Fomema Sdn Bhd V Dato� Dr. Haji Mohamed Haniffa Bin Haji Abdulla & 11 Ors

  

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THE HIGH COURT OF MALAYA AT KUALA LUMPUR (COMMERCIAL DIVISION)

 

SUIT NO: D-22-1712-2009 & D-24-130-2008

 

FOMEMA SDN BHD

 

V

 

DA TO’ DR. HAJIMOHAMED HANIFFA BIN HAJI ABDULLA

 

& 11 ORS

 

AND

 

KOPERASIDOKTOR MALAYSIA BERHAD

 

V

 

FOMEMA SDN BHD GROUNDS OF JUDGMENT

 

The Applicant/Defendant vide a Summons in Chambers dated 6.11.2009 (Enclosure 15) in D-24-130-2008 (Fomema) and the Applicant/Defendants vide a Summons in Chambers dated 11.11.2009 (Enclosure 10) in D-22-1712-2009 (Haniffa) applied for stay of proceedings pending the appeals to the Court of Appeal against the following:-

 

a) Order dated 24.7.2009 (“Leave Order”) granted in OS No. D-24-130-2008; and

 

b) Order dated 9.9.2009 (“Buy Out Order’) granted in petition D8-26-

 

42-2007.

 

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Brief Facts

 

On 18.7.1995 a joint venture agreement (JV) was executed between Pantai Fomema and KDM for the purpose of acquiring a Concession to monitor and supervise the medical examination of foreign workers. For the purpose of the Concession subsequently on 3.10.1996 Pantai Fomema and KDM entered into a shareholders’ agreement to incorporate Fomema with Pantai Fomema holding 75% and KDM holding 25% of issued and paid up capital.

 

Under the JV Pantai Fomema and KDM agreed to carry out at their own cost and expense the following:-

 

a) Pantai Fomema would establish and set up the Medical Control Services; and

 

b) KDM would set up the Information Centre with a centralised database.

 

The Government awarded the Concession to Fomema vide a Concession Agreement dated 17.9.1997. Under the aforesaid Concession Fomema was to provide the following services:-

 

a) a Medical Control Facility to, inter alia, deal and liaise with agencies and foreign workers, doctors and laboratories; and

 

b) an Information Centre with a centralised data containing all medical information on each foreign worker.

 

On 1.10.1997 Fomema as the Concessionaire sub-contracted the services relating to the Info Centre to KDM and the Medical Control

 

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Services to Pantai Fomema. This included the right to collect fees and to pay the laboratories. Fomema will collect RM2/- per foreign worker pursuant to the Shareholders’s Agreement.

 

Subsequently on 15.3.1999 a Novation Agreement was executed between KDM, Pantai Fomema and Fomema whereby KDM transferred all its rights and obligations with respect to the Info Centre to Pantai Fomema. As a result of the Novation Agreement KDM would not have any role under the Concession but would be instead be paid RM4.50/-per foreign worker. This sum was subsequently increased to RM5.50/-per foreign worker from 26.2.2002.

 

By a petition presented in 2001 under section 181 Companies Act 1965 vide KL High Court Originating Petition D1-26-49-2001 KDM alleged oppression against Pantai Fomema. This Petition was however settled by a Settlement Agreement between Pantai Fomema and KDM on 26.2.2002 whereby the payment to KDM was increased to RM5.50/- per foreign worker and in addition RM 1.1 million was paid to KDM for its assets.

 

A second 181 Petition was filed vide Petition No. D8-26-42-2007 by KDM. On 9.9.2009 the Buy Out Application was allowed by the Court and Pantai Fomema was ordered to buy the entire 25% shareholding held by KDM in Fomema. KDM filed an appeal on 18.9.2009 against the Court Order for the Buy Out.

 

Since the two Stay Applications are based on the similar facts and issues I shall deal with them concurrently.

 

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In any application for stay there must be special circumstances before the stay can be granted. In Serangoon Garden Estate Ltd v. Ang Keng [1953] MLJ 116 the Court while commenting on the discretion to grant a stay had this to say,

 

“…But it is a clear principle that the Court will not deprive a successful party of the fruits of his litigation until an appeal is determined, unless the unsuccessful party can show special circumstances to justify it.”

 

What is ‘special circumstances’?

 

Raja Azlan Shah (as His Majesty then was) in the case of Leong Poh Shee v. Ng Kat Chong [1966] 1 MLJ 86, defined special circumstances as

 

“. must be special under the circumstances as distinguished from ordinary circumstances. It must be something exceptional in character, something that exceeds or excels in some way that which is usual or common. The definition only serves to emphasize the fact that there are myriad circumstances that could constitute special circumstances with each case depending on its own facts. I am of the opinion that the list of factors Constituting special circumstances is infinite and could grow with time. Any attempt to limit the list or close a category would be to impose a fetter on the exercise of the discretion of the court whether to grant or stay an execution; making the discretion less of a discretion”.

 

In Ming Ann Holdings Sdn Bhd v. Danaharta Urus Sdn Bhd [2002] 3

 

CLJ 303 Abdul Hamid JCA (as he then was) said that,

 

“.The weight of authorities appears to me to say that the special circumstances must be special, not ordinary, common or usual

 

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circumstances and that go to the execution of the judgment and not to the validity or correctness of the judgment (or merits of the appeal). Many judges considered the question whether the appeal, if successful, is rendered nugatory under the head of special circumstances. (Sometimes, the phrase used is whether the appellant, if successful, can be restored to its former position). The general view appears to be that that is the more, if not the most, important factor of all. Of course, no one ever attempts to define special circumstances, for good reasons. It is also a common view that it depends on the facts of the particular case. Thus, “business realities” has been taken into consideration, I believe under this head…”

 

Both the Applicants in 1712 and 130 submitted that are special circumstances which merit a stay of the proceedings pending the disposal of the appeals. The special circumstances:-

 

a) by virtue of the Buy Out Order dated 9.9.2009 KDM will cease to be a member of Fomema and hence will have no locus standi to continue the proceedings;

 

b) the Buy Out Order was granted after the Leave Order was granted on 24.7.2009;

 

c) the commencement of the action is premised on the Leave Order if the Order is set aside on appeal the whole proceedings may be rendered academic and nugatory;

 

d) no injustice as KDM can be compensated in costs.

 

The consequence of the Buy Out Order once the valuation of the shares is settled is significant. If the appeal against the Buy Out Order is

 

dismissed KDM‘s rights as a shareholder of Fomema will cease and KDM will no longer have locus to initiate or continue proceedings against Haniffa or Fomema. Therefore the outcome of the appeal on the issue

 

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of locus standi must be determined first as it has a significant impact on the proceedings. Furthermore the valuation of the shares are still an ongoing process and hopefully will be settled by 20.5.2010.

 

I am therefore incline to agree with the learned Counsel for the Applicants that the issue of KDM’s locus standi constitutes a special circumstances which will warrant the Court to grant a stay of proceedings. In the circumstances of both the applications I grant Order in Terms for Enclosure 10 and 15 with cost.

 

(HASNAH BINTI DATO’ MOHAMMED HASHIM)

 

Judicial Commissioner

 

High Court of Malaya at Kuala Lumpur.

 

17 May 2010

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