Mudajaya Corporation Berhad v Chua
| Jurisdiction | New Zealand |
| Judgment Date | 21 June 2019 |
| Neutral Citation | [2019] NZHC 1436 |
| Date | 21 June 2019 |
| Docket Number | CIV-2019-404-281 |
| Court | High Court |
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2019-404-281
IN THE MATTER of the Reciprocal Enforcements of Judgments Act 1934
IN THE MATTER of a Judgment of the High Court of Malaya at Shah Alam, Malaysia
BD Gray QC, MHL Morrison and HMZ Ford for applicant
RJ Hollyman QC and AJB Holmes for first to fifth respondents
Civil Procedure, International Law — application to rescind Freezing Orders — respondent not served with notice of proceedings in Malaysia — application to register decision of the High Court of Malaya at Shah Alam, Malyasia — Reciprocal Enforcement of Judgments Act 1934
Application by Chua (“C”) to rescind or vary the Freezing Orders made by the High Court.
Mudjaya Corporation Berhad (“Mudjaya”) had applied under the Reciprocal Enforcement of Judgments Act 1934 (“REJA”) to register a decision of the High Court of Malaya at Shah Alam, Malyasia. Mudajaya was a large public corporation in Malaysia and claimed that its employee Chua (“C”) defrauded approximately RM 72 million (NZD $26.5 million). C agreed that he owed the company RM 65 million and in part satisfaction of that debt, agreed to transfer all or at least most of his property to Mudajaya in a series of Property Transfer Agreements (“PTA”). C and his family then moved to New Zealand. Mudajaya thereafter obtained judgment against C for the net amount still owing to by C. As C was not living in Malaysia at that time, orders for substituted service were obtained and judgment ultimately entered by default. Mudjaya was granted freezing and ancillary orders in anticipation of the Malaysian Judgment being registered. C said the Freezing Orders should be rescinded or varied because of material non-disclosure on the without notice application, that Mudajaya did not have a good arguable case to register the Malaysian Judgment in New Zealand as it was based on fraud pursuant to s6(1)(d) REJA (cases in which registered judgments must, or may, be set aside – fraud) as Mudajaya had admitted altering the PTAs to insert the amount owed after they were signed, lack of notice under s6(1)(c) REJA (judgment debtor did not receive notice of those proceedings in sufficient time to enable him to defend the proceedings) and lack of disclosure of C's potential defence of duress.
The issues were: whether there was material non-disclosure justifying the Freezing Orders being set aside; whether there was a good arguable case that the Malaysian Judgment would not be registered in New Zealand.
Rule 32.2(3)(a) High Court Rules (“HCR”) (freezing order) required disclosure by an applicant for freezing orders on a without notice basis of any possible defences known to the applicant. The gaps in the transcripts were not of sufficient importance to constitute a material non-disclosure justifying the orders being set aside. There was a good arguable case that C was involved in the receiving of and sharing in secret profits, and that his “admissions” and entry into the PTAs were not influenced by duress. The alleged non-disclosures had not fallen within the category of “egregious” to justify the orders being rescinded.
There was a tenable argument that the Malaysian Judgment would not be set aside on the grounds it was obtained by fraud for the purposes of s6(1)(d) REJA. C had admitted his involvement in the receipt of the secret payments. The grounds under s6(1)(e) ERJA (enforcement of the judgment would be contrary to public policy in New Zealand) were narrow. There was at least a factual contest as to the state of all the PTAs when C signed them, and he was aware that he was signing some without an amount included.
There was no evidence that C had actual notice of the Malaysian Proceedings after they had been commenced, but prior to judgment being entered. Knowing that proceedings were “likely” did not translate to notice of the actual proceedings in sufficient time to enable a defendant to defend them. Submission to jurisdiction and notice of proceedings in sufficient time to enable a defendant to defend them were different. There was an absence of direct appellate authority on the type of notice required for the purposes of s6(1)(c) REJA (judgment debtor did not receive notice of those proceedings in sufficient time to enable him to defend the proceedings). It was arguable that actual notice was required for the purposes of s 6(1)(c) REJA (judgment debtor did not receive notice of those proceedings in sufficient time to enable him to defend the proceedings).
Now that C was on notice that Mudajaya was taking steps to recover more of his assets, there was a real risk of dissipation
There was a tenable argument that the Malaysian Judgment, if registered in New Zealand, would not be set aside on the basis of s6(1)(c) REJA. C's application to rescind the Freezing Orders was granted.
[As to variation/discharge of freezing and charging orders]
| Introduction | [1] |
| Factual background – more detail | |
| Events in Malaysia 2015 to 2018 | [6] |
| The Malaysian Judgment | [11] |
| Mr Chua is located in New Zealand | [13] |
| The without notice application for freezing and other orders | [14] |
| The application to vary or rescind the Freezing Orders | [17] |
| Approach to the application | [18] |
| Was there material non-disclosure justifying the Freezing Orders being set aside? | |
| Legal principles | [25] |
| Discussion | [26] |
| An alleged defence of duress | [27] |
| That Mr Chua and his family had settled in New Zealand | [42] |
| After the event insertion of RM 65 million into PTAs | [45] |
| Non-disclosure or misstatement regarding efforts to serve the Malaysian Proceedings | [51] |
| Is there a good arguable case that the Malaysian Judgment will be registered in New Zealand? | |
| Introduction | [60] |
| Default judgment obtained by fraud | [61] |
| Enforcement of the judgment would be contrary to public policy | [69] |
| No notice was given to enable the judgment debtors to defend the proceedings | [72] |
| Discussion | [85] |
| Is there a real risk of dissipation of assets? | [112] |
| Legal principles | [113] |
| Discussion | [116] |
| Mudajaya's administration of the Freezing Orders | [123] |
| Result | [130] |
| Costs | [132] |
The applicant (Mudajaya) is a large public corporation in Malaysia. It says that over the period 2012–2013, one of its employees, the first respondent (Mr Chua), defrauded it of some RM 72 million. 1 This is said to have included the receipt of “secret profits”, or bribes, from three subcontractors on a major construction project then being carried out in Malaysia. Mudajaya's case is that Mr Chua arranged for payments and benefits totalling this amount to be paid to him and, on his instructions, to a Malaysian company associated with him (Nescaya) and/or a Malaysian company controlled by his brother (Inner Cube).
Mudajaya says when it confronted Mr Chua with these allegations, he admitted them (though initially disputed the amount of money involved). Ultimately, however, Mudajaya says Mr Chua agreed that he owed the company RM 65 million and in part satisfaction of that debt, agreed to transfer all or at least most of his property to Mudajaya. Shortly after these arrangements were entered into, but without Mudajaya's knowledge, Mr Chua and his immediate family moved to New Zealand. Mudajaya thereafter obtained judgment against Mr Chua (and members of his family) for what it says is the net amount still owing to it by Mr Chua. As Mr Chua was not living in Malaysia at that time, orders for substituted service were obtained and judgment ultimately entered by default (the Malaysian Judgment).
Mudajaya has now filed an application to register the Malaysian Judgment here in New Zealand, given it has since become aware of Mr Chua's presence in this jurisdiction. In February 2019, it also applied on a without notice basis for freezing and ancillary orders in anticipation of the Malaysian Judgment being registered. I heard that application on an urgent basis as Duty Judge. I granted the orders, though with some modifications (the Freezing Orders).
The respondents have since applied to rescind or vary the Freezing Orders. It is that application which this judgment determines.
The respondents say the Freezing Orders should be rescinded or varied because of what they say was material non-disclosure on the without notice application. The respondents also say Mudajaya does not have a good arguable case to register the Malaysian Judgment in New Zealand in any event, and there is no real risk of dissipation of assets.
Mudajaya says that in early March 2015, in a series of three meetings with senior executives of the company, Mr Chua admitted his involvement in the receipt of the secret payments referred to at [1] above. It says Mr Chua also agreed over the course of the meetings that he was indebted to Mudajaya in the sum of RM 65 million and agreed to transfer all property and assets then owned by him (and some family members) in part satisfaction of the debt. Mudajaya says Mr Chua and other members of his family also agreed to hold all existing and future assets on trust for Mudajaya towards satisfaction of the debt.
As a result of the three meetings, Mr Chua, his wife (the second respondent, Ms Tan) and Mr Chua's mother (Madame...
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