RK Nathan JC:

The Action

The plaintiffs are public companies listed on the Stock Exchange of Kuala Lumpur (KLSE). The plaintiffs have sued the defendants for, Mareva injunction, disclosure of assets within and without the jurisdiction, accounts, the appointment of a receiver, general and special damages, interest and costs.

For the purposes of these proceedings, the writ has only been served on the first, fourth and fifth defendants (the defendants). The main cause of action against the defendants is grounded in the tort of conspiracy to defraud the plaintiffs thereby causing loss and damage to the plaintiffs. The plaintiffs had obtained, by way of an ex parte application, a Mareva injunction by an order of this court dated 11 June 1996. The present application (encl. 10) heard inter partes is for the Mareva injunction to be extended until the trial of this action.

Background Facts

The second defendant, at one time a Malaysian, was at all material times the economic adviser to the Jilian Province of China. He was a very influential person in the Province of Jilian, China, by virtue of his position. The third defendant, a Chinese National, was at all material times the wife of the second defendant. The first defendant is the brother of the second defendant. Sometime in late 1992, the brothers discussed and/or negotiated with the Social Welfare and Charity Foundation of Jilian Province ('the Foundation') and secured or purported to secure a lottery project in the Province of Jilian for their company, Golden Glory International Management Services Limited Hong Kong ('GGIMS'). In Malaysia, Magnum Corporation Bhd. (Magnum) was and is the licensee to run the Empat Nombor Ekor Lottery through its subsidiary, Leisure Management Bhd.. At all material times the fourth defendant was the personal assistant to the group chief executive of Magnum. From about mid February 1993, the fourth defendant was made the executive director of Leisure

Management Bhd., replacing the fifth defendant. The fifth defendant has a doctorate in computer science and is a computer expert. At all material times until about mid February 1993 the fifth defendant was the executive director of Leisure Management Bhd running and/or operating the Empat Nombor Ekor Lottery. It is not in dispute that the fourth and fifth defendants were connected with the gaming industry and that their expertise lay in the running of lotteries.

The plaintiffs on the other hand were at all material times housing developers. The defendants on various occasions met the second defendant in China and discussed the lottery project with him and the Foundation officials. Arising from the said discussion the defendants decided to promote the Jilian lottery project to some cash rich companies in Malaysia. From December 1992 the defendants had meetings, discussions, and negotiations with the plaintiffs' representatives, namely Dato' Chan Ah Chye (Dato' Chan) and Chuah Teik Huat (Chuah) regarding the lottery project in Jilian Province, China, which the said defendants claimed they had secured through the second defendant and invited the plaintiffs to invest in the said project in Jilian jointly with the defendants. The defendants offered GGIMS as the vehicle to exploit the lottery project and invited the plaintiffs to buy the controlling shares in GGIMS from the defendants for the sum of US$5 million and to participate in the lottery project with the defendants. In addition the defendants asked for a further sum of US$5 million for their troubles in securing the lottery project as procurement fees. A feasibility study of the project was presented to the plaintiffs by the defendants.

GGIMS in the meantime entered into a Technical Assistance Agreement (TAA) dated 6 January 1993 with the Foundation to assist the Foundation to operate the lottery jointly with GGIMS. The defendants then presented the plaintiffs with a copy of the said TAA as confirmation of their representations. The defend