Introduction
Before YA Dato’ Raja Ahmad Mohzanuddin Shah Bin Raja Mohzan at the Kuala Lumpur High Court, Jonathan Khaw acted for the Defendant (“our Client”) in a dispute arising from allegations of a cross-border “love scam” involving disputed transfers in excess of RM2 million.
The Plaintiff alleged, among others, that our Client had induced the transfers through fraud, undue influence and/or misrepresentations arising from a romantic relationship which allegedly began through the dating application “Bumble”.
Arising from those allegations, the Plaintiff obtained an Ex Parte Mareva injunction, that is, a Freezing Injunction obtained from the Court without any notice to our Client, on the basis of an alleged risk of dissipation of assets (the “Ex Parte Order”). In practical terms, this meant that the Plaintiff was able to obtain the Order without our Client’s knowledge or any opportunity to present his version of events to the Court.
The Ex Parte Order immediately restricted all of our Client’s banking facilities, access to bank accounts in Malaysia and day-to-day financial operations.
As the substantive action remains pending before the High Court, this article does not discuss the merits of the parties’ underlying claims and disputed factual allegations, but is confined to certain interlocutory issues that arose during the course of the proceedings.
Challenge to the Ex Parte Order
Given the immediate impact of the Ex Parte Order on our Client, an urgent application was filed to set aside the Ex Parte Order on grounds including, among others, the following (the “Setting Aside Application”):-
(a) Failures in full and frank disclosure;
(b) Selective disclosure of material facts surrounding the parties’ relationship;
(c) The absence of a proper evidential basis supporting the alleged risk of dissipation of assets and proportionality; and
(d) Whether the Ex Parte relief obtained was justified in light of the overall factual matrix before the Court.
Our Client’s Setting Aside Application was supported by extensive documentary evidence, including numerous communications exchanged between the parties over a prolonged period. Taken as a whole, the evidence presented a materially more nuanced picture of the parties’ relationship and dealings than had been presented at the Ex Parte stage.
Shortly before the scheduled Inter Partes hearing of the Setting Aside Application, where both parties were to be heard by the Court, the Plaintiff informed the Court that our Client’s Setting Aside Application would not be opposed.
Whilst every case turns on its own facts, the Plaintiff’s decision not to oppose the Setting Aside Application meant that the Ex Parte Order could no longer be maintained on the basis upon which it had originally been granted. The Plaintiff’s application for an interim injunction pending trial likewise fell away and was dismissed. In addition, the Court reserved our Client’s claim for damages arising from the Ex Parte Order for assessment following the determination of the substantive action.
The Importance of Full and Frank Disclosure
One of the most important safeguards in any ex parte application is the duty of full and frank disclosure.
This duty exists because the application is heard without notice to the other side. The affected party is therefore deprived of the opportunity to present its version of events before the Court decides whether to grant relief.
The principle was explained more than a century ago in The King (1917) 1 KB 486, where Warrington LJ stated:
“A person who makes an ex parte application to the court … is under an obligation to the court to make the fullest possible disclosure of all material facts within his knowledge.”
The said principle has been consistently adopted and applied by our Courts. Failure to comply with this duty may result in the Ex Parte Order being set aside and costs being ordered against the applicant.
Conclusion
Freezing injunctions, or Mareva injunctions, are among the most powerful remedies available in commercial litigation and fraud-related disputes. Whether seeking such relief and/or defending against it, careful preparation and a well-considered strategy can often make a significant difference to the outcome.
If you require advice on Mareva injunctions, freezing orders and/or other urgent interlocutory applications, our team would be pleased to assist.
Note: This article is provided solely for educational purposes and does not constitute legal advice.