‘Justice is not an ala carte menu’ – High Court issues “unless orders” to debar defendants from defending claim unless they comply with disclosure orders

On 25 May 2022, the High Court of Malaya granted a worldwide Mareva injunction (also known as asset freezing order) against Mr Low Taek Jho (“Jho Low”) and his father, Tan Sri Low Hock Peng (“Tan Sri Low”) in a claim related to fraudulent losses suffered by a company owned by Malaysia’s Minister of Finance  (Incorporated), 1Malaysia Development Berhad (“1MDB”). In probably a first in Malaysia, as Jho Low and Tan Sri Low had previously breached two injunction orders requiring them to disclose their assets and whereabouts, the High Court was persuaded by English case authorities to allow 1MDB’s application for supplementary “unless orders” against Jho Low and Tan Sri Low to put additional pressure on them to comply with the disclosure orders made in aid of the inter partes Mareva injunction. Jho Low and Tan Sri Low are wanted by the Malaysian police and their exact whereabouts are not known but they had entered appearance and filed their Defence in the Malaysian proceedings.
The Court’s inherent jurisdiction
Pursuant to its inherent jurisdiction, the Court has wide powers to prevent any abuse of its process including all the powers that are necessary to fulfil itself as a court of law; to uphold, to protect and to fulfil its judicial function of administering justice in a regular, orderly and effective manner (Ezzen Heights Sdn Bhd v Ikhlas Abadi Sdn Bhd (Soh Yuh Mian, intervener) [2011] 4 MLJ 173). These inherent powers, which have been given statutory recognition by Order 92 rule 4 of the Rules of Court 2012, would include the power to make ancillary and supplementary orders to give effect to its decisions (Stone World Sdn Bhd v Engareh (M) Sdn Bhd [2020] 12 MLJ 237).
The unless orders
The High Court ordered that unless Jho Low and Tan Sri Low complied with the injunction order to disclose their whereabouts and their assets, they will be debarred from defending the proceedings, their defence will be struck out and the Plaintiffs will be at liberty to enter judgment against them.
While there have been no reported decisions on the making of such an unless order in Malaysia, the Court was greatly assisted by English decisions related to the fraud that occurred in the JSC BTA Bank of Kazakhstan. In JSC BTA Bank v Solodchenko [2012] 1 All ER 735 where the English solicitors of a fugitive defendant were ordered to disclose the whereabouts of their client, the English High Court stated:
"[39] It is in the highest degree unsatisfactory that (the defendant) can still be at large, as a fugitive from justice, while he has solicitors on the record acting for him, and intervening in legal proceedings as and when it suits his purposes. Such a procedure is liable to bring the administration of justice into disrepute, and to give the impression that British justice is an a la carte menu from which he can order at choice without ever having to pay the bill. – per Henderson, J (Emphasis added)
In the United Kingdom, the Court recognised that the risk of injustice can also arise by reason of difficulty in enforcing a judgment caused by a defendant hiding his assets prior to trial. Hence, in JSC BTA Bank v Ablyazov [2012] EWCA Civ 1411, the English Court of Appeal upheld an unless order granted by the High Court debarring the defendant from defending the claims made against him in several suits and for his defences to be struck out, unless within a stated period he, inter alia, complied with the disclosure orders (see also Lexi Holdings plc v Luqman [2007] EWCA Civ 1501).
The concept of debarring a party who has disobeyed and breached an order of the Court from prosecuting or defending a claim is not new in Malaysia. The general rule in Malaysia is that a contemnor forfeits his right to be heard and to use the judicial process for his own end or benefit if he disobeys a Court order until he has purged his contempt (Shamala a/p Sathiyaseelan v Dr Jeyaganesh a/l C Mogarajah (also known as. Muhammad Ridzwan bin Mogarajah) & Anor [2011] 2 MLJ 281; Low Swee Siong v Tan Siew Siew and other appeals [2013] 3 MLJ 247). However, this is probably the first case where a High Court in Malaysia has granted a pre-emptory debarring order to effectively preclude recalcitrant parties from defending an action as an additional measure to increase the effectiveness of its orders made in aid of a worldwide Mareva injunction.
Siva Kumar Kanagasabai, Dhanyaa Shreeya, Jeremiah Ch’ng and Tommy Lim of Skrine appeared for 1MDB in these proceedings.

This alert contains general information only. It does not constitute legal advice nor an expression of legal opinion and should not be relied upon as such. For further information, kindly contact skrine@skrine.com.