View Full Version : Applying Mareva Injunction on fraudulent housing developers

19-12-2002, 02:43 PM
<font size="+1">Applying <i>Mareva Injunction</i> on fraudulent housing developers</font>

Malaysiakini reported <a href="http://www.malaysiakini.com/news/200212160018591.php"target="new">December 16</a> that lawyers representing aggrieved buyers of the abandoned Rhythm Avenue and Newgate Avenue projects have filed a mareva injunction application to stop the defendants from dissipating their assets pending the disposal of the case.

Earlier, the same lawyers, who represented the buyers registered through CASSA, have served the first batch of writ of summons on the defendants. More writs representing other groups of buyers registered with CASSA are expected to be served on the defendants coming weeks.

Defendants in these cases are understood to be the companies developing the project, namely Sanjung Utama Sdn Bhd and SolarGlow Sdn Bhd, and company directors Yap Kwee Huat and Yap Kwee Chai, and project architect Goh Day Ren of Messrs. Perkhidmatan Akitek Sdn Bhd.

The heart of the argument is whether, by taking legal actions, these buyers - of Rhythm Avenue and Newgate Avenue apartments - will end up incurring more legal fees, while the culprits causing the projects to stall - hitherto yet to be adjudged by the Court - continue to enjoy their good lives without having to settle their contractual agreements with the affected buyers.

We noted a prominent local politikus has gone on record by saying there's no point in taking the developers to court as, even if the buyers win the case - he quoted the Highland Towers - the money for their demand for 'full refund plus interest" might not be there.

In other words, according to this politikus, these people who sue and should they win, may at best obtain a paper judgment that brings no compensation.

We do not know whether this politikus is saying the right thing, or whether he is saying things he himself does not understand, or saying things he thinks people will/do not understand.

But if the Courts do grant mareva injunction in the cases of Rhythm Avenue and Newgate Avenue, this politikus may be liable for misleading the public if an informed member of the public hurls him to court.

In law, according practising lawyers who told us, pleading of ignorance cannot be accepted as an excuse.

Now, what is mareva injunction ?

One should be informed that mareva injunction is often applied by invoking an equally powerful legal instrument, the Anton Piller order.

What we can say is that, mareva injunction is a convention tested for over 25 years in English laws, and it is a very powerful legal instrument to bite, not bark, at the defaulters.

This is a legacy left behind by Lord Denning (picture below).

<img src="http://www.thepaisleysnail.com/z777.jpg">

Lord Denning - "the greatest and most colourful judge this century has known" - wrote many books, including:
- The Changing Law (1953),
- The Road to Justice (1955),
- The Discipline of Law (1979),
- The Due Process of Law (1980),
- What’s Next in the Law (1982), and
- Landmarks in the Law (1984)

Lord Denning was President of the Lawyers’ Christian Fellowship (U.K.) from 1950 - 1987, and was the Patron until his death in 1999 at the age of 100.

Shali, please correct me if I'm wrong. :D

19-12-2002, 03:05 PM
<font size="+1">The Quiet Revolution</font>
Abridged from American Bankruptcy Institute, May 21, 1999

Over 25 years ago, a revolution began in England that eventually altered the legal landscape in much of the world pertaining to debtor-creditor relationships.

The revolution was begun by one man, Lord Denning MR (then the Master of the Rolls), with the following words:

...we are told that an injunction of this kind has never been granted before. It has never been the practice of the English courts to seize assets of a defendant in advance of judgment or to restrain disposal of them...It seems to me that the time has come when we should revise our practice...
The injunction imposed by Lord Denning is now commonly known as the Mareva injunction.

The Mareva injunction and its progeny, including the tactical nuclear weapon of the modern creator, the Anton Piller order, allow creditors to obtain disclosures of information and to seize assets in ways never before possible in common law jurisdictions.


19-12-2002, 03:17 PM
<font size="+1">How Mareva Injunction is applied</font>

When any party is the victim of alleged fraudulent conduct, the criminal law can be very slow to react and the only remedy available is for civil recovery action.

In the English laws, there are principles and emergency remedies available to an applicant against a fraudulent suspect.

Let's focus on just two: Mareva Injunction - An injunction preventing a party from dissipating property or moving property or assets out of the jurisdiction;

Anton Piller order - An order allowing for an applicant (without notice to a respondent) to enter the respondent's premises and inspect or seize documents or other items.

Stated simply, Mareva Injunctions permit courts in certain circumstances to take appropriate steps to ensure that judgments are not rendered valueless - and meaningless - through a debtor's pre-enforcement dissipation or concealment of assets.

Such injunctions typically freeze a debtor's assets before the entry of a judgment and, in extreme cases, prior to the commencement of a case.

Similarly, courts impose Anton Piller orders when there is a substantial likelihood that the legal process may be subverted through the willful destruction of evidence.

Such orders allow law enforcement officials acting on a creditor's behalf to use force and surprise to gain access to documents that a court has been convinced, on an ex parte basis, may otherwise be destroyed.

19-12-2002, 03:35 PM
<font size="+1">Mareva Injunction: The origin and world-wide adoption, including Malaysia</font>
Abridged from American Bankruptcy Institute, May 21, 1999

The Mareva Injunction was introduced in Nippon Yusen Kaisha v. Karageorgis [1975] 1 Lloyd's Rep. 137.

The facts were simple. The Greek charterers for the hire of a ship owed charter hire payments to the Japanese shipowner plaintiff NYK. The whereabouts of the Greeks was unknown; their offices in Piraeus were closed. They did, however, have funds on deposit in a London bank.

NYK reasonably feared that the funds would disappear before the judgment. When the High Court trial judge refused to act on an ex parte injunction application, NYK sought immediate review on an ex parte basis from the Court of Appeal, which granted an injunction to stop any transfer of the funds.

The bank holding the funds was notified, the funds were frozen, and ultimately the shipowners were paid.

A few weeks later, a similar emergency arose regarding an Italian ship, the Mareva. The Court of Appeal again acted to freeze the London bank account of a charterer.

Mareva Compania Naviera SA v. International Bulkcarriers SA [1975] 2 Lloyd's Rep. 509. This second pre-judgment seizure case gave name to a new English remedy against what Lord Chief Justice Denning has described as "shifty customers and delaying or defaulting debtors."

In both cases, the actions of the court were ex parte.

The Court of Appeal finally heard both sides of the argument in Rasu v. Perusahann (The "Pertamina") [1978] 1 QB 644, in which the court examined the law and affirmed the appropriateness of the remedy.

Parliament finally endorsed the Mareva remedy by statute in §37 of the <A HREF="http://www.westdoc.com/find/default.asp?rs=CLWD1.1&vr=1.0&cite=S+CT+1981"TARGET="NEW">Supreme Court Act 1981</A>.

The English Chancery Courts adopted a similar remedy at about the same time: the Anton Piller order, from the case of Anton Piller KG v. Manufacturing Process [1976] Ch. 55.

An English company discovered that its German competitors were infringing a copyright, but feared that if a writ were issued and served, the competitors would destroy the infringing material.

The plaintiffs accordingly applied ex parte for an order to enable the defendant's English premises to be searched before a writ was served. The order was granted, the premises searched and the infringing material seized.

These remedies, together with ancillary remedies for disclosure of information from third parties not accused of misdeeds, are now generally available in most of the common law jurisdictions, including Australia, Bermuda, the Bahamas, the Cayman Islands, Canada (see [1994] 6 JIBL 222), Hong Kong (see [1994] 11 JIBL 480), Singapore, Malaysia, Gibraltar, Jersey, Guernsey, the Turks & Caicos Islands, the Isle of Man, New Zealand and the Republic of Ireland (see [1994] 7 JIBL 273).


19-12-2002, 03:49 PM
<font size="+2">How Mareva Injunction also binds 3rd parties</font>
Abridged from American Bankruptcy Institute, May 21, 1999:

Recovering Assets from Offshore Jurisdictions Through the Use of Mareva Junctions and Anton Piller Relief Orders

Hans Christian Beyer
Stearns Weaver Miller Weissler Alhadeff & Sitterson P.A.

Mareva Injunctions are interlocutory orders granted before judgment (and in some jurisdictions, before the commencement of the civil action itself) enjoining a party from disposing of or dealing with his own assets.

The assets may be located within or outside of the court's jurisdiction, and Mareva Injunctions may be directed to assets located worldwide.

The injunction does not create an attachment, lien or security interest in frozen assets, but does direct that the defendant and third parties with knowledge of the order do nothing to transfer the frozen assets.

Although not technically an injunction directed at third parties, the Mareva order will be enforced by contempt sanctions against, for example, a bank with knowledge of the order that honors checks or transfer instructions drawn on funds that are the subject of such an injunction.

A typical use of a Mareva Injunctions is to freeze assets that are the subject of a fraudulent transfer claim, and a prima facie showing of fraud is sufficient to obtain an order.

Thus, for example, in my own experience, courts in the Channel Islands and the Isle of Man have entered Mareva Injunctions against a defendant on a showing of fraud by affidavit, freezing all of the defendant's assets located in the jurisdiction and directing the defendant to provide information with respect to his assets.

In keeping with the spirit of Mareva Injunctions, bankruptcy courts in this district have been willing, on an ex parte basis, to authorize the funding of such proceedings with assets of a debtor's estate.

Where a third party is by affidavit alleged to have become wittingly or unwittingly mixed up in a defendant's efforts to make itself judgment-proof or to defraud its creditors, those third parties served with the order can be required to provide "full information" about the primary defendant's assets so as to assist the plaintiff in seeking to recover assets.

This ancillary order is known as a Norwich Pharmacal order after Norwich Pharmacal v. Customs & Excise [1974] AC 133. See, also, Bankers Trust v. Shapira [1980] 1 WLR 1274 (requiring a bank to provide information regarding its customers' accounts and fund transfers in order to permit tracing their assets or proceeds).

Ancillary orders may contain "gagging clauses that require a bank or other third party to provide information about the defendant's assets before the defendant can be alerted to the fact that an order has been entered. The information disclosed pursuant to such as order can then be used to obtain a Mareva Injunction in the original jurisdiction or elsewhere.


19-12-2002, 03:58 PM
At the appropriate time, and with the consent of CASSA, we shall
reveal the long process about how a series of writ of summons were
filed and taken from the High Courts of Malaya - alongside the
mareva injunction - was executed to answer to the
express objective of a group of aggrieved buyers of Rhythm
Avenue and Newgate Avenue buyers: Termination of the S&P
agreement, full refund plus interest.

There were several strategists and researchers involved.

It is an interesting case. But we are 'gagged' for the time being
from disclosing premature information that may jeapardise the
case in hand.


19-12-2002, 04:13 PM
Words of Wisdom from Lord Denning

<font size="+1">"Without religion, no morality;
without morality, no law."</font>

20-12-2002, 05:23 PM
Hi I'm back!

And CASSA and AJ Arrifin, Yeo & Harpal - thank you for the various action proposed and taken. You people have been consistent all along unlike certain others - cakap only - nothing done until now!

Only try to duplicate CASSA and even that not up to standard for "a committee of 20 of self appointed whose who?" - more more of Mouse Lee's parrots!

It is time we exposure all those who have betrayed our trust in this matter - the local politician and friend of the developer, the MPSJ heroes, the unethical professional groups, and we must also not forget a certain self appointed "legitimate committee" - siapa appoint dia, got legal status or not - tar tak only "runners and mouthpiece for a certain local politician and friend of the developers!

Kita reject terus mereka! 2003 if election year will be shocko really! :D