Maxi Wonder Sdn Bhd v Dcs Trading Sdn Bhd (WA-22NCC-110-02/2024)

MAXI WONDER SDN BHD [Registration No: 200701032332 (790360-K)]

FONG SAU YING [NRIC No:731031-08-5342]

DATO PANG YEE TECK [Republic of Singapore Passport No.: K0389359K)

TAN HUI KANG [Republic of Singapore Passport No.: K2067158E)

ONG AH CHOO [Republic of Singapore Passport No.: E5433088H) …PLAINTIFFS AND DCS TRADING SDN BHD (Registration No.:201901006819 (1316146-V) …DEFENDANT GROUNDS OF JUDGMENT

This is the Defendant’s application for a Marejava Injunction against the Plaintiffs that can be seen in Enclosure 109.

The Defendant’s application seeks, among others, an order to prevent the Plaintiffs from removing from Malaysia or from disposing or diminish the value of any of their assets in Malaysia or overseas pending the final determination or outcome of the action. The Defendant also seeks an order for disclosure of all the Plaintiffs’ assets within Malaysia or overseas.

After hearing the parties, I dismissed the application as I found that the test required for a Mareva Injunction and for the disclosure of the assets of the Plaintiffs have not been satisfied by the Defendant.

I thank counsels for their detailed submissions pertaining to the applicable principles regarding an application for a Mareva Injunction.

I find that the principles of law that should be considered by a Court of Law when dealing with a Mareva Injunction is trite. I summarized the applicable test to justify the grant of a Mareva Injunction as follows: -

The Plaintiff must show that it has a good arguable case.

(ii) The Defendants must have assets within the Malaysian Court’s jurisdiction.

(iii) There is a real risk that the assets will be removed before Judgment could be satisfied.

I distilled the above principles from the decision of the Court of Appeal in The Customs and Tax Administration of The Kingdom of Denmark v Saling Capital Ltd & Ors and other appeals [2022] 1 MLJ 316, where Lee Heng Cheong JCA held: “[23] For a Mareva application, there are three pre-requisites to satisfy before the court may issue a Mareva injunction. They were set out by Mohamed Azmi SCJ (as he then was) in the majority decision of the Supreme Court case of Aspatra Sdn Bhd & Ors v. Bank Bumiputra (M) Bhd & Anor [1987] 2 CLJ 377; [1987] CLJ (Rep) 50; [1988] 1 MLJ 97 and they are as follows:

the applicant must show that it has a good arguable case;

(ii) that the defendants have assets within jurisdiction; and

(iii) that there is a risk of the assets being removed before judgment could be satisfied.”

I also refer to the following authorities: -

Mareva Compania Naviera SA v

(ii) S&F International Limited v Trans-Con Engineering Sdn Bhd [1985] 1 MLJ 62

(iii) Nimenia Maritime Corp v Trave Schiffahrtsgesellschaft GmBH & Co KG [1984] 1 All ER 398.

(iv) Lee Kai Wuen & Anor v Lee Yee Wuen [2022] 7 CLJ 505

I reproduce material parts from the judgment of Darryl Goon Siew Chye JCA in Lee Kai Wuen & Anor v Lee Yee Wuen (supra): - “[93] Thus, there must either be direct evidence of a real risk of dissipation of assets or circumstances in evidence that warrants an inference of such a risk. As Mustill J stated, and it bears repeating, 'Precisely what form the evidence may take will depend on the particular circumstances of the case. But the evidence must always be there ' (emphasis added). It must also be emphasised that the ingredient in question is not merely the risk of dissipation of assets, but a 'real risk'. The adjective used is in our view, not without significance. It lends to emphasise that a mere risk would not do. If it were otherwise, based merely on arguable allegations, at an interlocutory stage, a great majority of cases would qualify for a Mareva injunction. In the face of unproven allegations, such a consequence would clearly be oppressive. It merits noting that the Mareva injunction, together with the Anton Piller type injunction, were described by Donaldson LJ in Bank Mellat v. Nikpour [1985] FSR 87 at p. 92, as nuclear weapons of the law. The effect of these types of injunctions can be very harsh and oppressive and it is not inconceivable that in certain cases, they may have ruinous consequences. [94] The need for evidence of a real risk of dissipation of assets was also central to the decision of the Federal Court in Zainal Abidin Hj Abdul Rahman v. Century Hotel Sdn Bhd [1982] CLJU 34; [1982] 1 LNS 34; [1982] 1 MLJ 260, where His Royal Highness, Raja Azlan Shah CJ (Malaya) stated in respect of a Mareva injunction at p. 264: The appellant still has to establish the second requirement, that is in order to gain the particular form of protection sought by the injunction he must show that there is a danger that the company's available assets will be dissipated to prejudice the appellant's claim. That is a matter of evidence. (emphasis added) The decision of the Federal Court in that case was ultimately to dismiss the appeal against the decision of the High Court in refusing to grant a Mareva injunction sought. It was held that although the appellant had raised a serious question to be tried, there was no evidence to demonstrate that there was a danger that the available assets of the respondent would be dissipated, to the prejudice of the appellant's claim. [95] The Federal Court also stressed, of the court's jurisdiction to grant a Mareva injunction, in the following terms: It must not be debased into something invoked to obtain security for a judgment in advance, or pressuring a Defendant into a settlement. "The courts must be vigilant to ensure that a Mareva defendant is not treated like a judgment debtor" (see A.J. Bekhor & Co. Ltd. v. Bilton (supra - [1981] 2 All ER 577)). It is consequently not accurate to refer to a Mareva injunction as a pre-trial attachment (see Cretanor Maritime Co Ltd v. Irish Maritime Management Ltd [1978] 1 Lloyd's Rep 425). (emphasis added) [96] In a Mareva type of injunction, the injunction is directed at the assets of the defendant and which assets are not necessarily the subject matter, in specie, of the plaintiff's claim. The assets precluded from disposal are often the personal assets of the defendants. As Mustill J pointed out in Ninemia Maritime Corporation, at p. 403: The relief granted on a Mareva application is of a quite different character. It bears no relation to the relief granted at trial. The Plaintiff, however successful at the trial, will not obtain a perpetual injunction in terms of the interlocutory Mareva injunction. The latter bears on assets which in the great majority of cases have no connection at all with the cause of action on which the injunction is founded. (emphasis added) [97] The need for evidence of a real risk of dissipation in fact lies at the very heart of the jurisdiction and its raison d'etre. The sole purpose of a Mareva injunction, as Eusoffe Abdoolcader pointed out in S & F International Limited, referring to the decision in PCW (Underwriting Agencies) Ltd v. Dixon & Anor [1983] 2 All ER 158 was: ... the sole purpose of a Mareva injunction was to prevent a plaintiff being cheated out of the proceeds of an action, should he be successful, by a defendant transferring his assets abroad or dissipating his assets within the jurisdiction, and that the remedy was not intended to give a plaintiff priority over those assets, or to prevent a defendant from paying his debts as they fell due, or to punish him for his alleged misdeeds, or to enable a plaintiff to exert pressure on him to settle an action. (emphasis added) [98] To hold that a real risk of dissipation of assets may be presumed is effectively to negate the need to actually establish that such a risk exists. This, in our view, would be inconsistent with all the settled authorities that a real risk of dissipation is an essential ingredient. This requirement necessarily means it is an issue that has to be established and in legal proceedings, that can only be achieved by means of evidence. The binding authorities of our courts do not in fact establish that there exists any exception to the rule, such that this ingredient may be presumed in any identified circumstance. [99] What the authorities do establish, and none so clearly as in the decision in Ninemia Maritime Corporation which was expressly quoted by the Federal Court in S & F International Ltd, and thus a decision binding on this court, is that there must be evidence of a real risk of dissipation of assets - whether direct evidence or an inference that may properly be drawn from evidence that is led and provided. It may not be presumed, particularly at an interlocutory stage, when allegations made of impropriety have yet to be proved. If, however, want of probity or misconduct is so clearly established, even at the interlocutory stage, then, depending on the nature of the lack of probity or misconduct, a real risk of dissipation of assets may be inferred - not presumed. (emphasis added) [100] As for allegations of misappropriation, dishonesty or lack of probity, it is a matter of common sense that even if there exists evidence of these allegations, they must also be of a nature that has a real and material bearing on, or of a nature that can justify an inference of, a real risk of dissipation of assets (see Bouvier, Yves Charles Edgar And Another v. Accent Delight International Ltd And Another And Another Appeal [2015] SGCA 45; [2015] 5 SLR 558). Mere allegations of these nature, even with some evidence in support of these allegations, would not per se warrant a presumption or inference that there exists a real risk of dissipation of assets.”

The above decision was affirmed by the Federal Court.

I will explain in the following paragraphs why I find that this is not a suitable case for the orders sought by the Defendant. The crux of the decision of this Court in not allowing the said application lies on the Defendant’s failure to prove that the assets of the Plaintiff will be dissipated to prevent satisfaction of any potential judgment that may be entered against the Plaintiffs.

(I) The Defendant has failed to show that there is a real risk that the Plaintiffs’ assets will be dissipated or moved before judgment could be satisfied.

I opine that whether there is a real risk that the Plaintiffs may remove his assets before judgment could be satisfied is an issue that has to be determined based on the facts and evidence before Court. The term “real risk of dissipation of assets” is a term of art that must be determined by a Court of law based on the facts and evidence before it. No one single formula could be utilized, and it is impossible to formulate any simple rule that could be used for every case.

This appears in the judgment of the English Court in Les Ambassadeurs Club Limited v Songbo Yu [2021] EWCA 1310. In that case, Lady Justice Andrew held: - “The focus should be on whether, on the facts and circumstances of the particular case, the evidence adduced before the court objectively demonstrates a risk of unjustified dissipation which is sufficient in all the circumstances to make it just and convenient to grant a freezing injunction. Plainly a risk which is theoretical, fanciful or insignificant will not meet that threshold; but the judge should be addressing the question whether he or she is satisfied that the alleged risk is real, and that does not require any comparative exercise to be carried out, or the attaching of some other label to a risk which falls short of the threshold. Judges and practitioners have been addressing the test for many years without the need for such a gloss. I would not wish it to be suggested that henceforth, in every case in which a freezing order is sought, in order to avoid being criticized for making an error of law, the Judge must specifically turn his or her mind to the question whether the risk of dissipation is real "rather than fanciful".

The Defendant’s allegation as to the existence of the real risk that the Plaintiffs will dissipate their assets appears at (i) paragraphs 23 to 29 of the Defendant’s affidavit in support affirmed on 12-2-2025, (ii) paragraphs 8, 15, 16, 17, 18 to 31 of the Defendant’s affidavit affirmed on 10-3-2025 and (iii) paragraphs 9 to 15 of the affidavit affirmed on 24-3-2025.

I summarize the grounds raised by the Defendant that it alleges justifies the existence of a real risk that the Plaintiffs intends to dissipate their assets to defeat the judgment, if any, obtained against them: -

That the Plaintiffs intends to sell a piece of land held by the 1st Plaintiff.

(ii) That the 1st Plaintiff has not filed its statement of account since 2020 and there is a real risk that it is impecunious.

(iii) That the guarantors to the agreement are foreigners.

(iv) That the 1st Plaintiff has refused to inform or notify the Defendant of the assets the 1st Plaintiff’s holds.

That the Plaintiffs have not acted honestly and this Court should make an inference that they are planning to dissipate the 1st Plaintiff’s assets to defeat any potential judgment.

I find that the Defendant has failed to prove the existence of any evidence or facts that enables this Court to make an inference that there is a real danger that the Plaintiffs are dissipating their assets to defeat any potential judgment obtained by the Defendant.

Firstly, in the affidavit in support filed by the Defendant, it stresses that there is an inference that the Plaintiffs intends to sale the land known as HS(D) 536000, No. PT: PTB 23278, Bandar Johor Bahru, Daerah Johor Bahru, Johor due to the existence of an alleged caveat entered by Wong Woon Phang on 7-1-2025. It is suggested by the Defendant that there will be a proposed transaction concerning the said land to Wong Woon Phang.

I do note that the search undertaken with the land office concerning the property shows that the land is still charged to OSK Capital Berhad. The land search has not shown that the charge was discharged by OSK despite what was said by the Plaintiffs’ Counsel when queried by this Court. Therefore, I will have to assume, based on the results of the search, that the said charge remains.

Therefore, I do not find any evidence that the Plaintiffs intend to dissipate any of its assets for the purpose of defeating any judgment that may be entered against it. Even if I were to assume that the Plaintiffs intend or will sell the land at issue, this does not mean that there is a real risk of dissipation.

I have also considered the Originating Summons filed by the 1st Plaintiff and the affidavit affirmed by Pang Yee Teck to remove the caveat by Yap Kian Hoong. I accept that the 1st Plaintiff did state that the company intends to sell the land and is unable to do so due to the existence of the caveat filed. In the same affidavit, the 1st Plaintiff did state that it had not dealing with the caveator and that he had no legal interest or beneficial interest in the assets/ land owned by the 1st Plaintiff that are recognized by law.

At this stage, I find the 1st Plaintiff is entitled to deal with its assets as it wishes unless the Defendant is able to show that the purpose of the said disposition is to prevent the fruits of the Defendant’s litigation. The mere fact that the 1st Plaintiff wishes to sell its land does not justify the Mareva Injunction sought by the Defendant.

In its attempt to persuade this Court of the existence of the alleged serious risk, the Defendant also suggests that the 1st Plaintiff is impecunious and will be unable to fulfill any of its obligations to the Defendant. Counsel claims that this could be seen from the accounts filed by the 1st Plaintiff which show that its liability outweighs the assets owned by the company. Counsel for the Defendant also suggests that the 1st Plaintiff failed to file its statutory accounts as required under the Companies Act and the last that this was done was in the year 2020.

The Defendant also points out that the Plaintiffs were also not forthcoming when queried by the Defendant’s solicitors as to the status of the assets owned by the Plaintiffs in particular the land held by the 1st Plaintiff as seen in the letter dated 22-1-2025.

Based on the above, the Defendant’s Counsel suggests that the accumulation of the above factors suggests the existence of a strong case that the 1st Plaintiff is impecunious and that the attempt to sell the property is intended to prevent the Defendant from the fruits of its litigation.

I find that the facts and the claim as they appear in the statement of claim, the defence and the affidavits filed do not support the Defendant’s contention. In the cases where such inferences have been drawn, the Courts decided to make the leap and impute the finding of lack of bona fides on the party against whom the Mareva Injunction is ordered against where there are clear allegations of wrongdoing and where sufficient prima facie evidence of such wrongdoing has been proven in the affidavits filed. Under those circumstances, could an inference of bad faith be attributed to a litigant who refuses to disclose its assets.

This can be seen in SRC International Sdn Bhd v Dato’ Seri Mohd Najib [2022] 5 CLJ 949, Les Ambassadeurs Club Limited v Songbo Yu [2021] EWCA 1310, Lakatamia Shipping Company Ltd v Toshiko Morimoto [2019] EWCA Civ 2203, Convoy Collateral Limited v Cho Kwai Chee [2020] HKCA 537, Ang Chee Huat v Thomas Joseph Engelbach [1995] 2 CLJ 893, and The Customs and Tax Administration of The Kingdom of Denmark v Saling Capital Ltd & Ors and other appeals [2022] 1 MLJ 316 .

In this case, the Plaintiffs alleges that the transactions that the 1st Plaintiff entered with the Defendant were a sham to hide in fact was a money-lending transaction. The Plaintiffs alleges that the Defendant cannot enforce the agreement as it is not a licensed entity. The Defendant on the other hand allege otherwise and says that this is merely a ploy by the Plaintiffs to renege on their obligations.

Under those circumstances, I do not find that the claim as it appears in the Statement of Claim, the Defence and based on the affidavits filed are without any merit. The Plaintiffs have put forth issues that could only be decided at trial. It is not a claim that should be dismissed forthwith even under Order 18 rule 19 and the issues of facts could only be determined at trial.

This Court must scrutinize with care whether what has been alleged to be the dishonesty on the part of the Plaintiffs has been proven with sufficient cogent evidence and that such an inference is justified in the circumstances of this case. I find that the Defendant falls short of proving that the facts justify such inference.

Therefore, silence on the part of the Plaintiffs in not disclosing their assets to the Defendant, based on the circumstances of this case, does not raise any form of inference of any bad faith on the part of the Plaintiffs. I find that they are merely acting within their rights and the Defendant does not have any right to have the Plaintiff disclose all of their assets at this stage. The evidence disclosed at this stage does not merit any finding of dishonesty or bad faith on the part of the Plaintiffs. After all, the merits of the claim and defence must be determined at trial.

I do not find that the above factors, as disclosed in the affidavits and the pleadings, prove that the Plaintiffs are dissipating or attempting to dissipate their assets. I do not find the existence of a real risk that the Plaintiffs are shielding themselves against any claim by the Defendant. The mere fact that the Plaintiffs may sell its land, without any real evidence of such transactions being undertaken and how the proceeds of sale will be utilized, falls far short of the test required for the orders sought by the Defendant. I also, as stated earlier, do not find any bad faith on the part of the Plaintiffs. They have submitted to the jurisdiction of this Court to seek the remedies claimed against the Defendant.

For the above reasons, I find that the application in Enclosure 109 should be dismissed by this Court.

No Claim To be Enforced Against the Plaintiff

In this case, the Defendant did not pursue any Counterclaim against the Plaintiffs. The Defendant is only seeking an order that the Plaintiffs claim to be dismissed. It did not seek an order that the sums that are allegedly due and payable by the 1st Plaintiff or any of the other Plaintiffs be paid in full.

Therefore, in essence the Defendant is seeking to securitize the costs of this litigation by way of a Mareva Order. The Defendant should have then sought security for costs against the Plaintiffs if it believes that there are sufficient grounds to do so.

In the circumstances, I find that the Defendant has also failed to prove the existence of a good arguable claim that it may have against the Plaintiffs. As it stands, the Defendant is only defending the claim filed by the Plaintiff and there is no cause of action put forth or any order sought against the Plaintiffs.

In other words, even if they are successful in defending the Plaintiffs’ claim, the Defendant would only be entitled to an order that the claim be dismissed and costs. As such, the most appropriate route that should have been taken by the Defendant is to seek security for costs and not for a Mareva Injunction.

The Defendant itself is impecunious

Finally, much was stated by the Defendant concerning the financial position of the Plaintiffs.

However, I also note that the same can be said of the Defendant. As of 30-6-2022, the Defendant incurred losses to the sum of RM 18.8 million and only had 1.8 million in cash and cash equivalents. As such, the undertaking as to damages given by the Defendant may be worthless and not enforceable if the Plaintiffs are successful.

Therefore, the Defendant is not in a position to make such aspersions against the Plaintiff. Under such circumstances, the balance of convenience tilts heavily in favor of the Plaintiffs. C. Decision of this Court

For the aforesaid reasons, I dismissed the application in Enclosure 109. Dated 19th March 2025 Dato’ Indera Mohd Arief Emran bin Arifin Judge High Court of Malaya at Kuala Lumpur NCC5 Counsel Rishwant Singh, Mohd Irwan Ismail and Yap Jing Wen for the Plaintiff Messrs. Cecil Abraham & Partners Advocates & Solicitors Dato Arthur Wang Ming Way, Siow Young Kei and Nurufarhina Ab Rahim for the Defendant Messrs. Arthur Wang, Lian & Associates