ECOSEAL RESOURCES SDN. BHD v TAZALIZAH BINTI ABIDIN TALIB

Case Significance

Shows that a serious issue to be tried, evidenced by a substantial factual contradiction between co-defendants over the whereabouts of disputed funds, can support an interlocutory detention and preservation order under Order 29 rule 2 of the Rules of Court 2012.

This High Court decision at Shah Alam concerns an interlocutory appeal by a defendant against a Sessions Court order for the detention and preservation of a sum of money, made under Order 29 rule 2 of the Rules of Court 2012. The underlying dispute arose from a joint venture agreement between the plaintiff and the first defendant to purchase a 48-acre parcel of land at Pandan Perdana, under which each was to invest RM500,000. The plaintiff had paid RM350,000 into the account of the second defendant company at the request of the first defendant; the second defendant acknowledged receipt of the money and said it had subsequently paid the sum onward to the first defendant, while the first defendant denied the plaintiff's account of the payment. The Sessions Court had ordered the second defendant to pay the RM350,000 to the plaintiff within seven days by way of a preservation order. On appeal the questions were whether there was a serious issue to be tried and whether the balance of convenience favoured maintaining the preservation order. The High Court focused on a substantial contradiction between the positions of the first and second defendants concerning the whereabouts of the RM350,000 — the second defendant asserting it had transferred the money to the first defendant, and the first defendant denying the underlying payment. That conflict, in the Court's view, raised a serious issue that needed to be tried. Being satisfied that the threshold for interlocutory preservation was met, the Court dismissed the second defendant's appeal with costs of RM3,000.00, subject to allocatur. The decision illustrates how a genuine factual dispute over the fate of funds can justify an interlocutory order preserving those funds pending trial. In reaching that conclusion the Court noted that the competing accounts could only be resolved at trial, and that preserving the disputed sum in the meantime protected the position of the party ultimately found to be entitled to it, which is the very purpose of an order made under Order 29 rule 2.