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2022 MarsdenLR 2646
COURT OF APPEAL (PUTRAJAYA)
MOHAMAD ZABIDIN MOHD DIAH, J, NANTHA BALAN, J, DARRYL GOON SIEW CHYE, JJCA
Lee Kai Wuen & Anor – Plaintiff
Versus
Lee Yee Wuen – Defendant
CIVIL APPEAL NO J-02(IM)(NCC)-1315-09 OF 2020
Chua Kim Hong Rudeen (with Wong Kum Heng) (Rudeen Chua & Co) for the appellants.
Foo Joon Liang (with Lee Xin Div) (Gan Partnership) for the respondent.
A Mareva injunction requires clear evidence of a good arguable case, presence of assets in jurisdiction, and real risk of dissipation, which must be substantiated at the interlocutory stage.
Headnote:(A) Companies Act 2016 - Sections 345, 346, and 351 - Interlocutory Mareva injunction - The court considered the merits of granting a Mareva injunction to prevent asset dissipation pending trial - It was concluded that no sufficient evidence of risk of asset dissipation was established, errors in the High Court’s reasoning were noted. (Paras 56, 84, 123, 124)
(B) Interlocutory Injunctions - Requirements for issuing a Mareva injunction - The court requires evidence of a good arguable case, presence of assets in jurisdiction, and a real risk of their dissipation or secretion. (Paras 56, 85, 120)
Facts of the case:
The respondent sought an interlocutory Mareva injunction against family members due to alleged misappropriation of funds from a family-owned company. The appellant claimed that funds were necessary for the operational requirements of the company. The contentious joint accounts were utilized for business activities following the incapacitation of the company’s sole signatory. (Paras 3, 11, 19, 20)
Findings of Court:
The appeal was allowed, determining that there was no compelling evidence of dissipation risk as asserted by the respondent. The principle of necessity in the use of joint accounts for business obligations was found to be valid. (Paras 124, 125)
Issues: The court addressed whether the appellant demonstrated a good arguable case and the actual risk of asset dissipation after factors of familial relationships and business needs were considered. (Paras 60, 85)
Ratio Decidendi: The learned judge established that the absence of direct evidence of asset dissipation negated the respondent’s request for the Mareva injunction. The appeal judgement emphasized the necessity of substantiated evidence to infer risk, clarifying lawful means of operating a business in crisis situations. (Paras 84, 123)
Result: The appeal was allowed; the previous injunction was set aside.
Darryl Goon Siew Chye JCA:
JUDGMENT
Introduction
[1]This was a case that concerned disputing family members in a corporate setting. The central issue in this appeal was whether an interlocutory Mareva form of injunction should have been granted against the appellants by the High Court.
[2]The originating process in this appeal was an originating summons taken out by the respondent, as plaintiff, against the appellants, who were the first and second defendants.
[3]By this originating summons, the respondent invoked ss. 345346351Companies Act 2016O. 88 r. 2 of the Rules of Court 2012
The Injunctions
[4]On 21 February 2019, the respondent secured an ex parte interim Mareva injunction against the appellants. On 6 March 2019, an ad interim Mareva injunction appeared to have been granted against the appellants upon the terms of the earlier granted ex parte injunction, effective from 13 March 2019. That this appears so is because this order, dated 6 March 2019 was, unfortunately, unhappily worded thus, ‘IT IS HEREBY ORDERED that the ad interim is extended from 13 March 2019 until the disposal of the inter partes application’. As worded, the order suggests that there was a prior ad interim order granted and which was being extended. However, be that as it may, it would have been clear enough, certainly to the parties involved, that the order of 6 March 2019 was actually the grant of an ad interim order pending the inter partes hearing of the application for an interlocutory Mareva injunction until the disposal of the originating summons.
[5]In addition, and also on 6 March 2019, the ad interim Mareva injunction granted contained a variation that allowed for certain payments to be made by the appellants. The material part of this variation order of 6 March 2019 states as follows:
1.The Order dated 21 February 2019 be varied to allow the following payments to be made by the 1st and 2nd Defendants’ (“4 Payments”):
1.1 RM4,767.00 to Public Bank Bhd being instalment for shop house Lot No. 32, Kimanis Centro, Kimanis Papar, Sabah;
1.2 RM25,000.00 for CP204 Company Income Tax Instalment 2019;
1.3 RM6,021.00 to Public Bank Bhd being instalment for Kobelco S200XDL-10 with registration no. JSM 762; and
1.4 RM7,995.00 to Public Bank Bhd being instalment for Mercedes Benz S400 with registration no. JDL 8.
2.The 1st and 2nd Defendants shall make the 4 Payments directly to the said creditors.
[6]Why this variation was required is unclear. There was no outright restriction against the appellants from disposing any of their assets as such. Whether the variation was meant to permit the appellants to utilise their monies and assets, including those from the identified accounts, for the specified payments even if it would deplete their assets and monies below the limit stipulated in the order of 21 February 2019 ie, RM3,412,829.41, is unclear.
[7]On 15 September 2020, the inter partes application for the Mareva injunction was finally heard and an interlocutory Mareva injunction in terms of the ad interim Mareva injunction was granted by the High Court against the appellants.
[8]The material parts of the Mareva injunction granted were the following:
1. The 1st and 2nd Defendants be prohibited from removing from Malaysia in any way, dispose of or deal with or diminish the value of any of their assets which are in Malaysia whether in their own name(s) or not and whether solely or jointly owned up to the value of RM3,412,829.41 (“Mareva Sum”)
1.1 This prohibition includes any real properties and any credit balance or monies as may or may thereafter be held at any financial institutions, including but not limited to the following bank accounts:
i.OCBC Account No. 7152544566; and
ii.UOB Account No. 1493000867.
1.2 If the total unencumbered value of the 1st and/or 2nd Defendants’ assets in Malaysia exceeds the Mareva Sum, the 1st and/or 2nd Defendants may remove any of those assets from Malaysia or may dispose of or deal with them so long as the total unencumbered value of the as
