Malaysia - Trials & Appeals & Compensation (2024)

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The granting of worldwide Mareva injunction against HinLeong Trading, Lim Oon Kuin and his family members.

The liquidators of failed oil trader Hin Leong Trading("HLT") have scored a significant win intheir bid to recoup money from its founder, Lim Oon Kuin("OK Lim"), and his family members.

The Singapore High Court on 21 May 2021 granted a worldwideMareva injunction to freeze as much as US$3.5 billion of assetsworldwide, including properties in Singapore and Australia, shares,insurance policies and club memberships, belonging to the foundingfamily of collapsed oil trader HLT. It has been reported that theamount frozen under this injunction may be the largest in thecity-state's history.

OK Lim who was once an icon in Singapore's oil community,was also earlier charged with over 20 counts of forgery-relatedoffences.¹

What is worldwide Mareva injunction?

Typically, a Mareva injunction or a freezing order is granted torestrain a defendant from dealing with his assets within thejurisdiction in which the injunction is granted. The injunction isto prevent the defendant from dissipating his assets beforejudgment is obtained. In more recent developments, post-judgmentinjunctions have also been issued by the courts.

In an increasingly borderless world where the assets of adefendant are located abroad, the courts have in exceptionalcirc*mstances, granted injunctions to restrain defendants fromdealing with their assets located anywhere in the world. Aninjunction of this nature is commonly known as a worldwide Marevainjunction or a worldwide freezing order, and is an increasinglyuseful tool in cross border disputes.

In considering whether or not to grant a worldwide Marevainjunction, the court will apply the usual principles applicable toa domestic Mareva which include:

1. The plaintiff must have a good arguable case;
2. There is a real risk ofdissipation of assets by the defendant; and
3. The balance ofconvenience lies with the Plaintiff.

Can a Malaysian Court grant a worldwide Mareva injunction?

The Malaysian courts are no strangers to worldwide Marevainjunctions. The earliest reported decision of a Malaysian courtissuing such an injunction dates back to 2005 in the case ofMetrowangsa Asset Management Sdn Bhd & Anor v Ahmadb Hj Hassan & Ors [2005] 1 MLJ 654. In this case,the High Court granted an injunction to the plaintiffs to restrainseveral defendants from dealing with their assets, both within andoutside Malaysia, on the premise that the defendants had allegedlyembezzled approximately RM125 million belonging to theplaintiffs' clients.

Since then, there have been a number of cases where MalaysianCourt has granted worldwide Mareva injunction, some of which arediscussed in our article, Injunctions Sans Frontieres,which can be accessed here.

This article serves as an update to our previous article on theMalaysian position.

The Malaysian position : An update

Discussed below are some of the cases where applications forworldwide Mareva injunctions have been considered by the MalaysianCourts.

I. Malaysia Discounts Berhad and Others v Pesaka Astana (M)Sdn Bhd and Others [2008] MLJU 315 - Court of Appeal

In this case, the Appellants appealed against the variationsordered by the High Court to be made to a worldwide Marevainjunction which restrained some of the Respondents ("theMareva defendants") from dissipating their assets pendingtrial of the civil suit in the High Court.

The issue before the Court of Appeal was whether, in light ofthe factual background and the relevant established judicialprinciples governing variations to Mareva injunctions, the exerciseof discretion by the High Court in ordering the variations wasfair, equitable and correct.

The Court of Appeal held that the High Court has occasioned noappealable error in varying the Mareva order. The Court of Appealalso held that the variations ordered by the High Court areessentially to permit the Mareva defendants to pay their legitimateand bona fide debts, recurring bills, monies for current and futurecontracts, living expenses, instalment payments for a house inLondon, statutory EPF deductions, remission of proceeds of sale ofshares, legal fees for defending actions in courts andmiscellaneous transactions. A Mareva injunction, being an equitableremedy, is not intended to be used as an instrument of oppression.The Court concluded that it is plain that the variations ordered bythe High Court serve the purpose of permitting the Marevadefendants to discharge their legitimate and bona fide obligationswhich are completely consistent with the aforesaid establishedjudicial principles.

II. Tan Sri Abdul Rashid Hussain v Sharida Abdul Majid[2011] 1 LNS 798 - High Court

The plaintiff in this case obtained a consent order against thedefendant for a sum of RM11,760,000.00. When the defendantdefaulted in complying with the terms of the consent order, theplaintiff applied for post-judgment orders in the nature of aworldwide Mareva injunction in aid of execution.

Varghese George Varughese JC in allowing the plaintiff'sapplication held that for post-judgment Mareva orders, it is tritethat an applicant, need not show a good arguable case since theyhad already secured a judgment in its favour. What had to beestablished was that there was a real risk of dissipation of thedefendant's (judgment debtor's) assets or that such assetswere likely to be removed to avoid or deny execution being leviedto recover the judgment sum. The learned Judicial Commissioner alsoheld that the plaintiff had in his Affidavit in Support adverted tofacts that clearly evidenced the propensity on the part of thedefendant to frustrate the plaintiff from recovering the judgmentdebt.

III. Susila a/p S Sankaran v Subramaniam a/l PGovindasamy [2013] 4 CLJ 579 - High Court

The petitioner wife applied by way of summons in chambers,inter alia, for an order to restrain the respondenthusband from transferring or disposing of matrimonial assets,within and outside the jurisdiction, pending disposal of thePetition for Judicial Separation. The application was made under,amongst others, section 102 of the Law Reform (Marriage andDivorce) Act 1976.

Yeoh Wee Siam J dismissed the application on grounds that thepetitioner wife has used the wrong mode of commencing theproceedings as the relevant rules required the application to bemade by a notice of application and not summons in chambers.

Significantly, Her Ladyship also held that there was no evidencethat respondent husband has dissipated or disposed of thematrimonial assets nor was there a real risk of that happening withthe object of reducing the respondent husband's means to paymaintenance or to deprive the petitioner wife of her rights in upto 50% of the matrimonial assets.

IV. Alami Vegetable Oil Products SDN. BHD. v MohammedRadwan Alami & Ors [2019] MLJU 802 - High Court

This case involves a claim by the plaintiff that the defendantshad wrongfully disbursed the plaintiff's funds by unauthorizedwithdrawals to various parties and had, without authorisation, soldthe plaintiff's shares in a company which was a subsidiary ofthe third defendant whereby the plaintiff was the 80% shareholder,and first defendant was the holder of the remaining 20%shareholding. The plaintiff filed a claim against the Defendantsfor, inter alia, damages and restitution of RM317,000.00as against the first and second defendants and of RM5,331,800.00 asagainst all the defendants.

The Plaintiff also applied for an ex-parte worldwideMareva injunction against the first and second defendants torestrain them from dealing with their assets in so far as the valueof the assets exceed RM5,648,800.00 and against the third defendantin so far as the value if the assets exceed RM5,331,800.00.

In allowing the worldwide Mareva injunction, Ahmad Fairoz ZainalAbidin JC held that the plaintiff has a good and arguable case andthat the balance of convenience lies in the plaintiff's favour.The judge also held that the defendants have assets elsewhere inthe world and there is a real risk of dissipation of the assetsoutside of jurisdiction.

V. Mudajaya Corp Bhd - High Court (no written groundsavailable)

More recently, on 30 October 2019, Mudajaya Corp Bhdsuccessfully obtained a worldwide Mareva injunction up to the valueof RM49.31 million and ancillary orders prohibiting its formeremployee and three other individuals from dissipating their assets.The order also prohibits any third party from knowingly assistingor permitting a breach of the order until the disposal of the fulltrial.²

VI. The Customs and Tax Administration of The Kingdom ofDenmark v Saling Capital Ltd & 39 Ors, Civil Appeal No:S-02(IM)(NCvC)-1130-06/2019 - Court of Appeal

Finally, in this recent Court of Appeal case³,the appellant, the Customs and Tax Administration of the Kingdom ofDenmark, filed a civil suit against 40 respondents, comprisingindividuals and entities, to recover approximately RM 1 billionallegedly obtained by fraud perpetrated by the respondents.

In this appeal, the appellant appealed against the decision ofthe High Court in inter alia dismissing theappellant's inter partes application for a worldwideMareva injunction against the respondents. The Court of Appealallowed the appellant's appeal and granted the injunction,after considering the following factors:

1. given the worldwide extent of the fraud as pleaded by theappellant, a Mareva injunction which is limited to therespondents' assets within Malaysia would not be sufficient toadequately safeguard the appellant against a risk ofdissipation;
2. there was evidence thatthe respondents would dissipate, divert, conceal and/or mask theirassets; and
3. there was a full andfrank disclosure on the part of the appellant.

Conclusion

With the aid of a worldwide Mareva injunction, a plaintiff can,in appropriate circ*mstances, restrain a defendant from dissipatingits assets within and outside the jurisdiction, and therebymitigate the risk of ending-up with a mere paper judgment.

Footnotes

1. https://www.straitstimes.com/business/companies-markets/judicial-managers-win-high-court-judgment-to-freeze-assets-worldwide-of;https://www.businesstimes.com.sg/energy-commodities/hin-leongs-lim-family-fail-in-legal-bids-against-court-appointed-managers;and https://www.thestar.com.my/business/business-news/2021/03/30/singapore-hin-leong-founder-ok-lim-faces-another-23-forgery-related-charges

2. https://www.edgeprop.my/content/1604608/mudajaya-obtains-worldwide-mareva-injunction-against-ex-employee

3. The Court of Appeal's decision wasdelivered on 25 May 2021.

Originally published 08 June 2021

The content of this article is intended to provide a generalguide to the subject matter. Specialist advice should be soughtabout your specific circ*mstances.