Mudajaya Corporation Berhad v Keng

[2025] NZHC 1295

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2024-454--000102

CIV-2019-404-001240 [2025] NZHC 1295

IN THE MATTER OF

the Reciprocal Enforcement of Judgments Act 1934

IN THE MATTER OF

a judgment of the High Court of Malaysia at Shah Alam, Malaysia

BETWEEN

MUDAJAYA CORPORATION BERHAD

Judgment Creditor/Applicant

AND

MICHAEL CHUA KHIAN KENG

First Judgment Debtor/First Respondent

TAN KAH LUAN

Second Judgment Debtor/Second Respondent

/Continued…

Hearing:	14 May 2025
Counsel:	M Morrison, H Lanham and C Fraser for Judgment Creditor/Applicant
Judgment:	23 May 2025

JUDGMENT OF HARVEY J

This judgment is delivered by me on 23 May 2025 at 10 am pursuant to r 11.5 of the High Court Rules.

Counsel/Solicitors:

Morrison Partners, Auckland H Lanham, Auckland

…………………………………………….

Deputy Registrar

MUDAJAYA CORPORATION BERHAD v KENG [2025] NZHC 1295 [23 May 2025]

CIV-2024-454-000102 CIV-2019-404-001240

…/2

CRUX INTERNATIONAL LIMITED
Third Defendant/Third Respondent

MIKE MOTORSPORT LIMITED
Non-Party/Fourth Respondent

MIKE RACING LIMITED
Non-Party/Fifth Respondent

MICHAEL CHUA KHIAN KENG and
TAN KAH LUAN as trustees of THE VELOCITA TRUST
Fourth Defendants/Sixth Respondents

WAN YING LE
Non-Party/Seventh Respondent

Introduction

[1]                   Mudajaya Corp Berhad (Mudajaya) has brought two related proceedings against the respondents: an application to register a Malaysian judgment in Mudajaya’s favour (the 102 proceeding)1 and a substantive proceeding alleging, inter alia, knowing receipt and constructive trust  (the  1240  proceeding).2  Following Grau J’s order of 17 March 2025, both proceedings are being heard in the Auckland registry of this Court and are being case managed together.

[2]                   On 19 March 2025, Lang J granted Mudajaya’s substituted service application and listed the matters for mention at this call. By 27 March 2025, the respondents had been served with all relevant papers in the two proceedings, including the freezing order application. However, they have taken no steps to set aside registration of the Malaysian judgment nor to oppose the freezing order application. They are now out of time.

[3]                   Mudajaya seeks a half-day hearing to determine its application to set aside a protest to jurisdiction in the 1240 proceeding, and determination of its freezing order application on the papers.

Timetabling orders in relation to protest to jurisdiction

[4]                   Reviewing the affidavits of service, I am satisfied that substituted service as ordered by Lang J has been effected. I now make the following timetabling orders:

(a)A one-hour hearing is scheduled at 11.45 am on 26 June 2025 to determine Mudajaya’s intended application to set aside the protest to jurisdiction in the 1240 proceeding.

(b)Mudajaya is to file and serve its application to set aside the protest to jurisdiction in the 1240 proceeding and any affidavits in support by 28 May 2025. Service on the non-corporate defendants, Mr Chua and Ms Tan, is to be effected by substituted service per the orders of Lang J dated 19 March 2025.

1      CIV-2024-454-102.

2      CIV-2019-404-1240.

(c)The respondents’ notices of opposition and affidavits in support are to be filed by 18 June 2025.

(d)Mudajaya’s submissions are to be filed seven working days before the fixture and any submissions in opposition are to be filed three working days before the fixture.

Freezing orders

[5]                  As foreshadowed, Mudajaya seeks interim freezing orders (as well as charging and ancillary orders) in both the 102 and 1240 proceedings. Importantly, there are already freezing orders in place against all but the sixth and seventh respondents. These had been obtained without notice under an earlier proceeding, CIV-2019-404-281. The freezing orders were then continued by consent on 26 July 2019 in light of the fact that Mudajaya had obtained global freezing orders in the High Court of Malaya at Shah Alam.3

[6]                  The current application seeks largely the same freezing and ancillary orders as those which have been in place since 2019. The application is brought to ensure these orders also apply to the sixth respondent, and that they are replicated in the 102 and 1240 proceedings so they can be case managed in concert with these proceedings. The additional ancillary and discovery orders for updated affidavits (including against the seventh respondent) are, Mr Morrison for Mudajaya argued, also required to obtain an updated picture of the respondents’ assets and financial positions and because of their breaches of disclosure obligations under the existing orders.4

Background to the 102 and 1240 proceedings

[7]                  The 102 proceedings concern Mudajaya’s application to register a substantive Malaysian judgment dated 7 June 2024 against Mr Chua and Ms Tan. The Malaysian judgment was registered by Radich J in a decision dated 20 December 2024 which has

3      I grant leave pursuant to r 7.32 of the High Court Rules 2016 for Mudajaya to rely on their previous affidavits from the 281 proceedings in the present application for freezing and ancillary orders.

4      Only ancillary discovery orders are sought against the seventh respondent, as opposed to freezing or charging orders.

since been sealed. This was served on Mr Chua and Ms Tan, both of whom have failed to bring an application to set aside the registration notice despite having lodged an appeal in Malaysia. Mr Morrison submitted that the Malaysian judgment is now registered and enforceable in New Zealand.

[8]                  The 1240 proceedings originally concerned Mudajaya’s claim that Mr Chua breached a declaration of trust in favour of Mudajaya (in respect of Mr Chua’s property and assets) that was executed in 2015 after Mudajaya discovered various improprieties by Mr Chua in the course of his employment by Mudajaya. This declaration of trust was found to be valid in the Malaysian judgment alongside other documents Mr Chua and Ms Tan had executed acknowledging their indebtedness to Mudajaya. Notably, the dispositions of Mr Chua and Ms Tan’s property and assets into Crux International Ltd and Velocita Trust were made after the above declaration of trust and acknowledgements of debt.

[9]                  On 18 February 2025, Mudajaya filed an amended statement of claim in the 1240 proceedings which confined the proceedings to the claim that Crux and Velocita knowingly received funds held on trust for it, and now seeks declarations of trust and tracing orders accordingly. Mudajaya also included alternative claims under s 348 of the Property Law Act 2007.

Legal principles

[10]              Rule 32.2 of the High Court Rules 2016 enables the Court to make a freezing order restraining a respondent from removing any assets located in or outside New Zealand or from disposing of, dealing with, or diminishing the value of, those assets. The Court’s jurisdiction is flexible. Under r 32.3, it may also make an order ancillary to a freezing order or prospective freezing order, including for the purpose of eliciting information relating to the assets.

[11]As Asher J said in Oaks Hotels & Resorts NZ Ltd v Body Corporate 358851:5

[18] … the fact that an asset is to be disposed of is in itself not enough to invoke the jurisdiction. The heart of the jurisdiction is a real risk that a judgment or award may go unsatisfied. There must be a danger that the

5     Oaks Hotels & Resorts NZ Ltd v Body Corporate 358851 [2013] NZHC 2695.

prospective judgment creditor’s ability to recover will be defeated because assets have been disposed of. In Bank of New Zealand v Hawkins it was observed that there had to be a “... real risk that the defendant will dissipate or dispose of assets so as to render himself ‘judgment proof’”. … As Lawton LJ observed in Third Chandris Shipping Corporation v Unimarina SA, there must be facts from which the commercial court, like a prudent sensible commercial person, could properly infer a danger of default if assets are removed. This test is “not unduly exacting”.

…

[20] The jurisdiction is not designed to provide an applicant with pre-judgment security. The general rule that a respondent can deal with its assets without constraint, which applied to the original Mareva jurisdiction, is still reflected in the new detailed rule, if only indirectly. Even if the disposal will result in insufficient funds to pay a plaintiff, a Court is unlikely to interfere if the disposition is genuine and in the ordinary course of business. … The prospective judgment debtor must be able to continue to trade or carry on business in the usual way.

(Footnotes omitted)

[12]              To secure a freezing order under r 32.5 three steps are mandatory. First, the plaintiff must first demonstrate a good arguable case in their substantive claim. Second, that assets exist over which the order can apply. Third, that there is real risk of dissipation.6 The Court must also consider where the overall justice of the case lies. The heart of the jurisdiction is whether there is a real risk that a judgment or award may go unsatisfied.7 The need for a good arguable case will be satisfied where the allegations in the applicant’s proposed claim are capable of tenable argument and supported by evidence, taking into account the early stage of the proceeding.8 This is not a high threshold. While an applicant’s case should be more than barely arguable, it need not have a greater than 50 per cent chance of success.9

[13]              Assets to which the order can apply must be described clearly in the application to enable identification by the party tasked with complying with any freezing order. As to the risk of dissipation, where there has been only partial disclosure of a

6 Shaw v Narain [1992] 2 NZLR 544 (CA). See also Mareva Compania Naviera SA v International Bulkcarriers SA (“The Mareva”) [1980] 1 All ER 213 (CA).

7 See Oaks Hotels & Resorts NZ Ltd v Body Corporate 358851, above n 5, at [18].

8 Wing Hung Printing Ltd v Saito Offshore Pty Ltd [2010] NZCA 502, [2011] 1 NZLR 754; and Dotcom v Twentieth Century Fox Film Corp [2014] NZCA 509, (2014) 110 IPR 442 at [18] and [31].

9      Wilsons (NZ) Portland Cement Ltd v Gatx-Fuller Australasia Pty Ltd [1985] 2 NZLR 11 at 21–22; and Ninemia Maritime Corp v Trave Schiffahrtsgesellschaft mbH “The Niedersachsen” [1983] 1 WLR 1412 (CA) at 1417.

defendant’s financial circumstances, and limited responses to specific instances, this may heighten a sense of risk of dissipation. In addition, an applicant must provide evidence to justify a belief that the respondent will dissipate the assets such that there is a real risk a judgment in favour of the applicant will be partly or wholly unsatisfied if the freezing order is not made.10 When determining an application for freezing orders, the Court must also consider the overall justice of the case. This involves weighing the need to protect the applicant to ensure that they are not deprived of the benefit of any judgment against any prejudice or hardship that may be caused to the respondent if the orders are issued.

Does Mudajaya have a good arguable case?

[14]                 On the face of the evidence, Mudajaya appears to have an enforceable and registered judgment in the 102 proceedings. Similarly, the declaration of trust and acknowledgments of debt in the 1240 proceedings appear to be valid and to predate the disposition of Mr Chua and Ms Tan’s property and assets into Crux and Velocita. As director of Crux and trustees of Velocita, the pairs’ knowledge would seemingly be imputed to those respondents. In these circumstances, bearing in mind the early stage of the case, I am satisfied the proposed causes of action are capable of tenable argument and are supported by sufficient evidence. Overall, I accept that Mudajaya has a good arguable case in both proceedings.

Do the respondents have assets over which a freezing order might apply?

[15]                As outlined in Mr Wong’s affidavit of 4 February 2025, the respondents have assets over which a freezing order might apply. These assets can also be seen in the existing freezing orders obtained in the 281 proceedings, and refined with the benefit of further disclosure. I am therefore satisfied the respondents have assets over which a freezing order might apply.

10 Oaks Hotels & Resorts NZ Ltd v Body Corporate 358851, above n 5, at [18], [19] and [22]. The applicant must point to circumstances from which “a prudent, sensible commercial [person] can properly infer a danger of default”, a test which is “not unduly exacting”: Raukura Moana Fisheries Ltd v The Ship “Irina Zharkikh” [2001] 2 NZLR 801, [2001] 2 Lloyd's Rep 319 (HC) at [122].

Is there a real risk of dissipation of those assets?

[16]                 Mr Morrison submitted that there is a serious risk the first to sixth respondents’ assets will be dissipated. Counsel contended that Mr Chua and Ms Tan have already demonstrated an ability and willingness to move and dissipate assets. Mr Morrison referred to the sale of assets by the respondents following Mudajaya obtaining a default judgment in Malaysia, which was only halted by Mudajaya obtaining the current freezing orders in the 281 proceeding on 21 February 2019. He highlighted how the background of the Malaysian judgment is highly relevant: namely, that Mr Chua received excess payments or secret profits while employed by Mudajaya.

[17]               I accept that the respondents’ conduct as set out in the evidence creates a reasonable impression that they have both an ability and willingness to move and dissipate assets. In short, I find that there is a real danger of dissipation so that any judgment or award in the 102 or 1240 proceedings may go unsatisfied.

Where does the balance of convenience and overall justice lie?

[18]               Mr Morrison argued that the balance of convenience and overall justice favour the granting of the application. The freezing orders largely replicate those already existing under the 281 proceedings although extending those orders to encompass the sixth respondent.

[19]               I agree that, on balance, the interests of justice support the orders being granted. Appropriate exceptions for living and legal expenses, for example, are made in the orders, an undertaking for damages has been provided and Mudajaya’s claim significantly exceeds the value of the assets covered by the freezing orders. Further, leave is reserved for any party to apply on short notice to vary or set aside the orders. Given the risks of dissipation and the good arguable case brought by Mudajaya, in the circumstances of this case, I find the freezing orders should be granted.

Charging orders

[20]                 Mudajaya also seeks charging orders over the property at 332 Ngahere Park Road, RD 2, Palmerston North. This is apparently the family home owned by Mr

Chua and Ms Tan as trustees of Velocita. This property has remained subject to the charging orders obtained in 2019 under the 281 proceeding. Mudajaya seeks to maintain the same protection and for the same reasons.

[21]               On the evidence before the Court, I accept Mr Chua and Ms Tan have seemingly been removing or disposing or property with intent to defeat Mudajaya’s claims. There is also some evidence from the service affidavit of Doug Jones sworn on 13 March 2025 that suggests Mr Chua and Ms Tan are absent from New Zealand. Accordingly, I consider  that the grounds under r 17.41(a)  — and potentially also     r 17.41(b) — have been satisfied such that the charging order should be granted.

Discovery orders

[22]               Mr Morrison submitted the proposed discovery orders are necessary to obtain updated verified information about the assets of the respondents and given the respondents’ failure to comply with their disclosure under the current freezing orders. I consider it is appropriate to make such orders pursuant to r 32.3(2)(a).11

Decision

[23]                 The application is granted. Orders are now issued in accordance with the draft orders filed by Mudajaya with the Court on 16 May 2025.

Harvey J

11     See AJ Bekhor & Co Ltd v Bilton [1981] QB 923 (CA); and A v C [1981] QB 956.