persons Unknown. (Paras 34, 36, 39, 40, 86)
Facts of the case:
The Plaintiff, a German company, was deceived into paying EUR 123,014.65 to the 2nd Defendant's account, believing it was for a legitimate commission payment to Real KoWorks, a South Korean entity, following fraudulent email communications. (Paras 1-32)
Findings of Court:
The Plaintiff has a serious issue to be tried, the balance of convenience favored granting the injunctions to protect assets that were fraudulently obtained. (Paras 52-56)
Issues
: The fraudulent nature of the communications and the jurisdiction for nullifying the payments.
Ratio Decidendi:
The Court supported the granting of reliefs based on the principles laid out for actions involving theft or fraud regarding property, citing precedent cases about constructive trusts and the necessity for frozen injunctions in fraud cases. (Paras 33-39, 55-59)
Result:
Orders for proprietary and Mareva injunctions granted, with provisions for substituted service. (Para 90)
JUDGMENT
JUDGMENT
Introduction
[1] The Plaintiff is a victim of a cross-border cyber fraud known as a "push payment fraud" where the victim is tricked over emails to make a payment for a legitimate transaction into a different bank account under the control of the fraudster. Such a fraud has become increasingly common.
[2] In this case, through exchanges of emails, the fraudster (described below as Persons Unknown) deceived the Plaintiff into making payment of EUR 123,014.65 (approximately close to RM 600,000.00) ('Plaintiff's Monies') into a CIMB bank account in Malaysia. The Plaintiff thought it was making a genuine payment to its South Korean counterparty for a commission payment. Instead, the fraudster has now siphoned the Plaintiff's Monies away.
[3] This CIMB bank account is in the name of the 2nd Defendant ie Premier Outlook Services. The 2nd Defendant, Mohammad Azuwan, is the owner of the sole proprietorship of Premier Outlook Services.
[4] This judgment deals with 2 broad reliefs sought by the Plaintiff on an urgent ex parte basis via a hearing through the e-review platform:
(i) A proprietary injunction and Mareva injunction relief against the Defendants (Enclosure 3); and
(ii) Substituted service by way of email and advertisement against the fraudster 1st Defendant (Enclosure 4).
Background facts
(i) The Parties
[5] The Plaintiff, Zschimmer & Schwarz GmbH & Co KG Chemische Fabriken, is a German company and a manufacturer of speciality chemical products. It has a business arrangement with its representative company in South Korea, KoWorks where KoWorks would sell the Plaintiff's products and the Plaintiff would make commission payment to KoWorks based on the sales. In the paragraphs below, KoWorks will be referred to as "Real KoWorks".
[6] The 1st Defendant, being Persons Unknown, is a defendant and/or a group of defendants who has infiltrated the email communications between the Plaintiff and KoWorks and participated in the fraud to deceive the Plaintiff into mistakenly paying the commission into Premier Outlook Services' bank account in Malaysia. In the paragraphs below, where the 1st Defendant was impersonating the Plaintiff, he/they will be referred to as "Fake Plaintiff"; where the 1st Defendant was impersonating KoWorks, he/they will be referred to as "Fake KoWorks".
[7] The 2nd Defendant, Mohammad Azuwan bin Othman ("Mohammad Azuwan"), is the sole proprietor of Premier Outlook Services ("Premier Outlook"). The Plaintiff's Monies were paid into Premier Outlook's account in CIMB Bank Berhad ("Premier Outlook's CIMB Account").
[8] Kontiinuer Engenharia Industrial ("Kontiinuer") is also a significant party to the fraud. The 1st Defendant had first attempted to deceive the Plaintiff into paying the Plaintiff's Monies into Kontiinuer's bank account in Bank Muamalat Malaysia Berhad ("Kontiinuer's Muamalat Bank Account").
(ii) The 1st Attempted Fraud
[9] The fraud can be divided into two stages. First, the 1st Defendant had attempted to deceive the Plaintiff into paying the Plaintiff's Monies into Kontiinuer's Muamalat Bank Account but the attempt failed. Second, the 1st Defendant then successfully deceived the Plaintiff into paying the Plaintiff's Monies into Premier Outlook's CIMB Account.
[10] I shall first refer to the fraudulent circumstances where the 1st Defendant had attempted to deceive the Plaintiff to pay monies into Kontiinuer's Muamalat Bank Account.
[11] On 3 September 2020, Real KoWorks sent an email with a commission statement to the Plaintiff's representative, Mrs UIrike Diel ("Mrs Diel"), to request for a commission payment of EUR 123,140.65 to be paid into KoWorks' bank account, the Kebhana Bank in Korea.
[12] The 1st Defendant then infiltrated the email communications between the Plaintiff and the Real KoWorks to execute the fraud.
[13] The actual fraudulent process itself is complicated and would probably become clearer to this Court at the trial of this action. But for the present purposes, it suffic
