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2025 MarsdenLR 188
HIGH COURT MALAYA KUALA LUMPUR
ETIHAD CONSULTANCY & ORS – Appellant
Versus
ALPHACAPITAL (M) BERHAD – Respondent
[Suit No: WA-22M-791-07/2024]
The court upheld the Mareva injunction, emphasizing the need to prevent asset dissipation amid clear evidence of contractual breaches and the risk of irreparable loss for the plaintiffs.
Headnote:(A) Rules of Court 2012 - Order 29 r 1 - Mareva injunction - Continuation of injunction sought to prevent asset dissipation and ensure recovery by plaintiffs following defendant's alleged contractual breaches regarding investor funds. (Paras 1, 3, 5, 9, 60)
(B) Good arguable case - Court assesses whether plaintiffs established good arguable case based not on definitive success but on a case capable of serious argument; substantive dispute not prejudged at interlocutory stage. (Paras 16, 17)
(C) Risk of dissipation - Evidence revealed a real risk of asset dissipation; defendant's financial discrepancies indicated misconduct and potential for further dissipation of assets; preserving judicial authority. (Paras 34, 44-53)
(D) Balance of convenience - The merits of the plaintiff's claims and existing risk trump the defendant's vague claims of operational hardship; injunction granted to prevent irreparable loss. (Paras 55, 60)
Facts of the case:
Plaintiffs allege defendant defaulted on contractual obligations under Islamic investment agreements, leading to a request for a Mareva injunction to freeze assets pending the resolution of their claims. Defendant's alleged misappropriation of funds for luxury vehicles and failure to disclose assets were key issues.
Findings of Court:
Plaintiffs met all necessary criteria for maintaining the Mareva injunction due to established risk of asset dissipation, necessitating judicial intervention.
Issues: The core issues addressed were whether a good arguable case existed, the risk of asset dissipation, and the balance of convenience whether the injunction should be upheld.
Ratio Decidendi: The court emphasized the necessity of protecting the integrity of its orders to prevent asset dissipation and to uphold justice, highlighting the weight of plaintiffs' evidence with the absence of proper rebuttal by the defendant.
Result: Mareva injunction to remain in force pending final determination; costs awarded.
Key Points: - The court upheld the Mareva injunction, emphasizing the need to prevent asset dissipation amid clear evidence of contractual breaches and the risk of irreparable loss for the plaintiffs (!) . - The plaintiffs allege the defendant defaulted on contractual obligations under Islamic investment agreements, leading to a request for a Mareva injunction to freeze assets pending the resolution of their claims (!) (!) . - The core issues addressed were whether a good arguable case existed, the risk of asset dissipation, and the balance of convenience whether the injunction should be upheld (!) . - The court found that the plaintiffs established a good arguable case based on unrebutted affidavits and bank records refuting the defendant's defense (!) (!) . - The court determined there was a real risk of asset dissipation due to the defendant's conduct, including suspicious outflow of funds, depletion of bank accounts, lavish spending on luxury vehicles, and inconsistent corporate disclosures (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) . - The court found that the balance of convenience favored granting the injunction, as the defendant's vague claims of operational hardship did not outweigh the plaintiffs' substantiated risk of irreparable loss (!) . - The court emphasized that the Mareva injunction is a discretionary remedy aimed at upholding the integrity of the court's process and ensuring the effectiveness of its judgments (!) . - The Mareva injunction was ordered to remain in force pending the final determination of the action (!) . - Costs of RM10,000.00 were awarded to the plaintiffs, to be paid by the defendant within 14 days (!) . - The defendant failed to file affidavits or written submissions in opposition to the inter parte application, relying only on oral arguments (!) .
What is the test for establishing a good arguable case for a Mareva injunction?
What is the test for determining a real risk of dissipation of assets for a Mareva injunction?
What are the considerations for the balance of convenience in granting a Mareva injunction?
| Table of Content |
|---|
| 1. overview of plaintiffs seeking mareva injunction (Para 1 , 2 , 3 , 4 , 5 , 6 , 7) |
| 2. determining issues for court (Para 8) |
| 3. plaintiffs establish strong grounds for injunction (Para 9 , 10 , 11) |
| 4. defendant's contentions on claims and defenses (Para 12 , 13 , 14 , 15) |
| 5. court's analysis on good arguable case (Para 16 , 17 , 18 , 19 , 20 , 21 , 22 , 23 , 24 , 25 , 26 , 27 , 28 , 29 , 30 , 31 , 32 , 33) |
| 6. risk of dissipation of assets explained (Para 34 , 35 , 36 , 37 , 38 , 39 , 40 , 41 , 42 , 43) |
| 7. evidence shows clear risk of asset dissipation (Para 44 , 45 , 46 , 47 , 48 , 49 , 50 , 51 , 52 , 53) |
| 8. balance of convenience favors injunction (Para 54 , 55 , 56 , 57 , 58 , 59) |
| 9. court orders injunction and costs awarded (Para 60) |
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 Court 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-
