Yong Yeh Fong v William Cheong Wai Lun (WA-22NCC-219-04/2025)

YONG YEH FONG

CHAN KWANG HAU

KEE JOO EE

TEE WEI KANG

FOO KHAR YI

CHONG SIAU XIAN

HONG TEIN HWEE

TAN ZHENG HAO

KELVIN TING CHENG TAT

YANG WEN BIN

LIEW PUA KANG

CHEN XIAO HUI

SOO CHING GUAN

NG KUAN YEONG

KANNY CHAN WEE SIONG

ELILIA SEOW

TEOH JIE SHENG

LOI WEI LUN

LIM JIN HOWE

HON FANG TING

HON JING KANG

HON SHUN XIN (NRIC: 031121-01-1657) …PLAINTIF-PLAINTIF DAN S/N H/fsvAxl9ky/7UYZInj5rQ WILLIAM CHEONG WAI LUN (NRIC : 851124-14-5531) …DEFENDAN GROUNDS OF JUDGMENT (Enclosure 5)

The Plaintiffs in this action are individuals who had invested a total sum of USD328,445.87 between January 2022 and September 2023 through the 19th Plaintiff, Lim Jin Howe (“P19”), who was the Defendant’s point of contact. The Defendant had allegedly made fraudulent misrepresentations to P19 that induced the Plaintiffs to invest money in an investment scheme. By 28-9-2023, the investment had suffered a total loss.

The Plaintiffs filed this suit on 14-4-2025 and an ex-parte application for freezing orders against the Defendant on 15-5- 2025 (“Enclosure 5”). The writ was only served on 14-10-2025 by substituted service. An ex-parte order in terms of Enclosure 5 was granted on 8-9-2025 but was not served in time according to Order 29 Rule 1(2BA) of the Rules of Court 2012 and lapsed after 21 days. It was also set aside by consent of the parties after the Defendant entered an appearance on 23- 10-2025.

The Plaintiffs pursued Enclosure 5 on an inter-partes basis and after hearing counsel on 16-12-2025, this Court allowed Enclosure 5 until trial or further order, essentially ordering the freezing of the Defendant’s assets up to USD400,000.00 in and outside the jurisdiction of this Court, subject to the following allowances: a) any sums for the ordinary conduct of business with prior disclosure of particulars of such expenses; b) RM5,000.00 for ordinary living expenses and legal fees; and the filing of an affidavit to disclose all his assets within 7 days (“Mareva Injunction”). The Defendant has appealed to the Court of Appeal against the Order made on 16-12-2025. Analysis and findings

The purpose of the Mareva Injunction, so named after such injunctions were given in Mareva Compania Naviera SA v. International Bulkcarriers SA [1980] 1 All ER 213 is to preserve the Defendant’s assets and prevent him from dissipating them before judgment. The principles that apply when considering whether a Court should grant such orders are well-established and need not be restated here (S&F International Ltd v Trans-con Engineering Sdn Bhd [1985] CLJ (Rep) 280 (“S&F International”)).

In opposing the grant of the orders sought in Enclosure 5, the Defendant referred to the elements to be proved and argued that: a) The Plaintiffs have no good arguable case against the Defendant; b) The Plaintiffs failed to produce evidence of his assets within the jurisdiction; and c) The Plaintiffs failed to demonstrate that there is any real risk of dissipation of assets by the Defendant. The Defendant was also unsatisfied that the Plaintiffs’ undertaking as to damages had any value. Merits of claim

The investment scheme in this case involved the Plaintiffs channeling money into the Defendant’s hand for forex trading. The trading was operated on an online forex trading platform called “XM Forex Malaysia” (“Investment Scheme”). The allegation is that the Defendant had approached P19 and induced participation in the Investment Scheme by his representations about how profits could be made.

It is contended that the Defendant made claims, with reference to transcripts of a presentation by the Defendant and screenshots of trading accounts that he referred to as “my client’s accounts,” that: S/N H/fsvAxl9ky/7UYZInj5rQ a) the trading accounts utilize his “proprietary forex-trading technology” that executes the trades; b) his technology is actively being used by many large funds; c) it would generate acceptable and controllable expected monthly profits of around 10%, the risk would be very low, even safe, if a return of 5-10% was targeted and that 10- 15% monthly profit is achievable with sufficient capital.

This Court also sighted evidence that P19 confronted the Defendant through WhatsApp, questioning the reliability of the technology after observing these irregularities and mounting losses. The Defendant gave various assurances, including the assurance that the trading process was not human-controlled but based on system decisions, with a 30% cut-loss protection mechanism in place.

It is further contended that the Defendant misrepresented the Investment Scheme to the group of Plaintiffs that P19 represented and did so dishonestly i.e. willfully with the knowledge that they were untrue, or recklessly, without caring whether they were true or not (Derry v. Peek [1889] 14 App Cas 337).

The Defendant did not deny the adduced WhatsApp messages and the transcripts and translations thereof. The Defendant also adduced additional WhatsApp messages and translations S/N H/fsvAxl9ky/7UYZInj5rQ that showed him discussing the performance of the trading accounts with P19. The main thrust of the Defence is that: a) P19 is married to the 20th Plaintiff who has expertise and experience in forex trading, and undertook their own independent assessment of the Investment Scheme; b) Any representations made to the other Plaintiffs (other than P19) were made by P19 and therefore, the Defendant cannot be held liable for P19’s representations; and c) The operation of “XM Forex Malaysia” in Malaysia was unlicensed, unregulated and illegal, the Plaintiffs knowingly participated in an illegal act and should not be assisted.

Generally, this Court found the Defendant’s stance on the Plaintiffs’ claims to be incongruent with the evidence of the representations that he made to P19 about the Investment Scheme. His subsequent messages did not dilute the substance of the claim about the representations he made about the Investment Scheme i.e. that there was a self-executing trading technology employed with a cut-loss mechanism.

The Defendant’s representations and responses to queries were documented in recorded voice and text messages and were not denied or disclaimed by the Defendant. It was evident to this Court from reading these messages that the Defendant: S/N H/fsvAxl9ky/7UYZInj5rQ a) promoted and portrayed the technology as affording investors a safe self-executing trading platform; b) was aware P19 had collected and channeled such investment capital from other “members/investors” to him; c) gave an appearance that he had agency in the control of the “system” by claiming to be in communication with the “technical team” over queries; and d) gave rather convincing explanations in response to P19’s expressed concerns.

Now, the Defendant substantially admitted that the representations he made were false i.e. the system or technology to manage the trades did not perform as he claimed. The positive legal defence pleaded is that the Plaintiffs’ claim is unenforceable, grounded in the alleged illegality of forex trading on an unregulated financial platform.

This Court was not persuaded at this stage that the public policy principle of ex dolo malo non oritur action applies. Even if XM Forex Malaysia is unlicensed and hence an imprudent platform to use for trading, the Plaintiffs’ claim is based on the Defendant’s representations about the Investment Scheme and the technology purportedly deployed to manage the investments on the said platform. The Plaintiffs had no independent trading accounts.

The losses of each of the Plaintiffs who invested monies and whether they too relied on the Defendant’s misrepresentations and the Defendant’s state of mind in his interactions with P19 are matters for trial, but considering the evidence at this stage, the Plaintiffs’ claim is more than capable of serious argument, following the test in S&F International. Assets in the jurisdiction

The Defendant argued that there is no evidence he has any assets, and that the Plaintiff has therefore not proved this element for a Mareva injunction to lie. This point can be briefly addressed. As observed in Lien Hoe Sawmill Lien Hoe Sawmill Co. Sdn Bhd v Yap Sing Hock & Ors [1992] 2 CLJ (Rep) 727: “In my opinion what the plaintiff is required to do is to give some grounds for believing that the defendants have assets within jurisdiction. In Third Chandris Corp. v. Unimarine SA. [1979] 1m WB 645, Lord Denning MR in his judgment at p. 668 said: The plaintiff should give some grounds for believing that the defendant has assets here ... In most cases the plaintiff will not know the extent of the assets. He will only have indications of them. The existence of a bank account in England is enough, whether it is an overdraft or not ...”

In this case, the Defendant is a Malaysian citizen with an identity card and appears to be a functional member of society. He did not state under oath in his affidavit that he has no assets, and there is altogether no suggestion of impecuniosity on his part. It is also significant that on 4-10-2023, the Defendant proposed a repayment plan for the Plaintiffs’ losses and acted on the agreement by paying RM100,000.00. These are indications that he has assets. Risk of dissipation of assets

The Defendant also argued that there is no evidence of any risk of dissipation of assets by the Defendant. On this point, there is very seldom direct evidence of the dissipation of assets by a litigant. Dissipation of assets to defeat a potential judgment is, by nature, something that is typically done surreptitiously. Still, the authorities have established that solid evidence is necessary to establish facts that allow the Court to infer the risk.

As to what those facts may include, the Court of Appeal in Ang Chee Huat v. Thomas Joseph Engelbach [1995] 2 CLJ 893 cited the following observations of Peh Swee Chin J in Petowa Jaya Sdn. Bhd. v. Binaan Nasional Sdn. Bhd. [1988] 2 MLJ 261: “The second condition laid down by Mustill J., duly approved by the Federal Court, was also satisfied, i.e. there S/N H/fsvAxl9ky/7UYZInj5rQ was solid evidence that the probity of the defendant could not be relied on. The undisputed detention and use of the plaintiff’s equipment, without the consent of plaintiff, and above all, the undisputed detention of 98% of progress payments No. 22 and 23, without paying the same to the plaintiff, would indicate that the probity of the defendant could not be relied on with regard to the agreed retention sum with which the Mareva injunction was concerned; in other words, the defendant would, far more probably than not, dissipate the agreed retaliation sum in question without paying it to the plaintiff, or dealing with it not for the purpose that was intended. The risk of dissipation was not just a mere possibility, but almost a certainty.” [Emphasis added]

In this case, this Court also found sufficient objective evidence facts from which to infer dishonest conduct and a lack of probity on the part of the Defendant: a) he misrepresented the “technology” deployed to control execution of trades with the Plaintiffs’ money; b) he accepted money from the Plaintiffs to trade in what he now describes as an unlicensed and illegal trading platform; c) after the Plaintiffs’ entire investment was extinguished, he reneged on a promise to repay the losses; and d) he became unresponsive to the Plaintiffs until the writ in this action was served by substituted service.

The complete reversal of stance by the Defendant about the legitimacy of the Investment Scheme that he promoted and that he now refers to as an “illegal get rich quick scheme” was jarring, and was a major factor that gave rise to the inference that the Defendant’s probity is unreliable. His conduct justified the inference that he would, far more probably than not, conceal his assets than make them available to pay to the Plaintiffs. Sufficiency of undertaking as to damages

The final point argued by the Defendant against the grant of the Mareva Injunction is that the Plaintiffs’ undertaking as to damages is not supported by evidence of the Plaintiffs’ ability to meet it, relying on Cheah Theam Swee & Anor v Overseas Union Bank Ltd & Ors [1989] 1 MLJ 426 (“Cheah Theam Swee”).

The Court in Cheah Theam Swee did not lay down a general rule that a party must prove the sufficiency of its undertaking as to damages before the injunction is granted. The undertaking is weighed on the balance of convenience and may even be dispensed with where the injustice to the plaintiff is so manifest (Keet Gerald Francis Noel John v Mohd Noor Bin Abdullah & Ors [1995] 1 MLJ 193).

The same consideration applies in evaluating whether to grant a Mareva Injunction on the strength of the undertaking given to Court by the applicant. In the exercise of its discretion, the Court will not generally deny a plaintiff a Mareva Injunction to which he would otherwise be entitled simply because his undertaking has little or no value, having regard to what is the essential justice of the case (Allen v Jambo Ltd [1980] 1 WLR 1252).

In a challenge to the sufficiency of the Plaintiffs’ undertaking as to damages, some security or fortification might be ordered and in such circumstances, the burden would be on the defendant to demonstrate a risk of loss that caused by the injunction and why the undertaking may not cover the loss. But for a bare averment that the Plaintiffs’ undertaking is of no value in this case, the Defendant offered no factual basis to merit further argument on the sufficiency of the undertaking.

Moreover, the Mareva Injunction contains the procedural safeguards required in such orders, including allowances for the Defendant’s business, ordinary living expenses and legal representation. There were also no arguments by the Defendant about the sufficiency of these allowances.

For the reasons set out above, this Court allowed the Mareva Injunction in Enclosure 5 with costs of RM5,000.00. Bertarikh: 20 Januari 2026 ELAINE YAP CHIN GAIK PESURUHJAYA KEHAKIMAN MAHKAMAH TINGGI MALAYA KUALA LUMPUR Peguam