by Elvina Leong, LLB (Hons) (London), CLP
Recently, our Litigation & Construction Law Practice Group Partner, Mr. Nadesh Ganabaskaran, assisted by Mr. Raymond Kok Kai Ren, Ms. Samantha Au Yong Chi Yan and Ms. Elvina Leong, successfully obtained a Mareva Injunction at the High Court of Penang, in the tune of RM8.6 million and froze several bank accounts of the defendants. This article briefly discusses the law on Mareva Injunctions in Malaysia.
1. Mareva injunction
A Mareva injunction operates to prevent a Defendant from removing or dissipating with his assets in such a manner which deprives the Plaintiff the proceeds of his action. Tracing its origin from the English case of Mareva Compania Naviera SA v International Bulkcarriers SA The Mareva  1 All ER 213, it is now a well established feature of Malaysian law (Zainail Abidin bin Haji Abdul Rahman v Century Hotel Sdn Bhd  1 MLJ 40) that the Courts may exercise its discretion pursuant to Paragraph 6 of the Schedule to the Courts of Judicature Act 1964 to grant a Mareva injunction.
2. Conditions to be fulfilled in obtaining a Mareva injunction
It is no doubt that the effect of a Mareva injunction is draconian and intrusive in nature, with Donaldson LJ in Bank Mellat v Nikpour (1985) FSR 87 calling it “…one of the law’s two ‘nuclear’ weapons…” alongside the Anton Piller order.
Accordingly, the Plaintiff must satisfy the following conditions:
- The Plaintiff has a good arguable case;
- The Defendant has assets within jurisdiction; and
- There is a real risk that the Defendant might dissipate with or remove the assets.
(i) A good arguable case
The Plaintiff needs to satisfy the Court that he has a valid cause of action against the Defendant. It is well settled law that the Plaintiff is not required to show that that he has a strong prima facie case or that his case is so strong, it warrants a summary judgment (Biasamas Sdn Bhd v Kan Yan Heng  4 CLJ 754). It is sufficient to establish that the Plaintiff stands a fair chance in obtaining judgment against the Defendant.
(ii) The Defendant has assets within jurisdiction
This is more often than not a question of fact to be resolved by a trier of facts based on evidence put forth. The Courts have in instances of fraud or where in the interest of justice even went to the extent of lifting the corporate veil of these entities and found the assets of these entities to be regarded as the assets of the Defendant.
Further, the Courts also have the jurisdiction to grant an order for the discovery of documents or for interrogatories in aid of the Mareva injunction against the Defendant for the disclosure of his assets (Bank Bumiputera Malaysia Bhd & Anor v Lorrain Osmain & Ors  2 MLJ 236), so as to not render the Mareva a futile effort.
(iii) Risk of dissipation or removal of assets
“Are there facts from which the court, considering the matter in perspective as prudent sensible man, can properly infer a danger that the Defendant will deal with his assets such that he would have no assets within the jurisdiction to satisfy any debt?” (Third Chandris Shipping Corporation & Ors v Unimarine SA  2 All ER 979).
In ascertaining whether there is a risk of dissipation of assets, the Defendant’s previous actions which shows that his probity is not to relied upon is a highly relevant factor. The Defendant’s shoddy corporate structure, the dishonest conducts of the Defendant which arose from breach of fiduciary or statutory duties or even unauthorized withdrawal of monies from the account, have previously led the Courts in construing that there’s a risk the Defendant will be disposing his assets to frustrate the Plaintiff’s judgment.
3. A balancing act
Litigants should always remember the underlying objectives and polices behind the grant of a Mareva injunction. It is an “…equitable relief that is granted to ensure that the course of justice is not thwarted…court should carefully weigh the balance of justice to ensure that any order it makes or any relief it grants in the exercise of its Mareva jurisdiction is not used as an instrument of oppression…” (Motor Sport International Ltd & Ors v Delcont (M) Sdn Bhd  5 MLJ 51). As such, the Courts have to strike a balance between ensuring the Plaintiff is not deprived from the fruits of his litigation and that the Defendant is not being stifled in carrying out its legitimate business or have his ordinary standard of living be reduced in a view to accommodate a future judgment against him.
For any further enquiries, please do not hesitate to contact our Mr. Nadesh Ganabaskaran @ [email protected]