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1994 MarsdenLR 967
HIGH COURT MALAYA, KUALA LUMPUR
HAJI ABDUL MALEK BIN HAJI AHMAD, J
ZALIK SECURITIES – Appellant
Versus
JOHNNY LIM CHIN TEIK – Respondent
CIVIL SUIT NO. D5-22-395-94
A Mareva injunction may be granted where a plaintiff shows a good arguable case and a real risk of asset dissipation. Courts may include assets held in the name of a third party if evidence indicates those assets are in reality under the defendant's control.
Headnote:(A) Rules of the High Court 1980 - Order 29 Rule 1(2B) - Application for interlocutory injunction - Exparte order becoming interparte upon service and representation of counsel - Need for refiling rendered unnecessary.
(B) Injunction - Mareva injunction - Principles for granting - Plaintiff must show a good arguable case and a real risk of dissipation of assets - Court must balance the rights of third parties - Where assets appearing to belong to third parties are involved, court must have good reason to believe they are truly the defendant's assets.
(C) Discretion of Court - Power to grant injunction is vested in the court of first instance and will not be lightly interfered with by appellate bodies unless there is clear error of law or misconception of facts.
Facts of the case:
The plaintiff sought an urgent exparte injunction against the defendant, a former employee, following the discovery of unauthorized fund transfers involving the plaintiff's customers. The defendant, while in custody, was alleged to have misappropriated funds. The court granted the injunction, which also extended to an account held in the name of the defendant's spouse. The defendant moved to set aside the order, arguing lack of urgency, lack of a good arguable case, and improper inclusion of third-party assets.
Findings of Court:
The court found the evidence of living beyond one's means and unauthorized manipulation of accounts sufficient to establish a good arguable case and a high risk of asset dissipation. It was observed that the defendant's spouse's account was effectively maintained by the defendant, justifying its inclusion. The procedure of treating an exparte order as interparte upon appearance obviated the need to refile the application.
Issues: Whether the urgent injunction was justified, whether there was a risk of asset dissipation, and whether the inclusion of an account held in a third party's name was legally permissible under established principles.
Ratio Decidendi: A Mareva injunction is intended to prevent the frustration of potential judgments through asset dissipation. Where there is strong evidence that a defendant is living beyond their means and actively manipulating financial accounts, the court is justified in acting to protect potential claims. Furthermore, courts may include third-party assets if there is strong evidence that such assets are in reality under the control and ownership of the defendant.
Result: Defendant's application to set aside the injunction dismissed with costs.
Haji Abdul Malek bin Haji Ahmad J:
On 25 April 1994, I had granted, upon an undertaking for damages, an order in terms of the plaintiff's exparte application filed upon a certificate of urgency for:
a) the defendant whether by himself, his servants or agents, otherwise whosoever from parting or disposing of or dealing with and or removing or charging or assigning or otherwise dealing with any of his assets whatsoever within the jurisdiction of this Honourable Court to the extent of RM1,500,000;
b) in particular and without prejudice to the foregoing, the defendant be restrained from drawing from, charging or otherwise dealing with the account standing in his name in any branches of financial institutions operating and or carrying on business within the jurisdiction of this Honourable Court to the extent of RM1,500,000;
c) further and in particular and without prejudice to the foregoing, Audrey Keong Mei Cheng, the wife of the defendant, be restrained from drawing from, charging or otherwise dealing with the account standing in her name in the Development & Commercial Bank within the jurisdiction of this Honourable Court to the extent of RM1,500,000.
Pursuant to O. 29 r. 1(2B) of the Rules of the High Court 1980, I had adjourned the matter for two weeks. On 9 May 1994, learned Counsel for the defendant had appeared to state that since the original order was granted exparte, the plaintiff should have filed an interparte summons in chambers within the two weeks after service with the original returnable date given on the new summons in chambers as had been the practice in some of the other High Courts. I had, however, agreed with learned Counsel for the plaintiff that it would be impractical and quite unnecessary to file the same application again only by changing the word "exparte" to "interparte" and that for all purposes, since the defendant had been served and was in fact represented by Counsel on the returnable date, the order granted exparte had become interparte with both parties having appeared within the two weeks after the original exparte order and without the need for the plaintiff to refile the exparte application as an interparte one. In short, O. 29 r. 1(2B) was no longer applicable.
There was also no necessity in this situation, to my mind, for the defendant to file an application to set aside the order but they had done so. On 4 July 1994, learned Counsel for the defendant had asked for an adjournment as the papers had not been properly processed and on 27 July 1994, he had asked for a postponement to file an affidavit in reply. On both occasions, learned Counsel for the plaintiff had no objections to the adjournment.
On 19 September 1994, learned Counsel for the defendant had submitted that there was actually no urgency in the first place to hear the plaintiff's exparte application as the defendant was then in police custody and the plaintiff knew that. On that ground alone, he had submitted that the injunction should be set aside.
Further, he maintained that there must be a good arguable case and the risk of dissipation. At the most, he argued, there was only suspicion as the plaintiff was relying on a newspaper report of the defendant's arrest for criminal breach of trust of RM890,973.36 belonging to the plaintiff. He went on to state that the plaintiff's statement of claim was flawed and the defendant was innocent until proven guilty. He also added that the defendant did not live a lavish lifestyle and there had been a suppression of material facts. In fact, he stressed that the situation was worse here as there had been positive misrepresentation by the plaintiff and the order had also implicated an innocent third party who was the defendant's wife.
It may be appropriate at this juncture to refer to the plaintiff's statement of claim. It had been pleaded that the defendant was at all material times an employee of the plaintiff carrying out his duties as Head of the Settlement Department which was the departme
