SUMIFRU SINGAPORE PTE LTD V FELIX SANTOS ISHIZUKA AND OTHERS [2020] SGHC 7
In Sumifru Singapore Pte Ltd v Felix Santos Ishizuka and others [2020] SGHC 7 (“Sumifru v Felix”), the High Court made additional orders to supplement a world-wide Mareva injunction made against the defendants. This article will focus on the High Court’s reasons for making the additional orders.
I. Background
The defendants were subject to a world-wide Mareva injunction, which was subject to the standard exceptions, including permission for the defendants to spend monies on legal expenses and on dealings “in the ordinary and proper course of business” (“Ordinary Course exception”) ([4] Sumifru v Felix).
Thereafter, the defendants notified the plaintiff that it would be making a range of withdrawals from the second defendant’s OCBC Bank Account amounting to about US$2.9m. The plaintiff filed SUM 3820/2019 to vary the Mareva Injunction. As summarised by the High Court, the essence of SUM 3820/2019 was to “… police any further withdrawals by the defendants from the OCBC Account, and to ensure that any business proceeds relating to the withdrawals would be channelled back to the OCBC Account.” ([7] - [9] Sumifru v Felix).
The defendants were ordered to make full disclosure of all documents and correspondence in connection with the withdrawals and business proceeds relating to the withdrawals (“the Disclosure order”) and to pay all business proceeds relating to the withdrawals back to the OCBC Bank Account (“the Repayment order”). The Ordinary Course exception was also amended to require the second defendant to provide notice of its future intended withdrawals to the plaintiff’s solicitors (“the Notice obligation”) ([13] - [15] Sumifru v Felix).
Subsequently, the plaintiff filed SUM 4746/2019 to further vary the Mareva Injunction as they claimed the defendants had made various false statements and disclosures. The issues to be considered by the High Court were whether the Mareva Injunction ought to be further varied, and, if so, what the scope of such variation ought to be ([16] - [18] Sumifru v Felix).
II. The Decision of the High Court
The High Court adopted the principles set out in Compagnie Noga D’Importation et D’Exportation SA and another v Australian and New Zealand Banking Group Ltd and others [2006] EWHC 602, that the “essential test is whether it is in the interests of justice to make the variation sought”, and “[b]ecause the court has already been satisfied of a risk of dissipation[,] judges are entitled, on an application to vary [a Mareva injunction], to have a healthy scepticism about assertions” made by the defendant ([21] Sumifru v Felix).
Real risk of dissipation. The High Court found that the plaintiff’s argument that the second defendant’s purported business is illegal was irrelevant to the application. This is because the requirement of showing a real risk of dissipation lies at the heart of the court’s power to grant any Mareva injunction, and even if the second defendant’s purported business is illegal, such illegality, in and of itself, did not go towards showing a real risk of dissipation ([38] to [39] Sumifru v Felix).
Doubts about truthfulness. However, the High Court observed that there were certain doubts which arose about the truthfulness of the defendant’s disclosures. Among others, while it was alleged that by 6 November 2019, approximately US$590,855.54 had been received and approximately US$755,617.41 remained outstanding for collection, only US$101,987.70 appeared to have been repatriated back to the OCBC Bank Account by 28 November 2019. Furthermore, the attempts at repatriation were only brought to the attention of the High Court by way of an affidavit filed a day before the substantive hearing of SUM 4746/2019. Thus, the High Court was of the view that the belatedness and convenient timing of the alleged repatriation threw the bona fides of the defendants in complying with the Repayment order into doubt ([43] and [47] Sumifru v Felix).
In addition, there were doubts as to whether the first defendant had made full disclosure to the court in relation to the purported transfer of US$101,987.70 ([48] Sumifru v Felix).
Also, for the US$100,000 which had allegedly been withdrawn for business travels, there was no evidence showing the either the “fruits of such travels”, nor evidence showing that they were for business purposes, beyond bare assertions ([50] Sumifru v Felix).
Fortification of orders. In view of the above, the High Court decided that it was appropriated to make further orders to fortify the previous orders ([51] Sumifru v Felix).
In summary, the High Court ordered the defendant to make full and frank disclosure of the amount of business proceeds stemming from the rice trade and that those proceeds were to be remitted to the OCBC Bank Account. If the defendants failed to comply with the above orders, then all further withdrawals pursuant to the Ordinary Course exception would be prohibited ([54] Sumifru v Felix).
III. Observations of Sumifru v Felix and others
Parties should note that while the court has the power to vary a Mareva injunction that has been granted, in determining whether such a variation is warranted, the court has to balance two competing interests: the claimant’s legitimate interest in preserving the funds, and against that, that the claimant is not entitled to use a Mareva injunction as a method of obtaining security and bettering their position vis-a-vis the defendant and vis-a-vis any other creditors of a defendant ([19] - [20] Sumifru v Felix).
Parties should also note that applications to further vary a Mareva Injunction should not be utilised as an appeal against the earlier order(s) made, and the Courts will not permit the same. The result is that only points that were not raised in the earlier summons will be considered ([27] Sumifru v Felix).
Tags: Mareva Injunction; Variation; Risk of dissipation; Competing Interests; Interests of Justice; Barren Judgment; Full and Proper Disclosure.
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