Maxi Wonder Sdn Bhd & Ors v DCS Trading Sdn Bhd: Revisiting The Test For Mareva Injunction

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A Mareva injunction is a court order that freezes a litigant’s assets to prevent them from being dissipated or removed from the jurisdiction while legal action is ongoing. Recently, in Maxi Wonder Sdn Bhd & Ors v DCS Trading Sdn Bhd [WA-22NCC-110-02/2024], the High Court considered whether a Mareva injunction application by the defendant against the plaintiffs should be granted.

The Law On Mareva Injunction

In Maxi Wonder, the High Court applied the established three-pronged test that must be satisfied before granting a Mareva injunction, as outlined the Supreme Court in  Aspatra Sdn Bhd & Ors v. Bank Bumiputra (M) Bhd & Anor [1987] 2 CLJ 377:

(i)              the applicant must establish a good arguable case;

(ii)             the defendant must have assets within the Malaysian courts’ jurisdiction; and

(iii)           there is a real risk that the assets will be dissipated before the judgment could

  be satisfied.

This discussion will focus primarily on the third requirement – whether there is a real risk that the assets will be removed. To determine this, the court must find either direct evidence indicating a risk of dissipation or circumstances that justify drawing such an inference.

Importantly, the risk in question must be real rather than merely theoretical or speculative. It cannot be presumed, particularly at an interlocutory stage, where allegations of impropriety remain unproven. Thus, mere allegations, even if supported by some evidence, would not per se warrant a presumption or inference that a real risk of dissipation of assets exists. Further, the phrase “real risk of dissipation of assets” is a term of art that must be assessed by the court based on the specific facts and evidence presented in each case.

Grounds

In Maxi Wonder, the defendant alleged that there is a real risk that the plaintiffs intend to dissipate their assets to defeat the judgment, if any, obtained against them based on the following grounds:

(i)              that the plaintiffs intended to sell a piece of land held by the 1st plaintiff;

(ii)             the 1st plaintiff had not filed its statement of accounts since 2020 and there

  was a real risk that it was impecunious;

(iii)           the guarantors to the agreement were foreigners;

(iv)           that the 1st plaintiff had refused to inform or notify the defendant of the assets

the 1st plaintiff owned; and

(v)            the plaintiffs had not acted honestly and the court should infer that they were

planning to dissipate the 1st plaintiff’s assets to defeat any potential judgment.

Findings Of The High Court

The defendant emphasised in its affidavit in support that an inference could be drawn that the plaintiffs intended to sell a piece of land due to the existence of an alleged caveat lodged by a named individual. It was further suggested that a proposed transaction involving the said land was underway with that individual. However, the court found that the land remained charged to another company and there was no evidence that the charge had been discharged. Moreover, the court found that the 1st plaintiff was entitled to deal with its assets as it wishes unless cause to the contrary is shown by the defendant. The mere fact that the 1st plaintiff wished to sell its land does not justify the Mareva injunction sought by the defendant. As such, the court concluded that there was no evidence to support the defendant’s claim that the plaintiffs intended to dissipate their assets to defeat any potential judgment.

Furthermore, after examining the pleadings and the affidavits filed, the court found no basis for the defendant’s contention that the 1st plaintiff was impecunious and that the attempt to sell the property was intended to prevent the defendant from the fruits of its litigation.

Additionally, the court appreciated that whether there was a real risk that the plaintiffs may remove their assets before judgment could be satisfied was an issue that had to be determined based on the facts and evidence before the court. In this regard, silence on the part of the plaintiffs in not disclosing their assets to the defendant, based on the circumstances of this case, did not raise any form of inference of any bad faith on the part of the Plaintiffs. The court found that the evidence disclosed did not merit any finding of dishonesty or bad faith on the part of the plaintiffs. Moreover, the merits of the claim and defence must be determined at trial.

Besides, the court found that the defendant had also failed to prove the existence of a good arguable claim that it may have against the plaintiffs. The defendant merely claimed defence against the plaintiff’s claim and there was no cause of action and/or order sought against the plaintiffs.

Based on the above grounds, the court found that this was not a suitable case for granting the orders sought by the defendant, as the defendant had failed to prove the existence of any evidence or facts that would enable the court to infer that there was a real risk that the plaintiffs were dissipating their assets to defeat any potential judgment obtained by the defendant. Consequentially, the court dismissed the Mareva injunction by the defendant.

Conclusion

The High Court decision in Maxi Wonder Sdn Bhd undoubtedly serves as a yardstick of the threshold of risk in the realm of Malaysian jurisprudence. It emphasises the need for evidence of a real but not mere risk of dissipation of assets before the court can allow a Mareva injunction.

9 May 2025