MAREVA INJUNCTION AND MATERIAL NON-DISCLOSURE
Parastate Labs Inc v Wang Li and others [2023] SGHC 153 concerned an application for a worldwide Mareva injunction for a quantum of US$5m. While Andre Maniam J ultimately granted a Mareva injunction for US2.5m, this only came after a conversion of the ex parte application into an inter partes application due to the claimant’s material non-disclosure.
This decision concerned an application for a worldwide Mareva injunction by the claimant, Parastate, as against the first defendant, Mr Wang (at [10]). The test was “whether “it appears to the court to be just or convenient that such order should be made”: s 4(10), Civil Law Act 1909 (2020 Rev Ed).” (at [43])
Ex parte (without notice). The application was initially filed ex parte (at [8]; [15]), which meant that Parastate had the obligation to make full and frank disclosure of all material facts (at [26]).
However, Andre Maniam J found two instances of Parastate failing to make full and frank disclosure (at [27] – [28]), which had a significant impact on the ex parte application.
First breach. The first was in relation to para 73(1)(f) of the Supreme Court Practice Directions 2021 (“Practice Directions”) which required “… (f) An undertaking to pay for losses that may be caused to the opponent or other persons by the granting of the orders sought, stating what assets are available to meet that undertaking and to whom the assets belong” (at [15]).
Andre Maniam J found that Parastate’s supporting affidavit (a solicitor’s affidavit exhibiting a draft client affidavit) (at [14]) did not address the second part of the requirement, and this could (also) not be answered by Parastate’s counsel at the ex parte hearing (at [17] – [18]).
Second breach. The second was in relation to “Parastate’s deliberate omission of prescribed undertakings 9 and 10 in Form 25 of Appendix A of the Practice Directions” (at [28]), of which para 72 of the Practice Directions provided (among others) that “Any departure from the terms of the prescribed forms should be justified by the applicant in his or her supporting affidavit(s).” (at [29])
Andre Maniam J found that Parastate’s supporting affidavit should have mentioned the omitted prescribed undertakings and sought to justify such departure from the prescribed form, “rather than [for Parastate’s counsel] to only mention it in a response to a query from the court (in the event of the court noticing that the prescribed undertakings were missing).” (at [30] – [33])
In the circumstances, Andre Maniam J found that “the omission of the prescribed undertakings was deliberate.” (at [31])
Additionally, Andre Maniam J noted (at [37]) that not only did Parastate fail to disclose the omission of the prescribed undertakings, but Parastate also did not cite the Court of Appeal decision of Bouvier, Yves Charles Edgar and another v Accent Delight International Ltd and another and another appeal [2015] 5 SLR 558 (“Bouvier”), which discussed the importance of those undertakings, or the subsequent Court of Appeal decision of JTrust Asia Pte Ltd v Group Lease Holdings Pte Ltd and others [2018] 2 SLR 159 (“JTrust”) which cited Bouvier (at [37]).
Inter partes (with notice). The upshot of the above material non-disclosure was that Andre Maniam J declined to grant an injunction on an ex parte basis, directed that the application be converted to an inter partes one (at [9]), and gave directions for Parastate to address:
Its ability to meet an order as to damages (on its undertaking) (at [19]); and
Why prescribed undertakings 9 and 10 should not be required in light of the Court of Appeal’s observations in Bouvier (at [33] – [34]).
For the first direction, it suffices to say that it was held that Parastate’s further affidavit “still fell short of what the Practice Directions required” (at [21]), which not only amounted to a breach of the Practice Directions, but also a breach of the court’s direction (at [25]).
As for the second direction, Parastate accepted through its further affidavit that “the undertakings are usual undertakings that have to be given” and should be included in the Summons (at [35]). Hence, the Mareva injunction (ultimately granted) incorporated those undertakings (at [36]). But Andre Maniam J nevertheless found that “Parastate’s earlier conduct remained a relevant consideration.” (at [36])
Material non-disclosure. Andre Maniam J made clear that material non-disclosure could be taken into account not only at the ex parte stage, but also the inter partes stage (at [38]).
“38 Had I granted the Mareva injunction at the ex parte stage, it would have been susceptible to being set aside for material non-disclosure, although the court would have had a discretion nevertheless to continue the injunction or to re-grant it on new terms: JTrust at [90], particularly [90(e)]. On a parity of reasoning, if the material non-disclosure were detected by the court at the ex parte stage, and consequently no injunction were granted at that stage, it would remain open to the court to take into account the non-disclosure and refuse to grant the injunction at the inter partes stage: JTrust at [92] where the court mentioned “discharge or denial of Mareva relief”, and “the discharge or the refusal of the injunctions” [emphasis added].
39 I thus considered Parastate’s material non-disclosures (both in relation to its ability to meet its undertaking as to damages, and in deliberately omitting prescribed undertakings 9 and 10) in deciding Parastate’s Mareva application.”
And full and frank disclosure is important because the claimant must come to court with clean hands in seeking relief ex parte (at [26]).
Mareva injunction granted. Nonetheless, despite all these issues, a Mareva injunction was still granted because, at the end of the day, Andre Maniam J found that Parastate managed to establish that there was a good arguable case against Mr Wang, and a real risk of dissipation (at [44]).
Nonetheless, due to the issues identified earlier, Andre Maniam J reduced the sum of the injunction granted.
Significance. This case serves as a reminder on the importance of the obligation to make full and frank disclosure in ex parte applications.
As demonstrated by this case, it is important for the claimant to ensure that all the relevant undertakings are duly furnished in accordance with the prescribed forms.
A failure to do so can not only amount to a breach of the relevant Practice Directions, but it can amount to a material non-disclosure which can have substantial impact on the application itself.
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