Otm Solution Sdn Bhd v Azlan Bin Muhamad (BA-24NCC-161-12/2023)

AZLAN BIN MUHAMAD (No. K/P: 730730-01-5867)

PERENCANA DINGIN SDN BHD (No. Syarikat: 1216560-X)

JANA ANUGERAH SDN BHD (No. Syarikat: 1197802-X)

SYUKOR BIN MD SAYUTI (No. K/P: 730513-01-5537)

PRIDE OFFSHORE SDN BHD (No. Syarikat: 972903-U)

MC MARINE CONSTRUCTION SDN BHD (No. Syarikat: 1350042-A)

MOHD HALIMI BIN ABD RAHMAN (No. K/P: 731009-10-5773) …DEFENDAN-DEFENDAN JUDGMENT Introduction [1] On the 22nd of March, 2024, I heard the applications in Enclosure 4 (ex-parte application by the Plaintiff for a number of injunctive orders against the Defendants) and Enclosure 29 (application by the Defendants to set aside Enclosure 4). After considering the submissions raised and the authorities relied by the parties, this Court allowed the application in Enclosure 4 and dismissed Enclosure 29 with costs of RM8,000, subject to allocatur. [2] The Defendants have appealed against this Court’s decision in allowing the Plaintiff’s application for an interim injunction pending the disposal of the main action and in dismissing the Defendants’ application to set aside the interim injunction. [3] The grounds for my decision are set out below. The Overarching Issue [4] The principal issue in this interlocutory application is whether the requirements for the injunctive reliefs sought by the Plaintiff against the Defendants have been satisfied. Prior Proceedings [5] It is essential to outline the proceedings prior to the hearing of Enclosure 4 and Enclosure 29. This will provide a comprehensive overview of the events and hearings that took place before the 22nd of March, 2024 The Ex Parte Hearing on the 30th of January, 2024 [6] At this ex parte hearing of Enclosure 4, the Plaintiff put forward its submissions to make its case for the granting of the numerous injunctive orders sought. [7] As this was an ex parte application, the Plaintiff was queried by this Court as to, inter alia, the possible grounds or defences that may be raised by the Defendants and on any facts which may lead the Court not to grant the application ex parte or at all, to which the Plaintiff responded that it did not think that there would be any valid grounds or defences that could be raised by the Defendants or the existence of any facts that may lead this Court not to allow its application. [8] After a careful examination of the Plaintiff’s affidavit in support of its application and a consideration of the pre-requisites for the granting of the interim reliefs, this Court made an order in terms as per prayers (1) – (6) in Enclosure 4 with costs in the cause. The injunctive orders were as follows: 1) Suatu perintah injunksi bahawa Defendan-Defendan Pertama dan Ke-2, iaitu AZLAN BIN MUHAMAD dan PERENCANA DINGIN SDN BHD, dan/atau mana-mana bank atau institusi Kewangan di Malaysia yang mempunyai sebarang urusan dengan Defendan-Defendan tersebut DIHALANG DAN DITEGAH, samada dengan sendirinya atau melalui pengarah-pengarah, pengkhidmat-pengkhidmat, pegawai-pegawai, agen-agen atau mana-mana di antara mereka atau sebaliknya, daripada menggunakan, mengeluarkan, membayar, mendebitkan, mencagar, melupuskan atau dengan apa-apa cara yang lain sekalipun berurusan dengan sejumlah wang sehingga RM1,919,396.35 yang disimpan ke dalam dan berkedudukan kredit di dalam akaun-akaun bank kepada Defendan-Defendan tersebut dengan bank-bank dan/atau institusi-institusi kewangan ini; 2) Suatu perintah injunksi bahawa Defendan-Defendan Pertama dan Ke-3, iaitu AZLAN BIN MUHAMAD dan JANA ANUGERAH SDN BHD, dan/atau mana-mana bank atau institusi kewangan di Malaysia yang mempunyai sebarang urusan dengan Defendan-Defendan tersebut DIHALANG DAN DITEGAH, samada dengan sendirinya atau melalui pengarah-pengarah, pengkhidmat-pengkhidmat, pegawai-pegawai, agen-agen atau mana-mana di antara mereka atau sebaliknya, daripada menggunakan, mengeluarkan, membayar, mendebitkan, mencagar, melupuskan atau dengan apa-apa cara yang lain sekalipun berurusan dengan sejumlah wang sehingga RM478,497.90 yang disimpan ke dalam dan berkedudukan kredit di dalam akaun-akaun bank kepada Defendan-Defendan tersebut dengan bank-bank dan/atau institusi-institusi kewangan ini; 3) Suatu perintah injunksi bahawa Defendan-Defendan Pertama dan Ke-4, iaitu AZLAN BIN MUHAMAD dan SYUKOR BIN MD SAYUTI, dan/atau mana-mana bank atau institusi kKewangan di Malaysia yang mempunyai sebarang urusan dengan Defendan-Defendan tersebut DIHALANG DAN DITEGAH, samada dengan sendirinya atau melalui pengarah-pengarah, pengkhidmat-pengkhidmat, pegawai-pegawai, agen-agen atau mana-mana di antara mereka atau sebaliknya, daripada menggunakan, mengeluarkan, membayar, mendebitkan, mencagar, melupuskan atau dengan apa-apa cara yang lain sekalipun berurusan dengan sejumlah wang sehingga RM540,153.39 yang disimpan ke dalam dan berkedudukan kredit di dalam akaun-akaun bank kepada Defendan-Defendan tersebut dengan bank-bank dan/atau institusi-institusi kewangan ini: 4) Suatu perintah injunksi bahawa Defendan-Defendan Pertama, Ke-4 dan Ke-5, iaitu AZLAN BIN MUHAMAD, SYUKOR BIN MD SAYUTI dan PRIDE OFFSHORE SDN BHD dan/atau mana-mana bank atau institusi kewangan di Malaysia yang mempunyai sebarang urusan dengan Defendan-Defendan tersebut DIHALANG DAN DITEGAH, samada dengan sendirinya atau melalui pengarah-pengarah, pengkhidmat-pengkhidmat, pegawai-pegawai, agen-agen atau mana-mana di antara mereka atau sebaliknya, daripada menggunakan, mengeluarkan, membayar, mendebitkan, mencagar, melupuskan atau dengan apa-apa cara yang lain sekalipun berurusan dengan sejumlah wang sehingga RM1,187,912.03 yang disimpan ke dalam dan berkedudukan kredit di dalam akaun-akaun bank kepada Defendan-Defendan tersebut dengan bank-bank dan/atau institusi-institusi kewangan ini; 5) Suatu perintah injunksi bahawa Defendan-Defendan Pertama, Ke-4 dan Ke-6, iaitu AZLAN BIN MUHAMAD, SYUKOR BIN MD SAYUTI dan MC MARINE CONSTRUCTION SDN BHD dan/atau mana-mana bank atau institusi kewangan di Malaysia yang mempunyai sebarang urusan dengan Defendan-Defendan tersebut DIHALANG DAN DITEGAH, samada dengan sendirinya atau melalui pengarah-pengarah, pengkhidmat-pengkhidmat, pegawai-pegawai, agen-agen atau mana-mana di antara mereka atau sebaliknya, daripada menggunakan, mengeluarkan, membayar, mendebitkan, mencagar, melupuskan atau dengan apa-apa cara yang lain sekalipun berurusan dengan sejumlah wang sehingga RM1,133,748.69 yang disimpan ke dalam dan berkedudukan kredit di dalam akaun-akaun bank kepada Defendan-Defendan tersebut dengan bank-bank dan/atau institusi-institusi kewangan ini; 6) Suatu perintah injunksi bahawa Defendan-Defendan Pertama, Ke-4 dan Ke-7, iaitu AZLAN BIN MUHAMAD, SYUKOR BIN MD SAYUTI dan MOHD HALIMI BIN ABD RAHMAN dan/atau mana-mana bank atau institusi kewangan di Malaysia yang mempunyai sebarang urusan dengan Defendan-Defendan tersebut DIHALANG DAN DITEGAH, samada dengan sendirinya atau melalui pengarah-pengarah, pengkhidmat-pengkhidmat, pegawai-pegawai, agen-agen atau mana-mana di antara mereka atau sebaliknya, daripada menggunakan, mengeluarkan, membayar, mendebitkan, mencagar, melupuskan atau dengan apa-apa cara yang lain sekalipun berurusan dengan sejumlah wang sehingga RM3,400,000.00 yang disimpan ke dalam dan berkedudukan kredit di dalam akaun-akaun bank kepada Defendan-Defendan tersebut dengan bank-bank dan/atau institusi-institusi kewangan ini; [9] In line with the mandate of the provision in Order 29 rule 1(2BA) of the Rules of Court 2012 which requires the court to fix a date to hear the application inter partes within fourteen days from the date of the order, the inter partes hearing was fixed on the 2nd of February, 2024. The Inter Partes Hearing on the 2nd of February, 2024 [10] As the ex parte order had just been served on the Defendants, this Court gave the following directions, namely, that:

The Defendants to file their Affidavits in Reply on or by the 9th of February, 2024;

The Plaintiff to file its Affidavit in Reply on or by the 23rd of February, 2024;

The Parties to file their Written Submissions on Enclosure 4 on or by the 1st of March, 2024; and

Written Submissions in Reply, if any, to be filed on or by the 15th of March, 2024. [11] An inter partes hearing for Enclosure 4 was subsequently scheduled for the 22nd of March, 2024. [12] More importantly, there was a variation to the terms as ordered on 30th January, 2024. The variations to the terms were as follows:

The 1st Defendant be allowed RM20,000 per month as living expenses until further Order;

The 2nd Defendant, a company, be allowed a sum of RM100,000 as company expenses for each of the month of February and March, 2024 only, until further Order;

The 4th Defendant be allowed RM35,000 per month as living expenses until further Order:

The 7th Defendant be allowed RM10,000 per month as living expenses until further Order; and

At the end of paragraphs 1 - 6 of the Injunction Order – the following phrase be added – "sehingga penyelesaian tindakan ini atau sehingga perintah selanjutnya". [13] An ad interim injunction based on the above terms was duly granted pending the inter partes hearing on the 22nd of March, 2024. Proceedings on the 1st of March, 2024 [14] Despite the scheduled hearing of Enclosure 4 on March 22, 2024, the Defendants filed a Notice of Application in Enclosure 29 on February 21, 2024, seeking to set aside Enclosure 4. [15] The Defendant informed this Court that their rationale for filing Enclosure 29 to set aside Enclosure 4 was due to their "accounts being frozen" and their "business activities halted." [16] At the hearing of Enclosure 29 on the 1st of March, 2024, the Plaintiff had not yet filed its Affidavit in Reply and requested permission from this Court to do so. The Defendants raised no objections to the Plaintiff submitting an Affidavit in Reply to Enclosure 29. [17] At the same hearing, the Defendants informed this Court that due to the interim injunction orders previously granted, they encountered difficulties in withdrawing the sums of money permitted by the Court and in depositing funds into the 2nd Defendant’s account. [18] This Court remarked that the issues described by the Defendants represent "practical problems" that could be easily resolved. The Plaintiff assured this Court of its cooperation in addressing these issues by communicating with the involved banks. The Defendants confirmed that the Plaintiff had been actively cooperating in this regard. [19] When this Court inquired if the issues raised in Enclosure 29 had thus been resolved, the Defendants maintained that it had not and argued that Enclosure 29 should still be heard alongside Enclosure 4. [20] The Plaintiff pointed out that the application in Enclosure 29 to set aside an ex parte order that was granted on the 30th of January, 2024 was misconceived. This is because that ex parte order had expired by virtue of Order 29 rule 1(2B) of the Rules of Court 2012. Order 29 rule 1(2B) provides that:

Unless earlier revoked or set aside, an interim injunction obtained on an ex parte application shall automatically lapse twenty-one days from the date it was granted. According to the Plaintiff, the injunction that the Defendants ought to set aside was the ad interim injunction. [21] The Defendants responded that they were entitled to pursue the relief sought in Enclosure 29 on the authorities of RIH Services (M) Sdn Bhd v Tanjung Tuan Hotel Sdn Bhd [2002] 2 AMR 2457; [2002] 3 CLJ 83; [2002] 3 MLJ 1; [2002] 1 MLRA 493 and Middy Industries Sdn Bhd & Ors v Arensi-Marley (M) Sdn Bhd [2012] 1 LNS 830; [2013] 3 MLJ 511; [2013] 3 MLRA 114. [22] This Court agreed with the Defendants and thus gave directions for the Plaintiff to file its Affidavit in Reply to Enclosure 29 on or by the 12th of March, 2024 and all Written Submissions for both Enclosures 4 and 29 to be filed on or by the 19th of March, 2024, with replies if any, to be by way of oral submissions at the hearing on the 22nd of March, 2024. The Inter Partes Hearing on the 22nd of March, 2024 The Defendants’ Contentions [23] The Defendants’ first contention was that the Plaintiff in its ex parte application had not complied with Order 29 rule 1(2A) of the Rules of Courts 2012 which provides as follow:

The affidavit in support of an application made ex parte must contain a clear and concise statement of –

the facts giving rise to the claim;

the facts giving rise to the application for interim injunction;

the facts relied on to justify the application ex parte, including details of any notice given to the other party or, if notice has not been given, the reason for not giving notice;

any answer by the other party (or which he is likely to assert) to the claim or application;

any facts which may lead the Court not to grant the application ex parte or at all;

any similar application made to another Judge, and the order made on that application; and

the precise relief sought. [24] The crux of the first ground is that the Plaintiff had not made a full and frank disclosure. [25] The Defendants relied on All Kurma Sdn Bhd v Teoh Heng Tatt [2023] 7 MLJ 303 which had set aside the ex parte on the basis of non-compliance with Order 29 rule 1(2A) as the court found in that case that the plaintiff merely regurgitated the words and phrases used in Order 29 rule 1(2) and O 29 r 1(2A) to describe the requirements, without adequately particularising them and those general assertions were insufficient for the purpose of satisfying the requirements of O 29 r 1(2A)(c) of the Rules of Court 2012. In addition, the court also found that the plaintiff failed to fulfil the requirement under O29 rule 1(2A)(d) which required the plaintiff to state what the defendants would or likely to say to oppose the Mareva injunction application. [26] The authorities relied by the Defendants to support their full and frank disclosure ground include Creative Furnishing Sdn Bhd v Wong Koi [1989] 2 CLJ 93; [1989] 2 MLJ 153; [1989] 1 MLRA 132 and Kosma Palm Oil Mill Sdn Bhd & Ors v Koperasi Serbausaha Makmur [2004] 1 AMR 417; [2004] 1 CLJ 239; [2004] 1 MLJ 316; [2003] 2 MLRA 268. [27] Second, the Defendants also alleged that the Plaintiff in its ex parte application did not disclose any reason of urgency to justify the ex parte application. On this ground, the Defendants relied on Lim Hean Pin v Thean Seng Co Sdn Bhd [1992] 2 CLJ 828; [1992] 2 MLJ 10; [1992] 2 MLRH 70 and Digital Tempo Sdn Bhd v Pengangkutan Awam Putrajaya Travel & Tours Sdn Bhd [2020] CLJU 1222; [2021] 8 MLJ 55; [2020] MLRHU 1128. [28] The Defendants then alluded to the elements that must be fulfilled for the granting of a Mareva Injunction, as stated in Aspatra Sdn Bhd & Ors v Bank Bumiputra (M) Bhd & Anor [1987] CLJ Rep 50; [1988] 1 MLJ 97; [1987] 1 MLRA198, namely:

The applicant must show it has a good arguable case on a substantive claim;

The respondent has assets within the jurisdiction;

There is a real risk of dissipation of assets or their removal from the jurisdiction unless restrained by the court; and

The balance of convenience lies in favour of granting the injunction. [29] The Defendants argued that the Plaintiff failed to establish the first three elements and the balance of convenience lies in favour of not granting the injunction. [30] The fourth ground raised by the Defendants is indeed compelling. The allegation advanced by the Defendants was that the Plaintiff has “changed its direction to apply for “proprietary injunction” and this amounted to an attempt to mislead the Court as the application made under Enclosure 4 herein clearly made for Mareva injunction”. [31] The effectiveness of the undertaking as to damages forms the fifth ground of the Defendants’ case. This argument is premised on the fact that the Plaintiff, being a wound-up company, is "not eligible to provide any undertaking." The Plaintiff’s Arguments [32] In response to the above, the main thrust of the Plaintiff case is that there exist bona fide serious issues to be tried in this case and the interest of justice lies in granting the ex parte injunction. [33] To rebut the supposedly lack of full and frank disclosure ground, the Plaintiff submitted that that ground was baseless and devoid of merit. The Plaintiff underscored the fact that it has made full and frank disclosure of all relevant information and documents that were in the possession of the Liquidators acting on behalf of the Plaintiff at the time of making the ex parte application for injunctive relief dated the 18th of January 2024. [34] On the Defendants’ allegation that the Plaintiff failed to plead or state the urgency or risk of dissipation of assets in obtaining the said ex parte Order, this was outright denied by the Plaintiff. The Plaintiff alluded to its Affidavit at paragraph 11 of Enclosure 5 to support its contention. [35] The Plaintiff also raised the point or issue relating to proprietary injunction in its submission, asserting that: In any event, it is submitted that the injunctive relief sought by the Plaintiff was in the nature of a “proprietary injunction” in which there is no requirement for proof of any dissipation of asset because the asset sought to be injuncted belonged beneficially and legally to the Plaintiff. The Plaintiff then proceeded to cite Zschimmer & Schwarz GmbH & Co KG Chemische Fabriken v Persons Unknown & Anor [2021] AMEJ 0876; [2021] 4 CLJ 446; [2021] 7 MLJ 178; [2020] MLRHU 1821 where the distinction between a Mareva Injunction and a Proprietary Injunction was explained in that case. [36] The proprietary injunction point was challenged by the Defendants as never a part of the relief sought in Enclosure 4 (see paragraph [30] above). [37] Last but not least, the Plaintiff’s reply to the Defendants’ argument on their Undertaking as to Damages ground were as follows:

the inability of the Plaintiff to provide valuable Undertaking was directly caused by the Defendants in siphoning off more than RM8.0 million of the Plaintiff’s money from its bank accounts. It therefore does not lie in the mouth of the Defendants to claim that the Plaintiff’s Undertaking has no value when it was the one who has directly caused it;

in any event, it is submitted that the Plaintiff is essentially seeking for a proprietary injunction (to recover money that was legally and beneficially belonged to the Plaintiff); and

in the interest of justice, the Plaintiff should not be barred from seeking injunctive relief merely because it was financially incapacitated as a result of the wrongful actions of its former directors and officers. The Decision of this Court [38] Concerning the matter of whether the Plaintiff adhered to the requirements of full and frank disclosure when applying for the injunctive reliefs in Enclosure 4, this Court finds that the Plaintiff has disclosed all relevant information, considering the circumstances of the case. [39] As for the related question of whether there has been due compliance with the provisions of Order 29 rule 1(2A) of the Rules of Courts 2012, this Court holds the considered view that there were no breaches of these provisions. The cases cited by the Defendants are not applicable to the current case. The examination of compliance with Order 29 rule 1(2A) is case-specific, and the evidence presented to this Court supports the conclusion that the Plaintiff has complied with these provisions. [40] The Plaintiff alluded to the legal principles relevant to an application for interlocutory injunction, as well as the decision of the Court of Appeal in Keet Gerald Francis Noel John v Mohd Noor @ Harun bin Abdullah [1995] 2 AMR 373; [1995] 1 CLJ 293; [1995] 1 MLJ 193; [1994] 1 MLRA

This Court would like to reiterate that are distinct differences between the elements required for the granting of an interlocutory injunction and those necessary for other specific types of injunctions, such as a Mareva Injunction or a Proprietary Injunction. [41] It is worth reiterating that the courts follow a systematic series of questions when evaluating an application for an interlocutory injunction. The initial question is whether there exists a serious question to be tried. If the answer is negative, the application is immediately dismissed. If affirmative, the court moves to the next question: whether the applicant would be adequately compensated by damages if the interlocutory injunction is not granted, or alternatively, whether the applicant would suffer irreparable harm. Should the court determine that damages are an adequate remedy or that no irreparable harm would occur, the application is dismissed. Conversely, if damages are not sufficient or irreparable harm is likely, the court then examines the position of the respondent. This involves assessing whether the respondent could be adequately compensated by damages or might suffer irreparable harm should it later be determined that the interlocutory injunction was wrongly granted. If the respondent would not suffer significantly or could be compensated, the inquiry concludes, and the injunction is typically granted. However, if it emerges that both parties could suffer irreparable harm, whether the injunction is granted or denied, the court then undertakes a balance of convenience test. Should this balance not decidedly favor either party, the status quo is maintained, meaning no interlocutory injunction is issued. This methodical approach is consistently upheld by our courts. [42] Nevertheless, the standard framework outlined above does not directly apply to the current case, which concerns two particular types of interlocutory injunctions: the Mareva injunction and the Proprietary injunction. The criteria and considerations specific to a Mareva injunction are notably different, requiring a separate and distinct analytical approach. [43] In considering an application for a Mareva injunction (also known as a freezing order), an applicant is required to show that first, it has a good arguable case on a substantive claim; second, the respondent has assets within the jurisdiction; third, the balance of convenience lies in favour of granting the injunction; and fourth, there is a real risk of dissipation of assets or their removal from the jurisdiction. It is evident that a good arguable case requirement is a higher threshold than an application for an interlocutory injunction to restrain the commission of any allegedly wrongful act, which merely requires an applicant to establish a serious question to be tried. [44] On the other hand, when an applicant applies for a Proprietary injunction (also referred to as a proprietary freezing order) – to assert a proprietary claim over assets in the possession of the respondent – the applicant must show that first, there is a serious case to be tried as to whether the applicant is the rightful owner of the asset; second, whether damages would be an adequate remedy; and third, the balance of convenience lies in favour of granting the proprietary freezing order. [45] A Proprietary injunction is issued to preserve assets over which a claimant has a proprietary claim so that they can be turned over to the claimant if the claimant is successful in the action. There is no need to prove risk of dissipation in order to obtain a proprietary injunction, making it easier to obtain than a Mareva relief. [46] Given the significant differences outlined above, the Defendants' assertion that the Plaintiff has "changed course" by "substituting" the type of injunctive relief sought—from a Mareva injunction to a Proprietary injunction—constitutes a serious allegation that warrants careful examination by this Court. [47] Upon a perusal of the cause papers, this Court is satisfied that the nature of the relief sought by the Plaintiff is indeed proprietary in nature. In the Plaintiff’s Affidavit in Reply in Enclosure 34 at paragraph 56, the Plaintiff did aver as follows: In any event, I have been advised by the Plaintiff’s solicitors and verily believe and state that the orders obtained in this Application is in the nature of a proprietary injunction (which does not require proof that the Defendants have assets in Malaysia) as the Plaintiff is seeking to recover monies which legally and beneficially belonged to the Plaintiff and that the Defendants who have unlawfully received the said money are holding the money in trust for the benefit of the Plaintiff. Such monies were paid and transmitted to D2, D3, D5 and D6 as a result of the dishonest conduct and breach of trust committed by D1, D4 and D7. [48] This Court agrees with the Plaintiff that the freezing of the accounts is part of the Proprietary injunction sought. [49] Based on the totality of the evidence and circumstances of the present case, this Court is of the considered view that the balance of convenience lies in favour of the granting of an interim injunction until the disposal of the main action, on terms as previously agreed. [50] Enclosure 29 is dismissed with costs of RM8,000, subject to allocatur. Dated: 13 May, 2024 sgd [CHOONG YEOW CHOY] Judicial Commissioner High Court of Malaya Shah Alam Counsel: Chong Joo Tian with Siau Vui Leong for the Plaintiff (Messrs. JT Chong Assoc.) Mohd Iskandar bin Ismail with Mohamed Fadly bin Zakariya, Nur Maizatul Syakira binti Hashim and and Mohamad Nasrom bin Rashid for the Defendants (Messrs. Fadly Zakariya)