ILC Co., Ltd. v Saitama Hiroshi and others

ILC Co, Ltd, the applicant, had obtained a Mareva injunction against four respondents: Saitama Hiroshi, Hora Yohei, Asia Capital Management Pte Ltd and Oshima Yumiko. The 1st and 2nd respondents were enjoined up to US$6,718,925.11, and the 3rd and 4th respondents up to US$194,031.23. The 1st and 2nd respondents had not been served with process, so no step was taken against them.

The 3rd and 4th respondents put the full US$194,031.23 claimed against them into a separate account with DBS, to the applicant's satisfaction, and undertook not to draw on it. On that basis they declined to disclose their other assets. The applicant said this partial disclosure breached the injunction's disclosure order. It believed the two were helping the 1st respondent to hide, and possibly dissipate, his assets, and with leave granted in [2023] SGHC 206 it applied in Originating Application No 652 of 2023 (Summons No 2452 of 2023) to have them committed for contempt unless they made full disclosure within two weeks. Choo Han Teck J heard the application.

1. Whether the 3rd and 4th respondents breached the Mareva disclosure order by declining to disclose assets beyond the secured sum.
2. Whether the applicant could use the disclosure obligation to find out about the 1st respondent's assets.
3. Whether the applicant's conduct of the derivative action proceedings was procedurally proper.

The court agreed with counsel for the 3rd and 4th respondents. A Mareva injunction exists to keep the assets a plaintiff claims available until trial. By securing the US$194,031.23 in a separate account, the two respondents had preserved the whole sum claimed against them and so satisfied the order.

The applicant's demand for more disclosure rested on its belief that the pair were concealing assets for the 1st respondent, but it produced no evidence of that. Its reliance on an alleged close personal relationship between the 4th respondent and the 1st respondent was not supported by the emails it put forward, which showed only a business relationship. Knowing someone, or the 1st respondent having once been a director of the 3rd respondent, raised no presumption or adverse inference; allegations of hiding assets had to be specifically proved. Using one party's disclosure obligation as an indirect way to learn about another party's assets was not proper, especially without evidence linking them.

The court also found the wider proceedings procedurally wrong. The injunction had been obtained under HC/OA 153/2023, an application for leave to bring a derivative action under s 216A of the Companies Act 1967 on behalf of Asian Energy Investments Pte Ltd (AEI). Yet the applicant's own affidavit of 22 February 2023 said it was unlikely to pursue that action, as it planned to take control of AEI's board and have AEI sue directly. It had a major shareholder's support from the start, the 1st and 2nd respondents were removed as AEI directors on 26 April 2023, and on the 4th respondent's evidence the applicant had been AEI's majority shareholder since 27 July 2023 at the latest. There was no reason to keep the derivative action going.

The court dismissed the committal application against the 3rd and 4th respondents. It awarded costs of $4,000 each, plus reasonable disbursements, to those two respondents.