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2022 MarsdenLR 1806
HIGH COURT MALAYA PENANG
ALL KURMA SDN BHD – Appellant
Versus
TEOH HENG TATT & ORS – Respondent
[Civil Suit No: PA-22NCC-30-09-2021]
A Mareva injunction requires strict compliance with procedural rules, including demonstrating urgency and providing evidence of a real risk of asset dissipation, which the plaintiff failed to establish.
Headnote:(A) Rules of Court 2012 – Order 29 – Mareva injunction – Plaintiff obtained ex parte Mareva injunction preventing defendants from disposing of assets up to RM1,116,617.64 – Defendants' joint application to set aside injunction due to plaintiff's non-compliance with procedural requirements – Court found plaintiff failed to demonstrate urgency and adequately justify ex parte application. (Paras 1, 20, 59, 105)
(B)
Ex Parte Applications – Standards of compliance – Plaintiff must meet strict requirements under O 29 r 1 for ex parte injunction – Failure to provide satisfactory explanation for lack of notice to defendants resulted in setting aside the injunction. (Paras 12, 19, 61, 105)
(C)
Mareva Injunctions – Requirements – Applicant needs to prove a good arguable case, existence of assets in jurisdiction, and a real risk of dissipation of assets – Court found plaintiff failed to present sufficient evidence for risk of asset dissipation justifying injunction. (Paras 78, 99, 107)
Facts of the case:
The plaintiff sought a Mareva injunction under Order 29 against defendants Teo, Leader Food, and Taha Food, alleging breaches of duty resulting in loss quantified at RM1,116,617.64. The court assessed the legitimacy of the injunction after procedural challenges by the defendants.
Findings of Court:
The court determined that there was non-compliance with procedural requirements, leading to the injunction's annulment.
Issues
: The court addressed whether the plaintiff met the burden of proving urgency and real risk of asset dissipation to justify the Mareva injunction.
Ratio Decidendi:
The court emphasized the strict adherence required for ex parte applications and the necessity of substantial evidence for a risk of dissipation.
Result:
The plaintiff's inter partes application for a Mareva injunction was dismissed with costs. (Paras 105)
JUDGMENT
Prelusion
[1] The plaintiff obtained an ex parte Mareva injunction against a few of the defendants. The Mareva injunction was enforced. The affected defendants were each prohibited from disposing or dealing with their own assets up to approximately RM1m, which is the amount of the plaintiff's claim against each of them. Those affected defendants applied to set aside the ex parte Mareva injunction. Should the ex parte Mareva injunction be set aside?
[2] Also, the plaintiff's ex parte application for the Mareva injunction- Enclosure 5-was made inter partes, so that those defendants could be heard in an inter partes hearing. Should the Mareva injunction be granted inter partes?
The Parties
[3] The plaintiff sues the 1st defendant (Teo) for breaches of statutory duty and fiduciary duty, and for conspiracy to injure. The plaintiff sues the other defendants for dishonest assistance and for conspiracy to injure.
[4] The affected defendants in these proceedings are the 7th defendant: Leader Food Sdn Bhd (Leader Food), and the 8th defendant: Taha Food Sdn Bhd (Taha Food).
[5] I use these abbreviations here, for the ease of reference, because these were the abbreviations that were used by the parties in their pleadings, affidavits and written submissions.
The Applications/Enclosures For Disposal
[6] Leader Food's and Taha Food's joint application to set aside the Mareva injunction is encl 30. Teo's application to set aside the Mareva injunction is encl 32. The plaintiff's application for the Mareva injunction, made inter partes, is encl 5.
[7] These three Enclosures were decided one after the other. Leader Food and Taha Food's Enclosure 30 was heard first. A decision was made on encl 30. Then Teo's Enclosure 32 was dealt with, and an Order was made on it. More on encl 32 later. Then the plaintiff's inter partes encl 5 was heard, and an Order was made.
[8] I am writing one judgment to encompass all three Enclosures.
The Terms Of The Mareva Injunction
[9] In brief, the Mareva injunction prohibits Teo, Leader Food and Taha Food from disposing, dealing with or diminishing the value of any of their assets, including monies, up to the value of RM1,116,617.64.
[10] There are other terms providing for the disclosure of information and the discovery of documents about Teo's, Leader Food's and Taha Food's assets, but those terms are not pertinent to this judgment.
[11] And as usual, the penal notice under O 45 r 7 of the Rules Of 2012 ( ROC ) is endorsed on theMareva injunction to forewarn Teo, Leader Food, Taha Food and their directors.
The Elements For An Ex Parte Mareva Injunction
[12] First, I set out the principles to follow when considering to grant a Mareva injunction. The authorities on Mareva injunctions establish that the plaintiff must fulfil three elements. The plaintiff must demonstrate that:
(i) the plaintiff has "a good arguable case" against the defendants;
(ii) Teo, Leader Food and Taha Food have assets in Malaysia; and
(iii) there is "a real risk of dissipation or secretion of assets so as to render any judgment which the plaintiff may obtain nugatory": S & F International Ltd v. Trans-Con Engineering Sdn Bhd, ; [1985] CLJ (Rep) 280 ; Creative Furnishing Sdn Bhd v. Wong Koi ; ; [1989] 1 CLJ (Rep) 22 .
[13] In Creative Furnishing (supra) at p 134, the Supreme Court, through His Lordship Mohamed Azmi SCJ, set out the elements for a Mareva injunction, but also gave a caveat against readily granting such injunctions:
In Aspatra Sdn Bhd & Ors v. Bank Bumiputra (M) Bhd & Anor, [1988] 1 MLJ 97; [1987] CLJ (Rep) 50 at p 200, this Court by a majority had referred to the importance of the relief by way of a Mareva injunction for the purpose of preserving assets and preventing a defendant from dissipating his assets within jurisdiction before judgment. But the remedy is not of unlimited application. On the facts of the appeal before us, the respondent must satisfy the Court firstly, that he had a good arguable case; secondly, t
